Deception (Police Manual)

Question 1

Where are fraud charges contained?

Answer 1

Fraud charges are contained within Part 10 of the CA61 and also outside that part of the act in:

• Secret Commissions Act 1910 (charges akin to commercial bribery or kickbacks which required the leave of the Attorney-General to institute a prosecution)
• Bribery and Corruption Sections of CA61 (Prosecution restricted to s106 CA61 and are only commenced with the leave of the Attorney-General)
• Passport Act 1992 offences relating to the creation of false passports or the misuse of valid passports

Question 2

What is the definition of a bank note?

Answer 2

For the purposes of s255, 256 and 263 CA61, bank note means any negotiable instruments used or intended for use as currency and issued by the Reserve Bank of NZ, or by any bank in any country other than NZ, or by the government of any such country, or by any other authority authorised by law to issue notes.

Question 3

What is the difference between the words “Offence” and “Crime”?

Answer 3

“Offence” and “Crime” are used interchangeably in statute, and there is no material difference between them. They may be described as any act or omission that is punishable on conviction under any enactment, and are demarcated into four categories as defined in section 6 of the Criminal Procedure Act 2011.

Question 4

When will the Crown prosecute matters relating to Fraud offences?

Answer 4

The crown will prosecute category 3 fraud offences where the defendant elects trial by jury. The crown will take over the prosecution once the matter is adjourned to trial call over.

Question 5

What do you need to prove for an offence against s228 CA61 (Dishonestly Taking or Using Documents)?

Answer 5

You must prove the identity of the defendant and that they:

• with intent to obtain any property, service, pecuniary advantage, or valuable consideration
• dishonestly and without claim of right
• took or obtained any document

OR

used or attempted to use any document

Question 6

Can you charge an offender with both offences outlined in s228 CA61 if the ingredients of both offences has been met?

Answer 6

Yes - charging both ‘obtaining’ and ‘use’ of the same card is not duplicitous. Once a person has obtained a document dishonestly and without claim of right and with the requisite intent, the charge is complete. The later use involves a different act. It may involve the same intent but it is an intent that is formed at the time of the use of the document. The act of obtaining the document will always be at a slightly earlier time than its use.

Question 7

Where is the power to arrest for a fraud offence derived from?

Answer 7

s315(2)(a) CA61

Question 8

What do you need to prove for an offence against s240(1)(a) CA61 (Obtaining ownership, possession or control by Deception - property etc)?

Answer 8

You must prove the identity of the defendant and that they:

• by deception and without claim of right
• obtained ownership or possession of, or control over
• any property, service, privilege, pecuniary advantage, benefit, or valuable consideration
• directly or indirectly

Question 9

In what circumstances has someone attempted to obtain by deception?

Answer 9

If the person whom the false representation is made to does not believe it, but still parts with the property, they have not been induced and the property has not been obtained by false pretences. However the offender may be guilty of attempted to obtain by deception.

Question 10

What do you need to prove for an offence against s240(1)(b) CA61 (Obtaining credit by Deception)?

Answer 10

You must prove the identity of the defendant and that they:

• by deception and without claim of right
• in occurring any debt or liability
• obtained credit

Question 11

Who must obtain the credit in the offence “Obtaining credit by Deception”?

Answer 11

R v Mclean

The credit must be obtained by the person committing the fraud

Question 12

What do you need to prove for an offence against s240(1)(c) CA61 (Inducing or causing to deliver over etc by Deception)?

Answer 12

You must prove the identity of the defendant and that they:

• by deception and without claim of right
• induced or caused any other person to deliver over, execute, make, accept, endorse, destroy or alter
• any document with or thing capable of used to derive pecuniary advantage

Question 13

What do you need to prove for an offence against s240(1)(d) CA61 (Causing loss by Deception)?

Answer 13

You must prove the identity of the defendant and that they:

• by deception and without claim of right
• caused loss to any other person

Question 14

What do you need to prove for an offence against s249(1) CA61 (Accessing a computer system for dishonest purpose)?

