While rogue traders and professional criminals have been behind the fraud ‘super’ cases seen in recent years, the latest bi-annual ‘Fraud Barometer’ from KPMG has shown a rise in individuals committing more traditional scams such as Ponzi schemes, cheque fraud and procurement fraud in the South West and Wales.
Anant Modi, Head of KPMG’s Forensic Team in the South commented: “What we are seeing is individuals looking to feather their nests through ripping off employers, banks or the government. In the last few years we have become used to sophisticated frauds at eye-watering values. While the total value of fraud has dropped substantially in the absence of so-called fraud ‘super’ cases, the old-fashioned con man hasn’t given up his tricks. Times may be tough but the data shows that some people are unwilling to give up the lifestyles they’ve become accustomed to.”
Drilling into the detail, the analysis shows that procurement fraud in the South West and Wales totalled £2.6m in 2012, up dramatically from 2011 when no cases over £100,000 reached the courts. Cheque fraud also increased by 16%, reaching £361,000 in 2012.
The analysis also shows that the Government remains a target for fraudsters. Cases in the South West and Wales involving individuals over-claiming benefits or evading tax totalled £2.5m alone. Modi went on to say:
“Tax evasion is one of the hot topics of the moment but an increasing assault on the social welfare budgets, particularly benefit fraud, is a real and increasing threat for the government, as shown by the latest figures. For all the talk of austerity, measures really kick in this year and accordingly we expect to see an increase in this kind of fraud this year as personal pressures mount for individuals. Fraudulent actions of individuals in both the public and private sectors exacerbate the need to make cuts in the first place and cause more than just monetary loss: jobs can be lost and already tight government budgets are stretched further, with implications for the delivery of services.”
Case studies: personal gain, stuff the consequences!
NEWPORT
A businessman from Newport was sentenced for 32 months after defrauding investors in a £57 million Ponzi scheme.
BRISTOL
A senior bank clerk from Nailsea was jailed by Bristol Crown Court for 14 months after defrauding HSBC for over £200,000.
In a second case a manager for a homeless people’s charity was sentenced for two years after she fraudulently obtained £361,000 through forging cheques and using the company credit card.
BRIDGWATER
A man from Bridgwater was given an 18 month suspended jail term by Taunton Crown Court for his role fitting skimming devices on cash dispensers. The fraud was thought to be worth more than £3 million with 9,000 potential victims.
Modi went on to say: “Simple, opportunistic fraud remains prevalent, our clients’ current experience is very much that such fraud is still continuing unabated. Organisations need to consider these basic fraud threats, as well as the new and complex threats. For example, we are seeing a large number of clients being approached by suppliers purporting to have changed their bank details at present, and requesting payment to the updated account. In a number of cases, sadly we are seeing this succeed. Additionally, the banks, perhaps focused on regulatory efforts to combat financial crime at the front end, such as money laundering, are also enduring an increase in old-fashioned back office fraud.”
Professional crime: numbers down but no room for complacency
The report suggests that there is some good news in the fight against fraud. Over the past 12 months the number of cases perpetrated by professional criminals in the South West and Wales almost halved from 7 cases at the end of 2011 to 4 in the 12 months to December 2012. There is however no room for complacency as organised crime still accounts for 10% of the fraud value prosecuted in 2012.
Modi concluded: “Whilst it’s good news to see a drop in the value of fraud perpetrated, organisations should not be fooled into thinking that they can drop their guard. The history of KPMG’s Fraud Barometer tells us that the trend is a rising one. We are simply catching our breath…….”
