Fraud LGS 8

Question 1

INTRODUCTION
Problems with old law – 2006 act abolished old numerous offences of deception.

Answer 1

Solution – one single act of fraud – many ways of committing it.
Old Offences over complicated.

Question 2

OFFENCE OF FRAUD

What is fraud? An act that has a cheating / conning appearance.

Fraud not defined by Fraud Act, by implication confined to conduct falling within sections 2, 3 & 4 of the FA, i.e., there are 3 different ways of committing the offence of fraud (s.1).

Answer 2

s. 2 FRAUD BY MAKING FALSE REPRESENTATION
s. 3 FRAUD BY FAILING TO DISCLOSE INFORMATION
s. 4 FRAUD BY ABUSE OF POSITION

Question 3

FRAUD BY FALSE REPRESENTATION (s. 2)

S.2 FA provides:

(1) A person is in breach of this section if he-
(a) dishonestly makes a false representation, and (GHOSH TEST)
(b) intends, by making that 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 may be, untrue or misleading.

Question 4

Elements

Actus Reus

Mens Rea

Answer 4

Actus Reus 1) makes a false representation

Mens Rea 2) dishonestly
+3) knowing the representation is or might be untrue or misleading
4) with intent to make gain or cause loss or risk of loss to another

Question 5

Actus Reus

MAKING A FALSE REPRESENTATION

False representation wide concept partially defined by the Act. D does not need to obtain anything as a result of the representation and the representation does not even need to be communicated, so long as it is made.

Answer 5

s.2 (3) “Representation” means any representation as to fact or law, including a
representation as to the state of mind of —
(a) the person making the representation, or
(b) any other person.
(4) A representation may be express or implied.”

S. 2 (3) does not define what amounts to a ‘representation’, but it does tell us what it must be about.

Question 6

Statement of fact/law/state of mind

Answer 6

Fact: This bracelet is solid 24 carrot gold, (I know its only gold plated) false representation of fact.
Law: Less common – dodgy lawyer – misrepresents the legal effect of a document, or where such a lawyer tells their client htat they are not entitted to their deposit back when sale of house falls through and solicitor keeps it.
Implied statement of a person’s state of mind: D implies he will pay for a meal he sits down for.

Question 7

It does not include a statement of opinion

A salesman may state opinion not fact – “I think this is gold” where D is not held to have special knowledge. Just opinion.

Assertion that an opinion is genuinely held when it is not would be false representation as to state of mind of the maker of the statement.

A representation may be express or implied (S. 2 (4)).

Answer 7

(S. 2 (4)).No limitation on way representation is made. can be by words or conduct.
Can be written, spoken, posted on a phishing website, spoken into a Dictaphone or sent by email.

Question 8

A representation can be implied by conduct.

DPP v. Ray [1974]

R. v. Lambie [1982]

A representation can be made through body language –

A representation can be about identity

Answer 8

E.g., someone orders a meal in a restaurant implies by his conduct that he (or another) intends to pay for it.

Using card states you have the authority to use the credit card.

Nodding / wearing uniform.

using a false identity to open a bank account.

Question 9

A representation can be by omission -

(DPP v Ray)Rai [2000]

A representation can be made to a machine (Section 2 (5))

Answer 9

Staying silent usually ok – not caught under AR of the offence. Different from staying silent when there is a change of circumstnactes. Held that by saying nothing, he impliedly represented needs were unchanged. D failed to inform Local authority that Disabled mother had died, did not want to loose a home improvement grant.

e.g. person enters number into a CHIP and PIN machine or a bank ATM.

It may become an issue as to when, under s. 2 (5), false representation is made. When the card is pushed into the card reader, when the PIN number is typed or when “enter” is pressed.

Question 10

Silence

Firth (1990)

note s.3

FALSE REPRESENTATION

Answer 10

Appellant was consultant who worked for NHS and privately. Hospital made claim as he failed to inform them that private patients had used NHS beds etc.

FA creates offence of fraud by failing to disclose information. This type of case clearly falls within s.3.

s.2(2) representation is false if -
it is untrue or misleading

Question 11

Untrue, False or >> Misleading (less than wholly true)
Untrue or Misleading less than wholy true & capable of an interpretation to the detriment of the victim.

Mens Rea

D MUST KNOW HIS REPRESENTATION IS OR MIGHT BE UNTRUE OR MISLEADING

Answer 11

i) D must know his representation is or might (a risk)be untrue or misleading;

(ii) D’s intention in making the representation must be to a) make a gain for himself or
another or B) to cause loss to another or C) to expose another to the risk of loss; and
(iii) D must act dishonestly.

Actual Knowledge
Montila [2004]
In a case about money laundering the House of Lords said:
Loook at the facts – what the actual position is and then what was D’s mens rea relating to it.

Question 12

WITH INTENT TO MAKE A GAIN OR CAUSE A LOSS OR RISK OF LOSS TO ANOTHER

S.5

(Section 5 (3)).

(Section 5 (4)).

