Region sees drop in value of fraud cases

THE VALUE of fraud cases in the North West has fallen to £7m in the first half of this year from £52m in the same period last year.

Despite a record numbers of 166 cases nationwide there were just 14 in this region, according to research by business advisers KPMG.

Among the high profile cases before the courts was a the former deputy leader of Preston Council who was jailed for money laundering activities totalling £330,000;  a financial adviser from Chester who funded a lavish lifestyle by stealing £1.6m from the savings of pensioners who he tricked into investing in his business;  a Preston conman who set up a Ponzi scheme which collapsed, leaving friends £640,000 out of pocket; and a call centre worker from Liverpool who stole more than £250,000 from bank customers.

KPMG says professional fraudsters are increasingly targeting people with money to invest and who have become disheartened by low interest rates.

In the first half of this year there were 21 cases totalling £185m nationally.
‘Boiler room’ schemes are also a favourite scam. Typically they involve firms operating from outside the UK where they try and persuade investors to part with money for shares that are worthless and impossible to sell-on, often at inflated prices.

Martin Dougall, KPMG’s head of forensic in the North West says: “While interest rates remain low, it unsurprising that investors who are looking for new ways to grow their capital, remain susceptible to being targeted by fraudsters.

“At the same time, professional criminals show themselves to be highly adaptable and always looking for new scams.  As soon as one avenue is blocked, they will move on to another one.  That is why it is important for investors to remain continually vigilant.”

Meanwhile KPMG reported a surge in mortgage fraud in the first half of the year.

In the first six months of 2009, mortgage fraud cost banks and building societies £24m. The total for last year was £77m. However, lenders faced a bill of almost £96m after the first six months of this year, the research found.

Mr Dougall added: “This is a legacy issue for the banks from the pre-recession boom years when house prices inflated, providing the opportunity for fraud.

“Banks will be hoping that they have uncovered most of their fraudulent loans.  But the trend remains upwards and it could be some time before we see the peak.”