Fraud - Civil vs. Criminal FAQs

1) Is there a difference between civil fraud and criminal fraud?

2) Is there a difference in the burden of proof in civil fraud and criminal fraud matters?

3) What sanctions can be imposed on a defendant?

4) Will a defendant be ordered to repay me my money?

5) I am a victim of fraud - should I report the matter to the police or pursue the defendant through the civil courts or both?

 - Advantages of civil proceedings

 - Advantages of criminal proceedings

6) Do I have to report a fraud to the police?

7) Do I have to choose between the criminal and civil justice systems?

 - Conclusion

1) Is there a difference between civil fraud and criminal fraud?

There are many differences, but in short civil fraud is pursued by the victim(s) by way of a private action in the civil courts to seek recovery of the sums/assets which have been taken and/or the payment of compensation/damages to the victim(s). The decision in a civil trial will be made by a Judge.

Criminal fraud is a criminal offence which will be prosecuted by the prosecuting authorities (If the prosecuting authorities are not prepared to bring proceedings, in certain circumstances an individual or an entity can bring a private prosecution in the criminal courts against a defendant (and in respect of other offences)). In the criminal courts (Magistrates’ Court or Crown Court) with the sanctions likely to be a fine and/or imprisonment. The decision in a criminal trial will be made by a jury.

2) Is there a difference in the burden of proof in civil fraud and criminal fraud matters?

In civil proceedings the burden of proof is on the victim to prove “on the balance of probabilities” that the defendant committed the alleged fraud.

In criminal proceedings the burden of proof is on the prosecution to prove “beyond reasonable doubt” that the defendant committed the alleged fraud.

3) What sanctions can be imposed on a defendant?

In civil proceedings a successful victim may obtain an order that the defendant repay the money/assets taken and or pay damages to the victim. There is no sanction by way of punishment.

Depending on the offence for which the defendant is convicted, the court in which he is convicted and the value of the fraud, a criminal Judge can impose a prison sentence of up to 10 years and/or an unlimited fine.

4) Will a defendant be ordered to repay me my money?

In civil proceedings a successful victim may obtain an order that the defendant repay the money/assets taken and or pay damages to the victim. It is possible very quickly to obtain judgment/reach settlement in certain circumstances, e.g. where you have very strong evidence against the defendant.

If the defendant is convicted, the prosecuting authority can seek a compensation order against the defendant; this requires a convicted defendant to pay compensation to his victim(s). (This should not be confused with a confiscation order which requires a convicted defendant to pay the amount of his benefit from crime to the government, not the victim.)

5) I am a victim of fraud - should I report the matter to the police or pursue the defendant through the civil courts or both?

The primary consideration is do you want to try and get your money back?  If the answer is yes, then you need to bring civil proceedings against the defendant, maybe in parallel with reporting the matter to the police/SFO.

Advantages of civil proceedings

• Proceedings can be commenced and ancillary orders (e.g. freezing orders) can be obtained very quickly, without the uncertainty associated with whether a prosecuting authority will investigate the case.
• The main thrust of civil proceedings is the recovery of, or compensation for, losses suffered by the victim. If successful, you will obtain a judgment against the defendant which can be enforced against the defendant’s assets; this is how you are financially compensated for your loss. In criminal proceedings unless you can overcome the high hurdles to persuade the prosecutor to seek a compensation order (following a conviction) there will be no financial compensation for you.
• You are in complete control of whether to bring civil proceedings and how those proceedings progress. If you report a matter to the police/prosecuting authorities there is no guarantee that the defendant will be investigated or prosecuted and you have no control over the investigation or prosecution, or any publicity in respect of the investigation or prosecution. Apart from giving a statement to the police and possibly evidence at trial, you are unlikely to be involved.
• During the civil proceedings there is the process of “disclosure” which means that the defendant (as well as the victim) must disclose documents which may support your case and may assist in tracing the defendant’s assets.
• In civil proceedings the standard of proof is less – you have to prove your case on “the balance of probabilities”. In criminal matters the prosecution has to prove their case “beyond reasonable doubt”, so before you can expect any form of recovery or retribution the criminal case must be proved to this higher criminal standard.
• A variety of court orders are available to you to assist in preserving the defendant’s assets and obtaining information from the defendant and his/her bank, for example freezing orders, search orders, Banker’s Trust orders.
• It is much quicker to bring, complete and obtain judgment in civil proceedings than it is for the authorities to investigate and prosecute a criminal matter and then, following a conviction, seek a compensation order.
• Civil trials tend to be shorter than criminal trials.
• English civil judgments can be enforced in foreign jurisdictions enabling victims to seize the assets of the defendant even if held outside England and Wales.

Advantages of criminal proceedings

• The police/SFO have wider powers of investigation than you or your lawyers, for example, entering homes and business premises to execute search warrants (without notice), accessing bank accounts, telephone records and confidential information not available to the public, as well as interviewing witnesses under compulsion. 
• If convicted, the defendant may receive a custodial sentence and/or a hefty fine.  The fact that the defendant has been sent to prison may go someway to compensating you, even though you may not receive any financial compensation. 
• If there are parallel investigations on-going in different jurisdictions the law enforcement bodies in those jurisdictions may cooperate, for example, by pooling evidence which may make it easier to obtain a conviction. 
• You are not responsible for the costs, whereas in civil proceedings you are responsible for the costs (although if successful you may obtain an order for costs against the defendant). 

6) Do I have to report a fraud to the police?

No, in the UK there is no legal obligation to report a fraud to the police or to any other body, unless you and/or your business are part of a regulated sector that has a duty to do so.

7) Do I have to choose between the criminal and civil justice systems?

No, the two systems can work together. There is nothing to prohibit a civil claim following a criminal claim, or vice versa – or even both happening simultaneously. Simultaneous proceedings are allowed unless the defendant would face a real risk of serious prejudice which may lead to injustice in the civil proceedings, the criminal proceedings or both. 

Conclusion

The decision whether to opt for civil or criminal proceedings to pursue a defendant is rarely straightforward. It requires the application of a range of complex issues to the facts of your case. Matters are made even more difficult because this decision often needs to be made within a short period of time and without all the necessary information. To ensure the best possible outcome it is crucial that victims of fraud take professional advice from experienced lawyers on the best way to navigate the civil and criminal jurisdictions and how those jurisdictions relate to the facts at hand.