Fraud

Question 1

What three ways can fraud be committed?

Answer 1

• False representation (s2)
• Failing to disclose information (s3)
• Abuse of position (s4)

Question 2

What is “Fraud”?

Answer 2

s1 Fraud Act 2006

(1) A person is guilty of fraud if he is in breach of any of the sections listed in subsection (2) (which provide for different ways of committing the offence).

(2) The sections are—
(a) s2 (fraud by false representation),
(b) s3 (fraud by failing to disclose information), and
(c) s4 (fraud by abuse of position).

Penalty:

• Summarily– 6 months and/or fine.
• Indictment– 10 years and/ or fine.

Question 3

What is the ‘Actus Reus’ of Fraud?

Answer 3

All fraud offences under s2, s3 and s4 are committed when the defendant carries out the actus reus of the offence intending to ‘make a gain for himself or another’ and/or ‘to cause loss to another’.

Question 4

What is the meaning of ‘Gain’ and ‘Loss’ for fraud offences?

Answer 4

s5 Fraud Act 2006

(3) “Gain” includes a gain by keeping what one has, as well as a gain by getting what one does not have.
(4) “Loss” includes a loss by not getting what one might get, as well as a loss by parting with what one has.

IMPORTANT: these relate only to money and other property (inc intellectual property).

Question 5

Fraud by False Representation

Answer 5

s2 Fraud Act 2006

(1) A person is in breach of this section if he—
(a) Dishonestly makes a FALSE representation, and
(b) Intends, by making the representation—
(i) To make a GAIN for himself or another, or
(ii) To cause LOSS to another or to expose another to a risk of loss.

(2) A representation is false if—
(a) It is untrue or misleading, and
(b) The person making it knows that it is, or might be, untrue or misleading.

Key points:

• Can be communicated in words or conduct.
• Can be a misrepresentation.
• An untrue statement made honestly would not suffice.

Question 6

What is an example of fraud by false representation?

Answer 6

Phishing

This is the practice on sending out emails in bulk, usually purporting to represent a well known brand in the hope of sending victims to a bogus website that tricks them into disclosing bank account details.

Question 7

Fraud by Failing to Disclose Information

Answer 7

s3 Fraud Act 2006

A person is in breach of this section if he—

(a) Dishonestly fails to disclose to another person information which he is under a legal duty to disclose, and

(b) Intends, by failing to disclose the information—
(i) To make a gain for himself or another, or
(ii) To cause loss to another or to expose another to a risk of loss.

Question 8

What are examples of fraud by failing to disclose information?

Answer 8

Applying for car insurance, not disclosing the points you’ve got in the past year, gain cheaper car insurance.

A person internationally failed to disclose information relating to a heart condition when making an application for life insurance, gain cheaper life insurance.

When recipients of benefits dishonestly fail to disclose income etc that they are legally required to disclose, gain income AND benefits.

Question 9

Fraud by Abuse of Position

Answer 9

s4 Fraud Act 2006

(1) A person is in breach of this section if he—
(a) Occupies a position in which he is expected to safeguard, or not to act against, the financial interests of another person,
(b) Dishonestly abuses that position, and
(c) Intends, by means of the abuse of that position—
(i) To make a gain for himself or another, or
(ii) To cause loss to another or to expose another to a risk of loss.

(2) A person may be regarded as having abused his position even though his conduct consisted of an omission rather than an act.

Question 10

Possession or Control of Articles for Use in Frauds

Answer 10

s6 Fraud Act 2006

(1) A person is guilty of an offence if he has in his possession or under his control any article for use in the course of or in connection with any fraud.

Penalty:

• Summarily– 6 months and/or fine.
• Indictment– 5 years and/ or fine.

Question 11

Possession or Control of Articles for Use in Frauds

What is considered an ‘article’ for this section?

Answer 11

Can be anything whatsoever.

It includes any program or data held in electronic form, e.g:

• A computer program that generates credit card numbers.
• A computer template that can be used for producing blank utility bills.
• A computer file that contains lists of other people’s credit card details

Question 12

False Accounting Offence

Answer 12

s17 Theft Act 1968

(1) Where a person dishonestly, with a view to gain for himself or another or with intent to cause loss to another,—
(a) Destroys, defaces, conceals or falsifies any account or any record or document made or required for any accounting purpose; or
(b) In furnishing information for any purpose produces or makes use of any account, or any such record or document as aforesaid, which to his knowledge is or may be misleading, false or deceptive in a material particular;

…He shall commit an offence

Penalty:

• Summarily– 6 months and/or fine.
• Indictment– 7 years and/ or fine.

