Fraud

What should you do if you are being investigated for fraud?

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What is fraud?

The Fraud Act 2006 came into force on 15 January 2007 and applies in England, Wales and Northern Ireland. Previously fraud had been included in the Theft Act.

Fraud overlaps with theft and other offences. In many cases fraud will also be theft. There are differences though. For example, it’s not necessary in fraud to prove any consequences of the fraud, though they will be considered in sentencing, compensation and confiscation. It will still therefore be necessary to gather evidence of any consequences. In many instances, although proof of loss is not essential for the offence of fraud, it is usually the fact of a gain or loss that will prove the defendant’s dishonesty beyond reasonable doubt. Another difference from theft is that Fraud Act offences do not require ‘an intent permanently to deprive’ as is required in theft.

Fraud Act Offences

General definition

Section 1 of the Fraud Act 2006 creates a general offence of fraud. It describes three ways of committing fraud which are set out in:

  • Section 2: Fraud by false representation;
  • Section 3: Fraud by failure to disclose information when there is a legal duty to do so; and
  • Section 4: Fraud by abuse of position.

In each of these sections:

  • The defendant must be dishonest;
  • The intention must be to make a gain;
  • Or cause a loss or the risk of a loss to another;
  • But no actual gain or loss needs to have been made though – meaning that the fraud does not have to have been successful, it was still a fraud;
  • The maximum sentence is 10 years’ imprisonment.

Fraud by false representation (Section 2)

In any situation, whether private or commercial, if you are dishonest in your dealings and you stand to gain financially or someone else stands to lose financially, this is a fraud by false representation offence.

The prosecution must prove that the defendant:

  1. Made a false representation (in other words – was dishonest);
  2. Knowing that the representation was or might be untrue or misleading;
  3. With intent to make a gain for himself or another, to cause loss to another or to expose another to risk of loss.

Examples of fraud by false representation:

  • In the aftermath of the fire at Grenfell Tower 2017, some people claimed that they were residents in the Tower before the fire, allowing them to claim cash and compensation from the government.
  • Knowingly lying on any application form which attracts some form of financial advantage, such as a claim for universal credit
  • Trying to sell a car while claiming that it is in good order, although you know that there is a major issue with the vehicle.
  • Selling something that isn’t yours, for example saying that you’re selling an antique on behalf of your parents when you haven’t got their consent.
  • Using a member’s card that isn’t yours to gain access to a members club or gym.
  • Posing as a satisfied client of a business to prospective clients when you’re a paid employee of the firm and not a reliable, independent third party.

Fraud by failing to disclose information (Section 3)

Fraud by failing to disclose information is committed as soon as the defendant fails to disclose information, provided there was a legal duty to do so and that it was done with the necessary dishonest intent.

The prosecution must prove that the defendant:

  1. Failed to disclose information to another person;
  2. When he/she was under a legal duty to disclose that information;
  3. Dishonestly intending, by that failure, to make a gain or cause a loss.

Examples of fraud by failing to disclose information:

  • Having made an insurance claim for a valuable watch you believed had been stolen and for which you received an insurance payout of £5,000, after which you find the watch but decide not to tell the insurance company.
  • Failing to disclose required information to an insurance company when taking out a vehicle policy such as a previous accident or a conviction for drink-driving.
  • Claiming criminal legal aid and leaving out information about your financial circumstances to achieve eligibility.

Fraud by abuse of position (Section 4)

Fraud by abuse of position is committed once the defendant carries out the act that is the abuse of their position. It is immaterial whether or not it is successful and whether or not any gain or loss is actually made.

The prosecution must prove that the defendant:

  1. Occupies a position with an expectation to safeguard, or not to act against, the financial interests of another person;
  2. Abused that position;
  3. Dishonestly;
  4. Intending by that abuse to make a gain or cause a loss;
  5. The abuse may be an omission rather than an act.

Examples of fraud by abuse of position:

  • A person is employed to care for an elderly or disabled person and has access to their bank account but abuses that position by removing funds to buy things for him/her self.
  • An employee fails to take up the chance of a crucial contract for his employer in order that an associate or rival company can take it up instead.
  • A director of a company dishonestly makes use of knowledge gained as a director to make a personal gain, for example by buying shares knowing that a forthcoming announcement will cause a rise in the share price.
  • An employee who abuses his/her position by granting contracts or discounts to friends, relatives and associates.

 

A fraud allegation can have dire consequences for you and your family, your business, your finances and sometimes your mental health. Fraud allegations can be very stressful and you’ll feel nervous about the future. You’re bound to be wondering whether you will be get a prison sentence or a financial penalty and how you will support your family.

It’s crucial that you seek the help of fraud solicitors immediately so you get legal advice and representation right from the start.

Will I get Criminal Legal Aid?

How can ONRECORD help?

ONRECORD is designed to help you gather evidence and makes it easy for you to make a record of anything you think suspicious.

Collect and store evidence easily with the ONRECORD mobile app and with the help of our guidance.

When you think there’s enough evidence to seek advice, go to the police, if you think a crime has been committed, or start proceedings in the Court of Protection as a Litigant in Person.

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