The annual FraudTrack report by BDO, the professional services firm, collates data from all serious fraud cases which involve £50,000 or more. There were 413 reported cases in the 12 months between December 2010 and November 2011. This compared with 372 cases totalling £1.4bn in the equivalent 2009-2010 period.

There were substantial increases in tax fraud and fraud in the retail sector, which now represents 12 per cent of all cases compared with 2 per cent in 2010.

Simon Bevan, head of fraud at BDO, said it was no surprise that reported fraud was up because when the economic climate was difficult and companies were cutting costs, fraud was more likely to be uncovered.  “Tax fraud is consistently high and this tends to be in the form of VAT fraud, such as carousel fraud. This obviously [affects] the public sector and we know that this is a key focus for the coalition government, which has voiced its intention to cut the tax deficit,” he said.

Some 30 per cent of reported fraud – compared with 12 per cent in 2009 and 18 per cent in 2010 – is committed by suppliers and customers, with an average cost per supplier/customer fraud of £7.7m.

However, employee and management fraud as a percentage of the total has been steadily decreasing over the past 4 years, and now stands as a low of just 5.5 per cent.  BDO believes the figure reflects the fact whistle-blowers tend to keep their heads down at times of high unemployment.  The same is true for Employee fraud, which is down to 10% from 14% last year with an average fraud of £1.4m

Fraud in the financial services sector also fell as a proportion, accounting for 27 per cent of all reported fraud – the lowest percentage in the past five years. Mr Bevan said this was because financial services companies had invested heavily in systems and technology to prevent and track fraud.

Cases of corruption are steadily increasing, from less than 1 per cent of the total in 2009 to just under 2 per cent in 2010 and 4 per cent in 2011.  This rise can be attributed to the implementation of the Bribery Act which means prosecutors now have greater powers to bring more corruption cases.

Further information can be found here

 PricewaterhouseCoopers Global Economic Crime Survey 2011 (GECS) has revealed that economic crime is soaring as firms across the world cut back on their fraud detection, while senior executives made up almost half of the respondents who didn’t know if their organisation had suffered a fraud.

The findings, launched in Belfast this week, showed that 51% of firms in the UK have reported such a crime, a significant increase on the 43% of victims recorded in last year’s survey.  Perhaps most worrying is that Middle management are rewarding themselves – they are responsible for two-thirds of economic crimes.

Ian McConnell, from PwC, said that the most worrying element of the survey was the extent to which UK public and private sector organisations were falling victim to so-called white-collar fraud.  Over a third of organisations said their own employees were responsible for the largest frauds, with the typical employee fraudster being male, aged between 31 and 40, educated to below degree level and having worked for the organisation for three to five years.

Two Barclays bank workers have been jailed for a £1.4 million fraud of elderly customers.

Bank manager Karl Dean Edwards, 43, and personal banker Andrew Waters, 26, were each sentenced to five years imprisonment at Birmingham Crown Court. Both pleaded guilty to conspiracy to defraud at earlier hearings following an investigation by West Midlands Police.
A force spokeswoman said Edwards, of Crookbarrow Road, Norton, Worcester, and Waters, of London Road, Norbury, Croydon, were paid by an organised crime team to siphon money from the bank accounts of wealthy customers.
She said: “The investigation dates back to May 2006, when Edwards and Waters conspired together to identify and then access bank accounts belonging to three Barclays customers in order to steal £1.4 million from their accounts.”
Police said the bankers used false identification documents and forged papers to set up accounts in the names of the victims’ relatives. They would then move money from the victims’ accounts into the false accounts before transferring the sums into an offshore bank account.
Edwards was manager at the Hagley Road branch of Barclays in Birmingham, where the victims banked. Waters worked at the firm’s Croydon branch.
Joseph Murphy, 36, and Nathan Denton, 37, who were part of the organised crime team, were sentenced alongside the bankers.
Murphy, from Carshalton, Surrey, was imprisoned for three years and nine months. Denton, from Water Orton, Staffordshire, was sentenced to four-and-a-half years.
Detective Constable Simon Hughes from the economic crime team said: “The bankers deliberately targeted elderly wealthy victims who rarely checked their bank accounts.
“One victim had not been to the bank for over 20 years. The bankers used their position of trust and access to confidential customer information as a vital link in the fraud.”

Friday November 18,2011

A former legal secretary faces jail after pleading guilty to plundering a client’s account to the tune of nearly £500,000.

Leanne Harris, 25, wrote false cheques out in the name of a Mr Harris, depriving Joan Watson of more than £419,000 of her money.
She committed the offences while working at Arscotts Solicitors in Lansdowne Place, Hove, East Sussex, which has since gone under with the loss of up to 36 jobs.
At Hove Crown Court, Harris admitted committing five counts of fraud between November 2008 and May last year against Ms Watson. Harris also pleaded guilty to the theft of £64,815 between August 2007 and April 2010 from Miriam Turnbull over whom she had power of attorney.
Some time before joining Arscotts, Harris set up her own company through which she approached charities offering a free wills service.
The court was told that it was believed to have been through this service that she came into contact with Ms Turnbull.
Prosecutor Michael Warren did not open the details of the Crown’s case.
But defence counsel Lewis Power QC said Harris and her husband had been in financial strife, struggling to repay loans, meet bills and pay a mortgage.
Sentencing was adjourned by judge Michael Lawson QC for psychiatric reports but Mr Power said the starting point for sentencing of Harris, of Gildredge in Whitesmith, near Lewes, would be four years in jail.
Harris, clutching a Karen Millen handbag and wearing a grey skirt, was released on conditional bail until sentencing on January 27.

