Thursday, October 23, 2014
Fraud by failing to disclose information
Section 1 of the Fraud Act 2006 relates to the offence of failing to disclose information. The offence is wide ranging and can cover a number of circumstances.
An example would be where a person makes an insurance claim for a ring that they believed had been stolen. They report this to their insurance company and make a claim. They subsequently receive an insurance payout of £15,000 for the ring. Following this they later find the ring under the bed in their spare bedroom. They have discovered that the ring was not stolen but lost and decide not to tell the insurance company and then decide not to tell the insurance company about it and keep the money. They are then guilty of an offence of failing to disclose information.
This fraud case offence is treated seriously by the courts and is triable in either the Magistrates Court or the Crown Court, the maximum punishment is 10 years imprisonment.
The offence must be proven by the prosecution to the criminal standard- so that the jury are sure or ‘beyond reasonable doubt’.
So what do the prosecution have to prove?
That the defendant acted dishonestly. Dishonesty is not defined in the Act but it is in case law where there is a two stage test- firstly that by the standards of reasonable and honest people what was done was dishonest and then that the defendant themselves must have realised that what he was doing was, by those standards, dishonest. Clearly the requirement of dishonesty therefore means that the failure to disclose must be deliberate.
The defendant must also have intended to make a gain to himself or cause a loss to another- gain requires intent to make such a gain. However, gain does not mean a profit- a gain can be money that one already has if one is not entitled to it. Loss means actual loss but can also cover intent merely to expose another to risk of a loss. For example when monies are asked for but not paid over.
The defendant must be under a legal duty to disclose the information that is the subject matter of the charge. This often comes up in the context of insurance claims and applications as well as company prospectuses and a variety of other circumstances. There is no specific requirement that the defendant must have known that he had to disclose the information but without such evidence the defendant will have an excellent dishonesty defence. It must also be shown that he knew that the information that he failed to disclose was important otherwise it would not follow that by failing to make the disclosure he was intending to cause the loss or make the gain.
The offence runs from the moment that the defendant has the necessary dishonest intent and is under the duty to disclose and continues to operate as long as the disclosure is not made. It is often argued that the fact that someone volunteers the disclosure after being challenged does not give that person a defence in law as the dishonest intent will have continued unless the enquiry is made. This however is a matter of factual degree.
The offence of failure to disclose information under the Fraud Act is a difficult one for the prosecution to prove, there are many elements of the offence and a good deal of it is subjective. Lack of dishonesty defences often succeed. There are also a great number of technical defences available in respect of the legal obligations that one must be subject to in order to be guilty for such an offence.
If you find yourself investigated for an offence of failure to disclose information it is vital that you seek specialist legal assistance as soon as possible. Quentin Hunt has a wealth of experience in defending persons prosecuted under the fraud Act 2006. Contact Quentin for more information and a no obligation conversation or find out more about Quentin’s experience in this area.