Mary Monson Solicitors regularly represents employees, contractors and other associates of organisations as varied as government departments and FTSE100 listed companies. These cases vary from a few thousand pounds to figures in the millions, sometimes with many alleged conspirators. We recognise that every case is important to the person facing the allegation, irrespective of the amount.
We have included some basic information on how these cases can be investigated, prosecuted and defended below, as well as a case study of a case in which we have successfully defended.
Our fraud solicitors' case studies
Any fraud lawyer can claim to have expertise in different types of fraud or business crime cases. We have included here some case studies to give some idea of how our fraud solicitors prepare cases.
Procurement Fraud Case Study
Our client was a junior manager in a building services firm. He was accused of syphoning business off and passing it to a rival firm in exchange for a financial inducement. The total alleged contracts were to the value of £185,000.
He claimed to have been inadequately supervised to deal with enquiries in situations where his employer lacked capacity to take on the contract immediately. There was no money trail.
In the procurement fraud investigation's early stages, we took the unusual step of making key disclosures to the Economic Crime Unit police investigator, demonstrating a major supervisory and training deficit in the organisation.
Result | Case discontinued without charge
Procurement fraud and employee/contractor fraud types
There are many types of fraud that fall under this group of activities. A basic version can be an employee who charges out work as if to a third party contractor when in fact he or she is doing the work himself or getting a friend to do it in exchange for a slice of the proceeds. The more complex end of the scale includes situations where a consultant or employee of a large organisation such as a branch of government or a large company is involved in the outsourcing of work to a company in which he has an interest, or to people who will provide a kickback. Either way, the principle is that a person with a duty to the organisation he or she is working for dishonestly and for personal gain refers business in conflict with that person's duties.
Procurement fraud investigations - how do they begin?
Allegations of abuse of position or employee/contractor fraud usually arise out of an audit, formal or otherwise, into the spending or effectiveness of a department or project.
If an inefficiency or problem in a department is detected, in the context of typical workplace political manoeuvring, this sometimes turns into a witch-hunt, often driven by other members of the organisation. These people may attempt to create a fall-guy, in their desire to clean themselves of any association with the lax business management which has caused a loss.
After or during an internal investigation, the police may be called. Admissions or other evidence gathered by the internal inquiry may be used by the police as a starting point to understanding the situation. This means that anyone facing an internal investigation should be especially wary of cooperating if there is any prospect of a criminal investigation later.
There are a number of options open to a prosecutor bringing charges against an individual. There is a specific offence of Fraud by Abuse of Position (s.4 Fraud Act see page on navigation above) and the more general Fraud by False Representation (s.2 Fraud Act). The maximum sentence applicable for these offences is ten years imprisonment, although the maximum is usually reserved for the very worst cases, that is to say the most sophisticated operations running into several millions in benefit, and for the main defendant(s).
It is more usual in cases involving allegations where a number of people have been charged for the law of conspiracy to defraud be used. A conspiracy is a plan among two or more people to commit a criminal offence or offences. The plan must be to expose another to loss or risk, or to deceive someone into acting against his or her duty. This can be especially relevant in procurement fraud cases because the deception of a manager, a member of accounts staff or the board is usually a key ingredient of the fraud.
As with any allegation of fraud, the money trail is of great importance. The battle over defining the significance of transactions and the identity of beneficiaries is often critical. If there are good reasons why payments were made, even if the financial or contract arrangements may seem unorthodox, the defence team will have to address this. The legal team must make sure that the jury are provided with enough background as to how such arrangements were in all the circumstances honest.
Where there are multiple defendants in a case, some may have been aware of the criminality of a conspiracy, but others may be blameless and unwilling participants to the fraud. The usual rules of good criminal defence apply. Knowing the case inside out and understanding the relationships and responsibilities of different people who were involved in transactions well is essential. Sometimes someone's name may appear in paperwork or on bank transactions, but that may not always be decisive.
Understanding expectations within an organisation
Understanding what it was that was expected in a job role or business relationship, and what systems would have been in place to make sure that monies transferred out were transferred appropriately can be important. For example, if an employee at a company has outsourced work to a second company in which he or she has an undisclosed interest, and a policy at the company forbids outsourcing unless authorised by a board member, then a jury may be quick to find the manager guilty. If, on the other hand, a pattern is present of a lack of supervision or lack of a documented policy on payments and contracts outside the company, then the case may not be so open and shut.
Sentencing for Procurement Fraud
This type of fraud often attracts a prison sentence. The principal reason is that an inherent ingredient in most frauds involving either procurement or unauthorised outsourcing is a breach of trust, and this is regarded as an aggravating feature.
If the loss is to a charity or branch of government, that also makes the case more serious from a sentencing point of view. If other employees have suffered as a result of the fraud, then that again is an aggravating feature.
The main consideration in any fraud case in respect of sentence is the amount of the loss. The 2009 Fraud Sentencing Guidelines are relevant for all offences prosecuted under the Fraud Act 2006, and similar principles apply to non Fraud Act cases. See the section on fraud sentencing on our site.