Download - The Society of Notaries Public of BC

Spring 2010 Volume 19 • Number 1 

Published Quarterly by The Society of Notaries Public of British Columbia 

SPECIAL EDITION 

Publications Mail Agreement: 40010827

Proud to be serving The Society, 

Notaries, and Their Clients 

Providing the Advice Clients Need 

for Over 30 years: 

• Property disputes 

• Estates 

• Insurance claims 

• Board hearings 

• Environmental issues 

• Corporate/commercial law 

Acting for Notaries’ clients, we have 

• Prosecuted motor vehicle accident claims; 

• Defended claims from failed closings; 

• Obtained court orders to clear title; 

• Probated estates; 

• Defended claims against estates; 

• Resolved contract disputes. 

1575 – 650 West Georgia Street, PO Box 11635, Vancouver, BC V6B 4N9 

Toll Free: 1-800-233-4405 Tel: 604-687-9811 Fax: 604-687-8716 

email: lawyers@macaulay.com 

www.macaulay.com 

Todd 

McKendrick 

John 

Burgoyne 

Quang Duong 

©iStockphoto.com/ ooyoo

BC Notaries Are Respected in Their Communities. 

What Does it Take to Become a BC Notary Public? 

• Strong entrepreneurial and people skills 

• The highest degree of honesty and integrity 

• University degree and 5 years’ related experience 

• Fluency in English; other languages an asset 

• Financial backing 

• Dedication to serving the public 

Those are the characteristics of a BC Notary Public. 

There are business opportunities for Notaries in various communities throughout British Columbia. 

As a BC Notary, you will have the 

opportunity to enjoy a rewarding 

career as an independent 

businessperson who serves the 

public, and sets the example 

of integrity and trust for which 

Notaries are known throughout 

the world. 

If you have the qualities noted 

above, and are looking for a new 

career path, consider our Master 

of Arts in Applied Legal Studies 

(MAALS) program for BC Notaries, 

conducted through Simon Fraser 

University. 

For more information, please 

contact The Society of Notaries 

Public of British Columbia 

1-800-663-0343 

or visit our Website 

www.notaries.bc.ca.

Published by The socieTy of NoTaries Public of bc 

Special Edition 

THE SECRETARY AND EXECUTIVE DIRECTOR 

Fraud: Truth and Fiction 6 

Wayne Braid 

THE PRESIDENT 

Security in a BC Notary’s Office 8 

Susan Davis 

KEYNOTE 

Fraud: A Nasty Business 9 

Val Wilson 

Synonyms for Fraud 11 

Fraud in Our Times 

Nigel Atkin 

12 

Canadian Rogues Gallery 

of Financial Fraudsters 14 

Ian Callaway 

Profiling the Fraudster: Behavioural Cues 17 

Bibliography 29 

Ian Callaway 

The Fraudster’s Predatory Cycle 30 

Bibliography 32 

Ian Callaway 

©iStockphoto.com/nebari 

Protecting British Columbians 

from Identify Theft 34 

Kash Heed, Solicitor General of BC 

Security Tips 37 

Combating Identity Theft and Fraud 38 

Detective Brian Montague 

Robbing Peter to Pay Paul: Ponzi Schemes 40 

Brian Trainor 

Business to Business 43 

The Eron Mortgage Fraud: 

Lessons from a Ponzi Scheme 44 

Neil Boyd 

Ponzi Scheme Details 45 

Neil Boyd 

Fraud Inc. 47 

Constable Michael McLaughlin 

Advice about Fraud 

from a Professional Private Detective 49 

Ozzie Kaban 

The People’s Law School 

“Scams to Avoid” Booklet 53 

Gordon Hardy 

Better Business Bureau’s 

Top Ten Scams for 2009 55 

Four Fraud Vignettes 58 

Consumer Protection BC 

Bon Voyage! 61 


Is it Fraud or Not Quite? 62 

Donna Cheeseman 

Canada’s Anti-Money-Laundering Regime 64 

Parvine Khunkhun 

Don’t Become a Victim—or Worse 

“Why did they pick me?” 66 

Colin Parcher 

4 The Society of Notaries Public of British Columbia Volume 19 Number 1 Spring 2010

Cheque Forgery and Other Security Breeches 68 

David Watts 

Fraud and the Land Title Assurance Funds 

in British Columbia 72 

Ian C. B. Smith 

Fraudulent Conveyances 76 

Trevor Todd and Judith Milliken QC 

Torrens + Technology = Reduced Risk of Fraud 79 

Rudy Nielsen 

Land Fraud: Tell the Truth and Do your Research 80 

Bill Pekonen 

Real Estate Agents Vigilant for Fraud 82 

Alyson Fair 

Fraudsters in the Family Circle 84 

Grace Balbutin 

Editor’s 85 

Crimes Against the Elderly: 

Fraud via the Power of Attorney 86 

Laurie Salvador 

Recovering from Con Artists: Seniors Share Their Stories 88 

About The Finding home Initiative 89 

how to Belong in a Changing World 90 

Jessie Sutherland 

Technically Secure 92 

Akash Sablok 

GUEST COlUmN 

Pondering Ponzi Schemes 94 

Greg Dixon 

The Scrivener: 

What’s in a Name? 

“A professional penman, a copyist, a scribe . . . a Notary.” Thus 

the Oxford English Dictionary describes a Scrivener, the craftsman 

charged with ensuring that the written affairs of others flow 

smoothly, seamlessly, and accurately. Where a Scrivener must 

record the files accurately, it’s the Notary whose Seal is bond. 

We chose The Scrivener as the name of our magazine to celebrate 

the Notary’s role in drafting, communicating, authenticating, 

and getting the facts straight. We strive to publish articles about 

points of law and the Notary profession for the education and 

enjoyment of our members, our allied professionals in business, and 

the public. 

Published by The Society 

of Notaries Public of British Columbia 

Editor-in-Chief Val Wilson 

Legal Editors Wayne Braid, Ken Sherk 

PR and Magazine Akash Sablok, Chair 

Committee Michael Kravetz, Vice Chair 

Leona Bailey 

Tammy Morin Nakashima 

Terry Sidhu 

Amber Rooke, Staff Liaison 

Graphic Design Graffiki Design 

Courier Cheyenne Express 

The Scrivener 

Voice: 604 985-9250 

Fax: 604 985-0900 

email: scrivener@notaries.bc.ca 

Website: www.notaries.bc.ca 

The Society of Notaries Public of BC. 

604 681-4516 

To send photographs to The Scrivener, 

please see the Editor's column on page 85. 

All rights reserved. Contents may not be 

reprinted or reproduced without written 

permission from the publisher. This journal 

is a forum for discussion, not a medium 

of official pronouncement. The Society 

does not, in any sense, endorse or accept 

responsibility for opinions expressed by 

contributors. 

CANADA PoST: PuBLiCATioNS MAiL 

AGREEMENT No. 40010827 

Postage Paid at Vancouver, BC 

RETuRN uNDELiVERABLE CANADiAN 

ADDRESSES To CiRCuLATioN DEPT.: 

ThE SOCIETy OF NOTARIES 

PuBLIC OF BC 

SuITE 1220 – 625 hOWE STREET 

BOx 44 

VANCOuVER, BC V6C 2T6 

SCRiVENER@NoTARiES.BC.CA 

Volume 19 Number 1 Spring 2010 The Scrivener 5

THE SECRETARY AND EXECUTIVE DIRECTOR 

Fraud: 

Truth and Fiction 

Fraud: The word sends fear 

down our spines. 

it conjures up thoughts 

of theft, helplessness, criminals, 

and betrayal. 

If you are a first-time reader, we 

are pleased to welcome you to our 

magazine. If you are a regular reader, 

you will find this issue quite different 

from our typical quarterly fare. 

This Special Edition of 

The Scrivener is dedicated to the topic 

of Fraud—many aspects of the subject 

through the eyes, expertise, and 

experience of professionals in the field. 

In the business arena of my long 

career, first in the insurance business, 

then as a BC Notary, and now as an 

administrator, I have seen fraud and 

attempts at fraud. 

Fraud comes in many forms. 

It can be colossal, such as the fraud 

perpetrated by the likes of Bernie 

Madoff, or it can be small random acts 

of illegal and immoral activity that you 

might encounter at your front door or 

on the telephone. 

Fraud involves many people, 

events, and opportunities. It often 

arrives at the most unsuspecting 

time and place, sometimes from the 

Wayne Braid 

most unexpected people. Fraud has 

one common denominator—someone 

is knowingly taking advantage of 

a person who is in a vulnerable 

position. 

The writers we have chosen 

for our Fraud issue offer 

facts. They have not set 

out to appeal to our sense 

of fear to advance an 

agenda such as a specific 

insurance product or some 

form of “fraud protection.” 

How do we recognize when we are 

in that vulnerable position? 

How do we protect ourselves? 

How do we ensure we are always 

aware of what is happening in the 

world around us? 

To a certain extent, we depend 

on information delivered to us through 

the media. The challenge with trusting 

those stories is that writers may 

present erroneous information or they 

may tend to sensationalize the truth. 

The writers we have chosen for 

our Fraud issue offer facts. They have 

not set out to appeal to our sense of 

fear to advance an agenda such as 

a specific insurance product or some 

form of “fraud protection.” 

One of the fears 

currently being 

distorted in the 

media is title fraud. 

We are all afraid that 

someone will take 

advantage of our home 

Ian Smith ownership because it is 

our place of safety and, of course, our 

major asset. In his article, Ian Smith, 

former Registrar of the Land Title and 

Survey Authority (LTSA) in British 

Columbia, brings us back to reality. 

He verifies that since 2006, land 

title offices in BC have registered 

approximately 3 million transactions. 

Only 7 claims involving fraudulent 

mortgages were made against the 

Land Title Act Assurance Funds. 

We are much more vulnerable to 

someone stealing our identity or our 

bank or credit card information and 

using it for his or her own enrichment. 

Our elderly neighbour is more at risk to 

an unscrupulous person—maybe even 

a relative or close friend—who may 

take advantage of the senior. 

We are still receiving email 

missives from people in Nigeria or other 

offshore countries who have randomly 

selected us from among the millions of 

people in North America. The senders 

want us to help them relocate a huge 

6 The Society of Notaries Public of British Columbia Volume 19 Number 1 Spring 2010 

Photo Credit: www.wildmanphotography.com

sum of money that has magically 

surfaced. All we have to do is permit 

our bank account information to be 

used for only a short time and we will 

be paid handsomely. Unfortunately, 

some of us do decide to take a chance 

to “cash in on the windfall” and we end 

up being deceived. 

…if the opportunity sounds 

too good to be true, it is! 

Usually, if the opportunity sounds 

too good to be true, it is! 

In our work as BC Notaries, 

we often are called upon to be the 

watchdog—the person who makes 

certain that the people sitting in our 

office are who they say they are and 

that they are there for their stated 

purpose, not for the financial gain of 

some other individual or purpose. 

We BC Notaries recognize 

our obligation to the public in this 

respect. Our regular seminars and 

other education events communicate 

leading-edge specifics to our members 

on how to assist our clients and 

protect our clients’ valuable personal 

and business information. 

Our goal for this issue is to provide 

a useful education tool for our readers 

about some of the many types of fraud 

out there, to raise awareness about 

those crimes, and to offer useful tips 

and tools to help you protect yourself, 

your family, and your friends. 

We all must be vigilant regarding 

the spectre of fraud. Protecting our 

assets and our personal information 

should be at the top of our “to do list,” 

each and every day. s 

©iStockphoto.com/ RUSSELL TATE 

Westcoast Surveys Ltd. 

Registered member of ASTT of BC 

Site surveys for Mortgage Purposes 

westcoastsurveys@shaw.ca 

Don and Laura Prokopetz 

Tel 604 543-8665 Fax 604 543-8610 

Leave a Legacy 

for a Future Without 

Breast Cancer 

Making an estate gift 

today will make a difference 

tomorrow in the lives of those 

living with breast cancer. 

To make a donation or 

for information, contact: 

Director, Major Gifts & Planned Giving 

604.683.2873 or 1.800.561.6111 

www.cbcf.org/bcyukon 


THE PRESIDENT 

Security 

in a BC Notary’s office 

Throughout my career 

as a BC Notary, i have 

witnessed countless 

documents for people. 

Almost all my clients recognized 

the value of a Notary’s signature 

to a document and were happy the 

service was available to them. 

I have, however, encountered the 

occasional client who would make 

a comment to the effect that he would 

like to be able to make his living “just 

signing his name,” because it looks 

“easy.” He clearly did not understand 

or appreciate the responsibility that 

goes along with the privilege of signing 

a document as a Notary. 

A Notary’s signature is “as good 

as gold.” The Notary’s signature on 

a document confirms the document 

was signed by the person the Notary 

identified, on the date indicated. To 

function, our citizens—and indeed 

the world of business—rely on this 

confirmation. Notaries are the “gatekeepers” 

who do what is necessary 

to ensure that reliance is never 

compromised. 

In the past, when we didn’t have 

too much reason for concern about 

fraud in our society, BC Notaries would 

witness the signature of a person 

they knew without necessarily taking 

identification. If they did not know the 

person, they would take a look at the 

individual’s ID, but not always keep 

a copy of it. 

Susan Davis 

In today’s world, where fraud 

is becoming more prevalent, the 

responsibility of the Notary has increased 

accordingly. Now, Notaries Public in 

BC are required to take identification 

and maintain a record of that ID in 

every transaction they undertake. 

Therefore, please don’t be offended if 

a Notary you have known socially for 

a number of years now asks for your 

identification. That is being done to 

protect you and society as a whole. 

In today’s world, 

where fraud is becoming 

more prevalent, the 

responsibility of the Notary 

has increased accordingly. 

The process used by most 

Notaries in this province is to notify 

the client even before the appointment 

that satisfactory identification must 

be shown—at least one governmentissued 

piece of photo identification 

and a supplemental piece. In most 

Notary practices, for BC residents 

the preferred pieces of identification 

are a BC driver’s licence and a BC 

Care Card. If the person doesn’t have 

a driver’s licence, a government-issued 

BC ID or a passport is acceptable. 

The Notary will review the ID 

to confirm that the identification 

matches the name on the document, 

then scan or make a photocopy of the 

identification. That image is retained 

in the file related to the matter at 

hand. In some instances, a copy of 

the ID is forwarded along with the 

document to the authority or company 

for which the document is intended. 

For instance, when a Notary signs 

a mortgage on behalf of a lender, 

the lender will require a copy of the 

identification taken at the time the 

document was signed. As well, the 

Notary will complete a statement 

confirming he or she was provided 

with the identification shown in the 

attached copy. 

Some people have concerns 

about their ID information being in 

the possession of the Notary and our 

membership recognizes that concern is 

legitimate. As a result, each BC Notary 

office operates under a privacy policy 

that sets out what is to be done with 

the client’s identification. The policy 

includes an assurance that the Notary 

has made arrangements to secure 

all documents containing personal 

information against unauthorized 

access, collection, use, disclosure, 

copying, modification, disposal, or 

destruction. 

If you have any concerns, ask your 

Notary for a copy of his or her privacy 

policy for your review. 

It is a disturbing commentary on 

our times that these measures have 

become industry standard. Until those 

among us who victimize innocent 

people with their crimes of fraud 

discontinue their nefarious practices, 

everyone must step up to the plate to 

endeavour to protect the innocent. s 


KEYNOTE 

Fraud: 

A Nasty Business 

By the very nature of their 

calling, fraudsters lie. 

it must be challenging 

to have to remember which 

story they have told to whom. 

Telling the truth is so much easier. 

Imagine if criminals focused their 

energy on lawful pursuits . . . ? 

As Wayne Braid points out in his 

article, if the opportunity sounds too 

good to be true, it is! In fact, many 

of our authors expressed that alert. 

We don’t like to be repetitive, but that 

warning bears repeating. 

Fraud via email 

Last year, the 40-something son of 

a dear friend fell for “the Nigerian 

scam.” It’s been circulating for quite 

some time. The “wealthy” offshore 

strangers presented the opportunity 

via a broadcast email. When he took 

the bait, they reeled him in with 

patience and finesse. To test their 

trustworthiness, at first he transferred 

only small amounts of money to 

his new business associates. They 

promptly paid him back, as promised, 

and even sent him bonuses. Then 

they raised the ante. For what was to 

be their final transaction together, he 

managed to borrow $20,000 from the 

bank and transferred it to the usual 

offshore account. The reimbursement 

cheque bounced. Instead of making 

money, he was out $20,000. That 

scam is alive and well in cyberspace. 

I received the offer twice this week. 

Val Wilson 

Fraud in the Neighbourhood 

Here’s a new take on how to cheat 

people: Windshield Fraud. The RCMP 

recently circulated information 

to our Block Watch area network, 

warning that if we were stopped by 

a man claiming we had damaged his 

minivan, he was likely trying to scam 

us out of our money. 

Telling the truth is so much 

easier. Imagine if criminals 

focused their energy on 

lawful pursuits . . . ? 

The suspect was mostly targeting 

people on their way to the North 

Shore Transfer Station with trailers 

full of Spring-cleaning trash. He 

would claim his windshield had been 

damaged by something falling off the 

back of the victim’s vehicle. He told 

his victims he only wanted to recover 

the ICBC deductible of $300 to cover 

his costs and asked for the cash 

up-front. The suspect tried to appear 

legitimate by providing a BC Driver’s 

Licence number, the licence plate 

number from his vehicle, his phone 

number, and/or a “receipt.” The 

information was all fake. 

The fraud was ultimately revealed 

when a would-be victim insisted that 

the suspect make a claim through 

ICBC. The suspect refused and 

immediately left the scene. The victim 

followed him long enough to see the 

minivan driver attempt the same scam 

on another victim, then he called the 

police. The good news is that they 

caught the guy. For now. 

Big League Fraud 

This past March—the Competition 

Bureau’s 7th annual Fraud Prevention 

Month—Victoria’s Ian Thow was 

sentenced to 9 years in federal prison. 

He had hoodwinked trusting investors 

out of about $39 million by promising 

stratospheric investment returns. The 

remorseless and unapologetic Thow 

was ordered to pay $3.9 million in 

restitution. He will be eligible for 

day parole in 14 months and for full 

parole in 28 months. 

Please be aware of the actions 

and the motives of the individuals 

in your life. While most people are 

great, there are others who get up in 

the morning thinking of how they can 

separate you from your money and 

your possessions. s 

Volume 19 Number 1 Spring 2010 The Scrivener 9 

©iStockphoto.com/Sandra L Nicol 

Photo credit: Louiza Jamoukhanova

[ Security and service 

] 

in the right combination 

Over the past 100 years, Stewart Title has 

become one of the largest, most reliable title 

insurance companies in the world. Global 

presence and financial strength, however, tell 

only half the story. It’s how we work with legal 

professionals that sets us apart. A solid history 

of initiatives to support the legal community is a 

hallmark of our company. 

We are continually investing in both technology 

and people to streamline the real estate 

process, and give you the resources you need to 

handle transactions faster and more efficiently. 

Add to that our experienced underwriters and 

claims counsel and you've got the Stewart Title 

difference. 

At Stewart Title, we know it’s our relationship with 

our clients that determines our success. That’s 

why service is the foundation of our business 

and integrity, the keystone in all our dealings. 

Call us today 1-866-515-8401 or visit 

www.stewart.ca

Synonyms for Fraud 

Many words in the English language refer to fraudulent activity. Thanks to ian Callaway for compiling this list. 

Abstraction 

Acting 

Actor 

Affectation 

Affecter 

Annexation 

Appearance 

Appropriation 

Artfulness 

Artifice 

Attitudinizing 

Bait and switch 

Ballot-box stuffing 

Bamboozle 

Bamboozlement 

Barracuda 

Bilk bilker 

Blagueur 

Bluff 

Bluffer 

Bluffing 

Boosting 

Bunco schemes 

Bunco 

Bunko 

Cardsharping 

Charlatan 

Cheat 

Cheater 

Cheating 

Chicane 

Chicanery 

Churning 

Circumvention 

Clinquant 

Clip joint 

Color 

Coloring 

Con artist 

Con man 

Con 

Conceal 

Confidence man 

Conversion 

Conveyance 

Counterfeit 

Cozenage 

Crack 

Craft 

Craftiness 

Credibility gap 

Cyber slacking 

Deceit 

Deceitfulness 

Deceiver 

Deception 

Defrauder 

Delusion 

Diddle 

Diddling 

Disguise 

Dishonesty 

Disingenuousness 

Dissemblance 

Dissembling 

Dissimulation 

Dodge 

Double-dealing 

Dummy 

Dupery 

Duping 

Duplicity 

Embezzle 

Embezzlement 

Facade 

Face 

Fake 

Fakement 

Faker 

Fakery 

Faking 

False air 

False front 

False show 

False-heartedness 

Falsity 

Feigning 

Feint 

Filching 

Fishy transaction 

Flam 

Flimflam 

Flimflammer 

Forge 

Forgery 

Forswearing 

Four-flusher 

Four-flushing 

Frame-up 

Fraudulence 

Fraudulency 

Front 

Fulls 

Gaffle 

Gerrymandering 

Gilt 

Gloss 

Graft 

Grift 

Grifter 

Guile 

Gyp joint 

Gyp 

Half truths 

Hanky-panky 

Hoax 

Hollow man 

Hoodwinking 

Humbug 

Humbuggery 

Hustle 

Illicit business 

Imitation 

Impersonator 

Imposition 

Impostor 

Imposture 

Insincerity 

Intrigue 

Inveigler 

Jailbreak 

Junk 

Kiting 

Knave 

Lapping 

Larceny 

Liberation 

Lie 

Lifting 

Long firms 

Malingerer 

Man of straw 

Mannerist 

Mark 

Masquerade 

Meretriciousness 

Misrepresent 

Misrepresentation 

Mock 

Monkey business 

Mooch 

Mountebank 

Ostentation 

Outward show 

Paper tiger 

Paperhanger 

Paste 

Patsy 

Performer 

Perjury 

Phishing 

Phony 

Pilferage 

Pilfering 

Pinchbeck 

Pinching 

Play actor 

Playacting 

Poaching 

Ponzi 

Pose 

Poser 

Poseur 

Posing 

Posture 

Pretender 

Pretense 

Pretension 

Pretext 

Pseudo 

Pump and dump 

Put-on 

Put-up job 

Pyramid 

Quack 

Quacksalver 

Quackster 

Racket 

Representation 

Ringer 

Rip-off 

Rogue 

Ruse 

Saltimbanco 

Scam 

Scheme 

Scoundrel 

Scrounging 

Seeming 

Sell 

Semblance 

Sham 

Shammer 

Shark 

Sharp practice 

Sharper 

Shill 

Shoddy 

Shoplifting 

Show 

Simulacrum 

Simulation 

Skimming 

Snake oil sales 

Snatching 

Sneak thievery 

Snitching 

Social engineering 

Speciousness 

Stealage 

Stealing 

Sting 

Stratagem 

Straw man 

Subterfuge 

Sucker 

Swindle 

Swindler 

Swindling 

Swiping 

Talisman 

Theft 

Thievery 

Thieving 

Tinsel 

Touter 

Touts 

Treachery 

Trick 

Trickery 

Trickster 

Uncandidness 

Uncandor 

Unfrankness 

Unsincereness 

Untruthfulness 

Varnish 

Weasel words 

White collar crime 

Whited sepulcher 

Wiggle room 

Wile 

Window dressing 


Fraud in our Times 

“The rules of fair play do not 

apply in Love and War.” 

John LyLy, 1578 

When John Lyly wrote that proverb 

in Euphues: The Anatomy of Wyt, 

Europe was in the throes of rebirth 

in all aspects of culture. 

The upheaval of popular thought, 

in the arts or politics, in navigational 

tools, warfare, the Reformation, 

even the embryonic gift of the 

Enlightenment, was starting to shake 

the very foundations of society. 

Those dramatically shifting times 

were known as The Renaissance—in 

French, literally “rebirth”; in Italian, 

Rinascimento from ri, “again”: http:// 

en.wikipedia.org/wiki/Italian_language 

and nascere “be born.” 

Without belabouring the point, 

the moments of falling in love, of 

conception, to the longer moments of 

emerging life, as many know, can, in 

their respective states of chaos, easily 

represent the very extremes of heaven 

and hell. 

To many who have experienced 

love, the traditional steady-as-shegoes 

state of life assumptions, from 

how nature is perceived to how living 

patterns transform, also can represent 

chaos. Hollywood has made a fortune 

on that stuff. 

