Charged under the Companies Act
If you are charged under S993 of the Companies Act then the prosecution must prove that a business or company was carried on with the intent to defraud creditors of the company or creditors of any other person. Another way for the offence to be committed is for the prosecution to prove that a business or company was carried on for a fraudulent purpose. Every person who is a knowing party to that would commit an offence. This can apply to companies that have already been wound up as well as to existing businesses. It may well be the case that an order is sought by the Department for Business, Innovation and Skills (DBIS) seeks a winding up order in the public interest before any criminal investigation comes to any conclusion. These proceedings often overlap the criminal investigation and it is essential to get specialist advice. The DBIS will often seek institute disqualification proceedings to ensure that Directors who have acted in this way are disqualified.
Fraudulent trading however does have a completely different scenario where the company was set up deliberately in the first place to defraud creditors. This can be known as long firm fraud or short firm fraud. Long firm fraud is where a company sets up small trading accounts with suppliers and then they settle the accounts very quickly in order to build up a good credit rating with that supplier. Once the trust has been secured a large quantity of goods would be ordered and never paid for. Short firm fraud is where the goods are ordered and never paid for from the outset. Another form of fraudulent trading could be in the form of an advance fee fraud where fees are deducted at an early stage for goods/services/property that fails to be completed.
The dishonest element of this offence is the key and it is that element that needs aggressive defending. A dishonest intent is very difficult to prove beyond doubt as it requires being sure as to what was in someone’s mind. The dishonesty must be something that everyone else would usually find to be dishonest but also over and above that it has to be something the person charged would know that everyone else would view it as dishonest. This is an objective and a subjective test. Hindsight is easy but the difficult part is ensuring the jury are aware of the decisions you made at the time and why you made them. There is always another side to every story and you will need specialist help to ensure your story is told.
An important aspect of a number of financial cases these days is the recent banking history and the economic slump. Fraud cases often span a number of years and it is sometimes difficult to put ourselves back in the position before the recession kicked in and people were not as cautious about taking risks in business. Risk in those times may be viewed as dishonest in these more straightened times where the whole nation is more wary. If this is the case in your situation you will need assistance in making sure the jury know why you made the decisions you made.
Allegation of fraudulent trading
With an allegation of fraudulent trading it is essential you have someone with knowledge of company structures with an insight into company finances. These issues may well be key to your defence particularly if you carried on trading with the honest belief that you could trade out of your difficulties. Here at Stephensons we work very closely with our commercial department as the skill sets required often overlap. We have extensive experience of financial and corporate crime.
Our experienced team of fraud lawyers has the expertise and knowledge to look at the required level of detail to defend you. Contact our expert fraud solicitors on 0203 816 9274 or complete our online enquiry form.