Case study: How to recoup money stolen through employee fraud
By Disputes Partner, Karen Elder
The problem: A global fleet rental company found itself almost £200,000 out of pocket when the person employed as its accounts manager was found to be using his position to fraudulently divert supplier payments into his own bank account. The challenge was to find a way to recoup the money for our client.
The solution: We advised our client that a freezing and proprietary injunction was urgently required to prevent their former accounts manager from dissipating the stolen funds and to claim a beneficial interest in any items that had been purchased with the money that had been diverted to his account.
Our client had identified an accounting trail to the accounts manager that stemmed from his fraudulent activities in diverting supplier payments for vehicle purchases to his own bank account. These breaches were extremely serious from both a civil and criminal perspective and the police were informed.
We were instructed on an urgent and confidential basis to deal with the civil fraud and within a matter of days had prepared the affidavit evidence, instructed counsel and issued the application for the injunction to be heard in the Birmingham High Court.
Due to the highly sensitive nature of the fraud, the court granted the injunction without notice to the former employee who on receipt of the injunction papers made an unequivocal admission of liability.
At the same time as applying for the injunction, we conducted extensive investigations into the former employee and his family to identify the true extent of the stolen funds and the assets available for requisitioning and sale. We revealed that all of the diverted monies had already been spent, so we liaised with the client to identify the best ways to persuade wealthy family members to refund the stolen funds.
The outcome: After much negotiation, not only did we procure the sale of assets to refund our client and secure some immediate cash payments, but we also placed a charge on a family member’s home for the agreed balance of the debt due to our client. Most of our client’s legal costs were also recovered.
Value to client: We were able to act immediately to protect our client’s position while engaging in some creative thinking to ensure as great a recovery as possible for our client in the circumstances. We were able to work with, not just for, our client to achieve the result.