White-Collar Crime and Fraud in the Time of COVID-19 – The Law Enforcement Response

Will the coronavirus recession prompt an upsurge of fraud cases?

The post-COVID-19 international environment is indeed peculiarly challenging for all legal professionals, public enforcement and private attorneys as well, since the area of the white-collar crime has seen a mix of traditional fraud or corruption cases, blended with new types of cyber-crimes and money laundering schemes. Social distancing and indirect communication have determined business people to contact and contract deals mostly without direct (human) contact, which has created the perfect conditions for criminals or malicious business sharks to profit from inexperienced or otherwise unsophisticated business owners that are not accustomed to performing due-diligence of their partners, or are too trustworthy in relation to advancing important amounts of money before services or goods being provided.If you add the otherwise growing cyber-fraud component of criminality in society nowadays, with more and more complex techniques and mechanisms in place to avoid detection or investigation, as well as possibilities to recover prejudices caused, you get a comprehensive outlook on an increasingly difficult field of law, where fraud cases can no longer be tackled just by traditional investigative or defence methods and in which legal professionals must be more than astute theoreticians, but also highly skilled practitioners.

Furthermore, the increasing public opinion that many high-level criminal cases (corruption or economic frauds) are politically-driven has led to a certain degradation of the general trust in law enforcement

Do you think prosecutors are prepared for any potential increase in fraud-related files?

Law enforcement in Romania, though adequately financed and highly specialised in handling criminality of all types (considering we have specialised sections of the Prosecutors’ Office or dedicated Police structures for corruption, economic criminality, cyber-crimes or money laundering), suffer from the same inertia as always when confronted with new social, economic and technical realities. Though fraud-related crime follows the same patterns as before, the fact that the methods have improved or adapted with the changing times creates delays in official responses and generate time lapses in which perpetrators indulge and build on their undue wealth or status.

Economic crime tends to surge during and following a recession; what should law enforcement do in your jurisdiction to handle this?

The general opinion in nowadays Romanian society is that people and businesses alike would feel a lot more protected by law enforcement if their response would be swifter and more decisive (considering the lengthy duration of criminal investigations and trials in Romania), while their actions to be concentrated firstly on ensuring recovery of prejudices created.

Furthermore, the increasing public opinion that many high-level criminal cases (corruption or economic frauds) are politically-driven has led to a certain degradation of the general trust in law enforcement, which can only be reverted by a more people/victim-oriented approach to cases and investigations, as opposed to the formal and procedural methodology employed nowadays, with a focus on State interests.

Businesspeople are, evidently, more flexible when reacting to crises and the first to understand that special times usually require special measures.

How has the government and local authorities in your jurisdiction reacted to criminal law cases being handled during the crisis? What cases are classed as ‘urgent’ and are still being dealt with?

Unfortunately, these last few months have seen an understandable yet counter-productive slow-down in law enforcement actions. COVID-specific restrictions have generated delays in actions and reactions of prosecutorial and police authorities, which have focussed their work on office activities and less on interventional investigations. Criminal courts of law have been more active, especially in relation to old cases or when preventive measures were in place. Travel bans and other communication restrictions have been a tough issue to tackle, leading to unwanted delays in procedures.

How should company owners respond during this time, to avoid being hit hard?

Businesspeople are, evidently, more flexible when reacting to crises and the first to understand that special times usually require special measures. The pandemic has taught them they can no longer use their direct contact with their partners to acquire or maintain a feeling of trust, but rather they have to use professionals and specialised methods for such purposes; such examples are: due-diligence of business partners to avoid becoming victims of frauds, strong compliance programs to deter (even internal) corruption practices or legal analyses of contracts and all other relevant business relationships to minimise or contain financial, commercial or legal exposures.

Come to think of it, this is actually the professional way to act in a world where intrinsic trust is no longer possible or even recommendable, especially since the traditional “shake of a hand” can easily result in, besides germs,  financial instability or even business collapse.

What do you expect the outcome of the guidelines put in place to be once the pandemic crisis is more under control?

Since these new social and economical realities seem to have already become a way of life for many businesses, which plan to maintain business decisions taken during these months (employees working from home, increased digitalisation of processes, internet communication, etc.) and in the foreseeable future, things are bound to revert only gradually, but also just partially, to the old ways of doing business, which is more reason for companies to adapt to these new conditions.

In all fraud or generally criminal cases, the approach of those accused should not change dramatically in these times, since procedures are the same and incriminations have also not changed.

