Asset tracing - the need for a working case strategy

Civil fraud is a growing concern. In 2024, the overall reported value of fraud in the EU more than doubled compared to the previous year.

When you realize that you have been a victim of fraud, whether you are an individual or a corporate entity, there are a number of important matters that need to be considered at the pre-action stage of a case. Most people will often be focused on the loss and the events leading up to it, and will not necessarily give any immediate thoughts to how that loss can be recovered, and from where. However, it is important at the outset to not only look at the circumstances of fraud, but also to identify who can be pursued and, critically, whether they are worth pursuing financially. To that end, asset tracing is a fundamental consideration at the beginning of a fraud claim, not just at the enforcement stage.

There are many types of frauds, which can be classified into two main categories. Civil frauds are committed when information is intentionally or negligently misrepresented. For example, knowingly providing a bank with false values on your property or misrepresentation which causes damage to another person is a civil fraud. Criminal frauds involve acts of theft and deception, such as by identity theft, insurance fraud, or social security fraud. A few common subcategories of fraud include mail fraud, healthcare fraud, pyramid schemes, and work from home fraud.

A good example of a civil fraud is Donald Trump case. in February 2024, Donald Trump was convicted for civil fraud. A New York court ruled against Trump following allegations that the former US president and his organisation fraudulently inflated the value of their assets to secure favourable loans and other financial benefits.

It is important to understand that not every act of deceit or misrepresentation can be considered as fraud. It depends on circumstances. Under Polish criminal law a fraud is when you cause a person “to disadvantageously dispose of his own property”. It requires a proof that the perpetrator had the intent to deceive an injured party at the moment of the fraud. The mental component of the fraud, known as mens rea, must be proven by the prosecution.

The avenues used to initiate an asset recovery may have strategic implications on the case or outcome, necessitating lawyers to develop a working case strategy.

The first thing to do is consulting a lawyer experienced in civil fraud cases. This should be done sooner rather than later. The lawyer can:

• assess the strength of your case
• advise on the potential remedies and likely outcome
• help gather and organise evidence
• draft and file the necessary legal documents.

To succeed in a civil fraud claim, claimants must gather substantial evidence to prove a fraud has occurred and the loss or damage that incurred as a result.?

The type of evidence used in civil fraud cases includes:

• communication records: emails, text messages, and recorded conversations.
• financial records: bank statements, transaction records, and financial documents to trace the flow of money.
• legal documentation: contracts or any other official documents.
• witness statements: statements from witnesses testifying about the alleged fraud.

Gathering evidence in civil fraud in Poland is not an easy task because under Polish law there are no rules about disclosure of documents that could be the equivalent of the common law disclosure order or freezing orders. Unlike the common law where disclosure refers to the part of the litigation process in which each party is required to make available to the other party documents that are relevant to the issues in dispute at an early stage, Polish civil procedure does not include measures for pre-action disclosure, search warrants or similar orders for obtaining information. Consequently, a victim of a fraud usually has no possibility to establish the all facts and gather all the relevant evidence.?

Sometimes, the only way to gain information is to simply notify the public prosecutor and start the criminal proceedings. In theory, there is nothing to prohibit the use of parallel criminal and civil proceedings in Poland. The only caveat to this is when there is a real risk that the defendant would be subject to severe prejudice in either criminal or civil proceedings or both.?Notwithstanding these difficulties, the advantages of a multi-pronged attack can be rewarding.?Naturally, there are some potential pitfalls that can occur when evidence is gathered through the investigation of one set of proceedings and whether it can be used in the other.?This is particularly important in cross-jurisdictional proceedings.