Nigel Atkin 

In war, the absence of order 

can result in forms of chaos where 

a survivor mentality can manifest 

and, as history records, bring out the 

full range of human behaviour—the 

extremes of good and bad. 

In nature, growth involves 

perpetual transformation where one 

thing dies for another to grow. While 

watching the natural order of life on 

the Discovery Channel, it is often 

the chaos of the moment that draws 

our attention—the dramatic chase 

before dinner. In gardens, we witness 

our compost fueling our fresh spring 

greens. 

…you have to wonder if the 

idea that all’s fair in love 

and war rates as a proverb 

or a truism or was it simply 

manufactured as a clever 

turn of phrase. 

To get back to the point, in the 

aptly named Renaissance, many of the 

life extremes captured the reality that 

nothing is as chaotic as love and war. 

The anguish of dramatic change was 

witnessed, recorded, and revered in 

the poetry, literature, paintings, and 

music of those times. 

In such circumstances—those 

events of chaos—was it true that the 

rules of fair play did not apply? 

When John Lyly published 

Euphues: The Anatomy of Wyt (1578) 

and Euphues and his England (1580), 

his works illustrated the intellectual 

fashions and favourite themes of 

Renaissance society. His words 

were ordered in a highly mannered 

and artificial style using distinctive 

rhetorical devices. 

It is written on Wikipedia that his 

euphuistic sentences followed certain 

principles of balance and antithesis. 

Lyly wrote to three basic principles: 

Phrases of equal length that appear 

in succession; the balance of key 

verbal elements in successive 

sentences; and the correspondence 

of sounds and syllable, especially 

between words that are already 

balanced against each other. 

While Lyly’s popular style— 

perhaps a welcomed order to the 

ensuing chaos of the times—greatly 

influenced numerous writers, including 

Shakespeare, you have to wonder if 

the idea that all’s fair in love and war 

rates as a proverb or a truism or was it 

simply manufactured as a clever turn 

of phrase. 

Do, in fact, the events of love and 

war legitimize the idea that “all’s fair”? 


Fraud can easily be aligned with 

behaviour considered “not fair” in 

not only love and war. In many more 

“normal” aspects of life, chaos can be 

relative to experience and training. 

When we consider events more 

chaotic than orderly, there is, in some 

minds, greater opportunity to commit 

fraud. In these extremes, in chaos, in 

the absence of the rule of law, where 

there is no regulation, enforcement, 

or justice, there always are more 

opportunities to exploit the fraudulent 

nature of our being. 

Fraud can be defined a few ways. 

• Intentional deception resulting in 

injury to another person 

• A person who makes deceitful 

pretenses, an imposter 

• Deliberate trickery intended to 

gain an advantage or something 

intended to deceive 

All those definitions, without 

too much of a stretch, can easily 

apply in love and war. But does 

Lyly’s expression, which resulted for 

whatever reason in the Renaissance 

some 500 years ago, still apply in our 

own era of massive change? 

Many contend we are in the throes 

of another Renaissance, a glorious yet 

chaotic rebirth of culture that does, in 

fact, involve the entire planet. 

Many contend we are 

in the throes of another 

Renaissance, a glorious yet 

chaotic rebirth of culture 

that does, in fact, involve the 

entire planet. 

They cite a new order developing 

from the literal chaos of empowering 

technology and the economic turmoil 

as markets struggle in concert, and 

sometimes in conflict. 

They cite the difficult and often 

dangerous change as the emerging 

global institutions of commerce and 

governance struggle with insurgency, 

stability, and environmental 

sustainability. 

In all of this, there is evidence of 

deception, deceit, and trickery. Fraud 

does exist, as it always has when order 

is fragmented or not even established, 

and chaos reigns. 

As for whether the idea that the 

rules of fair play do not apply in love 

and war is correct or not—and you 

must consider that the proverb itself 

might indeed be a fraud—in the 

growing light of transparency and the 

increasing possibilities of international 

and intercultural dialogue, as wars 

evolve and gender rights improve, in 

the potential of common sense and 

equal rights, in this new era, on this 

question, the jury is still out. s 

Nigel Atkin, MA, is a regular 

contributor to The Scrivener. 

He teaches in the university of Victoria’s 

Certificate Program in Public Relations 

and works as an onsite instructor and 

communication consultant. 


Ian Callaway 

Canadian 

Rogues Gallery 

of Financial Fraudsters 

The following information has been researched from materials that are publicly available. 

For the most part, we randomly selected individuals representing a variety of frauds and occupations. 

Frank Biller 

After 2 years of playing Junior hockey 

and without any business training, 

Biller, from Merritt, BC, linked up 

with Brian Slobogian to become vice 

president and chief mortgage broker 

of Eron Mortgage Corporation. 

Eron collapsed in 1997. After being 

convicted of a $240 million real 

estate development fraud, at age 28 

Biller was sentenced to 3 years in jail 

and fined almost $170,000 by the 

BC Securities Commission. He filed 

for bankruptcy. 

©iStockphoto.com/Michael-Merck 

Conrad Black 

Once the publisher of the third-largest 

newspaper chain, on July 13, 2007, 

Conrad Black, also known as Lord 

Black of Crossharbour, was found 

guilty of diverting funds from Hollinger 

International for his personal use and 

gain. He was sentenced to 78 months 

in a US prison and ordered to repay 

Hollinger $6.1 million. He also was 

fined $125,000. 

Al Budai 

…sentenced to 3 years 

in jail for embezzling 

almost $1,000,000… 

Budai, a Kamloops’ accountant as 

well as the president and publisher 

of the Buy Low, Sell High Advisory, was 

banned for life by the BC Securities 

Commission as a result of illegal 

trading, the distribution of securities, 

and making misrepresentations to 

investors. Although Budai admitted 

to defrauding some 49 investors 

of $1,400,000, the BC Securities 

Commission did not assess him the 

maximum $250,000 fine because 

Budai demonstrated he did not 

have the capacity to pay it. His 

name was removed from the registry 

of accountants. 

Wade Chernoff 

The alleged cause of his fraudulent 

activity was a perceived need for 

special schooling for his gifted son 

and the poor money-management 

skills of his wife, who had left him. 

He apparently was planning to set up 

a trust fund for his son’s education, 

then kill himself in a skiing accident. 

A suspicious clerk at his firm 

triggered a forensic audit. Wade, a 

former accountant and assistant CFO, 

was sentenced to 3 years in jail for 

embezzling almost $1,000,000 from 

his employer in the forest products 

business. 

Jo Coffey 

Accountant Jo Coffey went to jail for 

embezzling almost $3 million from 

her clients over a 7-year period. 

She was initially charged with 

2 counts of forgery, 3 counts of 

breach of trust, and 4 counts of theft 

over $5000. Coffey was sentenced 

in 2007 to 5 years and ordered to pay 

restitution to her former clients. 

A former member of her association’s 

ethics committee and the board of 

governors, Coffey resigned from her 

accounting association in 2004. 

Several years later, she was barred 

from reinstatement. 


Dr. Jimmy Connolly 

(aka Gzim Bytyqi) 

Targeting newcomers to Canada, 

and in particular those from his 

native Kosovo, Dr. Connolly had been 

offering low-cost dental services from 

his basement in Toronto. He was also 

practising dentistry in Quebec. On 

January 2008, the Toronto police 

issued a warrant charging Dr. Connolly 

for criminal negligence causing bodily 

harm, fraud, and several offences 

under the Dentistry Act and the 

Regulated Health Professions Act. 

Laurence Dye 

Once given the highest award his 

professional organization could 

bestow, in 2009 after almost 37 years 

of practice, Dye of North Vancouver 

was expelled and banned for life 

from practising as an accountant 

after abusing the trust accounts of 

five mentally incompetent clients. 

The irony was that Dye had been 

appointed by a BC Supreme Court 

judge to administer the trust accounts 

of five adults who were incapable 

of looking after their own affairs. 

Dye took money from their accounts, 

lent the money at below-market rates, 

failed to provide an accounting, and 

paid himself fees without the approval 

of the office of the Public Guardian 

and Trustee. 

Terry Ellis 

Based on 12 counts of fraud and 

1 of forgery, 61-year-old Edmonton 

paralegal Ellis was convicted on 

November 30, 2007, of swindling 

real estate investors out of almost 

$30 million. Although this 

“grandmotherly” figure denied any 

involvement in any “fast and loose” 

practises with her five co-conspirators, 

Justice Verville’s 119-page decision 

commented, “It would defy 

imagination…that Ellis’ involvement 

in the mortgage fraud scheme… 

occurred by chance.” In addition to 

being considered the largest mortgage 

fraud in Alberta, it also is believed 

to be the first case in Canada where 

someone in an investment-related 

scheme was convicted of supporting 

a criminal organization. 

Ken Erickson 

Around 2000, Erickson of Abbotsford 

asserted that he had inside knowledge 

about the whereabouts in the 

Philippines of “old gold” plundered 

by Japanese soldiers in WW II. 

Despite the questionable plausibility 

of that notion, Erickson was able to 

secure investment funds from various 

prospects who were hoping to acquire 

gold at discounted prices, then sell 

it at world-market prices. Although 

Erickson was fined almost $120,000 

by the BC Securities Commission for 

illegal activities, he fled Canada. 

Dr. Sunil Gupta 

A physician operating a diagnostic 

laboratory in Ontario, in 2008 

Dr. Gupta was convicted of overbilling 

the Ontario Health Insurances 

Program more than $2.6 million 

for services he had not performed. 

In addition to having to pay $1 

million in restitution, Dr, Gupta was 

sentenced to 3 years in jail. 

Earl Jones 

©iStockphoto.com/www.grafikzeug.com 

Some 158 clients are alleged to 

have lost up to $50 million after the 

collapse of Jones’s 20-year Ponzi 

scheme. On February 15, 2010, 

some 117 victim impact statements 

were read in court. Jones received 

an 11-year sentence but, with good 

behaviour, he could be eligible 

for parole in the Fall of 2011. 

Angela Keatley 

(aka Angela Paulson) 

In her position as a support services’ 

assistant manager of a Surrey credit 

union, Keatley supervised “All 

aspects of payments….” Although 

Keatley was initially able to explain 

away inconsistencies because 

she was a “trusted employee,” 

over a 14-month period involving 

over 60 fraudulent transactions, 

she embezzled some $500,000. 

Keatley received a 2-year conditional 

sentence with the first 12 months in 

house arrest and the next 12 months 

under a 9 PM to 6 AM curfew. She 

was also sentenced to perform 75 

hours of community service. 

Vincent Lacroix 

Founder of the Norbourg trust fund, 

42-year-old Lacroix diverted $115 

million held in trust for over some 

9000 Quebec investors. Granted 

parole on a civil law sentence, 

while living in a halfway house 

Lacroix unexpectedly pled guilty to 

some 200 criminal charges. One 

of Canada’s biggest fraudsters was 

sentenced to 13 years in jail—the 

current longest sentence for a 

white-collar crime. As a spinoff, 

five members of Lacroix’s support 

team face an additional 722 

embezzlement-related charges. 

Paul Maudsley 

White Rock mutual funds 

representative, through his Shaylor 

Management Ltd., defrauded some 

$1.6 million from many elderly 

clients, including the insurance 

settlement of an individual who was 

a paraplegic. He used the money for 

his personal and lifestyle expenses, 

including alcohol, cocaine, and 

gambling addictions. In 2005, 

Maudsley received a $250,000 fine 

from Securities, of which less than 

$65,000 has been repaid. 

Robert Mander 

Investors allege they were lured 

into “Mander’s guru-like spell” with 

promises of up to 25 percent returns. 

His clients agreed to continue rolling 

over their investments to make even 


more money. After an ongoing series 

of stalls by Mander, on Monday 

March 15, 2010, he was served 

notice of a lawsuit by investors who 

were trying to determine what had 

happened to their money. Two days 

later, the Ontario Court was advised 

of Mr. Mander’s suicide. At the time 

of his death, Mander “owned” several 

million-dollar estates in Ontario’s 

Hamilton-Oakville area; one included 

an $85,000 playground for his 

son. While described as “trusting” 

and a “nice guy,” this single father 

appears to have targeted a number of 

wealthy persons to have invested over 

$40 million on what appears to be 

unfolding as a Ponzi scheme that did 

not share cash—only paper promises 

of cash. 

Edward Morrison 

(aka Cornelius Morrison/David Martin) 

On February 22, 2010, Morrison of 

Nanaimo was convicted under the 

Income Tax Act for making 13 false 

and deceptive statements in tax 

returns and under the Criminal Code 

of Canada for fraud. Because of his 

actions in either filing or causing 

to be filed fraudulent income tax 

returns, Morrison was fined almost 

$50,000 and sentenced to 4 years 

in jail. 

Michael Ruge 

In the mid-2000s, Ruge of Victoria 

was found guilty of having “bilked” 

investors—some of whom were fellow 

Rotarians—of over $1.2 million 

through his Chivas Growth Fund. 

Given a-25 year cease trading order 

and a $150,000 Securities fine, he 

paid only about $5000. Ruge alleged 

that he did not have the ability 

to pay. He was insolvent. 

Leo Sabourin 

Found guilty in May 2007 in an 

Ottawa Court on 3 counts of income 

tax evasion and 1 count of fraud over 

$5000, on May 20, 2009, Sabourin 

was fined almost $260,000 and 

sentenced to 4 years in jail. His case 

was based on tax returns he had filed 

between 1993 and 1999. Using a 

“financial plan” to reduce his clients’ 

taxes that no other accountants 

could match, Sabourin had filed 

returns for 115 chiropractors. The 

net result of his “strategy” was the 

underreporting of some $15 million 

in client incomes that resulted in 

the evasion of about $4.2 million in 

federal taxes. 

Amend Sharma 

Within 2 years of his appointment 

as vice president of accounting and 

administration in a Richmond firm, 

Sharma embezzled $4.6 million. He 

subsequently lost the money in an 

Internet investment fraud. Three years 

later, he was sentenced to 4 years in 

prison and ordered to pay $400,000 

in restitution to his former employer. 

Brian Slobogian 

Initially indicted on 33 counts 

of fraud, theft, and breach of trust, 

Slobogian—president of Eron 

Mortgage Corporation—at age 56 

was sentenced to 6 years in jail. 

BC’s Registrar of Mortgage Brokers 

had pulled Eron’s licence, which 

accelerated Eron’s collapse. In 

2001, the Supreme Court ruled 

against investors who sued the BC 

Mortgage Registrar over failing to 

issue earlier warnings. Slobogian was 

fined almost $310,000 by the BC 

Securities Commission, then filed for 

bankruptcy. 

Paulette Thomson 

In a 10-year period as a Vancouver 

bank manager, Thomson created 

some 87 fictitious loans that resulted 

in a $1.5 million embezzlement 

scheme. Her psychiatrist attributed 

her fraudulent activity to major 

depression, post-traumatic stress 

disorders, and a gambling addition. 

Vancouver Provincial Judge Warren 

countered that while “the majority 

of the individuals who come before 

this court have also experienced 

tragedy… . Regrettably these 

hardships seem to be part of the 

human condition.” Only about 

$100,000 of the money was 

recovered. In 2001, Thomson received 

a 3-year jail sentence. She was 

parolled after serving only 6 months. 

Martin Wirick 

In 2009, 54-year-old Vancouver 

lawyer Wirick was sentenced to 

a 7-year jail term for perpetrating 

what was described as the largest 

legal fraud in Canada. He did 107 

real estate transactions for real 

estate developer Tarsem Singh Gill. 

Wirick pleaded guilty to 2 counts of 

fraud and 2 counts of forgery. Some 

$31.2 million was lost; only about 

$5.2 million was recovered. The Law 

Society of BC compensated Wirick’s 

victims and subsequently, BC’s 

lawyers faced a substantial increase 

in dues. Although Wirick was a 

participant in the fraud, it has been 

alleged that his “desire to please” 

—emotophobia—was the root of his 

failings—he even gave Gill a fee 

discount for his legal work. 

Readers can check out Cease Trade 

Orders, Complaints, Decisions, and/ 

or Public Advisories posted by such 

bodies as these. 

• Canadian Health Care Anti-fraud 

Association 

• Canadian Securities 

Administrators (National) 

• Certified General Accountants 

(Provincial) 

• Chiropractic Associations 

(Provincial) 

• Dental Colleges (Provincial) 

• Financial Institutions/ 

Commissions (Provincial) 

• Institute of Chartered Accountants 

(Provincial) 

• Insurance Council Disciplinary 

Cancellations (Provincial) 

• Law Societies (Provincial) 

• Legislative Libraries (Provincial) 

• Medical Colleges (Provincial) 

• Mutual Funds Dealers Association 

of Canada 

• Notaries (Provincial) 

• Real Estate Councils 

(Provincial) s 


PROFILING ThE FRAuDSTER: 

Behavioural Cues 

For whatever reasons, since our earliest 

childhood days we have all been taunted 

with “it takes one to know one!” 

©iStockphoto.com/MBPHOTO, INC. 

Ian Callaway 

Yet living in our perceived sheltered and protected lives, 

many of us haven’t “knowingly” met up with fraudsters. 

Our vicarious exposure to fraud has been gleaned through 

movies such as The Sting, Wall Street, The Great Impostor, 

or through Michael Lewis’s book, The Big Short: Inside 

the Doomsday Machine (2009), which catastrophically 

illustrated how cascading calamities triggered a nearsystemic 

economic meltdown. 

Yet history is full of frauds. Whether truth or poetic 

license, after an epic 9 year war a simple wooden horse 

deceived Trojan defences and doomed the Trojans to 

slaughter and defeat. 

Using a “cash in advance” scheme in the 4th century 

BCE, Hegestratos, a Greek ship owner, attempted to dupe 

a corn shipping merchant by scuttling the transporting 

ship, keeping the cash, and claiming the ship’s loss under 

insurance. 

As part of WW II’s D-day, the Allies’ Operation Fortitude 

South misrepresented their true target by utilizing inflatable 

aircraft, tanks, and vehicles. 

The Prevalence of Fraud 

Without even considering Bre-X’s “64-billion dollar 

question” (likely only some $3 billion lost by investors), 

there has been no shortage of contemporary high-profile 

Canadian fraudsters. 

• Vancouver’s Kevin Steele: $10 million 

• Victoria’s Ian Thow: $8 million to $37 million 

• Montreal’s Earl Jones: $50 million 

• Toronto’s Weizhen Tang: $60 million 

• Montreal’s Vincent Lacroix: $110 million 

• BC’s Biller and Slobogian: $240 million 

• Toronto’s Manor and Mendeleson: $440 million 

• Alberta’s Brost and Sorenson: $400 million to $5 billion 


While there seems to be a long and 

ever-expanding number of fraudsters 

many day-to-day frauds fall well below 

detection or the publicity radar. 

In their article on the Policing 

of Fraud, Doig et al. (2001) are of 

the view that while the cost of fraud 

is “significantly greater than other 

crimes,” its true measure is difficult 

to determine. 

These authors hold that part 

of the reasoning for this nonquantifiable 

measure of fraud is 

that policing objectives have had 

a greater emphasis on “a political 

agenda concerned with public order 

and property crime” and as a result 

“fraud has not been a policing 

priority either for governments or for 

individual police forces.” 

As Duffield and Grabowsky (2001) 

point out, the idea that white-collar 

fraud is a "victimless crime," and 

therefore seemingly more socially 

acceptable than other crimes, seems 

to be judicially reinforced by relatively 

light sentencing of convicted offenders. 

In comparison to the US which 

Sunderland (2008) argues has a much 

higher conviction rate and much 

harsher penalties, she notes that the 

UK’s Financial Services Authority and 

the Serious Fraud Office are often 

criticized for either trying their cases 

ineffectually or applying sentences 

that are too lenient on fraudsters. 

In spite of flamboyant whitecollar 

convictions with truly unknown 

defrauded sums, Vermont’s current 

Attorney General William Sorrell 

estimated on CTV’s W-5 (2004) that 

the public only sees the tip of the 

iceberg as “…fewer than 10 percent 

of Canadian fraudsters get their due. 

Canadian courts are quite protective 

of Canadian citizens and Canadian 

companies in terms of readily allowing 

judgments from another state or 

country to be levied on assets that are 

in Canada.” 

While noting that Advance Fee 

Loan scams rank 9th in complaints to 

the US’s Federal Trade Commission, 

Gerri Detweiler (2010) commented that 

when wiring the money to the fictitious 

host lender, “Canada seems to be the 

most popular spot right now.” 

As reported by Mazurkewich 

(2009), PricewaterhouseCoopers’ 

survey of global economic crime not 

only suggested Canadian companies 

make great targets for fraud, but 

ranked Canada as the fourth most 

fraudulent nation in the world—behind 

Russia, South Africa, and Kenya. 

In this same 2009 Financial Post 

article, Toronto insolvency lawyer James 

Grout’s view was that while not as bad 

as many developing countries, the 

high incidence of commercial fraud 

ranks Canada poorly when compared 

to many strong democratic counties in 

the OECD. Grout’s explanation for this 

ranking—the lack of deterrents. “We 

don’t put anyone in jail.” 

“…fewer than 10 percent 

of Canadian fraudsters 

get their due. Canadian 

courts are quite protective 

of Canadian citizens and 

Canadian companies 

In his 2006 study “Detecting 

Occupational Fraud in Canada,” 

Montreal’s Professor Dominic Peltier- 

Rivest found that only 57.6% of all 

surveyed institutions reported fraud 

cases to the police. These institutions 

gave a number of reasons for not 

pursuing criminal prosecutions. 

• Fear of bad publicity (47.2%) 

• Private settlements (38.9%) 

• Disciplined internally (27.8%) 

• Too costly (22.2%) 

• Lack of evidence (11.1%) 

• Civil suits (11.1%) 

As for managerial selfpreservation, 

the rationale for 

concealing corporate fraud can range 

from attempting to maintain investor 

and/or stockholder confidence (Bird 

2009) to avoiding scrutiny as to 

“Who’s minding the store?” In the 

noninstitutional setting, a common 

rationale for not reporting fraud is 

“How could I have been so stupid?” 

As an indirect barometer of their 

concern for fraud, in its 2008 Annual 

Report the Canadian government’s 

Competition Bureau used the words 

fraud or fraudulent 82 times. Even 

though Peltier-Rivest cautioned 

that “Fraud…is a pervasive threat 

that exists in any economic system 

and has the potential to impact any 

organization regardless of size, type 

or industry,” the cumulative impact of 

small, unreported, and/or undiscovered 

scams can be enormous. 

In a March 11, 2010, release, the 

TD Bank Financial Group reported that 

with 34 million debit cards and some 

69 million credit cards in circulation in 

Canada representing some 3.8 billion 

annual debit transactions accounting 

for a value of some $171 billion, “40% 

of Canadians surveyed say they are 

‘very’ or ‘extremely’ concerned about 

becoming a victim of fraud in the 

future and one-third of Canadians feel 

they have been a victim of debit card 

or credit card fraud in the past.” 

A December 11, 2009, CBC story 

reported that fraud within Europe’s 

carbon-credit trading system had cost 

taxpayers more than $7 billion—and 

that was only in an 18-month period. 

While KPMG audit and tax 

advisors estimated in 2003 that 

“fraud costs UK business alone £13 

billion a year,” the UK’s National Fraud 

Authority estimated on January 22, 

2010, that “Fraud costs the economy 

more than 30 billion pounds a year...” 

due to its direct effects and indirect 

impact of losses being recovered 

whereas on January 25, 2010, the 

Insurance Journal reported “UK Fraud 

Costs $48 billion a Year.” 

Based on the Association of 

Certified Fraud Examiner’s (ACFE) 

2006 Report to the Nation, it was 

estimated that US organizations lose 

almost 5 percent of their revenue to 

fraud and that fraud consumes an 

annual $652 billion of the USA’s 

Gross Domestic Product (GDP). 

In their followup fraud survey, the 

ACFE’s 2008 Report to the Nation 

estimated that US organizations lose 

7 percent of their annual revenues to 

fraud which, based on the GDP, in spite 


In a recent release by 

the Canadian Institute for 

health Information (CIhI), 

it was estimated that 

between 2% to 10% of every 

healthcare dollar in North 

America is lost to fraud. 

of antifraud controls and legislation, 

would translate to a staggering $994 

billion in fraud loses. 

While “healthcare” is often held as 

a fundamental right of every Canadian, 

and the core of the Obama electoral 

platform, there is ample evidence that 

healthcare is a major source of fraud. 

In his book, Licence to Steal, 

Malcolm Sparrow (2000) concluded 

there was compelling evidence that up 

to 23 percent (between $100 to $300 

billion) of the $1.3 trillion spent on US 

healthcare in 2000 could have been 

fraudulently spent. 