Friday November 25,2011

MILLIONS of pounds are being stolen by staff in charge of vast education budgets in Britain’s schools. The fraud is often written off by head teachers and governors embarrassed by a scandal they failed to spot.

Recently, a finance manager stole more than £288,000 from Fibbersley Park Primary School at Willenhall near Walsall, West Midlands. She spent the cash on holidays and home improvements.

William Simmonds, chief executive of the National Association of School ­Business Management, said: “It is astounding this fraud went unchallenged for four years, but this case is just the tip of the iceberg.

“Ministers got rid of the Financial Management Standard which required school accounts to be signed off by an independent auditor at the end of the year. Now, only academies have to be audited externally while all other schools just fill in their own accounts.

“Eventually it usually is spotted but since a lot of the amounts being taken fraudulently will be little and often, it sometimes slips through the net for quite a while.

“Local education authorities do not want to talk about it as it doesn’t look good for them, and more often than not the stolen money is written off and the ­scandal hidden away.”

Kerry Smith, 43, began stealing from Fibbersley Park as soon as she became its £20,000-a-year finance officer in 2007.

No one noticed when she forged the deputy head’s name on cheques and for more than four years she signed 140 of them. The cheque stubs claimed the money had settled school bills. In fact 119 were made payable to her directly and to credit card firms she used.

The married mother-of-three squandered the cash on luxury holidays to New York, Cyprus and Sri Lanka and on designer clothes and handbags. Smith also upgraded her home in Bilston, near Wolverhampton, to the standard of those ­featured in ­luxury magazines.

Her fraud was spotted last November when a financial adviser found the school accounts should have been £70,000 in the black rather than £14,000 in the red.

Immediately Smith admitted theft and 12 counts of fraud. Earlier this year she was jailed for three years and four months.

Her case is not a one-off. In 2007 a head teacher stole at least £90,000 by claiming false expenses from the special school he ran for five years. He spent the cash on trips to the races and overnight stays at a yacht club.

Currently there are investigations into fraud in schools in Kent and Lincoln, both involving ­substantial sums.

In March this year a former head teacher who was knighted for services to education was arrested over claims he and his senior colleagues mismanaged more than £1million of school funds.

Sir Alan Davies, who was knighted in 2000, was arrested in relation to conspiracy to defraud Copland Community School in Wembley.

He and six colleagues have been bailed until next March.

Mr Simmonds said: “I feel this is an area which has to be strengthened and as quickly as ­possible. The Audit Commission has produced a leaflet to help schools manage their accounts and to keep a good eye on what is ­happening with the huge budgets that they have to manage.

“If all schools had to be externally audited this should bring this problem to an end, or at least catch things early before massive frauds can be ­committed.”

Sunday December 4,2011  By Hilary Douglas

Princess Diana used firm for divorce

A FORMER partner at Princess Diana’s law firm was facing a long jail sentence last night for his part in a spectacular £17.5million fraud.

Kevin Steele used his position at the solicitors which acted for Princess Diana in her divorce, to help a conman pull off the swindle.

A Swiss bank handed over the cash after hearing it would be used to fund development of a Turkish resort.

Steele, 51, played a crucial role by endorsing fraudster Michael ­Shepherd’s claim that he had access to £76.4million in Swiss accounts.

The lawyer even tricked three ­fellow partners at his prestigious law firm into counter-signing an undertaking that Shepherd was worth a fortune.

Phoney paperwork produced by Steele persuaded the EFG private bank to approve the loan.

Jurors at London’s Southwark Crown Court were told Shepherd, 50, and his accomplice Mark Pattinson, 37, both admitted fraud.

Yesterday, they found Steele guilty of conspiracy to commit fraud and guilty of fraud by abuse of his position.

Judge Graham Wood, QC, freed Steele on bail for a pre-sentence report but told him: “As you know, you face a substantial custodial sentence and your position as a solicitor obviously makes it worse.”

Steele, of Esher, Surrey, denied the charges and insisted he acted in good faith but was duped by Shepherd.

The court heard how Shepherd was no more than a moderately successful entrepreneur when he dreamt up the scam. Pattinson forged paperwork claiming Shepherd had a fortune in the Zurich-based bank BJB.

Steele, named as having power of attorney over the money, helped draft two of the bogus documents.

David Aaronberg, QC, prosecuting, told the jury: “What Shepherd did was to pretend that he was a phenomenally successful businessman enjoying huge personal wealth.

“Shepherd did not have a penny piece invested in BJB.” Mr Aaronberg said it was the “spectacular use” of the bogus paperwork which persuaded EFG to hand over the money.

