It is notorious that rates of ‘fraud’ are at an all-time high.
Estimates from the Crime Survey for England and Wales indicated that c. 4.6 million fraud offences were committed in the year ending March 2021, a 24% increase on the previous year. And such statistics do not capture unlawful, fraudulent conduct which is not reported as, or which falls short of amounting to, criminal conduct – i.e. ‘civil fraud’.
In this jurisdiction, the persistent (and justified) perception that fraud is under-reported, under-investigated and under-prosecuted also serves to embolden those who would abuse trust and commit fraud.
In the Private Wealth context, private individuals are perhaps particularly exposed because: (i) they are often especially reliant on the good faith and honesty of advisers (who often exercise a substantial degree of influence or control over their affairs); and (ii) they may be more willing to make investments or enter into transactions without undertaking the degree of due diligence which might be required by a large corporate organisation, often on the basis of personal relationships and introductions.
As such, private individuals can be susceptible to dishonest and other predatory conduct on the part of both commercial counterparties and advisers.
So, what are the warning signs which can foreshadow dishonest or unlawful conduct?
- Reluctance to put things formally in writing or properly document terms agreed
- Exploitative or controversial commercial proposals, which would be embarrassing if made public
- Late or last-minute provision of information which is vague or inadequate (particularly where the information in question should be readily accessible)
- Unrealistic time pressures requiring immediate decisions/action
- Reluctance to instruct or meet with lawyers and other advisers
- Unexplained resignations of or changes in counterparties’ advisers
- Evasiveness, including persistent failures to attend meetings and return calls/emails during working hours
- Persistent ‘small lies’, exaggerations, and half-truths (which may relate to trivial matters)
- Repeated instances of ‘bad luck’ where plans fall through, are cancelled, or changed due to unforeseen circumstances (e.g. alleged actions/failures of third parties, or alleged personal crises)
Clearly, if one or two such features are present, and only to a limited extent, this may not provide cause for much concern.
However, where several of such features are present, and significantly and/or persistently so, it is always wise to err on the side of caution and seek early advice from a legal specialist, as early identification of a potential issue and of the legal remedies available can have a dramatic impact on outcome, and on the risk and cost exposure involved.
Matthew Leverton is a Partner in the Commercial Litigation Group, part of the Harbottle & Lewis Dispute Resolution team.