Thinking of turning to crime? Become a fat-cat fraudster and the law will leave you alone



Stick to fraud: You're more likely to get away with it

Most people have a commonsense approach to fraud. We know cheating, lying and stealing when we see it.

The law does not work in such a simple way.

The case of the London woman who claimed a false address in order to get her child into a desirable school

illustrates the point.

She may or may not have cheated but charges against her were dropped because of legal doubts about whether she was technically guilty of fraud.



Cheating over a school place is not, it was argued, like a bank clerk fiddling the accounts to make a bit on the side.

To many of my constituents for whom access to a good education

is a prime concern, that will be a bewildering conclusion: an acceptance that anything goes and dishonesty won’t be punished by the law.

I don’t particularly want to single out this family for criticism since there are countless cases of parents resorting to dishonest little tricks to get their children into schools of their choice.

My point is a more general one: fraud, in the broad sense, is all around us but is tolerated. Every week I have people coming to my advice surgery telling me that they are victims of fraud.

They have lost a lot of money to a dodgy builder or bank or lawyer or travel company but cannot persuade the police to investigate or are told that there is insufficient proof of intent to defraud.

They are not rich enough to hire lawyers for a civil action and often may not be eligible for legal aid. They may suffer grievous loss and ruin. Yet nothing can be done to remedy the injustice, under the law.

At a time when many people are losing their jobs and homes and others are making fortunes, the frail protection we have is the law. And the law is what determines whether the fortunes have been made honestly and not by theft.



Yet we see what looks like fraud and cheating on a large scale and crooked people getting away with it while thousands of perfectly honest people go before courts every week to face the dire consequences of home repossession or bankruptcy.

I seriously worry that there is now a massive disconnect between what most people would regard as justice and fairness and what actually happens under our law.

Bernie Madoff has been sentenced to 150 years in jail for huge fraud

Last week, we had one case where justice was done. The world’s biggest fraudster went to jail in America. Bernie Madoff stole money in clever ways from - mostly - rich people and from charities he patronised.

For this crime he has been sentenced to several lifetimes in jail.



He has been treated more severely than a murderer or rapist. The US authorities were, I think, trying to give the public a reassuring message: that white-collar crime, notably fraud, has victims just as much as bank robbery or burglary; and that the law will eventually catch up with crooks.



Good messages. But messages that ring a little hollow, especially in Britain.

Madoff’s technique was what was called a Ponzi scheme. He stole money from investors who entrusted their cash to him and kept enough back to pay out reasonable returns on investments and those who asked for their money back. The rest of the money disappeared.



As in the US, Ponzi schemes and other forms of pyramid selling are criminal here in Britain. What the public finds strange is that the Madoff Ponzi scheme is not very

different from the way many of our financial and other banking institutions function.

People have made fortunes in the City on the basis of promises to investors that were as improbable as Madoff’s. Their banks duly collapsed; the taxpayer has compensated the victims (or not, in the case of Equitable Life); and the operators have walked away with their loot.

A couple of months ago, I visited the head of the Serious Fraud Office (SFO) to ask why more fraud was not being prosecuted. I believe that there are several Madoff-type schemes in the City now being investigated which will be brought to court.

Misconduct of a more general kind is difficult to prove. It is striking that despite the substantial criminal powers available to the police and the financial regulators (the FSA), these are rarely used.

The SFO also has a sad history of failed prosecutions (and its authority was badly undermined when Tony Blair stopped it investigating alleged large-scale bribery involving arms contracts and Saudi princes). The public has, I think, drawn the correct conclusion: Madoff was the exception. My career advice for British crooks is to stick to finance: you’ll never get to court, let alone prison.

One man who did not follow such advice is Ronnie Biggs, the Great Train Robber. Despite advancing years and poor health, he cannot be released from jail.



Paedophiles and murderers go free but he remains behind bars. I am not trying to defend Mr Biggs, who violently assaulted a train driver and stole a lot of money.

What the authorities can’t forgive is not the assault (worse happens every day and doesn’t even attract a custodial sentence) but his two-fingered salute to the powers that be.

He sends out the dangerous message that he isn’t sorry for helping himself to other people’s money. He was just unlucky enough to be caught.

Great Train Robbery: Ronnie Biggs pictured in 2001

The public’s cynicism grows by the day as they judge that there is a yawning gap between justice on financial abuses and crime in general. The parliamentary expenses scandal, for example, is sliding into the long grass apart from the revelations just surfacing about Mr George Osborne.



There is a large grey area between the ethical and the illegal but the two are interwoven. Unless justice is seen to be done, there is no legal underpinning for ethical behaviour.

The public sense that this recent financial – and parliamentary – crisis is part of a wider collapse of standards and decline in honesty and that the authorities are too weak or lazy or incompetent to ensure justice is done.

Before we settle back down to ‘business as usual’ it is vitally necessary that the mini-Madoffs who populate the financial community and their equivalents in public life who have been dishonest are brought before the courts and sentenced.

The SFO, the anti tax-dodging operations of HM Revenue & Customs, the police and other enforcement bodies, must be built up, not cut back. The law cannot be blind to fat-cat criminals and eagle-eyed to everyone else.



Vince Cable is the Liberal Democrat Treasury spokesman