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Case Studies

Fraud consultation

A counter-fraud body has welcomed a new consultation on sentencing for fraud, launched by the Sentencing Council.

A 14-week public consultation, which closes on October 4, is seeking views on sentencing for fraud, bribery and money laundering offences. A consideration of the consultation is the principal factors that make an offence more or less serious, with the culpability of the offender and the relative harm caused to victims in particular focus.

Ben Fletcher, Director of the Insurance Fraud Bureau (IFB), a not-for-profit agency tasked with investigating and disrupting organised motor insurance fraud, said: “Fraud is anti-social and can cause untold harm to the lives of individuals and the prosperity of UK businesses. Organised motor insurance fraud, the so-called ‘crash for cash’ phenomenon doesn’t just cost insurers nearly £400 million, it sees fraudsters gamble with the lives of innocent motorists by deliberately causing crashes to make fraudulent insurance claims.”

In February, four fraudsters were jailed for their part in causing the death of an innocent motorist, having deliberately induced an accident on the A40 just outside London.

Fletcher added, “The damage caused by ‘crash for cash’ extends far beyond bent metal and financial loss – it’s a dangerous act that can cause injury, and in the most tragic cases cost people their lives. Victims can be left psychologically scarred and feeling vulnerable on the roads. Strong sentences send a clear deterrent message to those plotting fraud that their potential financial reward does not outweigh the risk of serving jail time. The Sentencing Council’s consultation is timely and welcomed by the IFB, who will be providing feedback before the October deadline and urging industry partners to engage in this important issue.”

About the IFB

The IFB launched in July 2006 and leads or co-ordinates the industry response to the identification of criminal fraud networks and works with police and law enforcement agencies:

Sentencing Council announced new proposals in late June for how people convicted of fraud, money laundering and bribery should be sentenced.

The draft sentencing guidelines, which may lead to longer sentences for those who leave victims badly affected, aim to provide clear guidance on sentencing for these offences. This will help promote a consistent approach in courts in England and Wales.

Sentencing Council member Michael Caplan QC said: “Fraud is committed for financial gain, but it can mean much more than financial loss to the victim. Our research with victims showed the great impact it can have on them. Our proposed guidelines therefore direct courts to start the sentencing process by looking at what victims have been through. This is a consultation: we want people to give us their views on our proposals so we can develop sentences which people understand and have confidence in.”

More than 16,000 people were sentenced for fraud in 2011. Offences can range from a fraudulent attempt to get a refund in a high street shop to a multi-million pound VAT fraud, and the guidelines cover the great variety of offences that target individuals, businesses, public money and charities.

Fraud against individuals cost people (at an estimate) £6.1bn in 2011. It includes Ponzi schemes, gangs targeting people using cashpoints, cowboy builders who rip off vulnerable older people, identity fraud and internet offences like phishing, running fake online ticket sites and duping dating site users.

Private sector fraud cost business £45.5bn in 2011. Examples are employees claiming for bogus expenses, suppliers making fraudulent payment claims, cash for crash scams and other insurance fraud and people falsifying mortgage applications.
Fraud targeting public money amounted to £20.3bn in 2011. The biggest part of this is tax fraud such as income tax evasion and VAT fraud. Other examples are council tax fraud and benefit fraud.

Fraud against the not-for-profit sector cost charities £1.1bn in 2011. This may take the form of a charity employee diverting donations to their own bank account, someone conning grant funding from a charity on false pretences, or bogus charity collectors.

As well as providing courts with a consistent set of guidelines for this extremely varied range of offences, the guidelines also aim to take into account more fully the impact on victims of financial crimes. Research commissioned by the Sentencing Council suggested that these crimes can mean far more than just financial loss – even losing quite a small sum can have a big impact on some victims. Individuals may suffer emotionally and psychologically, losing confidence in their ability to manage their financial affairs, as well as finding themselves in financial difficulties and having their credit rating damaged.

The new guidelines according to the council place victim impact at the centre of considerations of what sentence the offender should get, and will mean higher sentences for some offenders compared to the current guideline, particularly where the financial loss is relatively small but the impact on the victim is high.

Offenders’ culpability will also be increased if they target people who are particularly vulnerable due to, for example, their age. This would apply to a cowboy builder who targets an elderly pensioner, convincing them to have unnecessary work done on their home at inflated costs.

Confidence fraud

A builder approached a frail 85-year-old and offered to clear her gutters for £75, which he did. He convinced her that there were urgent problems with her roof which he could repair for £2,000 and she had to use savings to pay him. A surveyor valued the work on the roof at less than £100. The builder was convicted at trial. His victim’s confidence was severely affected and she was unable to continue to live independently.

He had targeted a vulnerable victim which would put him into the highest level of culpability irrespective of the amount of money involved. Under existing guidelines, the sentence would be in the range of community order (medium) – 26 weeks custody. Under Sentencing Council proposals the range would be 26 weeks’ to two years custody.

Guidelines for the offences of money laundering and bribery are also being introduced for the first time, along with guidance for sentencing corporate offenders, which the current guidelines do not cover. They will also be able to be applied to conspiracy offences, including conspiracy to defraud.

A public consultation on the council’s proposals runs to October. Anyone can respond at the consultations part of the council website.



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