Question 13

What is an example of a false accounting offence?

Answer 13

Failing to make an entry in an accounts book, altering.a till receipt or supplying an auditor with records that are incomplete may, if accompanied by the other ingredients, amount to an offence.

Question 14

Question: Jenny has an argument with her father Albert over money. When he isn’t looking she takes his debit card from his wallet and goes to the local shops. She buys cigarettes and wine and gives her fathers debit card to the cashier who processes the items. The cashier does not read the card.

What offences has Jenny committed?

Answer 14

• Jenny has committed the offence of Theft of the card and also Fraud by False Representation.
• In relation to the fraud, Jenny has deliberately used the card knowing it noes not belong to her and is falsely representing she is allowed to use it.
• The fact the cashier does not read the card is irrelevant.

Question 15

Question: Albert needs work done to his gutters. Alan has a look and estimates the job at £2000. He tells Albert however that the work will cost in excess of £6000. Albert agrees and pays £6000 and Alan carried out the work.

Has Alan committed an offence, if so, what?

Answer 15

• Alan has committed an offence of fraud.
• He has misrepresented the work needed and charged vastly over the odds.
• Alan is making a false representation to make gain (£6000) for himself.

Question 16

Question: Iffy is an antique dealer. Ted, comes in with a Rolex. Iffy recognises that it is work over £10,000. Iffy tells Ted that it is a fake and worth no more than £50. He suggests that he takes it to another dealer to verify, giving him a name and address. Iffy calls the other dealer and tells him to value the watch at £50 and to buy it off him. They can split the profit.

What fraud offence has Iffy committed?

Answer 16

• Iffy has committed the offence of Fraud by Abuse of Position.
• Remember Abuse of Position can also be committed through an omission such as a disgruntled employee who fails to take home the change of a crucial contract, allowing a rival company to get it and cause a loss to his employer.

Question 17

Making or Supply Articles for Use in Frauds

Answer 17

s7 Fraud Act 2006

A person is guilty if he makes, adapts, supplies or offers to supply any article:

(a) Knowing that it is designed or adapted for use in the course of or in connection with fraud, or
(b) Intending it to be used to commit or assist in the commission of fraud.

Penalty:

• Summarily– 12 months and/or fine.
• Indictment– 10 years and/ or fine.

Question 18

Obtaining Services Dishonestly

Answer 18

s11 Fraud Act 2006

A person is guilty of an offence if he obtains services for himself or another…

(a) By a dishonest act or
(b) Services have been made on the basis that payment has been, is being or will be made.
(c) He obtains them without any payment having been made and when he obtains them he knows that they are being made not he belief above (ie payment will be made)

But intends that payment will not be made, or will not be made in full.

Penalty:

• Summarily– 12 months and/or fine.
• Indictment– 5 years and/ or fine.

Question 19

Example of Obtaining Services Dishonestly?

Answer 19

Buying child tickets for a ski lift for adults, avoiding payment in full by deception.

If, intending to avoid payment, he/she slipped into a concert hall to watch a concert without paying for the privilege.

Question 20

Question: Patrick goes for a sports massage. This costs £45 for 30 minutes and payment is expected at the end. Patrick has the whole massage and then at the end states that he will not pay as he did not think it was very good. In fact, Patrick had always intended to say this to avoid paying.

What offence has been committed?

Answer 20

• Patrick has committed the offence of Obtaining Services Dishonestly.
• He knows that payment is due after the massage but never intended to pay, using the excuse that it wasn’t very good.

Question 21

Question: Timothy is a computer programmer. He creates a program on a USB stick that when placed into the computer allows the viewer to watch Pay Per View sporting events for free. He uploads 10 USB sticks with his software and sells them to his friends for £5 each.

What offence has Timothy committed?

Answer 21

• Timothy has committed the offence of Making or Supplying Articles for use in Frauds.
• In this case, he has made an article and supplied it to his friends so they do not need to pay for sporting programs that would normally cost money.

