What is a private prosecution for fraud?
A private prosecution for fraud is a criminal prosecution brought by individuals or companies that are the victims of crime and public prosecuting authorities are unwilling to act. Individuals and companies have the right to bring a private prosecution under section 6 (1) Prosecution of Offences Act 1985.
The main fraud offences are in the Theft Act 1968 and the Fraud Act 2006. To prove a fraudulent offence has been committed, it is necessary to show that that a person acted dishonestly, intending to make a gain for himself or another or cause loss to another.
Private prosecutions for fraud
The Private Prosecution Service [PPS] provides the expertise and experience to aid a private person or company to pursue a criminal prosecution when the police or prosecuting authority do not. Private prosecutions for fraud have increased in recent years given that austerity measures have meant that the investigation of financial crime has not been a governmental priority with many specialist financial crime units being subject to cutbacks.
Private prosecutions: a route to get justice for fraud
The Annual Fraud Indicator demonstrates that the yearly cost of fraud could amount to over £193 billion. Financial fraud in the UK reached its highest level in 15 years in 2017, reaching over £2.11 billion for large reported frauds. There were reportedly 577 cases in 2017, with the size of each case averaging more than £3.66 million. Moreover, in 2016 alone there were 3.6 million fraud incidents with 1.9million alone cyber-related. Cybercrime and commercial disputes frequently involve allegations of fraud. The 3 most common types of fraud in the UK are: employee fraud, tax fraud and money laundering.
However, only 2% of those who carry out fraudulent activities are prosecuted through the public system. Private prosecutions potentially offer the 98% of victims of fraudsters justice.
Why commence a private prosecution for fraud?
To get justice for criminal offences committed against victims that have not been taken on by the police, CPS, the Serious Fraud Office (SFO) (investigation of serious and complex crime) or HMRC (investigate tax fraud). The media have reported that private prosecutions are on the increase due to police and CPS budget cuts which has limited the ability of the enforcement agencies to investigate and prosecute crime effectively. These cuts have created a trend among individuals to fund their own criminal actions against fraudsters due to a failure of the police to investigate or the CPS’s unwillingness to press ahead to trial.
If an offence under the Fraud Act 2006 is not the priority of the CPS, then private prosecutions are a necessary tool allowing a victim to take control of proceedings and actively pursue a conviction against the fraudster.
Some victims of fraud feel that civil proceedings may be prohibitively slow and a private prosecution would offer a speedier resolution. In addition, the civil damages awarded may not adequately compensate for the harm suffered whereas private prosecutions have the availability of tougher penalties which includes unlimited fines and imprisonment.
Many corporate entities have launched private prosecutions having been victim to fraud, rather than leave their rights to be protected by public law enforcement agencies.
Victims of crimes consider starting a private prosecution for a number of reasons, for example:
- to deter future criminal conduct by the suspect;
- to send a clear message to potential fraudsters that a company that has been defrauded will take strong action;
- as a necessary tool when the public prosecution authorities are unwilling to act;
- potential compensation for the victim.
- to establish a precedent for future conduct;
- to protect society; and
- a private prosecutor can access specialist expertise which many public prosecuting authorities cannot utilise, which can increase the chances of prosecution.
Private Prosecutions under the Fraud Act 2006
The Fraud Act 2006 provides the legislation for fraud offences and in the majority of cases, fraud will overlap with theft offences. The Private Prosecution Service have the expertise to advise you which offence reflects the true level of criminality concerned because it is important to differentiate between theft and fraud offences (the actus reus for fraud is less and theft carries a lower sentence).
A private prosecution for fraud must establish first and foremost that there was a false representation. The Fraud Act 2006 establishes three main offences:
- Fraud by false representation (Fraud Act 2006, section 2), which is an implied or express representation made by a person which is misleading or untrue and the person making it knows this to be the case. There have been private prosecutions for example in circumstances where a person fallaciously asserts that there had been an accident or misrepresents their position on a witness statement for an adverse possession application.
- Fraud by failing to disclose information where there is a legal duty to do so (Fraud Act 2006, section 3). This covers offences where a person has dishonesty omitted to provide information, examples include a person failing to declare a heart condition when making an application for life insurance or a solicitor fails to disclose vital information during the course of his retainer.
- Fraud by abuse of position (Fraud Act 2006, section 4), where a person occupies a position he is supposed to safeguard the financial interests of another, but fails in this duty. An examples include a care home employee with a vulnerable person in their care, abusing their position by accessing that person’s bank accounts.
When is a private prosecution for fraud more suitable than civil proceedings?
The borderline between civil liability and criminal liability for Fraud Act 2006 offences is relatively thin. The CPS advise that “prosecutors should guard against the criminal law being used as a debt collection agency”. The Private Prosecution Service ensure that at the outset of considering a private prosecution for fraud, that the offence alleged reflects the true level of criminality; that the evidential stage of the Full Code Test is met and that the public interest stage of the Full Code Test is established.
Why should a victim of fraud consider a private prosecution when the authorities do not prosecute?
It is evident that financial fraud and cybercrime cases have increased in recent years and coupled with the lack of public resources to pursue prosecution, victims of fraud are left with little to no redress from the police or CPS. Only approximately 650 police staff out of over 123,000 are employed to deal specifically with economic crime. Due to the lack of public prosecuting staff, it is no surprise that only 2% of those caught carrying out all types of fraud are processed through the state prosecution system (police, CPS or SFO).
Therefore, private prosecutions offer victims of fraud a route to justice. A private prosecution offers you more control over proceedings and offers a swifter solution than a police investigation.
How to bring a private prosecution for fraud
- Step 1: Gathering evidence and investigating
- Step 2: Assessing the strength of the evidence (with particular reference to the Full Code Test)
- Step 3: Laying an information detailing the charges at the Magistrates Court.
- Step 4: Trial, with the Crown Court dealing with the most serious and complex fraud cases.
A detailed examination of the private prosecution procedure can be found in the Private Prosecution Service’s Step-by-Step Guide.
Are private prosecutions for fraud cost effective?
Yes, a private prosecution for fraud can also be a cost effective solution to recovering any sums fraudulently taken. The state bear the cost of investigating and prosecuting a fraud offender during a public prosecution. In addition, if a private prosecutor is unsuccessful, it is unlikely that the court will make a costs order against the prosecutor if the case was conducted diligently and carefully. In this case, the Defendant would be entitled to compensation from central funds.
However, for a private prosecution it is also possible for a Court to order payment out of central funds to compensate a private prosecutor to recover a significant proportion of their legal costs.
The Private Prosecution Service: Experts in helping individuals and corporates prosecute fraud
The Private Prosecution Service [“PPS”] is a leading legal services provider that specialises in providing high quality legal advice to businesses, governments, government organisations and individuals. Private prosecution cases for fraud are our expertise. Private prosecutions can be a powerful, speedy and clinical means of obtaining justice from a fraudster. It is important to have as much evidence to hand for a private prosecution as the traditional law enforcement agencies have powers to gather evidence that are not available to private prosecutors.
Our expert team of prosecutors are experienced at advising on potential strategies and skilled at targeting the evidence needed to prove a fraud conviction and are experts in ensuring whatever evidence is available is admissible in any subsequent criminal proceedings.
We are the only law firm to operate from professional legal chambers located in the ancient Middle Temple (Inn of Court), near the Royal Courts of Justice and in the legal heart of Central London. Our team of lawyers, which comprises a mixture of solicitors and barristers, provide a first class and comprehensive legal service to help you get justice.
For the best Private Prosecution Lawyers in London call 02071830529 or email firstname.lastname@example.org.