The Serious Fraud Office has been criticised in recent years for failing to tackle mounting levels of property-related fraud, but it is finally showing its teeth with a rising number of convictions.
Last week, self-styled “Lord” Edward Davenport was jailed for more than seven years for his part in a commercial loans advance-fee fraud, which duped entrepreneurs seeking finance for construction projects in the UK and continental Europe out of millions of pounds.
Just a few months earlier, in a separate case, property developer Saghir Afzal and surveyor Ian McGarry were jailed for 13 years and seven years respectively. The pair pleaded guilty to a £50m commercial mortgage fraud that was based on the inflation of property prices using false leases.
Another property-related alleged fraud case is now in court. It involves investor Achilleas Kallakis and his business partner, Alexander Williams, who are both pleading not guilty to charges in relation to a £60m possible fraud against Allied Irish Banks and Bank of Scotland. Both are vigorously defending the claims.
More people coming forward
The SFO currently has almost £250m of apparent property-related fraud on its books and says that its recent successes are encouraging more people to report their concerns to the agency.
Jane de Lozey, a senior lawyer at the SFO, says: “I think in this country the culture of reporting suspicious activity has been slow, but that is beginning to change.
“Owing to the level of publicity that our cases have got this year, we have seen a surge in the amount of calls we are receiving. It is having a positive effect in encouraging people to report crimes.”
De Lozey says that the convictions it has secured this year have ensured that the unit is on track to realise its five-year plan. That plan includes being more proactive in developing cases, promoting a greater awareness of fraud, putting victims at the heart of its investigations and trying to compensate them for their losses.
Conviction rates in SFO cases have improved dramatically over recent years, with the latest statistics showing an increase from 62% in 2008 to 84% in 2010-11.
Seizing assets
De Lozey says that the SFO is also doing more to reclaim any profits from scams.
“We will use all powers at our disposal under the Proceeds of Crime Act 2002 to get compensation for victims and to ensure that the fraudsters are not left with the benefits of their crime,” she says.
In the case of McGarry and Afzal, that fight for compensation will begin in January. De Lozey says: “Four financial institutions took a hit of almost £50m in the McGarry case and we will try to seize as many assets as possible to recuperate some of the losses.”
Serious crime prevention orders and confiscation proceedings are also being worked up in the case of Davenport et al.
But the SFO says its role is not just to bring fraudsters to justice, but also to help in the prevention of fraud.
In an exclusive interview with Estates Gazette earlier this year, SFO director Richard Alderman said: “For me, stopping somebody becoming a victim of fraud is a much better result than prosecuting a fraudster once all the money has been lost.”
But, with another economic downturn looming on the horizon, the SFO is predicting a new surge of fraud cases coming to light as more cracks appear in deals that were done in the booming market.
joanna.bourke@estatesgazette.com
