Victim of Fraud

What you should know

You probably feel angry, betrayed and are in disbelief that someone you trusted has defrauded you. Decisions you make now are vital.

You might want to report the matter to police because you think it is your best chance to recover your losses.

You should know that in most cases, bringing a civil claim is by far the quickest and most effective way to get your money back. The Victoria Police website section on “Reporting Fraud” says “Police only investigate criminal matters in order to charge offenders and bring evidence before a court. Civil action is the most appropriate method of recovering money.” So before you race off to the police, get legal advice.

Advantages of Civil Cases

• In most cases a civil fraud claim can be commenced in Court within a few days of you engaging a lawyer. Civil action can include obtaining an injunction freezing the fraudsters assets (Freezing Orders), an injunction requiring the fraudster and others to allow your legal team to enter premises and seize items (Search Orders) and an injunction preventing the fraudster from leaving Australia. These injunctions are usually made by the Court in the absence of the fraudster before they even know you have started a case against them.
• In most civil cases, particularly where Freezing Orders are obtained so you can get a foot on the fraudsters assets, a favourable settlement can be achieved early on, avoiding the costs of a Court hearing. If you wish, you may then report the matter to police.

Disadvantages of making a complaint to police

• The focus of police is to charge offenders and secure convictions. It is not their job to get your money back.
• Criminal cases are harder to prove than civil claims. Criminal cases must be proved beyond reasonable doubt.
• Significant delay is involved. Once a complaint is made to police it typically takes many months if not years before the matter is investigated. It then usually take years before the matter finally gets before a judge and jury.
• Police are trained to investigate most crimes, but fraud cases can involve complex commercial relationships such as companies and trusts, and the movement of money through sophisticated financial arrangements in an attempt to deliberately hide proceeds of fraud. Fraud investigations typically require a thorough understanding of legal and financial affairs which are beyond the limited capabilities and resources of police. This is not a criticism of police. It is just how it is.

Don’t forget Insurance

• In some cases, particularly where an employee has committed fraud, a business may have insurance which might cover losses and investigation costs associated with the fraud. Not all insurance policies are the same. Some policies limit the amount of loss they will cover – $50,000 for example. Some policies require you to notify your insurer as soon as you become aware of the fraud – any failure to do so may cause the insurer to refuse to indemnify. As early as possible you should obtain legal advice regarding your rights and obligations under any policy of insurance.

What you should do

If you are the victim of fraud do not confront the fraudster or let them know they are under suspicion. You do not have to report the matter to police at the outset. Immediately obtain legal advice before you do anything. Only when you know all your options can you make sensible decision about how best to proceed.

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