Chapter 10 - Fraud

Question 1

What is the purpose of the Fraud Act 2006?

Answer 1

To overhaul the laws relating to deception and replace multiple deception offenses with a general offense of fraud.

Question 2

How is the offense of fraud committed under the Fraud Act 2006?

Answer 2

Fraud may be committed in three ways:
* Fraud by false representation (Section 2)
* Fraud by failing to disclose information (Section 3)
* Fraud by abuse of trust (Section 4)

Question 3

Is it necessary for the prosecution to prove the defendant obtained something as a result of fraud?

Answer 3

No. The prosecution only needs to prove the defendant intended to gain something or cause a loss.

Question 4

What is a key element of the mens rea for fraud?

Answer 4

Dishonesty

Question 5

What is the classification and maximum sentence for fraud?

Answer 5

Fraud is an either-way offense, meaning it can be tried in either the Magistrates’ Court or the Crown Court. The maximum sentence in the Crown Court is 10 years imprisonment and an unlimited fine.

Question 6

What is the most common type of fraud offense?

Answer 6

Fraud by false representation.

Question 7

What are the elements of fraud by false representation as defined by Section 2 of the Fraud Act 2006?

Answer 7

A person is guilty of fraud by false representation if they:
* Dishonestly make a false representation
* Intend to make a gain for themselves or another, or to cause loss to another, or to expose another to a risk of loss.

Question 8

What constitutes the actus reus of fraud by false representation?

Answer 8

The actus reus consists of making a representation, and that representation must be false.

Question 9

What constitutes the mens rea of fraud by false representation?

Answer 9

The mens rea involves three elements:
* The defendant must be dishonest
* The defendant must intend to gain for themselves or another, or to cause loss or risk of loss to another.
* The defendant must know the representation is or might be false.

Question 10

What is a false representation?

Answer 10

It can be something said that is untrue or behavior that creates a false impression. Using a stolen credit card to pay for goods is an example of false representation.

Question 11

When is a representation considered false under the Fraud Act 2006?

Answer 11

Section 2(2) of the Act states that a representation is false if it is untrue or misleading, and the person making it knows that it is, or might be, untrue or misleading.

Question 12

What does a representation include under the Fraud Act 2006?

Answer 12

It can include representations about facts, law, or the state of mind of the person making the representation or any other person.

Question 13

How can a representation be made?

Answer 13

It can be express or implied, in words or through conduct. It can be communicated in various ways, including writing, speaking, or posting on a website.

Question 14

Provide an example of an implied representation as to the state of mind.

Answer 14

Cynthia promises to change her will to benefit her niece, Anthea, if Anthea cares for her until she dies. These words imply that Cynthia intends to leave Anthea her house, thus the promise is a representation.

Question 15

Can a statement of opinion be considered a representation?

Answer 15

Yes. Even if a defendant states something as their opinion, they impliedly represent that it is their genuine opinion. For example, if Nelson tells his debtor, Holly, that she has no legal defense against his claim for payment, knowing she does have a defense, it is a false representation.

Question 16

Provide an example of a false representation where the actus reus would not be established.

Answer 16

Rodney sells Zeenat a watch, telling her it is made of nine-carat gold, believing it is not. When Zeenat has the watch valued, it turns out to be real gold. The actus reus is not established, as there was no false representation. Rodney may, however, be guilty of an attempted offense.

Question 17

Provide examples of express and implied false representations.

Answer 17

• Express: Marlon tells a woman he met online that he needs money to avoid being assaulted. He made up the story to get money from her.
• Implied: Elisha uses a stolen credit card to pay for shopping. She is implying that she has the authority to use the card.

Question 18

How is it determined whether a representation is false?

Answer 18

Whether or not a defendant has made a false representation is a question of fact to be determined by the jury. It usually involves a victim being misled by something said or written to them.

Question 19

How does the case of DPP v Ray illustrate the concept of false representation by conduct?

