Fraud

Fraud - S. 380 of the Criminal Code of Canada 

Summary of the Offence

Fraud is covered under s. 380 of the Criminal Code.

The essential elements of fraud are deception or falsehood, coupled with deceitful conduct to secure unlawful gain or cause potential or actual financial loss to another party.

Fraud can generally be categorized in two ways:

• Deception or Misrepresentation: This involves making false statements or misrepresentations knowingly, without belief in their truth, or recklessly without caring whether they are true or false.
• Intent to Cause Loss or Gain: The perpetrator must have the intent to either deprive someone else of something of value or benefit themselves or another party unlawfully.

How Serious is the Offence?

The seriousness of a fraud charge can depend on various factors, including the amount involved, the scheme's sophistication, and its impact on victims.

The Criminal Code differentiates the seriousness of fraud by classifying it as either fraud over $5,000.00 (s. 380(1)(a)) or fraud under $5,000.00 (s. 380(1)(b)).

• Fraud over $5,000.00 is a straight indictable offence.
• Fraud under $5,000.00 is a hybrid offence, meaning the Crown can choose to proceed either by indictment or summarily, depending on the facts and circumstances.

A summary offence is generally less serious both in terms of the type of crime and the sentence. By contrast, an indictable offence covers more serious crimes with heavier penalties.

Examples of the Offence

Fraud can be committed in various ways. Specific forms of fraud recognized in Canadian law include:

• Credit Card Fraud
• Insurance Fraud
• Securities Fraud
• Internet or Cyber Fraud
• Tax Fraud
• Forgery

There is no minimum amount of money that needs to be transferred for an act to be considered fraud.

Elements of the Offence

The Guilty Act (Actus Reus)

The case of R v Olan, [1978] 2 SCR 1175, set out the actus reus elements for the offence of fraud:

1. A prohibited act of deceit, falsehood, or some other fraudulent means; and
2. Deprivation caused by the prohibited act.

A prohibited act, as per s. 380 of the Criminal Code, includes deceit, falsehood, or some "other fraudulent means."

The third category of "other fraudulent means" was defined in R v Mercer, 1998 CanLII 8029 (NL CA), to include "means which are not in the nature of deceit or falsehood but encompass all other means which can be stigmatized as dishonest." The Courts determine what is dishonest objectively, by considering what a reasonable person would view as a dishonest act.

Causation is crucial in securing a conviction for fraud. The Crown must demonstrate that the victim's financial loss or deprivation directly resulted from the accused's fraudulent actions, establishing a clear link between the deceit (such as false statements or misrepresentations) and the victim's loss.

The Guilty Mind (Mens Rea)

In R v Theroux, [1993] 2 SCR 5, the mens rea for fraud was clarified. There must be:

1. A subjective awareness of undertaking the prohibited act; and
2. An understanding that the prohibited act carried with it a risk of depriving another of property.

The central aspect of fraud is the intent to deceive and the actual deceitful action, not the perpetrator's personal moral judgment. The legal focus is on the actions and intent of the accused rather than their subjective belief about the morality or harmlessness of those actions. Individuals are responsible for knowing that their deceptive actions are wrong and can potentially cause financial harm to others, regardless of whether they personally believe those actions are justifiable.

Possible Defences

Each fraud case is unique, and as such, there is no universal defence. Some possible defences include:

• Lack of Fraudulent Intent:
  To be convicted of fraud, the Crown must prove that the accused had the specific intent to deceive or defraud another party. This requires showing that the accused knew their actions were wrong and intended to deceive. However, this defence does not apply to recklessness or willful blindness.
• No Risk of Loss:
  A possible defence is to argue that the act in question did not result in actual deprivation or a risk of deprivation. For a fraud charge to be substantiated, there must be evidence of some form of loss to the victim—whether that loss was realized or likely to occur as a result of the accused’s actions.

• Applicable Charter Arguments
  The Charter of Rights and Freedoms outlines your rights both before and after an arrest. If the police do not adhere to these rights, it may support your defence. Any violations of your Charter rights could lead to the exclusion of evidence the prosecution intends to use.

Possible Punishment If Convicted

• Fraud Over $5,000.00:
  Maximum imprisonment term of up to 14 years. If convicted of fraud exceeding one million dollars, there is a minimum jail sentence of 2 years.
• Fraud Under $5,000.00:
  • If Proceeded Summarily:
    Up to two years less a day of imprisonment and/or a $5,000 fine.
  • If Proceeded by Indictment:
    Up to two years in jail and/or a $5,000 fine.