Kate is a founding partner of Edmonds Marshall McMahon, the UK’s premier private prosecution firm, specialising in high-value fraud and corruption matters. She focuses on serious, international fraud, asset recovery, large-scale investigations and perverting the course of justice. She is typically instructed by governments, corporates, hedge funds and HNWs in commercial fraud matters.
How has the role of private prosecutor in corporate crime proceedings changed since you started your career?
When we started our firm, private prosecutions were not common, particularly in financial crime. To this day, we are the UK’s only specialist private prosecution firm staffed by experienced prosecutors, although many more defence firms have begun to advertise an offering. From our perspective the role hasn’t changed – we prosecute privately in the same way we all did for the government, and we still apply government standards of evidence sufficiently and consider whether the prosecution is in the public interest. I think the government prosecutors have a significant amount of experience, and it’s sensible to follow their codes – albeit with greater resources. One thing that has changed are the courts: when we first started out they were perhaps more concerned about the propriety of private prosecutions, but now I think there is both confidence in the process and understanding of the need for such an avenue.
How do you prepare for a high-profile fraud trial?
Those that work with me might describe me as intense, controlling and obsessive about my cases – and they’d probably be correct! However, I am reasonably calm during the trial itself. It’s my firm view that you have to be over-prepared for trial because whatever you’ve done it will not cover everything – no matter how well prepared you are, there will be unforeseen curveballs.
To counteract that, I prepare by obsessing about what the defences might be, and try to gather as much evidence as possible to make sure we are prepared for those – often to a level that others may consider unnecessary. I also try to make sure witnesses are calm, familiar with their statements, well informed and looked after. I make sure that I test our arguments and presentation on people around me who might be in the jury – friends or neighbours or other mothers I might meet. What is “obvious” to a jury is different to what is “obvious” to highly intellectual counsel or lawyers. This includes showing them graphics and PowerPoint presentations – which are really important in boring fraud trials! I also harass and annoy counsel to make sure that they’re prepared. It’s all quite manic, but it usually comes together on the day, luckily!
What is a “boiler room” fraud and what challenges do they pose to prosecutors like yourself?
A boiler room fraud can be many different things but it is usually a group of “sales” people using high-pressure sales techniques to obtain investment in varied schemes. I have dealt with investment schemes for a teak-tree plantation in Brazil, international carbon credits, vintage wine, insurance and various other things. Salespeople are usually in one room, are taught aggressive sales techniques and convince investors over the phone. These cases are challenging and are hard to prosecute for the following reasons.
They target the elderly, vulnerable and unsophisticated with verbal enticements. That often means the victims, by virtue of their frailties, find it hard to recall the conversations. Unsurprisingly, victims are often (but not always) people who are at home during the day and lonely or polite enough to have a long call with a stranger.
Often there are a lot of victims – but they have not necessarily lost a lot of money individually, and they are reluctant to throw more money after the problem. Sometimes they have been convinced to part with their life savings or entire pension pot. It’s also quite hard sometimes to find the ringleader, as they’re often unknown to the day to day office staff.
Often the main operation centre is outside of the UK. Therefore, investigations (especially for those who have lost money already) are quite expensive. Typically, it’s important to get a “spy” sent into the actual call centre and they have to stay there for quite some time to understand what’s happening at the top. That can be really difficult.
One of the useful things about boiler rooms is that there tends to be high staff turnover (so there is often someone who will talk to you). Often they use their own computers as the scam is not usually long-life (so the data can be transported out of the workplace), and often staff boast about their wealth on social media.
These cases are really difficult to prosecute, time-consuming and often hard to prove. These are the prosecutions you do because you feel for the victims – not usually for the money or the lack of stress.
What qualities make for an effective fraud prosecutor?
A good fraud prosecutor has to be highly analytical and be able to see patterns within huge amounts of material. He or she should have a good instinct for what’s happened – quite often my clients will come to me and say “We suspect something has happened, but we don’t know what or how or whom.” That can be hard when you have a “corporate-sized” amount of information.
