Fraud costs shoot up by 1,900%

Jul 3 2009 by Karen Dent, The Journal

THE VALUE of fraud in the North East has shot up by a massive 1,900% compared to the same period last year, according to figures from accountants BDO Stoy Hayward.

Its Fraudtrack research reckons fraud worth £95m was committed in the region in the last six months, compared to £5m in the first half of 2008.

The financial and insurance sectors were responsible for the highest number of cases and accounted for eight out of 26 recorded frauds. The real estate sector lost the most amount of money to fraudsters as the recession begins to bite. Simon Bevan, head of BDO Stoy Hayward’s fraud team, said: “It comes as no surprise that fraud is rocketing, but I predict we will see overall fraud in the UK hit £3bn per annum. There is a whole wave of commercial lending fraud that is yet to be revealed by UK and overseas banks.

“It is frightening that the predicted level of £3bn is only representative of those cases that reach the courts. In our experience, many cases are never reported and over the past four years of our investigations, we have seen only one case reach the criminal court. The level of actual fraud is incalculable, but is likely to be in the double digit billions.”

But Frank Nesbitt, a director of the North East Fraud Forum and a former fraud investigator with Northumbria Police, says the region is not rife with fraudulent activity. “The North East in my opinion is one of the better places for crime detection and we’re not as bad as other areas like the Midlands and the South where fraud is rife.

“The numbers of reported fraud in the North East hasn’t changed, but the value of it has gone up,” he said.