CASE STUDY

Frank and Malcolm - Charged with Retaining Unlawful Bank Transfers
Criminal

Frank and Malcolm - Charged with Retaining Unlawful Bank Transfers Frank and Malcolm were the partners of a business, F & M Trading, whose turnover was approximately 250k per annum. The business bank account was held with MS Piggy Bank and their Small Business Manager was Tim Little.

During 2000 an internal audit was carried out at MS Piggy Bank. This audit uncovered a number of irregularities in respect of the portfolio under the control of Tim Little. This portfolio included F & M Trading. The main alleged dishonest scheme involved Tim Little setting up a series of unauthorised loans on a number of different accounts, some in fictitious names, and using these funds to inject sums into the accounts of a number of businesses under his control at MS Piggy Bank. Frank & Malcolm ran one of these businesses. It was alleged that during the period under review Frank & Malcolm benefited in the sum of £600,000, which represented unauthorised payments made by Tim Little into their business bank account.

Frank and Malcolm denied that they were aware of the considerable injection of funds into the business bank account. Even though this represented an increase of almost 80% on their business turnover for the period under review. Frank and Malcolm were charged with retaining wrongful credits.

We were instructed by the defence to consider a large number of issues.

One of the issues involved investigating the treatment of the £600,000 by the two accountants used by Frank and Malcolm during the period of review, namely Over2you and Knotquite Wright.

Over2You had passed draft Financial Statements to Knotquite Wright without obtaining answers to questions raised about the loan transfers. It appeared that Knotquite Wright prepared the businesses Financial Statements from the "information and Explanations supplied to them". It also seemed likely that Knotquite Wright completed the Financial Statements without either asking for or obtaining any information regarding the source of the substantial loan transactions. Neither accountant's working papers documented any discussion they had held with Frank and Malcolm regarding the loan transactions.

We were requested to attend the Crown Court to assist the defence barrister whilst the prosecution hearing was underway. Our own report was not cross-examined.

Frank and Malcolm were found not guilty.

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