False Accounting Fraud
What is false accounting?
The Theft Act 1968, s.17
(1) Where a person dishonestly, with a view to gain for himself or another or with intent to cause loss to another, -
- (a) destroys, defaces, conceals or falsifies any account or any record or document made or required for any accounting purpose; or
- (b) in giving information for any purpose, produces or makes use of any account, or any such record or document which he knows is or may be misleading, false or deceptive in a material particular;
he shall, on conviction on indictment, be liable to imprisonment for a term not exceeding seven years.
(2) a person who makes or concurs in making in an account or other document an entry which is or may be misleading, false or deceptive in a material particular, or who omits or concurs in omitting a material particular from an account or other document, is to be treated as falsifying the account or document.
Elements of the Offence
(a) Any account or any record or document made or required for an accounting purpose
A form claiming entitlement to housing benefit is a "document made or required for an accounting purpose": Osinuga v. Director of Public Prosecutions
A decision whether to make a loan does not itself amount to an accounting purpose; nonetheless, without any further direct evidence of the accounting practices of the lender, a jury would be entitled to conclude that an application for a mortgage or a loan made to a commercial institution is a document required for an accounting purpose because, if successful, it will lead to the opening of an account in favour of the applicant in the books of the lender: R. v. O[2011] CA.
(b) Falsification
Where it is alleged that the defendant omitted a material particular, the omission will be material if it has the effect of misleading a person to pay when they otherwise would not have to an entitlement R. v. Lancaster (Paul)[2010] rejecting an argument that particulars omitted from a benefit application form could only have been material if their omission resulted in benefit being paid to which the appellant was not entitled.
(c) With a view to gain, or with intent to cause loss
Theft Act 1968, s.34(2)(a)
(2) For purposes of this Act -
(a) "gain" and "loss" are to be construed as extending only to gain or loss in money or other property, but as extending to any such gain or loss whether temporary or permanent; and -
- (i) "gain" includes a gain by keeping what one has, as well as a gain by getting what one has not; and
- (ii) "loss" includes a loss by not getting what one might get, as well as a loss by parting with what one has;
In R. v. Eden,55 CA, the court held that there were various forms of temporary gain which could result in a verdict of guilty on a charge under section 17, including (on the facts of the case) a gain constituted "by putting off the evil day of having to sort out the muddle and pay up what may have been in error kept within the sub-post office when it ought to have been sent to head office"
"Gain" or "loss" must relate to money or other property;
Company Director Liability for False Accounting
Theft Act 1968, s.18
18. Liability of company officers where a company has been guilty of obtaining property by deception, obtaining a pecuniary advantage by deception or false accounting
(1) Where an offence committed by a company under section 17 of this Act is proved to have been committed with the consent or connivance of any director, manager, secretary or other similar officer of the body corporate, or any person who was purporting to act in any such capacity, he as well as the body corporate shall be guilty of that offence, and shall be liable to be proceeded against and punished accordingly.
(2) Where the affairs of a body corporate are managed by its members, this section shall apply in relation to the acts and defaults of a member in connection with his functions of management as if he were a director of the body corporate.
False Statement by Company Directors
Theft Act 1968, s.19
19. False statements by company directors, etc.
(1) Where an officer of a company with intent to deceive members or creditors of the company, publishes or concurs in publishing a written statement or account which to his knowledge is or may be misleading, false or deceptive in a material particular, he shall on conviction on indictment be liable to imprisonment for a term not exceeding seven years.
(2)For purposes of this section a person who has entered into a security for the benefit of a company is to be treated as a creditor of it.
(3)Where the affairs of a body corporate or association are managed by its members, this section shall apply to any statement which a member publishes or concurs in publishing in connection with his functions of management as if he were an officer of the body corporate or association.
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