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Smaller Frauds: First Stage Fraud Investigations

First Stage Investigation Service (FSI)

Experience has shown that there are a vast number of smaller frauds being perpetrated which are not being investigated or dealt with in any satisfactory way.  These are frauds such as employee thefts or “rip offs” by suppliers such as builders where the financial loss may only be several £thousands.

Such losses can still be serious for individuals or small businesses but often do not command the attention of the fraud investigation regulators who simply do not have the resources to deal with every fraud that is reported to them.  Very often they will ask for more proof or a better prepared case summary. Such a report need not be very long or involved to be persuasive enough to stimulate the authorities into action. Mark Jenner & Co are able to provide a swift appraisal of the circumstances, including the documents involved, and prepare a credible short report aimed at supporting an initial claim for losses – this can be sent to an errant supplier accompanied by a solicitors letter or used to encourage involvement by the authorities. It can be a cost effective solution to fraud in many cases.

An alternative solution is to investigate the loss and commence civil litigation against the thief.  However, this is generally only efficient when large sums have been lost as the legal and accounting costs are almost certainly going to be prohibitive.  It has been said that formal civil asset recovery through the courts is only worth while when sums of over £1,000,000 are being chased!

So what is the solution when your bookkeeper steals £10,000 from your business or your builder says you owe him another £20,000 to finish off the job after he has spent the agreed price?  At Mark Jenner & Co we recognise that these cases need a cost effective solution – to ensure a sensible and proportionate chance of getting your money back or ensuring that the authorities investigate so that you can make a claim for recompensing your loss.

A First Stage Investigation can achieve the following:

  • By discussing the case with you and acting as a sounding board we can help you to focus your thoughts and understand what options are available to you;
  • All information sources will be considered and correlated as we asses the case, establishing the method and extent of the loss;
  • The case assessment will be a presentation of the evidence in a format based on forensic accounting principles that can be presented to the authorities.  This is often all they require to commence a formal enquiry which can lead to prosecution, asset confiscation and open the avenue for you to make a victim compensation claim;
  • The case assessment can be persuasive in achieving a negotiated settlement – thus avoiding expensive and lengthy litigation.

Example 1 – Employee theft

The case is evaluated and an assessment presented.  With your agreement a letter is sent to the fraudulent employee and another to the police.  The situation is safely contained and it will be possible to dismiss the employee with enough evidence for gross missconduct without fear of employment tribunals.  Negotiations may retreive the losses as a result of the fear of a pending criminal investigation (the police may decide not to pursue the matter if recompense has been made as it would not necessarily be in the public interest).

Example 2 – Minority Shareholder at a Disadvantage

The directors wind up a business in which you have a minority interest.  Your minority shares become worthless.  You then discover that the directors have started up in business again from the same premises and using the same assets selling to the old customer base.  The case is investigated and evaluated resulting in an assessment which will include a overview of the valuation of your shares and indications of any insolvency offences that may have been committed – with your permission letters are sent to the Insolvency Service and the directors.  The assessment can be used as pressure and quantification for your loss of share value.

Important Note – Using Specialist Fraud Solicitors

A very good solution if you are a victim of a fraud is to approach a solicitor.  However, as all forensic accountants are not fraud experts, not all solicitors are capable of dealing with a fraud.  In many cases the right result may be achieved – but at great cost.  It is a legal lottery and in most cases it is better to only appoint a lawyer who is specifically experienced in the work required.

Mark Jenner & Co does not give legal advice.  For this reason we often work alongside lawyers investigating frauds and recovering assets.  As part of our First Stage Investigation we will review your need for legal advice if you have not already appointed solicitors.  Then, we will help you with your choice of firms and individual solicitors and ensure that your instructions to them are as specific as they can be to ensure that the costs are minimisied.

As a typical financial investigation by a forensic accountant can cost anything upwards of £10,000 and often much much more, we feel that First Stage Investigation offers the possibility for a cost effective solution in certain cases where formal legal, investigative and accountancy instructions would simply be too expensive.  If such an investigation becomes necessary, the initial work in a First Stage Investigation will of course count within a full blown asset tracing and recovery excercise which would be provided at our normal extremely competitive rates.  Please contact us to discuss whether or not this service is appropriate for your case.