Individuals and businesses that have fallen victim to fraud often use the civil courts to claim damages against the fraudster.
However, victims can also report the matter to the police. The difficulty is that public prosecutions can be slow-moving if they are brought at all and the fraudster may simply have moved the money out of reach by the time a case reaches court leaving nothing to enforce a compensation order against.
An attractive alternative can sometimes be to bring a private criminal prosecution. This is often a faster and more effective option than waiting for the authorities to act and can also be quicker and less expensive than civil litigation. It may be possible to obtain an injunction freezing assets as well as compensation for losses and confiscation of goods.
Increasing levels of fraud and financial crime
Fraud can be devastating to an individual or business, seriously affecting an organisation’s ability to function. Despite the high levels of financial crime reported, relatively few resources are directed towards investigating and prosecuting it. As well as reported financial crime, there is a substantial amount of fraud and financial crime that is not reported.
In a speech made in January 2023, James Thomson, Chair of the City of London Police Authority Board, said that while nearly half of all crime in England and Wales falls under the heading of fraud and economic crime, less than 2% of police funding nationally is put towards tackling it.
He called for a ‘collaborative and proactive’ approach between police forces, the government, and businesses.
While police forces and prosecutors struggle to cope with the ever-increasing levels of fraud and financial crime, private prosecutions for criminal offences may be a practical alternative for those looking to recover money lost to fraud or misrepresentation.
Financial crime includes:
- False accounting
- Insurance fraud
- Money laundering
- Identity theft
- Theft by an employee
- Credit card fraud
Is fraud a civil or criminal offence?
Fraud can be brought in a civil or criminal court. There is no general legal requirement to report fraud unless you or your organisation has a governing body where there is a reporting requirement.
If the prosecuting authority such as the DPP or SFO believes it has sufficient evidence to prove a crime, it may decide to bring a case in the criminal courts.
Where a public prosecution is not brought, a private individual or business can choose to make a civil claim to try and recover its losses. The standard of proof is higher in a criminal court, with the prosecution required to prove beyond reasonable doubt that the accused committed the offence. In a civil court, it is only necessary to prove this on the balance of probabilities.
However, bringing a private criminal prosecution does have a number of benefits that can make it an attractive option.
Why bring a private prosecution for fraud?
Under section 6(1) of the Prosecution of Offences Act 1985, it is open to anyone to bring a criminal prosecution. The burden of proof and standard of evidence is the same as if the case is being brought by the Director of Public Prosecutions.
The advantages of bringing a private prosecution for fraud, misrepresentation and financial crime include:
- You can ensure that your case is heard in court. If you rely on the police or DPP, they may decide after many months not to pursue the case, leaving you with nothing;
- If your case is successful, the court will generally require the convicted defendant to pay your costs. The court will collect this, using its enforcement officers where necessary, and the funds will be passed to you. If there is no money available, then central funds can be used to pay your costs;
- If your case is not successful, you can claim your costs if you have reached the Crown Court. This will be paid from the central fund;
- The risk of having a costs award made against you is low as costs are rarely awarded against a prosecutor even if their case is not successful;
- A private criminal prosecution will generally be heard more quickly than a civil case;
- It is open to anyone to bring a private prosecution, including liquidators of companies going through the liquidation process. This may be of interest to a company’s creditors;
- The criminal court has the authority to impose penalties not open to civil courts, including confiscation orders, imprisonment and a criminal record.
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The above information is for general guidance on your rights and responsibilities and is not legal advice. If you need more details on your rights or legal advice about what action to take, please contact a legal advisor.