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Civil Fraud Quarterly Round-Up: Q3 2021
Mary Young
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.
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.
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.
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.)
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.
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.
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.
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.
This is almost exclusively all that they do, it's in their DNA and they've got strength in both the civil and criminal side of things."
Chambers and Partners, Global-wide Litigation Support, 2021
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