Expensive tastes behind 67% spike in Scots fraud

Items confiscated by police as a result of fraud. Instances of fraud have risen by 67 per cent in Scotland in the past year. Picture: PA

A total of 29 high-value fraud cases worth more than £10 million were recorded last year.

The total value of fraud increased by £4,074,500 from £6,055,500 in 2013 to £10,130,000 last year for those offences which occurred in Scotland with a value in excess of £50,000.

A UK-wide report by BDO FraudTrack shows £6,974,000, around two-thirds (68 per cent) by value, involved finance and insurance, with the largest case involving six individuals from across Scotland who carried out a £3 million mortgage fraud.

Almost half (13) of the 29 total cases said they carried out the fraud for greed or to fund a lavish lifestyle, with nine not providing a reason, four citing debt, two a gambling problem and one divorce.

The large-scale mortgage fraud involved three men and three woman alleged to have concealed, disguised and transferred criminal property between April, 2008 and November, 2012.

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They were named in court as: Edwin McLaren, 49, Lorraine McLaren, 48, both of Quarriers Village, Renfrewshire; Arthur Horsey, 72, from Renfrew; John Horsey, 46, and Morag Horsey, 49, both from Haddington, East Lothian; and Lorraine McKenzie, 41, from Bothwell, Lanarkshire.

Meanwhile, the highest number of frauds involved theft and cash fraud, accounting for 14 of the 29 frauds in 2014 and a value of £2,407,000.

The largest case of theft and fraud involved a finance chief at an oil firm alleged to have defrauded her employers of £1 million. Jacky Donnachie-McPhie, 44, has been accused of committing the offence at Altus Intervention Limited, formerly Aker Qserv, over the course of 2014.

A spokeswoman for Police Scotland said: “A 44-year-old woman has been charged in connection with an alleged fraud at an oil company.”

In the UK the total value of fraud in 2014 was £720m, a decrease of 31 per cent from the previous year and the lowest value since FraudTrack began in 2003. The FraudTrack report also found the total number of reported cases rose to a record 546 cases in 2014 from 525 in 2013.

In Scotland the average value of fraud in 2014 was £349,310, up from £263,282 in 2013.

Judith Scott, Scottish director of fraud at BDO LLP, said: “The increase in fraud in Scotland during 2014 indicates that, despite the improvement in the economy, there are always individuals who will jump at an opportunity for fraud.

“The large value of the finance and insurance frauds is largely based on mortgage fraud, which clearly remains an issue for lenders. It would seem that determined individuals – and the largest fraud involved six people working as a group – can still get through the checks and balances of lenders to misappropriate large sums of money.”

She added: “The large number of theft and cash fraud is a worrying indication that many companies simply do not have suitable security arrangements in place to prevent such frauds. Such frauds tend to be fairly simple arrangements which exploit a loophole in a company’s financial systems.”

Many of the cases dealt with publicly in 2014 involved “old-fashioned” manipulation of victims and authorities, and relatively low-tech fraud schemes such as the submission of false invoices to get cash, support insurance claims or VAT refunds.

Earlier this month, Scottish companies were warned to do much more to tackle the threat posed to their security by “corrupt and careless” employees.

The warning was made at Scotland’s first national Insider Threat conference, organised by the Scottish Business Resilience Centre (SBRC).

Attendees heard that 85 per cent of fraud is committed by past and present staff, while the SBRC went on to say it feared fraud crimes affecting businesses would exceed £3 billion this year.