2011 was an 'extraordinary year' for fraudsters

The more dastardly among us had a vintage 12 months last year, says a survey by KPMG.

by Emma Haslett
Last Updated: 20 Jul 2012

They say crime doesn’t pay, but by the sounds of it, fraudsters have had a whale of a time recently. The latest edition of KPMG’s Fraud Barometer has shown that 2011 was an ‘extraordinary year’ for fraud, with the value of financial crimes rocketing to £3.5bn – that’s 150% up on 2010’s figure. And it was during the second half of the year that the criminals really got into their stride, with 70% of the total being recorded between July and December. …

KPMG reckons that at least part of the reason for the surge in the number of cases is that the authorities have become more vigilant: the study only looked at cases of over £100,000 that were heard in the High Court. But it added that a combination of ‘increasingly sophisticated’ technology used by fraudsters and a cash-strapped population more vulnerable than ever to ‘deals’ are also to blame.

The number of cases where the fraud was committed by companies’ own management went up by an unsettling 74% - although before you start installing the CCTV, the total number of cases were just 57, with a value of £729m – so it hasn’t become a crime epidemic quite yet. Although interestingly, while the value rose from £420m in 2012, the number of cases actually stayed more or less the same.

KPMG added that 41% of the crimes were by professional gangs. No surprises there.

Financial institutions were the worst-hit, losing a total of £1.5bn in 59 cases (and that’s not even including the alleged £1.3bn rogue trade at UBS, which hasn’t been tried yet), while the public sector lost £1.1bn – not insignificant, considering the Government’s current money worries. Crimes against investors were also popular, with Ponzi schemes, boiler-room scams and unregulated investment structures all featuring highly.

One of the most high-profile cases was a wine and whisky Ponzi scheme, where investors were promised a 110% return in within three months – and then promptly conned out of £30m. Which just goes to show, that if it sounds too good to be true, it almost certainly is…

Strategy Misc

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