Why the increase in fraud highlights the need for deeper background checks

Let’s be candid: the UK justice system is not in a great place. Prisons are close to full capacity, there’s a recruitment crisis for staffing them, and those vocal about prison reform highlight the reoffending rate of around 30%. Partly for these reasons, many judges are being told to avoid prison sentences and the probation service are pressured to let offenders out early. 

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All in all, if you are a UK criminal, the last few years have seen the odds change in your favour: 

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You are less likely to be caught. 

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If caught, you are less likely to be successfully prosecuted. 

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If successfully prosecuted, you are unlikely to face serious punishment.

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One significant area of impact of all this is UK employers. Are businesses more at risk of employing someone with a recent criminal history? If an employee commits a crime within the workplace, are companies sufficiently compensated?

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Some recent case studies that have appeared in the news may help to illustrate that, if you're an employer, it is incredible important to hire, screen and do your checks on every person on your payroll. 

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Christopher Peach 

Whilst working as the manager of the Black Lion Hotel, Peach committed a number of frauds to the value of £1.9m. He has now been caught and prosecuted, but to quote from a news article: 

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The 51-year-old was ordered to pay a nominal amount of £10, which the court said was typical when there were no assets to seize.

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As we will see, this type of penalty is common and a fact that some fraudsters may be aware of. This provides an opportunity to either spend any ill gotten gains swiftly, or conceal them through investments in cryptocurrency. 

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Peach was ultimately handed a five year prison sentence, a rarity reflecting the considerable sum of money involved. That acknowledged, even in the unlikely event that Christopher stays in prison for the full term, that equates to almost £400k in income per year of jail. It’s worth noting that the average UK gross annual salary is £34,900.

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Could a £10 fine and a relatively short prison sentence against £1.9m earnings deter anyone from defrauding their employer?

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Glyn Drabble

Between 2018 and 2022, Glyn Drabble defrauded a social club of  £397,920 while working as its treasurer. Glyn was sentenced to 38 months in prison for fraud, though no fine is listed. 

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If we’re to compare gains vs prison time, Drabble would be banking around £130k per year served - and so, again, it's hard to see the deterrence here. He was even caught moving his money through offshore accounts, which would suggest he has at least banked away some of it. 

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Sian White

As an example of lower level fraud, Sian White was recently convicted of defrauding an individual. She entered into a romantic relationship with her victim, moving  in with him, whilst simultaneously conning him out of all his savings via a fake job offer and fake rental agreement. Her victim, who quit his job and moved home, was left unemployed and homeless. For White, this con followed on from a string of prior convictions:

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• pretending to rent property to steal deposits
• taking out credit cards in other peoples names
• not paying her landlords - and then trashing properties for good measure

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Notably these are only the crimes we know of - it is easy to imagine White has committed other crimes and has further victims. It would be naive to think she is of no further threat or concern to the wider public - yet White has not been sent to jail. She received only community service and a suspended jail sentence..

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Nicola Nightingale

Even those who steal six figure sums can escape jail like Sian White. Nightingale stole £150,000 from the restaurant she worked for, but was sentenced to a mere 100 hours of community service and a nominal fine of £1. That amounts to some £1,500 of earnings in return for each hour of community service performed. Needless to say this was no disincentive at all: Nicola was even smiling when she left court. To share a very relevant quote from the restaurant’s owner:

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 "This should be a lesson for all people not to trust, do your research, get references and be aware of how your business is being run."

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Alison Smith

In 2004, Alison Smith was convicted of 'theft by an employee' to the amount of £3,200.

In June 2012, Smith began to steal from her new employer: Eiran Civil Engineering. It was only in January 2022 that she was caught for her systematic theft over the last decade - after having stolen around £1.5m. Smith was jailed for 5 years and was ordered to pay back some of the funds she had embezzled -  £61,000 of the £1,500,000, which amounted to 4% of the total she had accrued.

When you consider Smith will almost certainly be out of jail in under three years, it's hard to see the punishment. Even if she completes the five years, that’s at least £250k a year. 