Answer 14

You must prove the identity of the defendant and that they:

• directly or indirectly
• accessed any computer system
• dishonestly or by deception and without claim of right
• obtained ownership or possession of, or control over
• any property, or any privilege, service, pecuniary advantage, benefit, or valuable consideration

OR

caused loss to another person

Question 15

What do you need to prove for an offence against s249(2) CA61 (Accessing a computer system for dishonest purpose)?

Answer 15

You must prove the identity of the defendant and that they:

• directly or indirectly
• accessed any computer system
• dishonestly or by deception and without claim of right
• with intent to obtain ownership or possession of, or control over
• any property, or any privilege, service, pecuniary advantage, benefit, or valuable consideration

OR

to cause loss to another person

Question 16

What do you need to prove for an offence against s256(1) CA61 (Forgery)?

Answer 16

You must prove the identity of the defendant and that they:

• made a false document
• with the intention of using it to obtain any property, service, privilege, pecuniary advantage, benefit or valuable consideration

Question 17

What do you need to prove for an offence against s256(2) CA61 (Forgery)?

Answer 17

You must prove the identity of the defendant and that they:

• made a false document
• knowing it to be false
• with the intent that it in any way be used or acted on, whether in NZ or elsewhere as genuine

Question 18

What is the required intent to be proved for an offence against s256 CA61?

Answer 18

The prosecution must prove that at the time of making the false document, the defendant intended either:

• to use the document to obtain any property, service, privilege, pecuniary advantage, benefit or valuable consideration (s256(1)), or
• that the document be used or acted on, as genuine or that someone should do, or refrain from doing, something because they believed it was genuine (s256(2))

Question 19

What are the defences s256 CA61?

Answer 19

It is a defence to prove that the forger honestly believed they had the authority of another to sign that person’s name. However, merely expecting that the other person would honour the signature is not enough.

It is not a defence to prove that the accused was lawfully entitled to the money they sought to obtain.

Question 20

What do you need to prove for an offence against s257(1) CA61 (Using Forged Documents)?

Answer 20

You must prove the identity of the defendant and that they:

• knowing a document to be forged
• used the document to obtain any property, privilege, service, pecuniary advantage, benefit, or valuable consideration

OR

used dealt with or acted on it as if it was genuine

OR

caused any other person to do so

Question 21

What do you need to prove for an offence against s258(1) CA61 (Altering, destroying, or reproducing documents with Intent)?

Answer 21

You must prove the identity of the defendant and that they:

• with intent to
• obtain by deception any property, privilege, service, pecuniary advantage, benefit, or valuable consideration

OR

cause loss to any other person

• altered, concealed, or destroyed any document, or cause any document to be altered, concealed or destroyed

OR

made a document or caused a document to be made that is, in whole or in part, a reproduction of any other document

Question 22

What do you need to prove for an offence against s259(1) CA61 (Using altered or reproduced document with intent to deceive)?

Answer 22

You must prove the identity of the defendant and that they:

• knowing a document had been made or altered in the manner and with the intent referred to in s258
• with intent to
• obtain by deception any property, privilege, service, pecuniary advantage, benefit or valuable consideration

OR

cause loss to any other person

• used, dealt with or acted on the document

OR

caused any person to do so

Question 23

What do you need to prove for an offence against s260 CA61 (False Accounting)?

Answer 23

You must prove the identity of the defendant and that they:

• with intent to
• obtain by deception any property, privilege, service, pecuniary advantage, benefit, or valuable consideration,

OR

deceive or cause loss to any other person

• made or caused to be be made, or concurred in the making of any false entry in any book or account or other document required or used for accounting purposes

OR

omitted or caused to be omitted or concurred in the omission of any material particular from any such book or account or other document

OR

made any transfer of any interest in a stock, debenture, or debt in the name of any person other than the owner of that interest.

Question 24

How can bank records be obtained?

