Fraud Act Offences: A Practical Guide

Introduction: what this allegation means for you

A fraud allegation can be one of the most stressful situations a person can face. Investigations often involve detailed financial records, business documents, emails, messages and digital evidence. The sheer volume of material can make it difficult to understand what the real issues are.

Fraud is not simply about money going missing. The law is concerned with whether a person acted dishonestly and whether they intended to obtain a benefit, cause a loss, or expose another person to a risk of loss.

Fraud allegations can arise in many different circumstances. They may involve businesses, employers, customers, financial institutions, online transactions, professional responsibilities or disputes between individuals.

A person can be accused of fraud even where no money was actually obtained. In many cases, the key questions are what was said or done, what the person knew at the time, and whether their actions were dishonest.

What does the law say?

The Fraud Act 2006 modernised the law of fraud. The legislation focuses on dishonest conduct and the ulterior intention behind it. Whether any benefit is actually obtained from that dishonest conduct is not legally significant. In fact, it is difficult to imagine a situation where somebody could commit an attempted fraud under the current law.

The three main fraud offences are explained below.

Fraud by false representation

Fraud by false representation is one of the most common types of fraud allegation.

The offence is committed where a person makes a representation which is false or misleading and the person knows that it is false or misleading. In addition, the person making the representation must acts dishonestly with the intention of making a gain, causing a loss, or exposing another person to a risk of loss. As we said before, it is irrelevant whether the person gains anything or somebody else loses something.

By ‘a representation’ we really mean that the accused conveyed information to another person. For example, they might give false information about their income on a car finance application form or provide inaccurate financial information to support a mortgage application. They could create or use misleading documents to give the false impression that their business is in a stronger financial position to persuade another person to invest in the business. The victim of a car accident might exaggerate their injuries to increase a compensation payout. The possibilities are limitless.

The fact that dishonesty is required is important. Let’s imagine John is self-employed and applying for finance on a car. He is asked to estimate his income for the coming year and he puts down £150,000. If that is a lie then he has been dishonest and may be guilty of fraud by false representation; however, if he genuinely believes that is the correct figure but business takes a downturn then he has not acted dishonestly and is not guilty.

A central issue will often be whether the person knew the information was false and whether they intended to mislead.

Fraud by failing to disclose information

Fraud can also be committed by failing to reveal information where there is a legal duty to disclose it.

This offence does not mean that everyone must disclose every piece of information they know. The important point is whether the person was legally required to provide the information and dishonestly failed to do so.

These allegations can arise in situations involving business relationships; professional duties; financial arrangements; or positions where one person is trusted to provide accurate information.

A common issue in these cases is whether the defendant actually understood that they had a duty to disclose something.

Fraud by abuse of position

This offence applies where someone occupies a position where they are expected to safeguard another person’s financial interests and they abuse that position dishonestly.

It commonly arises where someone has responsibility for money, property or financial decisions.

Examples might include allegations that someone misused company funds; transferred money without authority; diverted payments; abused access to bank accounts.

The prosecution must prove more than that the defendant made a bad decision. It must show that the position was abused dishonestly. So, let us imagine that Mark grants Sarah a lasting power of attorney to look after his financial interests when he is unable to look after them himself. Sarah transfers £50,000 to her own account. Mark’s son becomes aware of the transfer and objects. Sarah argues that she made the transfer to pay for roof repairs to Mark’s house and was thus discharging her duty to Mark by ensuring his house was not devalued by water damage. In that case, she would have a defence. Clearly, if Sarah cannot provide evidence that she actually used the funds for roof repairs to Mark’s house then she will have some difficult explaining to do.

Related Fraud Act offences

The Fraud Act also contains other offences connected with fraudulent conduct.

These include possessing or supplying articles intended for use in fraud and obtaining services dishonestly. These offences can involve allegations such as possessing false documents, equipment or information intended to assist fraudulent activity.

This could cover lots of things. We’ve seen this charged in all sorts of cases from a man arrested for drink driving who was found to have a fake disability parking badge in his car right through to men arrested in possession of tens of thousands of other people’s bank card details.

What must the prosecution prove?

Although the exact requirements vary depending on the charge, fraud cases usually revolve around three important questions.

First, was the defendant dishonest?

Dishonesty is often the central issue. The prosecution must prove more than carelessness, poor administration or a mistake.

Many fraud investigations begin because something appears wrong in a set of accounts, a transaction or a document. The criminal courts, however, must decide whether that error was deliberate dishonesty or something else.

Second, did the defendant know the information was false or misleading? A person may rely on information provided by somebody else, misunderstand a requirement or make an innocent error.

Third, was there an intention to make a gain or cause a loss? The prosecution generally needs to show that the defendant intended to obtain a benefit, cause another person a loss, or expose them to a risk of loss. To be clear, the question is one of intention; whether a gain or loss occurred is irrelevant to the law although it may be persuasive evidence for the jury when they come to decide on intention.

