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Challenging the prosecution’s evidence

Service Area: Fraud

Member: Roger Isaacs

A recent case brought by the Serious Fraud Office (SFO) is a good example of  how those facing prosecution for fraud can use forensic accounting to challenge the evidence brought by prosecutors when facing serious criminal allegations.

In this case, three men have been charged with multiple offences in connection with the collapse of a Cayman Islands-based investment fund.

The fund had lent money to several law firms to pay for disbursements, mainly for personal injury cases.

It was suspended in October 2012 in the wake of allegations of fraud and was put into receivership in February 2013, owing investors around £120 million.

The SFO began its investigation in 2014. The case has been further complicated by the fact that the fund, which was registered in the Cayman Islands, used bank accounts in the Isle of Man and was sold to more than 500 investors across several different companies.

According to the SFO, the three men had diverted money from the fund for their own benefit. One man has been charged with three counts of fraudulent trading, one count of fraud and one count of transferring property, while the second faces one count of fraudulent trading.

Meanwhile, the third is charged with one count of fraudulent trading and one count of “being concerned in an arrangement which facilitates the acquisition, retention, use or control of criminal property by another”.

A lawyer representing the third man said that his client is “very disappointed with the decision to prosecute”, adding that he will “vigorously defend” the proceedings to clear his name.

Roger Isaacs, Forensic Partner at Milsted Langdon, said: “Given the complexity of the case, the defendants will be likely to use forensic accountants in their bid to prove their innocence.

“The SFO typically uses in-house accountants whereas defendants have the option of instructing independent forensic accountants as expert witnesses.  Independent experts owe an over-riding duty to the Court and their evidence can therefore often be preferred than that put forward by those who are employed by the prosecuting authority itself and who can therefore sometimes be perceived to be biased and lacking independent objectivity.”

Author: Roger Isaacs

26 August 2020

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