Limited resources, expertise and prioritizing violent crime all factors, fraud experts say
Ontario: yours to defraud?
In recent years, CBC Toronto has reported on a slew of alleged frauds that have upended the lives of countless victims in Ontario. The stories have covered everything from Ponzi schemes, to romance scams and fraudsters selling people’s houses out from under them.
These seemingly surging scams begged questions about how Ontario’s enforcement systems are handling fraud cases and whether they’re helping victims.
CBC Toronto went looking for answers for this investigative series, The Cost of Fraud, and 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.
Over the last decade, Ontario has seen fraud reports skyrocket, with just a sliver of annual reports leading to criminal charges, and nearly half of those already scant charges dropped each year. And it’s not just happening in this province — a similar drop off after the initial report can be seen in Canada-wide statistics.
“Ideally, criminality should be investigated and prosecuted and we’re simply not doing that in Canada these days with respect to the great majority of fraud,” said Peter German, president of the International Centre for Criminal Law Reform and former deputy commissioner of the RCMP.
“There are many $1,000,000 plus frauds that are simply not being investigated because of the resource issues.”
German, along with other police, legal and academic experts interviewed for this series, attributed issues with fraud enforcement to the nature of the resource-heavy investigations and prosecutions, a lack of specialized expertise, and prioritizing violent crime given limited capacity within a justice system facing significant backlogs.
“There’s a lack of political and institutional will to deal with financial crimes in a systematic and sustained way,” said Vanessa Iafolla, a fraud victim consultant and financial crime professor at Wilfrid Laurier University.
“If it bleeds it leads,” she said, noting that with fraud, “people only bleed money.”
Fraud losses of $416M reported last year
Last year Canadians reported losing about $416 million to fraud, a 55 per cent jump from the previous record-high of nearly $269 million across the country in 2021, according to the Canadian Anti-Fraud Centre. More than half of the losses in 2022 came from Ontario.
Those figures are especially stark considering police estimate only five to 10 per cent of frauds are ever reported.
“The statistics are pretty alarming,” said Dorian Dwyer, a retired Ontario Provincial Police fraud detective. “It’s one of the most underreported crimes, but it’s also one of the most voluminous criminal offences occurring, and it’s forever increasing.”
Annual fraud reports to police in Ontario are on the rise according to data from Statistics Canada. There were 31,407 cases reported to police in 2010. By 2021, that number had increased by 20,000 to 51,429.
For the last decade, the number of investigations completed, or reports “cleared” by police remained steady, until 2020 when the number of cases cleared dropped.
Fraud reports skyrocket in Ontario, while clearance and decisions drop
In 2021, the number of fraud reports cleared by police only accounted for 13 per cent of the total fraud reports received that year. However, the cleared reports also include reports from previous years, so it’s likely clearance is even lower.
“It’s a capacity issue,” said Dwyer. “Let’s face it, homicides, sexual assaults, bank robberies will always be that 911 event that’s driving police resources.”
Elderly victims could lose their home
Still, Dwyer says the impact of fraud can be devastating.
“You can be literally destroying a person’s life with what the courts may see as a minor fraud offence.”
For Frank Herman and his wife — both in their 80s — the consequences of falling for a phone scam involving a fake RCMP officer could include losing their Toronto home.
“This destroyed my trust in anything and everything,” said Herman. “They knew exactly what they were doing, except I had no idea what they were doing — I thought I was helping the law.”
In reality, Herman says fraudsters hacked into the couple’s online banking account and transferred the $150,000 maximum from their line of credit to their TD Bank chequing account. To the Hermans, the deposit made it look like the RCMP had transferred funds to their account so they could wire it to the U.K. as part of a police operation.
The couple reported the scam to police, but since a review of their computer didn’t turn up any evidence on the fraudsters, the Hermans say an investigator told them there was nothing they could do.
Crown often drops fraud charges
When police are able to clear a report by laying charges in Ontario, the case is then passed to the Crown for prosecution. The number of annual decisions reached in those fraud cases has plummeted by 94 per cent — from roughly 7,419 decisions in the 2010-2011 fiscal year to just 2,688 in 2020-2011.
Even with a declining number of decisions reached each year, nearly half of fraud cases in Ontario for most of the last decade have ended with charges being stayed or withdrawn. Except in 2020-2021, when fraud cases resulting in charges being stayed or withdrawn surpassed the number of fraud cases resulting in guilty decisions.
Nearly half of fraud cases end with decision to stay or withdraw charges in Ontario
CBC Toronto asked Ontario’s Ministry of the Attorney General why Crown lawyers decide to stay or withdraw roughly half of fraud charges each year.
In a statement, a spokesperson told CBC Toronto that the Crown screens every charge to determine whether there’s a reasonable prospect of conviction and whether the prosecution is in the public interest.
German, of the International Centre for Criminal Law Reform, argues dropped fraud charge stats like those lead police and prosecutors to question the point of taking on complex fraud cases in the first place.
“The frustration factor is, ‘Well, why do we bother if 50 per cent or so are not going to make it through the system?’ ” he said.
“And even those that do make it through the system, is the result really of significance from a deterrence perspective?”
Just 32 per cent of those convicted of fraud in Ontario in the last decade were sentenced to jail time. Of those who did get jail or prison time, 51 per cent were sentenced to one month or less. Only two per cent of fraud offenders were sentenced to two or more years in prison.
“Once you get down the crime funnel, essentially at the end of the day, there’s not a lot of accountability for people who engage in these kinds of activities,” said Iafolla.
That can be a tough pill to swallow for the few fraud victims whose cases make it that far — and who many experts say are treated differently by society than victims of other crimes.
Anyone can be scammed
“There is an absolute lack of empathy for victims,” said Iafolla. “I honestly believe that there is a scam that at the right moment, anybody in their life could fall for.”
Herman never thought it could happen to him.
The senior says he’s ignored other scam calls in the past, but in this case the fraudster knew details about the couple they assumed only the RCMP could know.
Now, TD Bank is threatening to foreclose on their condo if they don’t pay off the home equity line of credit, which is still collecting interest.
In a statement, a TD spokesperson said “it’s concerning” when a customer falls victim to a scam, and that the bank is sorry to hear about the couple’s circumstances.
“While our review confirmed that protection processes and policies were followed, we understand how distressing this situation must be,” said Samantha Grant.
“What they put me through at my age, I don’t wish it on my worst enemy,” said Herman. “We don’t have that kind of money.”
Herman says the police did offer him some advice.
“The officer told us to hire a good lawyer.”
This article was originally sourced from www.CBCnews.ca