Corporate Fraud & Theft

Long Firm Fraud

Long Firm Fraud is normally where an apparently legitimate business is set up with the purpose to defraud after a relatively long period of time.

The business sets about developing a decent credit history to win the trust of suppliers which they do by placing numerous small orders with wholesalers and ensuring they pay promptly. When the fraudsters are ready, they place several larger orders with the businesses with which they have established a good credit history. Once they receive the goods, the criminals will promptly disappear and sell the goods on from various trading places. Plus most long firm frauds are set up with the intention of carrying out the fraud within 2 years. This means they can disappear before they have to file any accounts at Companies House.

How to avoid getting caught up in a long firm fraud? Stop and think before accepting a much larger order from a company that you have been only dealing with for a relatively short period, even if they have been prompt payers in the past.

You should also check the trading history of the businesses you are dealing with. The key thing to look out for is whether they have been connected to a number of dissolved companies in the past, without apparent reason. You can also check to see if the company has been established for longer than they have been dealing with you.

Find out if they have filed accounts and if they suggest the company is in a healthy state. Plus, get the consent to check the credit histories of the individuals in the business. See if there is evidence that they reside where they say they do and find out if there is any data held on them that could be of concern. For example, County Court Judgments and bankruptcy information could all provide vital clues to an individual’s trading history.