False accounting
From CrimeLine from Andrew Keogh
False accounting is an indictable offence contrary to section 17 of the Theft Act 1968; and where a person destroys, conceals, or falsifies an account; or dishonestly provides information which is false, misleading or deceptive with a view to gain for himself or another or with intent to cause loss to another, they commit the offence.
Section 17 Theft Act 1968
(1) Where a person dishonestly, with a view to gain for himself or another or with intent to cause loss to another,—
- (a) destroys, defaces, conceals or falsifies any account or any record or document made or required for any accounting purpose; or
- (b) in furnishing information for any purpose produces or makes use of any account, or any such record or document as aforesaid, which to his knowledge is or may be misleading, false or deceptive in a material particular;
he shall, on conviction on indictment, be liable to imprisonment for a term not exceeding seven years.
(2) For purposes of this section a person who makes or concurs in making in an account or other document an entry which is or may be misleading, false or deceptive in a material particular, or who omits or concurs in omitting a material particular from an account or other document, is to be treated as falsifying the account or document.
Lancaster, R. v (02 March 2010)
Lancaster, R. v [2010] EWCA Crim 370 (02 March 2010)
This appeal raised a question about the meaning of the words "omits a material particular" in section 17 of the Theft Act 1968, which penalises various forms of conduct collectively described as false accounting.
28. There remains the question what is meant by "omits a material particular" in the second part of section 17(2), relating to non-disclosure.
29. Section 17(1)(b) refers to the production or use of a document which to the defendant's knowledge is or may be misleading, false or deceptive in a material particular. Section 17(2) identifies two ways in which a document may be regarded as falsified - either by an entry which is or may be misleading, false or deceptive in a material particular, or by omission of a material particular. Although the words "misleading, false or deceptive" are contained in the first part of the subsection (relating to misrepresentation), and not the second part (relating to non-disclosure), it is clear when read as a whole and in its context that the subsection is concerned with documents which are or may be materially misleading either by reason of what they contain or by reason of what they should contain but fail to contain. So in a non-disclosure case the omission will be material if it has the effect that the document is liable to mislead in a way which is significant (or, in the language of Mallett, in a way which matters).
30. Whether the omission is significant will depend on the nature of the document and the context. The test is objective, although it would not be helpful to the jury to use that term. A less lawyerish way of expressing it is to say that it is for the jury to judge for themselves, on the particular facts of the case, whether they regard the omission as significant.
31. As the court observed in Mallett, evidence may be admissible to explain the significance, but in some cases the significance will be obvious. This is likely to be so where the document is an application form containing questions, although it does not necessarily follow that an incomplete or incorrect answer will be material. An error or omission may be trivial. Further, it is possible to envisage cases where an application form may include questions which have no discernable bearing on the processing of the application. (Government application forms may include questions, for example, about ethnic or cultural background which are for statistical purposes rather than because they are needed for the processing of the application. Application forms issued by companies in the financial services sector may include questions designed to enable the company to build up a data bank for marketing purposes rather than for any reason connected with the application itself.) We would therefore not accept that there is a hard and fast rule that any omission to supply information required by an application form must necessarily amount to the omission of a material particular.
Graham, R v (25th October, 1996)
Graham, R v [1996] EWCA Crim 1211 (25th October, 1996)
- “It is plain from R v Mallett [1978] 1 WLR 820 and from Attorney General's Reference (No.1 of 1980) (1981) 72 Cr App R 60 that the effect of section 17 Theft Act 1968 is not to be whittled down, and we are not for our part persuaded that knowledge of the purpose for which any record or document is made or required forms any part of the mens rea of the offence. It is nonetheless clear that the section focuses on the existence of an account or record or document made or required for an accounting purpose, and these are essential ingredients of the offence.”
R v Shama (1990)
R v Shama (1990) 91 Cr.App.R 138 once a document has been created for accounting purposes the crown only need to prove that D had dishonestly and for the required purpose omitted material particulars from the document.
Edwards v Toombs (1983)
Edwards v Toombs [1983] Crim LR 43 The meaning of the word 'record' in section 17 is wide enough to include a mechanical account such as a meter attached to a turnstile for counting people passing through the turnstile.
