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Fraudsters up to Old Tricks, finds KPMG

While rogue traders and professional criminals have been behind the fraud ‘super’ cases seen in recent years, the latest bi-annual ‘Fraud Barometer’ from KPMG has shown a rise in individuals committing more traditional scams such as Ponzi schemes, cheque fraud and procurement fraud.

The analysis shows that identity fraud more than doubled in value to £26.3 million from £12.3 million the year before. Counterfeit goods fraud was three times the five-year average at £22.9 million and Ponzi schemes worth £72 million came to court – again three times the level seen in 2011 (£20 million).

The data shows a similar rising trend for procurement fraud, which increased to £21.4 million in 2012, and also that insider fraud is hitting corporates hard.

Fraud perpetrated by either management or employees accounted for 80% of the financial loss through fraud experienced by UK businesses in 2012. The number of cases involving employee fraud rose to 35 in 2012, up from 22 the year before. Their value has also seen a sharp climb, more than doubling from £12 million in 2011 to £25.1 million over the past 12 months.

There was also a marked increase in cases involving individuals over-claiming benefits or evading tax (15 cases compared to 3 in 2011).

“What we are seeing is individuals looking to feather their nests through ripping off employers, banks or the government,” said Hitesh Patel, UK Forensic Partner at KPMG. “In the last few years we have become used to sophisticated frauds at eye-watering values. While the total value of fraud has dropped substantially in the absence of so-called fraud ‘super’ cases, the old-fashioned con man hasn’t given up his tricks. Times may be tough but the data shows that some people are unwilling to give up the lifestyles they’ve become accustomed to.”

Contact our Fraud Defence Lawyers

If you are the subject of a false allegation regarding fraud and need one of our fraud defence solicitors to help you defend your case, please contact Jeffrey Lewis or Siobhain Egan or view our fraud defence services page.

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Rise in child sexual exploitation

Barnardo’s children’s charity dealt with 1,452 sexually exploited children in the UK last year – an increase of 22% - and has seen a 37% increase in cases over the past three years. Last week it called for more to be done to protect young people from being internally trafficked for sex.

Taking September 2012 as an example, Barnardo’s says that the number of young people it dealt with who had been trafficked within the country rose by 84% - from 76 to 140 children year on year.

“Domestic trafficking of children for sex is a sophisticated type of exploitation, a sinister form of organised violation through networks of criminals,” said Barnardo’s chief executive Anne Marie Carrie.

“Nobody currently knows the full extent of these crimes because of their hidden nature, but what we do know is that every time we open a new service for victims it quickly becomes fully subscribed,” she warned. “If we are to save children from suffering for years at the hands of their abusers, more must be done by the authorities to identify victims of child sexual exploitation who are being internally trafficked and to stop this activity earlier on.”

Barnardo's is calling for:

  • the UK Government and the devolved administrations to protect victims and other children from being trafficked for sex;
  • local multi-agency bodies with responsibility for safeguarding children in the UK to commit to monitoring the risk and the incidence of children being internally trafficked for sexual exploitation, and for police to use the full range of law enforcement and disruption tactics to arrest and deter the abusers;
  • the Department for Education and the Home Office to do more to deliver on the National Action Plan’s commitment to tackling child sexual exploitation in England – ensuring that local authorities and police forces monitor the risk and the reality of this horrific abuse; and
  • Police and Crime Commissioners in England and Wales to tackle domestic trafficking of children for sexual exploitation, ensuring that the police are fulfilling their responsibilities.

Contact our Defence Lawyers

If you are the subject of a false allegation regarding sexual offences please contact our defence lawyers in London. Please see here for more information.

Read more on the Barnardos press release here.

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Green shoots for 1st time property buyers.

Lending to 1st time property buyers has increased by 11% in 2012, as the numbers of loans extended to borrowers with small deposits rose.

Purchase approvals across the market rose by 3%, and new buyer numbers have climbed to their highest levels in 5 years.
Experts predict that the full effect of the Bank of England’s Funding for Lending scheme (value £80 billion) and a relaxation of bank capital adequacy rules will bear fruit.

This is all good news for our 1st time buying clientele, who are based mainly in London. Our specialist unit of lawyers dealing with 1st time buyers, Layna Thompson and Janak Bakrania have noticed that these clients are now of an older age group (average age now 35yrs old) and that as many as 2/3rds have financial assistance from friends or family.

In response to the fact that the average 1st time buyer in London needs 20% of the purchase price as a deposit and are waiting 10 years before they can buy, mortgage providers are engaging in a price war.