Answer 24

Bank records can be obtain in the following manner:

• by consent of the account holder
• by statutory authority such as a search warrant under s6 S&S Act 2012 or production order under s74 S&S Act 2012
• Under the Information Privacy Principle 11 of the Privacy Act 1993

Question 25

Why should you use a production order in the first instance to obtain bank records?

Answer 25

A production order should be used in the first instance (unless there is reason to believe that the information to be produced may be tampered with) as a production order authorises a less intrusive power than a search warrant, because it enables the recipient (bank) time to check their records and produce the information without the presence of Police

Question 26

What records are available on the execution of a search warrant or by compliance with a production order?

Answer 26

Records include:

• cheque register which may be computerised
• copies of letters to the customer
• details of customer cheque and EFTPOS transactions or bank statements
• diary notes
• stop payment notices

Question 27

How is the value of a cheque decided?

Answer 27

A distinction is drawn between the amount of the cheque and the piece of paper it is written on.

If the circumstances are such that a cheque would not have been honoured (eg no money in the account) it is the value of the paper only.

If the cheque could have been promptly and safely converted into money, its the value is the sum for which it is made out.

Question 28

How does the drawers belief affect a valueless cheque?

Answer 28

If the drawer honestly believes that there was sufficient funds in the account when the cheque is presented, or that they have an arrangement with the bank for adequate overdraft facilities, there is no intent to defraud and no offence is committed.

This also applies for post dated cheque. If the drawer honestly believes that there will be sufficent funds in the account when the cheque is present, there is no intent to defraud and no offence is committed.

Question 29

What is the criminal liability of a company?

Answer 29

A company can be guilty of a criminal offence. When a senior executive of a the company, acting on behalf of the company, commits an offence the company is criminally liable. The actions of the executive are said to be the actions and state of mind of the company. The executive is also personally liable as a party. Criminal actions of junior management, or of employees such as accountants, are not imputed to the company.

Question 30

What are the types of cheques and credit card offences?

Answer 30

Cheques and credit card offences usually relate to:

• Stolen cheques or card
• Counterfeit cards
• fradulent cheque accounts or cards
• Dishonoured cheque

Question 31

Outline the process of Interviewing in relation to investigating a credit card/cheque offence.

Answer 31

1. Interview the informant and:
   - find out the identity used by the offender
   - obtain a description of the offender, the property obtained and the vehicle used.
2. In all cases contact the accounts manager at the bank where the account is domiciled and find out:
   - the account holders full name, occupation, private and business addresses and telephone numbers
   - the date the account was opened
   - the account history and how it has been operated
   - the date the cheque book or credit card was reported missing
   - how and by whom a loss was reported
   - the serial number of any missing cheques
   - details of any cheques dishonoured and returned
   - whether the account holder is suspected of issuing valueless cheques

NOTE: Also find out if there are other banks to which cheques have been returned and, if possible, details of the people and firms defrauded

3. When an account has been opened with fictitious details, find out;
   - the account number and the date it was opened
   - the nature and amount of the first deposit
   - details of any deposits
   - the details used when the account was opened
   - description of the suspects and any of their associates at the time
   - the names and addresses of the employee who opened the account and any other employee who can identify the suspect. Interview these employees and obtain statements
   - the serial numbers of the cheques supplied
   - details of the dishonoured cheques and the people or firms defrauded
4. Obtain a sample of the suspects handwriting from the bank documents
5. When cheques are dishonoured through lack of funds, interview the account holder and obtain a statement that includes:
   - the suspects full name, address, occupation and age
   - the date the account was opened
   - the nature and amount of the first deposit, e.g. cash, tax refund or stolen cheque
   - any arrangements for regular deposits such as direct crediting of wages, and the dates and amounts of irregular ones
   - details of any overdraft management - check the banks diary notes for any extension to this
   - the general pattern of the way the account has been operated
   - the state of the account at the time the cheques were issued
   - where the suspect was aware of the state of the account. If so, find out when and by whom the suspect was informed. Obtain any correspondence asking him or her not to issue any more cheques and confirm that this was not returned to the bank undelivered
   - details of the dishonoured cheques and the people or firms defrauded
   - the amount if any savings in other accounts

NOTE: In order to prosecute, you must establish intent to defraud. The bank can help you gauge the geographical extent of the offending

6. Contact other Police stations and fraud squads that may hold related complaints and information. Investigations into serious fraud/deception offending must be co-ordinated, and one office or station must take responsibility for this
7. Find out whether the offender was photographed or their image captured on CCTV at the bank or retail outlet and obtain the images

Question 32

Outline the ongoing enquires in relation to investigating a credit card/cheque offence.