Prosecutors should also be flexible with their theories. I often have to stop lawyers from deciding what happened too early; they must be open to testing the theory against new material (investigators are much better with this!). They must have a good understanding of humanity: what would make someone do that? Why/how would they do that? Does it make sense to do it that way? I often start by asking clients to tell me as much as they can about the person we are chasing (if they know who it is) – that’s been the key to a lot of successful prosecutions. Although it’s a little easier with fraudsters as they often have similar personal traits: arrogance, confidence and a belief that they can outsmart anyone.
In your experience, how diverse is the white-collar crime space, and how should it be improved if needs be?
I have been told that our firm stands out in that there are more female partners and lawyers than male, which is unusual. Although it’s changing slowly, I would also say there is a tendency for the children of middle-class parents to become lawyers, and we spend time trying to encourage those students from less fortunate backgrounds into law. Generally speaking, I do not consider law to be very diverse. I think we all have a lot of work to do in this area; a useful step could be as simple as partnering up with a school to take on work experience students who are not as privileged as most of the lawyers we work with. One thing I can say is that I know a lot of lawyers, white, middle-class men included, are aware of this imbalance (particularly in relation to gender) and wish to improve it.
How has your role advising the government’s City of London Police (COLP) initiative on how to tackle fraud enhanced your practice?
I am not sure it’s enhanced my practice in a commercial sense, but it’s a fascinating area and COLP is the UK’s leading fraud force, so I was very proud to be asked to assist. As we are a firm of ex-government prosecutors, we really understand the issues and concerns around information sharing, and preservation of police integrity and independence in a way that most private practitioners may not. The fact that there is open discussion about a need to obtain external assistance for victims is the first step. The second step is to enable a formalised system of cooperation. We still have some way to go but the conversation has begun.
Going forward, what are the main challenges that business crime prosecutors will face?
There will be quite a few. It’s my view that the private prosecution market has significant room for expansion due to cuts in state resource. There are a significant number of defence lawyers with limited experience in prosecuting moving into it. Prosecutions in complex fraud are incredibly difficult – even for those who have done it for many years. That’s not to say that people cannot learn; lawyers are adaptable and determined. However, I think we will see a sharp rise in prosecutions with difficulties and costs orders against lawyers and clients.
Data protection and information gathering is another challenge. It is getting more and more difficult to gather data, and the restrictions on lawful investigations are greater.
Obviously, practitioners will also need to be fully conversant with AI (largely for quicker and cheaper document review – clients will expect the latest technology and cost savings), and that will affect all those firms who have purchased (now) out-of-date e-review software.
Finally, in business crime, we will see more and more cryptocurrency being used to spirit away money. And this is a tricky area!
What is the best piece of career advice you have ever received?
I have a few pieces of advice – I’ll tell them in order of me learning them!
My father always tested us, his children, by expressing extreme disappointment when we’d take “no” for an answer. Improving our skills involved him sending us off to undertake tasks intended to hone our negotiation and persuasion skills, such as getting discounts at market stalls, asking shop owners to serve us before the shop was open, and figuring out how to motivate other kids to help us in the garden. If we came back without achieving the objective, we’d be sent back to try again. It was embarrassing and frustrating, particularly as teenagers! It might sound strange, but being used to challenging “no” – irrespective of embarrassment, inconvenience or frustration – is an immense advantage in chasing fraudsters. It teaches you that there’s always a way to get around a negative answer and navigate the obstacles thrown up by fraudsters!
My first legal job was working for a highly respected, extremely hard-working, bright, kind, socially aware female judge. When I first started out in my career at the bar, I was terrified of making a mistake in court. I worked very long hours which she came to hear of, and one night she called me at midnight and said “You will make a mistake sooner or later. Work hard, but it’s pointless to worry about the inevitable.” At the time, that was what I needed to hear from someone I respected. Along similar lines, I often trot out some advice from Sheryl Sandberg: “Done is better than perfect!” That always motivates and cheers me!
