Introduction
Fraud by abuse of position, as set out in Section 4 of the Fraud Act 2006, is a serious offense. This occurs when someone holds a role requiring them to protect another’s financial interests, then acts dishonestly in that role to benefit themselves or harm others. The law does not strictly define “position of trust,” leaving courts to determine its meaning. This rule aims to prevent people from misusing their authority over others’ money or assets. To prove this offense, prosecutors must show the role existed, it was misused dishonestly, and there was intent to create a benefit or harm.
The Meaning of "Position" in Fraud by Abuse of Position
The Court of Appeal in R v Valujevs decided that a “position” under Section 4 does not require formal legal authority. The gangmasters in Valujevs managed Lithuanian workers’ pay and costs without official financial responsibility. Their control over vulnerable workers established a qualifying “position.” The court focused on actual control over formal titles.
Dishonesty and Abuse of Position
Dishonesty remains key to proving this offense. The test from Ivey v Genting Casinos (UK) Ltd t/a Crockfords [2017] UKSC 67 has two steps: first, determining what the defendant knew, then deciding if their actions were dishonest by ordinary standards. In Valujevs, the gangmasters unfairly reduced workers’ wages for rent and transport costs. Jurors found this dishonest, meeting the legal test.
Intention to Gain or Cause Loss
Section 4 requires proof that the defendant intended to benefit themselves or others, or harm someone financially. This applies to money or property, whether kept temporarily or permanently. In Valujevs, the gangmasters gained by overcharging workers for basic needs, directly lowering their earnings. This satisfied the law’s requirements for intent.
Differences Between Section 4 and Other Fraud Offenses
Section 4 of the Fraud Act 2006 has a distinct role. While similar to fraud by false representation (Section 2) or dishonest service obtainment (Section 11), important differences exist. Section 4 applies when trust or control is already present, without requiring lies (Section 2) or focusing only on services (Section 11). R v Valujevs demonstrates how Section 4 addresses misuse of power, even without formal agreements.
The Importance of R v Valujevs
R v Valujevs clarifies Section 4. It confirms that “position” includes informal control, not just legal roles. This protects vulnerable people from exploitation by those with power, regardless of official titles. The ruling emphasizes evaluating actual circumstances when deciding if a “position” exists. This case provides a clear example for future fraud-by-position cases, improving tools against financial abuse.