In documenting frauds perpetuated 

by ambulance services, dentists, 

medical labs, physicians, as well as 

healthcare provider corporations, 

Sparrow concluded that to steal money 

in healthcare, “You don’t even need to 

know much about it.” 

In a recent release by the 

Canadian Institute for Health 

Information (CIHI), it was estimated 

that between 2% to 10% of every 

healthcare dollar in North America is 

lost to fraud. 

Based on the CIHI’s figure of over 

$120 billion spent on healthcare, 

Canadian healthcare fraud could 

surpass $12 billion each year which 

was then translated to “represent 

enough money to drastically revitalize 

Canadian Medicare and purchase 

more than 3000 MRI machines.” 

On November 19, 2009, the CBC 

reported “Canadian Health-care 

Spending Tops $180B.” 

On March 1, 2010, the Canadian 

Health Care Anti-fraud Association 

reported, “Healthcare fraud is 

perpetrated by a handful of people but 

costs Canadians between $5 [billion] 

to $15 billion each year. That’s enough 

money to hire approximately 20,000 

new doctors or purchase more than 

5000 MRI machines.” 

One significant but unknown 

dollar-value loss is the circulation of 

Canadian Healthcare Cards. 

BC’s Ministry of Health Services 

Website has a section on “Protection 

Against Fraud” stating, “It is an 

offence to use another person’s 

personal health number or to 

knowingly allow your personal health 

number to be used by another person. 

To maintain BC’s health care plans 

for the benefit of all residents, the 

plans must be protected against 

inappropriate use by those who are not 

residents of BC and, therefore, are not 

eligible for coverage.” 

The CTV reported on July 7, 2007, 

that a 2006 audit of Ontario’s Health 

Cards found there were some 300,000 

more cards in circulation than there 

were Ontario residents. 

Another unknown healthcare 

cost is the use of “Healthcare” as 

a motivation to “donate.” On March 

6, 2009, the Public Health Agency of 

Canada wrote, “A number of fraudulent 

emails have been circulating the 

Internet asking recipients to donate 

money or to cash cheques or money 

orders for individuals who say they 

work for the Public Health Agency 

of Canada. These are fraudulent 

requests aimed at tricking recipients to 

providing funds to criminals.” 

Perhaps more frightening than 

the total dollars lost are health-related 

frauds perpetuated against individuals. 

A 2006 Statistics Canada survey 

found while 58 percent of adults 

search for health-related information 

online, almost 25 percent were 

searching for “alternative remedies,” 

which remain relatively unregulated. 

Separate and apart from qualitycontrol 

issues, this StatsCan survey 

found that 62 percent of those selfdirected 

Internet health researchers 

did not discuss this online information 

with their healthcare professionals. 

The ultimate tragedy of these 

Internet frauds is not just as Stevens 

and Harris (2009) wrote that 

“Counterfeit Medicines: A Serious 

Threat to Global Health,” but as 

Morra (2007) reported that a BC 

coroner has “…ruled last week 

that a 58-year-old woman died last 

year after ingesting contaminated 

counterfeit pills purchased online.” 

Whether factored into estimates 

of the total monies lost to healthcare 

fraud or not, there are also the tertiary 

frauds derived from positions of 

responsibility within the healthcare 

system. On March 4, 2010, the 

Victoria Times Colonist newspaper 

reported that a former BC Deputy 

Minister of Health as well as a Medical 

Consultant to the Fraser Valley Health 

Authority were charged with fraudulent 

kickbacks. 

In an article in the Army Lawyer 

Journal on Procurement Fraud, 

Coulter (2007) described where 

the US government had been either 

charged exorbitantly or been billed for 

nonexistent and worthless goods. 

Coulter noted that since 1986, 

the US Department of Justice has 

recovered under the False Claims Act 

some $18 billion in frauds against the 

government. In 2005, of the $609 

million in defense procurement fraud 

recoveries, they were broken down to 

the following. 

• 72% Healthcare 

• 20% Defense 

• 8% Non-healthcare/Non-defense 

federal agencies 

As for City Hall, the National 

Post’s McIsaac (2010) reported that 

some $600,000 was defrauded from 

the City of Toronto in 2009. 

A 2006 Statistics 

Canada survey found 

while 58 percent of adults 

search for health-related 

information online, almost 

25 percent were searching 

for “alternative remedies,” 

which remain relatively 

unregulated. 


Prevalence of Identity Theft 

Identity Theft—the collection, 

possession, and trafficking of 

corporate and/or personally identifying 

information—is the requisite 

precursor to Identity Fraud. 

Identity fraud is the subsequent 

personation or fraudulent use of the 

identifying information that has been 

stolen. 

Mysteriously subterfugal, 

exponentially numerative, exceptionally 

lucrative, and cloaked in myriad 

protective transnational laws, identity 

theft and identity fraud and the 

monies subsequently extracted easily 

flow across national borders. 

An example of the numerical 

efficiency of identity theft was 

reported in the Washington Post by 

Krim (2005) when one single theft 

yielded the Social Security Numbers of 

some 1.2 million federal workers and 

a separate single theft captured some 

40 million credit card numbers. 

As reported in the March 2008 

United States Attorneys’ Bulletin, 

Jonathan Rusch (Special Counsel 

for Fraud Prevention at the US 

Department of Justice and US Co- 

Chair of the US-Canada Working Group 

…the Canadian Council 

of Better Business Bureaus 

estimated that identity 

theft may cost Canadian 

consumers, banks, and credit 

card firms, stores, 

and other businesses more 

than $2 billion annually. 

on Cross-Border Mass-Marketing 

Fraud) holds the view that identity 

theft is considered one of the most 

pervasive forms of white-collar crime 

in the United States. 

In Javelin Strategy & Research’s 

2006 Identity Fraud Survey Report, 

Johannes et al. reported that more 

than 8.4 million US adults were 

victims of identity theft in 2005. 

While this 2006 Report found that 

$750 was the median (dollar amount 

at the midpoint number of frauds) lost 

to identify fraud, the mean (average 

fraud loss) was $5720. 

That same Report estimated 

that losses to businesses and others 

due to identity fraud totalled some 

$56.6 billion. According to Javelin’s 

©iStockphoto.com/ karlkotasinc 

2007 Identity Fraud Survey Report, 

Kim et al. sourced out the roots of 

secreted information, ranging from 

the sophisticated down to street-level 

trash-theft and vehicle break-ins. 

• Contained within the Canadian 

Department of Justice’s 

Backgrounder for Bill S-4, 

Identity Theft, January 8, 2010, 

more than 10,000 Canadians 

reported losses in 2007 

totalling more than $6 million 

to PhoneBusters, the Canadian 

antifraud call centre. 

• In only a 10-month period 

between January 1 and October 

31, 2008, more than 9000 

Canadians reported losses 

totalling over $8 million to 

PhoneBusters. 

MacLeod (2008) wrote that 

“Identity theft is one of Canada's 

fastest growing crimes and costs 

financial institutions more than 

$10 million annually.” 

Bill S-4’s Backgrounder appears 

to have expanded MacLeod’s focus 

on financial institutions and reported 

that the Canadian Council of Better 

Business Bureaus estimated that 

identity theft may cost Canadian 

consumers, banks, and credit card 

firms, stores, and other businesses 

more than $2 billion annually. 

In a release by the National 

Consumer Protection Week (NCPW) for 

March 7 to 13, 2010, this 17-member 

institutional organization warned about 

insidious business-related frauds that 

can quickly devastate the bottomline. 

According to the Federal Trade 

Commission’s 2009 list of top 15 

complaint categories, Identity Theft 

is at the top of the list. 

While an individual may more 

quickly observe if his or her Identity 

has been compromised, because of the 

multiple layers involved with a business’s 

purchasing-accounting-audit system, 

not only is identity fraud much harder 

to identify, it can be exceptionally 

lucrative; one California scammer was 

able to rack up some $450,000 in 

fraudulent purchases using another 

company’s identity. 


Regardless of whether the monies 

defrauded are recoverable or not, 

the aftermath of identity theft can 

wreak havoc on both individuals 

and businesses. Independent of the 

many hours spent to arrange new 

banking, correct credit reports, dispute 

fraudulent accounts, re-issue new 

identity documents, and re-secure their 

premises, the victims of identity fraud 

can spends hundreds, if not thousands, 

of dollars to certify documents, prepare 

reports, and retain legal counsel. 

Whether you have had your 

identity stolen, you have been a victim 

of procurement fraud, or you have 

paid needless surcharges attributable 

to fraud within the economic or 

healthcare system, the insidious 

pervasiveness of fraud affirms “There’s 

a problem in River City!” 

What Does Fraud Really Mean? 

In the mid-1800s, neatly dressed New 

York criminal William Thompson was 

preying on upper-class gentlemen. 

Thomson’s modus operandi was 

simple: Walk up to a dapper suspect, 

pretend the two were previously 

known to each other, capitalize on the 

suspect’s forgetful “embarrassment,” 

converse to build trust, ask to borrow 

some of the suspect’s money or his 

watch, promise to meet the next day, 

then fail to re-appear as agreed. 

Chronicling Thompson’s repetitive 

frauds, the New York Herald 

popularized the term “confidence 

man” and “con man.” 

While each of us may have 

a visceral definition of a “con” or 

fraud—see attached list of synonyms, 

a single line definition from the 

University of Toronto’s “Jurist Law” 

site is that Fraud is “A knowingly 

wrong act or deceitful statement.” 

According to Australian 

Criminologists Duffield and Grabosky 

(2001), “In its broadest term, fraud 

means obtaining something of value 

or avoiding an obligation by means of 

deception.” Ramamoorti and Olsen 

(2007) consider fraud “a human 

endeavour, involving deception, 

purposeful intent, intensity of desire, 

risk of apprehension, violation of trust, 

and rationalization.” 

Within the broad scope of 

corporate employment, the ACFE 

very broadly defined Occupational 

Fraud as the use of an occupation 

for personal enrichment through the 

deliberate misuse or misapplication of 

the employing organization’s resources 

and assets. 

Whereas a hoax may be 

considered deceptive and 

a fraudulent act, for an act 

to be considered as civilly 

or criminally fraudulent, the 

misrepresentation of having 

violated trust also must 

incorporate a loss by the 

victim and/or a gain 

by the perpetrator. 

A Certified Fraud Examiner and 

CPA, Lynch (2006) listed the 4 key 

elements of occupational fraud. 

• It is clandestine. 

• It violates the perpetrator’s 

fiduciary duties to the victim 

organization. 

• It costs the employing 

organization. 

• It is committed for the purpose 

of direct or indirect benefit to the 

perpetrator. 

Lynch also listed 4 requisite 

elements to be convicted of fraud 

in the United States. 

• A material false statement 

occurred 

• Knowledge that the articulated 

statement was false 

• Reliance by the victim on the 

false statement 

• Resultant damages due to 

reliance on the false statement 

Whereas a hoax may be 

considered deceptive and a fraudulent 

act, for an act to be considered as 

civilly or criminally fraudulent, the 

misrepresentation of having violated 

trust also must incorporate a loss 

by the victim and/or a gain by the 

perpetrator. 

Canadian Criminal Fraud? 

To understand the Canadian legal 

interpretation of fraud, the current 

judicial benchmark was a Quebec 

residential construction case 

appealed to the Supreme Court of 

Canada: Regina v. Théroux, [1993] 

2 S.C.R. 5 (1993). 

In Théroux, the Court held there 

are two key elements in the criminal 

test for fraud. 

The first of two key legal 

elements and the objective test in 

determining fraud was based on the 

common law principle known in Latin 

as actus reus—the prohibited or 

guilty act or conduct. While the actus 

reus for Fraud is currently defined in 

section 380, the actus reus for Theft 

is stated under section 322. 

(1) Every one commits theft who 

fraudulently and without colour 

of right takes, or fraudulently and 

without colour of right converts to 

his use or to the use of another 

person, anything, whether 

animate or inanimate, with intent 

a. to deprive, temporarily or 

absolutely, the owner of it, 

or a person who has a special 

property or interest in it, of 

the thing or of his property 

or interest in it; 

b. to pledge it or deposit it as 

security; 

c. to part with it under 

a condition with respect to 

its return that the person who 

parts with it may be unable 

to perform; or 

d. to deal with it in such 

a manner that it cannot be 

restored in the condition in 

which it was at the time it 

was taken or converted. 

In arriving at the Théroux 

decision, the Supreme Court carefully 

considered the analysis of actus 

reus in the 1978 Regina v. Olan, 

Hudson and Hartnett, considered the 

then-leading Canadian case on what 

constituted fraud. 


While some regulatory 

and statutory offences may 

require only proof of actus 

reus, the second and tandem 

legal element in criminal law 

is to establish mens rea— 

the state of mind. 

In the Olan decision, the Supreme 

Court held there are 2 key elements 

in the objective or physical test to 

establish actus reus—the prohibited or 

guilty act or conduct. 

• Dishonesty: Was a situation, the 

dishonest act, represented in 

such a manner that a reasonable 

person would consider it as 

deceitful, a falsehood, or 

fraudulent? 

• Deprivation: Was there either an 

economic loss, or even a risk of 

economic loss, caused by the 

dishonest act? 

While some regulatory and 

statutory offences may require only 

proof of actus reus, the second and 

tandem legal element in criminal law 

is to establish mens rea—the state 

of mind. Whereas actus reus is the 

objective or physical test, mens rea is, 

with the exception of strict liability 

statutes, the mental or subjective test 

in establishing criminality. 

Of five states of mind recognized 

under law—mental incompetence, 

negligence, recklessness, intent, and 

transferred malice—the one most often 

associated with mens rea in fraud is 

intent. 

Did the perpetrator have 

a subjective awareness or knowledge 

that his or her prohibited actions—the 

actus reus—could deprive another 

person of property, or even to put that 

person’s property at risk? 

Intention can either be direct, 

whereby the perpetrator intended 

a particular consequence of the action, 

or indirect, whereby the perpetrator 

foresaw, or ought to have foreseen, the 

consequential certainty of the action, 

even if it were not his or her primary 

objective. 

For fraud to be proven beyond 

reasonable doubt, the actus reus (the 

objective physical element of the 

prohibited or guilty act or conduct) 

must be causally related to the mens 

rea (the subjective state of the guilty 

mind element). 

A legal defence against mens 

rea is the Latin phrase actus non facit 

reum nisi mens sit rea—a criminal 

act is not culpable unless the mind is 

guilty. Was there intent? 

Under section 322 (Thef T) of the 

Canadian Criminal Code, here is some 

of the statutory language indicating 

the mens rea requirement. 

• fraudulently 

• with intent 

• to deprive 

• to pledge 

• to part with 

• cannot be restored 

With respect to section 380 (fraud), 

mens rea indicators may be the 

following. 

• by deceit 

• falsehood 

• fraudulent means 

• whether or not it is a false 

pretence 

• intent to defraud 

Fraud in the Canadian Criminal Code 

According to the Criminal Code of 

Canada (R.S., 1985, c.C-46), under 

section 380, Fraud is codified as 

1. Every one who, by deceit, 

falsehood or other fraudulent 

means, whether or not it is a false 

pretence within the meaning of 

this Act, defrauds the public or 

any person, whether ascertained 

or not, of any property, money 

or valuable security or any 

service….” 

or 

2. …with intent to defraud, affects 

the public market price of 

stocks, shares, merchandise 

or anything that is offered for 

sale to the public is guilty of an 

indictable offence and liable 

to imprisonment for a term not 

exceeding fourteen years.” 

In the Canadian Criminal Code, some 

12 additionally specific sections 

address fraud, falsification, and/or 

money-related matters. 

• 381 (Using Mails to Defraud) 

• 382 (Fraudulent Manipulation 

of Stock Exchange Transactions) 

• 383 (Gaming in Stocks or 

Merchandise) 

• 384 (Broker Reducing Stock By 

Selling For His Own Account) 

• 385 (Fraudulent Concealment 

of Title Documents) 

• 386 (Fraudulent Registration 

of Title) 

• 387 (Fraudulent Sale of Real 

Property) 

• 388 (Misleading Receipt) 

• 389 (Fraudulent Disposal 

of Goods On Which Money 

Advanced) 

• 390 (Fraudulent Receipts Under 

Bank Act) 

• 392 (Disposal of Property 

To Defraud Creditors) 

• 393 (Fraud in Relation to Fares, 

etc.) 

The Criminal Code also addresses 

fraud, falsification, and/or moneyrelated 

matters under at least another 

49 sections. ThefT is covered under 

these sections. 

• 326 (Theft of Telecommunication 

Service) 

• 327 (Possession of Device to 

Obtain Telecommunication 

Facility or Service) 

• 330 (Theft by Person Required 

to Account) 

• 331 (Theft by Person Holding 

Power of Attorney) 

• 332 (Misappropriation of Money 

Held Under Direction) 

For Offences resembling ThefT, 

there are at least 4 key sections. 

• 340 (Destroying Documents 

of Title) 

• 341 (Fraudulent Concealment 

• 342 (Theft, Forgery, etc., 

of Credit Card) 

• 342.1 (Unauthorized Use 

of Computer) 


Under having in POssessiOn, section 356 addresses Theft 

from Mail. 

With respect to false PreTenses, there are 4 key sections. 

• 361 (False Pretence) 

• 362 (False Pretence or False Statement) 

• 363 (Obtaining Execution of Valuable Security 

by Fraud) 

• 364 (Fraudulently Obtaining Food, Beverage, or 

Accommodation) 

Under fOrgery and Offences resembling fOrgery, 

there are some 10 key sections. 

• 366 (Forgery) 

• 368 (Use, Trafficking or Possession of Forged 

Document) 

• 369 (Exchequer Bill Paper, Public Seals, etc.) 

• 371 (Telegram, etc., in False Name) 

• 372 (False Messages) 

• 374 (Drawing Document Without Authority, etc.) 

• 375 (Obtaining, etc. By Instrument Based on Forged 

Document) 

• 376 (Counterfeiting Stamp, etc.) 

• 377 (Damaging Documents) 

• 378 (Offences in Relation to Registers) 

Under the falsificaTiOn Of bOOks and dOcumenTs, there 

are 4 key sections. 

• 397 (Books and Documents) 

• 400 (False Prospectus, etc.) 

• 401 (Obtaining Carriage by False Billing) 

• 402 (Trader Failing to Keep Accounts) 

Whereas section 426 specifically addresses secreT 

cOmmissiOns, there are some 9 different sections between 

448 and 462 concerned with Offences relaTing TO 

currency. 

With respect to idenTiTy ThefT and idenTiTy fraud, there 

are 5 key sections. 

• 402.1 (Definition of “Identity Information”) 

• 402.2 (Identity Theft) 

• 403 (Identity Fraud) 

• 404 (Personation at Examination) 

• 405 (Acknowledging Instrument in False Name) 

As for Criminal Code sections seeming to reflect Canada as 

a nation of “hewers of wood and drawers of water,” fraud or 

falsification is covered under these. 

• 322.5 (Wild Living Creature) 

• 323 (Oysters) 

• 338 (Fraudulently Taking Cattle or Defacing Brand) 

• 339 (Taking Possession, etc., of Drift Timber) 

• 394 (Fraud in Relation to Valuable Minerals) 

• 396 (Offences in Relation to Mines) 

Perhaps one of the more intriguing Criminal Code 

sections is 365 (Pretending to Practise Witchcraft, etc.) 

whereby a person would be “guilty of an offence punishable 

on summary conviction” for “Every one who fraudulently 

pretends to exercise or to use any kind of witchcraft, sorcery, 

enchantment, or conjuration… .” or “pretends from his skill in 

or knowledge of an occult or crafty science to discover where 

or in what manner anything that is supposed to have been 

stolen or lost may be found… .” 

We might wonder how someone would be considered if 

he or she did not “fraudulently pretend”? What if someone 

brought in a psychic to help find a lost person? 

Who Commits Fraud? 

The headline of the Vancouver Province on March 21, 

2010, read, “Cheery Grandmother-type Stole More Than 

$700,000.” Described by her victims as “friendly,” 

“generous with her time,” and “looked matronly,” 

discovering this 62-year-old predator was a “career 


©iStockphoto.com/bobbieo

criminal” who exploited a “managerial void” could lead 

almost anyone to the conclusion that there is no single 

predictor as to who would commit fraud. 

In response to the quest for a universal predictor as 

to “Who commits fraud,” Connie Veates’ (2006) article 

“How to Stop a Thief by Thinking Like a Thief” provides 

an answer: “In order to successfully understand fraud, you 

need to throw out some prejudices about the type of person 

who commits fraud.” 

The reality is fraudsters come from all educational levels 

and professions, in all shapes, sizes, colours, and genders, 

from any socio-economic background, from any religion, 

from any nation on the planet, and operate at a multitude of 

scales. They are chameleons of ubiquity! 

Whereas Pareto holds the 80/20 efficiency principle, 

CPA and Kentucky-based CFO Mike Campbell (2009) 

presents the 10/80/10 fraud guideline as “10% of the 

population is as honest as the day is long. They will not 

lie, cheat, or steal no matter what the circumstance. 

Another 10% are crooks and should be behind bars. The 

other 80% of us, given the right opportunity and the right 

circumstance, will behave unethically.” 

Within this fluid 80 percent, the range may well extend 

from taking office pens home for the children, to receiving 

a commission when in a conflict of interest, to fudging 

corporate finances, through to outright stealing. 

Although potentially cumulatively significant, on a costbenefit 

cost scrutiny, many frauds fall below the detection 

radar. Referring to the Fraud Cube © below, these sorts of 

low-profile frauds are usually small, require a minimal or 

single effort, and include limited interaction with others in 

their financial environment. 

HIGH 

PROFILE 

FRAUDS 

Regular and Ongoing Interaction 

© Ian Callaway, 2010 

Personal Contact 

Minimal Interaction 

Time Invested 

Considerable Repetitive Efforts 

Minimal – Single Effort 

Significant 

Dollar 

Amount 

Small 

LOW 

PROFILE 

FRAUDS 

At the other extreme, high-profile frauds are on 

the opposite corner of the Fraud Cube. On a costbenefit 

analysis, those frauds are larger, usually require 

a considerable investment of time by the perpetrator, and 

included considerable interaction with others, whether or not 

their cohorts were aware of the fraud being perpetrated. 

In the Journal of Management, Zahra (2005) notes that 

when senior-management fraud occurs, it stirs considerable 

stakeholder concern and stockholder controversy, and 

piques public interest. 

While fraud can be perpetuated at any corporate level, 

perhaps the most studied frauds—and the most ironic 

because of internal controls—are those that function within 

some form of organizational context . . . in particular, 

business, government, or volunteer structures. 

…“10% of the population is as honest as the 

day is long. They will not lie, cheat, or steal 

no matter what the circumstance. Another 10% 

are crooks and should be behind bars. 

The other 80% of us, given the right 

opportunity and the right circumstance, 

will behave unethically.” 

In the ACFE’s 2008 Report to the Nation, only 

40 percent of surveyed organizations had conducted 

background checks that included one or more of the following. 

• Employment History (51%) 

• Criminal Checks (39%) 

• Credit Checks (23%) 

While Criminal Checks had occurred in less than 

16 percent of the number of new hires (39% of the 40%), 

this ACFE’s survey found the following. 

• 87.4% of fraud perpetrators had never been previously 

charged or convicted 

• 5.7% had been charged but not convicted 

• 6.8% had been convicted 

With the exception of some amateur sports 

organizations that were driven by “sexual exploitation” 

issues rather than fraud, almost no volunteer organizations 

ranging from churches to charities to strata corporations 

conduct any form of background check on their volunteers 

before these individuals assume positions of responsibility, 

including positions with control over expenditures. 

Apart from the career criminal, Wendy Lyons, 

a chartered business psychologist in the UK, points out that 

many fraudsters start off by being genuinely successful and 

are driven to cheat to maintain the myth of their potency 

and infallibility (Sunderland, 2008). 


…the fraudster must be 

in a position to exploit, 

or to create, an opportunity 

not available to others. 

In the CPA Journal (2004), 

forensic accountants Hermanson 

and Wolfe identity 6 key capacity 

characteristics common to many 

fraudsters functioning within an 

organizational framework. 

It’s interesting that many of these 

fraud capacity characteristics parallel 

the psychological traits that Hare 

(1993) described in his book, Without 

Conscience, and later Babiuk and 

Hare (2006) described in their book, 

Snakes In Suits: When Psychopaths Go 

To Work. 

