Am I guilty of fraud?
According to a recently published KPMG report Fraud cases in the criminal courts are more prevalent than ever. The total value of fraud cases before the Criminal Courts this year was said to be some £732,000,000 a figure up £15,000,000 from the previous year. Next year’s figure is thought to be even higher.
This means that there is an increase in defendants before the Criminal Courts for matters of Fraud, this is despite budgetary cuts. The reasons for this are difficult to ascertain but can be put down to the Police and the SFO and FCA being interested in recovering money under the Proceeds of Crime Act 2002 and a lack of tolerance of HMRC in respect of tax evasion, an area which always plays well in the media.
I have the benefit of seeing clients who are at various stages of a fraud investigation, from those who are worried that they are going to be investigated for fraud to those under investigation through to those who have been charged with a fraud offence.
I am often asked - what can I do if I am accused of fraud and what are the defences to fraud charges.
There are many different types of fraud cases from the large scale boiler room fraud (see Wolf of Wall Street) and Missing Trader Intra Community Fraud cases through to the smaller scale frauds upon individuals and benefit fraud. Therefore, it is difficult to make generalised statements about or give general advice in respect of fraud. So, in this article I will look at some of the commonly asked questions in respect of fraud cases and will attempt a few pointers for those worried about allegations of fraud. For a more academic and in depth legal analysis of specific types of fraud cases please see my other blog articles on Fraud.
What proof is required in Fraud cases?
Regardless of the type of fraud case, as with all criminal cases the prosecution must prove the case against a defendant and must do so beyond reasonable doubt. This involves calling evidence. Often in fraud cases the evidence will be a combination of documentary evidence and the evidence of witnesses, often those who are said to be the victims of the fraudulent behaviour.
A general rule in fraud cases is that the ‘devil is in the detail’; the paperwork presented by the prosecution as well as any defence material must be thoroughly analysed and understood. Often what is initially a strong case against a defendant crumbles when the detail is analysed, especially when the evidence that is put forward by the prosecution is compared to properly prepared and presented defence material.
Dishonesty in Fraud cases
The majority of offences created by both the Theft Acts and the Fraud Act make dishonesty a specific ingredient of the offence. This means that the Prosecution must prove that the defendant has acted dishonestly. The same test of dishonesty applies for each; the leading authority is R. v. Ghosh  Q.B. 1053, 75 Cr.App.R. 154, CA, in that case the Court outlined the fact that there were two aspects to dishonesty, the objective and the subjective, and that the jury, in determining the issue, would have to go through a two-stage process before it could convict the defendant:
“In determining whether the prosecution has proved that the defendant was acting dishonestly, a jury must first of all decide whether according to the ordinary standards of reasonable and honest people what was done was dishonest. If it was not dishonest by those standards, that is the end of the matter and the prosecution fails. If it was dishonest by those standards, then the jury must consider whether the defendant himself must have realised that what he was doing was by those standards dishonest.”
In many cases it is very difficult for the prosecution to prove that a defendant acted dishonestly and a properly presented defence can give the prosecution difficulties in all but the most overwhelming cases.
What can I do if I am investigated for fraud?
If a defendant is under investigation for fraud allegations there are a number of steps that can be taken to secure their position. Firstly, it is important to get legal representation, even before the authorities have been in contact with you. The likelihood is that if you are under the spotlight there will be very little time for you to get your affairs in order if you are arrested. You will need to have a legal representative to whom you have explained your case and who has given you specific advice. Your representative should have an experienced police station representative who is experienced in fraud cases on stand by for you in case you are interviewed.
I often have clients come to me when they have been interviewed by the police with a generally trained legal aid police station representative advising; often the representative has only seen them for a short period of time prior to interview. This is not ideal and mistakes can be made. Anyone under suspicion should make sure that they have expert representation already organised.
If an individual is going to be investigated or prosecuted for fraud they will also want to preserve material that is likely to be useful for their defence. Fraud investigations are notorious for taking a long time and often by the time a client comes to their lawyer material that could have been useful for the defence is unavailable.