Later in my career, I had the privilege of being the underling of two of the best managers in London: Tamlyn Edmonds (my partner) and Sacha Harber-Kelly (formerly SFO, now Gibson Dunn). Both of them lead by example; they both work hard, they’re very organised, they accept the failures of others as their own, and they seek to claim as much responsibility as they can. They never blame, and manage in a kind yet firm way. They both inspire extraordinary loyalty. So while not advice, they have both provided extraordinary examples of good management to me.
Kate is a specialist private prosecutor with significant experience prosecuting (both publicly and privately) some of the UK’s largest frauds, particularly in complex, cross-jurisdictional fraud and bribery and corruption matters. Kate is a founding partner of the UK’s only private prosecution firm. In 2017, The Lawyer recognised Kate as one of the “Hot 100” lawyers in the UK. This award acknowledges the “best lawyers in the UK – the most daring, innovative and creative”. The Legal 500 (2016) describes Kate as “a fearless and energetic prosecutor” who has “a relentless commitment to justice”.
WHAT MOTIVATED YOU TO SPECIALISE IN ASSET RECOVERY AND FRAUD?
I have taken great joy in pitting wits against some of the cleverest fraudsters in recent history. It is immensely satisfying to unravel seemingly impenetrable frauds. One must put oneself in the fraudster’s place and imagine what those individuals must have been aiming for when establishing convoluted and complex arrangements for deceit. Almost all of my cases require a metaphorical magnifying glass and lots of thinking time. The more complex the better!
WHAT IS THE MOST INTERESTING CASE YOU HAVE BEEN A PART OF?
I always think the most interesting case is anything I have not yet solved and of which I am currently immersed! However, some highlights have been the first global plea agreement in Innospec, the largest corporate private prosecution in the UK, spanning 14 years; an Iraqi utilities fraud which had an unlikely cast of characters perpetrating the fraud – many who should have known better; and a significant case where a hedge fund was pitted against a bank, with some extremely surprising twists and turns. I also acted in a large Forex trading scandal where some exceptional investigating resulted in a surprising victory for our clients.
WHAT DID YOU FIND MOST CHALLENGING ABOUT ENTERING THE PRACTICE AREA?
It is very male-dominated, but many of these men have been mentors to me, as have the women. Asset tracing is complicated and requires a working understanding of so many different areas: international investigation, international law, trusts law, insolvency, and criminal and civil litigation. I always think investigations are more difficult than people think. The planning involved in a complex, international investigation, and the nuances of timing, strategy and execution, are fascinating yet endlessly tricky. However, if time and skill is put into an investigation, this is the single most important area a client can focus on in my view.
YOU HAVE WORKED ON COMPLEX CASES INVOLVING RECOVERING FUNDS THAT HAVE ENDED UP IN CRYPTOCURRENCIES. WHAT CHALLENGES DO SUCH CASES BRING?
Ahh, so many! According to a report released by CipherTrace, in 2018 cryptocriminals laundered US$1.7 billion using cryptocurrency, 3.6 times more than in 2017. This is an area which is new for us all and growing at a terrifying rate. We were extremely lucky to be one of the first firms to be in a large crypto-freezing case. However, our legal system is not ready for the pace at which cryptocurrency can dissipate – we just do not have time to get back to court for amendments and hearings. We do not have time to explain the movements of such funds to judges who do not know much of the area. We are not readily able to trace such rapidly moving funds through different jurisdictions with no regulation, and to know who to ask for assistance in a small, unregulated exchange in China: who is it exactly that we serve? Often, we do not know how to identify those funds as “our client’s” as in many instances, they change format through different cryptocurrencies. One recent case was against a seriously organised criminal group and it required enormous tenacity, speed and creativity. This is not an easy area and one which I personally am spending a lot of time in. There is much to learn and lawyers must first understand how cryptocurrencies work. And trust me – of the cryptocurrencies, bitcoin is the easiest to trace!
