Attorney General announces new fraud strategy for plea negotiations

National Faud Strategy

23.03.2009

It is estimated that fraud costs the UK £14 billion per annum. To help address this, the Attorney General's Office announced the launch of its National Fraud Strategy on 19 March 2009. The strategy aims to bring together governmental departments such as the City of London Police, The Serious Fraud Office and the Financial Services Authority to pool information in order to better monitor and tackle fraud.

One of the key changes brought in by the National Fraud Strategy will be to introduce plea negotiations for fraud investigations. The advantage of plea negotiations is that an agreement is reached early on which saves time and therefore costs associated with a complex investigation and lengthy trial. There are also advantages to the person under investigation as s/he is able to obtain a quick end to the investigation, guarantee a significant reduction in sentence for an early plea, and is in a position to dictate the terms on which he pleads guilty. The extra resources can be used to tackle other crimes. The measures also aim to increase the penalties available to the court and include banning orders preventing them from professional practice and winding up orders. The measures also aim to help those who have lost out to a fraud, and the courts will have stronger powers to preserve and recover assets in order to pay compensation orders.

The Council of Circuit Judges has expressed concern over the US style of plea bargaining where more serious charges are alleged in order to force an early plea bargain and they argue the court will not have the discretion to accept, amend or reject an agreement. There are also concerns from the judiciary that the prosecutor will not have all the facts at that early stage. For defence teams there are also significant problems in advising a client to plead guilty before all the facts have been considered and the evidence disclosed or tested. Therefore anyone who is subject to a criminal investigation for fraud needs to seek legal advice at a very early stage to assess whether to accept or reject an offer of a plea negotiation.

The extent to which plea negotiations will encourage those under investigation to plead guilty on an agreed factual basis in a fraud investigations remains to be seen. Much will depend on the defendant's instructions and the strength of the evidence. Many complex fraud cases consist of thousands of pages of evidence, much now electronic, which generally is not disclosed to the defence until after charge. Without disclosure of evidence it may be difficult for legal teams to assess whether there is sufficient evidence to establish a strong case for the prosecution. It is yet to be seen how effective, workable and popular these proposed measures will be in practice. Corporate bodies under investigation who face fine and/or confiscation orders on conviction are more likely to be interested in entering into plea negotiations as opposed to individual defendants. Reputational damage and costs of defending complex litigation will be considerations for corporate defendants. Individuals who could face imprisonment and confiscation orders after pleading guilty following a plea negotiation are we believe less likely to accept such an agreement at an early stage of the proceedings.