A basic principle of an offence of fraud is that Prosecution must provide sufficient evidence to indicate that the Defendant was acting dishonestly when they had undertaken the action in question and it is this that is often the most difficult to prove during many Trials involving fraud. An example might be a situation where a Defendant asks a business associate to lend him £30,000, having assured him that his or her business is viable when it was actually near insolvency. The Court would need to be sure that the Defendant was aware of this and that they knew that the request was a dishonest one. The test for dishonesty is usually decided by a Jury and one that must be decided on the facts specific to each case.
The law requires the Jury to be sure beyond reasonable doubt that the Defendant has been dishonest by satisfying both stages of the legal dishonesty test (commonly referred to as the the Gosh test).
The first stage of the test is that the act must be deemed to be dishonest by the standards of reasonable and honest people.
The second stage of the test is that the Defendant must have realised that what they were doing was (by the standards of reasonable and honest people) dishonest.
The second part of this test means that even if someone commits an act to which they believe to be justified (a famous example previously used by a Judge is that of Robin Hood robbing from the rich to give to the poor), if they would have been aware that ordinary people would find it dishonest, then dishonesty is proven. In other words, it is the knowledge of the fact that the public view a type of action as dishonest, not agreement with that view, which proves dishonesty.
How Fraud Allegations Arise
Fraud investigations commonly arise as a result of regulatory investigations or audits by regulatory bodies such as the FSA, although the reality is that allegations more often are the result of a party facing a major loss and reporting it to the authorities. Classic examples of credit card fraud conspiracies, mortgage fraud, Missing Trader (MTIC) or other VAT frauds begin due to a person or persons (in the latter case HMRC) has lost large amounts of money over a suspicious period of time.
Written by Athena Forensics. Computer Forensic and Mobile Phone Forensic Investigation and Expert Witness Services Throughout the UK www.athenaforensics.co.uk
0845 882 7386