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Tag: fraud

  • What To Do If You Are Accused Of Fraud?

    What To Do If You Are Accused Of Fraud?

    If you are accused of fraud and are being investigated by the police or a regulatory body such as the SFO, NCA, HMRC, or FCA, it is essential that you contact an experienced Fraud Solicitor immediately. We see so many cases in which it is clear that if we had been instructed earlier, the investigation/prosecution would never have gone as far as it had. 

    Fraud is a complex crime and is extremely hard to prove to the criminal standard (beyond reasonable doubt). However, if you are convicted, depending on the nature and extent of the fraud, you could face up to ten years’ imprisonment.

    In addition, if you are accused of fraud, investigations can be long, extremely stressful, and cause untold damage to your business reputation. Without meticulous, smart, and proactive legal advice, a person or company could bring a civil claim for fraud against you at the same time the criminal investigation/prosecution is taking place.

    This is becoming more common as the civil test for liability (on the balance of probabilities) is lower than that required for criminal prosecution.

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    What is fraud?

    Fraud is the use of trickery to gain a dishonest advantage, which is often financial, over another person. Types of fraud include (but are not limited to):

    • Electoral fraud
    • Mortgage fraud
    • Beneficiary fraud
    • False accounting
    • Fraudulent trading
    • Fraud By false representation
    • Identity theft
    • Immigration fraud
    • Ponzi schemes
    • Debit and credit card fraud
    • Tax fraud
    • Insurance fraud

    In addition to the above, there are also many types of conspiracies to defraud. 

    How can I defend an allegation of fraud?

    The most common defence in either a criminal or civil fraud trial is that the Defendant did not act dishonestly. For example, if you are accused of making false representations you can argue that at the time you were unaware that what you said was untrue.

    In the case of identity theft, your defence may be that the person whose identity you have been accused of stealing permitted you to use their details.

    When establishing whether or not you have been dishonest, the Court will use the test set out by the Supreme Court in Ivey v Genting Casinos (UK) Ltd t/a Crockford [2017] UKSC 67, namely: 

    • What was the defendant’s actual state of knowledge or belief as to the facts?
    • Irrespective of the defendant’s belief about the facts, was their conduct dishonest by the objective standards of ordinary decent people?

    There are other general defences available for criminal fraud, for example, necessity, duress, and mistake. An experienced Fraud Defence Solicitor can swiftly examine the facts of your case and the Prosecution’s evidence and advise you on the defence/s that is most likely to achieve success.

    Do I need a Fraud Solicitor if I am asked to attend an interview under caution?

    Never, ever attend an interview under caution or even an informal ‘chat’ without your Solicitor present. 

    The powers of the police and other regulatory bodies “who are charged with the duty of investigating offences or charging offenders” to conduct interviews under caution are contained in the Police and Criminal Evidence Act 1984 (PACE 1984).

    If you believe you are innocent it is natural to assume that if you speak to the authorities and calmly tell them your side of the story they will promptly apologise, shake your hand, and the matter will be put down to a misunderstanding.

    Unfortunately, this is not how things work.

    The job of the police and regulatory authorities is to investigate suspected criminal activity with the aim of bringing a successful prosecution. Having a Fraud Solicitor at your side who can not only advise you but also ensure the interviewers do not overreach their powers. 

    When it comes to SFO investigations, it is important to note that it obtains its investigatory powers from section 2 of the Criminal Justice Act (CJA) 1987. Therefore, it can compel organisations/people to produce documents and other evidence, apply for a search warrant, and attend interviews. These are referred to as ‘compulsory powers.’ 

    Importantly, section 2 allows the SFO to insist a person attends an interview that is not conducted under caution nor subject to the Police and Criminal Evidence Act (PACE). Therefore, there is no right to silence and if you want to have a Solicitor present, they need to convince the investigator that they should attend and if they are so permitted, agree to restrictions regarding their conduct.

    There are two safeguards concerning the interview powers provided by section 2, namely:

    • The powers cannot be used to obtain information subject to legal professional privilege, and
    • Answers provided in a section 2 interview cannot be used in a prosecution case if one is brought against the Defendant for the offence under investigation. However, they can be used to prosecute the Defendant for an offence of misleading the investigation.

