The City of London Police have recently launched a pilot scheme under which they will appoint solicitors from private law firms to recover money they allege has been obtained through fraud via the civil courts.
Under the current system defendants accused of fraud must first be convicted of the offence in the criminal courts before confiscation proceedings can be commenced under the Proceeds of Crime Act. This new development threatens to bypass the criminal courts entirely, abandon long held principles of justice for all and create a system where the only cases that are dealt with are those that a law firm deems financially viable from their perspective.
The current system can be a lengthy process often taking years from arrest, investigation, prosecution, conviction and subsequent confiscation proceedings. However, the delay in the system often occurs during the Police investigation. The Court proceedings themselves are considerably quicker than the often inexplicably lengthy police investigations. It appears that this new approach is designed at recovering the alleged fraudulent funds first and asking questions of guilt or innocence later.
There are a number of concerns about this pilot scheme:
- Assets could potentially be seized in the civil courts without a defendant ever having the opportunity to have his or her case heard in the criminal courts. It seems that the police are now trying to bypass the criminal courts and abdicate responsibility for investigating alleged crimes to law firms. If alleged fraudulent assets have been recovered in the civil courts there is far less incentive for the prosecuting authorities to pursue the matter any further. The burden of proof in civil cases is lower than in criminal cases and as such there is a greater prospect of success for the prosecuting authority.
- While the current mechanism for recovering the proceeds of crime can be lengthy there are already adequate protections in place to prevent assets being dissipated. Prosecuting authorities have the power to apply for restraint orders under the Proceeds of Crime Act without notice to the person involved. These restraint orders can place an absolute bar on a defendant dealing with their assets and often any company that they are associated with. This prevents defendants from disposing of assets or moving them overseas. Where defendants do try to hide assets there is provision within the Proceeds of Crime Act to include such hidden assets within a confiscation order.
- It should also be noted that restraint orders usually prohibit the defendant from spending their money on legal fees. Under the current system this is balanced by the availability of criminal legal aid for defendants, however, if cases are heard in the civil courts legal aid is much harder to obtain and an individual facing a claim in the civil courts under this new pilot may find that they are unable to fund legal representation. The claim will be brought by a law firm backed by an insurance scheme that is unlikely to be available to the defendant.
- Prosecution authorities already have a significant combination of powers at their disposal. A defendant’s assets can be restrained for years with very little evidence required (at short notice) and if they are then convicted beyond reasonable doubt in the criminal courts they are faced with the draconian Proceeds of Crime Act which is heavily stacked in favour of the prosecution. It seems that this latest development is further loading the odds in favour of prosecuting authorities.
Defendants faced with a claim in the civil courts under this new pilot should seek representation as soon as possible to challenge the claim. Restraint orders can be challenged in the first instance to free up money for living expenses. Our experience of dealing with cases brought under the Proceeds of Crime Act is that prosecuting authorities will throw everything at stripping everything they can from a defendant. There is every reason to suspect that this zealous approach will continue in the civil courts, however, it will be possible to contest the claims brought under this pilot scheme. We have found that cases brought under the Proceeds of Crime Act can be successfully challenged and that will continue to be the case under the new pilot.