Partner expulsion case offers lessons to LLP firms and their partners
Earlier this week The Times reported that “Fraud victims are being '"badly served'" by the Serious Fraud Office (SFO), which only recovered £1.3 million in compensation last year - despite UK fraud losses of £717 million..”
In that article Kingsley Napley's Stephen Parkinson said "Given the sums involved in SFO investigations, this is a very poor showing. An absolute priority in any fraud case is to secure the money quickly through a restraint order; if possible before the fraudster knows that an investigation is under way. To leave it for two months on average is simply not good enough."
It has long been our recommendation that if the victims of fraud want their money back, the best course of action is to bring proceedings in the civil courts. The sole aim of such civil proceedings is the recovery of money, whereas the primary aim of an investigation by the police or SFO is to prosecute the fraudster.
A victim of fraud needs to respond quickly to a fraud by obtaining a freezing order and/or search order to prevent the dissipation of assets and to obtain disclosure of information to enable the fraudster’s assets to be traced. We can also consider seeking an order against the financial institution into which the fraudster persuaded the victim to pay monies, forcing the financial institution to release information about the fraudster’s assets which can identify the whereabouts of the stolen funds.
An order requiring the fraudster to deliver up his/her passport is also available to prevent him/her fleeing the jurisdiction.Such orders can be obtained from the civil courts within a very short timeframe, within days of the victim discovering the fraud, and without notice to the fraudster.
Although the authorities do have powers to freeze (restrain) assets, search premises and take possession of passports the figures show that they are not taking such action or are not doing so quickly enough meaning that the fraudsters have dissipated the assets, destroyed the evidence and/or skipped the country.
Once the fraudster’s assets have been frozen (or even better recovered), then the victim can consider reporting the matter to the police or the SFO for them to consider criminal proceedings.
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