What a victim should do after discovery of fraud

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Net Patrol International Inc.  Data Investigation and Forensic Services
Bankruptcy and Insolvency Trustees

To discover a fraud is to discover a breach of trust. Whether the fraud relates to investment matters, employment scenarios, conduct between business associates, or other forms of relationships, the emotional effects resulting from fraud may be significant.

It is common for fraud victims to immediately react and contact the fraudster. They would demand the return of their funds or to contact the police. But it is always better to restrain yourself from these natural retributive inclinations. Although sometimes confronting a fraudster can be very amusing, like this man from the UK who decides to respond to the scamming messages: Daily Mail.

Here are a few tips on how to react when you find out that you have been a victim of fraud:

  1. Contact a trusted friend or family member not connected in any way to the fraudster to review the scenario, to provide support and to be a source of sound judgment. They can confirm the reasonableness of your beliefs that you have been defrauded;
  2. Preserve and organize documents relating to communications with the fraudster and to the transfers of money, together with any other evidence that is clearly relevant to the loss. Organizing documents in chronological order assists in explaining the story to a lawyer and maybe later to police;
  3. Research or seek a reference for an appropriate lawyer or law firm whose law practice focuses on fraud recovery.


Never contact the fraudster

Fraud, in its essence, is “theft by lies.” There are no persuasive reasons to believe that those who have lied in order to obtain money will later provide a straight answer when confronted with their lies. Rather, after having violated the trust of their victim, the tendency of fraudsters is to deny their wrongdoing and to offer a myriad of excuses, often blaming the victim for their own “misfortune.”

Often fraudsters who realize that their scheme has been discovered will attempt to cover their tracks by deleting the electronic communications evidencing their fraud, as well as to transfer the fruits of their dishonesty out of the victim’s reach, and to otherwise destroy the record of their wrongful conduct.

You should also never contact witnesses or anyone known to the fraudster. They could inadvertently or sometimes intentionally alert the fraudster, despite whatever assurances they give. It is best for fraud victims to have their case assessed by a lawyer to determine its strength before seeking to obtain further evidence held by the fraudster or by third parties.  An element of surprise often enhances a fraud victim’s chances of recovery and later seeking retribution.


Do not immediately contact the police

Many victims of fraud are inexperienced in dealing with the police and do not realize that the police are not well equipped to recover their funds. If you contact the police before assessing your case with your own civil counsel, you assume the risk that the fraudster will be alerted to a potential criminal investigation and may then use the victim’s own money to retain criminal defence lawyers. They may even transfer the victim’s money out of the jurisdiction or into the hands of accomplices.

In most scenarios the police are not equipped to bring emergency motions to freeze the victim’s funds in the hands of the fraudsters, and they are not equipped to trace the funds into the hands of third parties. Freezing the funds in the possession of fraudsters and their accomplices is the most important factor in increasing the chances of obtaining a recovery. Read more on contact with police upon discovery of fraud in this article: Should fraud victims immediately contact police upon discovery of a fraud?

Finding the right lawyer for a fraud case is not a “one size fits all” consideration. Fraud victims should consider the expertise and experience of the lawyers they are considering to handle their fraud recovery case, together with the rates the lawyers charge, and the types of retainers to which the lawyers are willing to agree. With respect to the rates the lawyers may charge, in addition to experience and expertise, this is often a function of the overhead that their firm carries and the number of lawyers and staff that are assigned to the file. With respect to the types of retainers into which lawyers are willing to enter, this is often a function of the willingness of the lawyer to share in the risk of recovery. For further information on considerations when selecting the appropriate fraud lawyer, read this article: Considerations in selecting your fraud lawyer

Written by: Norman Groot
Read more at Investigationcounsel.com