Fraudulent Trading

Our lawyers specialise in defending businesses and individuals when facing fraud allegations including allegations of fraudulent trading. This is a common charge after a company has been wound up and/or failed. The charge is brought under S993 of the Companies Act 2006. Prosecutors will charge often when the individual themselves believe they have simply been naïve or made a series of bad decisions.

The issue in these situations comes down to whether there has been any dishonesty. It is sometimes a fine balance in the evidence as to whether there has been any dishonest intent on the part of any individual. This would be where a business that was once a bona fide business got themselves into financial difficulties and essentially continued to trade knowing that creditors would not be paid. There comes a time in trading where the Directors should have known and this is where they could be charged with the offence as they have carried on trading for too long. Is this bad business sense or dishonesty?

If you are charged under S993 of the Companies Act then the prosecution must prove that a business or company was carried on with the intent to defraud creditors of the company or creditors of any other person. Another way for the offence to be committed is for the prosecution to prove that a business or company was carried on for a fraudulent purpose. Every person who is a knowing party to that would commit an offence. This can apply to companies that have already been wound up as well as to existing businesses. It may well be the case that an order is sought by the Department for Business, Innovation and Skills (DBIS) seeks a winding up order in the public interest before any criminal investigation comes to any conclusion. These proceedings often overlap the criminal investigation and it is essential to get specialist advice. The DBIS will often seek institute disqualification proceedings to ensure that Directors who have acted in this way are disqualified.

Fraudulent trading however does have a completely different scenario where the company was set up deliberately in the first place to defraud creditors. This can be known as long firm fraud or short firm fraud. Long firm fraud is where a company sets up small trading accounts with suppliers and then they settle the accounts very quickly in order to build up a good credit rating with that supplier. Once the trust has been secured a large quantity of goods would be ordered and never paid for. Short firm fraud is where the goods are ordered and never paid for from the outset. Another form of fraudulent trading could be in the form of an advance fee fraud where fees are deducted at an early stage for goods/services/property that fails to be completed.

The dishonest element of this offence is the key and it is that element that needs aggressive defending. A dishonest intent is very difficult to prove beyond doubt as it requires being sure as to what was in someone’s mind. The dishonesty must be something that everyone else would usually find to be dishonest but also over and above that it has to be something the person charged would know that everyone else would view it as dishonest. This is an objective and a subjective test. Hindsight is easy but the difficult part is ensuring the jury are aware of the decisions you made at the time and why you made them. There is always another side to every story and you will need specialist help to ensure your story is told.

An important aspect of a number of financial cases these days is the recent banking history and the economic slump. Fraud cases often span a number of years and it is sometimes difficult to put ourselves back in the position before the recession kicked in and people were not as cautious about taking risks in business. Risk in those times may be viewed as dishonest in these more straightened times where the whole nation is more wary. If this is the case in your situation you will need assistance in making sure the jury know why you made the decisions you made.

With an allegation of fraudulent trading it is essential you have someone with knowledge of company structures with an insight into company finances. These issues may well be key to your defence particularly if you carried on trading with the honest belief that you could trade out of your difficulties.

About Freeman & Co.

Nick Freeman is quite possibly the most famous criminal solicitor practising in the Country today. Dubbed by the media as “Mr Loophole” his reputation rose as an expert road traffic lawyer through his client list of famous sports personalities and celebrities.

But this is only the tip of the iceberg for Nick and his team of highly experienced criminal solicitors. Freeman & Co. have successfully represented people charged with a wide range of criminal offences ranging from assault to fraud, from rape to theft.

Nick has a singular mind to all his cases and challenging the details of every case is an ethos that pervades Freeman & Co. as a whole.

From the first police station interview to fighting your case through the courts, Freeman & Co. provide seamless representation and dedicated client care that is second to none.

Being charged with a criminal offence of any kind will be a daunting experience. Freeman & Co. are a specialist from of criminal solicitors who understand their clients’ needs and the overwhelming need to get the best possible result in all the circumstances.

If you are, a family member to friend have been charged with a criminal offence you can call Freeman & Co. today on 0161 236 7007. You can also send us a confidential email by clicking here.

We look forward to hearing from you.