Answer 19

In this case, the defendant and his friends ate at a restaurant and then ran off without paying. Their conduct throughout the meal, from ordering to remaining at the table, implied a continuing representation of their intention to pay. This representation became false when they decided not to pay.

Question 20

What if a defendant genuinely intends to pay for a meal but realizes they cannot afford it at the end?

Answer 20

It is difficult to argue that there is a real false representation with mens rea when the defendant realizes they have no money. It can be argued that their initial representation of intent to pay ceases, and a new, truthful representation that they will not pay begins.

Question 21

Would a defendant who eats a meal and then realizes they cannot pay be guilty of theft?

Answer 21

No. They would not be guilty of theft, but they could be guilty of making off without payment.

Question 22

How does the case of R v Lambie relate to false representations made through the use of credit cards?

Answer 22

In this case, the defendant continued to use her credit card after exceeding her limit. The court held that she had falsely represented that she had the authority to use the card by continuing to do so.

Question 23

Provide examples of cases that illustrate false representations.

Answer 23

• In Idrees v DPP, the defendant had someone impersonate him to take his driving theory test.
• In R v Nizzar, the defendant, working at a shop till, told a woman with a winning lottery ticket that she hadn’t won.
• In R v O’Leary, the defendant demanded payment for roofing work from elderly people with dementia that he never did.

Question 24

What are some of the challenges related to the term “misleading” in the context of false representation?

Answer 24

The Fraud Act 2006 does not define “misleading,” which has caused difficulties in interpretation. Some guidance suggests that “misleading” means “less than wholly true and capable of an interpretation to the detriment of the victim.”

Question 25

Provide an example of a potentially misleading representation.

Answer 25

Dennis sends an email asking for sponsorship for a swim to raise money for cancer research. He carries out the swim but only donates five percent of the money. While Dennis completed the swim, his email could be considered misleading because he kept most of the money.

Question 26

Is it necessary to prove that someone was deceived for the offense of fraud under Section 2?

Answer 26

No. It is not necessary to prove that anyone was deceived.

Question 27

Can fraud be committed by making a false representation to a machine?

Answer 27

Yes. Section 2(5) states that a representation can be considered made if it is submitted to any system or device designed to receive communications, with or without human intervention. Examples include using a stolen debit card at a self-checkout or entering stolen bank details on a website to purchase items.

Question 28

What are the three mens rea elements for the offense of fraud?

Answer 28

• Dishonesty.
• Intention to gain for themselves or another or cause loss to another, or expose another to risk of loss.
• Knowing that the representation is untrue or misleading, or that it might be so.

Question 29

What happens if the prosecution cannot prove that the defendant had certain knowledge that a representation was false?

Answer 29

They will have to establish that the defendant knew the representation might be untrue or misleading, which is akin to recklessness and is met by knowledge of falsity or a perception by the defendant that the representation might be false.

Question 30

Is there a definition of “dishonesty” in the Fraud Act 2006?

Answer 30

No. In most cases, the court will rely on common sense. If needed, the Ivey test will be applied.

Question 31

What is the requirement regarding the intention to gain or cause loss in a fraud case?

Answer 31

The defendant must intend that the gain or loss be a result of the false representation, establishing a causal link between the representation and the intended outcome.

Question 32

How does the Fraud Act 2006 define “gain” and “loss”?

Answer 32

• Gain and loss extend only to gain or loss in money or other property.
• Property means any property, whether real or personal, including things in action and other intangible property.
• Gain includes a gain by keeping what one has as well as a gain by getting what one does not have.
• Loss includes a loss by not getting what one might get, as well as a loss by parting with what one has.

Question 33

Provide examples of “gain” and “loss” in the context of fraud.

Answer 33

Benedict lies to his sister Laura to obtain a concert ticket from her (gaining something he doesn’t have and causing Laura to lose something she does). He also lies to her to borrow her car (temporary gain and loss). He lies to her about losing a book she lent him (gaining by keeping what he has and causing Laura to lose something she might get back). All of these examples demonstrate both gain and loss, though only one is required.

