Firms urged to be wary of scammers as scale of high-value fraud cases revealed

Firms are being urged to strengthen their defences against scammers after new data has revealed that Scotland recorded ten high-value fraud cases in the first half of 2021.

The cases of alleged fraud this year were valued at more than £2.5 million altogether, KPMG’s latest Fraud Barometer report out today has found –and contributing to a UK-wide total of £140m.

The firm’s bi-annual report measures fraud cases – not including online fraud – with losses of at least £100,000 reaching the UK courts.

Scotland’s high-value fraud cases included an accounts manager who caused a business to close after stealing more than £250,000 over a four-year period. He was jailed for 20 months.

KPMG’s Fraud Barometer has unveiled ten cases of alleged fraud in H1 in Scotland, valued at more than £2.5m. Picture: Jane Barlow/PA Wire.

Another case with a similar value involved a drug dealer who set up a web design company as a front for an international Bitcoin scam. The accused, who is currently serving five years in prison for drug-related crimes, scammed a £250,000 mortgage while converting and transferring cash and Bitcoin to a value of £789,000 over the course of six years.

KMPG said the latest fraud findings follow the continued warning from Police Scotland’s Take Five To Stop Fraud campaign to be careful of scammers using sophisticated methods to target vulnerable people and companies.

Annette Barker, head of forensic at the accountancy giant, said: “As Covid-19 restrictions begin to ease we are seeing the reopening of the criminal justice system and in turn, an increase in cases of fraud coming before the courts.

“The Scottish Courts and Tribunals Service said in March that it could take until at least 2025 to clear the backlog of cases. To put that into context, the aggregate value of cases in Scotland was more than £15.6m.

“However, it has been an extremely challenging year and a half since the pandemic began. We expect an increase in fraud cases to continue as some people take advantage of the vulnerability of individuals and organisations for their own gain.

“While the Scottish courts continue the battle to keep up, we urge people to remain cautious and to be aware of the potential dangers of becoming a victim of fraud.”

Increase

Looking at the picture across the UK, the number of alleged fraud cases being heard in courts in the first half of 2021 almost doubled compared to the same time in 2020. KPMG found that 151 alleged fraud cases were heard in the first six months of the year, as courts used a mix of virtual and face-to-face sessions to deal with the backlog.

Professional criminals seized on Covid-19 disruption, with embezzlement fraud, for example, involving 26 cases worth £15.9m in 2021 compared to 15 worth £8m in 2020, and including the case of a company secretary jailed for stealing £1.7m from her employer to buy horses.

Roy Waligora, partner and head of UK investigations at KPMG, said: “As organisations now look to the future with hybrid working, business leaders will need to ensure more robust internal controls are in place, including the degree of oversight they have on key areas of their business, such as finance or procurement.

“The relationship between employers and employees will see trust take a more central role, supported by strong risk controls. Now is the time to think about fraud risk-management frameworks and whether these can withstand heightened focus and scrutiny.”

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