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Investment Fraud and the Importance of Defence Case Statements

3 May 2016

Defence case statements are taking on increasing importance in criminal litigation. This is especially so where there are huge amounts of unused material; as there always will be in an investment fraud case. The prosecution will have a lot of material that is not a part of their case – the unused material.

The prosecution must disclose material that assists the defence case as pleaded in the defence case statement or which undermines the Crown’s case. It is, therefore, vitally important that care and skill is used in drafting the defence case statement, as it is that document which will prompt further disclosure.

The MG6C

Of course, the Crown might fail to see the signifi cance of a point in the defence case statement and not properly disclose material that could assist the defence case. That is what the MG6C is for. The MG6C is the prosecution’s schedule of unused material. All material seized or gathered in by the investigators must be either used in the case, returned or listed as unused in the MG6C – in an investment fraud case the MG6C will usually be a very lengthy document.

filing cabinets

If the prosecution don’t want to use particular documents or material then you can be sure, in an investment fraud case, that there will be material in there that the defence can find a use for. For example, there may be reams of material about similar transactions to the ones under scrutiny which raise no concern at all or other evidence that indicates that patterns of behaviour highlighted as suspicious are, in fact, quite typical.

There will be email chains that appear odd if the defendant was a dishonest schemer. There may be reams of mundane emails, calls, texts and Facebook messages between codefendants and others happening at key times which, if the allegations were true, might be thought to include our client.

But analysis – and proper use – of them may help convince a jury that a defendant might be an honest fool rather than a dishonest rogue.

Disclosure and Digital Unused Material

Many investment frauds will be huge in terms of the paperwork (in digital format) produced in the course of the investigation and used in the trial by the prosecution – the “used’’ material. But the “unused’’ will be monumental. There will often be a vast quantity of what is called “digital unused material’’. This is simply material stored on computers and the like that have been seized and examined and which the prosecution are not relying on.

In July 2011, the Attorney General produced Supplementary Guidelines on disclosure in relation to digitally stored material. That document, coupled with Lord Justice Gross’ Review of Disclosure, provides defenders with ammunition to positively engage and influence the way investigators handle the seized digital material. There is also now further Attorney General Guidance; which was issued in December 2013. The prosecuting body, be it the police, Serious Fraud Offi ce (SFO) or any other organisation, cannot look at every single item of digital material seized. But they must be seen to have examined it all somehow to comply with their duty of balanced investigation. Thus, as per the AG’s Guidelines the investigators use key word searches seeking ‘hits’. The defence can ask the Crown to explain why it is looking for certain key words in digital searches. This is a little-known power. But it is one that can help defenders understand the mind-set of those conducting the searches and make their own search term requests in response.

The defence should also be supplying their own key word suggestions for digital searching.

Seizure

The seizure of numerous computers by prosecutors from suspects can cause real practical problems in terms of scheduling the material on the computers even though the MG6C should technically include all the material on the seized computers.

Somewhere in there may be emails, documents letters and so on that help the defence case or weaken the prosecution’s case.

But how is it found?

The answer is by ensuring that the investigators do their key word searches properly – and prove it. Critically, the prosecution must properly schedule all the digital unused material in the MG6C.

This is vital. Scheduling, using broad generic terms, e.g. “emails from A Ltd to various investors in May 2013” is all that is required under the Guidelines and the Gross Review. Even so that requirement may be an onerous one for the investigators – and it is a duty that they have often failed at in recent times; leading to failed prosecutions.

Our experience is that different prosecution teams will take a different approach to the issue of digital unused material. Failing to properly apply the Guidelines can be fatal. Concerns about the disclosure process cannot be cured by warnings to the jury or the exclusion of evidence. If the disclosure process is not working properly then it is difficult for the Crown to argue that there can be a fair trial …and no fair trial equals no trial at all.

filing cabinet in laptop screen

Operation Amazon

The AG’s 2013 Guidelines, the Gross Review and the problems investigators and prosecutors face in coping with huge amounts of seized digital material was considered in the ‘Operation Amazon case; R v R & Others [2015] EWCA Crim 1941. The Court of Appeal, led by Leveson LJ, upheld all the principles established in the AG’s Guidance and the critical importance of the prosecution “getting it right first time” (a concept introduced by Leveson LJ in his 2015 Review of Efficiency in Criminal Proceedings).

The Court was rightly concerned that defendants might take advantage of the high standards required for proper administration of seized digital material by providing an “incentive… to undermine the prosecution by creating hurdles to overcome all in the hope that, at some stage, a particular hurdle will cause it to fail.”

The concerns that some defenders have are that their demands on the prosecution may be seen as the ‘gameplaying’ that Leveson LJ was concerned about. The risk is that proper caution turns into full-scale simple timidity so that the proper demands are not made.

We believe the solution is simple. It is early, full and effective preparation, especially in the taking of instructions leading to the drafting of the defence case statement. That early defence building deflects any kind of criticism.

The fact is that the prosecution have to meet the demands of proper handling of disclosure. These standards are high. If the defence can demonstrate that they have advanced their defence early and strongly then the prosecution cannot complain about improper tactics or come up with silly excuses for their failings.

The Crown’s duty is to meet the demands of a fair trial, not find an excuse for there not to be one. This was endorsed in R v R where it was again stated that “it is essential that the prosecution takes a grip on the case and its disclosure requirements from the outset.” Our experience in many investment cases is that such a grip is sometimes missing.

It is absolutely vital in investment fraud cases, therefore, that defenders are completely on top of the demands of the AG’s 2013 Guidelines from Day One – and can see how they can affect their client’s case. This means the lawyers must take the client through disclosure documents and, in particular, the MG6C at an early stage.


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