Crown decided prosecuting a fraud charge for $600K phishing scheme wasn’t in public interest

Supported By:

Net Patrol International Inc.  Data Investigation and Forensic Services
Bankruptcy and Insolvency Trustees

Crown lawyers withdrew a fraud charge against a Toronto man who had been found liable for fraud in civil court for misappropriating more than $600,000 in an email phishing scheme because they determined the prosecution wasn’t in the public interest, CBC Toronto has learned.

The decision was revealed in civil court filings in which a Hong Kong company is still trying to collect most of the $637,753 that Toronto resident Andre Dixon was ordered to pay by Ontario’s Superior Court of Justice more than two years ago.

In an email, the Toronto police officer who handled the criminal case told the company’s fraud recovery lawyer, Norman Groot, that “the Crown’s Office didn’t believe it was in the public’s interest to proceed with a trial” given that a judgment had been made against the accused in a civil lawsuit.

Criminal court records confirm that charges of fraud over $5,000 and possession of property obtained by crime over $5,000 were withdrawn against Dixon in this case in May. He did not respond to requests for comment for this story.

“It did raise the issue of does crime pay?” Groot, a Toronto lawyer, said about the Crown’s decision to withdraw the charges.

“When the bad guys know that there’s a lack of public interest — the apparent view of the Crown — they don’t feel very deterred.”

Both Groot and a financial crime expert who is not involved in the proceedings told CBC Toronto that the case raises serious questions about what Ontario’s criminal justice system is doing to deter fraud, which has skyrocketed in the province and across Canada in the last decade.

“This is absurd,” said Vanessa Iafolla, founder of Anti-Fraud Intelligence Consulting in Halifax.

“I cannot fathom the reasons for which it’s not in the public interest to prosecute a crime that has been identified by Statistics Canada as the single most prevalent crime that Canadians are facing.”

Earlier this year, a CBC Toronto investigation examined how Ontario’s enforcement systems are handling fraud cases and whether they’re helping victims.

The four-part series, The Cost of Fraud, discovered an overloaded justice system that is reluctant to prosecute fraud — failing to deter fraudsters and putting the onus on victims to recover their own losses if offenders refuse to pay them back as ordered.

Since then, Statistics Canada released a survey that found more Canadians reported they were victims of fraud than of any other crime, and the number of fraud victims was nearly double the number of people who said they were the victim of a violent crime. 

Crown must determine if case is in ‘public interest’

CBC Toronto asked Ontario’s Ministry of the Attorney General, which oversees Crown prosecutors, why this fraud prosecution wasn’t considered in the public interest because of the civil court judgment.

In an emailed statement, a ministry spokesperson said court transcripts can be ordered to see any comments placed on the record in the case.

“Crown counsel review files in accordance with the charge screening standard outlined in the Crown Prosecution Manual to determine if there is a reasonable prospect of conviction and if it is in the public interest to proceed,” spokesperson Maher Abdurahman said.

“If the Crown determines that the charge does not meet this standard, the Crown is duty-bound to withdraw the charge. In doing so, the Crown considers a number of factors, including evidence, legal principles and the circumstances specific to each charge.”

The ministry keeps statistics based on criminal case outcomes (such as charges withdrawn, guilty, acquitted etc.) but does not track the reasons for those dispositions.

Baby eels purchase at centre of phishing scheme

In the Dixon case, civil court filings outline how Sunshine Aquatic Products lost more than $635,000 in May 2021 through an email phishing scheme while trying to purchase baby eels, also known as glass eels, from Canada to export to Hong Kong.

Baby eels are the most valuable fish species by weight in Canada and were worth more than $5,000 per kilogram in 2022. They are often flown live to Asia, where they’re raised to adulthood for food.

According to the civil court judgment, the email account for one of Sunshine Aquatic Products’ sources for eels in Nova Scotia was hacked and used by Andre Dixon without the eel company’s permission. Dixon then arranged for the Hong Kong company to buy about $505,000 US worth of glass eels, but he provided a bank account for the transaction that was different from the account used by the Nova Scotia company.

“They convinced the company that there was a legitimate change of bank accounts, and so they transferred the funds that way,” Groot said.

But when Sunshine Aquatic Products never received the eels, the company discovered that the emails weren’t being sent by a representative of the Nova Scotia company, and it later learned that the bank account where the money was transferred was registered to Dixon personally, according to court records.

Groot was able to obtain court injunctions and orders to freeze the bank account and get bank statements, which showed his client’s funds were deposited into Dixon’s account and then disbursed. By the time the account was frozen, only about $124,700 remained.

“We got a court order to have that paid out to the victim,” Groot said.

“We also got a court order that all of the investigative work that we had done, including obtaining the bank records and who opened these accounts and that sort of stuff … be transferred to the Toronto police.”

Dixon did not defend the case, so Justice Fred Myers issued a default judgment in August 2021, concluding that “Mr. Dixon misappropriated over $600,000 from the plaintiffs by means of a deliberate and fraudulent phishing scheme” and that he is “liable for fraud — deceit — in misrepresenting his identity, for conversion of the plaintiffs’ property and for unjust enrichment.”

‘No realistic prospect’ full amount will be recovered

Myers ordered Dixon to pay the full amount taken through the phishing scheme, along with the costs of the court proceeding. So far, only the funds that were frozen have been paid back to Sunshine Aquatic Products, Groot said.

“There’s no realistic prospect that we’re going to recover it through the civil system,” he said. “So there should be punishment via the criminal system…. They need to be prosecuted, they need to get [criminal] records.”

Toronto police arrested Dixon, 36, in March of this year and the charges were withdrawn in May. 

Anti-fraud consultant Iafolla said there’s a striking difference in the way fraud victims are treated compared with other victims of crime.

“We don’t have people fix their own criminal justice problems,” she said.

“[With fraud] it’s about how much justice your money can buy.”

This article was originally sourced from www.CBCNews.ca