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January 28, 2014updated 11 Jan 2016 1:26pm

In good times HNWs are more vulnerable to fraud

By Spear's

According to the latest GDP figures released today, the economy has turned a corner, growing by 1.9 per cent last year. That’s the most rapid rate of growth since the financial meltdown of 2007, which resulted in the bankruptcy of Lehman Brothers in 2008, followed on 11 December with the arrest of Bernie Madoff in probably the greatest financial scam ever.

But how do you really measure economic growth? Can you define growth scientifically or is it more like the sort of subjective and expert agreement among the economic congescenti – like a champagne house declaring a vintage year?

Is 2014 heading now that way? The normal and predictable signs are there: an increase in wages and the return of City bonuses; rocketing house prices in London (Chelsea and Notting Hill up 12 per cent alone last year, Fulham closer to 15 per cent); manufacturing statistics show luxury car sales returning to the same levels as 2007, with Jaguar posting record sales for 2013 with 425,000 cars sold worldwide.

As soon as the GDP figures were released, shadow chancellor Ed Balls was quick to try and dismiss them saying the idea that the economy had recovered belonged in ‘cloud-cuckoo land’.

But all the signs of growth are now becoming increasingly difficult for Balls to ignore, including a slew of new evidence that has come to my attention that supports my own pet scientific theory that one of the very best ways to gauge economic growth is to examine HNW victim crime rates.

My economic growth rate theory states that the more cash and bonuses and credit card reserves people have to spend, and the more money they have sloshing around in their bank various accounts – onshore and offshore – the more vulnerable they are to crime as they simply are not monitoring their spending or where their cash is going.

When economic times are genuinely tight and there is little or no ‘growth’, HNW victim crimes and financial fraud figures actually decline. Was it just a coincidence that Bernie Madoff (pictured above) enjoyed his golden years of scamming his victims (often on his yacht moored in Cap D’Antibes) during the boom years between 2002-2006 after America recovered its confidence following 9/11?

No, of course not. When people have money and bonuses to spend, the financial scam artists and fraudsters will declare it a ‘very good year’.

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The only trouble with my economic theory is that it relies on the police or Crown Prosecution Service to actually successfully prosecute fraudsters who commit financial or other crimes against their victims.

The real problem is that hardly ever happens today, both with alleged criminal fraud and also white collar financial crimes within the finance sector – as overseen by the toothless and hugely ineffectual FSA that was abolished last year.

The majority of cases of HNW fraud and victim crime do not even make it into the police’s own crime reports – all part of dumbing down (or blatantly ignoring) in an effort to make it look as if crime rates are falling, when the very opposite is likely to be the case if the economy really is recovering.

Car crookery

An extraordinary case of exactly this has come to my attention, involving a scion of the Coutts banking family who fell prey over Christmas to a highly sophisticated fraud via an onshore bank account in the UK.

The scam involves selling luxury cars over the internet through a bogus website; the company then wire the money to a Santander bank account and then the car never arrives. The company behind the site has what looks like proper premises and a selection of beautiful luxury cars – but it is just a front.

The police were provided with all the details within hours of the fraud being detected. The police and the bank were also made aware that there were up to six other cars sold to HNWs in the same fraud.

What is so disturbing about the case of HNW victim crime is how the police have been completely unconcerned about the scam (‘Only if it were hundreds of thousands would we look into it,’ my friend was told at the police station), even to the point of not so much as contacting the bank’s fraud department.

Since I am a personal friend of the HNW victim’s family, they were so exasperated by the lack of interest in the fraud from both the bank (where the funds were sitting in the fraudster’s account the day following the crime) and the police that they contacted me to see if I was able to do anything to reach anybody senior at the bank over the weekend with regards to ‘freezing’ the fraudster’s bank account, and then handing the fraud matter over to the police.

But nothing seems to have been done by the bank as yet to help the HNW victim which raises serious legal issues as to whether they have knowingly allowed thousands of pounds of cash to sit unfrozen in an account despite its plainly criminal origins.

When I called up my lawyer, David Archer at Pitmans in London, he was not encouraging. Apparently allowing fraudsters to continue their HNW victim crimes is normal these days for the police. ‘Sadly not uncommon. Police pretty useless. And almost certainly there is no legal recourse to the website he found it on,’ he replied.

I then contacted the bank through their media department, and explained the details of the fraud case. Why was the account not investigated – or frozen – immediately on receiving a call from the HNW victim? If the money is still in the account, can this be done immediately? Will the bank be contacting the police fraud squad directly?

No: client confidentiality protects the fraudster.

Later that day, I received the following email from Santander: ‘The bank takes all instances of fraud very seriously and will always cooperate with the authorities in any investigation they may undertake. In this case, the victim’s bank has been in contact with us and confirmed that a payment received into the bank account may be related to a scam, and therefore we have agreed to review the account and take appropriate action, liaising directly with the payer’s bank.’

At this point, the news sounded encouraging.

Surely taking ‘appropriate action’ means freezing the fraudster’s bank account, contacting the police fraud squad and immediately returning the thousands of pounds illicitly received into the bank account to the victim? His own bank said that they would ‘look into it’ and report back to him after a period of 30 days had elapsed.

Which it now has. But nothing. This being modern Britain, where HNW victim fraud is of seemingly little concern to the bank as to the police. The HNW victim has so far not received a call back from the fraud department at the bank – nor a single penny back from the fraudster’s account.

Call a criminal lawyer

As a last resort, I contacted the leading criminal lawyer Barry Tucker, who knows the ways of the police better than most lawyers and has been personally involved in many of the country’s top fraud cases himself.

After I emailed him the details he replied that his firm ‘agrees this seems a clear case of fraud and we are all surprised that the bank have taken little interest especially as the Bank having been given the information are at risk of committing a Section 328 POCA 2002 offence of being involved in a money laundering arrangement if it allows the account holder to use-transfer the proceeds of the fraud’.

He also said that he was more than happy for his firm – the UK’s leading firm of criminal lawyers with HNW clients including the Rausing family – to take the case on and also for his colleagues who have contacts within the Scotland Yard fraud squad to speak with the police ‘to see if he can interest them’.

If a police officer is then sufficiently ‘interested’ – despite the glaring evidence of a fraud – then they contact the bank with their ‘suspicions’ which ‘might’ be enough to make the bank freeze the account at least temporarily while the victim seeks a civil freezing order by starting a county court action and obtaining an ex-parte freezing order.

That today’s police officers will only investigate a clear fraud – with all the bank details and various emails and mobile phone numbers provided by the HNW victim – when they are ’embarrassed’ into action is not something that the police should be proud of.

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