Answer 12

S.5 defines gain or loss and restricts them to gain or loss in money or other property whether temporary or permanent. Property means any property whether real or personal (including a thing 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

This mirrors s.34(2) Theft Act 1968 re blackmail so it is likely that existing case law will be followed.
D’s intention has to be to make a gain or loss by means of the false representation.
No loss or gain need actually occur.

Question 13

DISHONESTY

Answer 13

Dishonesty will be construed in line with the Ghosh test:
1.Was what was done dishonest by the ordinary standards of reasonable and honest people?
If no, acquit; if yes;

2.If so, did D realise what he was doing was, by those standards, dishonest?

There is no equivalent s. 2 Theft Act 1968 provision within the FA.

Question 14

FRAUD BY FAILING TO DISCLOSE INFORMATION (s.3)

S.3 makes it an offence to commit fraud by failing to disclose information to another person, where there is a legal duty to disclose that information. No requirement for a result from failure to disclose! Not a moral duty – it is legal and set in civil law.

Answer 14

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) he 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.

Actus Reus 1)Fails to disclose to another information
2) Under a legal duty to disclose
Mens Rea 3) Intention by failure to disclose to make a gain or cause a loss
4) Dishonesty

Question 15

Actus Reus
LEGAL DUTY TO DISCLOSE

When does a legal duty to disclose arise?

No de minimis provision

Answer 15

he FA does not tell you. However, ‘legal duty’ refers to a duty in civil law. The Law Commission’s Report on Fraud, provides the following instances as to when a legal duty may arise:

i. from statute (such as the provisions governing company prospectuses),
ii. from the fact that the transaction in question is one of the utmost good faith (such as a contract of insurance),
iii. from the express or implied terms of a contract,
iv. from the custom of a particular trade or market,
v. from the existence of a fiduciary relationship between the parties (such as that of agent and principal, solicitor (or other professional person) and client; or
vi. from a change in circumstances whereby an initially true representation has become untrue to the representor’s knowledge while it is still operative.

No mention in the FA that failure to disclose must relate to material or relevant information.

Question 16

Mens Rea

s.2 FA

Answer 16

s.2 FA requirements of :
D’s intention in failing to disclose the information must be to make a gain for himself or another or to cause loss to another or to expose another to the risk of loss; and

D must act dishonestly.
There is no requirement that D knows or be aware that he may have a legal duty to disclose and D cannot rely on incompetence. These will, however, relate to whether D was dishonest.

Question 17

FRAUD BY ABUSE OF POSITION (s.4)

S.4 provides:

Answer 17

(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 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 18

Elements

AR & MR

Answer 18

A.R. 1) D occupies a position in which he was expected to safeguard, or not act against, the financial interests of another

2) Abuse of that position
M.R. 3) Dishonesty
4) Intention by that abuse to make a gain/cause a loss

D has to occupy position where he is expected to safeguard, not act against, financial interests of another. offence is entirely offender focused as it is complete as soon as D has abused his position.Iimmaterial whether any gain or loss is made.

Question 19

Actus Reus
POSITION

OCCUPIES

ABUSE

Answer 19

No guidance from the FA on duty to safe guard the interests of others.

But to restrict the parameters of the offence, the Law Commission said it would be for the Judge to rule on whether, by virtue of his position, D is expected to safeguard the interests of V.

The section applies only in relation to the position D ‘occupies’. The ‘abuse’ must arise while D is in occupation of that position. It is submitted that the use of information when D is not “in post” could fall outside s 4, although it would be different if e.g. D took steps towards plan whilst still in post.

‘Abuse’ is not defined in the FA as it is intended to cover a wide range of conduct. The word may well fall to be interpreted as an ordinary English word.

Question 20

FINANCIAL INTERESTS

OMISSION

Answer 20

This term is not defined. There is no restriction that the financial interests be regarded as long term

S 4(2) FA states a person may have abused his position even though his conduct consisted of an omission rather than an act. E.g. employee passing up chance of a profitable contract for his employer’s business so that a rival company wins the tender at the expense of D’s employer.

Question 21

Mens Rea
DISHONESTLY

INTENTION BY THAT ABUSE TO MAKE GAIN/CAUSE LOSS OR EXPOSE TO A RISK OF LOSS

Answer 21

Same meaning as for s.2 FA so the Ghosh test will apply.

Same meaning as for s.2 FA. The 3 fraud sections could overlap.
The Fraud Act creates a number of ancillary offences which we will not cover in so much detail.

Question 22

POSSESSION OF ARTICLES FOR USE IN FRAUD (s.6)

Elements \

Wide offence, which probably attracts case law from s. 25 Theft Act 1968 (going equipped for burglary or theft). s 6 offence is wider. Whereas for s 25 D is only liable ‘when not at his place of abode’, the s 6 offence can be committed anywhere. Thus the fraudster who works from home is caught by s 6 FA.

