Organised crime pushes fraud to record level

Frauds perpetrated by organised gangs have doubled in the second half of 2006, according to a report by the forensic accountancy wing of KPMG.

The report found that 40% of fraud, amounting to £350m, was committed by managers, and that government and investors were the biggest victims of organised fraud.

The year saw 277 fraud cases, worth £837m, coming to court, the largest number ever recorded. Over 40% of all fraud cases in the second half of last year were carried out by professional criminals, compared with a quarter of cases in the first half of the year.

Jeremy Outen, partner at KPMG Forensic, said: "The proliferation of frauds carried out by organised crime gangs is extremely worrying. They have clearly been stepping up their efforts, with ID theft, card scams, bank insider frauds, money laundering and cigarette and VAT frauds their most common forms of attack. Despite considerable government efforts to make it harder for such gangs to operate, there is still a long way to go."

The biggest target of organised crime activity was the government, through carousel fraud on items such as mobile phones and computer chips, and the evasion of duty on items such as cigarettes and fuel.

The biggest carousel case of the year was valued at £57m. Overall, the government was the target of £312m of fraud in 2006. The financial sector suffered £141m worth of fraud.

There were many examples of gangs carrying out web-based scams to obtain and abuse credit card information, and several of gangs placing or coercing members of bank staff to pass on confidential account and card details.

One gang, operating prior to the introduction of chip and PIN, used MP3 players to bug free-standing cash machines in bars, bingo halls and bowling alleys and capture the card details of unsuspecting bank customers as they withdrew their cash enabling them to create cloned cards and carry out £200,000 of fraudulent purchases.

One teenage computer wizard traded nearly £1m worth of goods over the web, using the details of 12,000 credit cards that he had extracted from his former employer's records.

In another case a teenager, who pretended to be a viscount, lived a champagne lifestyle by fooling banks and credit card companies about his wealth, going on a £150,000 spending spree with the credit he was extended.


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