UK: Mishcon Fraud Watch (April)

Welcome to the April edition of Mishcon Fraud Watch, prepared by the Corporate Investigations & Asset Recovery Group at Mishcon de Reya.  Its aim is to provide businesses and their advisors with a snapshot of what has been happening in the world of fraud in the last month.

We make no judgement whatsoever as to the morality, legality or appropriateness of the conduct which forms the subject matter of this bulletin.  We simply aim to bring these matters to the attention of those involved in the prevention, detection and investigation of fraud.

The Assets Recovery Agency (ARA) has obtained Confiscation Orders, in the sum of £45,000 each, against Jerzy and Linda Madejczyk of Cheshire.  Mr and Mrs Madejczyk were both previously convicted of selling counterfeit goods, including handbags and jewellery.  

The ARA has obtained a Confiscation Order in the sum of £17,415 against John Wagstaff after Mr Wagstaff pleaded guilty to charges of counterfeiting and copyright offences.  

The ARA has obtained a Confiscation Order in the sum of £354,049 against Lee Thomas Martin of Surrey after Mr. Martin was convicted of 16 offences of criminal deception relating to his involvement in a large scale car-clocking enterprise. 

The ARA has been granted a Property Freezing Order over assets held by William Cawley Senior of London NW2.  Mr Cawley is currently serving a four and a half year prison sentence for burglary. 

Capita Financial Administrators are investigating a fraud which involved 26 of its customers losing £328,000 and other attempts to steal a further £1.55m over a period of time in 2004.

Barclays Bank has cut the amount its Internet banking customers can transfer online to external accounts in a bid to cut rising fraud levels.

A recent report by BDO Stoy Hayward has found that the value of reported fraud in the UK increased by approximately 30% in 2005.  The report highlights the cost of employee fraud, which has increased by over 80% since 2004.

The Chairman of HM Revenues & Customs has signed the The Memorandum of Understanding (MoU) to help provide a framework for co-operation in tackling alcohol fraud and smuggling into and out of the UK.  The Spirits Trade Association and The Gin and Vodka Association, whose members are responsible for over 80% of all spirit imports into the UK, have already signed up.

The Fraud Bill received its third reading in the House of Lords on 29 March 2006. No date has been set for its second reading in the House of Commons. The Bill makes provision for, and in connection with, criminal liability for fraud and obtaining services dishonestly.

Fourteen people have gone on trial in Marseille charged with embezzling €22.1m from Olympique Marseille football club.  The fraud is said to relate to the transfer of fifteen players between 1997 and 1999.  The defendants include club president Robert Louis-Dreyfus and ex-team manager Rolland Courbis.  

Microsoft is filing lawsuits against more than 50 people in Europe suspected of committing online fraud by creating fake MSN and Hotmail web sites.  The prosecutions are part of the Global Phishing Enforcement Initiative, which was announced in Brussels recently.

Baugur executives, including Chief Executive, Jon Asgeir Johannesson have been cleared of the eight remaining fraud charges against them.  They originally faced 40 charges, 32 of which were dismissed by the Icelandic courts in 2005.

KPMG has released a report into how prepared Indian companies are to combat fraud.  The India Fraud Survey Report 2006 found that companies in banking, insurance, mutual fund and asset management were least prepared to fight the risk of fraud. 

The US Supreme Court has closed a loophole in federal securities law aimed at preventing people who hold stocks, rather than buy and sell them, from bringing class-action claims for losses from stock fraud. 

Federal prosecutors have charged four executives at AB Watley, a day-trading firm, with conspiracy and securities fraud.  It is alleged that the men paid brokers at Merrill Lynch, Citigroup and Lehman Brothers to let them listen in on conversations between the firms' trading desks and big institutional customers. The traders used that information to buy and sell stocks making more than $800,000 in illegal gains from January 2002 to February 2004.

Employees of Hewlett-Packard in America have been warned to monitor their bank accounts after personal details relating to almost 200,000 employees were stolen.

Fashion designer Roberto Cavalli has been sentenced to 14 months in jail for tax evasion after he wrote off $2.7m in improvements to his Florence villa as business expenses.

The Nigerian Senate is to repeal the Crimninal Act and the Penal Code and introduce the National Information Technology Bill, which is aimed at helping the authorities prosecute advanced Internet crimes.

Mishcon's Culture vs Corruption Diary sheet is published by the Asset Protection & Recovery Group of Mishcon de Reya Solicitors.  Widely recognised as the leader in the field of fraud investigations, the Group has extensive experience in conducting and/or project managing highly sensitive international investigations in respect of bribery and corruption allegations.  The Group founded and run both the Asset Protection & Recovery Network, made up of international legal fraud specialists, and the Financial Fraud Group, for risk and compliance officers.