Answer 32

1. Liaise with the investigations officer and arrange:
   - to be advised immediately of any further dishonoured cheques
   - for the bank to recover the original cheques and forward them to you, bearing in mind that the banks policy may be to return the cheques to the complainants. If it insists on doing so, obtain the complainants details so you can ask the complainant to forward them to you.
2. Because the document may need to be examined by a fingerprint expert or document examiner, ensure that they are handled as little as possible.
   Do NOT:
   - punch, fold or crease them
   - use staples, pins or sellotape
   - make impressions on them when writing minutes on the file

Place them on file in a clear plastic bag.

3. Inform your colleagues and the fraud squad collator of the offending. Enter as NIA items the details of identifiable property obtain by means of the dishonoured cheques.

Question 33

Outline the process of Locating the Offender in relation to investigating a credit card/cheque offence.

Answer 33

1. Check any relevant addresses
2. Follow up any obvious information such as car registration, phone numbers and evidence of identity
3. • If you have a photo and the offender is unknown then issues a bulletin board message
     - If the property is easily identifiable then consider possible avenues of disposal
     - If appropriate, then implement an early warning system, particularly if a specific type of premises or property is being targets. Consider liaison with customs for ATM fraud and EFTPOS thefts/compromises. These are often perpertrated by organised trans-national gangs who remain in the country for a relatively short period of time.
4. If there are no suspects, consider early fingerprinting of cheques/vouchers

Question 34

Outline the process of Arrest in relation to investigating a credit card/cheque offence.

Answer 34

1. When apprehending the suspect, recover evidence such as:
   - credit cards
   - compromised/stolen EFTPOS terminals
   - equipment used for altering and interferring with electronic devices
   - anything capable of storing electronic data
   - cheque book
   - pens
   - property obtained

Issues a receipt using a POL268

2. Interview the suspect and obtain an explanation for the offence to establish whether there was intent to obtain or cause loss by deception
3. Find out the suspects:
   - knowledge of the state of the account
   - expectation of funds
   - overdraft arrangement, if any
4. Obtain a statement and handwriting samples. It is preferable to obtain the specimens on a form that is the same as, or similar to, the ‘offending’ document. If necessary blank forms could be made from duplicates of the original document.
5. Issues an offender report and conduct enquiries to check the suspects explanation

Question 35

Outline the steps of preparing the prosecution in relation to a credit card/cheque offence.

Answer 35

1. If there is a case to answer, obtain you supervisors authority to prosecute
2. Remember that:
   - where a series of stolen cheques is used to obtain cash and goods, it is usual to file a charge of obtaining or causing loss by deception in respect of each cheque without charging the forgery and using offences disclosed. The number and nature of the charges will, however, depend on the circumstances of each case
   - a decision to prosecute in the case of ‘return to drawer’ cheques will depend on the circumstances of each case
3. Prepare the file. Remember to quote cheque numbers and the correct subsection of section 240 or section 228 if applicable
4. Prepare a blanket charge if:
   - the suspects intends pleading guilty
   - it is difficult to specify individual dates for a series of offences

Question 36

What is a Category A Company Fraud investigation?

Answer 36

Large-scale theft and other dishonesty offences against employers by employees - usually people such as accountants and managers who use their position to manipulate the company’s financial system.

Question 37

What offences are normally involved in a Category A Company Fraud investigation?