    Refusing to comply with the SFO when it is exercising a compulsory power or providing false or misleading information is a criminal offence and can lead to a custodial sentence.

    Concluding comments

    Fraud and the various powers given to the police and regulatory authorities to investigate it are incredibly vast and go beyond what can be explained in a single article. For example, because it is notoriously difficult to successfully prosecute fraud and corruption cases if an investigation does not meet the relevant criteria to bring a prosecution but property derived from crime can be identified, authorities can use their civil recovery powers to freeze and recover assets. 

    If you are accused of criminal fraud or a civil claim for fraud has been brought against you, please contact us immediately. If you are subject to a ‘dawn raid’ we can provide an emergency response. 

    To discuss any points raised in this article, please call us on +44 (0) 203972 8469 or email us at mail@eldwicklaw.com and/or contact our Head of Business Crime, Abbas Nawrozzadeh. 

  • Money Laundering and Fraud Update with Jewellers at Risk

    Money Laundering and Fraud Update with Jewellers at Risk

    In a scene out of a Hollywood gangster film, millions of pounds of cash were being carried into a Bradford jewellers Fowler Oldfield. Those couriering the cash had convictions for drugs offences and fraud (amongst other things). The jewellers were quite clearly serving as a money laundering front for these criminals.

    The case has attracted some attention in recent months, as the Financial Conduct Authority (FCA) has accused Natwest (who provided the gold dealer with banking services) of breaching anti money laundering regulations when handling a string of cash deposits made between November 2011 and October 2016. A first hearing has already taken place at the Westminster Magistrates’ Court on 14 April 2021 and it is an example of the FCA taking a tougher approach towards banks and therefore others that handle large amounts of cash.

    What is money laundering in simple terms?

    Money laundering is the process by which the proceeds of crime are converted into assets which appear to have a legitimate origin, so that they can be retained permanently or recycled into further criminal enterprises.

    In simple terms: It is a way for criminals to disguise the illegal source of their money and it can range from sophisticated financial schemes or like in the Fowler Oldfield case criminals turning up to a jewellers with large bags of cash. The purpose of it is all the same though – to hide ‘dirty money’ made from criminal activities such as illegal arms sales, drug trafficking, prostitution, insider trading, theft or tax evasion.

    Money laundering offences are defined in Part 7 of the Proceeds of Crime Act 2002 (POCA) and carry lengthy prison sentences.

    What are the risks posed to those in the jewellery industry?

    As the Fowler Oldfield case demonstrates, jewellers will often be a target for criminals as it is relatively easy to launder money through the selling of high-end items such as jewellery and precious metals. That is why it is vital for jewellers to be vigilant and have proper anti money laundering regulations in place, so that they are not caught unawares.

    The ways in which you can do this are relatively simple and straightforward. First, it is important that you have proper KYC principles in place for business partners that are suppliers or customers of diamonds, gold and platinum group metals or jewellery products containing these. You do that by establishing the identity of the supplier and customer, and where there is a trigger, you have proper reporting protocols in place. The failure to disclose is a separate criminal offence under Section 330 of POCA.

    Second, you take proper advice from a solicitor or lawyer on what the applicable regulations are and that you put in place proper risk assessments. Those risk assessments will establish where a report may need to be triggered, such as with customers who regularly transact through third parties, like lawyers or accountants, or those that deal in large amounts of cash.

    If you require further information on what steps you should be taking to comply with your money laundering regulations, then you should take proper legal advice.

    What are the defences to money laundering?

    Given that there are numerous offences under Part 7 of POCA, the defences will differ. If you face an allegation of concealing criminal property, which is quite common for those handling large amounts of money, then an offence will not committed if you have made an suspicious activity report (SAR) within the timescales set out in Section 338 of POCA. This defence can also apply where you can demonstrate that you intended to make the disclosure, but could not do so, because you had some reasonable excuse.

    Another defence is where you know, or had reasonable grounds to believe, that the relevant criminal conduct occurred outside the UK, or fell within the “Exceptions to Overseas Conduct”.

