UK: Fraud Watch (May 2007)

Last Updated: 11 May 2007
Article by Gary Miller

Welcome to the May edition of Mishcon Fraud Watch, prepared by the Fraud & Insolvency 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 obtained a Property Freezing Order against assets worth an estimated £750,000 held by Patrick Paul Carr, Samuel Robert and Joanne Marion McKee in Lisburn, Northern Ireland. The ARA alleged that the assets derive from fuel smuggling, tax and excise duty evasion, money-laundering and benefit fraud.
Assets Recovery Agency press release, 30 March 2007

The ARA has obtained a Confiscation Order worth £191,000 against David John Mather of Kent. Mr Mather was convicted of eight counts of possessing and offering for sale over 5,000 counterfeit garments bearing trademarks such as Ben Sherman, Henri Lloyd, Kickers, Miss Sixty, Pringle, Speedo, Ted Baker and Timberland. The defendant's company Theo Boss (Leather Classics) Ltd was also found guilty on nine further counts.
Assets Recovery Agency press release, 28 March 2007

Banking and Finance

Eleven people in Bradford have been jailed for their part in a £500m money-laundering racket. The gang operated out of three travel agencies in Bradford and used the Hawala banking system as a cover.
Daily Mail, 18 April 2007

Construction

Police are investigating an "extensive and systematic" fraud at the slate quarrying business of Alfred McAlpine, the construction firm.
The Guardian, 24 April 2007

Legislation

The Fraud (Trials without a Jury) Bill had its second reading in the House of Lords on 20 March 2007. 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.

The Serious Crime Bill had its second reading in the House of Lords on 2 February 2007. The Lords will debate the report stage on 30 April 2007. The Bill provides for, amongst other things: information to be shared or processed to prevent fraud; the transfer of functions of the Director of the Assets Recovery Agency to the Serious Organised Crime Agency; and the Proceeds of Crime Act 2002 to be amended in relation to certain investigations and in relation to accredited financial investigators and search warrants.

Media and Communications

A film producer, Alex Swan, has been jailed for four and a half years after admitting four offences of forgery and seven of obtaining money by deception. The charges relate to grants from the European Union made to Mr Swan, which amounted to almost £2m.
The Guardian, 28 April 2007

Retail

Gangs have stolen up to £30m from UK petrol stations by cloning bankcards.
Sunday Times, 22 April 2007

Surveys

According to a recent survey by Deloitte and the International Association of Airline Internal Auditors, airline fraud is costing the industry more than £300m per year. Carriers have been hit by credit card scams, counterfeit tickets, false baggage claims and bogus frequent flyer schemes.
The Daily Telegraph, 23 April 2007

According to a recent survey by KPMG, company executives are the biggest culprits of workplace fraud. The survey found that senior mangers were responsible for 60% of fraud crimes committed at the companies surveyed.
The Times, 21 April 2007

According to Experian, the number of victims who reported identity fraud in the second half of 2006 was up 69% on the same period in 2005.
The Times, 12 April 2007

Utilities

The Serious Fraud Office (SFO) has dropped an investigation into Southern Water after eighteen months. The SFO found insufficient evidence that the company had deliberately misled regulators about its failure to meet customer service standards.
The Daily Telegraph, 21 April 2007

NORTH AMERICA

Gambling

Gary Kaplan, the founder of BetonSports, has been arrested in the Dominican Republic. Mr Kaplan and 10 others are charged with racketeering, conspiracy and fraud, and face calls for them to repay more than $4bn in alleged betting profits.
The Daily Telegraph, 31 March 2007

ASIA

Information Technology

The Securities and Exchange Commission is expected to file civil fraud charges against Nancy Heinen, Apple's former general counsel, alleging that she engaged in a scheme to defraud investors by changing grant dates of stock options to inflate value. Ms Heinen is expected to fight any charges made against her.
Financial Times, 24 April 2007

The former chief executive of Computer Associates, Sanjay Kumar, has agreed to pay nearly $800m in restitution to the victims of an accounting fraud.
The Times, 14 April 2007

EASTERN EUROPE

Utilities

A court in Moscow has claimed that PriceWaterhouseCoopers (PwC) effectively colluded with the oil firm Yukos to commit tax fraud. PwC said that it "strongly refutes that the firm was involved in the tax violations that Yukos was ultimately found guilty of, as suggested in the court's decision".
The Daily Telegraph, 3 April 2007

MISHCON DE REYA

Mishcon's Fraud Watch is published by the Fraud & Insolvency Group of Mishcon de Reya Solicitors. Widely recognised as the leader in the field of fraud investigations, the Group has extensive experience in conducting and/or project managing highly sensitive international investigations in respect of bribery and corruption allegations. 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.

www.mischon.com

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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