Introduction to fraud - Universal Law

Introduction to fraud

in this lesson what we're going to do is  talk about fraud we're going to

cover  everything that we need to know for the  crime of fraud in this lesson so

we're  going to have none of this introduction  to fraud none of this 10 to 11

videos  all focused on different aspects of  fraud we're going to cover it all in one

 lesson okay because for the most part  we've actually  covered a lot of the

things that we  already need to cover in the case of  theft because  theft and fraud

are actually very  similar in terms of a lot of the things  that are  required for

proving the the criminality  in terms of these individuals who are  committing theft

and fraud  for the most part things related to  dishonesty um it applies in the

same way  as it does when we're looking at the  1968 theft act so when we look at

fraud  we're going to be talking about a little  bit um at the basic introduction

the  basic background to why we have the  fraud act and then we're going to start 

to unpack the different aspects of the  2006 fraud act focusing mainly on the 

first of the uh instances of fraud which  is fraud by false representation but  then

also looking at the other two that  are also outlined in section one of the  fraud

act .

Fraud Background 

so as a basic background to the fraud  act itself before we had this 

overlapping um or this overarching shall  we say piece of legislation that deals  with all

aspects of fraud there were a  great deal of what the law commission  said were quote

overlapping but distinct  statutory offences surrounding the  concept of fraud and

deception  and this was very true they all had a  number of things in common they were

all  result crimes so there had to be a proof  of causation to a particular gain

and so  you were gaining some kind of particular  thing  and the gains were

actually represented  by different crimes so you'd have a  different crime for if you

were to gain  property or for example the execution of  a valuable security or for

example the  gaining of money  all of these things were represented to  different

crimes and as you can probably  imagine because there are lots of  different things

that could be  potentially gained  via some kind of fraud you could  probably

understand that this was a very  overlapping very complicated um  different  very messy

aspects of these dishonesty  offenses and these deception based  crimes and so with

the replacement of  all of these with the lovely 2006 fraud  act we seem to have a

much broader  overarching legislation  that really deals with and ties up all  of

these problems  so effectively there were just too many  technicalities and over

overlapping  issues to effectively uh deal with any  kind of fraud that has taken place 

when it comes to all of these different  overlapping crimes  so instead we get the

fraud act now  on the one hand the fraud act represents  a very significant um you

know  development in the law in the sense that  it does remove all of these

different  crimes and and introduces instead um  just this one overlapping um

overarching  at least aspect of of the crime which is  just that of fraud and the first

section  of the fraud act subsection 1 says that  a person is guilty of fraud if he is

in  breach of any of the sections listed in  subsections 2 which provide

different  ways for committing the offense  now you might already think that  even

though we now have this more  overarching uh  piece of legislation that deals with

all  kinds of different frauds there are  still different ways in which you can 

commit the crime of fraud and  so in on the one hand it's obviously  significantly

better than what we  previously had but on the other hand  there are still different

ways in which  you can commit the events of fraud  and subsection twos talks about

what  these offenses are so we have fraud by  false representation that is outlined

in  sections two  fraud by failing to disclose information  that's outlined in

section three and  then section four is fraud by abuse of  position  for the most part

we're gonna focus on  the first of these because the second  two sort of fall into

place quite uh  significantly once you understand all  the aspects of the first so

what i mean  by this is there's quite a lot of  overlap both with  the other

sections that are outlined  here  but also with theft as well so you're  going to feel

like this is a lot a lot  of this is going to be familiar to you  when we go

through it and so therefore  we're not going to spend as much time on  the second two

of these but more on the  first  so let's begin by talking about the  first of

these um crimes fraud by false  representation there should be note that  the

maximum penalty is 10 years which is  slightly higher than that of the seven  year

maximum penalty for theft um so it  does sort of instill  a little bit more of a

severity of the  crime so let's begin with the fraud act  uh section two of the fraud

act which is  fraud by false representation we're just  gonna outline the act

itself we're going  to look at the actors race elements the  men's rare elements and

then we're going  to look at some of the implications of  how we actually go about

making a  determination of fraud by false  representation  so  section 2 subsection 1

states that a  person is in breach of this section if  he a dishonestly makes a false

 representation and b intends by making  the representation uh  to i uh make a

game for himself or  another or to cause a loss to another or  expose another to a

risk of loss  so this is the um  the first part of the fraud act the  false

representation element of the  fraud act let's look at what each of  these elements actually

are so what are  the actus reyes and men's rare elements  of these offenses well

let's break it  down into these appropriate elements the  first and only actress

reyes element for  this offence is the first part which is  the making a false

representation  which is this part here which is um part  a so we are making a false 

representation the only and then the  rest of it is just all mandrea so that's  the only

actor's race that's the only  thing you actually have to do in the  real world to

satisfy the actors reyes  for this offense  the rest are men's rare elements so  there

is the um  the knowledge as the falsity of the  false representation you have to

know  that you are making a false  representation there is the dishonesty  aspect

so the dishonestly making a false  representation and then there's the  final

aspect which is the intention uh  by making the representation to a gain  for himself

or another or to cause loss  to another or expose another to a risk  of loss so

those are the men's rare  elements that's the actor's race element  let's break it

down in a little bit more  detail .

