There Is Wide Variation Within A Fraud Specialism!

I have been a specialist forensic accountant for over twenty years accepting expert witness and investigation assignments from clients all round the UK and further afield. I made the decision to specialise in fraud and financial crime at the beginning, and feel that this strengthens the service line I offer.

Many of the issues and problems raised within financial disputes are common to civil and criminal matters. This is why I am happy to accept asset-tracing assignments in matrimonial cases and loss of profit investigations within corporate disputes. However, dealing within the various fraud and financial regulatory frameworks is where my attention is normally focused.

There are a number of common themes exhibited by a large proportion of cases where I am instructed to carry out a financial investigation and/or act as an expert witness:

  • Proceeds of Crime (confiscations)
  • Hawala (international money transmission)
  • Money laundering
  • Asset tracing
  • Fraudulent trading/insolvent trading

Therefore, there are some cases that I receive that in some ways are very similar to each other. For example, I have undertaken a number of cases where an individual has been caught growing cannabis in his attic and spare rooms. When asked to respond to the Crown’s S16 Statement of Information in each case, I will have to check the defendant’s finances that are presented and ensure that no inappropriate assumptions have been made when analyzing several bank accounts.

However, apart from some simple recurring issues usually dealt with by analyzing bank statements and invoices or reviewing financial statements, all cases do have unique aspects and many can reveal unusual characteristics that must be considered in detail. Such characteristics might be potentially relevant to determining a person’s guilt or innocence of the charges being presented.

For example, in a recent case a defendant was being accused of money laundering because his business received a huge proportion of cash receipts. This could not be normal according to the Crown and so a figure for excess receipts was plucked out of thin air and this amount formed the quantum of the indictment. My work revealed that the nature of the business indicated that it would actually be unusual to receive anything but cash! I also showed that the well maintained business accounts (by an independent firm of Chartered Accountants) demonstrated that expected business receipts were much in line with the stock that was being purchased over several years.

There are plenty of cases that I see where an important aspect of the work involves interpreting what the Crown is trying to allege within their case disclosure. In complex frauds, this is sometimes not obvious and it has been known for the regulatory authorities to be somewhat reckless in presenting a case where the evidence does not fully support the allegations. Sometimes, where the main perpetrators have fled the jurisdiction the charges being brought against the unfortunate minor players left in situ can be disproportionate.

I have seen cases where a minor business services provider in a £100 million tax avoidance scam was indicted. The major provider of business services (who was in a better position to understand the whole scam) was ignored, likely because it would be too difficult to pursue this deep-pocketed international player.

One of the key strengths of a good forensic accountant is to unravel a case being brought and present the salient facts in a concise fashion to the instructing party – and indeed to the Court in due course. Understanding a case better can assist with formulating a strategy regarding how to fight the case, and has sometimes persuaded a client to accept an offer or even plead guilty. I recall a case brought by the Republic of Kenya a few years after the oil price crash in 2008 against the head of a private petroleum distributor said to have defrauded the country. He was being extradited from the UK by Kenya. My work involved examining the case including several expert forensic reports prepared by international “Big 4” accountancy firms. It emerged that the business owner was being made a scapegoat for impropriety and corruption within the Kenyan government’s own state owned businesses (petroleum distribution networks and state bank etc). The independent forensic work that I carried out was essentially a distillation of the complex Kenyan case through a series of reports and court attendances over a number of years.

In conclusion, while it is important for a forensic accountant to be known for a number of specialisms (for example in my case being a Hawala expert, or an MTIC expert etc.) in reality a good practitioner is able to approach any case on the basis that it will be unique. He or she will be able to identify the issues, present them clearly (researching underlying aspects from credible sources) and make conclusions that are based only on supportable and demonstrable facts.

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