Answer 37

The Crimes Act offences are usually:

• accessing a computer system for dishonest purposes
• altering, concealing, destroying or reproducing documents
• dishonestly taking or using documents
• false accounting
• forgery
• obtaining ownership, possession or control by
  deception
• Theft by a person is a special relationship
• using altered or reproduced documents

In addition to these are offences under the Secret Commissions Act 1910

Question 38

What is a Category B Company Fraud investigation?

Answer 38

Dishonesty offences committed against financial institutions by people outside the institution obtaining money from it through deception and GST fraud against the Inland Revenue Department by businesses that make false GST returns. In the latter case, the offender may be:

• an employee who covers misappropriation of money from their employer by obtaining fraudulent GST refunds to ‘replace’ the money the employee has stolen, or
• the operator of the business

Question 39

What offences are normally involved in a Category B Company Fraud investigation?

Answer 39

The Crimes Act offences are usually:

• Accessing a computer for dishonest purposes
• Dishonestly taking or using documents
• False accounting
• False statement by promoter
• Forgery

Question 40

What is required to prove the offending related to Category A and B Company Fraud?

Answer 40

The identity of the suspect is usually known and the purpose of the investigation is to prove the offending by:

• ensuring the informant provides all the documentary evidence
• establishing where the money went
• executing production orders or search warrants on the suspects bank accounts and home to seize evidence
• interviewing the suspect
• tracing the suspects actions

Question 41

What is a Category C Company Fraud investigation?

Answer 41

Commercial Fraud committed against the public by people who, either an an individual or through the guise of a company, entice people to invest money.

Question 42

What offences are normally involved in a Category C Company Fraud investigation?

Answer 42

The Crimes Act offences usually are:

• False statement by promoter
• Obtaining Credit by deception
• Obtaining ownership, possession or control by deception

Also consider whether the person has offended under the Financial Markets Authority Act 2011 or the Fair Trading Act 1986

Question 43

What is required to prove the offending related to Category C Company Fraud?

Answer 43

The identity of the suspect company and its principals is often known and the purpose of the investigation it to prove the offending by:

• confirming company officer details through a company search
• executing production orders or search warrants on the suspects bank accounts and premises to have evidential material produced or seized
• identifying, through the victims transactions, the details of the suspect company’s bank
• interviewing victims to determine the false representation and inducements made to them
• interviewing the suspect

Question 44

What is a Category D Company Fraud investigation?

Answer 44

Dishonesty offences committed by professional people in a position of trust, such as solicitors and accountants, against their clients

Question 45

What offences are normally involved in a Category D Company Fraud investigation?

Answer 45

The Crimes Act offences usually are:

• Dishonestly taking or using documents
• Theft by person in a special relationship
• Using forged documents

Question 46

What is required to prove the offending related to Category D Company Fraud?

Answer 46

The identity of the suspect is known and a professional body may already have carried out the enquiry. There will usually be a paper trail to follow, although it may be complex. The purpose of the investigation it to prove the offending by:

• gathering documentary evidence
• interviewing appropriate clients
• interviewing the suspect
• preparing and executing production orders or search warrants
• preparing the case in such a way that it can be understood by counsel and juries
• putting together the paper trail

Question 47

What resources are available to assist with a company fraud investigation?

Answer 47

• Commerce Commission which can assist in matters relating to the Fair Trading Act 1986 and pyramid selling
• Financial Markets Authority which can assist in matters relating to the Financial Markets Authority Act 2011 and the issuing of prospectuses
• Liquidators and receivers whom are normally accountants. These administer companies that are in liquidation and receivership
• Ministry of Business, Innovation and Employment. Possible sources are Companies Office, Insolvency Services, Official Assignee and Registrar of Companies
• NZ Customs which can assist in matters involving international travel and CAPPS alerts
• Police accountants and legal officers. Forensic accountants are based in Auckland, Wellington and Christchurch. Legal section can help in preparing production orders, search warrants and charges.

Question 48

When must the Serious Fraud Office be notified?