First, the fraudster must be in 

a position to exploit, or to create, an 

opportunity not available to others. 

Whether or not they do it initially, 

those perpetrators somehow gain 

access to the “keys to a vault” that is 

commensurate with the scale of the 

fraud to be perpetuated. 

On the low profile, that could 

range from access to stockroom 

supplies or taking a friend rather than 

a business associate to lunch. On 

the high profile, often relative to the 

impact on a particular organization or 

the size of the fraud, that can range 

from control over the books to stock 

manipulation. 

Next, using their position, 

function, or authorized access to 

assets or systems, the fraudster must 

be “smart enough” to leverage his or 

her knowledge of any internal controls 

to best advantage. As the Wharton 

Business School’s Shrand and 

Zechman (2008) found, fraud is more 

likely in industries that are complex 

and undergoing rapid growth, such as 

high-tech. 

While Shrand and Zechman 

identified high-tech as a higher-thanthe-norm 

potential because of its 

quickly changing technology, it should 

be noted that in some volunteer 

organizations, “apathy” creates 

a relative complexity to anyone but an 

outside observer. 

Third is a strong ego with an 

abundance of self-confidence. 

They’ve got chutzpah! In Shrand’s 

and Zechman’s research article, 

“Are Overconfident Executives More 

Inclined to Commit Fraud?” (2008), 

psychology research shows that people 

who get promoted to the top levels of 

a corporation are typically those with 

enough confidence to take chances. 

In what may be otherwise honest 

executives, their tipping point to 

the path down a slippery slope to 

engage in fraudulent behaviour may 

be because of their overconfidence 

about their firm’s ability under their 

leadership to perform in the future. 

According to Shrand and 

Zechman, some fraudulent actions 

requiring a “bending of the rules” 

may not be out of pure self-interest, 

but because the executives are 

overly optimistic that they can turn 

their firms around before fraudulent 

behaviour catches up with them—they 

were not necessarily trying to hurt 

anyone, but they ended up being in 

a position where they felt it was the 

only way to get out of a bad situation. 

Or it may be a volunteer having 

a fiduciary responsibility to his or 

her members by concealing certain 

expenditures by re-allocating them to 

different line items where they may be 

obscured and undetected. 

Regardless, those actions may 

well be considered by the Courts as 

fraudulent actions. 

In other situations, as the ACFE’s 

Reports note, the compensation 

structure of bonuses may be more of 

a self-serving trigger that begins to 

cascade out of control. 

As McLean (2007) argued in his 

“Fraud Triangle” paper, when firms 

ignore external market pressures and 

strictly take a profit-maximization 

perspective rather than a risk-adjusted 

outlook, this “is setting the stage for 

a very quantifiable disaster, whether or 

not that disaster materializes.” 

In addition to the applicability of 

McLean’s argument to the corporate 

environment, this same principle can be 

applied to many volunteer groups who 

consciously fail to set aside sufficient 

funds for the inevitable “rainy day,” to 

make today’s books appear much rosier 

than they really are. 

Another side of self-confidence 

can be narcissism. Of the 4 

behavioural groups listed by Allan 

(2003) as having been more prevalent 

in committing frauds, narcissism 

is common to 3 of them: Bullies, 

Egotists, and Control Freaks. Allan’s 

fourth group, the Mouse, suggests 

not only the antithesis of narcissism, 

but such a self-esteem vacuum that 

it can be bolstered only by the “I’ll 

show you” attitude, whether activated 

consciously or subconsciously. 

Regardless of what may motivate 

their frauds, those having the capacity 

to commit fraud may feel so superior, 

they can either avoid detection or 

think quickly enough on their feet to 

talk themselves out of trouble. Based 

on his clinical research, BC’s world 

expert on Psychopaths, Dr. Robert 

Hare, (1993 and 2006), found that 

narcissism is a key psychopathic 

characteristic with having a “grandiose 

sense of self-importance.” 

Although many organizationally 

related frauds are studied and follow 

Hermanson’s and Wolfe’s 6 key 

capacity characteristics, an unknown 

number of individual frauds can occur 

exhibiting only the above 3 capacities. 

• exploitation of an opportunity 

• access gained through their 

knowledge 

• self-confidence 

Exercising those 3 capacities, 

many victims are targeted by their 

affinity with a charitable group, 

Of the 4 behavioural groups 

listed by Allan (2003) as 

having been more prevalent 

in committing frauds, 

narcissism is common to 

3 of them: Bullies, Egotists, 

and Control Freaks. 


condominium complex, neighbourhood 

group, service club, or even a church. 

Recognizing the susceptibility to 

affinity fraud of people in religious 

communities, Abbotsford’s Catholic 

priest Seamus Mackrell and 

Presbyterian minister John Haycock 

formed their “God Squad,” reaching 

out to warn over 5000 unsuspecting 

victims in the Fraser Valley. 

On the other side of the cloth, The 

Vancouver Sun (2007) listed a number 

of religious figures in BC who 

perpetuated frauds on their flocks. 

• Kelowna’s leader John DeVries 

of the New Life Church 

• Langley’s pastor Gary Stanhiser 

of the Former Seventh Day 

Adventist Church 

• Smithers’ Bryan Richards 

(aka Richard Minard) and his 

Christian Power Hour radio show 

• Vancouver’s elder Fred Hofman of 

the Christian Reformed Church 

A fourth key characteristic of 

a fraud perpetrator is his or her 

coercive capacity. In some cases, 

that will be coercing others to commit 

fraud. Ramamoorti and Olsen (2007) 

note “one important behavioural 

insight is to recognize that high-level 

fraud is frequently a team sport that 

often involves collusion.” 

In Peltier-Rivest’s Detecting 

Occupational Fraud in Canada (2006), 

this researcher reported that while less 

than 60 percent of frauds had a single 

perpetrator, when there was collusion, 

©iStockphoto.com/JenniferPhotographyImaging 

the size of the frauds was some 8 

times larger. 

In other situations, whether 

cohorts or subordinates are driven by 

the fear of losing their job, prestige, 

or access to the “inner group,” these 

fraudsters pressure others to conceal 

their fraudulent actions. 

Others’ acquiescence to 

concealing frauds is simply based on 

the fraudster exuding an abundance 

of charm—another key trait of Hare’s 

psychopaths. 

Others’ acquiescence to 

concealing frauds is simply 

based on the fraudster 

exuding an abundance 

of charm—another key trait 

of hare’s psychopaths. 

In another coercive strategy 

that I call halo-effect coercion, the 

fraudster has created such a mythical 

organizational Adonis persona, it 

seems ludicrous that anyone would 

want to challenge such a leader—the 

myth is that person is beyond reproach 

either ethically or by being the 

organization’s quarterback. 

Within the group setting that 

promotes teamwork, Ramamoorti 

and Olsen (2007) hold that the 

“groupthink” bias can be so strong, 

it discounts or dismisses contrarian 

opinions to sway the group into 

“feeling good.” 

How often have we seen boards 

or councils made up of sycophant 

members who were cajoled or 

nominated into position by the group’s 

formal or informal leader, thereby 

virtually guaranteeing the fraudster 

unquestioned support or, at worst, 

a free “get out of jail” card? 

For those who do challenge the 

specious façade, often the individuals 

with the most to conceal may 

subterfugally label their detractor as 

hostile and carefully eviscerate his 

or her character and intentions until 

their challenger becomes marginalized 

and ostracized from the group-think 

mentality. 

While many might assume that 

the narcissistic fraud characteristic 

would compel fraudsters to position 

themselves in a visibly central role, 

many operate below the radar by 

using surrogates that they control by 

exploiting their weaknesses. Those 

pawns are vulnerable to exposure and 

quite possibly conviction. 

As a compliance consultant in 

the financial services community, 

McLean (2007) was brutally frank 

on mitigating pressures involving 

fraud, “Human beings ought to do 

many things that we do not do, and 

do not do many things that we ought 

to do. The Pollyannaish optimism of 

such a view is everything that risk 

management is not supposed to 

be—most notable, unrealistic. Until 

the world itself changes and all people 

become saints… .Threats to prosperity 

often lead to behaviours that are 

aberrant and anomic.” 

According to Lieberman (1998), 

“Honesty is the cornerstone of every 

relationship, whether it’s business or 

personal.” 

Based on our willingness to 

trust, a fifth capacity of an efficient 

fraudster is to restructure facts, 

subtly or in stark contrast to reality, 

to support their commitment to the 

organization’s honest goals—they lie 

effectively and with consistency. And 

if caught in a lie, they will change the 

benchmarks to re-align their story. 

The sixth key capacity 

characteristic of a fraudster is stress 

management. While many of us may 

find it draining to keep all sorts of 

balls in the air, successful fraudsters 

seem quite adept with both the dayto-day 

and the longterm stress of 

concealing a fraud or the risk of their 

being exposed. 

The “workhorse” who works 

long hours and seems never to 

take a vacation is often placed on 

a pedestal, admired for his or her 

commitment to the tasks at hand. 

While not every workhorse becomes 

a fraudster, sometimes that trait can 

become a tell-tale sign. 


In addition to the American 

Institute of Certified Public 

Accountants’ Statement on Auditing 

Standards No. 99, Consideration 

of Fraud in a Financial Statement 

(2002), which recommended 

mandatory vacations for employees 

performing key control functions, the 

ACFE’s 2008 “Occupational Fraud and 

Abuse” study found that in spite of 

being 14th on a 15-item list of utilized 

antifraud measures, 1 of the 3 most 

effective antifraud controls was “Job 

Rotation and Mandatory Vacations.” 

Even after accountants write words 

such as 

• “an interfund loan needs to be 

repaid,” 

• “unauthorized expenses need 

retroactive approval,” 

• “to increase the level of internal 

control,” 

• “we could not identify the 

purpose of these funds,” 

• “interim financial statements 

did not agree with the approved 

budget,” and 

• “we recommend proper budget 

numbers are used,” 

we may hear the treasurer of 

a volunteer organization cry, “we 

don’t need an audit because I want to 

manage these books until the budget 

gets straightened out. Could there be 

trouble in River City?” 

While lack of time away from 

a position of fiduciary responsibility 

or a willingness to single-handedly 

take on a stressful task that others 

often detest such as working through 

budgets often evokes some degree of 

admiration for a person’s capacity to 

manage stress, that in fact may be the 

fast track to canonization, an effort to 

conceal incompetence, or a fraudster’s 

stress-management stratagem. 

Whereas many employees look 

forward to vacations as stressreducing, 

paradoxically many 

fraudsters who require a high degree 

of personal interaction (see above 

Fraud Cube) to commit or perpetuate 

their frauds regard time away from 

the job as stress-inducing because 

their absence eliminates informational 

control and risks exposing their 

charade. While not the result of 

vacations, Enron’s unravelling was the 

result of internal investigators working 

at night, on the weekends, and at 

home to wrestle access to facts under 

the tight control of the key fraudsters. 

While it may be hard for many of 

us to fathom, some people seemingly 

do not react to stress. The vast 

majority of workers or volunteers 

demonstrate to varying degrees 

a conscientious commitment to their 

responsibilities. For these individuals, 

the stressors generated by their 

conscientiousness usually require 

breaks to “recharge their batteries.” 

If conscientiousness can trigger stress 

in an ever-changing environment, then 

those who are less than conscientious 

may, in fact, not react to stress. 

Whereas many employees 

look forward to vacations 

as stress-reducing, 

paradoxically many 

fraudsters…regard time 

away from the job as 

stress-inducing because 

their absence eliminates 

informational control and 

risks exposing their charade. 

In his book, Without Conscience, 

Hare (1993) devoted an entire chapter 

to white-collar swindlers and trustmongers. 

Hare’s research and premise 

on the white-collar fraudsters was 

subsequently expanded into the book, 

Snakes In Suits, When Psychopaths Go 

To Work (2006). 

Based on Hare’s clinical 

research, including MRI testing, the 

commonality in these two books is 

that some individuals are relatively 

devoid of a conscience. 

While many readers tend to 

associate the term “psychopath” with 

cold-blooded killers, the universality 

is that regardless of their public 

persona and whether they function 

©iStockphoto.com/ImageegamI 

at the street level, the corporate 

boardroom, or on a charitable 

or volunteer committee, some 

individuals simply do not react to the 

stress of their frauds simply because 

they, whether clinically diagnosed 

or not, have a personality that is 

rationalizing, limited, or without 

conscience—a key characteristic of 

a psychopathic tendency. 

And without a conscience, why 

would a person become exceptionally 

stressed? 

While not focusing on the 

motivations for fraud, Peltier-Rivest’s 

(2006) and the ACFE’s (2008 and 

2009) studies found some interesting 

patterns of fraud perpetuation—the 

trend is a better perspective than the 

specific percentages. 

Detection 

Some 52 percent of the detection of 

fraud by owners/executives came from 

tips, whereas 29.5 percent came from 

internal controls, internal audits, or 

external audits. 

These were the source of the tips. 

• Employees: 40.5% 

• Customers: 27.0% 

• Vendors: 18.9% 

• Anonymous: 10.8% 


Although less than 5 percent of 

frauds were initially detected by the 

police, those detected by the police 

had median losses twice as large as 

those from other sources. 

Gender 

f raud perpetuated by men was 

twice that of women and the sizes 

of median losses were 350 percent 

larger. 

Education 

While the correlation was unclear, 

those having a Bachelor’s degree 

perpetuated the second-mostfrequent 

number of frauds having 

a median loss of $1,000,000 

whereas those having only high 

school had the highest frequency of 

frauds (37.7%) but only a median 

loss of $100,000. 

In the USA, the higher the 

education, the greater the median 

loss, with postgraduate degrees having 

losses over twice as large as those 

with only a Bachelor’s degree. 

Age 

Although there was not a direct linear 

increase in the median loss and the 

perpetrator’s age, there was a general 

increase in fraud with age. 

What was most notable was 

the highest incidence of fraud was 

perpetuated by those 26 to 45 years 

of age (41.7%), followed by the 46 to 

55-year-old age group (29.8%). 

Losses caused by perpetrators 

older than 60 were 27 times higher 

than losses caused by employees 25 

and younger. 

In the USA, there was more of 

a linear relationship with the peak 

occurring between ages 51 to 60. 

Industry 

In the USA, this is the rank order for 

industries that had fraud perpetuated 

against them. 

• Telecommunications 

• Agriculture, Fishing, Forestry, 

Hunting 

• Manufacturing 

• Technology, Construction, Arts 

• Entertainment 

• Recreation 

Notes 

1. Manufacturing and Construction 

were in the top-6 industries that 

had fraud perpetuated against 

them in both Canada and the 

USA, but the sampling for 

Canada was so small that to draw 

industry observations might seem 

inappropriately skewed. 

2. While Education ranked #2 in 

Canada, it was last in a list of 21 

industries in USA. 

Departments 

The highest percentage of occupational 

fraud cases were the following. 

• Sales (17.4%) 

• Executive/ 

Upper Management (15.1%) 

• Accounting (15.1%) 

• Customer Service (12.8%) 

Position 

There is an inverse correlation 

between the perpetrator’s position and 

the median loss with the frequency of 

frauds perpetuated in this way. 

• 42% by Employees, 

with $75K median loss 

• 39% by Managers, 

with $165K median loss 

• 19% by Owner/Executives, 

with $1,000,000 median loss 

Prosecution 

Although less than 60 percent of 

all fraud cases were reported to the 

police, those frauds had a median loss 

twice as large as those not reported 

to police. Of the frauds not reported 

to the police for prosecution, citing 

more than one activity, these were the 

reasons given. 

• Fear of bad publicity (47.2%) 

• Private settlements (38.9%) 

• Disciplined internally (27.8%) 

• Too costly (22.2%) 

• Lack of evidence (11.1%) 

• Civil suits (11.1%) s 

Allan, Roddy. “The Human Face 

of Fraud,” CA Magazine, Online, 

May 2003. 

American Institute of Certified Public 

Accountants. Statement on Auditing 

Standards No. 99, Consideration of 

Fraud in a Financial Statement Audit, 

Appendix: Examples of Fraud Risk 

Factors. AICPA, 2009. 

2006 Report to the Nation on 

Occupational Fraud and Abuse. 

Austin: Association of Certified Fraud 

Examiners, 2006. 

Association of Certified Fraud 

Examiners. 2008 Report to the 

Nation on Occupational Fraud and 

Abuse. Austin: Association of Certified 

Fraud Examiners, 2008. 

Babiak, Paul and Hare, Robert. 

Snakes In Suits: When Psychopaths 

Go To Work. New York: Harper-Collins, 

2006. 

Bird, John. “Fraud, What Is It 

and How To Spot It,” Institute of 

Chartered Accountants in England & 

Wales, Online, January 5, 2009. 

Campbell, Mike. 

“The Fraud Triangle,” Blog, Online, 

January 13, 2009. 

“Identity Theft Backgrounder,” 

Department of Justice, Canada, 

January 8, 2010. 

“It Only Takes One Rotten Apple To 

Spoil the Bunch,” Canadian Health 

Care Anti-fraud Association, Online, 

March 1, 2010. 

“Canadian Health-care Spending To 

Top $180B,” CBC, Online, November 

19, 2009. 

“European Fraudsters Steal $7B in 

Carbon Credit Scam,” CBC News, 

Online, December 11, 2009. 

Coulter, Art. “Procurement Fraud,” 

Army Lawyer, January 2007, 

pp. 151 – 158. 


“Liberals Not Tackling Health Card 

Fraud: Critics,” CTV News, Online, 

July 7, 2007. 

“On The Border,” CTV W-5, Online, 

May 21, 2004. 

Detweiler, Gerry. “Small Business Scams 

Continue to Thrive,” D&B All Business 

Bloggers, Online, March 12, 2010. 

Doig, Alan et al. “New Public 

Management, Old Populism and the 

Policing of Fraud,” Public Policy and 

Administration, No 1, 2001, 

pp. 91 –113. 

Duffield, Grace and Grabosky, Peter. 

“The Psychology of Fraud,” Australian 

Institute of Criminology: Trends and 

Issues in Criminal Justice, March 2001. 

Government of Canada. Annual Report 

of the Commissioner of Competition, 

Ottawa: Competition Bureau of Canada, 

2008. 

Grabosky, Peter and Duffield, Grace. 

“Red Flags of Fraud,” Australian 

Institute of Criminology: Trends and 

Issues in Criminal Justice, March 

2001. 

Hare, Robert. Without Conscience: The 

Disturbing World of the Psychopaths 

Among Us. Toronto: Pocket Books, 

1993. 

Hermanson, Dana Wolfe, David. “The 

Fraud Diamond: Considering the Four 

Elements of Fraud,” CPA Journal, 

Online, December 2004. 

“UK Fraud Costs $48B a Year; 

ABI Calls for ‘Zero Tolerance,’ ” 

Insurance Journal, Online, January 25, 

2010. 

Johannes, Rubina, et al. 2006 Identity 

Fraud Survey Report. Pleasanton: 

Javelin Strategy & Research, 2006. 

Kim, Rachel et al. 2007 Identity Fraud 

Survey Report. Pleasanton: Javelin 

Strategy & Research, 2007. 

BIBLIOGRAPhy 

Krim, Jonathan. “Call 2002 the Year 

of the Data Breach,” Washington 

Post, Online, June 22, 2005. 

Lewis, Michael. The Big Short: Inside 

the Doomsday Machine. New York: 

Simon and Shuster, 2009. 

Lieberman, David. Never Be Lied To 

Again. New York: St. Martin’s Press, 

1998. 

Lynch, Bob. “Understanding Why 

People Commit Fraud,” Smart Coast 

Business, December 2006, 

pp. 64 -65. 

Mazurkewich, Karen. “Canada 

a Fraud Nation?” Financial Post, 

Online, November 24, 2009. 

McIsaac, Nicole. “City Lost 

$600,000 to Fraudster Last Year: 

Auditor,” National Post, Online, 

February 5, 2010. 

McLean, David. “From Fraud Triangle 

to ‘OpRiCom’ Triangle: Considerations 

for Operational Risk and Compliance 

in Times of Heightened Organizational 

Stress,” DMA Commentary, August 

21, 2007. 

McLeod, Michelle. “Top Five Ways 

Canadians Can Protect Against Credit 

Card Fraud,” IT Business.Ca, Online, 

November 6, 2008. 

Morra, Bernadette. The Thrill of 

Buying Counterfeits,” Toronto Star, 

Online, July 13, 2007. 

Peltier-Rivest, Dominic. Detecting 

Occupational Fraud in Canada: 

A Study of its Victims and 

Perpetrators. Austin: Association of 

Certified Fraud Examiners, 2007. 

Ramamoorti, Sri, and Olsen, William. 

“Fraud: The Human Factor,” 

Financial Executive, July/August 

2007, pp. 53 – 55. 

Rusch, Jonathan. “Identity Theft: The 

Scope of the Problem,” United States 

Attorneys’ Bulletin, March 2008. 

Shaw, Rob. “Former BC Deputy 

Minister Charged With Fraud Against 

Government,” Times Colonist, Online, 

March 4, 2010. 

Shrand, Catherine, and Zechman, 

Sarah. “Are Overconfident Executives 

More Inclined to Commit Fraud?” 

Wharton School of Business, March 

2008. 

Sparrow, Malcolm. License to Steal: 

How Fraud Bleeds America’s Health 

Care System. Boulder: Westview 

Press, 2000. 

Spencer, Kent. “Charmed By 

a Matronly Crook,” The Province, 

March 21, 2010, pp. A-8 -9. 

Stevens, Philip and Harris, Julian. 

“Counterfeit Medicines: A Serious 

Threat To Global Health,” Fraser 

Forum, May 2009. 

Sunderland, Ruth. “Inside the Minds 

of Men Who Want to get Rick Quick,” 

The Observer, Online, December 21, 

2008. 

TD Bank Financial Group. “Canadians 

Continue To Use Their Debit and 

Credit Cards with Confidence, Despite 

Concerns About Fraud,” D&B Market 

News Publishing, Online, March 11, 

2010. 

“Scam Artists Beware, God’s Fraud 

Squad Is in Town,” The Vancouver 

Sun, October 4, 2007. 

Veates, Connie. “How to Stop a Thief 

by Thinking Like a Thief,” 

CSO Security and Risk, Online, 

December 2006. 

Zahra, Shaker. “The Antecedents and 

Consequences of Top Management 

Fraud,” Journal of Management, 

No. 6, 2005, pp. 803 – 828. 


The Fraudster’s Predatory Cycle 

TV sleuth investigations 

revolve around means, 

motive, and opportunity. 

To understand “the roots of 

crime,” Cressey (1953), a father 

of modern criminology, applied 

sociological principles to crime and 

criminal justice to construct the Fraud 

Triangle. 

• Motivation—the incentive or 

need pressuring the execution of 

a clandestine activity 

• Opportunity—the access or 

knowledge required to carry out 

secret activities 

• Rationalization—the attitude 

justifying exceeding baseline or 

buffering countervailances that 

protect the unsuspecting from 

exploitation. 

Although not formally adopted by 

the Canadian Institute of Chartered 

Accountants in their Section 5135 

Fraud Audit Guidelines harmonized to 

the International Standard on Auditing 

#240, Cressey’s fraud triangle has 

been formally adopted in the American 

Statement on Auditing Standards #99. 

McLean (2007) described the fraud 

triangle as a handy conceptual device; 

Turner et al (2003) pointed out that 

information about fraud is enhanced 

when auditors evaluate within its 

context. 

As McMillan (2006) asserts, 

however, “the purpose of an audit is 

to provide reasonable assurance that 

the financial statements do not include 

any material misstatement as a result 

of fraudulent activity…the CPA firm 

may uncover fraud, but this is not the 

reason the auditors are there.” 

Whereas an audit is 

after-the-fact and therefore 

reactive, a proactive 

approach is to reduce the 

fraud from occurring. 

Whereas an audit is after-the-fact 

and therefore reactive, a proactive 

approach is to reduce the fraud 

from occurring. One such avenue is 

to establish system-type controls— 

reduce the opportunities for fraud. 

As Ramamoorti and Olsen 

(2007) argued, another is to focus 

on psychological answers and 

explanations rather than logical 

ones for the fraudster’s decision to 

deviate from the norm—focus on 

the motivation and rationalization for 

fraud. 

Drawing from the ACFE’s 2008 

Occupational Fraud Report, of the 

behavioural flags presented during 

fraud, the top three can be applied to 

any situation. 

Ian Callaway 

• #1 Living beyond means (39%) 

• #2 Financial difficulties (34%) 

• #3 Wheeler-dealer attitudes (20%) 

Three of the next highest-ranking flags 

also have universal applicability. 

