How to Spot Fraud

How to Spot Fraud

How to Spot Fraud

How to spot fraud. Fraud is usually a simple thing to spot. Fraud by its nature may sound sophisticated but in reality, it can often be spotted a mile away.

The image of a forensic fraud spotter wading through reams of computer data is the exception rather than the rule. His Honour Jude Paul Matthews said recently in the case of Brake & Ors v Swift & Anor [2020] EWHC 1810 (Ch): “…judges are not superhuman, and do not possess supernatural powers that enable them to divine when someone is not telling the truth.“. The same goes for fraudsters ie. they are not superhuman and they generally cannot make evidence vanish. Fraud arises from transactions and transactions save arguably for those unrecorded and undertaken in cash have a trail.

In many instances assembling the trail is the most time-consuming part of the endeavour as opposed to following it.

Cash might still exist as a material way of undertaking transactions but it is for many a slow and conceivably inconvenient way of undertaking transactions, particularly on a large scale. It will these days attract attention, as the need for doing business in cash becomes progressively less and less. Doing it with large amounts of physical cash can be awkward and cumbersome. That is why much fraud today has a trail and when you have a trail, it can be followed.

When you are dealing with fraudsters follow three simple rules and you probably will not go far wrong:

  1. Do underestimate the situation or the personalities.
  2. Expect the unexpected.
  3. Be nice and avoid the distraction of an argumentative setting.

This post largely considers the assessment of the human element to fraud from the vantage point of dealing with matters of ‘evidence’.

If you want to confront fraud two characteristics that are likely to be a prerequisite for spotting it, are persistence and tenacity. An essential ingredient in addressing fraud is the correct mindset. As a general point, a fraudster will rely upon the trusting nature of people.

As a starting point there are essentially two ways of tackling the approach to unraveling fraud. One is to adopt a theoretical mindset set out by the late Christopher Hitchens, in which he said as follows: ‘that which can be asserted without evidence, can be dismissed without evidence‘.

On the basis of that, a way to spot and unscramble fraud is to avoid trusting information which is not cross referenced to objectively reliable information. This is a strategy commonly deployed by judges in our courts. It is common place to read in a judgment handed down by the court, that a judge has weighed up the credibility of the witnesses in a Trial and in some instances, he or she will determine that a given witness was unsatisfactory or that for one reason or another their evidence cannot be relied upon except when it is supported by or it is consistent with contemporary documents.

Accordingly therefore consideration of information with reference to contemporary documents is fundamental in assessing and also even protecting oneself from being the victim of fraud. If you get a feeling that you are being misled by someone who is after either your money or money that you control then ask them for relevant documents.

However, what happens if the ‘important’ contemporary documents themselves have been forged? This is not always easy to spot. However, what is potentially important is that an assessment of pieces of information, is undertaken with reference to more than one source of contemporary document. It can be fatal in spotting or attempting to deal with fraud, to exclude the full range of available evidence that you can assemble.

In other words, as in the case when you are assessing whether or not what you are being told is reliable, you can draw confidence potentially from the consistency that a document or a given piece of information has with reference to other independent contemporary documents. You avoid unduly training your sights on a single piece of evidence of any kind in order to establish the truth and the facts.

Another point when you are trying to assess and deal with matters of fraud are matters of consistency. There are no hard and fast rules about this but a person who is inconsistent in their version of the facts, opens themselves up conceivably to suspicion. In the same way that a person who delays, prevaricates and moves at molasses-like speed also opens themselves up to suspicion. However, certain fraudsters will of course be aware of this and seek to ensure that consistency is in effect their middle name. It therefore follows that reliance upon consistency alone may not be sufficient to determine and or unravel fraud. It is crucial that consistency is something to keep an eye out for but inconsistencies do arise, particularly where people’s memories are concerned. This is another reason why reference to contemporary documents and such documents being sought out as widely as possible is perhaps, one of the greatest mechanisms that can be deployed in the fight to unravel fraud.

It is fundamental that you undertake a character assessment of the individual who you may have concerns about. The manner in which they act, particularly when questioned can be of central importance. It is the extent to which a person that is called upon to answer questions, can provide answers to the questions that they are asked, as opposed to the questions that they would like to be asked, that can so often be illuminating and so crucial when assessing credibility. If the questions are uncomfortable for the person who is being asked them and such a person is seemingly unable and or unwilling to give a straight answer to a direct question, this should send the alarm bells ringing.

This is something you might bear in mind when you are considering what weight to attribute to the answers to your questions. This is particularly noticeable if you repeatedly ask a question and somebody goes literally out of their way to avoid answering the question. That should not only send alarm bells ringing; that should send you in the direction of thinking perhaps that there is no smoke without fire.

However, a word of caution here in that simply because somebody is inconsistent, or does not answer the question or cannot refer to contemporary documents; although tempting it might be, this should alone not be the basis for an assumption of dishonesty. There are many reasons that can lead to people acting in such a way and whilst such a position will be unhelpful and possibly even of general concern, it is not alone grounds for alleging fraud. It is, however, something that you can certainly bear in mind.

Instinct is something else to consider. If something does not seem right based on a logical, rational and reasonable assessment of objectively reliable information, then use your instinct to dig deeper.

At the end of the day few people in my experience relish being the subject of such investigations. A person who has nothing to hide can cast light on matters potentially with ease and expedition.

This post “How to Spot Fraud is not legal advice and no liability is accepted for any reliance placed upon on.