There are three offences under the fraud Act which feature in the 2006 Fraud Act. Fraud by misrepresentation, fraud by failing to disclose information and fraud by abuse of position.
Fraud by misrepresentation is an offence under section 2 of the Fraud Act 2006. This applies where the defendant made a false representation dishonestly knowing that the representation was or might be untrue or misleading with intent to make a gain for himself or another, to cause loss to another or to expose another to risk of loss.
Fraud by failure to disclose information is an offence under Section 3 of the Fraud Act of 2006. This applies where the defendant failed to disclose information to another person when he was under a legal duty to disclose that information dishonestly intending, by that failure, to make a gain or cause a loss.
Fraud by abuse of position is an offence under Section 4 of the Fraud Act of 2006. This applies where the defendant occupies a position in which he was expected to safeguard, or not to act against, the financial interests of another person abused that position dishonestly intending by that abuse to make a gain/cause a loss.
Marios is an investment banker. At a meeting with investors in relation to Georgia Capital Investments, he set out a pitch for a new land investment in Thailand. The investment involved developing a large area of agricultural land for the purpose of producing renewable energy sources. The land is awaiting planning permission. One of the investors asks whether the land is insured against the possibility of a catastrophic climate event. Marios indicates that he will confirm the same. In a subsequent email to the investors, Marios says that there is insurance in place and that this insurance ‘covers all eventualities’. The fund is now being invested by the Serious Fraud Office. Marios sends you a copy of the insurance document. The document protects the land against ‘actions taken by developers which may negatively affect the value of the land. Which of the following is true:
- Marios has not made any representation here so there is no evidence of fraud by misrepresentation. He may be accused of fraud by abuse of position because he was in a position of trust with respect to his investor’s funds. If the investor’s funds are protected, then he would have a defence to any allegation under the Fraud Act.
- Marios has made a representation as to the nature of the insurance arrangements. This representation is false because it does not truly reflect the status of the insurance. This could amount to fraud by misrepresentation. It could also amount to a fraud by abuse of position or a fraud by a failure to disclose information.
- Marios has made a representation, but there is no evidence of his dishonesty. The issue would be whether the value of the fund had fallen or not. If it hadn’t then none of his investors would have made a loss, so the actus reus of any fraud allegation would be lacking.
- Marios has made a representation as to the nature of the insurance arrangements. This representation is false because it does not truly reflect the status of the insurance. This could amount to fraud by misrepresentation. It is not a fraud by abuse of position because there is no evidence that Marios was under a legal duty to protect his investor’s funds.