KPMG: Scotland reports ten high-value fraud cases in first half of 2021

KPMG: Scotland reports ten high-value fraud cases in first half of 2021

Annette Barker

Scotland has recorded ten high-value fraud cases during the first half of 2021, as logistical challenges for the country’s justice system begin to ease.

The latest data from KPMG’s Fraud Barometer report reveals ten cases of alleged fraud took place, valued at over £2.5 million, in 2021. The UK combined figure for 2021 stands at £140m. The firm’s bi-annual report measures fraud cases with losses of £100,000 or more reaching the UK courts.

Scotland’s high-value fraud cases included an accounts manager who caused a business to close after stealing more than £250,000 over a four-year period. The 40-year-old was found guilty and jailed for 20 months.

Another case with a similar value of fraud involved a drug dealer who set up a web design company as a front for an international Bitcoin scam. The accused, who is currently serving five years in prison for drug-related crimes, scammed a £250,000 mortgage while converting and transferring cash and Bitcoin to a value of £789,000 over the course of six years.

The latest fraud findings follow the continued warning from Police Scotland’s ‘Take Five To Stop Fraud’ campaign to be careful of scammers using sophisticated methods to target vulnerable individuals and companies.

Annette Barker, head of forensic, said: “As COVID-19 restrictions begin to ease we are seeing the reopening of the criminal justice system and in turn, an increase in cases of fraud coming before the courts.

“The Scottish Courts and Tribunals Service said in March that it could take until at least 2025 to clear the backlog of cases. To put that into context, the aggregate value of cases in Scotland was more than £15.6m. However, it has been an extremely challenging year and a half since the pandemic began. We expect an increase in fraud cases to continue as some people take advantage of the vulnerability of individuals and organisations for their own gain.

“Although it’s encouraging to see cases being brought before courts once again, we still have a long way to go to clear the backlog. While the Scottish courts continue the battle to keep up, we urge people to remain cautious and to be aware of the potential dangers of becoming a victim of fraud.”

The number of alleged fraud cases being heard in UK courts in the first half of 2021 has almost doubled compared to the same time in 2020, as UK courts saw continued recovery in the system following COVID-19 lockdowns.

Figures from KPMG UK’s Fraud Barometer found 151 alleged fraud cases were heard in the first six months of the year, as courts used a mix of virtual and face-to-face sessions to start the catch up with the backlog created by COVID-19 restrictions. Government figures stated in June this year that at the end of Q1 2021 there were over 59K outstanding cases for Crown Courts and just under 400K for magistrates’ courts.

The Barometer figures, which record alleged fraud cases - not including online fraud - with a value of over £100,000, saw the total value of alleged fraud reaching UK courts in the first half of 2021 fall significantly (70%) year on year, standing at £139.1m.

Roy Waligora, partner and head of UK investigations at KPMG, added: “Despite the courts struggling with the impact of lockdown and COVID-19 restrictions, attempts to break through the backlog of fraud cases in the system are progressing. The legal system, like much of the world, has adapted quickly to adopt technology to help alleviate the huge numbers of cases that were put on hold last year when the pandemic first hit. To give a feel for the previous levels we have seen, the first half of 2019 saw fraud values of over £319 million and in the same time in 2018 we saw over £895m.

“Whilst the number of alleged fraud cases reaching court is significantly up on last year, no super-cases have been recorded in the data, which may point to more complex cases being delayed.”

The extraordinary conditions created by the pandemic saw professional criminals take full advantage of the general public according to the figures. Cases that involved the UK public being the victim increased by 285% to 50 cases in the first half of 2021 (£43.1 million), compared to just 13 cases heard over the same period in 2020 (£22.6 million).

Cases relating to rogue tradesmen more than doubled in volume and was valued at £2.5 million in the first half of 2021, mostly involving elderly and vulnerable people who were scammed for unnecessary work or paid for services that were then never delivered. This spike is potentially a result of an absence of family members or carers who would usually offer support or financial advice on these matters.

The figures also reveal 10 cases involving probate worth over £3.3 million in the first half of this year, where there were only four cases in the first half of 2020 totalling £2.3 million.

Meanwhile, 16 cases involving account takeover worth over £8 million appeared in court, with the majority of these cases related to professional criminals who took advantage of newly captive audiences at home. In one case, a gang leader was jailed for six years for conning 15 people of over £200,000, including a 96-year-old victim, into handing over their savings. The gang called victims claiming to be officers and persuaded them to protect their savings by moving the money to a temporary safe account - in reality, one controlled by the crooks.

In total, 36 cases of alleged fraud worth more than £55m targeting the government appeared in court in the first half of 2021, compared to £78 million across 19 cases in the same period of 2020.

Two large cases were seen in the first half of 2021, one £12m counterfeit currency case and the other an immigration fraud totalling £20 million.

This reported value of fraud suggests a start is being made but still seems relatively small compared to perceptions of high fraud levels for COVID financial support. According to the latest Public Accounts Committee Fraud and Error Report, the Bounce Back Loan Scheme initiated by the government to support businesses through the pandemic, could potentially see up to £27 billion never repaid due to fraud or credit risks. 

With the dropping of basic fraud and error checks when paying out COVID-19 loans, the report points out the exposure to fraud has increased significantly and a rise in such cases in the near future is strongly anticipated.

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