Almost every day over the last couple of weeks there have been news stories about frauds – whether it’s a vulnerable person being defrauded of their life’s savings from their bank account or their pension fund or a company (or even a charity) being defrauded by its own employees.  Last week the news story was of a fraud committed by a so called ‘best friend’.

So, whether you are an individual or a corporate entity and you find that you are the victim of a fraud, what should you do?  Should you report the matter to the police?  Or should you pursue the fraudster through the civil courts to recover your money? Or both?

In considering whether to bring civil proceedings or to contact the Police to persuade them to bring criminal proceedings you may want to weigh up the advantages and disadvantages.           

The primary consideration is do you want to try and get your money back? If the answer is yes, then you need to bring civil proceedings against the fraudster, probably in parallel with reporting the matter to the Police/SFO. Here, we outline the benefits of bring civil proceedings and the benefits of bringing criminal proceedings.

Advantages of civil proceedings:

  • If successful, you will obtain a judgment against the fraudster which can be enforced against the fraudster’s assets; this is how you are financially compensated for your loss.  In criminal proceedings unless you can overcome the high hurdles to persuade the prosecutor to seek a compensation order there will be no financial compensation for you.
  • You are in control of whether to bring civil proceedings and how those proceedings progress.  If you decide to leave the matter to the Police/prosecuting authorities there is no guarantee that the fraudster will be either investigated or prosecuted.
  • During the civil proceedings there is the process of “disclosure” which means that the fraudster (as well as the victim) must disclose documents which may support your case and may assist in tracing the fraudster’s assets.
  • In civil proceedings the standard of proof is less – you have to prove your case on “the balance of probabilities”, in criminal matters the prosecution has to prove their case “beyond reasonable doubt”.
  • Civil proceedings progress much more quickly than criminal proceedings.
  • A variety of court orders are available to you to assist in preserving the fraudster’s assets and obtaining information from the fraudster and his/her bank.

Advantages of criminal proceedings:

  • The Police/Serious Fraud Office (SFO) are likely to have more resources to investigate/trace assets than you.
  • The Police/SFO have wider powers of investigation than you or your lawyers, for example, accessing bank accounts, telephone records and confidential information not available to the public, as well as interviewing witnesses under compulsion.           
  • If convicted, the fraudster may receive a custodial sentence and/or a hefty fine.  The fact that the fraudster has been sent to prison may go some way to compensating you, even though you may not receive any financial compensation.           
  • Cross-border cooperation between regulators in different jurisdictions – if parallel investigations are going in different jurisdictions the regulators in those jurisdictions may cooperate, for example, by pooling evidence which may make it easier to obtain a conviction.          
  • You are not responsible for the costs, whereas in civil proceedings you are responsible for the costs, although if successful you may obtain an order for costs against the fraudster.