As 2009 Draws to a Close!

The first decade of this millennium has been characterised by quite a lot of substantial frauds when you pause to look back. We have seen massive accounting scandals in the form of Enron and Parmalat – who would have thought that a top tier accountancy practice could collapse as a result of such a scandal as Enron?

The decade has seen a massive raft of VAT frauds in the “Carousel” merry go round of Missing Trader Inter Community mobile phone and computer chip scams. Coming years may see this fraud extend to all forms of products, even including the trading of carbon credits!

The scale of the Ponzi investment frauds that started emerging in the latter part of the decade only reflect a business model that seems to have been flourishing for three quarters of a century since Charles Ponzifirst gave his name to such an obvious swindle. There will be more of this in the newspapers for years to come as I believe the culture of the Ponzi style fraud is ingrained in the financial systems around the world. A lot of it is sustained in the same way as the global economy is sustained – the illusion of a bottomless bucket of credit.

And throughout recent years we have seen the authorities try to get tough with the organized criminals by confiscating their assets. What has happened is that the career criminals have enough money to hide behind and the onerous asset seizure is routinely applied to those who fail to cover their tracks or are stupid enough to neglect filing even token tax returns!

So where will we be in the coming 10 years or so? I think the fraud regulators may start to form some sort of cohesive group but how far will they get? Given the public sector wastage of the past 12 years or so I suspect that the limited funding available as a result of propping up the banks will not go far.

Speaking of funding we are still awaiting effects of the public spending cutbacks on the forensic accounting profession. Will criminal fraud and money laundering trials become shallow bun fights without the financial issues being fully aired by competent accountants?

My own views are that there will be ample scope for the efficient fraud operator to assist private clients if they are efficient, hard working and not greedy for fees. A hard task perhaps? I do not think that the individual or small business who has been “ripped off” is properly catered for. Losing £10,000 or even £100,000 does not seem to excite the authorities these days, but they will spend tens of £millions on the big frauds.

By managing fraud cases on behalf of groups of individuals who have lost out to systematic sharp businesses or outright fraudsters – it may be possible to persuade those agencies with the powers available to them to get involved.

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