Summary judgment awarded on the merits in a substantial banking tech-fraud

Overview

In a fully reasoned decision handed down on 22 March 2021, Mrs Justice Cockerill DBE sitting in the Commercial Court in London awarded summary judgment for in excess of €3.5 million against London-based Italian businessman Matteo Cerri and six companies which he owns and operates.

The decision is striking in that summary judgment was given on the merits against each of the respondent Defendants, the court holding that there was no reasonable prospect of their establishing a defence at trial and that there was no other compelling reason for a trial to be held.

In reaching her decision, the Judge identified and relied on several strands of compelling, predominantly technical, evidence.

The facts in brief

The Claimant, an Italian national, held money through nominees in a bank account in Cayman. Fraudulent telephone calls were made to the Cayman bank and a fraudulent fax was sent to it, resulting in €15 million of the Claimant’s money being sent to a bank account held in England by the First Defendant, which is a company owned and operated by the Fourth Defendant, Mr Cerri. Much of the money was then rapidly paid away to other Defendant companies, third parties with whom Mr Cerri and his companies had a relationship, or for the benefit of Mr Cerri’s wife and on personal expenditure items, such as to Netflix.

On learning of the fraud, the Claimant made a series of urgent applications to the vacation judge sitting in the Commercial Court in London – initially using the ‘Persons Unknown’ jurisdiction – which resulted in Worldwide Freezing Injunctions, Proprietary Freezing Orders and disclosure orders being made against several of the Defendants; and further non-party disclosure orders being made against banks and financial institutions.

In what the Judge described as “… a striking illustration of the assistance which this Court is able to give a defrauded party…” the combination of the rapidly-obtained injunctions and information produced in response to the disclosure orders allowed the Claimant to rapidly trace, freeze and recover from the Defendants and certain third-party recipients of the proceeds of the fraud approximately €11.5 million of the €15 million that had been stolen, leaving approximately €3.5 million (plus interest and costs) outstanding.

Summary Judgment

Key points of interest arising out of the judgment are:

  • The Claimant’s legal team tied Mr Cerri to the mobile phone that was used to make the fraudulent telephone calls to the Cayman bank by establishing, through making a non-party disclosure application against Vodafone, that the ‘burner’ phone (1) had been purchased in a Vodafone store close to the Cerri companies’ offices (2) was paid for with a Revolut Bank payment card and (3) had been used to make the fraudulent calls to the Cayman bank whilst connected through Vodafone reception masts situated between 100 m and 650 m from the Cerri companies’ offices.
  • By a further non-party disclosure application against Revolut Bank, the Claimant’s team established that the payment card used to buy the ‘burner’ phone was in the name of a junior employee of the First Defendant, and that the card had been funded by Mr Cerri the day before the phone was bought.
  • The Cerri Defendants put forward certain emails, which they said they had received from a certain third party and upon which they relied to exonerate themselves of the fraud.
  • However, the Court accepted that each of these emails was ‘spoofed’, meaning that they had been created by using a website which will produce and send an email to any addressee with the (false) appearance of having been sent from a genuine email account.
  • By way of answer, Mr Cerri asserted in evidence that he did not know at the time that the emails he had received were spoofed.
  • The Claimant, though, demonstrated to the satisfaction of the Court that this assertion was not true, since two of the spoofed emails received by Mr Cerri were purportedly sent as replies to emails sent by Mr Cerri to the genuine holder of the relevant email account. That could not have been the case, which meant that the outgoing emails must have been manufactured.
  • The evidence of rapid dissipation of the ‘stolen’ money weighed heavily with the court and was held not to be susceptible of an innocent explanation that was anything but fanciful.
  • The Court held that it was “…striking…” that whilst the Cerri Defendants had put forward a list of predominantly technical issues that they said they wished to investigate and evidence at trial, there had been “… scope for action on many of these points before now…”, whereas there had been no action at all on any of these matters to date. Particular criticism was levelled at the failure by Mr Cerri to produce native copies of emails, to get evidence from third parties, to get his own documents from storage or WhatsApp or to put forward evidence about the spoofing website.
  • In an interesting passage of the judgment, the Judge discusses the approach to be taken by the court when considering a number of evidential factors put forward by a Claimant on an application for summary judgment in a dishonesty case, some of which were sufficient in themselves to warrant an award of summary judgment, whilst others were extremely close. On the facts of this case, the judge held that “…there is extra weight lent by the accumulation…” of the primary and the additional points.

Takeaways

The judgment demonstrates that it is possible to obtain summary judgment, even in a hotly contested fraud case.

There was a perhaps pleasing resort to the use of forensic technical analysis and the assistance lent by the highly-developed injunctive and disclosure regimes of the Commercial Court to secure judgment against the perpetrators and beneficiaries of a fraud which had been committed by the use of technology.

Representation

In AB v The Family Officer Ltd & others, the Claimant was represented at the summary judgment hearing and throughout the action by Philip Hinks of 3VB, led by Paul Lowenstein QC of Twenty Essex. They were instructed by Tony Lewis, Nathan Capone and a team at Fieldfisher. Sarah Tresman of Twenty Essex was also instructed at earlier stages.

Philip Hinks and Paul Lowenstein QC, with other counsel, also represented the Claimant in the leading ‘Persons Unknown’ freezing injunction and cyber-fraud case of CMOC Sales & Marketing Ltd v Persons Unknown and 30 others [2018] EWHC 2230 (Comm); [2019] Lloyd’s Rep. F.C. 62.

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