Value of fraud cases soars to 750m - Saturday 12th of March 2005

The value of fraud cases doubled to more than ??750m last year as criminals stole record amounts of cash from firms and individuals, according to research published yesterday.

Accountants BDO Stoy Hayward said the number of such offences would continue to rise as organised gangs committed more fraud, in part through the use of identity theft.

Andrew Durant, a fraud specialist at the BDO, said: "Many people think fraudsters are motivated by financial need caused by difficult circumstances - such as illness, divorce or financial crisis. However, our research shows such causes are only mentioned in a small number of cases.

"The typical fraudster is already comfortably off and motivated by the desire for a more lavish lifestyle. Greed, not misfortune, appears to be the main motivator," he said.

The firm analysed all reported fraud cases of more than ??50,000 in 2004 and found 229 cases with a combined value of ??756m. It used information from the Serious Fraud Office, the Department of Trade and Industry, the Metropolitan police and local and national newspapers.

In the 78 instances where a motive was given for the crime, 60% said they wanted to fund a lavish lifestyle, while 10% used the proceeds to pay financial and gambling debts.

Mr Durant predicted that fraud motivated by a need to pay off gambling debts or to feed a betting addiction might lead to more fraud.

"I am expecting the proposed deregulation of gambling to lead to a rise in lower-value frauds over the next few years, with more cases of people seeking to cover their debts or, in some cases, simply finance their addiction."

He also predicted the involvement of organised crime in fraud. "This will often be combined with identity theft to allow fraudsters to hide their identities and money laundering so the criminals can appear legitimate," Mr Durant said.

He noted that prison terms did not appear to correlate with the rise in fraud, and suggested this was failing to act as a deterrent. Sentences were still "relatively low"; the average sentence for a fraud of more than ??1m was 3.3 years and for a theft of ??50,000, 2.4 years. "This is in stark contrast to America, at the other extreme, where large frauds can lead to sentences of up to 20 years," he said.

"Given a large number of frauds are not even detected, there's a big question mark over whether sentencing in the UK currently provides enough of a deterrent or reflects the damage frauds cause to people," he said.

The analysis excluded two cases which the accountants believed would have distorted the figures - an alleged ??3.3bn plot using forged gold certificates foiled by police and an alleged ??1bn betting conspiracy involving jockeys, a trainer and other racing figures.

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