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Alison Levitt QC proposes Combined Fraud Court

Posted on 05 September 2017

Alison Levitt QC proposes Combined Fraud Court

In Economic Crime: A new one-stop shop, an address given by Mishcon de Reya Partner Alison Levitt QC at the Cambridge Economic Crime Symposium on September 4 2017, she proposed a "totally new legal approach to economic crime". This approach is characterised by the creation of a Combined Fraud Court that incorporates both the civil and criminal systems, a Court which will be quicker and cheaper than the current framework and, crucially, will deliver a better outcome for victims of economic crime.

Read the full address below.

A year ago I stood where I am standing now and said to an audience (which may have included some of you) that if this is a war, we are not winning it.

So I asked myself the question has much changed in the last twelve months? Six weeks ago, the Financial Times published an article which stated that the number of prosecutions for white collar crime had fallen to a six year low, yet in the same period the number of reported economic crimes has increased nearly fourfold.

This is bad news. It sends a clear message that as a society we are not serious about stopping economic crime. If we don’t even try to punish it, why would people stop doing committing it?

The fact that the UK wasn’t doing so well was tacitly acknowledged in December last year when the Home Secretary announced that there was going to be a thorough review of how economic crime is investigated and prosecuted. But it’s now nine months later and we are still waiting.

In the last few days, we have been told that the economic crime review is due to report “at the end of the summer” (note today’s date). I thought I'd take this opportunity to set out what I would like to see in this Government review.

A year ago, I said what we needed was a courageous and imaginative solution to the challenges we face in relation to economic crime. A full government review lasting nine months should have provided that. Anything less than a new solution will be a missed opportunity.

Many of us have concerns about who it is that the Government is talking to. They have refused to make public the Terms of Reference, preferring to conduct an “internal review” restricted to the views of the Government agencies (Serious Fraud Office, Crown Prosecution Service, National Crime Agency, City of London Police etc.). We are told that all these agencies have had to fill in long and detailed questionnaires about their approach to economic crime. You are going to think I have a crystal ball when I say that I think I can be reasonably confident about what they have said.

I'm not alone in thinking that they will say  “we’re doing splendidly, we just need more money”.

You may agree with me that there are three problems with this as an approach. First, just doing more of the same doesn’t look like much of a solution to the problems we face. Secondly, there isn’t any more money. And finally what about the views of all the other stakeholders – us?

Are we not entitled to ask: why has the Government not spoken to anyone outside Government? They talk a great deal about public/private partnerships and the importance of information sharing. Why were the anti-corruption organisations, the financial institutions, the private sector investigators, the financial insurance industry, private sector lawyers and the organisations which support victims not asked to participate?

Had we been, we might have made some suggestions to the Government that did not just involve doing more of the same.

I am a former prosecutor now in the private sector and thus am part of a group which has some insight not only into the nature of the problem but also some idea as to possible solutions. I want to share with you today one of the suggestions I would have made to the Government, had they asked me.

Let’s start (as all good justice policy should) with victims. There are two categories of victim: first, those who actually lose their money as a result of fraud, and secondly, everyone else  because fraud has a huge financial burden on our economy. What do we victims of fraud most dislike about the legal system’s response? Two things: it costs a fortune and it takes forever. If you have been a victim of fraud, if you want your money back you will have to sue the fraudster through the civil courts to get damages. You will have to find the money to bring your case and it will take a great deal of time. Even if you win, the most you will have succeeded in doing is forcing the fraudster to give back what he or she stole in the first place – not much of a deterrent, you may think.

If you want the fraudster punished, then you are going to have to go through the criminal justice system. Resources are so tight that some police forces take the view that victims must choose: they can either try and get their money back using civil recovery or they can go for criminal punishment. If they go down the civil recovery route then the police have on occasions been known to say that it would not be in the public interest for a prosecution to take place and therefore they are not going to investigate.

That doesn’t make sense does it? If there are fewer prosecutions then there is less of a deterrent. That is failing all of us.

What I want to propose to the Government is this: we should have a totally new legal approach to economic crime. The one-stop shop. There should be a new branch of the court system: the new Combined Fraud Court. Why is it a combined court? Because it would combine the civil and criminal systems. Quicker and cheaper and crucially delivering a better outcome for victims.

How would it work? There would be a single trial, using aspects of both the civil and criminal law, heard by a specially qualified Fraud Judge sitting with a jury. At the end of the trial, the judge asks the jury whether they are satisfied to the criminal standard – beyond reasonable doubt – that the defendant is guilty. If the answer is yes, then the judge goes on to deal with aspects which are currently dealt with under separate regimes: sentencing the defendant, assessing and awarding damages to the victim, confiscating assets which represent the proceeds of the defendant’s crimes, and awarding costs.

If the jury is not sure of guilt, then the judge thanks them for their service and dismisses them. The judge then reverts to the civil procedure: she has heard all the evidence and asks herself whether, on the balance of probabilities, she finds in favour of the victim. If the answer is yes, then the judge assesses the damages payable to the victim and the costs.

What are the advantages?  The victim and the other witnesses only have to give evidence once, there is one trial rather than two, and so it is both quicker and cheaper. The same judge hears both the civil and the criminal aspects of the case so that there is consistency in assessing culpability in both  sentencing and in damages.

And where the victim is a corporation, then it could fund part or all of the process – perhaps under a compulsory insurance scheme.

Yes it’s different. Yes it’s not been done before in the UK. But this should be the purpose of a review: to look at things differently, to find new ways of dealing with new problems. Only then will  Government be serving the interests of victims and the wider public.

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