UK: Fraud Watch

Welcome to the April 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.

The ARA has secured a Property Freezing Order over assets estimated at £74,985 held by Susan Jayne Crosby of Lincoln. The Agency contends that Ms Crosby acquired equity value in a property with funds that originated from unlawful activity connected to laundering the proceeds of robbery.
Assets Recovery Agency press release, 7 March 2007

The ARA has secured a Property Freezing Order over assets estimated at £312,500 held by Mr Rimas Butkus, Ms Dangira Jankauskaite and Ms Neringa Jankuaskaite. The Agency contends that the three acquired seven properties in the E16 area of London with mortgages obtained using false documents.
Assets Recovery Agency press release, 6 March 2007

The ARA has secured an extension of an Interim Receiving Order on assets estimated at £8.2m held by Damien John McGleenan, Francis McGleenan and Joseph McGleenan of County Armagh. The original Order was granted in connection with an investigation into suspected fuel smuggling and evasion of excise duty and VAT.
Assets Recovery Agency press release, 5 March 2007

The Information Commissioner has criticised eleven UK banks and building societies for failing to protect personal customer information from identity fraud. Investigations into alleged breaches of security found that the banks and building societies dumped personal information in bins and waste recycling units with little or no security.
The Guardian, 14 March 2007

The Organisation for Economic Cooperation and Development (OECD) is to investigate whether there are flaws in UK law and its enforcement that may have undermined investigations into alleged bribery by BAE Systems. The OECD's antibribery group said it has "serious concerns" about the UK's decision to drop the investigation into BAE Systems and other companies.
Financial Times, 15 March 2007

HM Revenue & Customs

The UK will introduce measures aimed at combating "carousel fraud" on 1 June 2007. Under the new "reverse charge" the supplier at the end of the chain will pay VAT on goods such as computer chips and mobile phones.
The Times, 20 March 2007

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 and is in Committee. 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.

Regulation

The Attorney General's Office has published "Fighting Fraud Together", which is the Government's response to the Fraud Review 2005.
Attorney General's Office, 15 March 2007

Paul Newton and Matthew Walker, the owners of Doncaster insurance company Preston Whiteside, have admitted defrauding hundreds of small businesses of insurance premiums. They have been sentenced to fifteen and eight months respectively.

Fraud costs the UK £13.9bn a year according to a recent survey by the Association of Chief Police Officers. The Nature, Extent and Economic Impact of Fraud in the UK Report for the Association of Chief Police Officers' Economic Crime Portfolio Group, February 2007

Card fraud fell by a total of 3% in 2006, according to the latest figures from Apacs, the UK payments association.
Apacs press release, 14 March 2007

More than three million people in the UK committed workplace crimes in 2006 according to a recent survey by Proiviti. The report estimated the cost to companies at £50m.
Financial Times, 7 March 2007

The Fifth Circuit Court of Appeals in New Orleans has ruled that investors in Enron cannot take class action against Merrill Lynch and Credit Suisse. Instead they must pursue cases individually.
Financial Times, 20 March 2007

The US Justice Department announced an investigation into allegations of fraud in the wine trade. The investigation follows complaints by a wine collector that bottles of wine he believed to have belonged to Thomas Jefferson were counterfeit.
The Observer, 11 March 2007

The Securities and Exchange Commission has indicated that it would like the US Supreme Court to raise the standard needed for plaintiffs to plead fraud cases. Groups representing public pension funds and state attorneysgeneral have opposed the move.
Financial Times, 5 March 2007

The trial of Conrad Black has started in Chicago. Lord Black is charged with wire and mail fraud, racketeering, obstruction of justice and tax evasion. Three former Hollinger executives, John Boultbee, Peter Atkinson and Mark Kipnis, are also on trial.
The Daily Telegraph, 19 March 2007

The French government is considering measures to protect employees who blow the whistle on corporate abuse and fraud.
The Times, 6 March 2007

Takafumi Horie, founder of Japanese Internet company Livedoor, has been sentenced to two and half years in prison for securities fraud.
Financial Times, 17 March 2007

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 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.

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