Fraud is a massive problem, not only in the UK and USA but in most of the leading countries also. The fight against fraud needs to be stepped up, but the trend is to reduce public expenditure these days. This not only impacts agencies such as the police but also the fraudsters themselves will be feeling the pinch!
The question is – will this result in an even greater increase in the number of frauds taking place? If there are less police officers in the regional fraud squads and the Serious and Organised Crime Agency is being disbanded, does this not mean that the fraudster will have less to fear when committing his or her crime. Other agencies are reducing their spending on the fight against fraud. Take the Department for Business Innovation and Skills for example, who are substantially reducing the sums spent investigating companies – meaning that any company set up with the intention of defrauding its customers will be more likely to prosper.
The trouble is that when frauds come to trial they run up huge Legal Aid costs for the fraudster. All their legal costs, which in a complex fraud can amount to £100,000s, even several £millions;, when all the costs of the legal team are considered. It seems that along with the funding for the regulators, Legal aid is set to be significantly cut also.
On the face of it this seems to be fair. The authorities cannot afford to investigate or prosecute as many frauds – but if you do get caught you will not be allowed a comprehensive defence using the best legal and fraud experts available. Quid pro quo? A better opportunity but with a bigger risk.
The differing ways in which the funds might be allocated is likely to be where the problem lies. All fraudsters will be faced with difficulties in obtaining quality represenetation, but the fraud regulatory agencies will be able to choose where they spend their own scant resources in an attempt to get the most for their money. This has always been their way, where previously criticisms have been that resources are always spent on serious crime such as murder, rape and dealing drugs. Frauds were often considered too much work for only a single conviction – one police officer could typically spend a year or more investigating a relatively minor fraud, whereas the same resource could result in successful prosecutions for 100s of burglaries or one or more “serious” crimes.
The danger is that the police will investigate the easier frauds, where quick results are possible, leaving the complex frauds alone. This means that businessmen practicing only sharp practice might be targeted – or failed businesses accused of fraudulent trading. With little chance of a high quality defence it is possible that these will become victims of the cut backs and that the clever fraudsters will escape sanction.
Mark Jenner is a forensic accountant and fraud investigation specialist. His web site offers informative articles on fraud investigation fraud prevention and asset recovery together with advice on preventing money laundering. He regularly gives expert accounting evidence as a witness for the fraud regulators.