Being arrested for fraud can turn the life of you and your family upside down.  For many accused of white-collar crimes, knowledge of the criminal law system is limited at best, non-existent at worst.  This can lead to a willingness on the part of the accused to fully co-operate with investigators, believing that the truth will prevail.  Unfortunately, what often happens is the person under suspicion severely jeopardises their case due to their lack of understanding of the motivations and tactics used by authorities in fraud cases.

The other all present danger of complex fraud investigations and trials is media interest.  Take the case of Patisserie Valerie.  The company collapsed into administration in early 2019.  According to information sent to potential bidders for the stricken cafe chain, accounts dating back to at least September 2014 contain erroneous figures.  In 2018, a £40 million hole was found in the organisation’s accounts.  This has led to the arrest and bail of the former finance director, Chris Marsh.  The accountancy firm Grant Thornton is under investigation for its role as the auditor.  The investigation is likely to take around two years to complete.

The allegations of fraud, shareholder frustration at the lack of information, and the fact the business ultimately fell into administration has resulted in critical damage to the Patisserie Valerie brand, not to mention Grant Thornton.  To mitigate the risk of severe reputational damage it is imperative to call in expert legal advice the moment a suspicion of wrongdoing comes to light.

Commercially astute representation can result in a successful outcome

In December 2018, two former Tesco executives were cleared of fraud after Sir John Royce threw the case out of court for lack of evidence.

Chris Bush, former UK managing director, and John Scouler, former UK food commercial director, were accused of manipulating figures that resulted in Tesco’s profits being overstated by around £250 million.

Both denied the charges.

In R v Scouler and Bush (unreported), the Court of Appeal upheld the Court’s ruling that there was “no case to answer”.   The judgment came after Tesco Stores Ltd accepted responsibility for false accounting practices through a deferred prosecution agreement (DPA) in March 2017.

In January 2019, a third director was cleared of wrongdoing.

R v Scouler and Bush illustrates the value of instructing an experienced fraud barrister who can quickly spot weaknesses in the SFO’s evidence, resulting in the regulatory body losing a submission of no case to answer.

Having an understanding of what occurs during an arrest for fraud and your legal rights will ensure you are empowered to protect the best interests of you and your business.

What happens if you are arrested for fraud by an HMRC officer

To deprive a person of their liberty, there must be:

1. A power to arrest, and
2. That arrest must be carried out in a lawful manner.

If either of these requirements is not met, the arrest may be invalid and the detention unlawful under Article 5 of the European Convention on Human Rights.

Section 24(1) of the Police and Criminal Evidence Act 1984 (PACE 1984) gives the power of arrest to an HMRC officer in respect of tax offences.  They can arrest a person who is about to commit an offence, in the act of committing an offence, or who the arresting officer has reasonable suspicion is about to or is committing an offence, without the need for a warrant.

To make a lawful arrest, the HMRC officer must believe that arrest is necessary for one of the reasons stated in section 24(5) of PACE 1984.  An experienced barrister or solicitor will carefully examine the circumstances of your arrest and challenge the HMRC on the necessity of their actions.

If you are arrested, you must be brought to a police station straight away.  After opening the custody record and informing you of your rights, which includes the right to contact a legal representative, the officer must determine whether there is already “sufficient evidence” to charge you.

If you are charged, you will either be released on bail or remanded to be brought before the Magistrate’s Court.

At the police station, your barrister or solicitor’s role is to “protect and advance” your legal rights.  One of the main forms this takes is ensuring that you refrain from giving evidence which strengthens the prosecution’s case against you.  This is especially important if you are interviewed under caution – an action the HMRC is highly likely to take to further their investigation.

Serious Fraud Office (SFO) prosecutions

The SFO has no power to arrest a person; however, they can carry out interviews under caution and surveillance and will work with the police if an arrest is required.

SFO investigations take around five years to complete.  There are several reasons for this including the amount of evidence and its complexity, the fact that evidence often must be obtained from other jurisdictions and the process of forensic investigation on the evidence collated.

Having an experienced barrister/solicitor working with you from the start of an SFO investigation is essential.  Serious questions were raised regarding the fact that Tesco entered into a DPA consisting of a £129 million fine and £85 million compensation for investors, despite the fact the prosecution was dropped because the SFO’s case was “so weak” there was no case to answer.  The DPA documented that the three executives did partake in wrongdoing, stating they were “aware of and dishonestly perpetuated the misstatement [of figures]” leading up to market statements in August and September 2014, “thereby falsifying or concurring in the falsification of accounts or records made for an accounting purpose”.

Tesco entering into a DPA which specifically ascribed wrongdoing to their directors, who then had their cases thrown out of court because the evidence against them was so weak, demonstrates serious flaws in the process.  To avoid such a situation occurring, it is vital that all legal advisors communicate effectively, with a senior barrister leading the team to ensure a clear, logical strategy is mapped out which considers the possible results of the regulatory investigation and individual director prosecutions.

