Worldwide: Fraud Watch (January 2007)

Last Updated: 10 January 2007
Article by Gary Miller

Welcome to the January edition of Mishcon Fraud Watch, prepared by the Corporate Investigations & Asset Recovery Group at Mishcon de Reya. Its aim is to provide businesses and their advisors with a snapshot of what has been happening in the world of fraud in the last month.

We make no judgement whatsoever as to the morality, legality or appropriateness of the conduct which forms the subject matter of this bulletin. We simply aim to bring these matters to the attention of those involved in the prevention, detection and investigation of fraud.

UNITED KINGDOM

Assets Recovery Agency (ARA)

The ARA has been granted Confiscation Orders for £25,149.72 against Maria and David Hancock of Cedarwood Drive, Rogerstone, Newport following their conviction on charges of selling counterfeit DVDs.
Assets Recovery Agency press release, 19 December 2006

The ARA has been granted a Confiscation Order for £1,079,644 against Jonathon Leeming of Stratfield, Basingstoke, Hampshire following his conviction on charges of conspiracy to control prostitutes.
Assets Recovery Agency press release, 19 December 2006

The ARA has been granted a Confiscation Order for £55,000 against Peter David Spencer of Oakhall Park, Bradford, following his conviction on charges of selling pirate DVDs on eBay.
Assets Recovery Agency press release, 5 December 2006

The ARA has been granted a Civil Recovery Order on assets worth approximately £200,000 in the High Court in Belfast in respect of the estate of the late Paul Patrick Daly. Mr. Daly was shot dead in Belfast in May 2001 and had a string of criminal convictions dating back to 1983, including robbery, theft, serious assaults, and firearms offences.
Assets Recovery Agency press release, 5 December 2006

The ARA has been granted a Confiscation Order for £60,681 against Peter William Axford of Kilmartin Road, Ilford, Essex following his conviction on charges of selling counterfeit DVDs.
Assets Recovery Agency press release, 5 December 2006

Banking & Finance

Shareholders in Langbar International have issued a High Court claim against the former cash shell for more than £3m.
Financial Times, 22 December 2006

HM Revenue and Customs

The UK and the United Arab Emirates have signed a mutual legal assistance and extradition treaty aimed at curbing the use of Dubai as a centre for carrying out carousel fraud.
Financial Times, 4 December 2006

Legislation

The Fraud (Trials without a Jury) Bill had its second reading in the House of Commons on 29 November 2006. The Bill proposes amendments to section 43 of the Criminal Justice Act 2003, to allow the prosecution to apply for a fraud trial to proceed without a jury.

Pharmaceuticals

Nine men will appear in court to face charges relating to alleged counterfeit Viagra and Cialis drugs. The alleged counterfeit drugs were discovered in the UK supply chain in 2003.
The Times, 2 January 2007

Serious Fraud Office (SFO)

The Director of the Serious Fraud Office has discontinued the investigation into BAE Systems Plc as far as they relate to the Al Yamamah defence contract with the government of Saudi Arabia. The decision was made following representations to the Attorney General and the Director of the SFO concerning the need to safeguard national and international security.
Serious Fraud Office press release, 14 December 2006

The Serious Fraud Office has closed its investigation into suspected fraud at the Ravenhead Company Limited, which went into administration in February 2001, because of lack of evidence.
Serious Fraud Office press release, 12 December 2006

NORTH AMERICA

Banking and Finance

Franklin Raines, the former chairman and chief executive of Fannie Mae, and two other former executives have been charged with accounting fraud. The fraud is alleged to have cost the company $6bn and lasted six years. Financial Times, 19 December 2006

The Securities and Exchange Commission has announced changes to the implementation of the Sarbanes-Oxley laws in order to make it easier for foreign companies to list in the US. Companies will no longer have to produce detailed documentation on their internal controls and auditors will no longer have to approve as many internal company procedures.
The Independent, 14 December 2006

EUROPEAN UNION

Regulation

The EU Consumer Protection Co-operation Regulation comes into force on 1 January 2007. The Regulation will help tackle traders who prey on consumers across European borders, by establishing a network of national enforcement bodies with powers to work together across the EU. The UK's co-ordinating enforcement body will be the Office of Fair Trading.
Department of Trade and Industry press release, 29 December 2006

France has agreed to drop its objections to an exemption for Britain from EU rules on VAT. The concession will allow the Chancellor to bring in tough new rules to curb missing trader fraud.
The Times, 14 December 2006

WESTERN EUROPE

Banking and Finance

Peter Mikutta, a German millionaire now living in Switzerland, is claiming SFr44m in damages against Citibank for dereliction of its fiduciary duties. Mr Mikutta claims the bank allowed him to be defrauded by failing to check movements on his account. In a linked case, a former Citibank employee has been accused of fraud and falsifying documents by the public prosecutors in Zurich.
Financial Times, 19 December 2006

EASTERN EUROPE

Utilities

PriceWaterhouseCoopers is facing allegations in Russia that it provided false audits for Yukos between 2002 and 2004.
The Times, 29 December 2006

Mischon de Reya

Mishcon's Fraud Watch is published by the Corporate Investigations & Asset Recovery Group of Mishcon de Reya Solicitors. Widely recognised as the leader in the field of fraud investigations, the Group has pioneered the use of financial fraud techniques in numerous fields, including the rapidly growing areas of theft of confidential information and counterfeiting. The Group founded and runs both the Asset Protection & Recovery Network, made up of international legal fraud specialists, and the Financial Fraud Group, for risk and compliance officers.

This article is only intended as a general statement and no action should be taken in reliance on it without specific legal advice.

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