Barclays have introduced a new "Family Springboard mortgage”, which in real terms will give a loan to value (LTV) of 95% at 4.69%.

Essentially, the mortgage is fixed for three years and the family tie up 10% of the purchase price into a connected savings account until the end of the rate fix. Thus the true value of the deposit is 15%.

Our specialist, experienced conveyancing solicitors, based in London, know only too well the pressures that first time buyers are subject to, especially when relying on family assistance. We provide a reasonably priced, fficient, supportive service, gently guiding the 1st time buyer through the biggest financial outlay of their lives.

Contact Layna Thompson or Janak Bakrania on 02073872032.

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Report Reveals Cost of VAT Fraud

Tax fraud accounts for nearly half (44%) of all fraud reported in the UK, according to new research from BDO LLP, the accountancy and business advisory firm. This is the highest level since 2007.

BDO FraudTrack, which looks at all reported fraud cases over £50,000, found that while total fraud in 2012 fell by a third from £2.1bn to £1.37bn, tax fraud in 2012 fell only slightly over the same period. Totalling £603m, tax fraud is roughly double the amount in 2009 (£274m) and 2010 (£309m). Moreover, BDO believes that the vast majority of public and private sector fraud is not reported.

“Politicians and the public at large are presently pointing their finger at various multinationals for allegedly not paying the correct amount of corporation tax,” said report author Simon Bevan of BDO. “However, our latest survey of UK fraud shows that, in reality, it is the fraud element of UK’s VAT gap - the theoretical difference between what the Government expects to collect in sales tax and what it actually collects - that is the bigger drain on the public purse”.

The current UK VAT gap is around £10bn, with fraud accounting for approximately one third of this figure (£3.3bn).

BDO believes that approximately half of the £3.3bn figure relates to general non-compliance due to mistake or deliberate act by legitimate traders, whilst half is produced by a relatively smaller number of professional fraudsters committing missing trader fraud and carousel fraud.

Missing trader fraud occurs when an individual sells goods to a third party, charges sales tax and then either disappears or deliberately takes their company into administration before paying over their VAT liabilities.

Carousel fraud occurs when an individual buys goods from another member state without paying sales tax; they then move the goods through a number of companies (the carousel) before eventually exporting the goods to the original seller. At the point of export they claim their VAT refund (20%) from HMRC. The goods in question can go round the carousel many times leading to large losses to the revenue. Sometimes the goods in question physically move and sometimes they only appear to move through the use of false paperwork.

According to the FraudTrack figures, VAT fraud accounts for 41% of the total UK fraud figure.

For VAT fraud legal advice, please contact our fraud lawyers in London on 020 7387 2032.

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Confiscation Orders Update – by Siobhain Egan

At a time when confiscation orders are on the rise, those who have read the case of R -v- Varma (2012) UKSC 42 would have done so with interest.

To summarise, Varma entered pleas of guilty to be knowingly concerned in the fraudulent evasion of tobacco and was sentenced to a conditional discharge for two years. The Court made a confiscation order and an application was submitted for leave against the imposition of that order.

It was argued that it was inappropriate to punish a defendant by imposing a confiscation order where a conditional discharge had been imposed. The Court of Appeal allowed the appeal, however, in quashing the confiscation order they certified that there was a point of law of general public importance and the matter was referred to the Supreme Court.

The Supreme Court overturned the decision by the Court of Appeal and decided that the Crown Court has the power, and often the duty, to make a confiscation order against a defendant following conviction for an offence, regardless of what sentence had been imposed.

This case is of some significance, particularly for those lesser offences where the Court may be minded to impose discharges as opposed to financial or other penalties.  In such cases defendants must be aware of the financial repercussions of pleading guilty to any offences regardless of what sentence is then handed down.

Clearly, advice is necessary and desirable to defendants at an early stage of proceedings as to the likely range of penalties, including financial orders, that the courts may impose.

We at Lewis Nedas are able to offer a comprehensive advice service as to the whole range of confiscation orders that can be made by courts following conviction or a plea of guilty, in addition to advice on cases where the Police and/or prosecuting authorities invoke civil proceedings for the seizure of monies where criminal proceedings are deemed inappropriate or, for whatever reason, cannot be undertaken.

Whilst, on the face of it, the case of Varma is unlikely to trouble too many defendants, what is clear is that the courts are duty bound to consider confiscation orders and/or other financial orders in all criminal cases where a conviction is obtained.  That was not the case until this ruling.

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