• #5 Divorce/family problems (17%) 

• #7 Irritability, suspiciousness, 

defensiveness (14%) 

• #8 Addiction problems (13%) 

After examining the Diagnostic 

and Statistical Manual of Mental 

Disorders Manual (DSM-IV) with its 

virtual ubiquitous use by healthcare 

professionals, you will appreciate 

the complexity involved in trying to 

understand the signs and symptoms of 

the individual to be evaluated. While 

it may be instructive to understand 

the fraudster on a societal level and 

psychologically from a humanistic 

point of view, because individual and 

group needs are driven by genetic, 

financial, and social variables 

that change over time, today’s 

understanding may not have predictive 

longevity. Many a previously law-biding 

citizen subsequently succumbs to 

fraudulent activities. 

Duffield and Grabowsky (2001) of 

the Australian Institute of Criminology 

pointed out that behavioural scientists 

have been unable to identify 

personality characteristics that would 

serve as reliable markers of a potential 


fraudster, then they went on to assert 

the uncomfortable implication that 

many people could, given the right set 

of circumstances, be capable of fraud. 

When it comes to predicting fraud 

within such a fluid environment, most 

rational people have one goal: How 

I can I avoid being defrauded? 

Independent of the debate over 

whether DSM-IV should consider 

Psychopaths or Sociopaths as 

a separate disorder (they are currently 

subsumed under class #301.7, 

Antisocial Personality Disorders), by 

combining Hare’s Psychopathic stages 

with the animal kingdom’s predatory 

behaviours we can better understand 

how all fraudsters, as predators, 

function through a predicable cycle, 

regardless of the nature of their 

scams. 

Fraudsters need money to 

support their lifestyle or they crave 

the conquest of conning a victim— 

ego, power, and/or prestige figure 

prominently in their motivation. While 

some killer whales devour seals as 

a matter of sustenance, some seals 

have been nothing more than a toy 

to be overpowered, tortured, and 

discarded—the proverbial cat-andmouse 

game or atavistic power and 

ego. Regardless of motive, fraudsters 

are voracious predators readily 

adapting to ever-evolving defences. 

After need, predators assess 

for weakness. Birds of prey excel 

with binocular vision and subsonic 

speed. A snake’s Jacobson’s organ 

converts air particles into smell and its 

columella (ear bone) detects vibration 

to help it hone in on its next meal. 

Fraudsters have a sixth sense that is 

receptive to a victim’s motivational 

pheromonic cues that may include 

altruism, assertiveness, compassion, 

confidence, conscientiousness, 

control, credulity, dependency, doubt, 

ego, emotophobia, frugality, greed, 

honesty, identity, impressibility, 

impulsiveness, insecurity, intelligence, 

materialism, maturity, naïveté, 

narcissism, self-reliance, trust, vanity, 

or vice. In short, what’s the victim’s 

hot button? (Braiker, 2003; Campbell, 

2009; Holtfreter et al., 2010, Kantor, 

2006; and Simon, 1996) 

Some fraudsters seek to sink their 

fangs into institutional weaknesses. 

Anonymous Internet fraudsters rely on 

numbers. Whether in the corporation, 

the neighbourhood, or the volunteer 

organization, white-collar criminals 

float through the jungle, sizing-up 

weak spots within the ambient food 

chain. This assessment phase is like 

casing the joint. 

The third and time-intensive 

ground-laying stage in the fraudster’s 

predatory hunt is to manipulate 

the prey into position. Like their 

animal kingdom counterparts, while 

very conscious of their actions they 

act without conscience—a key 

psychopathetic characteristic. 

…what’s the victim’s 

hot button? 

Because first-party frauds 

are against institutions, they may 

be deemed “victimless.” Those 

manipulations are more transactional— 

driving up credit scores, fabricating 

applications, or securing loans under 

false pretenses. In the absence of 

direct human interaction, fraudsters 

perpetuating these scams may not 

seem as cold and calculated. 

Third-party frauds are 

characterized by various degrees 

of human interaction. Despite the 

predator’s lack of conscience, their 

true persona has been sufficiently 

masked in what many victims later 

describe as kindness, sincerity, and 

warmth rather than bullying. 

To manipulate his meal, the 

leopard carves out a single antelope 

from the herd and overpowers it 

with speed, stealth, and ultimately 

exhaustion. Like the cobra’s hypnotic 

sway, fraudsters mesmerize their prey 

toward compliance. 

Whereas legitimate entrepreneurs 

take guidance from Napoleon Hill’s 

post-Depression classic Think and 

Grow Rich (1937), fraudsters focus 

their crosshairs on illegitimate goals. 

Read from the fraudster’s perspective, 

Carnegie’s classic social-discourse 

self-help book How To Win Friends 

& Influence People (1981) becomes 

a manual for predation. 

• Ways to Make People Like You— 

6 chapters 

• How to Win People to Your Way 

of Thinking—12 chapters 

• How to Change People Without 

Giving Offense or Arousing 

Resentment—9 chapters 

Reminiscent of The Music Man’s 

Professor Henry Hill searching for 

telltale signs of Trouble in River 

City, fraudsters look beyond the 

obvious to create a solution to their 

prey’s “troubles.” Under the guise of 

benevolence, fraudsters seek out the 

Achilles Heel even of those who may 

exude power and strength. A March 

23, 2010, headline in The Vancouver 

Sun read: “Olympic Athletes 

Defrauded in Calgary Property Scam.” 

In the seesaw dance between 

hunter and quarry, fraudsters steer 

their prey away from what social 

psychologists term a central route to 

persuasion—logical and systematic 

assessments—to a peripheral route 

that relies on mental shortcuts to 

distract them. Strong emotions or 

promises are injected to bypass logical 

arguments and help trigger acceptance 

for the scam under construction. As 

Lieberman (1998) points out in Never 

Be Lied To Again, “Ninety percent of 

the decisions we make are based on 

emotion. We then use logic to justify 

our actions. If you appeal to someone 

strictly on a logical basis, you will have 

little chance of persuading him.” 

With an aura of authenticity or 

a promise to relieve loneliness or 

pain, Internet scams psychologically 

manipulate their prey into a position 

of vulnerability. Rags-to-riches 

investment scams manoeuvre victims 

by building a bridge of trust to a land 

of dreams. 

Whether in terms of money, ego, 

power, and/or prestige, the fourth 

stage is the ultimate reward—reaping 

the fruits of the fraudster’s labour. 

Some frauds offer an immediate 

kill—most internet scams are like that. 

Once the money has been transferred, 

the fraudster is gone. 


Bibliography 

Diagnostic and Statistical Manual of Mental Disorders IV. American 

Psychiatric Association, Washington, 2000. 

2008 Report to the Nation on Occupational Fraud and Abuse. Austin: 

Association of Certified Fraud Examiners, 2008. 

Braiker, Harriet. Who’s Pulling Your Strings?: How to Break the Cycle 

of Manipulation and Regain Control of Your Life. Toronto: McGraw-Hill, 

2003. 

Campbell, Mike. “The Fraud Triangle,” Blog, Online, January 13, 2009. 

General Assurance and Auditing Section 5135. The Canadian Institute 

of Charted Accountants, Toronto: CICA Virtual Professional Library, 2009. 

Carnegie, Dale. How To Win Friends and Influence People (Revised 

Edition). New York: Simon and Schuster, 1981. 

Cressey, Donald. Other People’s Money: A Study in the Social Psychology 

of Embezzlement. Glencoe, Free Press, 1953. 

Duffield, Grace and Grabosky, Peter. “The Psychology of Fraud,” 

Australian Institute of Criminology: Trends and Issues in Criminal Justice, 

March 2001. 

Hill, Napoleon. Think & Grow Rich (Revised Edition). New York: Fawcett 

Crest, 1960. 

Holtfreter, Kristy, et al. “Low Self-Control and Fraud” Offending, 

Victimization, and Their Overlap,” Criminal Justice and Behavior, No. 2, 

2010, pp. 188 – 203. 

Kantor, Martin. The Psychopathology of Everyday Life: How Antisocial 

Personality Disorder Affects All of Us. Westport: Praeger, 2006. 

Lieberman, David. Never Be Lied To Again. New York: St. Martin’s Press, 

1998. 

McLean, David. “From Fraud Triangle to ‘OpRiCom’ Triangle: 

Considerations for Operational Risk and Compliance in Times of 

Heightened Organizational Stress,” DMA Commentary, August 21, 2007. 

McMillan, Ed. “Considerations of Fraud in a Financial Statement,” 

Chamber Executive, Fall 2006, pp. 36 – 37. 

Ramamoorti, Sri, and Olsen, William. “Fraud: The Human Factor,” 

Financial Executive, July/August 2007, pp. 53 – 55. 

Simon, George. In Sheep’s Clothing: Understanding and Dealing with 

Manipulative People. AJ Christopher, 1996. 

Trump, Donald, and Bohner, Kate. Trump: The Art of the Comeback. 

Toronto: Random House, 1997. 

Turner, Jerry, et al. “An Analysis of the Fraud Triangle,” 

America Accounting Association, Online, 2003. 

The majority of scams are 

parasitic, whereby the fraudsters 

continue to feed on their prey until 

the carcass is lifeless. 

The fifth stage of predation 

is abandonment. In some cases, 

fraudsters attempt to postpone 

abandonment by cannibalizing their 

critics, labelling them disbelievers. 

In other cases, the fraudsters position 

sycophants on the front line to serve 

as pawns that take the fall for the 

fraudsters’ malevolent actions. 

Dealmaker Donald Trump (1997) 

uses the word “guarded” extensively 

throughout The Art of the Comeback. 

“Deals are people…and if you don’t 

have a deep understanding of people 

and their motives, you can never 

become a dealmaker… .” “…keep in 

mind that some of the most evil and 

deceptive people are the ones with 

the smoothest tones and the most 

sophisticated style.” “I have noticed 

over the years that those who are 

guarded or, to put it somewhat more 

coldly, slightly paranoid, end up being 

the most successful. How often do you 

read about heirs of the wealthy who 

are easy prey to the slicksters…and 

others who feed on the weak?” 

The study of the mind and 

methods of fraudsters can be quite 

fascinating. Informed awareness can 

help you protect yourself and your 

loved ones against unscrupulous 

individuals. s 

insurance analyst and forensic examiner 

Ian Callaway, MA, MEd, RHu, BCFE, 

has been retained by associations, 

claimants, employers, individuals, and 

insurers to advise on documentation 

and strategy covering association, 

group, government, and individual 

policy forms. A recognized Disability 

insurance expert witness, ian has 

spoken at every major international 

Disability insurance forum, the National 

institute of Accountants, and the 

Canadian Bar Association and served 

as Chair for the Disability insurance 

Research Symposium. 

Voice: 604 629-0042 

ian@iancallaway.com 


C. Ross Healy, CEO 

2008 Analyst 

of the Year Award, 

Business Edge 

Magazine 

Value Investing Means 

Never Having to Say You’re Sorry 

True Value Investing 

Means Higher Returns at Lower Risk 

A Service for the Do-It-Yourself Investor 

SAC Services for the Investor 

• 3 key selection criteria 

• User-friendly 

• Objective and independent 

• Strong market timing 

• Buy and sell recommendations 

• Excellent 17-year record 

The Morgan Creek Office of 

Raymond James 

SAC Services for the Trader 

• Short-term opportunity focus 

• Precise stop losses 

• Long and short opportunities 

• Market and group timing 

• Total investor control 

• Constant information flow 

Plus a weekly strategy review and comments, and a detailed monthly letter 

Ask about our 2-week free trial! 

Brent Lang 

Business Manager, 

International 

For investors, today’s environment is cluttered and chaotic. The economy Vice President is increasingly dy 

Markets and politics are global. There are thousands of investments from 604 531-8807 which to choose. Bu 

blang@strategicanalysis.ca 

investors don’t have the time or the inclination to become a nancial analyst. 

The right advisor will 

Serving 

act 

Investors 

as your 

Since 

trusted 

1979 

advocate in an environment of constant c 

Raymond James advisors are intimately familiar with the products, plans and processes that c 

help you WWW.STRATEGICANALYSIS.CA 

achieve your goals. With so much at stake, there’s no better feeling than nding an

While new technologies 

have made it easier 

for companies and 

consumers to do business, 

personal information today is 

distributed more widely than 

ever before, making life much 

easier for criminals—and much 

harder for victims. 

Identity theft affected about 

33,000 Canadians between 2007 and 

2009. The losses totalled a staggering 

$27 million. The problem involves 

the unauthorized collection and use 

of personal information—usually for 

criminal purposes—that can leave its 

victims with onerous bills, bad credit 

ratings, and taxes owing. 

Canadian Anti-Fraud Centre: 

Identify Fraud Statistics, 

Canada-Wide 

Year Dollars Lost Victims 

2007 $6.5 million 10,328 

2008 $9.6 million 11,463 

2009 $10.9 million 11,109 

When I was a member of the 

Vancouver Police Department, I was 

part of the management team that 

created a pilot task force on identity 

Kash Heed, Solicitor General 

of British Columbia 

Protecting British Columbians 

from identify Theft 

theft where I saw first-hand the scope 

of the problem and the devastation 

it can cause. We took a proactive 

approach to combat this problem 

by working closely with a dedicated 

Crown Prosecutor, other police 

agencies, financial institutions, and 

private businesses. Very quickly, it 

became clear that this was far from 

a local problem. 

In 2008, our government 

made extensive changes to 

strengthen the security and 

integrity of driver’s licences, 

identification cards, and 

birth certificates. 

We took down a number of targets 

who were drug addicts that fed their 

habit by stealing mail and debit 

and credit cards. That information 

quickly found its way into the hands 

of criminal organizations on an 

international level. The VPD has 

continued to build on the success of 

the pilot by creating a permanent unit 

solely dedicated to combating this 

complex challenge. 

The work being done by VPD is 

in addition to the work of many other 

police departments throughout BC who 

are focusing on identity theft, such as 

the RCMP Commercial Crime Section 

and the Combined Forces Identity 

Theft Team—a partnership between 

the Surrey RCMP Detachment and 

Canada Post to target mail and identity 

theft. During the past year, they 

conducted 33 surveillance projects 

that resulted in 87 arrests and 271 

charges. 

While the police are working 

hard to catch those who are 

perpetuating this fast-evolving crime, 

our government is doing its part by 

taking steps to help protect British 

Columbians on a number of fronts. 

For example, during the month of 

March each year, Consumer Protection 

BC supports Fraud Prevention month, 

through various public education and 

community awareness campaigns. 


©iStockphoto.com/ryccio 

In 2008, our government made 

extensive changes to strengthen 

the security and integrity of driver’s 

licences, identification cards, and 

birth certificates. Driver’s licences— 

our primary source of identification 

and a crucial foundation document 

through which other key documents 

are obtained—are now equipped 

with cutting-edge security features to 

make them as impervious as possible 

to tampering. 

The new cards are harder to alter 

or forge, thanks to physical features 

like raised, lasered, and ghosted 

images, as well as holographic overlays. 

They are also tougher to obtain under 

different identities. Facial-recognition 

technology used by ICBC helps make an 

identification when a person has applied 

for a licence under more than one name. 

We have also strengthened the 

integrity of birth certificates. The 

Province redesigned this documentation 

specifically to improve its security and 

durability. The 20 new security features 

brought them out of the 1950s. The 

certificates are some of the most hightech, 

tamper-proof documents in the 

world. 

Some visible features include 

• irregular marks on the front and 

back that align to form a maple 

leaf when held up to the light, and 

two transparent windows—one with 

a colour-shifting property and the 

other with floating maple leaves; 

• unique watermark and shadow 

features; and 

• a larger size that makes it 

impractical to carry the birth 

certificate in a wallet, which 

reduces the chance of loss or theft. 



in your in Your WiLL Will 

By remembering Variety – - The The 

Children’s Children’s Charity in in your will, will, 

you can help children children who have 

special needs in in the the province. 

Your generosity will will provide provide hope, 

hope, enrich enrich lives, and lives, build and a build better 

a future better for future children for like children Xander. 

like For Xander. more inFormation on 

hoW For to Leave more info a Legacy: . . . 

Call (604) Call 320-0505 (604) 320-0505 or 

Toll-free Toll-free 1(800) 1 (800) 381-2040 

or visit Visit our our website website at at 

www.variety.bc.ca/legacy 

www.variety.bc.ca/legacy. 

Those improvements are making 

it harder for fraudsters and organized 

crime, but the real success in battling 

the proliferation of identity theft 

will come from the public using 

smart, preventative measures versus 

reacting to the crime after the fact. 

As technology continues to move 

at a lightning-fast pace, so does 

organized crime. 

That’s why it’s so important 

to protect your identity with the 

same vigilance used to protect 

other valuables. Identity theft is 

no small matter, but if we all make 

small changes, we can make a big 

difference. s 

Minister heed graduated from the BC 

Police Academy in 1979 and has spent 

the past 30 years serving the public in 

law enforcement. He began his career 

as an officer with the Vancouver Police 

Department where he moved through 

the ranks of Constable to Superintendent. 

During that time, he completed his 

BA and MA at Simon Fraser university 

through part-time studies. in 2007, 

he was appointed Chief of the West 

Vancouver Police Department. on May 

12, 2009, Kash Heed was elected MLA for 

Vancouver-Fraserview and subsequently 

was appointed Minister of Public Safety 

and Solicitor General. 


SECuRITy TIPS 

• Don't give your credit card number on the 

telephone, by electronic mail, or to a voice mailbox 

unless you know the person with whom you're 

communicating or unless you have initiated the 

communication yourself—and you know that the 

communication channel is secure. 

• Be careful about sharing personal information or 

letting it circulate freely. 

• When you are asked to provide personal 

information, ask how it will be used, why it is 

needed, who will be sharing it, and how it will be 

safeguarded. 

• Check your bank and credit card statements 

carefully. 

• Notify creditors immediately if your identification 

or credit cards are lost or stolen. 

• Choose difficult passwords—not your mother’s 

maiden name. Memorize them and change them 

often. Don’t write them down or put them in your 

wallet or some other obvious place. 

• Be careful what you put in your trash or recycling. 

Burn or shred personal financial information such 

as statements, credit card offers, receipts, and 

insurance forms. Insist that the companies with 

whom you do business do the same. 

• When making withdrawals at ATM machines, 

check your surroundings carefully. Keep an eye out 

for things that don’t seem right or are somehow 

different—for example, a camera where there 

wasn’t one before or a different keypad. If you have 

any doubts, talk to a teller, if possible, or go to 

another machine. 

• Keep an eye on merchants who are handling your 

card. If possible, don’t let it out of your sight. 

If you suspect your identity has been stolen . . . 

• Immediately report the incident to police. Get an 

incident report number from the police and quote 

it in all correspondence with your credit agencies. 

• Report credit card and cheque thefts to the issuers 

and to your bank. Request new card numbers and 

ask that your accounts be flagged to Canada’s 

major credit reporting agencies: Equifax and Trans 

Union. 

• If you discover that someone is using your Social 

Insurance Number, call the Government of 

Canada at 506 548-7961. 


Photograph by Denise Rowe ©, PhotoSensitive 

Kevin Connell with his wife, 

Mariette. Kevin is now in 

remission after treatment 

of a multiple myeloma, 

a rare cancer. 

Embrace 

giving. 

Join the fight against cancer. The Canadian Cancer 

Society is your best investment in the cancer cause. 

Your courageous gift brings hope to thousands of people 

by funding outstanding research projects every year. 

A gift in your Will, stock or cash is tax deductible and 

goes directly to the fight against cancer. 

For immediate attention, please contact Toni Andreola 

at tandreola@bc.cancer.ca or 1 800-663-2524. Learn 

about the Estate Tax Eliminator Clause and request a free 

copy of Your Personal Estate and Will Planning Guide. 

cancer.ca

Combating 

identity Theft 

and Fraud 

in 2005, the Vancouver Police Department 

(VPD) created a task force to address the 

growing issue of identity theft and identitytheft-related 

property crime. 

A box of dynamite was located in an apartment building storage 

locker belonging to the suite the ITU was searching with a warrant. 

An explosives expert was called in and determined there were 

enough explosives to destroy the entire building. 

Detective Brian Montague 

The task force targeted individuals and groups known 

to recruit, share, train, commit, and assist others to commit 

identity theft crimes for financial gain. As a result of its 

colossal success in arresting and convicting suspects 

involved in identity theft and fraud, the Identity Theft Unit 

(ITU) became a permanent section in the VPD, consisting 

of 1 Sergeant and 7 Detectives who bring with them a wide 

range of police experience and expertise. 

The theft of someone’s identity is a relatively simple 

process and the related fraud, while more complicated, 

can be very lucrative. Suspects involved in this activity are 

regularly dressed in designer clothing and live in upscale 

neighbourhoods. While committing their crimes, they often 

fraudulently rent expensive vehicles and stay in luxury hotels 

using forged identification and credit cards in the names of 

their victims. 

The theft of someone’s identity is a relatively 

simple process and the related fraud, while 

more complicated, can be very lucrative. 

To combat the criminal activity associated with identity 

theft and fraud, the ITU employs a variety of tactics. 

Our unit conducts countless investigations and executes 

numerous search warrants on homes, storage facilities, 

and other places associated with identity theft suspects. 

Those search warrants turn up not only stolen mail, various 

personal and financial documents, stolen identification, 

forged credit cards, instruments of forgery, and fraudulently 

obtained property, the search process has yielded drugs, 

firearms, counterfeit money, and even explosives. 


The ITU takes a proactive approach 

to its investigations targeting known 

and active offenders. We work closely 

with a dedicated Crown Prosecutor and 

have an excellent working relationship 

with various government agencies, 

other police departments, and financial 

institutions, all in an effort to reduce 

fraud and criminal activity related to 

identity theft and the impact it has on 

its victims. 

To help prevent becoming victims 

of identity theft and fraud, individuals 

need to be extremely careful when 

providing their personal information to 

anyone, especially over the phone or 

Internet. Mail, financial documents, 

and any documents containing 

personal information such as birth 

dates, credit card numbers, and 

social insurance numbers should be 

stored safely or properly disposed of 

when no longer needed. 

Businesses also need 

to be diligent when 

storing or disposing 

of documents containing 

the personal information 

of their customers. 

Businesses also need to be 

diligent when storing or disposing of 

documents containing the personal 

information of their customers. 

If a person believes his or her 

identity has been compromised, 

the individual should consider the 

following steps—to confirm that his 

or her identity has in fact been stolen 

and to help prevent suspects involved 

in identity theft from using the 

information to commit fraud. 

• Contact the respective financial 

institutions and credit card 

companies. 

• Consider contacting a credit 

services company such as 

TransUnion or Equifax. 

• File a police report. s 

Brian Montague, Detective in the 

identity Theft unit of the Vancouver 

Police Department, was born and raised 

in Vancouver. His career responsibilities 

with VPD over 16 years include a year 

working in the Vancouver Jail; 6 years 

on uniformed patrol in various parts of 

Vancouver including Downtown and the 

Downtown East Side; 2 years with the 

District 2 Drug Enforcement and Education 

Team; 5 years in a surveillance capacity 

working with several units, and 2 years 

in the iTu. 

brian.montague@vpd.ca 

A typical search with a warrant, conducted recently by the ITU, turned up a small portion of forged credit cards and identification. 


ROBBING PETER TO PAy PAuL: 

Ponzi Schemes 

on a regular basis, the 

headlines blast forth: 

Report Alleges Ponzi Scheme; 

Gambled and Lost in Alleged Ponzi 

Scheme 

What is a Ponzi scheme? 

Where did this term originate? 

The word Ponzi is a direct reference 

to an Italian immigrant named Charles 

Ponzi who, in 1919, was trying to 

fulfill the American dream while 

newly settled in Boston. With $200 

of borrowed money in his pocket, 

he set out to discover his fortune. 

Amazingly, it took a grand total of 

6 months to come to fruition. 

how did he do it? 

The name Ponzi has become 

associated with a scam known 

colloquially as “Rob Peter to Pay 

Paul.” An investment is offered at 

an extremely attractive rate. They 

may be corporate bonds, GICs, or in 

Charles Ponzi’s case, stamps. The 

investment is sold with a guaranteed 

rate of return far above what more 

common investments would offer. 

Unsuspecting investors are invited 

to attend an information meeting 

where they are set upon by highpressure 

salespeople born with the gift 

of the gab. Mental images of yachts, 

cruises, foreign vacations, luxury cars, 

and unimaginable wealth are painted, 

Brian Trainor 

all the while ensuring that those in 

attendance remember their drab, 

stressful, penny-pinching way of life. 

