Fraud as defined in the Fraud Act 2006 — practice questions

Route 1 — s2 false representation: Elena told the client the bank made an error — an express false representation about a fact (s2(1)). She knew it was untrue (s2(1)(a)). She acted dishonestly (Ivey) and intended gain (s5 — obtaining money) and loss to the client.

Route 2 — s4 abuse of position: Elena occupied a position of trust as carer with access to finances (s4(1)). She abused that position by transferring funds for personal use — R v Valujevs: abuse covers breach of trust for personal benefit. Dishonesty and intent to gain/loss as above.

Route 3 — s3 failing to disclose: Less clear here — s3 requires legal duty to disclose. Carer's fiduciary duty may support this, but s2 and s4 are stronger on these facts.

Dishonesty (Ivey): Transferring client funds dishonestly and blaming the bank fails both stages — ordinary people would view this as dishonest; Elena clearly realised.

Conclusion: Elena is likely guilty of fraud by false representation (s2) and/or fraud by abuse of position (s4) under s1. No need to prove deception caused the transfer — intent at time of act suffices.

Ben's liability will be assessed under s.1 of the Fraud Act 2006, specifically through fraud by false representation (s.2).

Actus Reus (AR): Making a false representation. Ben made an express representation in the loan application that Innovate Ltd's turnover was £1.2 million. Under s.2(2)(a), a representation is 'false' if it is untrue or misleading. Ben's statement was untrue.

Calculation of the misrepresentation: The value of the false statement can be quantified:

• Stated Turnover: £1,200,000
• Actual Turnover: £800,000
• Value of Inflation: £1,200,000 - £800,000 = £400,000 This calculation shows the representation was substantially false.

Mens Rea (MR):

1. Knowledge of falsity: Ben 'knowingly' inflated the figures, meaning he knew the representation was untrue (s.2(1)(b)(i)).
2. Dishonesty: Applying the Ivey v Genting Casinos test:
   • (i) What was Ben's knowledge? He knew the true turnover was £800,000.
   • (ii) Was his conduct dishonest by the standards of ordinary, decent people? Yes, deliberately inflating company accounts to mislead a bank is objectively dishonest.
3. Intention to make a gain or cause loss: Under s.5, 'gain' includes obtaining property one does not have. Ben intended to make a gain of £500,000 (the loan) for Innovate Ltd. The gain can be for another (s.5(2)(b)). He also exposed the bank to a risk of loss.

Conclusion: Ben has satisfied both the actus reus and mens rea for fraud by false representation under s.2. The offence was complete when he submitted the application, as the outcome is irrelevant. He is highly likely to be found guilty.