Credit Fraud Investigation Technique
Fraud in lending often creates difficulties bodies of inquiry and investigation in its investigation. A relatively new article appeared in the Criminal Code of the Russian Federation in 2012, and over the past period of wide practice has not been developed. The activities of operational staff and investigators are complicated by the constant improvement of the methods and means used by fraudsters. They have a wide network of accomplices at their service; bank employees often collude with them. Sometimes investigators fail to prevent the organizer of the scheme from fleeing abroad.
Legal and regulatory framework
Article 159.1 of the Criminal Code of the Russian Federation presupposes the theft of funds from banks provided by them on the terms of urgency, payment and repayment. The main feature that characterizes this type of theft is the provision of knowingly false or inaccurate information when applying for a loan. It is possible to recognize that the non-return of borrowed funds is precisely a fraud in the field of lending is possible only if the presence of intent to steal was present at the time of the loan agreement. This complexity poses significant legal challenges in collecting evidence.
It is interesting that the introduction of 6 new articles into the Criminal Code, highlighting new subtypes of theft, did not cover all areas in which criminal forces are looking for a point of application. Only lending and insurance are covered, the failure to repay funds of leasing companies passed the attention of the legislator. There was a fraud in the field of banking when using payment cards (Art. 159.3 of the Criminal Code of the Russian Federation), but such a type of fraud as telephone fraud, when the funds of customers of mobile operators are debited using various modern technologies, was not included in a separate crime. At the same time, the volumes of stolen funds are quite comparable, they most often disappear from leasing companies in situations when lease payments are not paid, property disappears in an unknown direction, and companies go bankrupt. The method of committing this type of offense is similar to fraud in the field of lending, the lessor is provided with fake documents, balance sheets, financial statements, which should mislead him, the forensic characteristics are identical to the acts committed in the field of lending.
Professional jurists find that in addition to the aforementioned areas - leasing legal relations and telephone fraud - separate corpus delicti could be introduced for fraudulent actions in the field of agricultural products turnover. It is important that, regardless of the specific qualifications, deception or breach of confidence will be at the heart of each type of crime. The complexity of proof, in addition to fraud, the presence of intent to commit theft at the very moment of concluding a loan agreement often seriously complicates the work of investigators, and cases fall apart in court. The inability to repay the debt is often explained by the financial crisis, changes in the market, and the actions of competitors. Often, the only way to convince a judge of intent is through direct forgery. You can also influence the opinion of the court in the case when the funds received in the form of a targeted loan are instantly transferred to another legal entity for cashing out or withdrawing abroad.
Forensic characteristics of credit fraud
You need to know your opponent by sight, therefore, in order to study a specific act, the methods of its commission, methods of struggle and investigation, it is necessary to first study its forensic characteristics, standard methods of commission, and frequent mechanisms used to carry out theft. Then, when developing an investigation plan, it will be possible to work in already known directions.
For all types of acts provided for in Articles 159, 159.1-159.6 of the Criminal Code of the Russian Federation, the method of fraud will be deception or abuse of confidence of the person who makes the decision to issue funds or owns them. But in fact, the victims of credit fraud are not the banks themselves, but their depositors, people who entrusted them with their funds. This is due to the fact that deposits of individuals, ordinary workers or retirees usually become credit resources. If a bank that systematically issues irrevocable loans fails, they will be the first to suffer.
For Article 159.1 of the Criminal Code of the Russian Federation, such persons will be bank employees or managers who are provided with false or inaccurate documents or information. In this case, falsity is characterized as a deliberate forgery, therefore, sometimes such an act is considered in conjunction with articles providing for liability for the use of forged documents. But the sign of inaccuracy when applying the forensic characteristics of this composition may simply mean insufficient data, which is why the credit inspector cannot make the right decision when considering them, accurately assess the borrower's solvency.
Among the methods of data falsification , which are most often used by legal entities, stand out:
- providing not a valid balance sheet, but with changed indicators, which should prove a sufficiently stable financial condition of the company;
- the provision of a pledged item, the characteristics of which do not correspond to the declared ones: dilapidated property complexes, non-working machines or equipment;
- provision of documents for pledged items that do not belong to the borrower or do not exist in reality;
- falsification of business plans and other documents, promises of inflated receipts for a loaned business project.
It is far from always that a specific bank employee can independently identify forgery or unreliability of information. This has to be done by the bodies of inquiry and investigation during the investigation, using typical forensic characteristics of the act.