Answer 48

The serious fraud office investigates serious or complex fraud. It must be notified of:

• All fraud complaints with an actual or potential loss in excess of $2,000,000. The actual or potential loss must result from the fraud under investigation
• All fraud complaints where the facts, law or evidence is of great complexity. Such complaints could include those involving international financial transactions, computer manipulations or other complex methods of commission. However, complaints involving international financial transactions or computer manipulations that are simple or straight forward do not fall into this category
• Any fraud complaint of great interest or concern; for example, fraud involving a public figure

The office will determine whether the complaint involves serious or complex fraud. Do not refer a complaint to the office in order to avoid carrying out a difficult investigation.

Question 49

Who can notify the serious fraud office?

Answer 49

Must be made by employees who have been appointed by the district commander.

Question 50

What is the notification procedure?

Answer 50

• make the initial notification by telephone to discuss the case and ascertain if it is necessary to forward the file to the office.
• The Serious Fraud Office will within 5 days consult with the Police employee who made the notification and advise whether the complaint is one of serious or complex fraud and whether the office will investigate it
• An agreement must be reached between the Police and the office on which agency will carry out the investigation. If the investigation is to be carried out by the Police, the officer will return the file and if the office is to carry out the investigation, the file will be forwarded to them (if it has not already been done)
• If Police want to retain responsibility for the investigation and an agreement to this effect can not be reached, the district commander must notify the director of the Serious Fraud Office in writing.
• The Director of the Serious Fraud Office may notify the Commissioner of Police that the office wants to assume responsibility for the investigation under s11 of the Serious Fraud Office Act 1990. The matter must then be resolved as provided by the act.

Question 51

Does an investigator for the Serious Fraud Office have a power of arrest?

Answer 51

No - consequently there are occasions when Police will be asked to arrest the suspect on their behalf.

Question 52

What must be completed before making an arrest without warrant on behalf of the Serious Fraud Office?

Answer 52

Before making an arrest:

• the SFO must provide to the CIB officer assigned to facilitate the arrest, a written report that outlines sufficient level of evidence necessary to make an arrest pursuant to s315 CA61. This includes providing key documentary evidence for inspection.
• The report must identify the rationale for arrest as opposed to summons or other means of initiating the prosecution
• The CIB officer must be satisfied that the appropriate grounds exist for the arrest to be made, before action is taken
• The SFO prepares and files the hard copy charging document for each offence. The SFO cannot electronically file a charging document, Only one charging document is required for the initial arrest.

Question 53

What is process for arresting pursuant to a warrant?

Answer 53

The SFO is responsible for filing the charging document and seeking a warrant in lieu of summons.

Once issued, the warrant must be referred to Police for action.

Question 54

What is the procedure after an arrest is made on behalf of the Serious Fraud Office?

Answer 54

The suspect is taken to the nearest watchouse for processing.

Watchouse staff must then:

1. Fingerprint and photograph the prisoner
2. Completed the custody module / charge sheet, and clearly endorse it on the front with the words “Arrest on behalf of the serious fraud office”
3. Enter the file on the DOC LOC system. Code the file ‘2Z Other Service’ and include the SFO and the suspects particulars as subjects on the cover sheet
4. Check the identity of the suspect and if no PRN exists, create a new identity (create person transaction). Endorse the PRN on the charge sheet, fingerprint form and photograph card.
5. The written report that outlines the sufficient level of evidence necessary to make an arrest must be attached to the police file and the court date endorsed on the file.
6. No statistics are required and the file must be clearance closed as “Reported”. The Police file is then filed.

Question 55

What is the Serious Frauds Responsibilities after an arrest has been made on their behalf?

Answer 55

• Advising Police if the defendant is to be bailed otherwise the defendant must remain in custody until the next available hearing date.
• The SFO is responsible for filing all charging documents prior to the first appearance of the defendant in court
• all prosecution action including providing counsel to attend the initial and all subsequent court appearances

Question 56

What is the Police responsibility following an arrest and processing of the defendant on behalf of the Serious Fraud Officer?

Answer 56

• Supplying the SFO with the PRN
• Police must not in any circumstances represent the SFO in court (under the Criminal Procedures Act, proceedings can only be conducted by the prosecuting agency)