It is with a large degree of frustration that I write this blogpost.
On a micro-scale, I am continually aware of a variety of cases of fraud committed and reported to the Police, with the promise of an investigation, but no progress or continuation.
Why is this?
3 reasons spring to mind:
1. The Police lack financial resources and there are budgetary limitations, restricting action and effectiveness;
2. The Crown Prosecution Service (‘CPS’) lack financial resources and there are budgetary limitations, restricting action and effectiveness;
3. The standard of proof differs between civil and criminal litigation action. In the former, it is a ‘balance of probabilities’, (arguably, given Hornal v Neuberger Products Limited  1 QB 247). In the latter, it is ‘beyond all reasonable doubt’.
That means that theoretically it is easier to bring a claim of fraud in the Civil Courts, rather than to be dragged lugubriously through the Criminal Courts.
The Police know this. The CPS know this. Seasoned and educated criminals of the ‘Moriarty variety’, know this. I believe that a good deal of cases do not proceed past the Police, to the CPS, or are reported but the CPS do not take the cases further.
The CPS have 2 main burdens to overcome, when considering prosecution, namely, evidential consideration, and public policy considerations.
Evidential considerations are plain enough to understand, but public policy considerations are not so straight-forward. Factors must necessarily include a consideration of costs and time to be spent on such a case.
What about recovery of assets, following a conviction at a criminal trial? Or alternatively, to confiscate assets where someone is living off the proceeds of crime?
The Proceeds of Crime Act 2002 creates an agency (now the Serious Organised Crime Agency), to recover and confiscate money and assets both civilly and criminally against the convicted as well as the suspected.
What happens to what is recovered?
What is recovered, is ploughed back into community projects and other police operations to target criminals.
What happens when there is nothing to recover?
That is an interesting question: I do not know the answer, but I can hazard a guess that this is not a factor, but should be a factor. I stand to be corrected on this.
If this were a civil case, and my client was a businessman, there would be a number of factors to consider, which I list non-exhaustively:
- what is the strength of the case, and the respective possible defence?
- irrespective of the strength of the case, is the Defendant/Respondent going to argue, and on what basis?
- is the Defendant/Respondent able to pay, or has assets to pay a Judgment? All very well, bringing a claim and obtaining Judgment, but what about enforceability of a Judgment? Or the prospect of how difficult it would be to recover assets from elsewhere?
Is this the same for other Governmental Agencies such as Trading Standards?
In a variety of cases that I have dealt with, I got the impression that financial considerations for recovery played a much larger role, than it did for many Police forces mainly because in certain Trading Standards Offices, there was a rule that ‘they got to eat what they killed’, proverbially speaking. That is a huge incentive to stretch resources on the basis of a reward. Although those cases were some years ago. One wonders how such promises of financial incentives based on results, are not affected by the Bribery Act 2010?
It is easy to say, but realistically it is a disaster for a small business unwittingly involved in a fraud, to then find time and resources to do something about it themselves.
What goes wrong?
Put simply…a lack of financial resources and budgetary limitations for the victim to pursue a case against those they have wronged.
The civil standard of proof may well be less, but it is then no longer a concern for the budgets of either the Police or the CPS because…over the years, it is an easier option to justify not pursuing a case of fraud, because the victim has recourse in the Civil courts. That, to a large extent, must play a role in the decision-making process as to whether or not to prosecute.
Such a fraud used to be unrecoverable. Police were reliant upon Banks to disclose CCTV evidence to corroborate the crime, but the Banks were not so forthcoming on providing such information, and the Police were left in an invidious position wanting to prosecute but unable to do so because of a sufficient evidence.
Now, the Banks realise just how wide-spread this fraud is, and are starting to attend forums both on-line and physically to combat the same.
The way forward: I proffer 3 possibilities:
A. Certain criminal fraud cases could be re-classified as quasi-criminal/civil offences.
Let’s face it, the way Police Policy is going, this could be another opportunity to show how crime has fallen in this area, because a misdemeanour re-classified is no longer a crime: A ‘No-Crimed’ decision].
The standard of proof could be downgraded to a civil case rather than a criminal case in certain situations. POCA should be allowed to prosecute, and a percentage of winnings from recovery ought to be agreed as to what share of what is recovered comes to them, or goes elsewhere. These figures should be published and the information, transparent. There should be no personal individual gain from such recovery.
B. What is required is a huge ‘buy-in’ of time and energy to be adopted by both the Police, security, customers, manufacturers, Local Authorities, other Government Agencies, and businesses.
More funds should be spent on deterrence and prevention of crime to deter would-be offenders from pursuing such a path. Education is key to teach children the effects of crime and corruption, and its effects on society and the World. Without certainty, we have instability, and therefore insecurity. Speculation is rife.
C. Deferred Prosecution Agreements (‘DPAs’) in cases relating to the Bribery Act. this will shortly be/is available as a brokering/negotiating tool to admit ‘conditional ‘ guilty.
The best analogy I can think of, is when, under the Company Directors Disqualification Act 1986, if convicted, one could face disqualification as a Director for a number years, dependent upon the gravity of circumstances, and/ a fine, imprisonment, or both. The issue was down-graded in certain circumstances where a Disqualification Order upon undertakings given, meant that the stigma of prosecution fell away, and one could simply agree not to be a Director or a Shadow Director for a term of years. A DPA works in a similar way, although I am unsure as to whether there will be an official ‘name and shame’ scheme, or the purpose instead is to ensure that rather than heads being cut off from the top, undertakings are given as to quality and training for example in respect of bribery, proceeds of crime, and money laundering regulations. On the basis that a Company or individual can maintain those high standards of morality for a period of time, prosecution would be avoided (costs and time kept proportionately), and lessons learnt. There should also be an element conditional upon monies or assets being surrendered or transferred before any Order is made under POCA.
I invite your comments to this.
Professor Rosen is a Solicitor-Advocate, Partner and head of Litigation at Darlingtons Solicitors. A working member of the Fraud Advisory Panel, a Certified Fraud Examiner with the ACFE, an Associate Professor of Law at Brunel University, and a member of the Society of Legal Scholars.
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