By investing in ABC Bonds, 

investors could throw off the shackles 

of poverty and reap the rewards only 

wealth could offer. Who wouldn’t 

invest? By the end of the meeting, 

most will surge to the front of the 

room, cash in hand, begging to invest. 

Who wouldn’t want to buy 

into a sure thing with such 

high rates of return? 

Who wouldn’t want to buy into 

a sure thing with such high rates of 

return? For example, you could buy 

a bond for $1000 with a guaranteed 

return of 100 percent in 6 months. 

After 6 months, you would cash in 

your bond and receive your $1000 

investment, plus $1000 extra as 

promised in interest—100 percent 

lift—a very appealing prospect. 

The downside to any Ponzi scheme 

is there is no investment. The payouts 

are funded by new cash coming into 

the scheme. Early investors are paid 

with new money. 

That encourages word of mouth 

advertising: “This is real! I invested 

a grand and a month later got two 

grand back. You gotta get in, man.” 

But all the while, those who 

bought have invested in nothing 

because there is nothing in which to 

invest. There is no bond and therefore 

only a fortunate first few will get their 

promised return. These frauds operate 

like a magician’s stage—all smoke and 

mirrors. They play on your hope and, 

yes, your greed. 

A Ponzi scheme is illegal for this 

reason—few will win. Eventually, the 

money has to run dry, given simple 

multiplication, and when it does, 

those who invested last, lose. The 

timing all depends on whether the 

scammers are smart enough to shut it 

down before the authorities are on to 

them. Most are. 

Ponzi Schemes and Pyramid Schemes 

Several years ago, I investigated 

a pyramid scheme called Women 

Helping Women. This type of scam 

goes by various names such as the 

Recipe Club but they are all the 

same: Illegal. 

The rule of WHW was for each 

woman to bring new women to the 

meetings where a charismatic leader 

would convince them to invest $5000 

each into the plan. With 8 new 

women signed up at the bottom of the 

pyramid who each promised to pay 

$5000 to get into the game, the pot 

stood at $40,000 at night’s end. 

This drawing will show this clearly. 


Jan 

Willa 

Betty 

Mary Erin Beth 

Each pyramid was drawn on a board 

and consisted of four rows. 

• 8 slots along the bottom 

• 4 slots in the third row 

• 2 slots in the second row 

• 1 slot at the top 

As new members signed up, you 

moved up a row. New names were 

entered into the row of 8. Once you 

reached the top, you received the 

$40,000. 

Meetings were held on a Saturday 

or Sunday night in the ringleader’s 

garage. The 8 new women were told to 

take their $5000 to the home of the 

woman who was listed at the top of 

the pyramid no later than Wednesday 

of the following week. 

The money was to be in cash 

only, in a plain paper bag, and no last 

names were to be used, much less 

known. No source for the money was 

to be given to the bank teller, should 

the teller ask, and nothing was to be 

said to spouses or partners. 

In exchange for handing over the 

money, the newest members of the 

chain received a $25 gift card for 

a local mall. That was done to foster 

the mistaken belief that the entire 

proposition was legal if each person got 

something in exchange for her money. 

In effect, she was purchasing a $25 

gift card with her $5000. Still illegal! 

By Wednesday night, the woman 

whose name appeared at the top of 

the pyramid was holding $40,000 

in cash and the 8 newcomers had 

Joan 

LEVEL 

1 

Cathy 

LEVEL 

2 

Pearl Sarah Rani 

LEVEL 

3 

Anne Ruth May Jo 

The problem with this type 

of scam is that eventually, 

the money runs out and the 

newest entrants do not get 

their $40,000; they simply 

lose their $5000. 

LEVEL 

4 

their names in the 8 slots along the 

bottom. Those 8 now must recruit 

2 newcomers each (16 women in 

total). The original pyramid must split 

into two, so everyone can move up 

a level. Eight slots in two pyramids 

must be filled. 

The problem with this type of 

scam is that eventually, the money 

runs out and the newest entrants do 

not get their $40,000; they simply 

lose their $5000. That is why pyramid 

schemes and Ponzi schemes are 

illegal. Not everyone wins. 

Simple numbers play that out. 

As the pyramids split continuously 

week after week, the number of new 

members required to fill the bottom 

rows of the many pyramids now in play 

number in the thousands. 

In a pyramid scheme, 8 new 

women are needed every week for 

the top person to receive his or her 

$40,000. Who do people in the 

scheme recruit first? Family and 

friends are the first choice because 

they are the easiest to approach. 

Once those contacts have been 

exhausted, the real hard work comes 

in—recruiting strangers. 

Back to Chuck 

In 1919, Charles Ponzi went from 

$200 in his pocket to a fortune of 

$10 million—in 6 months. 

How? 

Stamps. 

Quite by accident, Ponzi 

discovered the International Reply 

Coupon. These coupons could be 

bought to pay the postage on a return 

letter. Ponzi would place the coupons 

inside his letter to Mom. Mom, who 

was living in Spain, would exchange 

the International Reply Coupon for 

return postage on her letter of reply. 

Ponzi discovered that because the 

value of foreign currency was volatile 

compared to the US dollar, currency 

exchange rates fluctuated daily. He 

could purchase 20 IRCs in the States 

for $1 or send the dollar to a friend 

in Spain where the peseta was worth 

only 15 cents US and have the friend 

purchase 22 IRCs for the same dollar 

and mail them back. Once in Ponzi’s 

hands, the IRCs would be cashed 

State-side for a 10 percent profit. 

Ponzi began to promote his 

investment vehicle with great fanfare 

and before long, investors were lining 

up around the block to give him their 

money. He soon realized he didn’t 

need to use the IRCs as an enticement. 

Instead, he increased the return rate 

from 10 percent to 50 percent. 

In 6 months, Charles Ponzi had 

$10 million in the bank, police outside 

his office controlling the crowds that 

stretched into the thousands, and 

enough free publicity to garner the 

nickname, “The Wizard of Finance.” 

Of course those who came in to 

have their investments reimbursed 

after the allotted time period were paid 

with the new money Ponzi took in from 

those shoving handfuls at him in his 

office. Eventually, the scheme started 

to break down as the US Federal 

Securities Commission began to look 

into it. 

There was no investment vehicle, 

nor were there future earnings. Only 

heartbreak remained for those who 

came to the party late. Charles Ponzi 

was busted and went to jail. Rob Peter 

to Pay Paul had come to be. 


EFS Works for Us 

BC Notaries Ken Sherk, Susan Tong, David Watts, and Rashida Samji with Dudley 

The Electronic Filing System (EFS) is now widely in use by 

BC Notaries and lawyers. All EFS transactions are completely secure 

with digital signatures ensuring authenticity. 

Some of the Many Benefits of EFS . . . 

• Close deals faster. Receive a pending number immediately. 

Speed up executions by fax or email images. 

• Close multiple deals in a day. Eliminate deadlines. 

• Registry agents can perform the electronic submission 

of professionally certified documents. 

Switching is easy. 

Book your FREE onsite 

training right now. 

Simply call 1-800-663-6102. 


for a 

World Free From Cancer 

To ensure that your client’s gift benefits cancer 

care and research in B.C. at the BC Cancer Agency, 

please ensure that the full legal name of our 

organization is used in estate and financial 

planning documents. 

BC Cancer Foundation 

Registration Number: 11881 8434 RR0001 

To find out more about the BC Cancer Foundation or obtain 

a free gift planning kit, please contact Isabela Zabava, LL.B. 

at 604.877.6157, izabava@bccancer.bc.ca or visit us online 

at www.bccancerfoundation.com/giftplanning 

The Key Elements of a Ponzi Scheme 

1. A seller who is extremely 

charismatic. I like to describe 

such a person as one who could 

sell snow to an Eskimo. 

2. A promise of high return or payout 

far beyond what anyone else is 

offering 

3. High pressure to invest at the 

meetings. Invest now! 

4. Very little in the way of 

information, print materials, 

pamphlets, or documents 

5. Tough economic times when 

people are looking for a way 

to hedge their bets against 

a recession. That makes the 

perfect storm for a Ponzi scheme. 

If it sounds too good to be true, it is. 

Ponzi schemes play on your greed, 

justifications, and willingness to put 

aside your disbelief and self-talk. 

• You want to believe you can make 

millions. 

• You convince yourself life has 

been hard and you deserve to win. 

• It’s your turn! 

The best piece of advice I can 

offer is this: Listen to that little voice 

inside your head that is whispering 

“Run!” s 

Sgt. Trainor, a recently retired police 

detective from the Saskatoon Police 

Service, is a regular guest on national 

radio and television. He has presented 

hundreds of fraud-prevention lectures 

across Canada and has teamed with the 

Canadian Red Cross to speak to school 

students about bullying and to deliver 

Workplace Harassment seminars to 

large and small companies. Twenty-one 

thousand copies of his comic book on 

bullying have been given to Grade 5 

students across Saskatchewan. 

Brian’s book Stop 

Fraud is available 

at most bookstores 

across the country and 

at Amazon.ca. 

www.fraudsquad.ca 


Bailey Jung 

President, Owner-Operator 

#400 #178 – 5489 2242 Kingsway, Byrne Road, Vancouver, Burnaby, BC BC V5N V5J 5X6 3J1 

Tel: Tel: 604.708.4200 604 708-4200 | | Fax: 604.877.2216 604 431-8300 | Cell: | Cell: 604.970.3113 

604 970-3113 

bailey@silverbulletshreddingcom 

bailey@silverbulletshredding.com 

Business to Business 

LEGAL SURVEYS • MUNICIPAL ENGINEERING 

LANd deVeLOPMeNT ANd MANAGeMeNT 

1A – 3411 Shenton Rd 

Nanaimo, BC 

V9T 2H1 

P 250-758-4631 

F 250-758-4660 

4212 Glanford Ave 

Victoria, BC 

V8Z 4B7 

P 250 -727-2214 

F 250 -727-3395 

www.jeANdeRSON.COM 

Margot R. Rutherford* 

Notary Public 

A Member of The Society 

of Notaries Public of British Columbia 

*Denotes Professional Notarial Corporation 

981 Fitzgerald Avenue Tel: 250 338-6251 

Courtenay, BC V9N 2R6 Fax: 250 338-5337 

email: mrrutherford-notary@shaw.ca 

www.silverbulletshredding.com 

170 Morison Ave 

PO Box 247 

Parksville, BC V9P 2G4 

P 250 -248-5755 

F 250 -248-6199 

Kathryn (Kate) GreeninG 

Notary Public 

telephone: 250 338-1445 320 tenth Street 

Fax: 250 338-6638 courtenay, bc 

toll Free: 1-800-335-8338 V9N 1P5 

250 656-3951 

101 – 9830 Second Street 

Sidney, BC V8L 3C6 

Real Estate 

Estate Planning 

Differentiate yourself with Distinction. 

Become a Certified Senior Advisor (CSA). 

Setting the standard of service for the 50+ population 

1-877-272-9066 • www.Canadacsa.com 


ThE ERON MORTGAGE FR AuD : 

Lessons 

from a Ponzi Scheme 

Eron Mortgage was 

a contemporary, albeit 

more sophisticated, version 

of Charles Ponzi’s scheme. 

Like the postal reply coupon, the 

high returns on investments promoted 

by Eron mortgage—real estate 

developments in Canada and the 

United States—seemed plausible to 

investors at the time. 

Like Charles Ponzi, the principals 

of Eron Mortgage did not actually carry 

out the plans they enthusiastically 

described to their willing contributors, 

although their businesses were widely 

praised by many media commentators. 

And in both cases, after questions 

were raised about their businesses, 

their books were examined and their 

frauds discovered. 

But for both Ponzi’s investors and 

the investors of Eron Mortgage, it was 

too late; the businesses had crashed 

and their money was gone, and little 

could be done to retrieve it. 

In 2004 and 2005, our research 

team of academics, polling experts, 

and communications specialists 

conducted a postmortem of the Eron 

Mortgage fraud, focused on responses 

from more than 2200 Eron Mortgage 

investors. After reviewing relevant 

Eron research literature and the 

After compilation of the results 

from the initial instrument and 

presentation of an interim report, 

the questionnaire was revised and 

a final version mailed to 1765 Eron 

investors. In addition to drawing upon 

the information gained from these two 

questionnaires, the research team 

conducted telephone interviews with 

180 individual Eron investors and 

conducted face-to-face interviews with 

regulators, legal counsel, accountants, 

and others with expertise in securities 

regulation and investor fraud. 

We received a total of 559 valid 

responses from Eron investors. 

• We found that about 60 per cent 

of the Eron investors were male 

and they were older than the 

average Canadian investors. Most 

were in their mid-50s or older at 

the time of their initial investment. 

• The Eron investors were no 

Neil Boyd 

specific findings of the BC Securities 

Commission, we held focus groups 

and developed a pilot questionnaire, 

mailed to 520 randomly selected Eron 

investors in December of 2004. 

The purpose of the Eron 

investment was, for the 

overwhelming majority of 

investors, to fund retirement. 

better educated and no more 

affluent than the average British 

Columbian of a similar age. 

• They were not particularly 

wealthy—approximately two thirds 

reported total annual incomes of 

less than $75,000 and, with an 

average age of 55, their net worth 

was approximately $200,000. 

The purpose of the Eron 

investment was, for the overwhelming 

majority of investors, to fund 

retirement. They were men and women 

who were approaching retirement 

without adequate resources, and 

we learned that the majority of the 

investors took their existing retirement 

funds, borrowed money, and mortgaged 

their homes to invest in Eron. 

Additionally, we found that those 

who described themselves as highly 

knowledgeable investors—typically 

affluent middle-aged men—lost more 

than twice as much as the other Eron 

investors. 

Finally we learned, contrary to 

some assumptions about returns in 

Ponzi schemes, that those who invested 

early in Eron, between 1993 and 1995, 

lost about twice as much as those who 

invested in 1996 and 1997. 

The effects of the Eron Mortgage 

losses were literally devastating to 

hundreds of the Eron investors. More 

than half of those who lost more 


than $50,000 reported extreme or major harm to their 

emotional well-being, their current financial situation, and 

their retirement security. Between 20 and 30 per cent of 

those investors also reported extreme or major harm to their 

marital relations, friendships, and physical health. 

Our report proposed two possibilities in the realm of 

regulatory reform. 

• First, to protect investors in the private or so-called 

exempt capital market, all principals in businesses 

that seek to raise capital should be required to obtain 

a third-party credit check, disclosing the relevant 

business backgrounds of the principals and thereby 

providing some measure of protection to potential 

investors. In that particular case, the previous 

bankruptcies of the principals—Frank Biller and Brian 

Slobogian—would have come to light. 

• Additionally, we question the logic of an exemption 

from the need for an offering memorandum, when 

that exemption is based on personal trust. One of the 

hallmarks of investment fraud is that it operates on 

the basis of exploitation of existing trust. It is not clear 

that there is any compelling evidence to suggest that 

being a family member, close friend, or close business 

associate of the principal provides increased protection 

for investors in the private markets. 

More than half of those who lost more than 

$50,000 reported extreme or major harm 

to their emotional well-being, their current 

financial situation, and their retirement security. 

Our report cited three challenges for investor education, 

posed specifically by the experiences of Eron Mortgage. 

First, it is critical that the public, our courts, and our 

law and policymakers understand the very considerable 

consequences of securities fraud. In both civil and criminal 

contexts, the penalties imposed do not adequately reflect 

the harms created by such activity. The deliberateness 

of the conduct of the principals and the devastating 

consequences upon hundreds of individuals stand in stark 

contrast to much violent crime—criminal activity that 

receives considerably more attention and attracts much 

more substantial penalties. 

Second, the report identified two kinds of vulnerable 

investors in investment frauds. 

1. Pre-retirement investors, approaching retirement 

without adequate resources and desperate to find a way 

to maintain a dignified lifestyle beyond their working 

years. As the Baby Boomers approach retirement in the 

coming decade, investor education for these individuals 

will become a more pressing problem. 

2. The vulnerable investor—the affluent middle-aged 

male, assumed to be highly knowledgeable about 

Ponzi Scheme 

Details 

Neil Boyd 

in the Summer 

of 1920, Charles 

Ponzi was the 

talk of Boston. 

His 7-monthold 

business, The 

Security Exchange 

Company, was taking 

in more than a million 

dollars a week from 

investors. He had 

guaranteed them 50 

percent interest on 

their principal in 45 days—an astonishing rate of 

return. The mechanism for generating this wealth 

was an international reply postal coupon, a device 

for facilitating international business. Ponzi told his 

prospective purchasers he could buy a postal coupon 

in Spain for about 1 cent and when he cashed it in 

America, he could buy six 1 cent stamps. 

His plan was to convert on a grand scale—buy 

millions of dollars of coupons in foreign countries 

and convert them into 5 and 10 times their value 

in America. It was all legal—and lauded by some 

commentators as a brilliant plan. 

The scheme appeared to work. Early investors 

did see 50 per cent return on their money and, as 

a consequence, investments grew exponentially 

through the Spring and Summer of 1920. But Ponzi 

was simply using the money from new investors to 

enrich himself and pay off earlier obligations; he had 

created a new variation on the longstanding pyramid 

deception—a variation now termed a Ponzi scheme. 

The Boston Post questioned the legitimacy of 

Ponzi’s approach in July of 1920: Who, after all, 

would buy the millions of dollars of stamps that Ponzi 

was said to be collecting? In response to increasing 

media criticism, Ponzi allowed an auditor to examine 

his books, and his abrupt decline began. The 

newspaper learned Ponzi had previous convictions 

for forgery and smuggling and had spent time in 

prison in both Canada and the United States; his 

books quickly revealed his latest deception. He was 

convicted of fraud and sent to jail for 14 years, 

leaving thousands of Americans in financial ruin. 


Fully - Supported 

Online Meets 

Associates in 63 countries 

Open 

Close the deal. 

A Subsidiary Company of 0838513 B.C. Ltd. 

www.dyedurhambc.com 

or connect through BC Online 

investments. A carefully focused 

and creative set of approaches 

to investor education will be 

necessary to reach this individual. 

Finally, we learned the Eron 

investors did not know that the BC 

Securities Commission has no legal 

responsibility 

• to check the qualifications of 

investment principals; 

• to disclose who is under 

investigation; 

• to evaluate the risk of 

investments; or 

• to recover investors’ money. 

There is a clear and pressing 

need to make clear to investors in the 

private capital markets that they are 

essentially on their own—the principle 

of caveat emptor is paramount. 

The best protection for an investor 

is that his or her decision to invest 

take place with skepticism and with 

a clear understanding of the risks 

of the private market. It is the wellinformed 

and skeptical investor who 

will be least likely to be fooled by the 

fraudulent dishonesty of men like 

Frank Biller and Brian Slobogian. s 

This article was excerpted and adapted 

from a report prepared for the British 

Columbia Securities Commission by 

Neil Boyd, Final Report, Eron Mortgage 

Study, March 2005, Neil Boyd, 

Principal Researcher. 

Neil Boyd, a Professor and Associate 

Director of the School of Criminology 

at Simon Fraser university, was educated 

in law at osgoode Hall Law School. 

He is the author of 6 books; 2 textbooks, 

The Social Dimensions of Law, and 

Canadian Law: An Introduction 

(now in its 4th Edition); and many 

academic articles. He also is a frequent 

media commentator on subjects related 

to crime and justice. 

His most recent book, A Thousand 

Dreams: Vancouver’s Downtown 

Eastside and the Fight for its Future, 

is co-authored with Senator Larry 

Campbell and Lori Culbert of 

The Vancouver Sun. 


Ask Corporal Dave Reece 

how to protect yourself 

from fraud and he 

answers without hesitation, 

“Due diligence. Know who 

you’re dealing with.” 

Reece is the current head of the 

North Vancouver RCMP’s Economic 

Crime Unit and a financial crime 

veteran. He spent 9 years with 

Integrated Proceeds of Crime and 

4 more with the RCMP’s Commercial 

Crime Unit. His career stretches 41 

years from its beginning in the United 

Kingdom, to the Vancouver Police, to 

his current position in the RCMP. 

Reece is quick to pinpoint 

the particular challenges faced by 

Fraud inc. 

Cpl. Dave Reece working on a file involving some fraudulent 

documents 

Constable Michael McLaughlin 

Notaries, lawyers, accountants, and 

other professionals in the evolving 

world of economic crime. 

Reece is quick to pinpoint 

the particular challenges 

faced by Notaries, lawyers, 

accountants, and other 

professionals in the evolving 

world of economic crime. 

They are not “ordinary” people 

when it comes to the potential risks 

they face. The stakes are much higher. 

Even smart people can be duped if 

they are careless or greedy, and they 

stand to lose huge sums of money or 

even face criminal charges if things go 

awry. As you read this, Reece and his 

unit are working on two cases of North 

Vancouver mortgage fraud that involve 

millions and likely will lead to multiple 

criminal charges. It’s a safe bet that 

the targets of the investigations have 

no idea what’s coming. 

Reece says the same advice that 

protects every potential victim applies 

equally well to the professional world. 

“If it looks too good to be true, stay 

away. Do your due diligence; don’t 

accept anything at face value. Your 

friends could be taken in, too.” 

You can do much of that diligence 

yourself through healthy skepticism 

and a check of open sources like 

BC Online. There, you’ll get access 

to government databases, company 

information, and legal judgments. 

Check the local financial news to see 

if the company or person with whom 

Cpl. Reece in our exhibits locker, looking at some stolen and 

cloned PIN pad terminals 


you are about to do business has had 

trouble that was made public in the 

past few years. Your effort could save 

you a lot of grief. 

If all that research sounds like 

it’s above your level of expertise, or 

it’s simply too much bother, then get 

yourself a lawyer. They are there to 

protect you when you can’t do checks on 

your own. Make sure you get a good one. 

No conversation about financial 

crime is complete without addressing 

the temptation to participate. You need 

to beware that being part of a crime— 

or looking the other way when things 

are obviously crooked—could lead to 

a world of trouble. 

Cash or bank drafts are sometimes 

laundered through Notaries and 

lawyers, and that’s usually an 

indication that high levels of organized 

crime are involved. If you don’t know 

the source of a client’s cash, ask 

him or her to declare it. That is not 

always a legal requirement, but it will 

save you from police using a warrant 

to enter your home or business and 

seizing filing cabinets full of your 

documents—or worse. 

Working professionals, and 

accountants in particular, are 

increasingly at risk from a new scam 

whereby Canadian criminals target the 

United States government. Reece says 

fraudsters are using stolen personal 

information from people in the 

southern US to file income tax returns 

here in Canada. 

US regulators have recently caught 

on to the scam and are aggressively 

pursuing those responsible. Any 

accountants who have been accepting 

fees from a questionable source could 

find themselves in court facing a civil 

suit from the US government. If you 

want to avoid this latest scam, you 

need to listen to your inner voice when 

a Canadian client is claiming income 

tax from another country. 

If you want to know the biggest, 

most damaging trend in recent history, 

nothing beats PIN pad fraud, says 

Reece. “It’s reached such proportions 

that bankers are worried it may start 

undermining the credit card system.” 

PIN pad fraud is a classic arms 

race of technology between banks 

and criminals. Criminals have learned 

that by replacing legitimate PIN pad 

terminals with cloned versions, they 

can siphon off credit card data using 

wireless technology. 

Financial institutions are 

scrambling to replace classic 

“magnetic stripe” credit cards with 

more secure “chip cards.” Chip cards 

require a Personal Identification 

Number just like a debit card, and 

they are much harder to copy. 

Still, they are not perfect either. 

Reece says organized crime groups 

in Europe are already having some 

success defeating the chips. 

There are ways to protect yourself 

and they usually mean avoiding 

shortcuts. If you run a business, lock 

your PIN pad terminal securely to 

an immovable surface. Know your 

employees; make sure you have 

their correct and current personal 

information and do not let them leave 

a PIN pad terminal unattended. 

You also need to keep a close eye 

on your credit card statements and on 

your cards themselves. 

Whether it’s Ponzi schemes that 

have been around for years in various 

forms, or the most cutting-edge tech 

fraud, it is important to remember that 

even smart people can get taken in. 

Whether we end up as victims 

thanks to our own greed, or suffer 

indirectly because an elderly relative 

has lost his or her life savings, we all 

suffer when fraudsters succeed. Police 

are adjusting to the evolving crimes 

but fraud is a growth industry and 

investigations take time. 

