Legal aid cuts mean we're more at risk from fraudsters than ever before
Legal aid cuts mean trying fraudsters in court has become even more difficult.
Scam merchants, insider traders and other financial miscreants can rest a little easier. Thanks to the unintended and doubtlessly unforeseen consequences of the Government's crackdown on legal aid, a major fraud prosecution has collapsed and those in the dock have walked free because Judge Anthony Leonard said the defendants were unable to have a fair trial.
Those accused in a number of other high-profile financial prosecutions could use the judge's remarks last week as a literal get out of jail free card.
And that could mean a redoubling of high pressure selling of dubious or downright dishonest schemes. If there is nothing to fear beyond a rap on the knuckles and a ban from being a director (easy to get round – just get a friend or a very junior employee to do it), then there is nothing to lose from trying to rip cash from the unsuspecting if the fear of prison goes.
Fraud trials are tricky
The case, at Southwark Crown Court, was brought last year by the Financial Conduct Authority (FCA) against Scott Crawley and seven other men, allegedly involved in landbanking via Plott UK Ltd, European Property Investments Ltd and Stirling Alexander Ltd. The FCA said the companies were believed to have taken more than £5 million from UK investors between 2008 and 2011.
Fraud trials have always been difficult to prosecute. The points of law can be tricky – scamsters often manage to steer just the ride side of the rulebook – while victims are often loath to appear. And that's before you consider the cross-border nature of so many rackets. A scheme may have collapsed and the companies responsible put into compulsory liquidation, but that is still not the same as prosecuting and locking someone up.
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Why it collapsed
Big fraud trials are labelled “very high cost case” (VHCC) in lawyer jargon because of the length of trial and the legal complexities.
The Southwark trial that was halted because legal aid cuts meant the defendants could not find a barrister of sufficient standing who was willing to do the job at the rate offered, although the prosecution was not hindered by finances in this way.
It is a fundamental rule of English law that no one is guilty until pronounced so by a court - no matter how strong the evidence and how vociferous public opinion might be - and that to ensure this, defendants have to be represented by the equal of the prosecution. In VHCC trials, this usually means a QC plus junior barristers plus defence solicitors.
If the defendants cannot pay, and the state now refuses to foot the bill demanded, then there cannot be a fair trial. Solicitors acting for those accused in this landbanking case approached 70 sets of barristers' chambers - and only found one QC willing to act - before he pulled out the very next day. This, the Southwark judge said, was a “violation” of the accused men's legal rights and would result in an unfair trial.
"It is in the interests of justice for both sides that serious and complex cases of this sort should be properly prosecuted and properly tried," said solicitor Philip Smith, who represented some of the accused. "That means with equality of arms whereby you have the best barristers on both sides."
The prime minister's brother Alex Cameron QC, who acted without fee to get the trial halted said: "A stay is exceptional, but so is lack of representation in this country. We are worried about a fair trial. It's not the fault of the FCA but we do [blame] the state more widely."
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Legal aids cuts
The Ministry of Justice has reduced fees for defence lawyers by 30%, though some barristers dispute this and say it is an even bigger cut). It argued the men in the dock could have found suitable lawyers within the new price parameters.
The decision will impact on around a dozen other VHCC trials, including prosecutions for insider trading which have been in the system for at least five years, and interest rate rigging.
More widely, the implication is that fraud is even more beyond the law's capability to prosecute than previously.
We have never had the tough US fraud sentencing model - witness the 150 years given to septuagenarian Bernie Madoff for his massive Ponzi scheme. Now, although the FCA is appealing against the court's ruling, we seem even further away from treating massive alleged fraud as seriously as mobile phone theft.
We are now all more at risk from boiler rooms, landbanking, phoney wine plans, and all the other scams than ever before.
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More on scams:
We must act on these 0203 phone number scammers
The sneaky Companies House scam
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