Making Fraud Pay: Private Prosecutions

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The PwC Report on Economic Crime 2018 indicated that 50% of UK Respondents to their survey had experienced economic crime in the past 24 months.

Of those who lost money 24% lost more than $1m.

According to the NHS Counter Fraud Authority:

“fraud costs the NHS £1.29 billion a year - enough money to pay for over 40,000 staff nurses, or to purchase over 5,000 frontline ambulances. This is taxpayers' money that is taken away from patient care and falls into the hands of criminals.”

This is, of course, dastardly in the extreme but surely the long arm of the law will be bringing the criminals to book? Not quite.

A 2018 Which? report indicated that 96.3% of all cases passed on to Police by Action Fraud (the UK’s national fraud reporting centre) went unsolved. If you find that difficult to believe then consider the written submission to the Home Affairs Select Committee by the City of London Police. It showed that in 2016-17, local police solved 3.1% of fraud cases, while 85% were unsolved, and 12.1% of cases were ongoing.

Not a clear up rate that Hercule Poirot would accept as reasonable. There are, of course, a whole host of reasons behind these figures and one might even dismiss them out of hand on the basis that there are “lies, damned lies and statistics”.

What can be done?

It would be reasonable to suggest that most people who are victims of fraud seek redress. Punishment by imprisonment or other penalty is not something that will replace the missing cash. If a criminal’s assets are confiscated those items go to the state, not the victim.

This combined with low rates of detection has seen an increase in private investigation, prosecutions and civil recovery cases. In 2014 the Lord Chief Justice said:

“There is an increase in private prosecutions at a time of retrenchment of state activity in many areas where the state had previously provided sufficient funds to enable state bodies to conduct such prosecutions.”

Any individual or company has the right to bring its own prosecution in the criminal courts pursuant to S.6 (1) of the Prosecution of Offenders Act 1985.

Why bother? There are a number of advantages to bringing the case to court yourself.

  • Control – you have the authority to dictate the way the case is shaped and progressed. Importantly you have the power to decide what may be acceptable to you in terms of pleas to charges that have been brought. You can decide what if any compensation orders are to be sought. You will not have to rely upon an overstretched and under resourced CPS to make those decisions for you.
  • Costs – unlike in civil proceedings, costs can be claimed from the Crown if you are successful. Even if you lose it is not a foregone conclusion that you will have to pay the defendant’s costs, provided you can show that the case was brought with good cause and not in a malicious manner for an ulterior motive.
  • Speed – criminal cases move through the judicial system at breakneck speed compared to the sometimes glacial pace of civil proceedings.
  • Publicity – the impact of a successful criminal prosecution is so much greater than a successful civil case for no other reason than the morbid curiosity of the general public.  Even if the case is lost the message that is sent out is that you, as an institution, will fight back.
  • Compensation – this is a priority for you. It is not one that is necessarily shared by the Crown. The proceeds of a compensation order should go to the victim. The proceeds of a confiscation order will be paid to the state.  Both can be sought in a private prosecution. In 2016 an Old Bailey Judge ordered that a defendant who had been convicted in a private prosecution pay a confiscation order in the sum of £20M to the State and a compensation sum of £18M to the victim.

A private prosecution is a powerful weapon in the armoury of a victim of fraud. The threat of civil proceedings makes less of an impact. It can facilitate a swift settlement of losses. Even if it does not drag the perpetrator to the table there are a number of tools organisations can use to investigate and uncover assets from which a settlement can be forced.

In many cases private investigators, forensic accountants and other experts (IT and software experts for example) can paint a telling picture of a fraudster’s finances, often dispelling the lie that has been peddled that they are penniless.

In many cases it has been shown that the criminal who pleads poverty has properties abroad held by family members or holds other assets across the world.

Rather than discount the thought of action to recover a loss or accept a decision by the CPS not to proceed it may well be worthwhile considering action individually. As Lord Wilberforce said a private prosecution is “a valuable constitutional safeguard against inertia or partiality on the part of authority.”

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