Fraud FAQs

Fraud FAQs

Fraud is the most common criminal offence committed in England and Wales. Being investigated and/or charged with fraud is an incredibly stressful experience for you and your family. The more you understand about the legal process, the more confident you will feel. Therefore, I have created a list of questions that clients often ask when I first meet them.

What is fraud?

Fraud is the use of trickery to gain a dishonest advantage, which is often financial, over another person.

Fraud is primarily governed by:

• The Fraud Act 2006

• The Theft Act 1968

What are the types of fraud in the UK?

Types of fraud include (but are not limited to):

• Mortgage fraud

• False accounting

• Fraudulent trading

• Misrepresentation

• Identity theft

• Ponzi schemes

• Debit and credit card fraud

• Tax fraud

• Insurance fraud

• Dating fraud

• Cryptocurrency fraud

What is considered serious fraud in the UK?

Although all types of fraud are serious offences, the Serious Fraud Office investigates allegations and self-reports of large, complex corporate fraud, bribery, and corruption cases that often involve several jurisdictions.

What are the three things required for fraud?

People involved in investigating and preventing corporate fraud often talk about the Fraud Triangle. This is a framework used to explain how and why someone will commit fraud. The three elements are:

Opportunity

Opportunity refers to the conditions that allow fraud to occur. Someone is unlikely to risk committing fraud if an organisation's financial systems are strictly monitored and controls are in place to pick up any anomalies in the accounts.

Incentive

This refers to the pressure on a person to commit fraud. This could be personal. For example, the individual is in debt or suffers a gambling addiction. Or they could feel under pressure to meet company targets.

Rationalisation

Rationalisation refers to how a person justifies having committed fraud. For example, they may say to themselves that the company's directors are making millions and they deserve some of the profits after all the hard work they have put in. Or they may feel bitter towards their employer and use fraud as a way of getting their revenge.

Can I go to prison for fraud?

This depends on the seriousness of the fraud offence. If you are convicted in the Crown Court, you could receive a sentence of up to ten years imprisonment.

When deciding on what sentence to hand down, the presiding judge will use the Sentencing Guidelines to establish a starting point. They will then adjust the sentence by looking at any aggravating or mitigating factors.

Aggravating factors

• Committing the offence whilst out on bail

• Previous convictions

• Steps were taken to prevent the victim reporting or obtaining assistance and/or from assisting or supporting the prosecution

• Attempts to conceal/dispose of evidence

• Established evidence of community/wider impact

• Failure to comply with current court orders

• Offence committed on licence or post sentence supervision

• Failure to respond to warnings about behaviour

• Offences committed across borders

• Trying to blame others

Mitigating factors

• No previous convictions or no relevant/recent convictions

• Remorse

• Positive character and /or exemplary conduct (regardless of previous convictions)

• Little or no prospect of the fraud succeeding

• Serious medical conditions requiring urgent, intensive or long-term treatment

• Age and/or lack of maturity (which may be applicable to offenders aged 18-25)

• Lapse of time since apprehension where this does not arise from the conduct of the offender

• Mental disorder or learning disability

• Sole or primary carer for dependent relatives

• Pregnancy, childbirth, and post-natal care

• Offender co-operated with the investigation, made early admissions and/or voluntarily reported offending

• Determination and/or demonstration of steps having been taken to address addiction or offending behaviour

• Difficult and/or deprived background or personal circumstances

• Prospects of or in work, training or education

The above lists are not exhaustive. The judge can consider any aggravating or mitigating factors they deem relevant.

Your Fraud Solicitor will make submissions to the Court on the mitigating factors that should be applied to your case.

What are the different types of cryptocurrency fraud?

Cryptocurrency fraud and scams are becoming increasingly common and can take many forms, including:

• Deceptive practices resulting in the stealing of cryptocurrency from a person's digital wallet

• Unauthorised acquisition of cryptocurrency through hacking.

• Fraudulent cryptocurrency investments, often perpetrated by people posing as investment managers, enticing people to invest in fictitious crypto schemes.

• Scams related to Initial Coin Offerings (ICOs), wherein investors contribute funds to a sham currency with the expectation of significant returns.

• Ransomware attacks that demand payment in the form of cryptocurrency.

How is dishonesty proven in fraud cases?

The crux of the mental element of fraud is dishonesty. For many years, the dishonesty test used by the Court to establish if the Defendant was dishonest was the one formed by R v Ghosh [1982] EWCA Crim 2. This required the Prosecution to prove that the Defendant subjectively knew they were being dishonest when they committed the offence and their actions were objectively dishonest according to the standards of ordinary people.

In Ivey v Genting Casinos (UK) Ltd t/a Crockford [2017] UKSC 67, the Supreme Court ended the Ghosh test and developed a new two-stage test for dishonestly, which must be answered by a Magistrate or, in the case of a Crown Court trial, the jury:

• 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?

The Ivey test removes the need for the Prosecution to prove the Defendant knew or believed they were being dishonest.

When it comes to the definition of the 'standards of ordinary people', in Floreat Investment Management Limited v Churchill [2022] EWHC 357 (Comm), the Court held that dishonesty involves a serious lapse from ordinary and proper standards. It should not be found lightly, especially in situations where "a degree of slackness in complying with formalities was not out of the norm".

Is it hard to prove fraud?

Yes, it is challenging to prove the mental element of fraud, namely dishonesty. However, fraud is an extremely complex crime, and it is crucial to have an experienced Fraud Solicitor and Barrister advise and represent you.

If you have any questions regarding this article, please call us on 0300 3732424. If you have been arrested and require police station representation, please call our emergency number 0300 373399.