The below explains the difference between civil fraud and criminal fraud through frequently asked questions:
Civil fraud is a civil action that can be brought by a defrauded person (the ‘claimant’) to recover losses caused by the fraudulent conduct of others. The remedy sought by the claimant is usually compensation – a payment of money – from the alleged fraudster(s) (the ‘defendant(s)’). A civil fraud action is pursued by the victim(s) by way of a private action in the civil courts. The decision in a civil trial will be made by a Judge.
Criminal fraud is a criminal offence which will be prosecuted by the prosecuting authorities in the criminal courts (Magistrates’ Court or Crown Court) with the sanctions likely to be a fine for the defendant(s) and/or imprisonment. The decision in a criminal trial will be made by a jury.
Firstly, what do we mean by the “burden of proof”? In a legal dispute, one party has the “burden of proof” to show that they are correct, while the other party has no such burden and is presumed to be correct. The burden of proof requires a party to produce evidence to establish the truth of facts needed to satisfy all the required legal elements of the dispute.
In civil proceedings the burden of proof is on the victim (i.e. the claimant) to prove “on the balance of probabilities” that the defendant committed the alleged fraud. This means that the claimant will need to convince the Judge that it is more likely than not, that the defendant committed the alleged fraud.
In criminal proceedings the burden of proof is on the prosecution to prove “beyond reasonable doubt” that the defendant committed the alleged fraud. This is a higher standard of proof than in civil proceedings.
In civil proceedings a successful victim may obtain an order that the defendant repay the money/assets taken and or pay damages to the victim. It is possible very quickly to obtain judgment/reach settlement in certain circumstances, e.g. where you have very strong evidence against the defendant. There is no sanction by way of punishment for the defendant.
In criminal proceedings, depending on the offence for which the defendant is convicted, the court in which he is convicted and the value of the fraud, a criminal Judge can impose a prison sentence of up to 10 years and/or an unlimited fine.
If the defendant is convicted, the prosecuting authority can seek a compensation order against the defendant; this requires a convicted defendant to pay compensation to his victim(s). A compensation order can be given either as a sentence in its own right or alongside another sentence – such as a fine. The amount of compensation that a court may give is unlimited.
Compensation may be ordered for any amount that the court considers appropriate, taking into account any evidence and any representations made by:
Compensation orders are appropriate in straightforward cases where the amount of compensation can be easily calculated.
Where the offender does not have enough money to pay the full amount requested by the victim, the court may reduce the amount of the compensation order which means it may not cover the full cost of any loss or damage caused, or allow additional time for the offender to pay – compensation may be paid over a period of up to 3 years in appropriate cases.
Any compensation to a victim is collected from an offender first, before any other financial orders given by the court, such as victim surcharge, a fine or costs.
If your primary concern is to try and get your money back, then you need to bring civil proceedings. If your primary concern is to bring the defendant to justice by some form of punishment, then reporting the matter to the police is the best option for you. You can also do both.
No, in the UK there is no legal obligation to report a fraud to the police or to any other body, unless you and/or your business are part of a regulated sector that has a duty to do so.
If you decide that you do wish to report a fraud, you can do so to the Police, or to Action Fraud. Action Fraud is the UK’s national reporting centre for fraud and cybercrime and is run by the City of London Police, working alongside the National Fraud Intelligence Bureau who are responsible for assessment of the reports and to ensure that all fraud reports reach the right place. It provides a central point of contact for information about fraud and financially motivated internet crime.
It is possible for criminal and civil fraud cases to be run at the same time, although careful consideration should be given to the timing of commencing each action. Depending on the desired outcome, often it is better to pursue the defendant via a civil claim first. This is because:-
The decision whether to opt for civil or criminal proceedings to pursue a defendant is rarely straightforward. It requires the application of a range of complex issues to the facts of your case. Matters are made even more difficult because this decision often needs to be made within a short period of time and without all the necessary information. To ensure the best possible outcome it is crucial that victims of fraud take professional advice from experienced lawyers on the best way to navigate the civil and criminal jurisdictions and how those jurisdictions relate to the facts at hand.
If you believe you have a claim for civil fraud, or you are being accused of fraudulent activity, and wish to discuss this further, please contact Claire Boucher.
You will also find more information in our “Guide to Civil Fraud”.
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