Gavin Pearson is a forensic accountant, expert witness and expert determiner with 20 years’ experience. He is a Partner in the Forensic Accounting Team at Quantuma and in this article, provides his predictions for fraudulent activity in 2020 and the way in which fraudsters may be pursued.
Whilst there are fluctuations in detected fraud levels from year to year and the types of fraud change (with a particular growth in cyber and other technology driven frauds), fraud continues to be a major problem for UK organisations and entities. However, what has evolved in recent years (and we expect to see evolution into 2020) is the way in which fraudsters are pursued.
Unfortunately, the police and prosecuting bodies continue to have very little appetite and resource for investigating fraud matters, meaning that many fraud matters (even those where millions of pounds have been defrauded) are not subject to investigation by the public authorities and the guilty avoid the consequences of their actions. Clients who have been defrauded, are regularly astonished at the lack of interest the police have in their position, with the police often suggesting that civil action should instead be pursued (although whilst this may lead to recovery of funds lost, it does not have a punitive impact on those who committed the fraud).
There has consequently been a significant increase in the use of private prosecutions by individuals and organisations in recent years. A private prosecution is a criminal prosecution which is commenced by an individual or organisation outside of the police or another prosecuting body. Whilst certain bodies such as the RSCPA have brought private prosecutions for a number of years, in recent years there has been a significant increase in the number of individuals and corporate entities seeking to bring private prosecutions, often for fraud type activities. The Quantuma Forensic Accounting Team has been involved in a number of high-profile private prosecutions which resulted in conviction, including R -v- Somaia, R -v- Gerald Lawless and R -v- Kulich.
Advantages for pursuing a private prosecution, as well as seeing that justice is done (potential penalties, including imprisonment, are the same as in any criminal matter), include the potential to recover funds through the confiscation/compensation regime (and the potential for some of the costs of the prosecution to be recovered from public monies) and the fact that the client will have more control over the process than if it was a public prosecution.
My prediction would be that the use of private prosecutions will continue to grow over the next year, with an increasing number of law firms (and direct access barristers) now offering this to their clients as an alternative to civil recovery. The only factor that might impact this is if a new government makes significant additional funds available for public fraud prosecutions. However, alongside that growth, we would anticipate that the government and public bodies may take an increasing interest in the area of private prosecutions for a number of reasons.
Firstly, if there is a rise in what are seen as spurious or poorly argued prosecutions, not only does the Director of Public Prosecutions have the ability to take them over (and potentially shut them down) but there may be concerns about the rise in numbers. Secondly, and connected with this, the costs recovered by the government may put increasing strain on public finances. Consequently, it would appear possible that the government may look to tighten the rules over private prosecutions and their funding (which already started with pre-charge costs no longer being recoverable from public funds).