Key areas where action should be taken are:
- Keeping in touch with potential defence witnesses. A crucial area. Often there would have been defence witnesses who could be traced and who could give vital evidence, the longer the period of time the more difficult these people can be to trace.
- Is there CCTV which could be useful? This is often erased or overwritten after a short period of time- make sure that your representative preserves it.
- Are there emails or other electronically held material that will be useful? Often email chains can show a defendant’s state of mind very accurately. It is imperative that these emails are preserved, often in hard copy and kept for use. I have lost count of the number of times that emails have been ‘lost’ by the prosecution or where cloud based emails have been erased or have lapsed due to the passage of time.
- Is there other documentation that could be useful to the defence? If this is the case then that material should be specifically retained and copies provided to a lawyer who can retain the copies under legal privilege. Again I have lost count of the number of times that the prosecution has uplifted an enormous amount of material from a premises and have been unable to locate a specific document that would have been very useful to the defence.
- Maintaining the memory of the potential defendant- many fraud cases end up going to Court years after the offences are alleged to have taken place. Placing an ‘aide memoir’ with your defence team, which will be protected by legal privilege, will help the potential defendant remember crucial details about the case if the matter eventually gets to Court.
Conspiracy in fraud cases. Conspiracy to defraud.
Fraud cases are often charged as conspiracies. A criminal conspiracy is an agreement between one or more person (either known or unknown) to pursue a course of criminal conduct. Each participant must be a knowing participant in the criminal enterprise. Ignorance of the law is not a defence to a fraud charge but a defendant may have some considerable success with a defence that he did not realise that he was participating in a criminal conspiracy.
A recent defence I undertook involved a conspiracy to defraud which was prosecuted at the Old Bailey. The defendants were said to have been party to a conspiracy to defraud taxpayers by fraudulent tax repayments. Mr D the defendant I was representing maintained that although there was a fraud, everything that he did was done honestly and that he did not knowingly participate in a criminal scheme. He was acquitted as the prosecution could not disprove his version of events.
Larger fraud cases will often be prosecuted under the common law offence of Conspiracy to Defraud; this will mostly be reserved for cases where the overall loss is in the millions of pounds.
Avoiding prosecution- negotiated settlement in fraud cases
It is an old legal maxim that the best way to win a trial is to avoid having one in the first place. As such if you find yourself under the spotlight for fraudulent conduct it is often advantageous to have your representatives explore alternatives to criminal prosecution. This is particularly advantageous for those who are members of professions who will lose their jobs if they gain a criminal record. There are many disposals of cases which fall short of a criminal conviction, from the acceptance of a caution to the voluntary repatriation of funds that have been misappropriated to a full scale civil settlement or a deferred prosecution agreement for SFO cases or a COP9 in HMRC cases. It is impossible to outline what potential settlement may be available without some detail as to the type of case but it is very rare that representations cannot be made as to a settlement of the matter. If put forward forcefully these representations can be very attractive to a prosecution team. Fraud trials are expensive to prosecute and have no guarantee of success; therefore, a negotiated settlement where monies are repaid can be of considerable attraction. Negotiations of this sort are factually, legally and tactically complicated and anyone considering this as a course of action should do so on the basis of specific and expert advice.
It is difficult to write generally in respect of fraud cases as there are so many different types of such cases, all of which will have their own unique characteristics. However, some principles are applicable across the board. If you find yourself accused of fraud you should make sure that you preserve material that will be useful for your defence. You should also make contact with a lawyer who has experience in Fraud matter who will be able to advise you as to a ‘road map’ going forward and will be able to put you in the best position to avoid prosecution.
Quentin Hunt is a Criminal Barrister who specialises in Fraud and matters of dishonesty. The Chambers and Partners independent guide to the legal profession describes him as: “a specialist in serious fraud cases” who is “very good and very bright” with “an exceptional work ethic”. Quentin now accepts instructions direct from members of the public. You may contact Quentin directly for a no obligation discussion about your case.
POSTED: Friday, March 17, 2017