8) Fraud Flashcards
What three different ways of committing fraud does the Fraud Act 2006 list?
- Fraud by false rep (s2)
- Fraud by failure to disclose (s3)
- Fraud by abuse of position (s4)
If tried on indictment, what is the max penalty for fraud?
- 10 years
- Unlimited fine
Does the actus reus of false representation need to deceive anyone?
No
The actus reus is enough.
Fraud by false representation
Fraud by false rep
* Dishonestly makes false rep
* and intends, by making the representation,
- to make a gain for himself or another
- to cause loss to another, or expose another to a risk of loss
FA s2
What is the actus reus of false representation
- Express or implied representation (s2(4))
- Representation as to fact, law or state of mind
- Representation untrue or misleading
R v King
- Second hand car dealer who stated that the mileage reading “may not be correct”
- = impliedly respresented that he was **not certain the reading was wrong **
- When in fact he knew it was wrong as he had altered it.
IMPLIED
DPP v Ray
- Continuing implied rep when entering restaurant
- Ordering and eating meal
- Had neither the means nor intention of paying for it.
IMPLIED
Can silence amount to a representation?
Pure silence without accompanying action cannot amount to a representation
R v Twaite
Idrees v DPP
Failed driving teory test 15.
Unknown person then took the test and passed.
Person who took test made false rep by conduct; as Idrees’ agent.
Magistrates court convicted Idrees of fraud by false rep
= FALSE REP BY CONDUCT
Actus Reus: Representation
- Representation as to fact or law = straight forward
- Representation as to state of mind = further consideration.
s2(3)
Can a false representation as to one’s belief satisfy the requirements of the FA 2006 2(3)
Perhaps!
If it can be shown that the defendant does not in fact hold that opinion or belief.
Edgington v Fitzmaurice
- Very difficult to prove a man’s state of mind at a particular time
- But if can be ascertained can be fact.
Misrep of mind = Misstatement of fact
R v King
- Second hand car dealer
- Mileage may not be correct.
- In fact knew it was wrong
Misrep of mental state = misrep of fact
Smith v Land and House Property Corp
- If facts are not equally well known
- Statement of opinion by more well qualifed
= Implied statement of fact
May amount to a false representation if in a better position
DPP v Ray
- State of mind required can relate to intention
- If actually had no intention
- Implied intention by ordering and eating food
May amount to a false representation
Can an implied state of mind amount to misrep?
- Yes if the defendant actually had no such intention
Representation must be untrue or misleading
- Whether a representation is untrue will be an issue of fact for jury.
- It is unclear what the term “misleading” adds
s2(2)(a)
Overcharging - most straightforward charge
- To est liability by fraud by false rep.
- May be able to charge for fraud by abuse of position
R v Silverman
- A builder who worked for two elderly sisters for a number of years
- Charged excessive amounts by work done
- He made no specific comment about fairness.
Circumstances of mutual trust - Took dishonest advantage.
- Criminal law applies when dishonest advantage of the other by rep …
FALSE REP FOUND
Does “far from worldly wise” and “unquestionably gullible” amount to vulnerable?
R v Jones
Milkman was convicted of obtaining oprperty by deception by overcharging for crates of milk.
* Long time and trusted friend
* Not vulnerable
* Trust
Deceiving a machine
S2(5)
* Representation may be regarded as made if anything is submitted in any farm to any system or device designed to receive, convey or respond to comms.
What will using a stolen card PIN to get money at an AT< or make online purchases be?
- Deceiving a machine
- Fraud by false representation
FA 2006, s 2(5)
Theft & false rep to a machine
Mens Rea of Fraud by False Representation
- Dishonesty
- Mens Rea for the false statement
- Intention to make a gain or cause a loss
Mens Rea - Dishonesty
- Same as applied in theft, without negative definitions.
- Ivent v Genting Casinos
Ivey v Genting Casinos
1) What was the defendants knowledge and belief as to the facts?
2) Given that knowledge and those beliefs, was the defendant dishonest by the standards of ordinary decent people.
R v Clarke
- PI Lied about being a fraud squad officer to get a job
- Claimed it was not dishonest as believed he could do the jon
- Trial judge found that there was dishonesty
DISHONESTY
Mens Rea for the false statement
Defendant must know or be aware that the statement is untrue or miseading
Will be satisfied if Defendant is subjectively aware of the possibility that what they are saying or implying is false.
FA 2006 s 2(2)(b)
R v Staines
Recklessness
- Recklessness with regard to false statement
- More than mere carelessness or negligence
- Must be indifference or disregard whether a statement is true of false
If a person gives a clear caveat that their statement might be wrong are they making a false or true statement?
This will be true
R v Staines
If a person believes, however unreasonably, that the representation is true, is it a deception?
No, if they believe that it is true
R v Staines
Intention to make a gain or cause a loss
Only requires intention, doesnt actually have to come to play
Does an actual gain or loss need to be made for fraud by false rep to be found?
- No
- all that is required is that the defendnt intended to make a gain.
