Conspiracy to Defraud Explained
Conspiracy to defraud cases are often among the most complex. The mention of the word conspiracy can cause real worry when a person faces prosecution or investigation. So what is conspiracy to defraud, and should it be considered any more serious than any normal fraud allegation? What type of approach should a client expect from a criminal solicitor or fraud specialist if he or she wants to avoid being convicted?
At Mary Monson Solicitors, our criminal lawyers have experience in these cases going back to the 1980s. By the 1990s we were regarded as national specialists in this area. Every year we are retained by new clients charged with fraud cases often involving several millions of pounds of benefit. These cases vary from less sophisticated frauds to more advanced frauds.
Three examples of cases in which we have acted within the last year include:
- A multi million pound conspiracy to defraud a credit card company out of funds laundered through iTunes by alleged fake professional recording artists
- A multi million pound conspiracy to sell illegally obtained online music vouchers on eBay
- A sophisticated weighbridge fraud conspiracy involving 12 defendants
We recognise that any criminal allegation can put a huge blot on the accused person’s life. Many people facing these allegations are normal people with little or no history with the police. It is a criminal lawyer’s job to be sensitive to clients, and to have the skill and the strength to fight for them in the way that clients would if they could defend themselves.
For anyone accused of a conspiracy to defraud offence, we have included below a free basic guide to how the law works below.
In layman’s terms, a conspiracy is a plan between two or more people to commit an offence or offences. The offences don’t have to have actually been carried out for the conspiracy to take place. Conspiracy is a legal principle which can apply to any offence. It dates back to the pre-civil war era when fear of plans (or conspiracies) to overthrow the monarchy was high. Conspiracy to defraud has developed not as a result of statute (parliament created law) but as a result of slow development through previously decided cases.
The law has evolved so that two forms of conspiracy to defraud exist:
Conspiracy to expose a person to loss or risk
The first is an agreement between two or more people to dishonestly deprive someone of something that he or she is entitled to. This can also include just exposing the person to an economic risk or disadvantage. There does not have to be an intention to deceive the person.
Conspiracy to deceive a person who is in a position of responsibility
The second version of the offence requires two or more people to have a dishonest agreement to defraud someone by deceiving that person into acting against his or her duty. This often involves frauds where public officials are deceived and the fraud occurs as a result, or can perhaps even include people who owe a duty to, for example, their clients or even their employers.
Either form of the offence is capable of overlapping with the offence of statutory conspiracy where the agreement would necessarily involve the commission of an offence and would also involve a fraud being practised on another person. In these circumstances, the prosecution has a choice as to which kind of charge to put.
Why is Conspiracy to Defraud used instead of the Fraud Act offences?
The Attorney General (a major government adviser on legal practice), has stated that the new Fraud Act offences (designed to include specific types of modern fraud) should always be used in preference to Conspiracy unless:
- The Fraud Act offences don’t reflect the nature of the offence – this could include situations in which a fraud has definitely taken place, and the accused appear guilty, but it is difficult to say with certainty who did what, but that a plan certainly existed, and therefore a conspiracy. This can be particularly relevant in high tech frauds where the data or equipment examined does not give much of a clue as to who actually committed the offence itself.
- Where splitting the case into the different Fraud Act offences might require a confusing number of different charges or separate trials. This would make the case both needlessly complicated and expensive.
Other types of agreements which could result in the prosecution choosing to use conspiracy to defraud include:
- An agreement to conceal a bank’s losses or liabilities from its shareholders, creditors and depositors
- An agreement by company directors to conceal secret profits from the company
- An agreement to falsify hire-purchase or credit applications, in order to get lenders to make loans they would otherwise not be willing to make
- or an agreement to make pirate copies of films
As stated above, the prosecution often use conspiracy to defraud as an alternative to Fraud Act offences because, as in (a) above, it is difficult for them to know who in the conspiracy did what. This should raise serious questions in the mind of the criminal defence team as to whether this means that there isn’t enough evidence to convict all defendants in the first place, and the prosecution are simply trying to lump all the defendants together.
In short, are the prosecution simply throwing mud and seeing what sticks? These are questions that a specialist fraud lawyer should be looking at very closely in deciding the strategy his or her client might adopt. One issue is whether the client should answer any questions at all, either from the police or the prosecution barrister. The defence team may decide which path to take based on a sense that the prosecution have brought the conspiracy charge out of desperation, and not convenience.
The defence’s jury speech may then be better if it focuses on the lack of evidence, instead of focusing on having a war with the evidence that there is. These issues are complex, and no answer is right or wrong every time. The important thing is to be strategically aware, so that if these issues arise, the defence is ready to take advantage, or alter the approach it is taking if necessary.
The Prosecution Must Prove Dishonesty
Dishonesty is of course relevant in all fraud cases. Unless the defendants can be shown to have acted dishonestly, there can be no fraud. In a conspiracy, a participant in the fraud who didn’t know what the fraud was about, or that he or she was acting dishonestly, cannot be convicted. This may be particularly important in cases where the client is an employee or not the major organiser, and might not have known what was going on.
There is a two stage test for whether someone has been dishonest: the first stage of the test is that according to the standards of reasonable and honest people what was done must have been dishonest. The second stage of the test is that the defendant himself must have realised that what he was doing was (by the standards of reasonable and honest people) dishonest.
Which Court and What Length of Sentence?
Conspiracy to defraud can be heard only at the Crown Court. It is an offence at Common Law which means it is an offence created by previous decided cases. It is punishable by up to ten years’ imprisonment or a fine or both, although sentences of the maximum length are quite rare, and are usually only given in the most serious cases.
The Importance of the Evidence
In any conspiracy case there will be some defendants who are more easily shown to be involved at the sharp end of the offending than others. It can be a classic technique in well run criminal operations to have a ‘fall guy’ who is the person in the conspiracy who is on the front line, risks being linked directly to the crime, but is actually the fraud’s least important player.
The police will often investigate on the basis that the major players in the fraud are hiding behind the scenes, and will focus on apparently innocent links with the more obviously guilty defendants. These links may include phone billing evidence, a money trail (including money transfers, unexplained assets such as property etc.), or surveillance.
What is the best approach in a Fraud Conspiracy Case?
There is no single answer to the question of good preparation in fraud cases. The set of different resources and skills required is closer to the workings of a combination lock than a single key. Some of the fundamentals that a client might expect of his or her solicitor include:
- A knowledge of business and commerce if applicable
- The ability to predict the prosecution’s motivation and strategy and outflank it
- Knowing the evidence in the case to a high degree
- Really getting to know the client and the culture of the relationships in the case
- Choosing an excellent and appropriate barrister