Common defence strategies

A common defence in fraud cases is that something went wrong, but it was not dishonest.

Businesses, organisations and individuals can make mistakes. Accounts can contain errors, information can be misunderstood, and documents can be completed incorrectly. The fact that an outcome was wrong does not necessarily mean that there was criminal intent.

Another common issue is lack of knowledge. A defendant may argue that they did not know information was inaccurate or misleading, particularly where they relied on another person, professional advice or existing records.

In some cases, the defence may focus on authority. A person may accept that they carried out an act but argue that they had permission to do so.

Fraud cases also frequently involve challenging the prosecution’s interpretation of the evidence. Bank records, emails and accounting documents may look suspicious when viewed in isolation but may have a different explanation when considered in context.

Evidence that may help your case

The evidence in fraud cases is often extensive. Helpful material may include emails, messages, contracts, financial records, business documents and evidence showing the background to transactions.

Evidence of instructions, authority or communications with others can be particularly important.

It is also important to preserve documents. Deleting records, even unintentionally, can create further complications.

Common mistakes defendants make

One of the biggest mistakes is assuming that the evidence will ‘speak for itself’. Fraud cases often depend on interpretation, and investigators may not always understand the full context behind a transaction or decision.

Another mistake is trying to explain matters informally before taking advice. Statements made during an investigation can later become important evidence.

People also sometimes focus only on the amount of money involved. The seriousness of a fraud allegation depends not only on value but also on the alleged dishonesty, planning, role and circumstances.

What sentences are available for fraud?

Frauds a cover a very wide range of offending, from straightforward allegations to highly complex cases involving large sums of money. Likewise, the sentences cover the entire spectrum of sentencing options from fines to lengthy prison sentences.

When deciding sentence, the court will consider matters such as the amount involved, the length of time the conduct continued, whether there was planning, whether there was an abuse of trust and the impact on victims. The court will also consider the defendant’s personal circumstances, including their previous convictions, character, remorse and any steps taken to address the consequences.

More serious fraud cases, particularly those involving significant financial loss, sophisticated methods or abuse of a trusted position, can result in a substantial prison sentence.

What happens next?

Fraud investigations can take much longer than many other criminal investigations because authorities may need to examine large amounts of financial and digital material. As a consequence, investigators at organisations like HMRC and the Serious Fraud Office can keep a suspect on bail much longer than the police can in less complex investigations.

You should expect to be questioned under caution by one or more investigators. In complex cases, they are likely to conduct multiple interviews. The first will often be at a relatively early stage to give you a chance to explain the situation and confess early if you are so inclined. Later interviews will take place once the investigators have a fuller picture of the allegation they are investigating. By this stage, you should expect the investigators to have a comprehensive interview plan ready. That plan is likely to include a scheme of staged disclosure that allows the investigator to simultaneously check the honesty of any account given and trip up a dishonest suspect. It is vitally important that you are advised in these interviews by an experienced solicitor who can help you put your position as clearly as possible without falling into any traps.

If charged, the case will proceed through the criminal courts. The first hearing will take place in the local magistrates’ court. If the offence is relatively straightforward and the sentence likely to be one that the magistrates could impose then it could be heard in the magistrates’ court at a trial hearing. If the allegation is serious and/or complex it will be sent to the Crown Court for a trial to take place there before a judge and jury.

How Chetwode can help

Fraud allegations require careful preparation and attention to detail. It is important you are advised and represented by solicitors with experience of criminal law and dealing with sophisticated investigators.

At Chetwode, we can assist by advising before police interview, reviewing the evidence, identifying weaknesses in the prosecution case and ensuring your account is properly understood. We will help you identify a barrister of appropriate skill and experience for your case who can provide further advice and representation in the Crown Court.

Fraud cases are often decided by the detail. Early advice can help protect your position.

FAQs

Can I be convicted of fraud if nobody lost money?

Yes. Fraud focuses on conduct and intention rather than whether the intended outcome actually happened.

Is making a mistake fraud?

No. Fraud requires proof of dishonesty and the required intention. A genuine mistake is a full defence.

Is every false statement fraud?

No. The prosecution must prove that the statement was false, that the defendant knew it was false, and that they acted dishonestly with the required intention.

Should I answer questions in a fraud interview?

We don’t know… yet!

Every case is different and the decisions made in your case will turn on the facts of your case not on anything else. Once we have spoken to you, obtained disclosure from the investigators, and considered the situation properly we will be able to provide advice on what to say and do during the interview that is tailored to you and nobody else.

Next steps

If you are being investigated for a fraud offence, obtaining advice at an early stage is important.

The sooner the evidence is reviewed, the sooner your legal team can understand the allegations, advise on your options and help you make informed decisions.