Fraud in the South West and Wales reached £11.3m in the first six months of 2013, according to KPMG’s Fraud Barometer. The report reveals that a sinister trend has emerged: employees and managerial staff have become the biggest perpetrators of fraud and were responsible for 83% of frauds allegedly committed so far this year.
While businesses were most frequently targeted by fraudsters, investors were the worst hit financially. A single large case targeting investors accounted for 68% of the total fraud in the region, when a foreign exchange dealer in Plymouth allegedly committed a series of investment frauds totalling £7.7million. The case is due to be heard by Plymouth Crown Court in the autumn.
Anant Modi, Head of KPMG’s Forensic team in the South, said:
“With pensions, traditional investments and incomes under relentless downward pressure, people are feeling compelled to seek alternative ways of growing their savings to maintain their lifestyles. This desire to boost depressed returns may tempt some investors to try new schemes offering returns way above the market norms.
“Unfortunately, if it looks too good to be true, it probably is. Professional fraudsters are highly adept at dressing up their scams to look like legitimate investment opportunities and many honest investors can fall victim to such ploys. We note that the Financial Conduct Authority is moving to regulate alternative asset classes which may mitigate the problem, but the public should still be alive to the threat of investment scams.”
Beware the enemy from within
According to KPMG’s findings, the majority of fraud in the South West and Wales was perpetrated by men over the age of 46. This demographic was responsible for 55% of the number frauds committed and 79% of the fraud by value. 83% of this group were also employed by their victim, either as an employee, or held managerial responsibility.
Anant concludes:
“What is clear from this year’s report is that some fraudsters are choosing to bite the hand that feeds them and are using their position within a company to boost their income through fraud. This puts an even greater burden on our embattled businesses to safeguard themselves from the enemy within.
“It is a welcome development to see that the Government continues its fight against white collar crime. A very severe punishment regime is being proposed in the sentencing guidelines consultation paper issued recently to tackle the growing scourge of white collar crime and the acknowledgement that the real cost of fraud is more than just financial.”