Question 22

Question: Matthew has a trick where he nips in the backdoor of the cinema and hides until the new film starts. He decides to do this on a Saturday morning to watch the new King Kong film. He waits until the door opens and sneaks in, sitting at the back and waiting for the film to start. What Matthew doesn’t know is that the cinema is running a promotion and all films are free to watch that day up until 6pm.

Has Matthew committed an offence of Obtaining Services Dishonestly?

Answer 22

• No, Matthew has not.
• Although Matthew would normally commit this offence, payment is not expected nor required and therefore he cannot be guilty of the offence, even though he doesn’t know.

Question 23

Making a False Instrument with Intent

Answer 23

s1 Forgery and Counterfeiting Act 1981

A person is guilty of forgery if he makes a false instrument, with the intention that he or another shall use it to induce somebody to accept it as genuine, and by reason of so accepting it to do or not to do some act to his own or any other person’s prejudice.

Question 24

Question: Jacques is a printer and decides to make a fake passport. He produces a high-quality forgery which would facilitate entry to most countries. His intention is to sell it for £1000. Jacques goes to bed that night and decides that what he has done is wrong. He destroys the passport and has no intention of ever making another one.

Has Jacques committed the offence of Making a False Instrument?

Answer 24

• Yes, the moment Jacques makes the passport he has committed the offence.
• It is irrelevant that it is never used only that it is made.
• The fact that Jacques has realised he has done wrong is mitigation and has no bearing on the actual offence. t

Question 25

Copying a False Instrument with Intent

Answer 25

s2 Forgery and Counterfeiting Act 1981

It is an offence for a person to make a copy of an instrument which is, and which he knows or believes to be, a false instrument, with the intention that he or another shall use it to induce somebody to accept it as a copy of a genuine instrument, and by reason of so accepting it to do or not to do some act to his own or any other person’s prejudice.

Question 26

Using a False Instrument with Intent

Answer 26

s3 Forgery and Counterfeiting Act 1981

It is an offence for a person to use an instrument which is, and which he knows or believes to be, false, with the intention of inducing somebody to accept it as genuine, and by reason of so accepting it to do or not to do some act to his own or any other person’s prejudice.

e.g Under 18 buying alcohol with fake ID.

Question 27

Using a Copy of a False Instrument with Intent

Answer 27

s4 Forgery and Counterfeiting Act 1981

It is an offence for a person to use a copy of an instrument which is, and which he knows or believes to be, a false instrument, with the intention of inducing somebody to accept it as a copy of a genuine instrument, and by reason of so accepting it to do or not to do some act to his own or any other person’s prejudice.

Question 28

Making a Counterfeit Note or Coin with Intent

Answer 28

s14 Forgery and Counterfeiting Act 1981

It is an offence for a person to make a counterfeit note or coin intending to pass it off as genuine.

A person cannot make a counterfeit note or coin without lawful authority.

*Also offences of Passing Counterfeit Notes with Intent or Having Custody or Control of Counterfeit Notes with Intent are governed under this act.

Question 29

Question: Tony decides that he will make some counterfeit Spanish currency. He does not have any Euro notes so instead decided to forge a thousand 100 Peseta banknotes. He mistakenly thinks that Pesetas can still be used in Spain, even though they have not been valid since 2002. He intends to spend them when he goes on holiday.

Has Tony committed an offence of making a counterfeit note?

Answer 29

• No, Tony has not committed an offence of making a counterfeit note.
• When it comes to foreign counterfeit notes, they must be in current use.
• British notes can be previously used notes and do not still need to be in current use.

Question 30

Question: Kit borrows his neighbour’s forged utility bill. He photocopies this a number of times with the intention to take it into a bank to assist him in opening an account. He returns the original to his neighbour who is fully aware of Kit’s actions.

What offence, if any has Kit committed?

Answer 30

• Kit has committed the offence of copying a false instrument with intent.
• He knows the utility bill is a forgery and has deliberately copied it. His intention is to use it to open a bank account.

Question 31

Fraud by False Representation

Does this offence of fraud apply where the representation is made using machines?

Answer 31

Yes – for example, where a person enters a number into a ‘chip-and-pin’ machine.

Question 32

Obtaining Services Dishonestly

If D sneaks aboard a lorry of a freight train and obtains a free ride, would D commit an offence under s11?

Answer 32

No – because the haulage companies does not provide such rides, even for payment.

Services provided for free not knowing they’re free also wound amount to an offence.