One of the most distressing aspects of a fraud investigation is the prospect of prison. Many people accused of fraud have never been in trouble with the police or been to prison and are terrified of the possibility. So is prison inevitable for fraud cases? Do the courts punish everyone involved in the case to the same extent? At Mary Monson Solicitors our lawyers have experience of complex and financial cases going back 30 years, and have been successful in hundreds of cases at keeping our clients out of prison. We have included some explanations of the key areas of the new Fraud Sentencing Guidelines below. While we hope that what we have provided is useful, it is not a good idea to just rely on these explanations alone for guidance in a specific case. Every case is different, and sentences can be affected by a number of factors. When in doubt, always consult a suitably experienced fraud criminal solicitor.
Note: It is important to remember when reading these explanations that sentences can often be reduced if excellent work is done by the solicitors and barrister in mitigation – this means showing the judge things about the situation and the defendant which put him or her in a better light. Character references, medical information, and extensive time spent preparing with the client can all be valuable ingredients to a fraud solicitor in a damage limitation plan which helps to reduce sentence or even to avoid prison.
The Fraud Sentencing Guidelines
In 2009 the Sentencing Guidelines Council, the government body responsible for deciding lengths of sentence, set out definitive sentence guidelines for Fraud Act offences sentenced by the courts after 26th October 2009. The guidelines apply only to adults.
The guidelines divide fraud offences into five types, which are listed below. This does not create new offences. These categories of fraud are only there to give judges an idea of what sentence to give. They are then split into levels of seriousness for that type of offence to give the usual length of sentence.
1. Confidence fraud
These are frauds where the perpetrator wins the confidence of the victim and obtains money or other property by deception. These include advance fee frauds, so called ‘419 scams’, foreign lottery scams and bogus charity scams. In short, they usually include any kind of fraud where someone is conned out of money or other assets. A common factor in many of these frauds is the targeting of vulnerable victims. Also, they will often be multiple frauds, i.e. many victims are deceived in the same way.
These offences are usually charged under the Fraud Act (section 1), where the maximum sentence permitted by law is 10 years imprisonment. For allegations of false accounting under the Theft Act 1968, 7 years is the maximum.
However, sentences of this length are relatively rare, and usually reserved for the most serious criminal organisations. They range in seriousness from large scale frauds to so called ‘one off’ confidence frauds.
Serious Large Scale Confidence Frauds
At the top end of the spectrum lie large scale confidence frauds involving the deliberate targeting of a number of victims. For this type of fraud, sentences of up to 7 years are common if the fraud is in excess of £500,000. Where the value is between £20,000 and £100,000, sentences of up to four years are more likely.
Less Serious ‘one-off’ Confidence Frauds
At the lower end of the spectrum are one-off frauds, in which only one deception has taken place. Where the victim is vulnerable, a typical sentence might range between a community based sentence and 6 months imprisonment, although this can increase to around 18 months where the amount of money is very large.
2. Possessing, making or supplying articles for use in fraud
‘Articles’ just means ‘things’. This can include false fronts for cash machines, computer programs for generating credit card numbers, lists of bank account details and lists of potential victims for confidence fraud. It can also include any item used for the manipulation or creation of credit cards, both false and genuine.
This type of offence is charged under the Fraud Act, which allows a theoretical maximum sentence of 10 years imprisonment for making or supplying articles, and 5 years for possessing articles. Maximum sentences are rare.
For possessing articles for use in a fraud, typical sentences might range from community based penalties for a fairly basic and not very sophisticated fraud to around 12 – 18 months for more serious and better organised frauds.
For making or supplying articles for use in a fraud, typical sentences can range from 6 months for a less sophisticated operation to between two and seven years for a skilfully planned fraud.
3. Banking, insurance and credit fraud
This includes obtaining a mortgage by supplying false details, payment card fraud and false claims on insurers.
These offences are usually charged under the Fraud Act (s. 1), where the maximum sentence permitted by law is 10 years imprisonment. Such sentences are usually only given rarely, and for the most serious cases.
For offences where the offence involves a calculated, professional fraud, which has taken place over a significant length of time, sentences might range from 4-7 years, where the amount is over £500,000. That sentence can be a lot shorter where the figure is below £100,000.
At the other end of the spectrum are cases which involve perhaps a single transaction and/or a fairly unsophisticated approach. These result in shorter custodial sentences, and, where the amount of money is much smaller, may result in a community based punishment.
4. Benefit fraud
This category includes both individuals who have been convicted of claiming fraudulently and people running sophisticated, high value benefit fraud rings. They are often treated very differently by sentencing judges.
The theoretical maximum sentences are 10 and 7 years, dependent on which law the defendant is charged under. To repeat, these lengths of sentence is extremely rare in most cases of benefit fraud.
Sentences of between 2 and 7 years are common for professionally planned operations, often involving a large benefit cheating syndicate. For single claimant benefit frauds, involving figures of less than 20,000, non custodial sentences are typical, but custody is not an impossibility where the offending has taken place over a long time.
5. Revenue fraud
This includes evasion of VAT, MTIC (Missing Trader) and carousel frauds.