What does all this mean for those under investigation?

From a different perspective, the slow-down of the judicial system can prove to be very frustrating for those under investigation or trial, since the expected end-result (of a verdict of innocence) seems more distant and sometimes even not as likely due to lesser investigative proneness or activities by prosecutors and courts alike. As in all situations, there is also the reverse of the medal, meaning more and more suspects and defendants started building their defences on the increased possibility of meeting the statutes of limitations for certain crimes (especially in cases of private frauds) or on reaching amicable solutions (including Deferred Prosecution Agreements), which leads to other specific legal challenges in such situations, depending on the different side of a criminal case where one is situated.

• What can those accused do during this period of uncertainty? How can lawyers assist?

 After seeking legal advice, what should be the first step someone should take when being accused of fraud?

In all fraud or generally criminal cases, the approach of those accused should not change dramatically in these times, since procedures are the same and incriminations have also not changed. The first and foremost step to take is to seek professional legal counsel before taking any step further, meaning seeking an attorney who not only knows the law in theory but also in practice and who is flexible and adaptable in providing the best applicable legal strategy to counter either ungrounded (or illegal) accusations or which to diminish criminal responsibility by all procedural means available.

Regrettable as it is, we encounter this in practice more often than we would wish to – clients approaching us to help them in the last hour of their cases, after initial defence strategies failed because, even if these were not theoretically incorrect, they were impracticable or resulted, for lack of thorough planning and overview, in far worse business consequences. Especially for legal (or defence) strategies, theory without perspective and applicability causes imminent failure or unavoidable collapse.

 

 

ENACHE PIRTEA & ASSOCIATES

Address:

32 Pictor Ion Negulici Street

1^st District, Bucharest 011943

Romania

Contact:

                Phone: +40 371 471 000

                Fax: +40 371 607 160

                E-mail: office@enachepirtea.ro

Web address:

www.enachepirtea.ro

Mădălin Enache is a Senior Partner of the firm and heads the White-Collar & Business Crime Litigation practice, the focus of his activity being the legal defence of corporate and private clients in relation to criminal investigations and litigations in which they are involved. Starting 2006 Mădălin practices extensively and quasi-exclusively in high-level white-collar criminal cases, having successfully proven his first-class professional expertise in some of the most difficult, top-level and media-scrutinised criminal investigations and trials, with prejudices or financial impact of up to 1 billion EUR. He was also the Romanian lead-member of the international teams of attorneys involved in several well-known international investigations performed by the DOJ and the SFO in relation to corrupt or money laundering practices of certain corporations from the pharma or financial fields.

Throughout his already impressive career, Mădălin counselled, assisted and represented renowned global, international or Romanian corporate clients, as well as key figure businessmen or executives and high-profile politicians and public figures (prime-ministers, ministers, presidential councillors, PM’s, MEP’s, business tycoons, etc.) involved in a wide range of cases in front of the criminal investigation authorities or the courts of law.

 

Extraordinary Professionalism Applied to the requirements and needs of the clients – this is what ENACHE PIRTEA & Associates stands for and this is the main drive of the law firm that goes “the extra mile”. We have successfully created the law firm where clients can find lawyers who think business and who give them applicable leading-edge solutions, in order to ensure businesses move forward with ethics and integrity, while people are safe to enjoy a better future.

EPA was set up in 2018 through the merger of the specialised law boutique offices of two highly reputed “new wave” Business Criminal Law attorneys, Ms Simona Pirtea and Mr Mădălin Enache, both with extensive experience in white-collar criminality cases and in business crime matters of relevant importance, acquired over the last 15 years of criminal practice and during the many years of coordinating the criminal law departments in two of the top law firms in Bucharest.

Comprising a team of 14 attorneys and specialised consultants, the firm’s focal area of activity is Criminal Law (White-Collar and Business Crime), in its two main components: criminal investigation and litigation, as well as business crime consultancy and counselling (business ethics and integrity), in areas such as corruption crimes or money laundering, economic criminality or abuse of office, embezzlement of EU funds or cybercrimes, copyright or environmental criminal breaches. Furthermore, EPA has developed an important Business Law practice as well, proving that across-the-board experience in business matters (corporate, commercial, labour, civil litigation, etc.) and the trust of clients are key ingredients for successful legal projects.

The professional achievements and dedication of the firm especially in the field of white-collar and business crime have already been acknowledged by some of the most prestigious international publications (Legal500, Chambers Europe, ICLG, etc.).