Breakdown of a banking-tech fraud
Locations
Key to the success of the case was the technical evidence provided by the claimant's legal team, gathered using a series of third party disclosure orders.
In what might have passed for a (very long) episode of The Wire or NCIS the key evidence involved the use of burner phones, faked emails and cell tower call triangulation.
Given the strength of the evidence, the Commercial Court held that the defendants had no realistic prospect of defending the claim and awarded judgment in favour of the claimant.
The facts
The claimant held money through nominees in a bank account in Cayman.
Fraudulent telephone calls were made to the Cayman bank and a fraudulent fax was sent, resulting in €15 million of the claimant’s money being sent to a bank account held in England by the first defendant, which is a company owned and operated by the fourth defendant, Mr Cerri.
Much of the money was then rapidly paid away to other defendant companies – third parties with whom Mr Cerri and his companies had a relationship.
On learning of the fraud, the claimant made a series of urgent applications to the Commercial Court in London – initially using the ‘Persons Unknown’ jurisdiction – which resulted in Worldwide Freezing Injunctions, Proprietary Freezing Orders and disclosure orders being made against several of the defendants.
Further non-party disclosure orders were made against banks and financial institutions to trace the destination of the claimant's monies.
Using the powers of the Commercial Court, the combination of rapidly-obtained injunctions and information produced in response to the disclosure orders, the claimant was able quickly trace, freeze and recover from the defendants and certain third-party recipients of the proceeds of the fraud, approximately €11.5 million of the €15 million that had been stolen.
This left approximately €3.5 million (plus interest and costs) outstanding.
Key evidence obtained from third parties
Successful summary judgment applications in fraud claims are rare because of the inherent allegation of dishonesty against the defendant, which typically means such claims proceed to trial where the defendant can be cross-examined.
In this case the Fieldfisher team obtained the following cogent evidence, with the use of mobile phone location data and technical evidence on spoofed emails, that the relevant defendant was behind the fraud:
-
The Fieldfisher team tied Mr Cerri to the mobile phone that was used to make the fraudulent telephone calls to the Cayman bank by establishing (via a third party disclosure application against Vodafone) that the ‘burner’ phone used to make the fraudulent calls to the Cayman bank had connected through a cell tower mast less than 100 metres from Mr Cerri's office in Mayfair. The burner phone was also purchased from a Vodafone store 600 metres from Mr Cerri's office.
-
The burner phone had been paid for using a Revolut bank card. By a further non-party disclosure application against Revolut Bank, the Fieldfisher team established that the payment card used to buy the phone was in the name of a junior employee of the first defendant, and that the card had been funded by Mr Cerri the day before the phone was bought.
-
The Cerri defendants put forward emails, which they said they had received from a certain third party and upon which they relied to exonerate themselves of the fraud.
-
However, Fieldfisher established, and the court accepted, that each of these emails was ‘spoofed’, meaning that they had been created by using a website that will produce and send an email to any addressee with the (false) appearance of having been sent from a genuine email account.
-
Mr Cerri asserted in evidence that he did not know at the time that the emails he had received were spoofed.
-
But the claimant demonstrated, to the satisfaction of the court, that this assertion was not true, since two of the spoofed emails received by Mr Cerri were purportedly sent as replies to emails sent by Mr Cerri to the genuine holder of the relevant email account. That could not have been the case, which meant that the outgoing emails must have been manufactured.
-
-
The evidence of rapid dissipation of the ‘stolen’ money obtained from various banks weighed heavily with the court and was held not to be susceptible of an innocent explanation that was anything but fanciful.
Takeaways
The judgment demonstrates that it is possible to obtain summary judgment, even in a hotly contested fraud case. In this respect, obtaining cogent evidence is paramount.
In the digital age, it is very difficult to commit fraud without leaving some sort of electronic footprint.
Many frauds rely heavily on the use of electronic communications and electronic money transfers. This information can potentially be requisitioned by a claimant in a fraud claim to obtain cogent evidence.
In this case, Fieldfisher and its counsel team utilised the highly-developed injunctive and disclosure regimes of the Commercial Court to secure judgment against the perpetrators and beneficiaries of a fraud committed using technology.
Representation
The Fieldfisher team was led by Fieldfisher dispute resolution partner Tony Lewis and director Nathan Capone, alongside senior associate Stephen Cartwright, director Rebecca McKee and director Nicola Sewell.
The claimant was represented at the summary judgment hearing and throughout the action by Paul Lowenstein QC of Twenty Essex, leading Philip Hinks of 3VB. Sarah Tresman of Twenty Essex and Adil Mohamedbhai of Serle Court were also instructed at earlier stages.
For more information on Fieldfisher's fraud, financial crime and investigations expertise, please contact a member of the team.