In summary

The fact the DPA and the court in the Tesco fraud investigation/trial contradicted each other in their findings shows how complicated a case of corporate fraud can become following years of investigation and analysis of mountains of complex evidence.

If you have been arrested for fraud, or are being investigated by the SFO or HMRC, experienced legal advice is critical.  Having no experience or support when dealing with regulatory enforcement officers or the criminal justice system could result in the destruction of your company, career, and reputation.

Tanveer Qureshi is a Legal 500 barrister, specialising in ASA compliance, business to business fraud, health and safety, food standards, civil litigation, and corporate crime.  If you require legal representation, please contact directly on 020 3870 3187.

In February 2019, BBC’s Panorama investigated the use of digital influencers in the advertising industry and the impact this new form of advertising is having on consumers.  Leveraging what is dubbed the “Wild West” of misleading and unregulated advertising, the modern-day megastars of YouTube, Snapchat, and Instagram promote everything from diet pills to online gambling.

Brands have embraced the use of influencers and many young people seeking fame and fortune promote themselves heavily in the hope of being spotted by big business to promote their products.

Legislation failing to keep up with innovation is nothing new.  The Data Protection Act 2018, passed on the back of the EU General Data Protection Regulations, replaced legislation which had not been updated for 20 years.  In less than half that time, the way data was used by business changed exponentially, thanks to social media (Facebook and Twitter became available to the public in 2006) and the ubiquity of the Smartphone.  Companies are therefore caught between a rock and a hard place when it comes to playing by the rules in the digital age; they must compete by doing what the competition does (but better) and navigate murky laws and moral boundaries which are constantly shifting beneath marketing manager’s feet.

How social media influencers can help companies sell their products

Any expert in sales will tell you the number one rule of selling has nothing to do with mastering a fancy close or building a formidable pipeline.  Of course, these aspects of the sales process are important, but people buy from people they like.  And to like someone, you must trust them.

Trust in advertising has never been lower.  In a 2017 survey on the global state of consumer trust in advertising, 83% of people found online ads disruptive and lumped them in the same category as fake news.  According to the report:

“Print ads still reign for the most trusted form of advertising (shame they can’t save newspapers), with 82 percent of people saying they’re the most trustworthy for making purchasing decisions, with TV coming a close second at 80 percent.”

When it comes to digital advertising, search advertisements are deemed the most trustworthy, with 61% saying they positively influence buying decisions.

Investing in social media influencers is a powerful tool for marketers because by letting followers into their everyday lives, the influencers have already built trust.  And this trust is not simply with a few hundred or even a thousand people.  Top influencers have millions of followers around the globe.  Talent agencies have sprung up to connect brands to social media stars who can reach a massive audience simply by wearing or using an organisation’s product in everyday life.  The influencer advertising industry is said to be worth around £4 billion worldwide and is growing rapidly.

Regulators take action

In early 2019 the Competition and Markets Authority (CMA) warned social media influencers that if they failed to follow guidelines and make it clear when they were being paid to promote a product or brand, they could face prosecution and risked heavy fines or even imprisonment.

The warning followed an investigation by the CMA.  The Advertising Standards Authority (ASA) launched its own investigation into influencer marketing at the same time and in January 2019, it issued hundreds of warnings relating to the breaking of paid partnership rules.

The current rules relating to influencer advertising

The ASA has provided guidance for influencers on what they must do to ensure followers are clear about whether or not they are viewing a paid post which qualifies as an advert.

The CAP Code, enforced by the ASA, applies to most forms of influencer marketing, as does consumer protection legislation, such as the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) which is enforced by the CMA.

A post will qualify as an advertisement if the brand:

• Pays the influencer (this could be in money or ‘freebies’, and
• Has editorial control over the content, including final approval.

If content has been paid for and the brand has some form of editorial control, it must be clearly labelled as such by using hashtags such as #ad or #sponsored.  These must be displayed clearly at the beginning of the post, not buried in amongst a plethora of other hashtags at the end.

Even if the brand makes a gift to the influencer without a requirement that a specific post must be made featuring the contents of the gift, the fact that the product is in fact a corporate gift must be declared if it appears within the influencer’s social media content.   The influencer could use #freebie to ensure followers/viewers are not misled.

Influencers must also be vigilant in declaring a commercial relationship and/or sponsored content on every individual post.  Simply stating that a commercial relationship is in place in their profile is not enough to reach compliance.

In summary

The law surrounding advertising and social media influencers remains in its infancy, and both influencers and brands need to tread carefully, seeking expert advice to ensure compliance.  One key factor which causes confusion is that of jurisdiction.  If a British company works with an influencer based abroad, the ASA may not have jurisdiction to investigate.  However, this does not mean the enforcement authority in the influencer’s home country cannot launch an investigation into possible compliance breaches.

To find out more about online advertising and influencer marketing compliance issues, you can instruct me directly.

Tanveer Qureshi is a Legal 500 barrister, specialising in ASA compliance, business to business fraud, health and safety, food standards, civil litigation, and corporate crime.  If you require legal representation, please contact on 020 3870 3187.