These offences are considered to be serious where they are well organised and sometimes result in the loss of millions of pounds to the taxpayer. Carousel, missing trader, and alcohol duty frauds such as diversion frauds attract the highest sentences.
For figures under £100,000, where a fraud has evolved in a situation which was not fraudulent at the outset, a community based penalty might be a typical sentence.
However, where multiple frauds have taken place, and/or the fraud was intended from the beginning, sentences of up to 3 months are often passed for figures as low as £20,000.
Where the fraud is well planned, sophisticated, and the values are in the tens or hundreds of thousands, sentences of 3-5 years are often handed out.
How does a court decide how serious the offence is and how blameworthy the defendant is when sentencing?
To decide the seriousness of any fraud offence, the court considers the defendant’s culpability (this means how blameworthy they are) and any harm that the offence caused. The Judge will take the following into account when giving sentence:
- The extent to which the offence was planned or opportunistic
- Whether the fraud is part of a ‘professional’ operation
- Whether it was carried out over a long or short period
- The willingness of the defendant and his or her motivation in carrying out the offence
- The value of the money or property involved
- Whether the offender was in a position of trust (for example an employee)
- Whether a number of people were involved in the planning or carrying out of the offence
- The impact on the victim or victims, and how many there were
- Any risk of physical harm to another (e.g. burning down a building or staging an accident to obtain an insurance payment)
- Whether less damage or loss was intended than actually ended up taking place
- Whether the defendant was in any way entitled to any of the property
- Whether there has been an attempt to conceal or dispose of evidence
- Whether the victim(s) were vulnerable and / or deliberately targeted
- Whether someone’s identity has been used
The guidelines point out that fraud is not a victimless crime and can cause considerable harm to society and the economy beyond the immediate financial impact of the offence. An example of this could be a reduction in market confidence and confidence in certain industries, as well as damaging or even closing down businesses.
Fraud is also often used to fund serious organised crime that may target vulnerable people, such as in the case of drug supply and people trafficking. The judge may consider that the financial value of any loss may not reflect the full extent of the criminal operations it is funding.
Mitigating factors are aspects of the defendant’s case that can reduce the sentence a judge gives. In all fraud cases, they can include:
- Whether the defendant has any mental illness or disability
- Youth or age, if that means that they are less responsible
- The fact that the offender played only a minor role in the offence
- Whether the behaviour was not fraudulent at the outset, but circumstances changed
- Whether the defendant can show that incorrect advice from a third party contributed to the fraud taking place
- Where there is evidence that someone stopped offending before they were caught
- Whether there have been full admissions and cooperation with the authorities
- Whether the money has been given back voluntarily
- Where there has been extreme and undeserved financial pressure on the defendant before the fraud took place
Ancillary Orders – extra elements to a sentence
There are ancillary orders that a court can make on a defendant if he or she is convicted of a fraud offence. These are extra restrictions or requirements on a defendant affecting his or her activity, finances and property. These are quite controversial as they can result in, for example, a defendant being disqualified from acting as a company director for up to 15 years. In extreme circumstances a defendant can be forbidden from trading in a certain type of business for a period of up to 5 years, or even be required to report all of his or her financial dealings for up to 15 years. Some common ancillary orders include:
A court will consider making a compensation order in favour of the victim in any case where a victim has suffered financial loss or personal injury. Compensation can either be a sentence on its own or can be combined with another sentence, such as a fine, community order, or prison sentence.
Where a court takes the view that the defendant has benefited financially from the offence, the court must, in accordance with the Proceeds of Crime Act 2002, consider whether it is appropriate to make a confiscation order. For more information click the sections on Proceeds of Crime and Confiscation on the toolbar on the left of this screen.
A court can deprive a convicted defendant of property used or intended to be used to commit an offence. This could include, for example, computer software and hardware for manipulating credit cards, or computers used in advance fee or other IT based frauds.
A court may order that stolen goods are restored to the victim. Alternatively, it may order that money equivalent to the value of the goods is paid to the victim from money seized from the defendant or assets owned by the defendant to that value are transferred to the victim.
Disqualification from acting as a company director
When a person is convicted of an offence related to the running of a business (provided the offence is serious enough to be heard in the Crown Court) the court can ban that person from acting as a company director, for 5 years in the Magistrates Court, or 15 years in the Crown Court.
Financial reporting order
This applies to defendants who the court believes are likely to be involved in the future in further offences of dishonesty. In this situation, the court may make an order which requires the defendant to report his or her financial affairs at regular intervals. This order can last up to 15 years if given in the Crown Court, or 5 years in the Magistrates Court.
Serious crime prevention order
This is the most wide reaching and onerous of the extra orders a court can impose.
It allows the prosecution, where an offender is being sentenced by the Crown Court for a serious offence, to apply for an order may be made if the court has reasonable grounds to believe that it would protect the public by restricting the convicted person’s ability to be involved in serious crime. The order lasts up to five years.
Examples of types of this order include being prohibited from or restricted in:
- Working arrangements with certain individuals
- Working in certain businesse
- Using certain business methods
- Using types of item
- National and International Travel
Convicted people can also be required to disclose business and personal information on demand or at regular intervals.