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What is the difference between civil and criminal fraud?
While the laws surrounding fraud are complex, most people understand that anyone found to be guilty of the offence could face a range of serious penalties.
However, what many people do not realise is that fraud can be pursued as either a civil or criminal matter. If someone believes that they are the victim of fraud, they can choose to have it treated as a criminal matter, or they can use civil law to recover their losses.
It is important to understand the differences between the two types of fraud and how they may apply to your situation, especially where you have been accused of committing any type of fraud.
We discuss both civil and criminal fraud in detail below, in addition to several other important questions that you should be aware of if you are accused of a fraud offence.
What is civil fraud?
To summarise, civil fraud will involve any type of fraudulent activity that is pursued by a victim by way of private action in the civil courts. The victim would seek the recovery of any assets they have lost, or the payment of compensation to account for their losses.
A trial will take place following a civil fraud investigation, with a final decision regarding the civil fraud penalties being made by the judge presiding over the case.
What is criminal fraud?
As you might expect, criminal fraud is a criminal offence. This means that prosecuting authorities, such as the Serious Fraud Office (SFO), the police , the DWP or Trading Standards or in some rare instances an individual or company, have enough evidence to bring the matter before the Magistrates Court or Crown Court.
Defendants who are found guilty could face a range of criminal fraud penalties, including fines and terms of imprisonment.
What is the burden of proof during civil and criminal fraud investigations?
There is a clear difference between the burden of proof required for civil fraud and criminal fraud investigations.
To bring forward civil fraud charges, it must be demonstrated that ‘on the balance of probabilities’ that the defendant in a case committed the alleged fraud.
Whereas for criminal fraud penalties to be actioned, it is up to the prosecution to prove ‘beyond reasonable doubt’ that the defendant committed the alleged fraud.
Does a fraud victim have to choose between the civil and criminal justice systems?
No, not necessarily. There is nothing preventing someone who believes they are the victim of fraud from pursuing both civil and criminal fraud claims. In some cases, they may choose to do so simultaneously.
Simultaneous civil and criminal fraud proceedings will be allowed unless the defendant in the case would face a risk of prejudice which could lead to injustice in either civil or criminal proceedings or both.
Can my assets be frozen if I am a defendant in a civil case?
If you are under investigation for fraud and are facing either criminal or civil fraud penalties, your assets could be ‘frozen’ while the investigation is ongoing.
A freezing order could be served against you, whether you are acting as an individual or on behalf of a business, for a number of reasons. Typically, a freezing order will be put in place where the court believes there is a risk you will remove assets beyond the reach of a claimant.
Will I be ordered to repay money to a victim in civil and criminal fraud cases?
The answer to this will largely depend on the particulars of the case itself. In civil fraud cases, a victim may be able to obtain an order that means you, as the defendant, must repay the assets that have been taken, or pay damages.
In criminal fraud cases, if you are convicted, the prosecuting authority may see fit to issue a compensation order which requires you to pay compensation to the victim.
What should I do if I’m accused of civil or criminal fraud?
If you are facing an accusation of fraud, it is essential that you have robust representation and support from expert fraud defence solicitors. It could mean the difference between being found guilty or avoiding penalties altogether.
At Renshaw Derrick, our civil and criminal fraud defence solicitors have years of practical experience handling serious fraud and money laundering cases. As a firm, we are members of the Law Society Criminal Litigation Accreditation Scheme for our high level of skills and ability to help our clients achieve positive outcomes.
Every member of our team is a skilled legal professional, each dedicated to their specialist areas of criminal law. For information about each member of our team, please feel free to visit Our People page.