Fraud Ills 'Spreading like the Flu' FRAUD

Article excerpt

Byline: By John Cranage Business Staff

Midland companies are losing faith in the police and the courts as prosecutions for fraud slump, it was claimed today.

Criminal employees and executives siphoning off company funds either through greed or debt are "feeling invisible" as a result, said Sat Plaha, Birmingham-based forensics partner at accounts BDO Stoy Hayward.

According to BDO, the value of convicted fraud cases in the Midlands dropped from pounds 617.5 million in 2006 to almost half that (pounds 320 million) in 2007. The trend is echoed in East Anglia, London and the South East, Scotland and Wales.

"Fraud is actually spreading like the 'flu," Mr Plaha said. "Until you are hit by it you don't always know how bad it can be. Less fraud is going through the courts and many fraudsters may be feeling invisible.

"The gap between the number of frauds investigated and prosecutions in criminal courts is widening. Our fraud team took on up to three investigations a week in 2007, yet supposedly the amount of fraud is decreasing."

VAT fraud alone cost the UK pounds 541 million last year, pounds 10 for every man, woman and child.

Disparity in sentences imposed on those who are convicted is making fraud more profitable for hardened criminals, according to BDO.

Tough sentences are imposed on offenders with drug or alcohol problems while criminals who plead they were driven to fraud by gambling or marital problems are treated more leniently.

Either way, the average sentence last year of 2.8 years for committing a fraud allows fraudsters to laugh all the way to their offshore bank, as increasingly fraudsters and the proceeds of fraud cross international boundaries, said Mr Plaha.

"When you balance the low chance of being discovered and prosecuted against the millions many white collar fraudsters make, it is not hard to see why fraud is increasing, and more people than ever are getting away with it. …