It is some time since my last post, I would like to think that is because I have been so busy that I have not had time for niceties such as marketing and updating my fraud blog. The truth is that I have been busy, but looking at my bank balance you would think otherwise! My heart felt thanks to those clients that pay my bills on time but there are less than warm feelings for the Legal Services Commission who insist that I help the UK’s austerity measures by loaning my income to them for periods best measured in large proportions of a year instead of months.

I am due to circulate my contacts in the autumn with news of my fraud business developments, at which time I will inform everyone of my new business address details. Having used a Royal Mail Post Office Box for two years I gave up recently in disgust – mail was taking two weeks to arrive and some items went missing, including one cheque! Therefore I have taken the following offices and can receive all mail here (however any sent to my home address will of course still get to me safely):

MARK JENNER & CO

POPESHEAD COURT OFFICES

PETER LANE

YORK

YO1 8SU

UK

Usually during the Summer months when work quietens down a little, I pause and take stock of my business strategy. Things have not been quiet during the traditional holiday period which is good – but I have still taken some time to think and have decided to target my traditional areas of expertise much more – corporate fraud investigation and asset recovery. I suppose the fact is that I have not really been targeting anything at the moment, just keeping in touch with my contacts and finding that fortunately the work assignments have been flowing in regularly – often through my Mark Jenner & Co web site

Corporate investigation is an area that I enjoy and gives most satisfaction in terms of feeling that you are actually assisting with a problem. I am currently investigating a number of phoenix trading companies that have not been acting “in the public interest” (which is about as much as I can say at this stage) and a case of the mysterious disappearance of a client’s £400,000 investment through a dodgy broker – who is now being indicted for this loss and several others.

One of the opportunities I see is for my type of business to assist in larger corporate frauds, fraud investigations and asset tracing exercises. Money and investment is tight all around, and an operation to deal with a large financial loss must be funded in a more balanced way. Unfortunately once the initial shock of massive losses is over, perhaps the company has gone bust as a result, the principals often lose interest – passing the affair over to city recovery firms and solicitor practices. I would propose managing a significant part of the matter utilising resources already available to the victims.  Undoubtedly the large professional firms firms do an excellent job, but there are some occasions when the recovered assets are simply funding their existence.

I would like to see better managed recovery operations, with more input by the victims and perhaps more occasions when contingency fees are charged by the larger firms. Easily recovered money (such as restrained bank balances etc) should be ring-fenced with only basic costs taken by professional firms from the “pot”. Any profits, normally classed as “premium rates” should be taken from speculative asset recovery work. This is how I have worked in the past, though in practice very few accountants and investigators will work this way.

However, there may be another way. Creditors (i.e. people who are owed money) can take control of the operation to recover their losses. They must act swiftly to ensure that their actions are effective and do not allow the dust to settle on the matter – as can happen when the assignment is taken on by a large business recovery firm of professionals. I can remember being handed cases almost two years after an insolvency and it was a race against time to bring action using the Insolvency Act. There is a lot I can do early on which could lead to recoveries or provide intellegence to the authorities – and allow the creditors to be more in control over the recovery efforts, hopefully leading to larger dividends and a better outcome.

Time I think is the crooks biggest ally. Insolvency practitioners, accountants and lawyers can act quickly when they want, but once a case is on board “due process” tends to mean that investigation activities can grind on slowly. Time builds layers of defence over a crook’s actions, and makes it hard for the professionals to bring a case.  If the law enforcement authorities get involved, this can insert another time period into the process and civil asset recovery becomes very difficult.

Every case is different, and I hold my hat off to one or two insolvency firms (you know who you are) who do a grand proactive job of recovering assets, albeit at a cost. I do think that it should be mandatory for recovery success to take place before anything more than modest fees are paid.

It is possible to divide asset recovery into a number of different camps depending on the circumstances giving rise to the need for claiming back money or goods that rightfully belong elsewhere. 

The first of these areas include criminal asset recovery or confiscation, from fraudsters and other criminals who benefit from their crime such as drug dealers or those that deal in human trafficking.  Such asset recovery is carried out through the criminal justice system but can also involve civil asset recovery using both the civil and the criminal courts depending on the circumstances.

The next area is the asset tracing and recovery from fraudsters or persons or organisations involved in sharp business practice through the civil courts.  This involves civil litigation through the civil courts.

Last but not least is the recovery of assets from insolvent individuals and organisations.  This is recovery of assets after the fact, attempting to trace assets that should be available to creditors of the insolvent entity.  A fraud investigator investigating such losses must need to be aware of both criminal and civil considerations when dealing with bankruptcies, receiverships and liquidations.  An insolvency will normally be investigated under the provisions contained within the Insolvency Act 1986 which details of numerous criminal offences.

Whatever powers and provisions used to investigate and recover assets, there can be no better outcome to asset recovery than when negotiated settlemement and recovery is achieved.  This means that costly litigation is avoided and a fraudster may well avoid the most serious sanctions if he pays the money back. 

When deciding to investigate a loss due to fraudulent activity with a view to recovering assets an understanding of the likelihood of recovery must be obtained before substantial resources are expended on protracted analysis, interviews and other research.  This is to reduce the risk of the gamble taken as to whether or not an asset recovery action will be successeful.  It is quite easy for legal fees to reach six figures and more when asset freezing injunctions, search orders, financial investigations and legal counsel are employed by lawyers progressing a case.  This is why it is always a good idea to have a fraud response plan in place within any organisation (in addition to a fraud policy) which sets out how to act if a fraud or loss is suspected.  Provisions can be made for an immediate and totally confidential appraisal by a fraud expert in order that the correct decisions can be made at the start and costly mistakes avoided.