Fraud in Scotland increased by 67 per cent in 2014

The total value increased by £4,074,500 from £6,055,500 in 2013 to £10,130,000 last year for the 29 frauds which occurred in Scotland with a value in excess of £50,000.

The report shows that £6,974,000, almost two thirds (68 per cent) by value, involved finance and insurance with the largest case involving six individuals from across Scotland who carried out a £3m mortgage fraud.

The highest number of frauds involved theft and cash fraud which accounted for 14 of the 29 frauds in 2014 and a value of £2,407,000.

The largest case of theft and fraud involved a finance chief at an oil company who defrauded them of £1 million.

Almost half (13) of the 29 total cases said they carried out the fraud for greed or to fund a lavish lifestyle with nine not providing a reason, four citing debt, two a gambling problem and one divorce.

In the UK the total value of fraud in 2014 was £720m, a decrease of 31 per cent from the previous year and the lowest value since FraudTrack started in 2003.

Paradoxically, the latest report finds that the total number of reported cases rose to a record 546 cases in 2014 from 525 in 2013.

The average value of fraud meanwhile, has continued to fall from £3.3m in 2012 to £2.0m in 2013 and £1.3m in 2014. In Scotland the average value of fraud in 2014 was £349,310 up from £263,282 in 2013.

Whilst the average value of reported fraud in the UK fell by 34 per cent to £1.3m in 2014, just two frauds (a film tax evasion case, and a money laundering operation at a bureaux de change) accounted for 31 per cent of total reported frauds in 2014.

Removing these two cases, the average value of remaining frauds was £0.9m which is a 55 per cent fall from 2013.

Further to this the report shows that 402 of the 546 reported cases had a value of £0.5m or below.

Whilst these cases represent 74 per cent of all fraud cases they only make up 9 per cent of the total value of all reported fraud.

Scottish director of fraud at BDO LLP, Judith Scott (pictured), said: “The increase in fraud in Scotland during 2014 indicates that, despite the improvement in the economy, there are always individuals who will jump at an opportunity for fraud.

“The large value of the finance and insurance frauds is largely based on mortgage fraud which clearly remains an issue for lenders. It would seem that determined individuals (and the largest fraud involved six people working as a group) can still get through the checks and balances of lenders to misappropriate large sums of money.

“The large number of theft and cash fraud is a worrying indication that many companies simply do not have suitable security arrangements in place to prevent such frauds.

“Such frauds tend to be fairly simple arrangements which exploit a loophole in a company’s financial systems.

“Often these can easily be detected but are carried out by someone in a position of trust. However, the growth in number of reported frauds suggests that the police and courts are becoming increasingly effective at convicting low level fraudulent activity.

“Many of the cases dealt with publicly in 2014 involved ‘old fashioned’ manipulation of victims and authorities, and relatively low-tech fraud schemes.

“Submitting false invoices whether to get cash, support insurance claims or VAT refunds are all simple and make up a large number of cases, often in conjunction with other types of fraud.”

Ms Scott added: “This jump in figures highlights that employers need to remain vigilant and ensure that there are appropriate checks in place for all of their financial systems to ensure that they are not being defrauded.”