Region worst hit by fraud says study

THE value and volume of fraud is higher in the North West than any other region, according to BDO’s Fraud Track research.

The accountancy and business advisory firm’s 2014 analysis, which examines all reported fraud over £50,000, saw the North West amass £50m worth of fraud, making it the most costly region outside of London and the South East.

Yorkshire was closely behind, reporting £49.5m of fraud, followed by the South West (£35.1m) and the North East and East Midlands both with £18.2m.

While the number of cases has risen dramatically from 47 to 72 in the past 12 months, the combined value is largely unchanged from £49m last year, indicating that 2014 was characterised by an increase in unsophisticated fraudulent activity that was low in value but high in volume.

Brent Wilkinson, forensic partner at BDO in Manchester, said: “One of the reasons we are seeing stagnant values despite the volume of cases increasing is due to a growing trend of high value complex fraud being dealt with outside the judicial system, and out of the public eye.

“Companies are increasingly assessing the reputational cost of a public case to their business, with many preferring to deal with perpetrators through civil – not criminal -remedies.”

Some of the North West’s largest cases included an £8m construction industry swindle involving four fraudsters from Greater Manchester, a £6.8m mortgage scam by a  property tycoon nicknamed ‘Mr Fastcash’ and a professional gambler in Cheshire, and a solicitor from Burnley accused of stealing £1.1m in credit balances.

Manchester once again has the region’s worst fraud record, accounting for almost half of all reported cases in the North West.

Tax fraud proved the region’s biggest downfall, accounting for £29m of the North West’s total. Public administration and finance and insurance are the sectors being hit the hardest by fraudulent activity, with £29.6m and £15.6m respectively.

The total value of UK fraud in 2014 (£720m) was the lowest since Fraud Track started in 2003. However, the total number of reported cases actually rose to a record number (546), while the average value continued to fall from £3.3m (2012) to £2.0m (2013) and £1.3m in 2014.