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Freezing the assets of anonymous fraudsters

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Summary: In the recent case of CMOC Sales & Marketing Limited v Persons Unknown the English High Court granted that first worldwide freezing order against ‘Persons Unknown’. The case also made some pragmatic orders concerning alternative service on unknown defendants and is a good example of common practices from the data and privacy space converging with more classic fraud and asset tracing actions.

HHJ Waksman QC continued the recent trend of decisions in the English High Court to make sensible orders that extend the court’s powers to assist in pursuing cases of fraud in an increasingly connected and technologized world.

In the recent case of CMOC Sales & Marketing Limited v Persons Unknown the court granted the first worldwide freezing order against ‘Persons Unknown’.  While orders against ‘Persons Unknown’ have become fairly common in actions for breach of privacy and actions against trespassers, HHJ Waksman QC considered whether the court has jurisdiction to extend this form of order to a freezing injunction.

The claimants, CMOC, had been the victim of a sophisticated email hack where unknown fraudsters had intercepted emails and sent fake payment instructions to CMOC’s bank account.  These payments were processed by the bank, believing them to be genuine instructions, and, before the fraud was discovered, unauthorised payments of some US$7m and €1.2m had been made.

On the initial application for the worldwide freezing order, HHJ Waksman QC considered that a freezing order of this kind was necessary to act as a springboard for other forms of relief that are often sought in cases of international fraud litigation.  He also considered that the primary purpose of the freezing order was to protect assets in relevant bank accounts and notification to the respondents is a secondary concern when granting an initial injunction.

In cases of international fraud, where stolen assets are often bounced through a number of different entities and jurisdictions, it is important for the court to develop its powers to address this.  Through the use of orders against ‘Persons Unknown’, combined with unmasking orders, Norwich Pharmacal relief or Bankers Trust orders, the court is able to assist victims of fraud in tracking down their stolen assets and give them an opportunity to recover them.  HHJ Waksman QC also noted that an action against ‘Persons Unknown’ was particularly appropriate here when the reason the perpetrators were unknown was because they were anonymous hackers. 

To support the pursuit of this litigation and the difficulties of serving on unknown defendants, HHJ Waksman QC also granted orders permitting alternative service by Facebook Messenger and WhatsApp.  Again, these forms of order are becoming increasingly common when dealing with offences conducted primarily through the internet or social media (See our blog 'You have one unread message: service of injunction by text' here).

As the case developed, the claimants also sought orders permitting service by granting access to a data room.  While we understand that this was perhaps not as helpful in reality as it may have been, this also seems to be a sensible option for alternative service in document-heavy litigation in the future, particularly where the litigants are sophisticated parties.

This case continues to show the court developing sensible extensions of its powers to help litigants to combat the difficulties encountered in pursuing defendants who appear to exist only in the digital world.  It is also good to see the adoption of forms orders that are common to privacy and data protection practitioners in new and novel ways to help victims of fraud recover stolen property. 

If you would like to discuss these developments in more detail, contact me at Sarah.McAtominey@bclplaw.com.

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