Parliament wrote fraud by abuse of position into law in the Fraud Act 2006, which received royal assent on 8 November 2006 and came into effect on 15 January 2007. It is one of three ways to commit the general offence of fraud the Act created.
The other two are fraud by false representation and fraud by failing to disclose information. The Act covers England and Wales and Northern Ireland.
What the offence covers
Section 4 applies to a person who holds a position in which they are expected to safeguard someone else’s financial interests, and who abuses it. That includes an omission as well as an overt act. Someone who fails to act when they should have done so can be caught.
The Act asks for two further things. The defendant must have acted dishonestly, and must have intended to make a gain for themselves or anyone else, or to cause a loss, or risk of loss, to another person. “Gain” and “loss” mean money or property only, including intangible property. They can be temporary or permanent, and a gain can mean holding on to what you already have.
One difference from the old law matters. The Theft Act 1978 offences needed a victim who had been deceived. The Fraud Act offences do not. The Act largely replaced those older deception offences, which drew criticism for being complex and hard to prove in court.
Examples cited by one firm of defence solicitors include an employer who keeps short-changing workers on pay, and an IT specialist who manipulates an accounting system to send regular payments into an account in their own name.
How a case unfolds
An investigation starts when police believe someone has defrauded another person or failed to act when they should have. Suspects can expect detailed questions, and police may want to speak to friends and family.
The solicitors describe a wide reach. Police may seek court permission to examine phone records, social media accounts, devices, emails, messages and bank accounts. With a warrant from a judge or magistrate they can search a home, a vehicle and a workplace. Investigators collect audio recordings, transcripts, photographs, video and expert reports, and it falls to the prosecution to prove guilt.
The same firm advises anyone arrested or charged to bring a specialist fraud solicitor to every police interview, and says a good lawyer may sometimes get a case dismissed before it reaches court.
Penalties
On conviction on indictment, the maximum is ten years in prison, a fine, or both. A lesser summary conviction carries up to twelve months, or six months in Northern Ireland.
A conviction brings a permanent criminal record. Courts can also add ancillary orders, including one barring a person from acting as a company director.
