In the current climate, it can be difficult for the police to prioritise all fraud cases. This could leave victims feeling helpless and frustrated, but there is an alternative solution. You could potentially gain the same benefits from the courts through privately investigating and prosecuting.
Fraud is on the rise, says our July 2013 Fraud Barometer, with fraud conviction losses up by 38 percent from 2012.
An estimated 98.5 percent of fraud cases aren’t reported to police, and only 0.4 percent of the reported cases result in criminal sanctions, Portsmouth University research reveals.
If you’re a fraud victim, a state prosecution may not be your only option. Private prosecutions offer an alternative method to obtain justice.
Individuals or businesses can start private prosecutions, rather than the police or Crown Prosecution Service (CPS).
Private prosecutions can result in criminal convictions and recover losses under criminal law, which may not be possible otherwise.
They can effectively deter counterfeiting, fraud (internal or external) and protect commercial rights, while still offering the power of the courts. They can run alongside civil action, with a criminal conviction being persuasive evidence in civil proceedings.
Private prosecutions require a thorough investigation, but losses are recoverable. Evidence must be appropriately collated and prepared for submission for court.
The outcome is not dependent on a person’s assets, and the court should compensate expenses using central funds, whatever the result.
Client A, a UK corporate, is regularly targeted by third party fraudsters, costing them millions of pounds per year.
In this case, Mr X and his associates were selling goods over several years, allowing people unlawful access to Client A’s services.
Following an investigation, Mr X and his associates were charged and privately prosecuted successfully, receiving sentences between one and eight years.
Case study two
Client B, a large UK-based money lender, has approximately 10,000 agents who deal with loans and handle money every day.
It suffers a number of losses each year through fraud or theft committed by its agents.
In this case, an agent – Mrs Y – has taken out approximately £45,000 in loans under customers’ names but kept the money for herself.
Following an investigation, Mrs Y made full admissions and was charged by the police. However, the CPS decided to discontinue the prosecution due to a lack of resource.
Client B then privately prosecuted Mrs Y. She was convicted with a two-year suspended custodial sentence. All costs were returned to Client B, which experiences approximately 50 similar cases per year.
The Director of Public Prosecutions (DPP) can take over the private prosecution and discontinue it if it doesn’t satisfy prosecution evidence or public interest requirements.
It may also take over where prosecution is likely to damage the interests of justice. A private prosecutor, like a public prosecutor, has specific disclosure obligations, although disclosure tests are similar under both civil and criminal law.
Consent to prosecute is required for certain offences, such as ones committed under the Bribery Act 2010. In such cases, consent is required from the DPP, Attorney General, or the Director of Revenue and Customs.
Next time you suspect a fraud, remember that private prosecutions are another possible avenue for taking action.
This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.