Fraud in the UK reached a peak in 2009 when a record £1.3bn of cases came to court, according to the latest KPMG Forensic’s Fraud Barometer. Meanwhile, the barometer also discovered mortgage fraud doubled in 2009, to a total of 31 cases worth £77m. This was compared with 10 cases worth just £3.7m in 2007 and 25 cases worth £36m in 2008. Some cases involved organised rings, such as one case of alleged commercial mortgage fraud in which six people were charged with selling properties between one another in a number of back-to-back deals at inflated prices. Others involved individual applicants, such as one north east man who was charged with 16 different offences relating to mortgage loan application fraud, totalling more than £700,000.
Meanwhile, KPMG has predicted increasing amounts of mortgage fraud will come to light in the wake of the end of the property boom and as lenders increasingly scrutinise their mortgage books and reclassify their mortgage asset portfolios.
In total, according to KPMG, more than £7bn of fraud was heard in Britain’s courts in the ‘noughties’, compared with less than £5bn in the 1990s.
Another sector badly hit with fraud was accounting.
KPMG said there were many cases of fraud within accounting and book-keeping departments and 33 cases worth a collective £44m came to court in 2009.
Elsewhere, the hardest hit sector was the government and public sector organisations, which suffered frauds to the value of £476m – mainly in the form of tax and benefit fraud – more than double the £207m figure for 2008.
In addition, financial institutions remained a major target, with cases worth nearly £396m, slightly up from £388m the previous year.
Hitesh Patel, partner at KPMG Forensic, said: “Britain appears to have a rising fraud problem, as is evident by looking at the steady increase through the last 10 years.
“The last decade, I am afraid, could certainly be dubbed the ‘naughty noughties’. The credit crunch will undoubtedly make the situation worse, and we are yet to see the full impact of it. The forecast therefore is: getting worse. “
The 2000s were also characterised by a series of global fraud ‘super-cases’ – though none of these have to date occurred in the UK.
The alleged frauds by individuals such as Bernard Madoff, Allen Stanford and Jerome Kerviel have run into the billions in their estimated value.
Mr. Patel added: “Over the last 10 years, the boom in technology has acted as a catalyst for a boom in fraud.
“Computerisation and globalisation have made fraud easier, quicker to carry out and easier to conceal.”
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