Sometimes, when individuals are fraudulent, the interests of the bank are guarded by security services that manage to determine, for example, the signs of a fake passport: a re-pasted photograph, the difference between the data on the place of issue of the passport from those indicated on the seal, information about the cancellation of the passport in the database of the Ministry of Internal Affairs. Such crimes are easier to investigate than those committed in the field of entrepreneurial activity. Already at the stage of detecting a fake, it is possible to initiate a criminal case on an attempt to commit a crime under Art. 159.1 of the Criminal Code of the Russian Federation. It is considered completed at the moment the funds are credited to the accounts of the criminal or the goods purchased by him are paid, if the fraud is committed in the field of consumer lending. But even for an attempt to commit it, a criminal caught by the hand can be held accountable.
An important forensic characteristic of the act under Art. 159.1 of the Criminal Code of the Russian Federation, it becomes its commission as part of a group of persons, one of the participants of which is a bank employee. Their connivance often helps to commit crimes, and the investigator, studying a particular case, will definitely check the bank employee who issued the documents, his possible connection with the criminal who directly took out the loan and the alleged organizer. In the case of obtaining a loan for a legal entity specially created and used for the purpose of theft, you can contact the organizer by establishing which economic group the given legal entity belongs to. This can be done by analyzing the possible signs of affiliation.
When analyzing the method of committing a crime, it can be established that it will be a set of interrelated steps and actions of one or more persons. The purpose of the act will always be to obtain a loan, commercial or targeted, the interest on which is subsidized from public funds. Such subsidizing of a part of the interest rate sometimes constitutes a separate offense, a common fraud. This happens in cases where a loan provided on the basis of state support is spent inappropriately. The investigation of such acts is often complicated by the interest of regional authorities and heads of local bank branches in them. Any crime in the commission of which the management of a banking institution is involved or it itself becomes the organizer is usually distinguished by the most serious qualifying features that fall under the influence of the norms of Part 4 of Art. 159.1: commission of a crime in the field of lending with the participation of an organized group or causing damage on an especially large scale.
At the first stage of the investigation, the investigators follow the standard algorithm:
- determine the main directions in which the investigation will be conducted;
- appoint urgent primary operational and investigative actions (search, seizure of documents, interview of witnesses);
- establish important circumstances relevant to the case;
- carry out the range of procedural actions established by law;
- establish the facts to be proved in the course of the investigation, the limits of the investigation.
All decisions of the investigator should be based on the full amount of information that can be obtained at the very beginning of the investigation. At the same time, an inspection of the scene, a search and other steps related to the presence of the investigation team on the territory of the bank should be carried out promptly so as not to disrupt the usual mode of operation of the credit institution. If any evidence is to be seized and there are securities among them, they must be described in as much detail as possible and provided with such a storage regime so that their loss becomes impossible. Other investigative actions must also be carried out with the utmost care.
The information obtained in the first hours of the investigation becomes the basis for the formation of a further complex of investigative actions. Sources of information when committing a crime in the field of lending are:
- information obtained during the examination of the premises of the intruder borrower;
- inventory and audit acts;
- information obtained during the inspection of equipment or warehouses where goods that were pledged were stored;
- audit reports;
- written explanations by employees of the borrowing organization or its affiliates;
- expert advice in a particular area of business.
All these sources can contain both reliable and false information, and their assessment must be approached with the utmost care. Information of forensic value should be assigned to a separate group. The investigator has to prove the fictitiousness of entrepreneurial activity, the presence of intent to commit a crime, the fact of collusion of a group of persons. This may be evidenced by such moments:
- lack of assets that should be present based on balance sheets or inventory statements;
- finding in the same room documents or seals of various legal entities;
- documents for the production of seals;
- the presence of double-entry bookkeeping;
- availability of data on possible falsification of business plans and documents on the basis of which a loan was obtained, information about them does not coincide with those that can be requested from the tax office;
- sending requests to the IFTS about the real financial position of the borrower, his accounting statements, payment of taxes;
- facts of frequent presence in the borrower's territory of bank employees who could be involved in a crime.
One of the important forensic characteristics of the act is the definition of the personal characteristics of the subject of the crime, which helps to narrow the circle of suspects. When carrying out the first investigative actions, it is possible to establish:
- whether the subject is connected with the criminal world - fake, stolen passports or pasted-in photographs indicate this;
- how much he is involved in entrepreneurial activity - this is evidenced by the quality of preparation of business plans and other documents;
- what field of activity he specializes in.
