Last year the UK was hit by record fraud levels, a massive 80% of which took place in the South East. The figure stolen from the Government, businesses and individuals by criminals in Sussex and the surrounding area was 1,101,215,000 in 2010. You have read that correctly – more than £1.1 billion in a year.
In 2010, the UK fell victim to more fraud cases than ever before, and the South East was the worst hit, recording 143 cases last year. This broadly accounted for the increase in cases found across the Fraud Barometer as it reached a new high in its 23-year history.
One of the largest cases seen in the UK was worth £103m, in which a 48-year-old man claimed a flood of fraudulent bids for tax breaks on research into green technologies.
Hitesh Patel, Forensic Partner at KPMG who compiled the ‘Fraud Barometer’ statistics, said: “Over 45 percent of the number of cases that reached court last year were heard in courts in London and the South East and accounted for 80 percent of all UK fraud that took place in the UK last year by value.
“Government agencies, like commercial businesses, have been increasingly vulnerable to the threat of fraud. In a year of austerity measures implemented by Government, tax increases, the threat of rising unemployment and significant structural change, it is hardly surprising that the long fingers of the fraudster have reached into the public purse. The greater concentration of population in the South East means a larger number of opportunists and organised fraudsters targeting social welfare budgets.
“Fraud is not a victimless crime, particularly at a time when the country deficit is so high. Anti-fraud measures need to be
reviewed and amplified by the public sector to combat this assault,” he added.
The Government has estimated that recovering funds from those who undermine the tax system should bring in around £7 billion per annum, by 2014-15, in additional tax revenues. The volume of UK fraud cases snowballed in 2010, with 314 incidents reported, the highest level recorded since the current measurement began, 23 years ago.
Businesses trying to survive and individuals seeking to maintain lifestyles by whatever means will have undoubtedly driven the numbers up – it is these vulnerable groups that have been the prey for professional criminals.” Hitesh explained.
Management remained unchecked during 2010, as fraud increased in this group by 20 per cent year-on-year, to £419 million. Being in a position of trust and authority enabled management to cause greater financial damage than employees – i.e. 61 cases totalling £419m in 2010 compared with 79 cases totalling £129m respectively.
The biggest case over the last 12 months was worth £200m – in which a director of a City firm transferred large sums of taxpayer money out of the country. He then went on to set up a currency exchange business to help more than 100 criminal clients clean up the proceeds of their fraud.
Fraud is moving with the times too, as determined criminals use trends and popular media to tap into resources. A DJ was recently accused of plotting a credit card scam on the iTunes website. Both the man and his ten accomplices targeted the Apple and Amazon sites with twenty songs which they then sold through the respective websites. It is thought that they then stole approximately 1,500 credit cards to buy the songs, and then claimed back just under £469,000 in royalties.
While credit card and data theft remain common tools from which criminals are able to profit, the need for ever more effective techniques to combat fraud grow greater by the day.
Unfortunately anti-fraud measures do not always keep pace with professional criminal activity, although the fight against mortgage fraud seems to be making some progress.
Mortgage fraud, which was rife in the first half of 2010, plummeted, from July to December, dropping from 21 to 13 cases (£96m – £12.4m) suggesting the larger, more organised mortgage fraud is being tackled head on by the financial institutions.
FRAUD IN YOUR BACK YARD
1. The leader of a gang of Ukrainian builders who netted £8 million in fraudulent tax rebates was jailed for six years after spending taxpayers’ money on prostitutes and luxuries that included expensive cars and riverside apartments. The 27 year old and his cohorts took photos of themselves on the bonnets of Range Rovers and a BMW X5 with their thumbs up, next to pots filled with debit cards. He, and ten fellow conspirators, had used 1,200 fake identities to claim rebates over fictitious repayments of tax.
2. An illegal immigrant and his sister, who made at least £100,000 taking other people’s driving tests, were jailed for fraud in August 2010. The couple were suspected of taking theory exams for hundreds of learner drivers, charging up to £500 a time. They applied for theory tests in the names of at least 78 learners, but fraud experts believe they were involved in hundreds over the last six years.
3. An accountant has been jailed after siphoning off almost a quarter of a million pounds from the Toyota dealership he worked for in Gillingham. The 38 year old wrote out a number of cheques from the company account which he then paid into his own bank accounts. He also used the company account to pay off his credit card bills. He managed to steal a total of £245,627 from the company between May 2004 and April 2009.
4. A media executive was jailed for three years for stealing more than £500,000 from his employer. Dean Fisher used some of the money to buy players for Croydon Athletic Football Club, of which he was the chairman. He also lost money gambling, bought a Rolex watch and a Range Rover, and paid for an £8,000 gastric bypass operation.
5. A husband and wife invented 10 children to fraudulently claim nearly £150,000 worth of benefits. The couple told the authorities they had 13 children when they only had three in order to rake in child tax credits to which they were not entitled, the court heard. They also claimed for the costs of a childminder who lived more than 100 miles away and who had never heard of them, the judge was told. The husband, was sentenced to 20 months in jail while his wife received a six month sentence suspended for 18 months and 250 hours of unpaid work. The pair, who own four homes and live in a four-bedroom house, will face a confiscation hearing at a later date to decide how much money they must pay back.
6. A fraud investigator was jailed for two and a half years for diverting £200,000 in ghost payments to two landlords over 18 months. The 46 year old man who was in charge of overseeing payments in the benefits office had created a series of claims in the names of people who had previously been claimants but were no longer receiving money. He reactivated dormant claims but instead of sending the money to individual landlords, he diverted large amounts to two of his friends who were landlords and they have also been jailed for their part in the scam. All three will face confiscation proceedings and will be forced to sell their assets to repay the £200,000.
7. A city insurance broker who siphoned off nearly £1 million of clients’ money to fool his bosses into paying him more has been jailed for three-and-a-half years. The 51 year old claimed the money was the profit on his work account for selling financial insurance products. As a result bosses paid him an extra £270,000 in salary, commission and bonuses over four years. He admitted four counts of furnishing false information and had previously been sentenced to 18 months in the mid-Nineties for stealing £35,000 from a travel agency where he worked. The company believes that overall the fraud cost it £2.5 million, as the deception also led it to pay out extra shareholder dividends and staff bonuses, in addition to the cost of the bonuses, and the money owed to his clients.
8. A mother-of-two masterminded a fraud that cheated a holiday firm out of almost £250,000 by booking luxury trips abroad using fake credit cards. The 28 year old was one of seven women and five men, most of whom were on benefits and from the Maidstone and Medway areas. The scam involved using false credit card details to book expensive holidays with Thomas Cook to places such as Jamaica, USA and the Maldives. The convicted fraudster, who was on bail for other deception matters at the time, was jailed for four and a half years
9. A benefits cheat from Southend received a suspended sentence for claiming £32,000 for children who did not exist. The 47 year old was part of a scam which saw more than £500,000 siphoned off from the public purse in bogus tax credits payments. Basildon Crown Court heard she put in a claim for six children who did not exist, and then boosted the payouts by saying five of them had disabilities. The unemployed mum-of-two also lied about having a part-time job in order to qualify for the payments. She was sentenced to six-months in prison, but suspended the sentence for 18 months due to her poor mental health.
10. An illegal Ukrainian immigrant from Kidbrooke has been sentenced to three-and-a-half years in jail for a £500,000 tax fraud. The 25-year-old registered 350 fictitious people on the self-assessment tax system and falsely claimed £559,497 of tax repayments for 218 of them. The man had been living in the UK under a false Lithuanian identity and used a fake passport to open 74 bank accounts over two years, which received a number of fraudulent repayments.