Fraud Laws in Canada

A fraud charge is an umbrella term that can cover a broad range of acts. However, simply put, fraud involves unlawfully and deceitfully taking someone’s property, money or valuable security or any service. It is covered under s. 380 of the Criminal Code.

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

The severity of fraud is determined by the value and complexity of the fraud. Fraud over $5,000.00 is generally more serious as it is an indictable offence. On the other hand, fraud under $5,000.00 is a hybrid offence in which the Crown can choose to proceed by indictment or summarily depending on the circumstances of the case.

Fraud is a serious offence. If you need a fraud lawyer, our experienced lawyers are ready to help you fight the charge.

Fraud Examples

Some common examples of fraud may include the following:

• Credit card fraud
• Tax fraud
• Misrepresentation of legal documents
• Embezzlement
• “White collar fraud”
• Insurance fraud
• Worker’s Compensation Board fraud
• Bankruptcy fraud
• Possession of stolen property
• Forgery
• Identity theft
• Construction fraud

Fraud Defences

Each fraud case will be inherently different. As such, there is not one universal defence against fraud. Rather, a good defence will depend on the circumstances of your offence and the evidence against you.

However, common defences to fraud charges often do include:

• Arguments for the lack of fraudulent intent.
• That there was no risk of loss.
• Any charter defences that may be applicable to aid in excluding evidence against you.

Fraud Punishment

Punishment for fraud charges depends on whether the Crown elects to proceed summarily or by indictment and whether you have been charged with fraud over $5,000.00 or under $5,000.00. Additionally, factors such as what you took and from who will also affect the penalty that you may receive for a fraud conviction.

Individuals found guilty of fraud over $5,000.00 are punishable by indictment only and you could be facing an imprisonment term of up to 14 years.

If you have been found guilty of fraud under $5,000.00 you could be facing up to two years in jail and/or a $5,000 fine depending on whether the Crown elects to proceed summarily or by indictment.

Additionally, if an individual is found guilty of fraud in excess of one million dollars, there is a minimum jail sentence of 2 years imposed.

Fraud Laws in Canada Infographic

Overview of Fraud Charges

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

The severity of a fraud charge depends largely on the value of the goods taken and the level of sophistication when committing the fraud. Under the Criminal Code you can be charged either with fraud over $5,000.00, s.380(1)(a) of the Criminal Code, or fraud under $5,000.00, s.380(1)(b) of the Criminal Code. Fraud over $5,000.00 is generally more serious in nature as the Crown must proceed by indictment and does not have a choice to proceed otherwise. However, for fraud under $5,000.00, depending on the aggravating and mitigating factors of your case, the Crown can choose to proceed either summarily or by indictment. This classification and how the Crown elects to proceed becomes important when discussing the punishment associated with fraud charges.

In Canada, you are innocent until proven guilty. This means that the Crown must prove the elements of fraud beyond a reasonable doubt to obtain a conviction of fraud. Specifically, the Crown must prove the mens rea, actus reus, and causation to obtain a fraud conviction.

The Guilt Act (Actus reus)

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

The guilty act for fraud includes proving the following beyond a reasonable doubt:

• a prohibited act of deceit, a falsehood or some other fraudulent means; and
• 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”. This 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.” What is dishonest is determined objectively by the Courts by determining what a reasonable person would consider to be a dishonest act. As such, this third category of “other fraudulent means” has been used by Courts to support convictions in situations where deceit and falsehood cannot be shown. In R v Zlatic, [1993] 2 SCR 29, the Court indicated that these situations include the use of corporate funds for personal use, non-disclosure of important facts, exploiting weaknesses of others, unauthorized diversion of funds, and unauthorized arrogation of funds or property.

In relation to the deprivation caused by the prohibited act, the deprivation may consist of actual loss, however, this element is also satisfied when the accused merely places the victim’s pecuniary interests at risk.

The Guilty Mind (Mens rea)

The case of R v Theroux, [1993] 2 SCR 5 indicated that the mens rea for fraud is that there must be a present:

• subjective awareness of undertaking the prohibited act; and
• that the prohibited act carried with it a risk of depriving another of property.

This means that the accused must knowingly deceive someone with the intent that they are going to deprive them of their property. However, the fact that the accused believed that the conduct is not wrong or that no one will end up hurt is not a defence against a charge of fraud. As such, the mens rea requirement for fraud does not necessarily mean that the accused subjectively appreciates the dishonesty of his or her acts. Rather, the accused must knowingly undertake the conduct which constitutes the dishonest act and subjectively appreciate that the consequences of such conduct could be deprivation.