Atkinson v R. (07 November 2003)
Atkinson v R. [2003] EWCA Crim 3031 (07 November 2003)
- 16….. Where it was established that the appellant had submitted prescription forms containing materially false information, the essential question was whether she did so dishonestly. The specific intent required for murder is quite distinct from the act or acts which cause death. The same may be said of physical acts which comprise false accounting and the mental state in which those acts are done. The mental state has to be dishonest with a view to gain or with intent to cause loss. But that is a composite mental state which only lawyers would think of breaking into component parts. Dishonesty in this context connotes deliberately and intentionally making a false accounting statement knowing it to be false. The purpose or intention of making the false statement has to be established. And we suppose that unusual facts might possibly arise where a person deliberately and intentionally makes a false accounting statement knowing it to be false without any purpose of personal gain or loss to another. But that would be quite unusual. In the present case, there was no issue but that, if the appellant did make deliberate false accounting statements knowing them to be false, she did so with the necessary intent. As the judge rightly said, the crucial question was whether she was dishonest or not….”
Sampson & Ors, R. v (25 May 2007)
Sampson & Ors, R. v [2007] EWCA Crim 1238 (25 May 2007)
- “…… the question whether the invoices were made for an accounting purpose should not have been left to the devices of the jury without more evidence, expert or otherwise, to explain the accounting purpose. Whilst we accept that there may be cases where this is necessary (see R v Sundhers [1998] Crim LR 497 CA), we do not consider that the jury had insufficient evidence to deal with the question whether the invoices were genuine or false in this case.”
Sundhers, (23rd January, 1998)
In Sundhers, R v [1998] EWCA Crim 225 (23rd January, 1998) The appellant was convicted on four counts of furnishing false information contrary to section 17(1)(b) of the Theft Act 1968. The facts were in short compass and not in dispute. The allegation on the part of the prosecution was that the appellant had taken out home insurance policies with three separate insurance companies and had submitted claim forms to each of those companies in respect of the same damage. The forms stated that he had not made a claim of a similar nature within the last five years and that he did not have other insurances for the items claimed: when in fact he already had insurance policies on which he had made claims in 1991, 1992 and 1994. The issue at the trial was whether the appellant had been dishonest in acting as he did. The appeal turns on a short but not wholly straightforward point on the evidence that is required to establish a charge under section 17(1)(b) of the 1968 Act.
The expression "any such record or document as aforesaid" is a reference to section 17(1)(a) "a record or document", and this is the important phrase in this case, "made or required for any accounting purpose."
At the end of the prosecution case the defence submitted that the claim forms upon which the prosecution relied had not been shown by the prosecution to be made or required for an accounting purpose. It was not disputed, that firstly a document may be required for an accounting purpose even though it has other purposes as well; and secondly that the falsity complained of does not necessarily have to be in the material that demonstrates in that document that accounting purpose. Those propositions are to be drawn from the case of Attorney General's Reference No.1 of 1980 [1981] 1 WLR 34.
What was complained of in this case was that the prosecution evidence was insufficient to establish that the claim form had in any way been required or was required for an accounting purpose.
Held: In our judgement therefore there was not evidence before the jury from which they could properly conclude that these documents were required for an accounting purpose, nor could they draw that conclusion from such evidence as they did have, that is to say the nature and form of the claim forms. We well understand the difficulty that this point caused below, and certainly would not seek to criticise the learned Recorder for the approach he took, but we have to say that with the benefit of the further reflection and the benefit of the submissions that we have received both orally and in writing we cannot agree that he took the right approach.
For fear that it might be thought that the judgment of this court creates insuperable difficulties in the way of prosecutions in cases of this type under section 17, we will go so far as to say that really very little evidence, or certainly very little unchallenged evidence, as to the modus operandi of the company and as to the use of the claim forms once they had been submitted would no doubt have been sufficient to cure this point: if of course the jury was minded to accept it, which is a matter for them. Although we made reference earlier in this judgment to the question of there being no expert evidence, we of course do not suggest that this is a matter that needs to be the subject of expert evidence, or indeed is appropriately the subject of expert evidence, provided there is some evidence upon which the jury can act as to how the claim forms are treated in an accounting way within the companies with which they are concerned. For that reason and for that reason only therefore we are constrained to say that this conviction is based upon an incorrect approach and must be quashed.
Manning, R v (24th June, 1998)
Manning, R v [1998] EWCA Crim 2074 (24th June, 1998) This appeal involved a question of some difficulty as to the correct approach to part of the definition of false accounting in section 17 of the Theft Act 1968.
