Action Fraud reported losses totalling £2.35bn ($3.19bn) in 2020-21, with the offending largely appearing to arise out of financial investments. But with cuts to public spending straining the Crown Prosecution Service, private prosecutions have become one of the few ways to guarantee access to justice, writes Kate McMahon, partner and founder at Edmonds Marshall McMahon


 

Whilst historically prosecutions were always brought privately, it was not until 1986 that the CPS was created.

The ability to bring a private prosecution is a constitutional right, and expressly retained by virtue of 6(1) of the Prosecution of Offences Act 1985. The reason that private prosecutions exist are to safeguard a citizen’s access to justice in the face of a lethargic or partial justice system.

Private prosecutions are initiated by private individuals or companies but operate in the exact same way a prosecution brought by the state would, except that they are quicker and more focused, with the individual or organisation retaining significant control.

With police often unable to deal with large frauds private prosecutions are an increasingly popular and effective tool. There is also the added advantage that victims can use the draconian criminal confiscation regime to reclaim their assets. The regime allows for long terms of imprisonment to be imposed for non-repayment of the amount of the fraud.

In 2021, property tycoon and businessman Elie Taktouk was convicted and sentenced to seven years’ imprisonment for a fraud committed against father and son Frank and Adrien Noel, who lost their entire investment, being approximately £2.5m.

The fraud related to a failed property investment of which Taktouk was project manager. He acted against the interests of the investment, lying about how it was being financed before representing that he had paid various suppliers for works done on the property, when in fact, he had been pocketing the monies transferred to him and spending them on his luxury lifestyle and his expensive divorce from Daniella Semaan, now married to footballer Cesc Fàbregas.

Frank and Adrien Noel approached Edmonds Marshall McMahon (EMM), private prosecution specialists, to investigate and prosecute the fraud. Initally, the defendant blamed the fraud on Joseph Farah, the building works contractor whom Taktouk had hired, as Taktouk had forged invoices to make it appear as though Farah had been paid to do extensive works.

It was not until a private investigation revealed what had actually happened that EMM’s clients were able to pursue the successful criminal prosecution against Taktouk. The matter proceeds to confiscation, which is expected to be finalised early 2022.

Compensation

In 2015, reinsurance company DAS UK Holdings engaged EMM to investigate and ultimately pursue a criminal prosecution against the former CEO of DAS and other former employees and associates. In 2018, Paul Asplin, David Kearns and Sally Jones were convicted and sentenced for a prolonged fraud committed against DAS over 14 years.

Paul Asplin, the former CEO of DAS UK Holdings, and David Kearns a senior employee, had stolen millions from DAS by setting up a company in which they had a hidden interest and siphoning work to it. The Court ordered the defendants to pay a total of £8.29m to DAS by way of compensation. They were given six months to pay.

In 2018, Gerard Lawless was sentenced to 7.5 years imprisonment for misappropriating monies from his friend’s company, of which he was financial controller, by transferring money to his and his wife’s personal accounts, cashing company cheques to his personal account and using the company credit card for personal spending. He stole in excess of £1.5m. The fraud was initially discovered when Lawless’s company credit card statement was sent to the company’s office. EMM were again approached to investigate and ultimately, prosecute. Lawless was ordered to pay £342,000 by way of a confiscation order.

In the latter two cases mentioned, both private prosecutors approached the police however their matters were turned away. In the case of DAS UK Holdings, this is of no surprise where the fraud was complex, required significant investigation, was difficult to detect – a number of previous firms had been instructed – and involved an enormous amount of material. As such, they were left with no option but to instruct EMM to conduct an investigation.

A private prosecution will often have greater access to resources than a public prosecution. It is therefore typical that the case will often be better prepared and the evidence more robust. This leads to a higher success rate to overcome the ‘beyond reasonable doubt’ burden that criminal law requires for a conviction. However, where individuals have large amounts of money stolen from them, it is a sad reality that they will largely be forced to take matters into their own hands.

Where the value of the fraud is particularly high and the cost to business reputation is also high, it can be sensible to privately investigate and prosecute for the ultimate commercial or professional health of the company or individuals involved.