Middle class fraud wave sweeps East Midlands

The value of alleged fraud cases coming to court in the Midlands saw a fourfold increase in the first half of 2016 compared to 2015, according to the latest KPMG Fraud Barometer.

With a total value of £139m, cases in the Midlands account for 42% of the total value of fraud in the UK for the first half of the year, surpassing all other regions including London.

Despite the fact that the Midlands saw a decrease in the number of cases passing through the courts, from 19 to 12, there has been a significant increase to the value, compared to last year’s £32m. The increase in value of alleged fraud cases in the Midlands goes against the national trend, where both total fraud and average case values have fallen.

The Midlands has seen a clear shift in the types of alleged fraud committed in comparison with the first half of 2015. Fraud against commercial businesses, financial institutions and investors declined, while government organisations were the main victims in the period.

People in management positions were responsible for most cases in the Midlands with their share of alleged fraud increasing to 58% over the first six months of the year. The statistics also showed a noticeable change in the number of employees allegedly committing fraud, which accounted for 26% of cases in the first six months of 2015, but none this year.

Case studies to reach the region’s crown and magistrates’ courts during this period include:

· A dentist from Leicester who posed as a successful property investor to con patients and friends out of £1,000,0000 to fund his lavish lifestyle; and

· A businessman from Nottingham who defrauded HMRC of £300,000 by pocketing VAT from the security business he ran under different names over five years.

Julie Bruce, forensic director at KPMG in the Midlands, said: “The fact that the number of cases has decreased this year is positive news. However, given that the value of alleged fraud in the Midlands has increased substantially, it is clear that organisations must continue increasing awareness, as fraudsters seek out new and unconventional ways to operate.

“Our research highlights a significant increase in frauds allegedly perpetrated by people in management positions. While businesses, banks and public sector organisations have taken steps to protect themselves in recent years, there will always be people in positions of authority that try to abuse the responsibility entrusted to them. Businesses need to ensure that effective anti-fraud controls are in place and applicable to all staff, regardless of their position. This is even more crucial following the Brexit vote, as uncertainty provides the perfect ecosystem for fraudsters to exploit people’s vulnerabilities.”