Even when the courts lay a stiff 

sentence on those responsible, the 

money that was defrauded is already 

gone. Be ethical, exercise your due 

diligence, and if it seems too good to 

be true, then walk away. s 

Constable Michael McLaughlin is 

a current member of the RCMP. He 

spent most of 2009 with the North 

Vancouver Economic Crime Section. 


ADVICE ABOuT FRAuD 

FROM A PROFESSIONAL 

Private Detective 

My observations in this 

article are based on 

3 decades of fraud 

investigations and following 

through with criminal and civil 

actions. 

Fraud can be interpreted in 

numerous ways. Put simply, it is 

a criminal’s way of hurting someone 

intentionally. It is deception for 

personal gain that causes damage to 

an individual, a group, a corporation, 

or government. 

The Reasoning behind Fraud 

The components of fraud often 

include greed and narcissism—on the 

part of the victim and the perpetrator. 

It is the fraudster’s desire to enhance 

his or her position with people who 

are vulnerable. Some individuals who 

allow themselves to be subjected to 

fraud think they can gain wealth or 

stature. They fall for a convincing line 

without researching “the dangling 

carrot.” Those gullible and perhaps 

greedy targets are taken in by 

people who think they are smart and 

untouchable and who manipulate 

others without feeling any guilt. 

Once the con artist understands 

and recognizes a victim’s vulnerability, 

it’s open season for fraud—regardless 

of age, denomination, or gender. 

Characteristics of a Narcissist 

Ozzie Kaban 

Narcissism is a personality disorder 

whose traits can be diagnosed by 

degrees. 

• Many are self-centred. Their 

needs are paramount. No one 

else is important. They have no 

remorse. 

• They don’t care about the damage 

they cause their victims. They 

believe people can and should be 

manipulated. 

No matter how 

intelligent and cautious 

we think we are, each 

of us will be subjected 

to some form of fraud 

during our lives. It is my 

belief that there’s a little 

bit of larceny in us all. 

• They will not admit to being 

wrong. When things go bad, they 

always blame someone else. 

• They usually are pathological 

liars. 

Oh, yes, they put on a good 

front—persona—to impress and 

exploit others. Typically, they dress 

well, drive an impressive vehicle, and 

are never short of words and charm. 

Trying to Save Face 

People who fall for opportunities that 

are “too good to be true” may not 

admit to being defrauded, thus the 

fraud will not be reported. Believing 

they can regain their financial losses 

and save face, the victims will go 

into another fraudulent scheme that 

promises even greater potential for 

financial gain. 

human Nature 

No matter how intelligent and 

cautious we think we are, each of 

us will be subjected to some form 

of fraud during our lives. It is my 

belief that there’s a little bit of larceny 

in us all. It all depends on how we 

control our greed and nurture our 

ability to research opportunities. 

It’s so easy for larcenous people 

to portray themselves as legitimate 

businesspeople. All they need is a cell 

phone, a vehicle with a magnetic sign 

on the door, and a business card, 

which can be printed on their home 

computer. In many cases, a snappy 

card can serve to convince the buyer 

that the fraudster is legitimate. 

Many consumers are looking to 

save money but they fail to invest the 

time to research the consequences. 

The elderly are easy targets in many 

ways. Generally, seniors have a fixed 

income and if some smooth-talking 

person offers a great deal to redo 


their roof or paint the siding, it’s 

automatically of interest to them. 

Fraud artists are usually very 

smooth, appear to be kind, and may 

even carry a picture of their granny 

with them . . . to convince buyers they 

are hardworking folk with families— 

and that they are totally honest. 

Once a deal is struck—usually 

for cash, to avoid a paper trail and of 

course to eliminate tax—they will ask 

for a deposit. Once they have the cash 

in hand, the fraud starts. Labour and 

products that were promised may not 

arrive or they are substandard. That can 

have a devastating effect on the buyer. 

Information Gathering for Fraud 

There are so many ways to gather 

information for fraudulent purposes. 

In apartment or house rentals, for 

example, the applicant is asked for his 

or her Social Insurance (SIN) number 

and credit card number, financial 

statements, banking information, 

mother’s maiden name, and so on. 

STOP! 

• To whom are you divulging that 

information? 

• How will your private information 

be used? Will it be used 

for identity theft and fraud, 

investment and security fraud, 

counterfeit payment cards, or 

credit card fraud? 

In today’s economy, you must 

be very careful and on guard, even 

with existing companies. The need 

to be more profitable will cause 

some companies to cut quality and 

workmanship while still promising 

their clients first-class service and 

guarantees. 

Be cautious. Attempts to defraud 

you via the telephone or online can 

include promises of a big win, a gift, 

and free trips—if you provide credit 

card numbers and other personal 

information. Don’t divulge any personal 

information to a nice voice on the 

telephone. Just hang up! 

Be Aware 

Pay attention to the media. Every day, 

people are being defrauded of millions 

of dollars. In our business, we have 

experienced a number of these cases 

in the past year. A chap in Toronto 

defrauded friends, neighbours, and 

relatives of millions of dollars. He 

has been convicted and sentenced 

to serve 14 years in jail. Because it 

is a white-collar crime, he’ll probably 

be out in 2. 

Look at the profitability of 

crime. Millions of dollars are lost and 

subsequently gained. The money is 

rarely recovered. The man is out in 2 

years, but the investors have lost their 

life savings and have nowhere to turn. 

Surprisingly, a good 

percentage of fraud 

is committed by people 

we would trust—perhaps 

an employee. 

There appear to be no boundaries 

when it comes to fraud, deception, 

and theft. Fraudsters have no 

sympathy or respect for family, friends, 

or neighbours. Honest people always 

surprise me with their gullibility when 

it comes to fast financial gain that 

is offered in the form of business 

opportunities and pyramid schemes, 

to mention two. 

Just when I think I’ve seen it 

all, a truly innovative twist stretches 

the limits of deception. In one of 

our Investigations, a man defrauded 

a church congregation of millions of 

dollars. You would think someone 

sitting next to you in church— 

supposedly believing in honesty, 

respect, and God—could be trusted. 

That alleged pillar of society defrauded 

elderly people of their assets. Thinking 

they were going to become instantly 

rich, they re-mortgaged their houses. 

Some people in their late 70s and 80s 

were devastated. By the time this man 

was found, the money was gone. 

Remember: You are an intelligent 

individual, capable of making good 

decisions. You are capable of doing 

the research. Don’t let false promises 

and questionable information allow 

you to make mistakes. Push greed 

and gullibility to the side and use your 

common sense. 

©iStockphoto.com/Kalulu 

False Identities 

We were hired to do an investigation 

relating to the false or fraudulent 

use of identification documents for 

the purpose of obtaining welfare 

cheques. Through our street 

informant, we acquired the name 

of an individual who could provide 

us with stolen or false identification 

that would give us the information 

necessary to obtain welfare. 

One method of data-gathering for 

fraud was to visit back-country 

cemeteries to glean names and dates 

of birth from very old tombstones. 

With some research, sufficient ID 

could be collected to supply the 

government with enough information 

to get a birth certificate. The reason 

given for wanting the new birth 

certificate? The original was lost. 

By providing enough details, an 

identity could be created that would 

satisfy the government or a financial 

institution so the thief could open 

a bank account, apply for a passport, 

or receive welfare cheques. 

After our investigation was 

completed, a lot of those loopholes 

were plugged. By the way, our fraud 

artist was receiving five welfare 

cheques a month—not a bad income! 


Staff 

Surprisingly, a good percentage of 

fraud is committed by people we 

would trust—perhaps an employee. 

For example, in the electronic 

business an employee is entrusted 

to make up purchase orders and buy 

parts for the company but he diverts 

some of the parts for his own use. 

The employee then sells the parts or 

installs the parts himself for cash or in 

trade to someone for other products. 

That is a double-barrelled fraud. The 

employee is defrauding his employer 

and the person or company that has 

received the “stolen” parts or service is 

not paying tax on the purchases and is 

therefore defrauding the government. 

Never let your guard down. Make 

certain your employees are held 

accountable for their time and their 

activities. 

Love 

Fraud disguised as love is prevalent. 

We have investigated fraud cases 

that were almost unbelievable . . . 

the victim was so gullible and the 

perpetrator so heartless. 

In most cases, the victims are 

intelligent but simply turn a blind eye 

to a glib man or woman who promises 

everlasting love. 

One such case was that of a well-todo 

female. She owned her own business, 

©iStockphoto.com/xploresoft, LLC 

her home was free and clear, she had 

a new car, and she had little or no debt. 

Along comes a highly presentable male 

whom she meets at a friend’s party. Very 

quickly, a relationship develops and the 

male moves into the home of his newfound 

victim. 

The relationship blossoms 

with Mr. Wonderful showering Poor 

Victim with gifts, flowers, and lots 

of affection. The fraudster then 

confides in her . . . he produces 

forged paperwork showing ownership 

of vast property holdings in the east. 

A proposal of marriage is made with 

the promise of a big, beautiful home 

after his properties are sold. 

Fraud disguised as love 

is prevalent. We have 

investigated fraud cases 

that were almost 

unbelievable . . . the victim 

was so gullible and the 

perpetrator so heartless. 

Next, the fraudster convinces 

the victim that the property he owns 

would double in price if he bought 

an adjacent property. He does not, 

however, have the cash at this moment 

to make the purchase. There are other 

offers on the property and he must act 

quickly to secure the deal. 

Mr. Wonderful then suggests to 

Poor Victim that if she were to invest 

$250,000, he would make her a half 

partner in his entire holdings because 

he loves her, trusts her, and their 

relationship is for keeps. Poor Victim 

gets a mortgage on her home, then 

lovingly and trustingly hands over the 

money to her own true love. 

When we finally got involved in 

the investigation, the fraudster had 

vanished. We found his identity was 

fake and the property in question 

never existed. Poor Victim was left 

with a broken heart and a $250,000 

mortgage on her home. 

Often, problems can be avoided 

by doing due diligence early in 

a relationship. 

Seniors 

In my many years of investigation, 

one of the things I detest the most is 

abuse of seniors. 

Many seniors are conditioned to 

think that once they reach a certain 

age, they are no longer capable of 

being productive or of looking after 

themselves. That type of thinking 

encourages some seniors to develop 

a sense of dependency. They are 

fearful of making decisions and afraid 

of being abandoned. 

They have their Notary or lawyer 

create a Power of Attorney and they 

appoint a family member, friend, or 

acquaintance to be their “attorney”— 

the person with the power to make 

decisions for them in the event they 

cannot do so for themselves. Because 

they trust that person, they may 

slowly involve that individual in more 

and more aspects of their daily lives. 

The “attorney” may become a sort of 

caregiver to the senior. 

That’s where there is the potential 

for fraud. Although the senior may note 

discrepancies such as missing cash and 

jewellery—and even discover receipts 

for items or services he or she has not 

ordered or received, surprisingly the 

senior may be reluctant to question 

any of that. Why? Fear of losing the 

affection of the person on whom the 

senior has become so reliant—and who 

is now stealing from the senior. With 

every passing day, the thief may become 

more and more brazen in the acts of 

fraud. 

Our firm regularly investigates 

scurrilous scenarios regarding senior 

citizens. Here’s an example of 

a situation we have seen many times. 

An elderly widow with good financial 

resources is befriended by a male, 

usually about 20 years her junior. 

The male turns her head with flowers, 

tender compliments, and romantic 

notions that she hasn’t heard for 

years, if ever. He’s an accomplished 

con man. 

His next move is to separate her 

from friends and family by convincing 

her that he alone has her best 

interests at heart. In many cases, such 

a man will profess eternal love; he 


assures her that he will always protect 

her and be there for her because her 

friends and family have no respect for 

her . . . all they want is to see her die 

and get her money. Once the man has 

isolated the lady and is now in control, 

the serious defrauding begins. 

We have investigated 

circumstances like that on numerous 

occasions. When the family retains 

our services and we are asked to do 

a background check on the man, 

we often find unethical or criminal 

information about him. When he learns 

someone is investigating him, he 

disappears, fearing he may be exposed. 

The loss to the victim is traumatic. 

It’s not only women who are taken 

in by unscrupulous people. In our 

experience, the “younger lover” scams 

are about even for men and women. 

Elderly men can be stung by younger 

women. In one case, a male in his 80s 

met a lady in her 50s. He became so 

totally obsessed with her ego-stroking 

flattery, her attention, and her physical 

manipulation that he invited her to move 

in with him. She did, then she slowly 

turned the man away from his family. 

©iStockphoto.com/25 Studios 

She was one of many females 

who prey on elderly males by 

overwhelming them with affection, 

praising their looks and their virility, 

and of course planting the seed 

that their family members are only 

interested in their money. The female 

is usually emphatic about the fact 

that all she wants to do is look after 

her new love and that money is 

not important. She does, however, 

permit and encourage him to buy her 

gifts, give her money and perhaps 

a car, and pay for all the household 

expenses. There again, after she 

effectively severs the male’s ties with 

his family and friends, her fraudulent 

behaviour becomes more overt. 

More people are asking us 

to investigate the individuals 

with whom they want 

to become involved in one 

way or another, and to 

check out their offsprings’ 

romantic partners. 

Alert 

Every woman likes to be told she 

is beautiful and intelligent. Every 

man wants to hear he is attractive, 

a good provider, and a great lover. 

Through that formula, in the hands 

of the fraudster—male or female— 

fortunes have been lost. 

heavy Caseloads 

In my opinion, it is unfortunate that 

only a small percentage of fraud 

cases are brought to the attention 

of the public. Police departments 

are swamped with all types of 

investigations. They are understaffed 

and are in no way able to help everyone. 

A fraud of less than $100,000 

will take as much time to investigate 

as a multimillion-dollar crime. They 

both consume valuable manpower and 

budget. We find that clients are now 

coming to us to put a case together for 

them. Once we have all the evidence 

in hand, the case can be turned over 

to the authorities. 

Check It Out! 

Because of media coverage, more 

people are now being made aware of 

the many fraud cases before the courts. 

With today’s computer technology, 

many documents can be copied 

and thus be mistaken for an original 

document issued by a business or 

government. 

Due diligence can save a lot 

of problems and embarrassment. 

Doing background checks on people 

and corporations is an intelligent 

way of proceeding with any future 

relationship, whether personal or 

business. 

More people are asking us to 

investigate the individuals with whom 

they want to become involved in one 

way or another, and to check out 

their offsprings’ romantic partners. 

Corporations are asking us to do due 

diligence so that a partnership or 

investment deal may be possible. 

That research may produce 

a favourable result but there are times 

when directors or silent partners must 

be scrutinized. The corporation or 

company may be clean but it may be 

run by partners, directors, or investors 

who are not. 

Although due diligence does not 

provide a 100 percent guarantee, 

an investigation may give you 

the confidence to enter into an 

association you are contemplating. 

It is less costly than being defrauded 

later. s 

Ozzie Kaban, of Kaban Protective 

Services inc., is a Private investigator 

and Security Consultant licensed 

by the Department of the Attorney 

General of BC. His extensive studies 

have enabled him to better understand 

human behavioural patterns. His 

designations include RPC (Registered 

Professional Counsellor), MPCP (Master 

Practitioner of Counselling Psychology), 

and RCCH (Registered Counselling 

Clinical Hypnotherapist). 

Voice: 604 251-2121 

okaban@telus.net 

www.kabanpro.com 


The idea for our popular 

booklet Scams to 

Avoid came as a kind 

of a Christmas present from 

the Better Business Bureau in 

December 1998. 

As it does every year, the BBB 

issued a bulletin listing the 10 top 

scams for that year. We thought it was 

a shame that the BBB bulletin—so 

timely during the Christmas consumer 

frenzy—was published by many 

newspapers in the weeks around the 

festive season but forgotten by the 

New Year. That was the genesis of 

an idea: What if the BBB’s consumer 

alerts were available year-round in the 

form of a booklet? 

We contacted the BBB to see 

if they were interested in working 

together on a series of one-page fact 

sheets. They were keen on the idea. 

We would do the writing, printing, and 

distribution of the fact sheets; the 

BBB would review them for accuracy 

prior to publication. 

We started out with eight 

individual fact sheets dealing with 

common consumer frauds such as 

charity-appeal scams, foreign lotteries, 

and travel scams. Back then, we 

distributed only hard copies of the 

fact sheets. Remember, that was 

before the Internet had emerged as 

a popular and easily accessible source 

of information. 

A Lesson Learned 

For more information: 

Gordon Hardy 

ThE PEOPLE'S LAW SChOOL 

“Scams to Avoid” Booklet 

We noted people tended to request 

every single fact sheet we had, not just 

the ones that concerned them, as we 

supposed they would. As an experiment, 

we bound all the fact sheets into 

a single booklet. The moment we made 

the booklet available, requests for single 

fact sheets dropped to zero. 

Better Business Bureau of Mainland B.C. 

Suite 404, 788 Beatty Street 

Vancouver, BC V6B 2M1 

Tel. 604 682 2711 

Toll Free: 1 888 803 1222 

Email: inquiries@mbc.bbb.org 

mbc.bbb.org 

Better Business Bureau of Vancouver 

Island 

#220-1175 Cook Street 

Victoria, BC, V8V 4A1 

Tel. 250 386 6348 

Toll Free: 1 877 826 4222 

Email: info@vi.bbb.org 

vi.bbb.org 

Increasingly, we see the 

Internet emerging as the 

people’s choice for accessing 

information about a wide 

variety of topics, including 

legal subjects. 

Competition Bureau Canada 

2000-300 West Georgia St 

Vancouver, BC V6B 6E1 

Toll Free: 1 800 348 5358 

Email: compbureau@cb-bc.gc.ca 

www.competitionbureau.gc.ca 

or contact 

the Canadian Anti-Fraud Call 

Centre (“PhoneBusters”) 

Toll Free: 1 888 495 8501 

phonebusters.com 


PO Box 9244 

Victoria, BC V8W 9J2 

Toll Free in BC: 1 888 564 9963 

Email: info@ 

consumerprotectionbc.ca 

consumerprotectionbc.ca 

Aha, we thought. BC If Crime given Prevention a choice 

Association 

between a series of fact #275 - sheets 6450 Roberts or Street the 

Burnaby, BC V5G 4E1 

same fact sheets bound Tel. 604 into 291 9959 a single 

Toll Free: 1 888 405 2288 

booklet, people will choose Email: info@bccpa.org the 

bccpa.org 

booklet. 

BC Securities Commission 

PO Box 10142 Pacific Ctr 

701 West Georgia Street 

Vancouver BC V7Y 1J2 

Inquiries: 604-899-6854 

1 800 373 6393( toll free 

across Canada) 

InvestRight: 

investright.org 

BCSC: bcsc.bc.ca 

But we think people behave 

differently when printing materials 

from Websites. There, we give people 

a choice: They can print the individual 

fact sheets—more accurately called 

Web pages—or the entire booklet, fully 

formatted and illustrated. 

Increasingly, we see the Internet 

emerging as the people’s choice for 

accessing information about a wide 

variety of topics, including legal 

subjects. We also are moving to provide 

people with alternatives to the written 

word, such as cartoon animation. 

Health Claim Scams 

ID Theft 

Home Repair 

Rip-Offs 

Hidden Cell 

Phone Charges 

Cashback Fraud 

Small Business Loan 

and Supply Scams 

Mystery Shopping 

Job Scams 

Not So “Free” Trials 

Free Government 

Money Schemes 

Business 

Opportunities 

Cartoon Animation 

as Public Legal Education 

We’ve already posted to our Website 

some short, funny cartoon animations 

about credit card use and debt 

collection issues. In the coming 

months, we hope to create additional 

cartoon animations about consumer 


1 

Inte 

can 

Be 

aut 

uns 

wa 

pra 

Do 

dis 

bef 

all.” 

Q 

c 

d 

c 

2 

is 

to 

C 

5 

2 

pro 

wh 

sig 

off 

the 

suc 

we 

car 

avo 

tra 

me 

you 

Q 

b 

e 

s 

to 

c

GEORGE E.H. CADmAN,* Q.C. 

604 647-4123 Cell 604 290-8947 

gehcqc@boughton.ca www.boughton.ca 

Real Estate, Corporate Litigation 

and Dispute Resolution 

BOUGHTON LAW CORPORATION 

Suite 1000, 595 Burrard St., P.O. BOx 49290, 

VancOuVer, Bc V7x 1S8 

tel 604 687-6789 Fax 604 683-5317 

*law cOrPOratiOn 

Estate 

Litigation 

I can help. 

• Past President, TLABC 

• Past Chair Wills & 

Trusts Section, CBA 

• Over 35 years of 

litigation experience 

Trevor Todd 

Wills 

Estates 

Estate Litigation 

P | 604 264-8470 

Referrals Welcome. 

www.disinherited.com 

E | rttodd@disinherited.com 

law issues such as identity theft, the 

consequences of co-signing a loan, and 

the true costs of quick-cash payday 

loans. 

hard-Copy Booklets 

We also recognize there is a very 

big place for the written word. Each 

year, we receive requests for about 

100,000 of our various booklets from 

community organizations, public 

libraries, schools, and BC Notaries 

Public. There is a simple reason for 

that: Many of the groups that request 

our booklets don’t have the time or 

staff to print 5 or 50 copies of our 

online booklets to give to their clients. 

What they want is a ready supply 

of hard-copy booklets that they can 

put into their clients’ hands. Thanks 

in large measure to the Notary 

Foundation of British Columbia, we 

can provide those booklets quickly and 

without charge. 

New Edition of Scams to Avoid 

Since we first created Scams to Avoid, 

we have distributed about 70,000 

copies. We have updated it to include 

new scams as they emerge, such as 

identity theft and Internet scams. 

In the next few months, we will 

produce a new edition of Scams 

to Avoid, this time addressing new 

scams such as eco-fraud, where 

marketers make false claims about 

the environmental friendliness of their 

products. 

Scams artists are clever scoundrels 

who adapt with the times. If you fall 

victim to a consumer scam, there usually 

is little you can do. The best defence 

against scams is to recognize them in 

advance and avoid them. We hope our 

booklet Scams to Avoid is helping British 

Columbians do just that. s 

Gordon hardy was born and educated 

in Vancouver, BC. After working for 

The Vancouver Sun and The Rome Daily 

American, he joined the People’s Law 

School as staff journalist in 1980. He 

subsequently became the coordinator 

of the School’s publications program, 

and its Executive Director in 1986. 

Voice 604 331-5406 

ghardy@publiclegaled.bc.ca 


Last year, the Top Ten 

Scams focused on dubious 

practices of online 

commerce, asking consumers 

to read the fine print BEFoRE 

they clicked “yes.” 

Complaints in 2009 ranged from 

teeth whiteners to premium text 

messages to government grants, but 

all tied back to consumers unwittingly 

consenting to sign up for the service or 

product. 

“We often chastise ourselves for 

the impulse-buy at the checkout aisle, 

but when we are online we often skip 

reading the terms in conditions to get 

in on a deal,” says Lynda Pasacreta, 

BBB President and CEO. “Web 

marketers are savvy to consumers who 

click first and ask questions later and 

are reaping record profits from it.” 

The following Top Ten Scams 

list was developed jointly by the 

BBB, Business Practices and 

Consumer Protection Authority of BC, 

Competition Bureau of Canada, BC 

Crime Prevention Association, and BC 

Securities Commission. 

Better Business Bureau’s 

Top Ten Scams for 2009 

in no specific order, here are 

the top ten scams of 2009. 

1. health Claim Scams 

Bogus products that make 

“breakthrough” health claims on 

the Internet or promise cures for 

illnesses, such as cancer, target the 

most vulnerable consumers. Be wary 

of online swine flu remedies not 

authorized by Health Canada that are 

making unsubstantiated health claims 

that they kill or ward off the virus. 

Consult your health care practitioner 

before trying any new treatment. 

Don’t be influenced by “miraculous” 

testimonials discussed on Websites 

and blogs. Think twice before buying 

a product that claims it can “do it all.” 

QUICK TIP 

If you have questions or complaints 

about counterfeit drugs and/or drugs 

purchased over the Internet, please 

call Health Canada’s toll-free line 

at 1-800-267-9675. If you suspect 

a Website is promoting a treatment 

or cure that is too good to be true, 

please contact the Competition 

Bureau toll free at 1-800-348-5358 

or go to competitionbureau.gc.ca/info. 

2. Not So “Free” Trials 

©iStockphoto.com/hidesy 

You may want to try out a new diet 

product, an acne cream, or a teeth 

whitener, but be careful about 

signing up for “free” trial offers. 

