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North East businesses and investors ‘defrauded to the tune of £11.2m’

KPMG’s Fraud Barometer, which measures fraud cases with losses of £100k or more reaching the UK courts, has found that the national value of fraud rose by 22% in the first half of this year to £385m (£317m in the same period last year).

With 160 cases, fraud volumes remained virtually identical to the first half of 2014, meaning that the average value of fraud has increased from £2m to £2.4m, a 21% increase.

In the North East, six cases resulted in fraud to the value of £11.8m appearing before the Crown Courts between January and June 2015. This is a jump of £3.9m, or 49% compared to the same period last year, due to a single £8m case.

Cases to reach the region’s crown courts during this period include:

• A financial advisor who has been jailed after admitting to 37 charges totalling £2.9m of fraud against clients during a seven year period
• A man who was found guilty of £465k of fraud at Teesside Crown Court relating to the sale of counterfeit DVDs
• And, the £8m alleged fraud against his employer by a financial director.

Sara Smith of KPMG’s Forensic practice in the North East, said: “The picture painted by the North East cases in our current Fraud Barometer is one of a series of significant frauds on their own organisation or their customers by management figures who have exploited their positions to engage in illegal activities.

“Businesses and investors are the biggest losers in the last half year, having been alleged to be defrauded to the tune of £11.2m before the perpetrators were caught.

“It’s a real warning for anyone who allows others to handle their money, to make robust checks on who they are dealing with, and for business owners to maintain controls and scrutiny over those in a position to redirect funds out of the company.”

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