What constitutes a false representation ? :

 so the first question is what actually 

constitutes a false  representation now what causes a false  representation is actually

incredibly  broad  we could have a false representation as  to the facts of a particular 

circumstance as to the law of a  particular circumstance or even to the  state of mind of 

of either the maker of the  representation or even to some third  party it's a

very broad framework by  which we can um satisfy this actus race  element okay  we

can have what is known as an express  false representation so telling a  blatant

lie expressly telling a lie or a  more implied false representation  through 

possibly the conduct of an individual or  possibly through the emission of an 

individual and there is where we have  a an implied false representation  sections two

subsections two a rep tells  us that a representation is can be  defined as false if it is

quote untrue  or misleading uh untrue we obviously  know it would be an evidentiary

claim we  have to uh to the claim itself whether  or not it is true but the word 

misleading gives us an even broader  mandate because it means that even if d  believes

that uh what they were doing  sorry it gives a very broad mandate by  misleading

because it includes a number  of different aspects  that may be um  considered to be 

not necessarily directly making a false  representation but at least allowing 

somebody to believe a certain thing by  way of false representation that can  also

constitute um the actor's race  element um one aspect that isn't the  case is if the

defendant believes that  what they are doing is untrue or  misleading they are actually

they  believe they are doing a false  representation but in actuality it is in 

fact a true thing that they that they  said or done  um then they cannot be said to

have  satisfied the actors reyes and therefore  they cannot have committed the

crime and  the case of cornelius  highlights this quite nicely if you want  to see

that if you want to read a little  bit further detail  basically if you fully

intend to  try and commit fraud by false  representation but the actual false 

representation you are um trying to um  trying to submit to  to a particular person is

actually true  then you haven't committed fraud which  is quite interesting 

Mandatory elements :

now let's talk about the men's rare  elements the mandatory elements are much  broader as

i've just mentioned there are  three aspects of it rather than just the  one actors

race  firstly the defendant must have  knowledge that the representation is or 

might be untrue and misleading okay  that's sections two subsections to um b  and we

also have this requirement of  dishonesty now you will be you will  reminded of the

last lesson when we  looked at the men's rayer for theft that  dishonesty obviously

plays a very key  role we already know just like with the  case of theft that the

what constitutes  dishonesty is a matter for the jury not  for a judge this was

made very clear in  case law from the previous lesson  and the test that is applied

is just  like the same test that is applied to  the cases of theft which is the

iv test  despite the fact that the act was  actually written with the assumption 

that it would be the ghost test that  applies don't forget the ghost test came 

from 1982 and therefore um was  established case law for about 30 years  before it

was overturned  by lord hughes  and then it was um eventually um  supported again

in a case from 2020 as  remember if you want to refresh on this  go back to look

at the men's ray for  theft video that we did yesterday  but we know that 

despite the fact that um the ivy test is  what is in play uh the uh the  the the law

commission did actually  write the legislation under the  assumption that it would be the

ghost  test that applies instead so  while this  may sound like some kind of a

problem  but it's not necessarily a big issue  since there are a multiple different 

other aspects of men's ray are involved  and also because the actress reyes of  the

crime of theft by false  representation includes the act of  making a false

representation so there  is a certain  context of wrongfulness that exists  within the access

race itself which  means that is almost  if we can show the actors reyes it's 

almost assumed that we have a level of  wrongfulness or dishonesty  present in the

case and therefore the iv  test that is applied  really  is almost acts as a

negative defense for  the defendant rather than a positive  test for the jury so it

almost acts as a  negative  way of trying to disprove dishonesty  rather than trying

to prove dishonest  dishonesty by within the case of fraud  um as applied and by

the jury so it's  not necessarily a big problem that the  act was written with the

ghost test in  mind rather than the iv test but this is  just how the law has

operated .

  Intention to Gain :

the next aspect is the intention to gain  or cause a loss this only applies

to  property whether that be real or  personal property and we define this in 

sections five subsections two so we have  here in section five subsections two a  um

extends only to gain or loss in money  or other property include any such gain  or

loss whether temporary or permanent  and property means any property whether  real

or personal including things in  action and other tangible property and  then we

have the fact that gain includes  a gain by keeping what one has as well  as a gain

by getting what one does not  have  so  at first there's a uh  you will notice

that there is some  similarity in the language when it comes  to what constitutes

property for theft  and what constitutes property for fraud  by false representation so

the idea of  things in action and intangible  properties and  the idea of real and

personal properties  but we also have something that is  interesting that it slightly 

distinguishes theft from fraud which is  with the case of theft there is the  intention to

permanently deprive one of  one's property whereas with fraud  we have the fact that gain

can include  gain by keeping what one has okay so  what one already owns or gained

by  getting what one does not have  so we have an aspect here where  it doesn't

necessarily have to be a  permanent deprivation of gain  it can be keeping what one has or

 getting what one does not have similarly  loss is uh defined in a very similar

way  um in the same part of the legislation  by saying that loss includes a loss

by  not getting what one might get as well  as a loss by parting with what one

has  so again both are these aspects of um fraud by false representation.

