Fraud and the Investigation industry

There is something not quite right about someone who professes an expertise in fraud investigations ...

The Private Investigator’s position as viewed by The Association of British Investigators’ past president, Tony Imossi, MABI, CFE who is the Managing Director of Solicitors’ Law Services.

Accredited Fraud Investigators Scheme

There is something not quite right about one who professes an expertise in fraud investigations. Fraud is a difficult yet potentially interesting area of law to the acquainted but hugely boring to those lacking the knowledge or inclination to study the subject under its many guises.

Students of the subject have to be blessed with an unhealthy if not unrealistic self righteous attitude that stands uneasy with their street wise understanding of the scams.

I confess to my own interest in this area of investigative work. I write this article knowing that this highly specialised field may not be so entertaining or of practical use to all readers and as tempted as I am to share some of my knowledge and work experiences in this field, I will limit my contribution to the subject in this article.

First, I must recommend members to read the ‘Sweet tea’ scam of a High Yield Investment Fraud described in some detail in the FBI press release on www.fbi.gov/pressrel/pressrel03/mueller030703.htm

Still awake? Then it is worthy to mention that due to a lack of resources the UK departments of law enforcement that would otherwise protect or rescue the victims of such crimes are simply unable to cope.

The victims are increasingly needing to seek help at their own expense by engaging Private Investigators who in turn provide the investigative and recovery service to the public with one or both hands tied behind their backs by over zealously enforced yet misunderstood privacy laws.

A problem that I personally was hoping would be resolved, in part at least, by the implementation of the Accredited Fraud Investigators Scheme.

Alas, the main Accredited Fraud Investigators Scheme, although having been agreed in principle by the stakeholders, Metropolitan Police, City of London Police, Confederation of British Industry and the Association of British Insurers, seems to have lost momentum and interest.

Could this be due to a very limited consultation with the investigative sector? Dare I point a finger of suspicion on the few larger players whose interests were best served by keeping this service away from a competitive level playing field such a scheme would have created? I understand that some police authorities have introduced similar schemes but their success is very questionable. Perhaps it is early days.

Identity Theft and the privacy laws

By the way, were you aware that there is no such crime in the UK as “Identity theft”? Well not yet.

What is against the current law is using the identity to obtain money (identity fraud).

The interpretation of the Data Protection legislation has enabled, in deed encouraged, this area of fraudulent activity to mind boggling extremes. I remember not so long ago being able to see and recognise such fraudulent activity by a simple credit search against an address. Not so these days and thus the fraudsters can carry on with their criminal activity, unchecked, for much longer.

There seems to be only one source that monitors the identity theft problem with any degree of reliability and that is the Credit Industry Fraud Advisory System (CIFAS). This facility is by its nature a closed group, which whilst providing a valuable service to the credit industry is beyond accessibility to most investigators. CIFAS statistics showed an increase of identity theft by 461% in 2000, followed by a rise in 2001 of 122% and further growth of 54% in 2002.

Identity theft is not just used to steal personal credit but is being used frequently in theft of corporate identities. And here lies the area in which investigators can not only find reasonably well-paid work but also go about their business less impeded by the privacy laws in the UK.

I could not help but observe an almost evil-like glint in the eye of those charged with enforcement of this pro-criminal bureaucracy as they speak publicly on the subject. Maybe the civil rights privacy obsession and madness will implode at some point and free markets will be given a new lifeline to natural progress. It must surely be only a matter of time.

In the meantime and in the absence of privileged access to data (maybe a dream but we champions of victims’ rights can but try) the rest of the private investigation industry soldiers on trying to earn a crust in the ever-decreasing bread-and-butter market.

So where has bread-and-butter work gone?

Wrongly perceived by the public (and the authorities) as a Private Investigator’s main activity, what little domestic investigation used to be available has almost evaporated. A generation ago the burden of proof in matrimonial cases was such that most divorces presented work for the Investigators. Not so these days.

I recall the days when ALL litigation originating process required personal service unless otherwise ordered by the Court after attempts had failed. I am referring to the hand delivery of legal papers. A huge ancillary industry for the PI sector vanished with the initial revision of these procedures 25 years ago. An industry known publication by The Association of British Investigators, originally by its past president, the late Alan Drake, entitled The Process Servers’ Guide was written because of the volume of such work that then existed. Process serving by hand is now rarely required.

The investigation and recovery industry benefited hugely by the mistakes of the over-lending eighties. The credit and banking services learnt by their mistakes and quite rightly so, albeit after a heavy cost, changed policy to prevention rather than cure. This saw a progressive decline in routine trace, financial status, litigation support and recovery work during the nineties. The suppressed interest-rates the UK is currently enjoying maintain the status quo. No doubt when the bubble bursts, things will change again.

Concurrently, process serving and other more technical areas of litigation support took another hammering from the Woolf Reforms. I have to confess that whilst I take the view that the Civil Procedure Rules has had the opposite effect to that intended in the bigger picture, “Access to Justice”, the CPR did at least apply some common sense and practical approaches to what often became unnecessarily bureaucratic procedural requirements, such as the need to pin down and serve legal process on an evasive and uncooperative litigant. What nonsense. If someone wants to duck and dive responsibility, so be it, such folly is exposed when creditors and other civil victims enforce their Court Orders.

As one door shuts another opens. Hence my opening comments on the fraud related investigative services.

There is a noticeable change happening that may or may not be such a bad thing in the long term. The bigger and richer investigation agencies are becoming bigger and richer still. The smaller and less well-off agencies are finding their margins getting tighter. The licensing process beginning to unfold following The Private Security Industry Act 2001 seems to recognise this and consequently the views and needs of the lone operative agents are looked upon with less relevance by the authorities. But it is recognised that the larger agencies, whose activities are better described as “Case Management” are dependant on the assistance and services undertaken by the more modestly sized agencies. The exchange of views and cooperation currently taking place in the licensing process witnesses this point.

However, without the bread and butter work one wonders who will be left to see through the implementation of the statutory regulation.

Tony Imossi MABI, CFE
Managing Director
Solicitors’ Law Services

Links:
Tony Imossi, Solicitors’ Law Services, www.investigations.co.uk