Shepherd, of Lancaster, and ­Pattinson, of Preston, Lancs, will be sentenced with Steele next month.

Serious Fraud Office director Richard Alderman said: “I welcome today’s verdict. It’s a victory for honesty and fair dealing in business.”

Tuesday December 6,2011 By John Twomey

Gupta, who also sat on the board of Procter & Gamble Co. (PG) and led McKinsey & Co., was charged with five counts of securities fraud and one count of conspiracy to commit securities fraud in an indictment unsealed last week in Manhattan federal court.

The indictment alleges that Gupta, 62, of Westport, Connecticut, was a close friend and business associate of Rajaratnam’s who made multimillion dollar investments with him and also passed him inside information after attending board meetings from 2008 through January 2009. The tips generated “illicit profits and loss avoidance” of more than $23 million, the U.S. Securities and Exchange Commission alleged in a lawsuit filed yesterday.

“Rajat Gupta was entrusted by some of the premier institutions of American business to sit inside their boardrooms, among their executives and directors, and receive their confidential information so that he could give advice and counsel,” said Manhattan U.S. Attorney Preet Bharara, whose office is prosecuting the case.

The case shows that corruption has “insinuated itself into the boardrooms of elite companies,” Bharara said.

By Patricia Hurtado, David Glovin and Chris Dolmetsch - Oct 27, 2011

http://www.bloomberg.com/news/2011-10-26/ex-goldman-sachs-director-gupta-said-to-face-insider-trading-probe-charges.html

The SFO said on Tuesday that individuals with inside knowledge of suspect business practices could call the new “SFO Confidential” hotline or fill in a new online form.

The agency said the new hotline would complement its national fraud reporting service for victims. But it is keen to ensure strong cases are not clogged up in the system.

“Company executives, staff, professional advisors, business associates of various kinds or trade competitors can talk to us in confidence,” said SFO Director Richard Alderman.

“I have set up a special team to make the SFO readily accessible to whistleblowers, with trained staff sympathetic in dealing with any anxieties people might have about coming forward.”

The SFO, which receives public funds of only around 30 million pounds per year to investigate and prosecute complex fraud, has to rely in part on whistleblowers to successfully prosecute fraud.

The agency, which has been given more teeth with the Bribery Act, promised to protect a whistleblower’s identity. However, people could contact it anonymously if preferred, it said.

The Bribery Act, which came into force in July, makes failure to prevent bribery — whether it is committed by staff, subsidiaries or “associated persons” anywhere in the world — a criminal offence.

It also clamps down on so-called “facilitation payments” — often used to oil the wheels of business by speeding up services such as visa applications — and “disproportionate” hospitality.

Whistleblowers who call the hotline number can talk through their concerns with an SFO Confidential adviser. Their identity will be securely protected, and contact can be made anonymously if preferred.

The SFO Confidential contact number is 020 7239 7388 and operates from 9.00 a.m. to 5.00 p.m. Monday to Friday.

Further information is available on the SFO website. Reports can also be emailed to confidential@sfo.gsi.gov.uk

(Reuters – Reporting by Kirstin Ridley; Editing by Greg Mahlich)

While general shoplifting was estimated at 43.8% (£2.1bn) of the total loss, theft by UK employees was also a major factor accounting for 36.1% (£1.8bn).

Employee theft has risen from £1.6bn to £1.8bn in the last 12 months alone.

According to the report, employees are the most prolific, accounting for an average loss of £1,600 worth of loss prior to being detected, compared with an average of £80 for shoplifters.

The total amount of retail goods lost – calculated as a percentage of sales – rose by 6.2% in the year to July, according to the Global Retail Theft Barometer, a study by the Centre for Retail Research found.

Neil Matthews, vice-president of loss prevention firm Checkpoint Systems, who commissioned the report, said: “The fact that retail loss has increased so significantly should certainly not be taken lightly.

The Global Retail Theft Barometer 2011, based on a survey of 1,187 large retailers with combined sales of 984 billion US dollars (£623.8 billion), found that thieves were stealing an average of £79 worth of goods each time, indicating a preference for branded merchandise that could be resold.

“The survey reflects trends that we are aware of,” said a spokeswoman for the British Retail Consortium. “Retailers are reducing opportunistic levels of shoplifting, but there is a hard core of shoplifters who are stealing for more organised reasons and manage to get away with higher value goods.”

In a speech setting out measures to tighten immigration rules, Mr Cameron said people should report suspicions to Crimestoppers and the UK Border Agency.

He also outlined plans to tackle forced and bogus marriages and for new rules for those wanting to settle in the UK.

“Together we will reclaim our borders and send illegal immigrants home.”

Mr Cameron said: “If we take the steps set out today and deal with all the different avenues of migration, legal and illegal, then levels of immigration can return to where they were in the 1980s and 90s… a time when immigration was not a front rank political issue.”

In his speech, the PM also said the government was to consult on making it a criminal offence in England, Wales and Northern Ireland to force a person to marry against their will.

10 October 2011 Last updated at 15:38

The Full Report can be found http://www.bbc.co.uk/news/uk-15235649