What can the mens rea of intending to make a gain or loss involve
- Intends to make a gain for themselves
- Intends to make a gain for someone else
- Intends to cause a loss to another
- Exposes someone to a risk of loss
Section2 of Theft Act
Fraud by false representation
Section 3
Fraud by failure to disclose
Section 4 Fraud by abuse of position
What is the actus reus of fraud by failure to disclose
1) Existence of a legal duty; and
2) Failure to disclose
Existence of a legal duty to disclose
- No defintion in the Fraud Act
- Some guidance in Law Commissions report
Law Commissions guidance
On duty to disclose
- Arising from statute
- Within a transaction of utmost good faith
- Contained in express or implied terms of contract
- Arising from a custom in a particular trade or market
- Arising grom fiduciary relationship
R v Razoq
- Duty arising from contract
- Razoq was a doctor signed a locum agency
- Agreed to inform agency of any disciplinary proceedings
- Failed to disclose
Found guilty of s 3 Fraud Act 2006
LEGAL DUTY TO DISCLOSE FROM CONTRACT
R v Mashta
- Mashta claiming benefits on grounds of destitution
- During time obtained employment
- Held to be under a legal duty to disclose change in financial circumstances
Actus Reus - Failure to disclose
- Failure to disclose the information to another person
- A matter of fact
- Will be easy to prove in most instances
Mens Rea of failure to disclose
- Dishonesty
- Intention to make a gain or cause a loss
Dishonesty Test
Test for dishonesty
* What was the defendant’s knowledge and belief as to the facts
* * Given that knowledge and those beliefs, was the defendant dishonest by the standards of ordinary decent people
Ivey v Genting Casinos
Mens Rea of Fraud by failure to disclose
- Intention to make a gain or cause a loss
Definition of “Gain” and “loss”
- Extends only to gain or loss in money or other property
- Includes any such gain or loss whether temporary or permanent.
Fraud Act 2006
What does gain include?
Gain includes a gain by keeping what one has, as well as by getting what one does not have.
Fraud Act 2006
What does loss include?
Includes loss by not getting what one might get, as well as a loss by parting with what one has
Fraud Act 2006
Mens rea for fraud by failure to disclose - Intention to gain or cause a loss
- Intends gain for themselves or someone else
- Intends to cause a loss to another or exposes someone to a risk of loss.
R v Dziruni
A false representation made with a view to getting a job could be regarded as intention to make a gain in terms of money.
This could also apply to fraud by failure to disclose.
How many offences of fraud are there?
One
What type of duty to disclose is a contract of insurance?
A duty of the utmost good faith
Would you be criminally liable for fraud by failure to disclose if there was no gain or loss?
the mens rea does not require an actual gain or loss just an intention to make a gain, cause a loss or expose someone to a risk of loss.
Fraud by abuse of position
Fraud Act 2006, section 4
* Person is in breach if they
- Occupy a position in which they are expected to safeguard or not act against the financial interests of another person
- dishonestly abuses position
- intending by means of abuse of position
- To make a gain / expose another to risk of loss.
Can a person be regarded as having abused his position even though conduct consisted of omission rather than an act?
YES!
Actus Reus of fraud by abuse of position
The Act does not seek to define type of position required except that must be one where Defendant is to look after the victim’s financial wellbeing
Law Commissions report that led to Fraud Act gives assistance as to occupying a position
- Trustee and Beneficiary
- Director and company
- Professional person and client
- Agent and principle
- Employee and employer
- Partners
Can a duty of occupying a position arise within a family or in the context of voluntary work
Yes
Who can utimately decide if an eligible position is occupied based on any given facts?
A judge may rule and if go to jury be subject of directions
Summarise the actus reus:
of occupying a position
- Easy to prove a professional, fiduciary or long term business relationship
- Type of fraud outlined in s4 is not limited to such relationships
R v Pennock & Pennock
- CoA confirmed that this is a matter which will be determined on a case-by-case basis re abuse of position.
R v Marshall
Marshall had control over bank accounts for residents with learning difficulties.
Withdrew money and used i on herself
= Fraud by abuse of position
R v Valujevs and another
V & M were gang masters.
They occupied a position of trust = a position akin to a fiduciary duty to the victim
Providing accommodation did not give rise to the relevnt position - it was the assumption of responsibility for the collection of wages.
In a general commercial area are defendants expected to occupy a position akin to a fiduciary duty
In a competitive market, businesses are entitled to look after their own interests.
R v Valujevs and another
Whose expectation is it on not acting against financial interests
Expectation = an objective one
It is for the judge to assess, whether the position held by individual is capable of being one “in which he is expected to safeguard or not act against the financial interests of another person”
What type of test is that of the “expectation” of not acting against financial interests of another person?
- An objective one, based on the reasonable person standard
R v Valujevs and another
Actus Reus - abuse of position
- No guidance from Fraud Act 2006
- Some guidance from R v Pennock & Pennock - puts to “improper use” the position held
R v Pennock & Pennock - abuse of position
- Befriended Mrs Pennock’s ealderly uncle - joint bank account - bought a house
- Nothing illegal - as didnt require signature to withdraw money
- Retained an equitable interest even though not on the title
- Failed to abuse their position
Suggests offence only committed if unlawful = too narrow of a definition
In Abuse of position cases, are dishonesty and abuse addressed separately or together?
- Although linked closely
- The two are addressed separately
Abuse of position by ommission
Section 4(2)
Offence can be committed by an ommission as well as by an act.
eg when employee has duty to collect payment on bhealf of employer and fails to do so.
Mens rea of abuse of position
- Dishonesty
- Intention to make a gain or a loss.
Does the negative definition of dishonesty contained in the Theft Act 1968 apply?
NO
Does there need to be actual gain or loss for the offence of fraud?
No, simply the intention to make a gain
S4(1)(c)
Failing to collect sums owed to employer due to laziness
= Oblique intention to make a gain for another and cause loss to their aemployer
R vWoollin = virtually certain that gain and loss would be caused, defendant would appreciate that this was the case.
What section of the Fraud Act 2006 is fraud by abyse of position contained?
Section 4
Who decides whether the defendant occupies a position for the purposes of fraud by abuse of position?
The judge and jury have a role in this
