Drugs gangs move into financial fraud

12 April 2012

Crime gangs normally associated with the drugs trade are turning to fraud and recruiting corrupt employees in banks and financial institutions, a senior police officer warned today.

Fraud detectives say they are investigating cases where criminals associated with gangs have deliberately targeted employees in trusted positions inside companies.

City of London Police, the national lead on fraud investigation, say they are now investigating around 100 cases with an "insider dimension."

In some cases detectives say gangs with links to street crime and the drugs trade are diversifying into fraud by corrupting employees in positions of responsibility within respected firms.

The warning comes after a fraud prevention service claimed a significant rise in the number of women being identified as insider staff fraudsters.

In 2004 Joyti De-Laurey, a former secretary at the City investment bank Goldman Sachs, was jailed for seven years for stealing £4.5 million from her bosses' personal bank accounts.

Detective Chief Superintendent Steve Head, the head of the force's Economic Crime Department, said cases of insider fraud were increasing.

He revealed that some cases were being uncovered as companies introduced tighter controls on their finances because of the recession.

Investigators say people who could have been trusted for many years in positions of trust are suddenly being caught with their hand in the till.

But in some cases they revealed that organised gangs are recruiting vulnerable people in positions of trust and forcing them to commit thefts.

In one case last year the girlfriend of a known gangster was jailed for 15 months after being convicted of stealing around £100,000 from a City company.

The 32-year-old woman worked as an accounts clerk and was caught after the firm noticed she was paying substantial sums to a friend.

In general police say they are arresting lawyers, valuers, accountants and insurance brokers who have exploited their position for personal and illegitimate financial gain.

Last month an accountant with Toys R Us was jailed for seven years after defrauding the company of £3.6 million. Paul Hopes, 58, of Reading, spent the cash on prostitutes and expensive cars and a cocaine habit.

Det Ch Supt Head said: "Organised crime networks will look at an organisation or a company and then target an individual within it.

"Some individuals could be corrupt but most are just greedy. When companies are dealing in billions of pounds then you can see why it is worthwhile for criminal organisations."

Police have found corrupt individuals working for banks, building societies and insurance companies as well as other firms.

He added: "I think we are seeing more cases of insider fraud partly because of the recession because it is forcing companies to scrutinise their accounts more closely to see where they can make savings.

"But we are making it a priority to go after corrupt officials wherever they are operating. We cannot and will not allow a greedy and corrupt minority to undermine public trust and confidence in our systems; whether its getting a mortgage or any other professional service."

Recent figures from a fraud watchdog show employee fraud rocketing in the first six months of this year.

The Cifas Fraud Prevention service said dishonest actions by staff to obtain benefits by theft and deception increased by 69% in the first half of 2009 compared with the last half of 2008.

There were dramatic increases in the numbers of women being identified as staff fraudsters.

The warning came as the City force recorded a 72 per cent rise in fraud this year driven largely by a jump in mortgage scams.

The force say allegations of mortgage fraud are now one of the largest areas of activity for its officers. The number of investigations is expected to increase over the next year as frauds came to light and lenders sought to recover their losses.

Create a FREE account to continue reading

eros

Registration is a free and easy way to support our journalism.

Join our community where you can: comment on stories; sign up to newsletters; enter competitions and access content on our app.

Your email address

Must be at least 6 characters, include an upper and lower case character and a number

You must be at least 18 years old to create an account

* Required fields

Already have an account? SIGN IN

By clicking Create Account you confirm that your data has been entered correctly and you have read and agree to our Terms of use , Cookie policy and Privacy policy .

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged in