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Civil fraud – The criminal crossover

Park Square Barristers’ Katherine Robinson compares the crossover between civil fraud and criminal fraud.

Insurance fraud takes  many forms, from the ‘crash for cash’ which was much publicised some years ago, involving sometimes elaborately staged collisions with one or more willing participants, to frauds which do not even require such steps.

Efforts to prevent insurance fraud ought to involve joined-up thinking between the civil and criminal jurisdictions to deter and punish this offending, which costs companies and the general public huge sums.

Prior to the banning of referral fees in PI cases in 2013, fraudulent claims management companies (CMCs) – often unauthorised – would obtain fees from law firms for what appeared to be genuine referrals but which were, in fact, based on polices incepted purely to facilitate the obtaining of fraudulent referral fees. This was a far easier proposition from traditional crash-for-cash, as the claim itself need not be fabricated to appear genuine. No medical reports are necessary and no vehicle examination is required.

The fraudsters get their referral fee (often by harassing the law firm into early payment on the promise of more work) only for the claim to be found to be obviously false. By which time the fraudsters are long gone.

Pursuing criminal proceedings for fraud

Whilst it is possible to bring civil fraud cases in these circumstances, given the powers of the criminal courts to both punish those responsible and to order compensation/confiscation of any available assets, it would be advantageous for those affected by such frauds, whether insurance companies or legal entities, to pursue criminal proceedings. This can either be by providing the police with the evidence to prosecute, or by way of private prosecution.  Alongside the obvious benefits, the deterrent effect of the publicity of individuals being imprisoned for these offences can only help in raising the profile of the consequences of offending which criminals often justify as a ‘victimless crime’.

Criminal penalties for fraud

I have successfully prosecuted several such criminal conspiracies, and have recently concluded confiscation proceedings against the ring leaders of a Sheffield-based accident management company scam, which at its height involved staging a bus crash with more than 20 passengers. The benefit figure against the main defendant reached close to £1 million. Although he doesn’t at present have assets to pay the order in full, it will remain for the rest of his life, enabling the authorities to return at any point to take from him any money or assets he obtains, even legitimately, in the future.

In my experience, this will be of perhaps greater punishment than the prison sentence he received, as career fraudsters would wish to return to their activities and enjoy the benefits of their offending. If he were to have, for example, a car or house in future, this could be taken from him in satisfaction of the confiscation order.