Types of Fraud
Mortgage Fraud
Mortgage fraud is essentially an allegation that there has been a significant misrepresentation or omission of information on a mortgage loan application, which has denied the lender the opportunity to make a true assessment of the application.
When investigating mortgage fraud, the police will consider:
- the amount of funds advanced,
- the value of any losses suffered by lenders,
- the number of properties involved,
- if any false identities are put forward, and
- the level of sophistication involved.
This is not an exhaustive list, but the relevant factors based on our experience.
Our team of fraud solicitors have significant experience in defending allegations of mortgage fraud. We have advised property finders, purchasers, property developers, mortgage brokers, bridging lenders and conveyancing solicitors.
Fraudulent Trading
Fraudulent trading occurs where a company carries on a business with the intention of defrauding creditors or for another fraudulent purpose. At one end of the scale this can involve reckless trading without a genuine intention to discharge a company’s debt. At the other end, a genuine business, which encounters financial difficulties, which continues to trade, beyond when it should, in an attempt to trade out of financial difficulty, often motivated by preserving the company and saving jobs.
Missing Trader Intra Community Fraud (MTIC) (Carousel fraud)
This involves the theft of VAT from the government, to take advantage of the treatment of VAT within multi-jurisdictional trading.
The ‘missing trader’ charges VAT on sale of goods, then absconds without paying the VAT over to HMRC. Before the missing trader goes missing, the goods are sold to intermediary companies, referred to as ‘buffer traders’. The goods are then sold to the exporter, who having paid VAT on the purchase of the goods, exports them, resulting in a significant VAT reclaim from HMRC. The goods then typically re-enter the UK, hence the phrase ‘carousel fraud.’
Members of our serious fraud team have significant experience in defending those accused of MTIC fraud.
Investment Frauds
The two most common types of investment frauds are referred to as boiler room frauds and ponzi fraud.
Boiler Room Fraud (Share scams)
Boiler room fraud involves the selling of shares to investors in companies which are usually fictitious or not successfully trading at inflated prices. Often a broker, usually based overseas (typically in Spain, Dubai, Switzerland) will cold call investors in the UK, posing as stockbrokers. The boiler room usually at some stage disappears, leaving investors out of pocket.
Ponzi Fraud/Pyramid schemes
A ponzi fraud or pyramid scheme is a fraudulent investment operation that offers a higher rate of return than usually available. Investors are attracted to the schemes, which promise a quick return at high rates.
Asset Stripping
Asset stripping involves taking company funds or assets while leaving behind the debts. Directors transfer only the assets of a company, not the liabilities, leaving a dormant company which is put into liquidation. This is sometimes referred to as "phoenixing".
Share Ramping/Market Manipulation
Share ramping (commonly referred to as 'pump and dump' and 'book ramping') occurs where individuals influence the share price of a company and then take advantage of it. A common example of this is where shares are purchased at a low price, a rumor is started that the company is being taken over, then when the share prices rise, the shares are sold for a significant profit.
Contact Us
The above are only a selection of the types of fraud that are often investigated. If you have become the subject of an investigation or you have been charged with having committed a fraud, then, whatever the type of fraud involved, contact Richard Nelson LLP on 0115 986 3636. With offices in most of the major legal centres in England and Wales we are ideally placed to be able to assist you.