THE AREA OF PRIVATE PROSECUTION AND FRAUD IS EXTREMELY BUSY AT THE MOMENT. WHAT IS CAUSING THIS INCREASE IN ACTIVITY?
I think we are seeing that savvy clients are sick of being victims. Many have tried either civil litigation or to take matters to police and for different reasons have been unable to regain their loss or have not had their cases accepted for investigation and prosecution. Frankly, we are lucky in the UK with our police and prosecution system – I work all over the world and observe criminal justice at work. However, there is no denying that the police and the CPS prioritise vulnerable victims – such as the elderly who have lost pensions – and cases of the greatest harm to society, such as terrorism and murder. I don’t disagree with that prioritisation, but myriad types of fraud plague corporates and individuals and those frauds are increasing year on year. The more complex and difficult to investigate it is, the more difficult it is to get the time of the police. The SFO opened seven new criminal investigations in 2017-2018. It charged four companies and 24 individuals. Considering fraud continues to increase (KPMG has identified a 55 per cent increase year-on-year since 2011), the prosecutions being run by the government are a drop in the ocean.
DUE TO A LACK OF RESOURCES, POLICE HAVE BEEN HANDING OVER FRAUD CASES TO PRIVATE PRACTITIONERS LIKE YOURSELF. DO YOU EXPECT TO SEE INCREASED COLLABORATION BETWEEN THE POLICE AND PRIVATE PRACTICE LAWYERS IN FUTURE?
I think that this is likely, although it must be done carefully to preserve the independence and position of the police. However, City of London Police are already world-leading in their collaboration with the private sector – they have managed to do privately funded, independent work with insurance agencies, brands and banks over the last 10 years.
HOW DO YOU SEE YOUR PRACTICE DEVELOPING OVER THE NEXT FIVE YEARS?
I hope my cases continue to grow in international reach and complexity. I really enjoy the challenge of working with other lawyers and investigators in different jurisdictions. I have no doubt my work will be more focused on the areas of cryptocurrency and cybercrime. This means turning to different investigative methods, which I am really enjoying learning about.
YOU HAVE ENJOYED A DISTINGUISHED CAREER SO FAR. WHAT WOULD YOU LIKE TO ACHIEVE THAT YOU HAVE NOT YET ACCOMPLISHED?
I would very much like to develop more public/private partnerships in fraud. It strikes me that we would be a stronger collective force against fraudsters if the police and private lawyers and investigators were more aligned in their response to chasing the “big ones”. I would like to continue effectively chasing cryptocurrency – it’s difficult and a little scary but extremely interesting. I would also like to continue to work for governments as I find it fascinating. I love our innovative and family-like firm, all of whom deeply care for our clients and their outcomes and I really hope that we continue to grow in the same manner.
Kate McMahon is a founding partner of Edmonds Marshall McMahon, the UK’s preeminent private prosecution firm. She is an internationally regarded, dual-qualified prosecutor specialising in complex and serious fraud, money laundering, corruption, regulatory crime and asset recovery. Kate has extensive experience in global investigations and is considered to be a leading strategist.
After qualifying in Australia in 2004, Kate held impressive positions in the Government Legal Service (UK) and the Serious Fraud Office where she worked as a senior lawyer on some of the UK’s largest criminal cross-jurisdictional prosecutions and the UK’s first global plea agreement.
Kate has been described as “highly commercial”, “a formidable adversary” and “highly respected” by The Legal 500 and has been a recommended individual in the area of white-collar crime since 2013. She has been recognised in the Women in Law Awards (The Lawyer). Kate often appears on television and regularly speaks at international conferences on corruption, private prosecutions and asset recovery.
She is currently one of the selected solicitors to act with the government in a new City of London police initiative to tackle fraud. In 2017, Kate was named in The Lawyer’s "Hot 100" list of the 100 most influential lawyers in the UK. Kate advises governments internationally.