Fraud is one of the most prevalent crimes in Ontario today. Whether it’s a fake text from your bank, a phone call from someone posing as a charity, or a complicated investment scam, fraudsters are always finding new and inventive ways to trick people and businesses out of their money.
In this blog, we’ll examine fraud in Ontario in greater detail. We’ll begin by explaining the legal definition of fraud and outlining its key elements. Next, we’ll walk through some of the most common types of fraud. After that, we’ll cover the primary legal defences available to those charged with fraud. Finally, we’ll detail the potential penalties for those convicted of fraud under Ontario and Canadian law.
Fraud: Definition and Elements
Fraud is defined in section 380(1) of the Criminal Code of Canada as a prohibited act of “deceit, falsehood or other fraudulent means” that deprives the public or a specific person of “any property, money or valuable security, or any service.” To secure a conviction for fraud, the Crown must prove two key elements:
- A prohibited act (“actus reus”). This refers to fraudulent conduct itself. It requires that the accused use dishonest means to cause a loss (or risk of loss) to the victim.
- A guilty mind (“mens rea”). This refers to the mental state of the accused. It requires that they intended to deceive the victim and either knew or should have known that their actions would result in a loss (or risk of loss) to the victim.
Fraud can only be established when both the actus reus and the mens rea are present.
Common Types of Fraud
Fraud is like a chameleon; it can take many shapes and forms. Because of this, it can sometimes be hard to identify. However, some of the most common types of fraud include:
Embezzlement
Embezzlement is dealt with in section 322 of the Criminal Code under “Theft.” It typically occurs when one person (the embezzler) is entrusted with another person’s property and subsequently steals that property through deceitful means.
Tax Fraud
Tax fraud occurs when a person intentionally falsifies information on a tax return to pay less than what they owe. It’s generally prosecuted under section 239 of Canada’s Income Tax Act.
Mortgage Fraud
Mortgage fraud is the deliberate misrepresentation of mortgage-related information with the intent to mislead a lender or other party.
Insurance Fraud
Insurance fraud involves manipulating the insurance process for financial gain. It encompasses a range of actions, such as falsifying information, omitting crucial details, or committing criminal acts like arson to collect insurance money.
Credit Card Fraud
Credit card fraud involves deception or theft. It involves using someone else’s credit card or credit card information to make purchases or access funds.
Main Legal Defences to Fraud
A person charged with fraud has numerous legal defences. Their choice will ultimately depend on the facts of the case, the type of fraud in question, and the jurisdiction.
1. Lack of Intent to Defraud
Intent (i.e., mens rea) is critical in a fraud charge. A possible defence, therefore, is that the accused did not mean to defraud the victim. This defence turns on the accused’s mindset—whether they wished to deceive the victim and whether they acted in good faith.
Example
The owner of a small hair salon is charged with fraud after submitting inaccurate financial statements to a bank to obtain a loan. The prosecution claims the owner committed fraud by knowingly overstating their revenue to secure the loan. But the owner argues, in her defence, that she believed the numbers were accurate at the time and did not deliberately attempt to defraud the bank.
2. Lack of Deprivation or Risk
The defence of lack of deprivation or risk may apply where the accused makes a false representation, but the victim has not suffered any loss. This defence challenges whether the accused’s actions caused harm to the victim.
Example
A lawyer at a large law firm uses the company credit card for travel expenses on a work trip to Arizona. He is subsequently accused of fraud because his expenses, including room service and spa visits, violated company policy. In his defence, the lawyer argues that his expenditures did not create any financial loss (or risk of loss) to the firm.
3. Lack of Deceit or Falsehood
According to the defence of lack of deceit or falsehood, the accused did not act dishonestly, even if the victim misunderstood the situation or suffered a loss. This defence calls into question the actus reus, the first element of fraud.
Example
An aspiring entrepreneur is charged with fraud after raising funds from investors for a startup business that ultimately failed. The prosecution argues that the accused misled investors by promising high returns, while the accused maintains that they believed everything they told the investors. The business’s failure was not a product of the accused’s dishonesty.
4. Honest But Mistaken Belief
This defence applies when the defendant genuinely believed their actions were lawful due to their misunderstanding of the facts. The accused thus lacked the mens rea component of fraud, as there was no intention to deceive.
Example
A person finds a buyer for their used car and tells them that the car has never been in an accident. The buyer later discovers that the car had been in an accident and accuses the seller of fraud. The prosecution claims that the seller misrepresented the car’s condition when making the sale. But the seller’s defence is that they honestly—yet mistakenly—believed that the car had never been in an accident (based on the information at their disposal) and did not intend to mislead or deceive the buyer.
Penalties for Fraud
The penalty for fraud under section 380 of the Criminal Code depends on the monetary value of the property at stake (i.e., the object of the fraud). If the value exceeds $5,000, the accused faces a maximum sentence of 14 years in prison. If the value exceeds $1 million, the accused faces a minimum sentence of two years. And if the property is valued at less than $5,000, the accused faces a maximum sentence of two years in prison.
Safeguarding Your Future By Understanding Fraud
Fraud is a complex and evolving crime that touches nearly every sector of society in Ontario, from individual consumers to major financial institutions. Knowing the legal definition of fraud, recognizing its different forms, and understanding the possible defences and penalties are essential for mounting a successful legal response. While each case ultimately turns on the specific facts and evidence, staying informed remains your most effective safeguard.
Contact the Criminal Defence Lawyers at Barrison & Manitius for Experienced Defence Against Fraud Charges
The criminal defence lawyers at Barrison & Manitius have the skill and experience to defend you against fraud and other property charges. Whatever legal situation you may be facing, we are committed to understanding your unique circumstances so that we can advise you on a strategy to obtain the best outcome possible.
Conveniently located near the Durham Consolidated Courthouse, Barrison & Manitius maintains a 24/7 emergency call service for clients in immediate need. We proudly serve all of Durham Region, including Oshawa, Whitby, Ajax, Pickering, and the surrounding communities, including Cobourg, Peterborough, and Lindsay. To schedule a confidential consultation, please call us at 905-404-1947 (toll-free at 1-888-680-1947) or reach out online.