What is fraud?
Fraud involves deliberately misleading another person in order to either make a gain for themself or cause that person to incur a loss. Fraud itself is not a type of claim. Instead, it is a way of describing multiple types of claim. The key difference between fraud and other actions is that a person doesn’t just act negligently or recklessly. To have committed fraud that person must have acted dishonestly.
Is it a civil matter or a criminal offence?
It can be both.
A civil matter refers to a private action brought in the civil courts by an individual who is the victim of fraud. The victim decides whether to file their claim and start proceedings. A judge will decide whether a defendant has committed fraud on the balance of probabilities. If they have, the judge can order that defendant to pay damages to the victim.
Criminal offences are dealt with in the criminal courts. They are usually prosecuted by the Crown Prosecution Service and decided by a jury. In certain circumstances, an individual can bring a private prosecution and prosecute a case themselves in place of the Crown Prosecution Service. A jury will decide whether a defendant has committed fraud beyond reasonable doubt. If they have, that person can be sentenced to 10 years’ imprisonment and ordered to pay an unlimited fine or compensation.
Which is better, a civil claim or a criminal prosecution?
In civil claims, you have control over how your matter is conducted, subject to any orders made by the court. There is a stage in the litigation process called disclosure, which allows you to obtain information from the defendant about what has happened to your assets. This can improve your chance of recovering any lost assets by tracing what has happened to them since they were transferred out of your possession or control. Civil proceedings are generally quicker than criminal prosecutions and the focus is on recovering assets rather than imposing a sentence of imprisonment. In civil proceedings, a court will make an order, which might be capable of being enforced in another jurisdiction. When assets have been dissipated around the world in multiple jurisdictions, this can be vital in order to recover lost assets.
You are usually not required to report any alleged fraud to the police so it’s your decision whether or not to do so. Civil claims and criminal prosecutions can happen at the same time or one after the other.
In simple terms, if you want to recover your assets, your best option is likely to be a civil claim. Fraud cases often involve complex facts, however, and it’s important to make a decision based on the specific facts of each case.
Types of civil fraud claim
Some common types of claim that are brought in civil cases involving fraud are deceit, conspiracy, breach of fiduciary duty, breach of trust, fraudulent misrepresentation, dishonest assistance and conversion. The court will apply different standards in civil fraud claims such as in relation to what loss can be claimed, the time limit for starting a claim and piercing the protection offered by structures such as a limited liability company or a trust.
Types of court order
The court may make a number of orders including freezing a person’s assets, searching their premises, compelling that person or a bank to disclose documents or information and ordering payment of damages. Fraud claims must be carefully prepared and specifically described in evidence. They require a high standard of evidence but in return offer a powerful arsenal of legal weapons. In short, as declared by the court over a century ago, “fraud unravels all.”