City of London Police is making the right decision in focusing its attention on the recovery of victims’ losses in fraud cases, rather than being concerned with securing a conviction. It is hoped that the novel scheme will allow for more efficient recovery of victims’ stolen assets.
The pilot follows a report by the House of Commons Home Affairs Committee on the effectiveness of the Proceeds of Crime Act 2002, which concluded that not enough is being done by the authorities to recover victims’ losses resulting from fraud. The report makes clear that there are ’significant weaknesses’ in the scheme for recovery. For example, only 26 pence in every £100 of confiscated proceeds is actually recovered, according to a 2013 National Audit Office report. At September 2015, there was £1.61 billion total debt outstanding from confiscation orders. This was up from £1.46 billion in September 2013.
Following a request under the Freedom of Information Act made by Pinsent Masons, it was revealed that the Serious Fraud Office is moving too slowly when it comes to recovering the proceeds of white collar crime. Since 2011, out of 25 restraint orders issued, only two were issued in the first two months of an investigation.
This shift in focus is therefore a welcome step in the right direction. The use of civil fraud solicitors to assist the enforcement of confiscation orders and the recovery of victims’ losses was proposed by Pinsent Masons as part of written evidence in response to the Home Affairs Committee’s inquiry.
The report noted Pinsent Masons' recommendation that proceeds should be effectively frozen at the very beginning of an investigation [whether through civil or criminal processes] so that they were available to be confiscated upon conviction and specifically that investigating agencies should freeze suspected criminal assets within two months of the commencement of an investigation. This would significantly improve enforcement and recovery rates of confiscation orders. Pinsent Masons' recommendation that consideration should be given to outsourcing the recovery and enforcement of confiscation orders to the private sector was also noted.
As the committee concluded, the relevant authorities do not currently have the budget or resources to properly address the recovery of stolen assets. Civil fraud solicitors, such Pinsent Masons’ specialist civil fraud and asset recovery team, have the expertise and resources to increase recovery rates by working in tandem with the authorities to ensure the enforcement of confiscation orders. Pinsent Masons’ dedicated team is experienced in obtaining worldwide freezing orders (protecting stolen assets from dissipation) and disclosure orders (to assist in identifying further avenues of enquiry to recover funds) which significantly improve a victim’s chances of recovering misappropriated monies.
Public monies could also be protected by civil fraud solicitors acting on a 'no win, no fee' basis or by using competitive tendering processes. Competitive tendering will ensure the solicitors acting have to work hard and efficiently for the fees they are charging, creating less of an impact on the public purse.
Alan Sheeley is head of civil fraud and asset recovery at Pinsent Masons LLP