Question 34

When is the offense of fraud by false representation considered committed?

Answer 34

It is committed as soon as the false representation is made, regardless of whether anyone was deceived or any loss occurred. The full offense is complete when the false representation is made, provided the defendant has the requisite mens rea.

Question 35

How is fraud committed by failing to disclose information?

Answer 35

A person is guilty of fraud under Section 3 if they:
* Dishonestly fail to disclose information they are legally obligated to disclose
* Intend to gain for themselves or another, or to cause loss to another, or to expose another to a risk of loss by failing to disclose the information.

Question 36

Provide an example of fraud by failing to disclose information.

Answer 36

Bradley fails to disclose a pre-existing heart condition when applying for travel insurance. As insurance contracts require good faith, he was legally obligated to disclose this information.

Question 37

When does failing to disclose information become a criminal offense?

Answer 37

Only when the defendant is under a legal duty to disclose the information. This duty can arise from statutes, contracts, good faith transactions, trade customs, or fiduciary relationships.

Question 38

Provide examples of when there is a legal duty to disclose information.

Answer 38

• Mehmet fails to disclose that he has been declared bankrupt when his brother appoints him as trustee for his son.
• Ravinder fails to disclose that she was disciplined for cheating in university when applying for a job that requires the applicant to be of good character.

Question 39

Is it relevant whether anyone is deceived or any property is lost or gained in fraud by failing to disclose information?

Answer 39

No. The offense is committed as soon as the accused fails to disclose the information.

Question 40

What is the mens rea required for fraud by failing to disclose information?

Answer 40

Dishonesty and the intention to make a gain for themselves or another, or to cause loss to another, or to expose another to a risk of loss.

Question 41

What are the elements of fraud by abuse of position?

Answer 41

A person is guilty if they:
* Occupy a position where they are expected to safeguard the financial interests of another
* Dishonestly abuse that position
* Intend to gain for themselves or another or cause loss to another, or to expose another to a risk of loss through the abuse.

Question 42

Does the defendant need to succeed in making a gain or causing a loss for fraud by abuse of position to be committed?

Answer 42

No. The offense is complete once they abuse their position.

Question 43

What types of relationships might create a position of financial trust?

Answer 43

Trustee and beneficiary, director and company, professional and client, agent and principal, employee and employer, as well as relationships within families or voluntary work. For example, an employee of a software company who uses their database access to sell products to a rival company.

Question 44

How does the case of R v Valujevs demonstrate the broad interpretation of fraud by abuse of position?

Answer 44

In this case, unlicensed gang masters exploited migrant workers by taking unlawful deductions from wages and charging excessive rent. They were found to occupy a position where they should have safeguarded the workers’ financial interests.

Question 45

Provide examples of fraud by abuse of position.

Answer 45

• Lee, an estate agent, undervalues a property so his brother can purchase it at a reduced price, failing to disclose this conflict of interest to the seller.
• Carys, a care worker, charges an elderly client an excessive amount for her services, exploiting their relationship of trust.

Question 46

Is simply holding a position of trust sufficient for a fraud conviction?

Answer 46

No. The defendant must abuse their position.

Question 47

How can the abuse of position be committed?

Answer 47

Through a positive act or an omission.

Question 48

Provide an example of fraud by abuse of position committed by a positive act.

Answer 48

Rouse, the deputy manager of a care home, used residents’ credit cards to withdraw money and pay his personal bills.

Question 49

What is the mens rea for fraud by abuse of position?

Answer 49

Dishonesty and intention to gain for themselves or another, or to cause loss to another, or to expose another to risk of loss.

Question 50

Can a defendant be criminally liable for different types of fraud under the Fraud Act 2006?

Answer 50

Yes, it is not unusual for a defendant to be liable for multiple offenses, as the different sections of the Act describe different ways to commit fraud.