Top Three Fraud Defences

As stated earlier, given that each fraud case will be inherently different, there is not one universal defence to fraud. Rather, a good defence will depend on the circumstances of your offence and the evidence against you.

However, common defences to fraud charges often do include arguments for the lack of fraudulent intent, that there was no risk of loss, and/or any charter defences that may be applicable to aid in excluding evidence against you.

1. Lack of Fraudulent Intent

It is a full defence to the charge of fraud if the accused did not possess the requisite fraudulent intent. The Crown must prove, beyond a reasonable doubt, that the actus reus and mens rea of a fraud charge are met in order to secure a conviction for fraud. As such, without a subjective awareness that you were committing fraud, you cannot be convicted of fraud as the mens rea element would not be satisfied. However, an accused will not be able to rely on this defence if the accused was reckless or willfully blind.

2. No Risk of Loss

In order for the actus reus for fraud to be met, there needs to be some sort of deprivation, either actual loss or the risk of loss. As such, a possible defence to a fraud charge is to argue that the act in question did not result in actual deprivation or a risk of deprivation. The victim suffers a deprivation when there is a transfer of assets or pecuniary interest or a risk of that. As such, if you are able to prove that there was in fact no actual deprivation or risk of deprivation, in that there was no transfer of assets or pecuniary interests, the Crown will not be able to secure a conviction as an essential element of the actus reus is not met.

3. Charter Defences

The Charter sets out your rights and freedoms. One such right contained within the charter is under s.8, the right to be free from unreasonable search and seizure. Often, the evidence in fraud convictions against you will be found in records of transfers and transactions. If while obtaining these documents the police have either deliberately or inadvertently violated your s.8 Charter rights, for example obtained these documents without a warrant or without adequate grounds for a warrant, your defence lawyer can make a Charter motion to exclude any evidence gathered by virtue of the illegal search under s.24(2) of the Charter. If the motion is successful, it is likely that evidence that would be needed to convict you for a fraud charge would be excluded. This means that the Crown would not be able to rely on that evidence to prove that you are guilty of fraud.

Fraud Punishment

The sentence that you may receive for a conviction for fraud will depend heavily on the circumstances of your case, such as what you took, the value of what you took, and who you took it from. One of the most important factors when it comes to sentencing for fraud is whether you are found guilty of fraud over $5000.00 or fraud under $5000.00.

Frequently Asked Questions about Fraud

What are the other aggravating factors for fraud, as per s. 380.1 of the Criminal Code, includes?

• the degree of sophistication, planning, or deception in the fraud;
• the number of dishonest transactions during the offence;
• duration of the dishonesty;
• the number of victims impacted by the fraud;
• the vulnerability of the victims impacted by the fraud;
• the impact that the fraud had on the victims
• the nature and the extent of the loss;
• if any efforts were made by the accused to conceal the fraud;
• if there was any personal benefit for the accused; and
• the number of individuals involved in the fraud and the accused’s role in the fraud;

Mitigating factors for fraud include:

• voluntary repayment of restitution by the accused before sentencing;
• whether the accused had any honest motive for the fraud;
• whether the accused suffered any major personal impact from the offence of fraud;
• no prior record of fraud is held by the accused.

How much money is considered fraud in Canada?

There is no minimum amount of money that needs to be transferred for an act to be considered fraud. This is because deprivation element of fraud can be satisfied when the accused merely places the victim’s pecuniary interests at risk. This means that an offence for fraud can still be made out if the victim loses no actual money.

However, how much money you take would be a relevant factor in classifying your offence as either fraud over $5,000.00 or fraud under $5,000. This classification would go directly to the severity of the offence and determine penalties.

What is the penalty for fraud over $5,000.00?

If the amount involved in the fraud is over $5000.00, the maximum sentence that carries with it is 14 years jail time. Even if it your first offence and you are convicted of fraud over $5000.00, the prosecution position usually involves jail time.

Additionally, in severe cases of fraud, when the amount exceeds one million dollars, there is a minimum sentence of 2 years in prison that is imposed.

However, in all cases of fraud, both mitigating and aggravating factors will be taken into consideration when deciding the appropriate penalty for the fraud charge.

Is fraud criminal or civil in Canada?

For fraud over $5,000.00, the Crown must proceed by Indictment. As such, cases of fraud over $5,000.00 are considered to be criminal acts in Canada.

However, fraud under $5,000.00 can either be a civil or criminal act. In civil cases of fraud, there is no prosecutor present, as there would be in a criminal case; rather there is a plaintiff suing a defendant for damages. Additionally, in civil fraud cases, you will be simply forced to pay damages which are normally the amount claimed plus any other fees. However, in criminal fraud cases, if you are found guilty you could be charged a fine, be given jail time, and/or have a criminal record.