Frauds and Scams: A Growing Concern for Police and the Public

Posted by  on October 17, 2018
Frauds and Scams: A Growing Concern for Police and the Public

Chances are, you have been the victim of a fraud or scam, or you know someone who has. In fact, the Competition Bureau and the Canadian Anti-Fraud Centre received almost 90,000 complaints of fraud and fraudulent activity in 2016, an increase of almost 30% over the year before. Irrespective of education level, gender, age or even socioeconomic status, every year thousands of Canadians fall prey to fraudsters. Canadians lost an estimated almost $300 million to fraudsters between 2014 and 2016 alone.

Fraud is a serious crime in Canada. “Fraud” is defined in Section 380(1) of the Criminal Code of Canada as follows:

“Everyone who, by deceit, falsehood or other fraudulent means, whether or not it is a false pretense within the meaning of this Act, defrauds the public or any person, whether ascertained or not, of any property, money or valuable security or any service is guilty of an offence …”

So, what exactly does it mean to “defraud” someone? How do you know if you have been “defrauded?” The courts have been particularly hesitant to provide a thorough and exhaustive definition of “fraud.” In fact, the Criminal Code purposely does not define “fraud.” In R. v. Zlatic, the actus reus (the action or conduct that is a constituent element of a crime) of the offence of fraud set out two essential elements:

1. A prohibited act of deceit, falsehood, or some other fraudulent means; and
2. A deprivation caused by the prohibited act (either as an actual loss or a pecuniary interest at risk).

In R. v. Olan, Dickson J. of the Supreme Court of Canada stated:

“Courts, for good reason, have been loath to attempt anything in the nature of an exhaustive definition of ‘defraud’ but one may safely say, upon the authorities, that two elements are essential, ‘dishonesty’ and ‘deprivation.’

In other words, the Crown must establish “dishonest deprivation” to prove the offence of fraud contrary to Section 380(1) of the Criminal Code. There can be no fraud without deprivation.

The offence of fraud requires a mens rea, the intention or knowledge of wrongdoing that constitutes part of a crime. In R. v. Theroux, the Supreme Court of Canada held that the mens rea component of the offence of fraud is established by proof of the subjective knowledge of the prohibited act and subjective knowledge that the prohibited act could have the consequence of deprivation of another. Deprivation may consist of the knowledge that the victim’s financial interests would be put at risk by the prohibited act.

Whether the Accused actually intended to dishonestly deprive the victim is irrelevant. Where the prohibited act and knowledge requirements are established, the Crown must only establish that the Accused had knowledge that the consequence of deprivation could occur. This is why an individual who “borrows” money with the intention of returning it at a later time may still be charged with fraud. The subjective knowledge that the dishonest act was prohibited and that the victim may be deprived is sufficient to establish the fault requirement of fraud.

In order to be “deprived” of property, the victim must first be entitled to it. In R. v. Davidson, during the dissolution of a marriage, the wife became entitled to an equalization payment for the sale of the house. When the husband sold the house, he kept the proceeds. The court in Davidson determined that the wife was not “defrauded” of the house because she had no entitlement to the proceeds from the sale of the house. The wife had entitlement to an equalization payment (an equal share of the estimated value of the house), but not the actual profits from the sale of the house.

In other words, people who commit fraud use deception to deprive others of property that shouldn’t be theirs. Fraud is commonly confused with theft. Theft can be simply understood as depriving others of their property without the element of a false pretense. A false pretense is a representation made by a person who knows that representation to be false. This false representation is then made with the intent to induce unsuspecting victims to act upon the representation. This is why writing a “bad cheque” is fraud, and not theft. The merchant or recipient of the bad cheque does not suspect that the cheque will not clear, or have sufficient funds. This is the false pretense used to deceive the merchant or recipient.

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Arun S. Maini, lawyer and founder of The Defence Group, has practised criminal law since 1995. He’s a graduate of the University of Toronto and Dalhousie University Law School. After completing his articles at a Bay St. law firm, Mr. Maini joined the federal Department of Justice as a prosecutor of drug trafficking, tax evasion, and immigration fraud cases in Toronto, Brampton and Vancouver. In 1999, Mr. Maini transferred to the provincial Crown attorney’s office in Brampton, where he prosecuted a wide range of criminal offences, from theft to murder. In 2003, Mr. Maini left the government to establish The Defence Group. Mr. Maini handles all criminal offences and regulatory prosecutions.

Over more than 25 years as a criminal lawyer, Mr. Maini has prosecuted and defended hundreds of criminal cases, and has extensive jury trial experience. Mr. Maini has also lectured at The Advocates’ Society and has taught advocacy at the Law Society and Osgoode Hall Law School’s Intensive Trial Advocacy program. Maini appears occasionally in the media to comment on criminal law – see examples from the CBC, the Toronto Star, and the National Post.

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