PracticeAccounting FirmsFraud sentencing: getting off lightly

Fraud sentencing: getting off lightly

The current lenient fraud sentencing is the real crime

Within the past two weeks, Michael Bright, the founder and former chief
executive of Independent Insurance, and Sharon Bridgewater, a former finance
director of Hicklin Slade & Partners have both been sentenced for fraud
offences.

Bridgewater stole £2m from her employers and got five years for theft;
Bright, who brought his company to collapse resulting in more than 1,000 lost
jobs and costing the FSA £357m in compensation, got a maximum of seven years for
fraudulent trading.

Not only is there no weighting in these sentences to reflect the seriousness
of the crimes, but they do not act as a deterrent. More than likely, both will
serve only half of their sentences for good behaviour and walk into a new job on
their release.

The average length of sentence in the UK for fraud is between three and four
years. Fraudsters often don’t see the inside of a prison as their non-violent
crimes are punished with a community service order. Compare this to the 20 years
plus sentences that are handed out in the US.

Non-violent? Tell that to the families of those who have committed suicide as
a result of falling victim to a scam. Family-run businesses are ruined;
pensioners left penniless; employees kicked out of their jobs Ð lives are ruined
as a result of fraud and the punishment should fit the crime. The Association of
Chief Police Officers earlier this year estimated that fraud costs approximately
£330 for every person in the UK.

The most effective way to combat any crime is to increase the chances of
criminals being caught, while at the same time punishing them with a suitably
scary deterrent. In my experience, only one-in-ten fraud cases ends in a
prosecution and we are failing to deal with the deterrent part of the equation.

If fraudsters believe there is little chance of being caught and even if they
are, being out of prison within a couple of years, they will carry on as usual.

I welcome the creation of a National Fraud Strategic Authority and,
particularly, the additional £29m resources. In one case I worked on, the police
refused to get involved saying that anything less than £1m wasn’t of interest to
them. These decisions are usually down to lack of resources.

But even if the new anti-fraud strategy results in greater detection and
prosecution of fraudsters, sentences of five to seven years won’t make them stop
and think twice. But 20 years and an order to pay compensation to the victim
certainly would. It’s time for the authorities to wake up and throw the book at
fraudsters if we want to deter these crimes in the future.

Andrew Durant is managing director of Navigant
Consulting

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