Reclaiming funds following fraud

Reclaiming funds following fraud

How can victims of fraud trace and claim monies they paid into an investment scheme which later became fraudulent? Ian Wilson and Pia Dutton, both barristers at 3 Verulam Buildings, discuss the Chancellor’s guidance on the means and mechanisms by which such monies should be recovered in his decision in the case of the National Crime Agency v Robb.

Original news

National Crime Agency v Robb [2014] EWHC 4384 (Ch), [2015] All ER (D) 39 (Jan)

Following frauds committed by the defendant, the Chancery Division made rulings on whether and how the lead claimants would be able to recover sums paid to him.

What was decided in this case?

A group of investors sought a declaration under the Proceeds of Crime Act 2002, s 281 (POCA 2002) that they had a proprietary claim to a fund in which they had invested as a result of a conspiracy to commit fraud.

After absconding to the Turkish Republic of Northern Cyprus during a drugs trial in 1997, the defendant established a property investment scheme in concert with a company called Aga Developments Ltd (the company), through which he amassed in excess of £3m from over 150 investors.

On 17 September 2009, Walker J made a property freezing order in respect of the funds pursuant to POCA 2002, s 245A. That order was extended by an order of Mackay J on 30 March 2012. Mackay J found that the investment scheme, although not intended to be fraudulent from the outset, became intentionally fraudulent as from 1 February 2005.

There were three key issues:

  • whether certain investors (the claimants) had a proprietary claim to the frozen fund
  • whether the claimants were entitled to any part of the fund to which they were unable to trace their investment payments
  • whether the claimants’ share in the fund increased by virtue of other investors not having made claims under POCA, s 281

The Chancellor, Sir Terence Etherton, gave judgment for the claimants and held as follows:

  • the claimants could establish a proprietary claim to part

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