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The Case for Background Checking

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Looking at Smith’s case, you may think that Eiran Civil Engineering should have done a criminal record check. Smith had a record and surely this would have come up? Actually, no - given the 2004 sentence was only a 12-month community order, that would have become “spent” by 2012. If Eiran Civil Engineering had run a basic disclosure, Alison would have had a clear result. 

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So are criminal record checks not a safeguard? In the UK, a criminal check is also referred to as a DBS (Disclosure and Barring Service) check, and there are four types.:

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A basic check: which shows unspent convictions and conditional cautions

A standard check: which shows spent and unspent convictions and cautions

An enhanced check: which shows the same as a standard check plus any information held by local police that’s considered relevant to the role

An enhanced check with barred lists: which shows the same as an enhanced check plus whether the applicant is on the list of people barred from doing the role

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Most employers opt for a basic check, but, objectively, there is less value in these basic criminal disclosures - a lot of convictions that would have appeared historically are not going to be there. 

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In Alison Smith’s case, you'd imagine that if an employer is running a criminal record check on a new employee, they'd see any criminal offences specifically made against prior employers. This is simply not how the system works - not even when someone is applying to work in a senior position as a financial manager.

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Former offenders absolutely need a chance at rehabilitation and a crucial part of that is finding gainful employment. The balance; however, seems horrendously wrong right now. Not least because in October 2023, the Police, Crime, Sentencing and Courts Act made further reductions to the time a conviction will be listed on a basic disclosure. These further changes seem to have done little to help ex-offenders turn their lives around and nothing to help employers or the public.

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The main changes were to reduce how long convictions will appear for ex-prisoners.

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Prison sentence of 4+ years: previously the conviction would remain for 7 years after release. Now it is 42 months.

Prison sentence of 1~4 years: previously the conviction would remain for 4 years after release. Now it is 2 years.

Prison sentence of <1 year: previously the conviction would remain for 12 months. Now it is 6 months.

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There's no special carve out for criminals who prey on companies – and this leaves employers vulnerable. If a fraudster is sentenced to a small jail term e.g. 6 months, then the offense will be spent 6 months after that. It means that just over a year after being sentenced, a convicted fraudster can target a new company with a clear basic DBS check.

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It’s also created some unfair contradictions that show how little thought and effort went into the changes.

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For example,  a conviction for community service can now last longer than a small prison sentence. My reading of current legislation is that any community service will be unspent for 24 months, but a prison term of <12 months will be the duration of the imprisonment plus 6 months.

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As such, if someone is sentenced to 100 hours of community service then that is on a record for 24 months. If they are sentenced to prison for six months and enter immediately, then the conviction will last for around 12 months.

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Justice Secretary Alex Chalk stated at the time: “These reforms will help ex-offenders get the steady income, routine and purpose they need which cuts reoffending and ensures fewer members of the public become victims of crime.” I think he was wrong on both counts; this was a gimmicky change to look busy whilst delivering no substance. Prisoners still face a period where it's difficult to find work and it's harder for the public to know of relevant risks. 

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Rather than not do any checks; however, the limited scope of a basic disclosure means that  employers need to do a lot more. In 2024, a basic disclosure is not a self-sufficient background check.

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In that last example, Alison Smith was reported to have had alcohol and gambling problems that are believed to have caused the offenses. On that basis, I imagine Eiran Civil Engineering may have had more useful findings had they run credit and reference checks in 2012. Moreover, if they were to run checks right now, they'd also be able to make use of very powerful adverse media and social media checks too - not to mention ongoing monitoring for roles with access to significant assets.

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Background screening is a constantly evolving environment - some tools will become less effective over time, but thankfully there are always newer, smarter and more cost-effective checks coming online too. For that reason employers should review their screening program on an annual basis to ensure it is evolving to meet new threats. Veremark are happy to offer free consultations to ensure vetting programmes are taking advantage of recent innovations.

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Background checking is now quick, convenient, comprehensive and cost-effective. Veremark even offers a range of instant checks - including adverse media searches that would pull stories like the ones cited and instant employment checks.

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In addition to safeguarding against fraud and the insider threat - background checks are an effective way to avoid bad hires, reduce churn, protect corporate culture, and generate more trust.

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