'Five things I learnt chasing fraudsters'

When I first started doing this type of work, I remember being somewhat impressed by the complicated webs that fraudsters often had set up well in advance of committing the particular fraud in question, which frequently included a web of international bank accounts through which flowed digital transactions that could be difficult to trace.  

With the addition of cryptocurrency into the mix, and the use of unregulated exchanges, this can add further layers of complication. 

Despite this, there is some redeeming news. First, not all fraudsters are so sophisticated and my firm has acted on many cases in which funds have been successfully recovered. 

Even if you do not know the identity of the wrongdoer, you can take action against persons(s) unknown.

It is usual in a fraud case not to know (or to be uncertain as to) the true identity of the person you have been defrauded by, for example because a front is being used, the fraudster has stolen another’s identity, or a shell company is being used (ie the fraudster is deliberately trying to hide their identity).

In a fraud case we acted on in 2008, £8mn had been sent in smaller parcels to eight different banks each with different payee names, and it was impossible to know if the names reflected the true identity of those behind the fraud. So, in this case, who do we pursue? 

Be clear about the funds that you are prepared to spend pursing recovery at the outset. 

The general rule remains that proceedings may not be brought against unnamed parties. 

However, if the claimant can nevertheless identify a set of known features about that person, then it may be possible for the claimant to pursue relief against 'person(s) unknown'.  

To do this, it is important to make sure that the description is sufficiently certain so as to be able to identify both those who are included and not included in the description. 

It does not matter that the description may apply to no one or to more than one person, nor that there is no further element of subsequent identification.   

Even if you do not have a proprietary claim against the fraudsters – you have a personal claim against their other assets and can seek damages.

When your own funds have been stolen, you have a proprietary claim against those assets (ie that is my money and I want it back). 

One of the purposes of asset tracing is to trace those funds to their destination in order to seize them for recovery.

However, in this instance, a victim is also likely to have a personal claim against the fraudsters themselves (ie person(s) unknown). 

Hence, even if your stolen money has been dissipated and is beyond reach (either because it has been spent, or you are unable to trace it to its final destination) you can pursue the fraudsters for damages and then seek to enforce that against their personal assets (so long as they have identifiable assets). 

Having said this, fraudsters by their very nature are difficult to identify and locate, hence often this is not the most effective route for recovery.

For this reason, we would often recommend working alongside investigators to gain more information and certainty on the asset position once potential targets have been identified.

The more time has passed since fraud occurred, the less likely it is that funds might be successfully recovered.

There are other ways victim of fraud may wish to seek relief, and this can include exploring options against your own bank, the fraudster’s bank, the legitimate counterparty to the transaction (if applicable), and checking your own insurance policies for potential coverage. 

However, at least for now, the position vis-à-vis recovery against your own or the fraudster’s bank is likely to be difficult absent certain specific facts.

No two situations are the same and asset tracing is inherently unpredictable – for the good, and for the bad.

I have learnt through acting on many cases in this area that no two cases are ever the same and even now there can be surprising results (often for the better).

It is normal that the more time has passed since fraud occurred, the less likely it is that funds might be successfully recovered, however that is not always the case and should not be taken as read. 

In a recent case, in which the fraud happened more than one year ago – and hence there had been plenty of time for the money to change hands multiple time and be siphoned away never to be seen again – we had prepared the client for the eventuality that there were no funds left in the fraudster’s account. 

However, after obtaining disclosure from the fraudster’s bank, we learnt that the police had taken action, frozen the funds early on and seized those funds. 

Sometimes there are pleasant surprises along the way, but it is important to understand that this is not always the case, and to be realistic and know when to stop the pursuit.

We were therefore able to claim those funds back from the police. 

However, even when frauds have happened a long time ago, there is still value in moving quickly. 

In this case, we were told that the funds were imminently about to be transferred by the police to the Home Office, which would have made recovery more challenging and potentially impossible. 

Set your limits before starting the pursuit.

Following on from the above, given the unpredictable nature of this type of case, it is important to understand the inherent limits of an asset-tracing/enforcement exercise and be clear about the funds that you are prepared to spend pursing recovery at the outset. 

Obviously, this can be revisited over time depending on how the case progresses.

It might be that information comes to light that makes the road to recovery smoother (eg targets with assets are located within the jurisdiction). 

However, it is also possible that unhelpful information is found that makes the main target(s) an unpalatable option (eg they have no funds, or the companies that they are associated with are all shell companies). 

As mentioned above, sometimes there are pleasant surprises along the way, but it is important to understand that this is not always the case, and to be realistic and know when to stop the pursuit.

One of the most important things is to act without delay.  

This leads on to my most simple but effective tip, which is to always act without undue delay. 

Obviously the broader strategy needs to be considered, and the risks of doing certain actions that could have certain consequences, for example seeking a disclosure order against a bank could carry the risk of tipping off the fraudsters, but as a general rule, it is best to act quickly and seek legal advice.

Rosie Wild is a partner at disputes firm Cooke, Young & Keidan in London