Defending Investment Fraud Cases

When it comes to defending investment fraud cases, you have to go back to basics. After all, the jury will. No matter how complex the allegation or how difficult the subject matter may be to the average juryman or woman, there is really only one issue at the end of the day: those 12 people of the jury have to consider whether the defendant in the dock is honest or dishonest.

Whether it’s a Fraud Act prosecution, a conspiracy to cheat or a conspiracy to defraud case, the prosecution fails unless the jury is persuaded, to a very high standard, that the intent of the defendant was a dishonest one: not only was the investment scheme a dishonest one, but the defendant knew it and dishonestly took part.

Ghosh

That question of dishonesty is always a matter of fact for the jury, and it always relates to the defendant’s state of mind – not his conduct. In Ghosh [1982] QB 1053, the Court of Appeal set down the correct approach.

It is a two-stage test. The jury must be directed fi rst of all to decide whether; “according to the ordinary standards of reasonable and honest people what was done was dishonest” (this is assuming ‘what was done’ is proven). If so, the jury then goes on to consider whether the defendant “himself must have realised that what he was doing was by those standards dishonest….”. This is the socalled objective/subjective test of putting a reasonable ordinary man in the shoes of the defendant.

In theory, it is for the prosecution to prove dishonesty by applying the Ghosh test. In reality, there will often be a pressing need for the defendant to show either honesty, or a clear lack of dishonesty. There must be a pro-active defence case in investment fraud cases.

Analysis

We all know from life experience that gauging someone’s credibility, their honesty and integrity is not something that is easily assessed by dry recital of facts. Juries do not live in a vacuum and just because they have to decide facts on disputed evidence does not mean they will not apply their own life experiences to the task at hand. That reality appears to be often overlooked in fraud cases.

Demonstrating honesty requires tapping into the ‘human condition’. Getting the jury to understand the peculiarities of the defendant’s nature and the circumstances which led him or her to the dock requires understanding.

The jury are not trying to figure out who pulled the trigger or assess if consent was really given in a sex case. Matters in investment fraud can be much more subtle. Fraud defences will usually require a deeper analysis of the facts and the personalities – and preparation and presentation skills.

The more astute defendants understand this. They are often concerned that the jury will simply not understand them and will not appreciate the need for the complex financial arrangements that are being presented to them as evidence of money laundering. Those defendants know that their explanations are long and complex and require an understanding of their trade, relationships with co-defendants and personal backgrounds. It not only about a ‘knowledge’ of facts, but a real understanding of how, for example, accountants audit accounts or how investment brokers earn their fees.

The UNES Principle

At Rahman Ravelli, our lawyers are skilled in looking for, and bringing to the fore, those key features so that the jury might first have some UNDERSTANDING of our client, and then move onto EMPATHY, so that they are truly imagining what it is like to be in the client’s shoes. That is often enough, as all that is needed for a successful defence is ‘reasonable doubt’ about the Crown’s claims.

But often we can go further so that the understanding and empathy engender a SYMPATHY from the jury for our client’s position. That is the aim. This is our firm’s UNES Principle; it works and is the guiding principle in building our investment fraud defence.

As will be seen the components of the UNES Principle have to be found – see the article below on unused material. If they cannot immediately be found in the prosecution’s case then the defence solicitor has to go and obtain them elsewhere. That is where defence witnesses need the most careful consideration; including defence experts.

Experts

Of course, the defence can use experts to demonstrate industry norms and accepted practice. But experts can not only help build the defence, they can also provide the ammunition for the counterattack.

So, for example, an accountant in trouble in a conspiracy to cheat allegation can use an independent accounting expert to help explain to the jury what would be professionally expected of an accountant in such a situation. Such an expert can emphasise how the defendant appears to have complied with all the regulatory requirements with little that would stand out as unusual or odd.

But that only goes so far because the jury might know there was indeed a fraud. For example, if a co-defendant has pleaded guilty, the only question is was the accountant (our client) involved? In that situation experts can really come into their own by an examination, for example, of other business in the defendant’s firm. This would involve a comparing and contrasting not just with industry norms but how, day to day, the evidence shows that the defendant did nothing different than he or she did for any of their other clients. The point can be made that these aspects were never properly assessed by the prosecuting authorities – thus providing the defence with a strong counter-attack.

This kind of counter-attack also helps engender the empathy part of our UNES Principle. It always helps when the jury is able to empathise with the man in the dock and see him as simply a person doing their job – maybe imperfectly but not dishonestly.