    If you are facing an allegation of failing to disclose, then a defence under Section 330 (6) will be if you had a reasonable excuse for failing to disclose the suspicion or under Section 330 (7) that you knew or had reasonable grounds to believe that the money laundering was occurring outside of the UK and that this money laundering was not unlawful in that country.

    What if you find yourself being accused of money laundering?

    If you have been accused of money laundering and face a criminal investigation, then it is vital that you immediately seek legal advice. A proper assessment of your internal compliance can be carried out and a solicitor will be able to work with you to establish whether you have a viable defence.

    Examples of our recent work:

  • Furlough Fraud – Eldwick Law Fraud Solicitors

    Furlough Fraud – Eldwick Law Fraud Solicitors

    What is the furlough scheme?

    On 20 April 2020, the government introduced the ‘Coronavirus Job Retention Scheme’ (CJRS). This is commonly referred to as the ‘Furlough Scheme’. A furlough is defined as a ‘temporary leave of absence’ from work. Whilst this scheme is ultimately helping struggling businesses and individuals, there is scope for abuse of the system, also known as ‘furlough fraud’. It is important for individuals and businesses to understand the implications of the scheme and take steps to prevent fraud.

    The Chancellor took the unprecedented move of offering government assistance to all employers, operating on a PAYE scheme, who otherwise would not be able to pay their staff. To prevent redundancies, the government offered support by subsidising 80% of their wages. From 1 August 2020, the government will start to slowly withdraw their support. They will first require employers to meet National Insurance and pension contributions in August. Throughout September and October, the percentage of contribution to employees’ wages will subside. The scheme ends on 31st October 2020.

    Under the scheme employees are not allowed to undertake any work at all for their employer. This excludes training, for any hours that their employers claim furlough assistance from the government for.

    The CJRS has been hailed as a lifesaving measure to prevent mass unemployment and to support the ‘stay-at-home’ orders that were necessary to contain the pandemic. However, as the total cost of the scheme has swelled to £28.7bn in 12 July 2020, the obvious question becomes how the Treasury is going to be able to recoup on this unprecedented public investment.

    Furlough fraud

    In a powerful statement of intent, HMRC arrested a 57-year old man from Solihull for allegedly defrauding the CJRS of £495,000. The man had his bank accounts frozen and is alleged to be part of a wider multi-million-pound tax fraud. He is one of eight men from the West Midlands area to have been arrested as part of the investigation. Whilst the HMRC were forced to suspend its investigatory activities in April due to capacity issues, the department is back with a vengeance to clamp down on any instances of fraud.

    HMRC reported over 1,900 complaints in May alone. These were arising from alleged mis-use of the CJRS scheme. Employers were claiming government support for furloughed workers while still requiring those workers to come to work. This is a clear abuse of process. However, given the raft of Coronavirus assistance packages that have been on offer for employees, self-employed workers and small businesses , the lines are easily blurred. It can be easier than people think to essentially ‘double-claim’ on government assistance.

    HMRC have set out additional safeguards to prevent fraudulent activity within the scheme which include:

    • Proof that the employee was on the payroll from 28 February 2020, in order to prevent the creation of fake employees
    • The requirement for an employer to have already been authenticated by HMRC.
    • A four- to six-day processing period to make background checks, which should flag high-risk claims.
    • Checks made after payout to verify a claim was real.
    • A whistleblowing facility so that abuse can be reported.

    The Finance Bill 2020

    HMRC has indicated the new Finance Bill will offer a 90-day grace period. This will allow employers to refer themselves to the authorities. You can refer yourself if you believe you have benefitted too much from the CJRS and voluntarily submit yourself to a reassessment. HMRC will pursue enforcement proceedings all the way to criminal sanction for those deliberately attempting to defraud the scheme. They will show leniency in cases where over-benefitting from the scheme was not intentional and take a co-operative approach to employers who have sums that they might need to repay.

    If you are an employer benefitting from the furlough scheme, it is important to ensure you have complied with your relevant obligations. It is imperative to ensure you have read the relevant guidance, properly trained HR and payroll staff in the scheme and updated your policies and procedures.

    Eldwick Law has specialist practitioners able to give tailored advice to businesses of all sizes.