Asset recovery can still be an option for individual and corporate victims of fraud, such as many retailers, who prefer not to engage in criminal or civil proceedings, or fear they will take too long.
A vast clientele must exist for this solution, if the City of London’s police’s guesstimate that 85% of fraud goes unreported is anywhere near the truth.
James Mills, MD of Requite Solutions, knows as well as anyone why fraud victims often lack confidence in the police and the courts to provide redress.
He and Suzanne Raftery, (Requite’s Head of Investigations and co-founder of the business) both worked at the UK Metropolitan Police’s Serious and Organised Crime Command. They have combined experience of breaking some of the UK’s most complex fraud, money laundering and cyber crime cases.
They launched Requite this year, and a definite element in that decision was a desire to help people more than they could in the police, Mills says.
“I’m not criticising the police, they are under-resourced, and the staff they have probably don’t have adequate training in any facet of investigation let alone specific fraud investigations.”
Mills joined the Met after an early career in the city with financial big-hitter BZW (Barclays financial investment arm) and Tullet and Tokyo. After slaking a thirst for adventure as a firearms officer with the Specialised Operations Armed Unit he refined his financial and investigative skills facilitating Operation Falcon, (Fraud and Linked Crime Online).
Raftery, meanwhile, who graduated in the top percentile in her year in Economics and Business Finance from Brunel University, became a qualified National Crime Agency accredited financial investigator.
A third member of the team, Alex Yearsley, Head of Risk and Overseas Investigations, was Head of Special Projects for the campaigning group Global Witness for 12 years, conducting investigations into grand corruption and illicit trades across Africa.
Requite is targeting a gap in the market identified by the head of Operation Falcon, DCI Andrew Gould, earlier this year, when he told corporates at the Retail Risk – London conference that if they wanted to see more fraudsters arrested:
“You do the intelligence – we’ll do the enforcement.”
The combination of skills required to produce actionable intelligence on complex fraud cases sufficient to achieve asset recovery, if not a court outcome, is probably rare.
While there are said to be 10,000 private investigators in the UK only about 2,000 have accredited investigative skills – and many of those will be more experienced at investigating personal injury claims, or suspected adultery, than complex or cyber fraud.
Few experienced investigators have graduated from Operation Falcon and transitioned to the private sector as yet. Falcon has only been in existence since mid 2104, and never achieved expected staffing levels. Currently it has about 100 officers, Mills estimates, each of whom is likely to be following 20 cases, on average.
“They are snowed under. They are doing what they can, but if they can close a crime they will,” he says.
As for the complex fraud unit within the Met’s Serious and Organised Crime Command, he estimates it has only about 20 officers currently, each of whom probably has two to three cases on the go at any one time. And those cases can take three or more years.
After the police have sorted out which cases they can handle, the Crown Prosecution Service performs another triage, weeding out those with less than a 50% chance of conviction.
Asset recovery is another specialism. The Met has not many more than 10 qualified “confiscators”, and they spend most of their time in court, Mills says.
A corporate or individual client can entrust the intelligence gathering to lawyers, but their expertise tends to lie elsewhere, he would argue.
Requite has already succeeded in recovering millions of pounds for a high net worth individual who had been defrauded of £10 million in “tax efficient investments” set up by his adviser. The client took on Requite after employing lawyers for six months at a cost of £300,000.
“They achieved nothing,” Mills says. “They gave us a pile of paperwork, and said “this is evidence”, but in fact it wasn’t.”
Requite recovered £6 million for the client by producing actionable evidence and presenting it to the fraudster, Mills explains.
Requite is keen to offer its services to retailers, for whom the reputational risk of publicity over fraud cases is high.
“We’ve seen how it went with Tesco. It’s not a positive spin. But I think it’s absurd the way retail companies write frauds off as bad debts, because they’re not necessarily bad. A lot of these things can be quite easily fixed, or reduced.”
Requite is advising retailers currently on preventive measures to reduce frauds and chargebacks, with an emphasis on insider fraud, usually the biggest risk to a company and often the hardest to guard against.
Technical fixes – monitoring privileged access to an IT network for example, and monitoring social media – can obviously help, but Mills says he is amused at some of the simple minded advice he has heard on the issue even from top professional services firm, including one of the Big Four accountants.
Lawyers and accountants are very good at what they do but detective work is not traditionally their function, which is why they also turn to private investigators, he argues.
“When investigating a fraud, whether corporate, retail, individual or whatever, we will gather the evidence and formulate it in an evidential package that will make a case move faster,” Mills promises. “If there are any assets to be seized and returned we will do our best to get those to the client and that will only take place if the investigation happens quickly.”