Answer 22

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

Actus Reus1) Had possession or control of
2) An article
Both 3) For use in the course of or in connection with any fraud
Mens Rea 4) Intention that the article would be so used

Question 23

AN ARTICLE
The meaning of ‘article’ is very wide. Virtually any article might be used in the course of or in connection with a fraud. E.g., credit card cloning devices

FOR USE IN THE COURSE OF OR IN CONNECTION WITH ANY FRAUD
Could be said to be both A.R. & M.R. issue.

Answer 23

It would also include paper, pens, PCs, printers and identity badges. S. 8 FA states “article” includes any program or data held in electronic form, so a program for generating credit card numbers or e-mails for use in phishing attacks are ‘articles’.

It is submitted that D must possess or control the article with the intention that it be used in the course of, or in connection with, a fraud. This is the interpretation given to the corresponding offence under s 25 TA

Question 24

Mens Rea

Answer 24

Mens Rea
Intention that it should be so used? (See discussion above.)

Question 25

s.7 MAKING OR SUPPLYING ARTICLES FOR USE IN FRAUD

Answer 25

(1) A person is guilty of an offence 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.

Question 26

Elements\

Actus Reus1) makes, adapts, supplies or offers to supply any article
2) for use in the course of or in connection with fraud
Mens Rea
3) knowing that it is designed or adapted for use in the course of or in connection with fraud (Section 7 (1) (a)) or
4) intending it to be used to commit or assist in the commission of fraud (Section 7 (1) (b).

Answer 26

Actus Reus
ARTICLE - As before.
MAKES/ADAPTS - Ordinary meaning
Mens Rea
KNOWING/INTENDING USE IN THE COURSE OF OR IN CONNECTION WITH FRAUD
“Knowledge” in Section 7 (1) (a) is a strict mens rea requirement.
In practice, the use to which the article can be put is likely to provide sufficient evidence of D’s state of mind. For example, articles such as:
o the kits that are attached to ATM machines to capture card details;
o forged credit cards or the equipment for making them;
o lists of credit card numbers;
o counterfeit goods presented as genuine;
do not have an innocent purpose that readily springs to mind.
The manufacturer of articles that are capable of being used in or in connection with fraud but have other innocent uses will not fall foul of this section unless he intends that it should be used in a dishonest way (Section 7(1)(b)).
If you are given a problem involving s.1 fraud, look out for s 6 & s 7 offences as well.

Question 27

OBTAINING SERVICES DISHONESTLY s 11 FA

Answer 27

1) A person is guilty of an offence under this section if he obtains services for himself or another
(a) by a dishonest act, and
(b) in breach of subsection (2).

(2) A person obtains services in breach of this subsection if
(a) they are made available on the basis that payment has been, is being or will be made for or in respect of them,
(b) he obtains them without any payment having been made for or in respect of them or without payment having been made in full, and
I when he obtains them, he knows
(i) that they are being made available on the basis described in paragraph (a), or
(ii) that they might be,
but intends that payment will not be made, or will not be made in full.

Question 28

Elements:

Actus Reus 1) obtains for himself or another
2) services
Mens Rea 3) dishonestly
4) knowing the services are made available on the basis that payment has been, is being or will be made for or in respect of them or that they might be and

Answer 28

BOTH 5) avoids or intends to avoid payment in full or in part.
Section 11 will cover circumstances where D obtains services by a dishonest act. S 11 is a result crime. It differs from sections 2,3 and 4 of the FA in that it requires the benefit actually to be obtained (not merely to have been intended). E.gs of conduct that may fall within the ambit of s 11 are:
• obtains chargeable data or software over the internet without paying;
• obtains a parking space in a pay-on-entry car park by putting a foreign coin in the slot;
• attaches a decoder to his TV to enable him to access chargeable satellite services without paying;
• uses the services of a members’ club without paying and without being a member;
• Climbs over a wall to gain entry to a football match for which an entrance fee is charged.
Actus Reus

OBTAINS A SERVICE
This is a result crime. D’s dishonest act must be a cause of the obtaining of a service. The obtaining may be for D or another.
It is not possible to commit this offence by omission alone.Note that the service may be provided via the use of a machine.

‘Service’ is not defined by the FA. However, the offence is restricted in that it only applies to services for which payment is required.

Question 29

WITHOUT PAYMENT

D must obtain the relevant service without paying for it or without paying in full for it.

Mens Rea
DISHONESTY

Answer 29

The Ghosh test applies.

KNOWLEDGE THAT PAYMENT IS REQUIRED OR MIGHT BE
offence is only made where D knows payment is required or might be. E.g., D parks his car in a public car park believing it is a free car park does not commit this offence. In these circumstances the element of dishonesty would also be missing.

Intent TO AVOID PAYMENT IN FULL OR PART
The Law Commission gives the example of parents who lie about their child’s religious up bringing in order to secure a place at particular fee-paying school, but has every intention to pay. Such behaviour is not caught by s 11.

Would the parents have committed a fraud by false representation contrary to s 2 FA?
No – parents do not have intent to gain or cause loss in the sense required for that offence.