Author: Azizur Rahman
17 August 2012
6 min read
If you are accused of conspiracy to defraud or conspiracy to cheat, it’s important that you know what steps to take. This article looks at the nuances of this type of crime and explains what you need to do to defend yourself.
We cannot hope to do justice to the multitude of possibilities that these offences throw up (we’d need to write an entire book), but we will show you how these offences ‘work’.
Latest statistics from the UK Fraud Costs Measurement Committee (UKFCMC) show that fraud accounts for annual losses of £193 billion nationwide. With such astronomical sums of money being lost, it’s no surprise that the authorities are closing in on offenders, with the number of serious fraud allegations increasing in recent years.
As the figures suggest, fraud is common. There are probably more fraud cases coming to court than conspiracy to defraud cases, but that does not mean there is less conspiracy to defraud going on than actual fraud. Many conspiracies to defraud may have ended up with fraud being committed, leading to a straight fraud prosecution rather than one for conspiracy to defraud.
*Key point - In the simplest terms, conspiracy to defraud involves two or more people planning to dishonestly deprive another person of something that belongs to that person. The offence of conspiracy to defraud is the agreement to do the fraud NOT committing the fraud.
The definition of conspiracy is a plan by a group of people to do something unlawful or harmful. The unlawful act that was planned does not have to be committed for the people involved to be guilty of conspiracy.
There are two types of conspiracy; common-law and statutory conspiracy.
Statutory conspiracy offences can be found in section 1 of the Criminal Law Act 1977. The Act abolished most forms of common-law conspiracy but expressly preserved the common-law offence of conspiracy to defraud; s5 (2).
From bank fraud to tax fraud, people can be guilty of conspiring to defraud any individual, company or organisation. If anyone or any organisation has an asset that two or more people plan to take dishonestly, then there has been a conspiracy to defraud.
In recent years, Rahman Ravelli has represented clients in fraud cases involving the NHS, schools, carbon credit schemes, company shares and mortgages, to name just a handful. You can read more about our reputation here.
Now to explain the intricacies of different variations of conspiracy to defraud and conspiracy to cheat…
A report published by the Law Commission in 2002 eventually led to the Fraud Act 2006, which was enforced on January 15th 2007.
This effectively simplified the law, with the introduction of section 1 of the Act being a particularly poignant moment. It created a single offence of fraud that can be committed in one of three different ways:
A person will be guilty of the first offence if they dishonestly make a false representation with intent to gain or cause loss to another, or to expose another to risk of loss. Once again, the offence carries no requirement for actual loss or even the risk of loss, and in fact no requirement of even causing an alleged victim to believe the false representations. Dishonesty is the key.
For a ‘representation’ to be ‘false’ the maker of the statement must “know that it is, or might be, untrue or misleading”. This latter part is designed to catch representations such as the promotion of a scheme involving high-yield investments.
In such a case it would be difficult to prove that a defendant knew in advance that a representation was in fact untrue, but easier to show that he was aware that it might be misleading. This offence can be used to prosecute so-called ‘boiler room’ frauds. In conspiracy cases against the revenue however, even though the 2006 Act could be used, the prosecution will invariably opt for the common-law offence.
The maximum penalty for conspiracy to defraud is 10 years in prison.
While there are certain conspiracy to defraud sentencing guidelines to follow; because there are so many variations of the offence, it’s difficult to predict the severity of the punishment on a case-by-case basis.
One of the most high-profile cases occurred in 2013, when Achilleas Kallakis and Alexander Williams were each found guilty of two counts of conspiracy to defraud in relation to activities that saw banks duped out of £740 million. Kallakis was given seven years in jail for the two offences and Williams five years.
However, the Court of Appeal decided that these sentences were too lenient and increased Kallakis’ sentence to 11 years and Williams’ to eight years. They were also forced to pay confiscation orders of £3.7 million.
In short, the prosecution has certain points to prove – chiefly that there has been dishonesty and that, if the conspiracy had been acted on, the intended target would have suffered loss.
Investigating authorities will look to obtain all possible evidence such as computer records, paperwork, phone records and witness testimony to secure a charge and conviction for CTD. They need to obtain anything and everything that could prove that there was an agreement between two or more people to defraud a third party.
Evidence could come from a person who believes they were about to be defrauded or, in corporate cases, a member of staff or other interested party who acts as a whistle blower. Auditors, accountants and other people in positions of responsibility may also be in a position to suspect that two or more people are planning to defraud an organisation. In some cases, evidence could come from a police informant or even an undercover officer posing as a criminal.
Cases will vary in length, depending on the complexity of the case, the number of people involved, the amount of evidence and how much of that evidence is challenged by the defence.
One area in which the defence can challenge the prosecution’s claims of conspiracy to defraud is whether there was actual contact between the accused parties.
A second is - if there was contact between them - what, if anything, they agreed to do. Were there innocent reasons for any contact? What was discussed? What is the prosecution relying on to prove its allegations?
A defence team could challenge the admissibility of evidence. This could involve disputing the legality and authenticity of phone records, informant evidence or even any evidence provided by undercover police officers. Carefully prepared cross examination of prosecution witnesses and swift challenges to any statements they make will help expose weaknesses in the case that is being made against a defendant.
The prosecution has to prove that the defendant was fully aware of the specific details of the offence that was being planned.
There is scope for a defence to challenge prosecution allegations that they were fully involved in the planning and knew exactly what was being planned. Prosecutors will often portray people who are on the very fringes of a conspiracy to defraud as being far more involved and far more knowledgeable than they actually are.
Rahman Ravelli has represented clients successfully in conspiracy to defraud cases for two decades. The firm is recognised as a leader in the field. Defending such cases involves close scrutiny of the available evidence, shrewd use of legal skills regarding disclosure to obtain any other possibly relevant material and an attention to all details.
It is vital that anyone facing an investigation seeks the right legal representation immediately. It has to be representation that specialises in this area of law, is experienced in dealing with and negotiating with the relevant authorities and is skilled in obtaining, analysing, utilising and challenging all possible evidence to mount a robust defence for a client. Failure to seek legal advice swiftly can make it far more difficult to challenge conspiracy to defraud allegations.
Aziz Rahman is Senior Partner at Rahman Ravelli and its founder. His ability to coordinate national, international and multi-agency defences has led to success in some of the most significant corporate crime cases of this century and top rankings in international legal guides. He is recognised worldwide as one of the most capable legal experts regarding top-level, high-value commercial and financial disputes.