Okanta, R v (20th December, 1996)
Okanta, R v [1996 EWCA Crim 1785 (20th December, 1996) was a case that concerned a reference or confirmatory letter sent to a building society in support of a loan application. The court was invited, to assume that that letter was required for an accounting purpose. The court said this:
- "In relation to a criminal charge of this kind, we do not feel justified in making any assumption beyond the scope of the evidence called. If there were room for the making of any such assumption, we would be inclined to assume (in the absence of evidence on the topic) that, whereas a Building Society relies upon a 'reference' or confirmatory letter of the kind signed by the appellant for the purpose of deciding whether to make a loan (which we do not think amounts in itself to an accounting purpose), the calculation of the instalments for repayment or the rates of interest to be charged are based simply on customary or 'tariff' rates of the Society...."
Sampson & Anor, R v (3rd April, 1998)
Sampson & Anor, R v [1998 EWCA Crim 1177 (3rd April, 1998) The appellants were each convicted of an offence under section 17 of the Theft Act 1968. The only issue raised by this appeal was whether the document in question was proved to have been of one which was required for an accounting purpose. Their defence was that they completed the document in question, a mortgage application form, under the guidance of, and with the advice of, an unnamed and otherwise unidentified person, who claimed to be a broker or salesman of one kind or another. Held: We therefore find ourselves in the same position as did Kennedy LJ in the Osinuga case, and we find it quite impossible to see how it could be said that the application form was not a document required for an accounting purpose.
Osinuga v Director of Public Prosecutions (21st October, 1997)
Osinuga v Director of Public Prosecutions [1997] EWHC Admin 902 (21st October, 1997) The questions which were posed for the consideration of this Court are three: first, whether the magistrates were right to rule against the submission of no case to answer, even though there was no direct evidence which stated in terms that the housing benefit claim form was a document required for accounting purposes; secondly, whether the magistrates were entitled to draw an inference that the document in question, the housing benefit application, was a document required for accounting purposes: and thirdly, whether the magistrates were wrong to draw an inference that a housing benefit claim form, on the procedures and in the circumstance detailed in the evidence, is also to be found to be document required for an accounting purpose. Held: the magistrates were not wrong to draw the inference that a housing benefit claim form, on the procedures and in the circumstance detailed in the evidence before them, was to be regarded as a document required for an accounting purpose. Whether it would always be so must be a matter to be decided in terms of the evidence which is before the magistrates in any other case.
Doncaster v R (23 January 2008)
Doncaster v R [2008] EWCA Crim 5 (23 January 2008) The appellant submitted that the judge had erred in rejecting a submission of no case to answer in respect of counts 2 and 3. The basis of this submission had been that the second and third statements of assets could not have been documents "required for an accounting purpose", a necessary ingredient of the offence on those counts. The judge considered that that was a question for the jury. They had heard that these statements had been required by the Revenue as the basis for any settlement of the second and third enquiries, so that the Revenue could know the appellant's exact financial position. It was for the jury to say whether those documents had therefore been required for an accounting purpose. In our judgment the judge was entitled to come to that decision and we do not think it is arguable otherwise. This is despite appellant’s reliance on R v. Okanta [1997] Crim LR 451 which he submitted was indistinguishable: but that concerned a case, in any event on different facts, which was merely being considered by this court as a possible substituted verdict and was rejected by this court on the evidence.
Attorney-General's Reference (No 1 of 1980 )
In Attorney-General's Reference (No 1 of 1980 ) 72 Cr App R 60 Lord Chief Justice said:
- "The learned judge based his conclusion, so it seems, on two grounds: (1) that the document was not required for an accounting purpose until after it had been received and considered by the finance company and after the decision had been reached to grant a loan; and (2) that there was no duty to account until after this decision had been made.
- As to the second ground, it does not seem to us that the moment at which any duty to account arose had any relevance to the question of whether the document was or was not required for an accounting purpose.
- As to the first ground, it is to be observed that section 17(1)(a) in using the words "made or required" indicates that there is a distinction to be drawn between a document made specifically for the purpose of accounting and one made for some other purpose but which is required for an accounting purpose. Thus it is apparent that a document may fall within the ambit of the section if it is made for some purpose other than an accounting purpose but is required for an accounting purpose as a subsidiary consideration.
- In the present circumstances the borrower [the court was there concerned with an application for a loan] would be making the document for the purpose of his loan proposal to be considered, whereas, at the same time, the document might be 'required' by the finance company for an accounting purpose."
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