Former factoring clients are preparing to initiate private prosecution against current and former employee's of a number asset based lenders. The former clients all have the same starting point, they owed a significant amount to the factoring company. They all attended a meetings with the factoring company where they were informed by the factoring company that it was agreeable to cooperating with them regarding support. 

The former clients allege that the then employees of the factoring company had already decided to appoint an IP over their companies. An IP was appointed and the former clients are now initiating private prosecution for dishonesty offences. 

What is quite fascinating as these former clients do not want the factoring company to wriggle out by blaming a 'rogue' employee - Is deciding at what level to prosecute
 
Factoring companies committed fraud on an industrial scale and still are!


The Law of England & Wales

In the jurisdiction of England & Wales, private prosecutions are a growth area and in certain circumstances, companies and high net worth individuals are initiating proceedings in the criminal courts, and prosecuting individuals or companies who they believe have committed a criminal offence. The growth in factoring cases beign brought may be due to the fact that in the age of austerity, regulators have limited resources.

A private prosecution is considered to be a prosecution started by a company or an individual who is not acting on behalf of the police or another prosecuting authority.

For example, in 2011, Virgin Media succeeded in a private prosecution against three men who took part in a fraud which involved selling set-top boxes across the UK. Press articles speculated that the cost of the fraud to Virgin had been approximately GBP 144 million a year. The offenders were jailed.

Private prosecutions can have a wide applicability to offending that can arise in the conduct of business. For example, under the Fraud Act 2006 a person or a company can commit an offence of fraud if they make a false representation in order to gain an advantage.

Private prosecutions have several benefits:
  • A compensation order can be requested at the sentencing stage.
  • A private prosecution is easy to publicise.
  • A private prosecution can be concluded faster than civil proceedings.
  • A criminal conviction can be evidence in a civil case.
The right to bring a private prosecution is, however, subject to some controls:
  • Some offences require the consent of the Attorney General, the Director of Public Prosecutions (“DPP”) or the Director of the Serious Fraud Office before initiating proceedings.
  • The DPP has the power to take over a case, although CPS Guidance makes it clear that this will not occur unless there is a need for the CPS to do so. There is no obligation to notify the CPS of a private prosecution.
If the CPS does take a case over, it may seek to discontinue it unless the test under the Code for Crown Prosecutors is met (the “Code”). For a prosecution to continue under the Code, the CPS will examine whether:
  • Prosecutors are satisfied that there is sufficient evidence to provide a realistic prospect of conviction against each suspect on each charge.
  • If the evidential test is satisfied, whether a prosecution is required in the public interest.
Not all law firms have expertise in this criminal sphere. EMM Legal are uniquely placed with experience in  criminal litigation. This allows them to conduct an initial investigation and then advise on whether a civil or criminal process may be a more appropriate method of enforcement. In deciding whether a private prosecution is appropriate, Emm Legal will refer to the Code.