In July 2016, the claimant advanced a series of loans to a property development company “B”, secured by guarantees from the Directors “G” and “R” and a mortgage over R’s house. Soon after the advance, the claimant obtained information that it had been the victim of impersonation fraud and G and R were not the people they claimed to be. As a result, the security it held over the property was not valid.
Using disclosure orders to trace proceeds
Alex was instructed to draft the claim in fraudulent misrepresentation and unlawful means conspiracy against the company, B, as well as the freezing order and a disclosure order under the Bankers Trust jurisdiction. Disclosure orders enable claimants to establish the true identity of fraudsters and to trace the proceeds of funds if they have been moved on.
Those orders were obtained in the High Court chancery division on 16 September 2016, revealing the transfer of large sums to a foreign exchange company, enabling the money to be sent abroad via peer to peer money transfer. In addition, the disclosure showed transfers into accounts in the names of G and R.
Alex obtained joinder of the fraudsters as “Persons Unknown”, avoiding confusion with the impersonated individuals and satisfying the test in Bloomsbury Publishing. In addition a further freezing order was obtained which was limited to specific bank accounts identified as receiving proceeds of the fraud.
The claimant has now prevented the dissipation of a significant part of the proceeds of the fraud and obtained further information about the fraud and its perpetrators.
Alex commented, “In these cases it is vital to get into court quickly, both to freeze the assets you know about and to obtain information to find where the money has gone. Where you have a good case of fraud, a Bankers Trust order can help you identify other accounts being used to dissipate the funds.
“As these orders are made without notice, it is vital to ensure that all the relevant information is put before the court. In addition, in cases involving impersonation fraud, the court will be anxious to ensure that the victims of the impersonation are not negatively impacted by the freezing order, so the fraudsters must be accurately identified and the order limited to those accounts which can be linked directly to the fraud proceeds”.