On 26 October 2009, the sentencing guideline for statutory offences of fraud came into force. The guideline does not deal with the offences of conspiracy to defraud or cheating the public revenue, where case law will continue to apply. Since many fraud offences are broadly defined, some types of activity are capable of leading to a conviction for more than one offence.

Therefore, the guideline focuses on the type of fraud involved, rather than the specific conviction offence. It aims to produce a coherent and consistent approach to sentencing all forms of fraudulent behaviour, which supersedes previous guidelines and relevant case law. The statutory offences are classified in five groups:

  • Confidence fraud – section 1 of the Fraud Act 2006; section 17 of the Theft Act 1968;
  • Possessing, making or supplying articles for use in fraud – sections 1, 6 and 7 of the Fraud Act 2006;
  • Banking and insurance fraud and obtaining credit through fraud – section 1 of the Fraud Act 2006 and section 17 of the Theft Act 1968;
  • Benefit fraud – section 1 of the Fraud Act 2006; section 17 of the Theft Act 1968; section 35 of the Tax Credits Act 2002; sections 111A(i), 111(i) A, 111(i) B. 111(1)(D) and 111(ii)E of the Social Security Administration Act 1992. It should be noted that the offence under section 112 is omitted from the guideline.
  • Revenue fraud (against HM Revenue & Customs) and section 1 of the Fraud Act 2006; section 17 of the Theft Act 1968; sections 72 (1) 72(3) 72 (8) of the Value Added Tax Act 1994; section 144 of the Finance Act 2000; sections 170(1) (a) (i) and (ii), 170 (1) (b) 170 (2) (a), 170B, 50 (i) (a) and 50(2) of the Customs & Excise Management Act 1979.

The offence of obtaining services dishonestly, contrary to section 11 of the Fraud Act 2006, may be committed in circumstances that would otherwise be charged as an offence, contrary to section 1 of the act, or may be more akin to making off without payment. Where it involves conduct that can be characterised as a fraud offence, such as obtaining credit through fraud or payment card fraud, the court should apply the guideline for the relevant type of offence. But where the conduct could be characterised as making off without payment, the guideline for that offence should be used from the Magistrates’ Court Sentencing Guidelines.

The primary consideration when sentencing fraud offences is the seriousness of the offending behaviour. Starting points and ranges take account of other sanctions and ancillary orders likely to be applied which may have a significant impact on the offender.

The tables used in the fraud guideline are more complex than those to which the profession has become used but are not intended to be more rigidly applied. The use of the table provides only a starting point for sentence. Their use ensures consistency between courts for similar types of behaviour. However, once the appropriate range of sentencing is identified the court must still apply aggravating and mitigating factors and then personal mitigation before making a final reduction for a guilty plea in appropriate cases. As with all guidelines, it is critical that solicitors have regard not only to the tables but to the notes on the facing page of the guideline. All starting points and ranges are for first-time offenders (that is persons without relevant convictions) on the basis that they plead not guilty.

The guideline has identified specific aggravating factors, mitigating factors and relevant issues of personal mitigation. These include, in particular, the voluntary cessation of offending, the complete and unprompted disclosure of the extent of the fraud, voluntary restitution and financial pressure when that is exceptional and not of the offender’s own making.

In relation to fraud cases, provision has been made until 31 December 2011 for the grant of provisional representation orders. If the Crown identifies a case as being a serious or complex fraud, and invites the defence to take part in plea discussions under the attorney general’s guidelines on plea discussions in cases of serious or complex fraud, and the Legal Services Commission is satisfied that any trial would last for more than 25 days, any solicitor may enter into a contract with the commission. This will enable lawyers, including advocates and leading advocates, to be paid for pre-charge discussions for a maximum of three months, with a maximum single extension granted within that period of a further three months.

ConfiscationA person does not obtain a benefit when acting as a courier or minder as they do not obtain ‘a right to possession’. It followed that the courier or custodian of cash does not ‘benefit’ from its value in confiscation proceedings. However, holding the money in a bank account suffices unless the offender can show he was a bare trustee.

In a conspiracy case, it does not follow that each conspirator has jointly obtained the whole benefit (R v Allpress & Others [2009] EWCA Crim 8). In confiscation proceedings, the judge, having heard all the evidence in the case, was not limited, in assessing the amount of benefit obtained, by the findings of fact necessarily made by the jury in convicting the defendant, as long as the judge was not acting inconsistently with any such findings.

The normal principles that a defendant could only be sentenced for specific matters proved did not limit a confiscation enquiry, to which different rules apply (R v Sangha & Others [2009] Crim 212.

Thus a court could rely on the evidence given during the trial in relation to matters not charged in the indictment to find the offender had benefited from, for instance, drug trafficking. The statutory assumptions are not the only way to establish that benefit (R v Briggs-Price [2009] UKHL 19).

A guilty plea entered by the defence without challenge to the prosecution’s version of the fact did not debar the defence raising issues later in confiscation proceedings (R v Knaggs [2009] EWCA Crim 1363). There is no power to make a confiscation order if the court imposes an absolute or conditional discharge (R v Clarke [2009] EWCA Crim 1074), but a confiscation order can be made against a defendant, notwithstanding that his assets are held by a trustee in bankruptcy (R v Shahid [2009] EWCA Crim 831).

In R v Lowe [2009] EWCA Crim 194 and CPS v Nelson Pattal & Paulet [2009] EWCA Crim 1573 the court has emphasised that applications to stay confiscation proceedings as an abuse should be granted only in very limited circumstances. Otherwise, parliament’s intention would be undermined.

It was not an abuse to extract an amount greater than the value of the profit from the crime. It appears that the Crown Prosecution Service, which has issued guidance to prosecutors, will only stay proceedings in simple benefit cases where the defendant has voluntarily paid full compensation, or in other cases where the defendant is ready, willing and able immediately to repay all the victims the full amount of their losses and has not otherwise profited from his crime. In employment cases, confiscation orders are appropriate, unless the link between the criminality and the receipt of the wages is too remote. For instance, where had the representation been corrected, the employment would have continued, even though after many years of otherwise lawful employment a relatively minor previous conviction is discovered.

When calculating the value of the benefit from importing illegal drugs, use could be made of the black market value as the ‘market value’ after section of the 70 Proceeds of Crime Act 2002. (R v Islam [2009] UKHL 30). This is to be differentiated from the rule when identifying the value of the available assets to pay the order of the court. At that point, the market must be taken to the one in which the defendant could realise his assets without acting illegally. But there is no such restriction at the earlier stage of calculating the benefit received.

An application for a certificate of inadequacy cannot be used as an appeal against a judge’s findings in confiscation proceedings, including a finding that there were hidden assets (R v Younis [2008] EWCA Crim 2950).

Costs In relation to confiscation proceedings for all hearings on or after 21 August 2009, a new regime for the payment of advocates came into force. The regulations allow for a daily and half daily rate, together with a fixed fee, dependent on the number of pages of relevant material between 51 and 1,000. An hourly rate is then provided in cases where there are over 1,000 relevant pages. The regulations define the relevant evidence for these purposes.

Anthony Edwards, TV Edwards