For the court, it becomes very important to establish the motive for the crime, and for this composition, it is not in every case exclusively self-serving. Often additional motives are the self-interest of banks, numerous cases of deprivation of apartments and other property, leading to suicide. This position helps the subject to justify their actions. It is curious that among the subjects of such crimes, 76% are men, 24% are women, and they often act as accomplices. 74% of all crimes in the field of lending are committed with the presence of accomplices. Interestingly, the average age of scammers is about 40 years. This is partly due to the fact that in order to mislead a banking specialist, you need to have an already established social status.
After establishing the identity of the organizer of the fraudulent scheme, the investigator needs to determine a preventive measure for him, and then difficulties begin. A feature of a criminal subject is his high mobility: thanks to the previously stolen amounts, he can leave the country at any time. Often, the first signal that an investigation is starting leads to an instant withdrawal of company funds from the accounts under the pretext of paying a patch, purchasing agricultural products, or for other legal purposes of receiving cash by legal entities. As a rule, in this situation the accountant of the company becomes an accomplice, whose written testimony will help to prove the presence of intent to commit a crime in the field of lending. In criminal cases of this kind, it is often financial workers who become defendants, organizers and general directors cannot be found, and it is not always possible to prove the involvement of a bank employee in fraud. Criminal activity, however, stops, but it is not possible to return the money to a credit institution or government structure. That is why instant actions of the investigator to identify the organizer of the scheme and his arrest, placement in custody help to partially compensate for the damage caused. But this is not always possible. Government policies to decriminalize business crimes, in which judges avoid using a measure such as pre-trial detention, often makes it difficult to stop a fraudster. He is also helped by experienced lawyers and the opportunity to offer a substantial amount of money as collateral.
Sometimes, the concealment of the fact of a crime falling under Article 159.1 "Credit fraud" is carried out through bankruptcy. In this case, it is extremely difficult to prove the fact that the loan was taken with the original purpose of not returning it. In bankruptcy cases, many new creditors appear - from employees with wage arrears to the tax authorities, the culprit is actively defending himself, allegedly trying to save the enterprise, but in vain. Such pseudo-bankrupts usually, bypassing the stage of financial recovery and supervision, immediately appoint bankruptcy proceedings, during which the accomplices receive all the company's property for next to nothing.
Current judicial practice
The application of Article 159.1 of the Criminal Code of the Russian Federation by the Russian judicial authorities is selective. When committing a truly large fraud in the field of lending, investigators and judges are more likely to take on board simply fraud under Article 159 of the Criminal Code of the Russian Federation. This composition allows you to expand the evidence base, the presence of intent to prove is much easier. Specifically, not very many cases are initiated under 159.1 of the Criminal Code of the Russian Federation, and some of them simply do not reach the court, falling apart due to the actions of experienced lawyers at the stage of preliminary investigation.
Since 2014, in cases related to this article, a little more than 1,200 cases have been found in the database of Russian courts of general jurisdiction. It is interesting that in most of them the accused are persons who managed to steal small amounts from a credit institution. Millions of crimes either do not go to court, or fall under other articles, for example, business fraud. This article was applied earlier, when the subject of a crime committed against bankers was an individual entrepreneur.
For example, an entrepreneur from Saratov was brought to justice for the theft of about 3.5 million rubles. The money received for business development under the state program "Microcredit for the development of small business", he spent on personal needs. The investigation did not study the question of whether a bank employee acted as his accomplice. Despite the fact that the defendant managed to bring the case to bankruptcy, the court was able to bring him to justice precisely for fraud in the field of entrepreneurial activity under Part 4 of Art. 159.4 of the Criminal Code of the Russian Federation. But in the future, the practice of using this article by the courts exhausted itself. Based on the norms given in the Resolution of the Constitutional Court of the Russian Federation of 11.12.2014 No. 32-P, it was found to be inappropriate to the Constitution of the Russian Federation and became invalid.
Recently, most often, Article 159.1 of the Criminal Code of the Russian Federation is used when stealing money from microfinance organizations, which practically do not check the financial solvency of their clientele. Proof of intent in these cases is the provision of deliberately false information about the place of work, sources and amounts of income. Since it is not possible to steal large sums from these organizations, the perpetrators are sentenced to several months of restriction of liberty for receiving a microcredit in the amount of 5-10 thousand rubles.
Thus, it cannot be said that Article 159.1 of the Criminal Code of the Russian Federation has a wide application practice. It is likely that it may soon disappear from the Criminal Code as an independent composition.
When considering the practice of imposing punishment, it is clear that the severity of the crime corresponds to the severity of the punishment, often it is served conditionally.
Understanding the underlying forensic characteristics of lending fraud helps investigators optimize their investigation structure and achieve results faster.