Failure to disclose :

let's move on then to the next of these  different aspects of fraud which is the  fraud 

by failure to disclose information which  is section three of the fraud act like

i  mentioned i'm only going to touch on  these two final ones very very briefly 

because they are going to be covering a  lot of the similar ground already so a 

person is in breach of this section if  he a dishonestly fails to disclose to 

another person information which he is  under a legal duty to disclose and be  intends

uh by failing to disclose  information uh to make gain for himself  or another or

to cause a loss to another  or to expose another to a risk of loss  again  the

second aspect of this uh of this  part of the statute is exactly the same  as

sections two and the only distinction  is the actus reyes element so we still  have the

dishonesty we still have the  intention of gain and the and the  intention to cause uh

loss so  we have the uh access race element being  the simply failing to disclose 

information under which d has a legal  duty to disclose  now this can arise out of many

different  aspects and  effectively if you're thinking of this  through a problem

question if you have  a problem question on this  on this issue uh you should be able

to  work out whether or not um the defendant  actually has a uh a legal duty to 

disclose a particular piece of  information that shouldn't be something  that is a

matter of debate within the  law that's something that you should  know about already

um you know things  like um  failing to disclose the fact that you  have um  got

a a secondary income while also  claiming benefits  failing to disclose

information relating  to a mortgage failing to disclose  information relating to insurance

that  could affect your ability to claim  insurance etc etc these are the kind of 

things that one has a legal duty to  disclose when in these situations  and then the

mens rare elements  dishonesty again the ivy principle  applies and then we also

again have  section five which applies with the  intention to make  a game for

himself or another or to  cause a loss to another or to expose  another to a risk of

loss section 5  applies iv applies it's exactly the same  as sections 2 which is

the fraud by  false representation .

Abuse of Position :

finally we have sections 4 which is the  fraud

by abuse of position again the  only element that changes is the actor's  race

element of this offense and we say  in section 4 that a person is in breach  of this

section if he a occupies a  position in which he is expected to  safeguard or not act

again uh the  financial sorry or not act against the  financial interest of another

person  slight typo there  and we then have part b i'm saying that  they dishonestly

abuse that position and  they intend by means of the abuse of  that position to make

a game for himself  or another or to cause loss to another  or to expose another

to a risk of loss  again part c is exactly the same um with  within this instance

and part b again  dishonesty  iv applies uh section five applies to  part c the

only distinction is the  actors race again which is where you  have to occupy a

position in which you  are expected to safeguard or act not act  against the financial

interests of  another person  so  the final thing i want to make note is  uh oh yeah

sorry the final thing once  may note in this part here is the fact  that uh under

section two we also have  the fact that a person may be regarded  as having abused

this position even  though his conduct is consistent uh  consisted of an omission

rather than an  act so emissions apply here as well  the final thing i want to make

note of  is if you are given a problem question  on this kind of along this kind of

line  of dishonesty offences  for the most part you will probably if  given a

problem question on dishonesty  offences  have to deal with whether or not you  apply

theft or fraud to the particular  conduct because there are obviously  advantages

and disadvantages to both of  those positions  because on the one hand while theft

 contains quite a long and extensive  amount of actors race um evidentiary 

problems that you have to deal with you  know the concept of appropriation the  concept

of property the concept of said  property belonging to another  when it comes to

fraud  there is a very little in the way of  terms of in terms of actors reyes that 

needs to be shown but then on the other  hand with the case of theft um there's 

very little men's rare that needs to be  um shown compared to  the case of fraud

which is the  dishonesty aspect and the section five  offense part as well  but  in

terms of doing a problem question is  probably if you're not sure  whether to apply

theft or fraud  there's probably a reason for that  you'll want to be  talking about

both of these offenses in  the problem question it means that if  they're if it is

not abundantly clear  exactly which of the two offenses that  we're that we're

talking about you are  going to then  need to  wrestle with the fact and go back and 

forth on whether or not you apply theft  or fraud just a little a side note for 

those who are doing exams and doing exam  problem questions  the final dishonesty

offenses that i  want to cover are making off without  payment robbery uh burglary and

i  believe there's one other and then we  would have finished all of these 

substantive crimes uh for um criminal  law and we're gonna deal with a number  of um

external uh extra problems that we  have to deal with for criminal law such  as parties

to the crime um the concept  of duress the concept of intoxication  and capacity

uh general defenses and  also inco-8 offenses as well and that's  what we'll

cover for the next  few lessons after we've covered the rest  of the dishonesty

offences