Many Websites offering a free trial for 

products do not disclose the billing 

terms and conditions or do not have 

such details prominently displayed 

on their Website. Before providing 

any credit or debit card information, 

review the Website fully to avoid 

repeated billing. Remember that 

money transfers and direct debit are 

two of the main methods through 

which scam artists seek to obtain 

your money. 

QUICK TIP 

When considering trial offers, be 

sure to determine first whether 

you are enrolling in a membership, 

subscription, or service contract that 

allows the company to charge fees to 

credit cards. To file a complaint, go to 

bbb.org. 


3. ID Theft 

Often, people discover they are 

victims of identity theft after they 

are contacted by a collection agency 

for an account they never set up or 

because their credit has taken a hit. 

ID theft occurs when someone uses 

your information to obtain loans, 

goods, or services, then does not pay 

the bills. Increasingly, people online 

are being lured into revealing personal 

information. 

QUICK TIP 

Do not fall for requests for information 

or other scare tactics. Online 

scammers send emails that look 

legitimate, requesting that your 

“account information needs to be 

updated.” Another new tactic called 

“scareware” has a pop-up message 

showing that your computer is 

infected with a virus and that you 

need to visit a Website to purchase 

and download antivirus software that 

would fix the problem. 

They are all phishing tactics—ways to 

get you to reveal personal or financial 

information. If you receive those 

messages, simply delete them and do 

not click on any links. Doing so may 

compromise your computer’s security. 

If you are a victim of ID theft, call 

your financial institutions to request 

that your current cards be cancelled 

and that new cards be issued. 

You also should contact your local 

police and Canada’s main credit 

reporting agencies: TransUnion 

Canada at tuc.ca (1-866-525-0262) 

and Equifax Canada at equifax.ca 

(1-866-779-6440). 

4. home Repair Rip-Offs 

Imagine hearing your furnace is 

leaking dangerous carbon monoxide 

into your home. Many times, 

homeowners are told they need to 

do an immediate replacement due 

to a crack in their heat exchanger 

or because the contractor’s gassniffer 

device shows high carbon 

monoxide levels. That high-pressure 

safety situation often ends up in 

unnecessary and costly repairs. 

QUICK TIP 

Do not make a decision to repair right 

away. Start with the Better Business 

Bureau and search for a company 

reliability report at bbb.org. Ask the 

person to provide a gas permit and 

a licence with the BC Safety Authority. 

Call to verify it: 1-866-566-7233. 

Report misleading door-to-door sales 

practices to Consumer Protection BC. 

For complaints, contact Consumer 

Protection BC at 1-888-564-9963 or 

go to consumerprotectionbc.ca. 

5. Small Business Loan 

and Supply Scams 

Looking for credit to keep your 

business afloat can be tough. That 

is why you need to be careful of “no 

credit” or “bad credit” loan offers. 

What looks like quick and easy credit 

can often end up resulting in huge 

financial loss and possibly ID theft. 

Other companies call and pretend 

to be a regular supplier looking to 

confirm your address in a directory 

or to ship office supplies. Once 

bills arrive for unwanted advertising 

or overpriced supplies, aggressive 

“collection” agents call with threats 

of legal action. 

QUICK TIP 

If you receive an unsolicited phone 

call, email, or letter from a lender, 

be suspicious. Avoid dealing with 

a person who guarantees a loan 

without checking your credit or 

reviewing your business plan. 

Also, beware of lenders who 

• cater to applicants with bad 

credit; 

• pressure you to make a decision 

on the spot; or 

• request payment using a wire 

transfer service such as 

MoneyGram or Western Union. 

Restrict the number of people in your 

company that can make purchase 

decisions and insist on a valid 

purchase order. To report a small 

business loan or supply fraud, please 

contact the Competition Bureau 

at competitionbureau.gc.ca or 

1-800-348-5358. 

6. Free Government-Money Schemes 

Do you think you are entitled to 

free money from the Canadian 

government? Be suspicious of 

companies offering “free” advice for 

obtaining government grants. Often, 

social networking sites and online 

ads will point to blogs that appear 

to be written by everyday people 

who are sharing the secret of how 

they received thousands of dollars 

in grants from the government to 

pay off their debt. In reality, that is 

a mass marketing scheme that does 

not provide an easy way for you to get 

a government grant. Rather, it costs 

you money to participate. 

QUICK TIP 

While it’s true the federal government 

does give out grant money every year, 

most grants are given to specific 

target groups, such as postsecondary 

researchers or specific industries. 

There is no reason to pay for software 

or how-to guides when applying for 

government grants. Such information 

is already available free on the Service 

Canada Website, servicecanada.gc.ca, 

or by calling 1-800-O-Canada (1- 

800-622-6232). If you believe 

someone is engaging in fraudulent 

activity regarding government grants, 

please contact the Canadian Anti- 

Fraud Call Centre (“PhoneBusters”) 

at phonebusters.com or 

1-800-495-8501. 


7. Business Opportunities 

Your friend or a family member 

may have invited you to attend 

a presentation involving an investment 

opportunity. You don’t know anything 

about the company and are desperate 

to hear it is legit. The investments 

appear lucrative, but often involve 

more hype than substance. The 

promoter convinces investors they 

can be part-owners of an exciting 

investment portfolio, provided they 

enlist new recruits. The promoter may 

even offer promising commissions in 

cash and bullion. 

QUICK TIP 

In reality, that could be an illegal 

pyramid scheme. The new capital 

brought by new investors is keeping 

this imaginary investment afloat. Get 

the facts. If you attend an information 

session, be sure to collect business 

cards and promotional materials. 

You also should ask questions of the 

promoters. 

• Who are the principals of the 

company? 

• What are the average earnings of 

a “typical” participant, with half 

the participants earning more 

than that amount and half the 

participants earning less? 

• How much are the start-up costs? 

Before agreeing to anything, gather 

as much information as possible. If 

you have reason to believe someone is 

engaging in misleading advertising or 

deceptive marketing practices, please 

contact the Competition Bureau at 

competitionbureau.gc.ca or 1-800- 

348-5358. You also should consult 

the BC Securities Commission’s 

investright.org for information on how 

to select an advisor and what to look 

for when choosing to invest. 

8. Cashback Fraud 

Cashback fraud usually begins when 

you advertise something for sale, such 

as a car. A buyer agrees to pay your 

asking price, but sends you a cheque 

or banker’s draft for a larger sum. The 

person asks you to bank his cheque, 

then send him a money transfer for 

the difference. Sure enough, his or 

her cheque bounces a few days after 

your money transfer has left your 

account. You’re now out of pocket and 

looking for a bogus buyer who’s outof-reach. 

QUICK TIP 

Criminal cashback works because 

cheques take longer to clear than 

electronic bank transfers. Do not 

ever wire money to a stranger. Do 

not allow greed to be your guide. 

Be careful of offers higher than the 

asking price. If you believe you are 

a victim of cashback fraud, contact 

phonebusters.com or call 

1-888-495-8501. 

9. hidden Cell Phone Charges 

If you own a cell phone and see 

new and unexplained charges on 

your bill each month, it may be due 

to premium text message services. 

People complain that they did not 

realize they were signing up for this 

service when they agreed to play an 

online game or take an IQ test. In the 

end, they receive monthly billings that 

do not come from their cell phone 

service providers, but through thirdparty 

companies. 

QUICK TIP 

Premium subscription services require 

customers to confirm their subscription 

twice to ensure they are aware of the 

cost per message, the frequency of 

messages, and the opt-out information. 

Read all the terms and conditions 

when signing up for a game and think 

twice if you are required to provide 

your cell phone number. To file 

a complaint, contact the Commissioner 

for Complaints for Telecommunications 

Services at ccts-cprst.ca. 

10. Mystery Jobs Scams 

The scenario sounds too good to be 

true—and it is. You have been led to 

believe you will be paid to mystery 

shop via a wire-transfer service. You 

receive a cheque, which you are told 

to deposit, keeping a small percentage 

of the money as your wage. Then you 

are asked to send back the difference 

via a wire transfer and to complete 

a survey on the service you encounter. 

In the end, the cheque bounces and 

you lose all your money. 

QUICK TIP 

Be skeptical of mystery shopper ads 

in newspapers or online. In most cases, 

they are bogus services requiring you to 

pay money up-front. Avoid companies 

that promise guaranteed jobs and 

that sell directories of companies that 

provide mystery shoppers. 

To file a complaint, contact 

the Competition Bureau at 

competitionbureau.gc.ca or 

1-800-348-5358. 

For mystery shopping work, go to 

the Mystery Shopping Providers 

Association (MSPA) Website at 

mysteryshop.org. s 

Contacts for More information 

Better Business Bureau 

Lower Mainland: 604 682-2711 

BC Interior (250 area code only): 

1-888-803-1222 

Fax: 604 681-1544 

Website: www.mbc.bbb.org 

Email: contactus@mbc.bbb.org 

Competition Bureau 

Telephone: 819 997-4282 

Toll-free: 1-800-348-5358 

(Canada) 

Toll-free TTY: 1-800-642-3844 

(for hearing-impaired only) 

Fax: 819 997-0324 

Website: www.competitionbureau.gc.ca 

BC Securities Commission 

Telephone: 604 899-6500 

Fax: 604 899-6506 

Email: inquiries@bcsc.bc.ca 

Website: www.investright.org 

BC Crime Prevention Association 

Telephone: 604 501-9222 

Fax: 604 501-2261 

Toll Free: 1-888-405-2288 

Email: info@bccpa.org 

Website: www.bccpa.org 


Phone: 604 320-1667 

Toll Free: 1-888-564-9963 

Fax: 250 920-7181 

Email: info@consumerprotectionbc.ca 

Website: www.consumerprotectionbc.ca 


The Case 

of the Swindled Senior 

Twenty-two-year-old 

Tanya loved her mother 

Bessie enormously. 

Theirs was a close relationship. 

In recent months, however, 

Tanya sensed something was 

troubling Bessie . . . she was 

uncharacteristically withdrawn, 

secretive, and appeared depressed. 

Her mother also seemed to be getting 

a lot of mail, most of it strewn about 

the house. Tanya remembered how 

only a few weeks earlier, an elated and 

happy Bessie had remarked that “her 

ship was about to come in.” 

The phone call from Bessie’s bank 

manager shook Tanya to her core. 

Bessie had withdrawn almost all her 

savings in a very short period of time 

and the manager was concerned. 

Four Fraud Vignettes 

©iStockphoto.com/uprightouch 

What Would you Do? 

Tanya began her investigation 

by sitting down with her mother 

and discussing her concerns. She 

refrained from being confrontational 

or judgmental and eventually learned 

the truth. Her mother was convinced 

she had won $5 million in a lottery 

and had been sending thousands of 

dollars to “collect” her considerable 

winnings. Of course, the lottery was 

a scam and her mother was out 

$50,000. 

In a typical lottery scam, 

the victims receive 

official-looking 

correspondence in the mail 

that tells them they have 

won millions in a lottery. 

Each year, Consumer Protection 

BC and the police deal with many 

seniors and the young-at-heart who 

have been bilked out of their life 

savings by fast-talking con artists and 

flashy mail-outs. 

In a typical lottery scam, the 

victims receive official-looking 

correspondence in the mail that 

tells them they have won millions 

in a lottery. To collect their winnings, 

they need to send money to cover 

the taxes and administrative fees. 

Those who do send money are 

placed on “sucker lists” and receive 

further mail and phone calls telling 

them to send more money. To keep 

the victims quiet while the scam is in 

progress, the fraudsters tell them not 

to discuss their “good fortune” with 

anyone until the official announcement. 

Before long, the victims are drained dry 

of their money and, in most instances, 

the money is never recovered. 

TIP 

Remember, if it seems to be too good 

to be true, it is. Legitimate winners 

of lotteries never have to send 

money to claim their winnings. 


of the Renovation Rip-Off 

Bill lives alone. He likes people 

and they like him. 

One day, he had a knock at his door. 

He opened it to find two men standing 

there. They were in his area doing 

renovation work for one of his 

neighbours, they said. Did he need any 

work done at a great price? 

Before Bill knew it, he had 

signed a contract to have an attached 

sundeck built at a cost of $15,000. 

He gave the men his personal cheque 

for the full amount, which they cashed 

at his bank the same day. 


Bill waited for his sundeck to 

be built . . . and waited and waited 

and waited. He kept calling the men, 

wondering when they were going to 

build his sundeck. One of them finally 

showed up several weeks later and 

spent 2 hours on the job, nailing a few 

boards in place. That was the last Bill 

ever saw or heard of the men. 


Consumer Protection BC took on this 

case and was successful in helping 

Bill obtain a full refund. Charges were 

brought against both men for fraud. 

Under the Business Practice and 

Consumer Protection Act, the above 

contract qualifies as a direct sales 

contract because it was entered into 

at a place other than the supplier’s 

permanent place of business. Door-todoor 

sales are examples of direct sales 

contracts. 

With such contracts, you have 

a number of cancellation options. 

• You can cancel a direct sales 

contract within 10 days of 

receiving the contract. That is 

known as the “cooling off period.” 

You don’t need a reason to cancel. 

• You can cancel the contract after 

10 days, but only under certain 

conditions. Visit our Website at 

www.consumerprotectionbc.ca 

(look under Consumer Contracts) 

to learn more about direct sales 

contracts and your cancellation 

rights. 

you can cancel a direct sales 

contract within 10 days 

of receiving the contract. 

That is known as the “cooling 

off period.” you don’t need 

a reason to cancel. 

TIPS 

Bill learned many valuable lessons. 

1. Now, before he buys, he checks 

out the company with Consumer 

Protection BC and his local 

Better Business Bureau. 

2. He does not allow himself to be 

pressured into buying. 

3. He comparison-shops. 

4. He reads the contract carefully, 

including the fine print. 

5. He does not give all the money 

up-front. 

6. He ensures he receives a copy 

of the contract and a signed 

receipt. 

7. He ensures the contract 

specifies when the work is to 

begin and the date it is to be 

completed. In short, Bill has 

learned to be a smarter shopper. 

Consumers should 

be wary of a company 

that asks for personal 

and banking information 

before they even fill out 

a loan application. 


of the Tempting T-Bird 

Jeremy really wanted to buy 

that second-hand car. 

The bright red T-Bird had black leather 

seats. He had already thought of the 

perfect item to hang on the rear-view 

mirror. He knew he didn’t have the 

money but had just seen an ad for 

guaranteed loans. All Jeremy had to 

do was send them $50 and he would 

get the money. 

The ad looked pretty fancy and 

had a toll-free number. The ad said 

it didn’t matter if a person had bad 

credit, which Jeremy did. It sounded 

like the perfect solution. And he really 

wanted that car. 

Jeremy decided to go for it 

and sent in his money. It wasn’t 

long before he heard back from the 

company—he had almost qualified 

for the loan and just had to send in 

an additional payment to secure the 

money. He was so close to getting his 

car. He could already picture himself 

behind the wheel. 


Like Jeremy, many people pay the 

additional money, only to find they 

have been denied the loan. They don’t 

get their money back and the loan 

company is never head from again. 

Every year, people are lured by 

these ads and lose hundreds—even 

thousands—of dollars. In BC it’s 

illegal for loan brokers to ask for 

money before a consumer gets the 

loan. The loan broker fee must be 

taken off the amount that is advanced 

or lent to the consumer. Ads for 

advance-fee loans are often seen in 

the newspaper classifieds or online. 

Although there are legitimate loan 

agencies out there, a glossy ad does 

not guarantee the lender is legitimate. 

Consumers should be wary of 

a company that asks for personal and 

banking information before they even fill 

out a loan application. Also, be careful 

of companies that can guarantee a loan 

before they even see your credit rating. 

TIP 

You never should have to pay up-front 

for a loan. Any fee must be charged 

AFTER the loan has been secured. 


of the Sneaky Serviceman 

Melissa and Ryan recently 

bought their first home together. 

The house was a fixer-upper but it 

had a lovely garden and a big front lawn. 

Ryan had recently purchased some new 

gardening supplies and Melissa was 

eager to start tidying the yard. As 

the couple cheerfully took their tools 

outside, they saw a big white “Weed- 

Pros” van parked outside their home. 

A man in a coverall uniform smiled 

as he approached Ryan and handed 

him a bill. The man explained he was 

providing weed spraying services in the 

neighbourhood and had sprayed their 

lawn, too. Ryan told the man he never 

requested that service and would not 

pay the bill. As the serviceman walked 

back toward his van, he told Ryan if 

he didn’t pay, the bill would be sent to 

a collection agency. 


SOMEONE MISSING? 

We find missing persons – Guaranteed 

NO FIND, NO FEE 

1-800-661-2800 

North America’s Major Tracing Firm Since 1967. 

www.empiretracing.com 

Call now for a no-obligation quote. 

Metro Vancouver/Fraser Valley: 604-299-3908, ext 343 

Vancouver Island: 250-386-3366, ext 4 

Thompson Okanagan: 250-860-2329, ext 29 

Toll-Free: 1-877-469-4438, ext 274 

kathy_mannas@can.salvationarmy.org 

Ryan and Melissa were concerned. 

They acknowledged that spraying 

services had indeed been provided, 

but Ryan certainly didn’t feel 

they were responsible for the bill. 

Nonetheless, Melissa was worried 

that by ignoring the bill, it would go 

to a collection agency and potentially 

affect their credit rating. 

Ryan was torn. He had plans 

to buy a pickup truck to use during 

the home renovations and knew that 

a negative item on his credit report 

could really hamper his getting a loan, 

but he felt that what was happening to 

them was very unfair. 


Often, people are provided with goods 

or services they never requested. That 

happens most often with services such 

as weed spraying, chimney sweeping, 

or blowing water out of underground 

sprinklers before the weather gets cold. 

Those who are providing the services 

are hoping you will pay for those 

services provided without caring that 

they were never requested. 

Under the Business Practice 

and Consumer Protection Act, that 

serviceman may have been providing 

unsolicited goods and services. 

According to BC’s consumer protection 

law, a consumer has no legal 

obligation with respect to unsolicited 

goods or services. 

If you have already paid for 

an unsolicited item, there may be 

something you can do. Contact 

Consumer Protection BC to find out 

the details. 

TIP 

You are not legally obligated to pay 

for unsolicited goods or services. s 

“What Would you Do?” columns are 

presented by Consumer Protection BC 

to raise consumer awareness. 

Know your rights! if you have questions 

about your rights and responsibilities as 

a consumer in British Columbia, please 

contact Consumer Protection BC. 

Toll free: 1-888-564-9963 

www.consumerprotectionbc.ca 


©

Ah . . .the beach . . . the 

water . . . the food . . . the 

shopping . . . the sights . . . 

We all look forward to our 

vacations with anticipation. The last 

thing that occurs to us is that we 

could get caught up in a scam. Sadly, 

vacation scams have cost consumers 

billions of dollars. 

It’s important to be an informed 

consumer when booking travel. There 

are many legitimate travel businesses 

out there but you always should do 

your homework and be aware of your 

rights and responsibilities as a travel 

consumer. 

Here are some tips to consider 

when making your travel arrangements. 

• Use a licensed travel agent. 

Bon Voyage! 

Travel agents and wholesalers are 

required to be licensed in BC. Look 

for the Consumer Protection BC 

decal on their business location or 

the Consumer Protection BC icon 

on their Website. To find a licensed 

travel agency in BC, visit 

www.travelrightsbc.ca. 

• Don’t be fooled by fancy Websites, 

emails, flyers, or telemarketers. 

Few legitimate businesses can 

afford to give away products 

and services of real value or 

to substantially undercut other 

companies’ prices. Check out the 

company with your local Better 

Business Bureau. 

We hope your holiday is 

everything you want it to 

be but remember, if a travel 

deal seems too good to be 

true, it probably is. 

• Get the details. 

Ask for the details of any vacation 

package in writing, including 

refund and cancellation policies. 

Always check the fine print for all 

the terms and conditions. 

• Keep the documentation. 

Request a copy of your travelservices 

contract and keep all 

receipts. 


• Pay with your credit card. 

©iStockphoto.com/dstephens 

It’s a good idea to pay with 

a credit card because it may offer 

you some protection. You also 

can ask whether your credit card 

provides you any travel insurance. 

Most BC consumers aren’t aware 

of BC’s Travel Assurance Fund. 

If you booked through a licensed 

BC travel agent and do not receive 

the contracted travel services 

for which you paid, you may be 

eligible to receive compensation 

through the Travel Assurance 

Fund. 

If you want more information 

about the Travel Assurance Fund, 

your rights and responsibilities, and 

other great travel information, please 

visit www.travelrightsbc.ca. Recently 

launched by Consumer Protection BC, 

that Website provides resources for 

both travel consumers and licensed 

travel agents in BC. 

We hope your holiday is everything 

you want it to be but remember, if 

a travel deal seems too good to be 

true, it probably is. s 


Do these statements 

sound familiar? 

I’m entitled. I’ve been paying 

premiums for a lot of years and never 

got anything back. 

It’s not really illegal. 

It’s just an insurance company. 

They have lots of money. 

Why shouldn’t I? I’ve heard of 

other people who received more than 

I have. 

Those viewpoints are more 

common than you might think. 

Fraud in the insurance industry 

accounts for 10 to 15 percent of your 

insurance premium, which translates 

into over $3 billion annually and is 

continuing to rise. 

Combating insurance fraud is 

everyone’s responsibility, including 

the insurance industry’s responsibility 

to educate and the policyholders’ 

responsibility to report insurance 

fraud. 

Donna Cheeseman 

is it Fraud or Not Quite? 

Fraud in the insurance 

industry accounts for 

10 to 15 percent of your 

insurance premium, 

which translates into over 

$3 billion annually and 

is continuing to rise. 

What is being done within the 

industry to reduce and prevent fraud? 

Within the insurance industry, 

the primary goal of the Insurance 

Bureau of Canada is to provide 

investigative services to protect the 

premiums of honest policyholders, by 

ensuring that insurance companies 

pay only legitimate and honest 

claims. A dedicated team of fraud 

investigators—the fraud squad— 

numbering more than 40 people, 

focuses its time and attention on 

organized insurance crime. 

The American Coalition Against 

Insurance Fraud conducted a poll to 

©iStockphoto.com/MBPHOTO, INC. 

find out how people view insurance 

fraud. Individual opinions ranged from 

the moralist, who saw this as wrong 

and that people should be punished, 

to the critic, who justified that 

insurance fraud was okay, because it 

affects a faceless organization with 

lots of money. 

What they have forgotten is that 

their family, friends and neighbours 

are paying for insurance fraud 

via increased premiums. A recent 

report on ethical standards involving 

30,000 high school students revealed 

that 30 percent of the respondents 

had shoplifted and 64 percent of them 

had cheated on an exam. 

What does that say for the future? 

Who are these individuals 

who commit fraud? 

It may surprise you to know it can 

be your elderly neighbour or the 

professional person living next 

door or a tradesperson or a person 

working in the legal and financial 

services sectors. It’s not always the 


individual living in a seedy area of 

town, operating a call centre targeting 

seniors, although those claims seem 

to attract more attention. 

What triggers fraud? 

• Economic conditions can trigger 

an increase in insurance fraud 

for individuals and commercial 

entities. The increase in breakand-enters 

for profit, the number 

of arsons for financial or other 

business reasons, or the slip, 

trip, and falls have and will 

continue to increase until we see 

more recovery in the economic 

situation. 

• Opportunity triggers it. Your home 

is broken into or there is a severe 

windstorm or you are involved in 

an auto accident. No one planned 

or anticipated he or she would 

suffer a loss or injury, but now 

that it has occurred, maybe this is 

a perfect time to get that new set 

of golf clubs. Is that wrong? Does 

anyone care if you get a better set 

of golf clubs? Different choices 

will be made, depending on if you 

are a moralist or a critic. 

• A business may not be able to keep 

up with its debt service or people 

may not be able to sell their home 

or automobile. Desperate situations 

can sometimes result in desperate 

measures. 

Other Precipitators of Fraud 

Community, geographical, and 

economic conditions also are 

precipitators to insurance fraud and 

when it may occur. 

• Small-town Saskatchewan tends 

to have lower occurrences of 

fraud. People identify more 

with their neighbours and 

their community and with the 

individual insuring their home or 

business. 

• In larger centres where there 

is a lower sense of community, 

people don’t necessarily see the 

impact of committing insurance 

fraud. They don’t identity with 

their location. 

• As business looks for cost-cutting 

measures via the use of technology, 

that can create opportunity for an 

increase in fraud. 

• In the banking industry, we have 

seen an increase in fraud. With 

a decrease in the number of 

branch locations and an increase 

in online banking, opportunity has 

been created for individuals who 

would commit fraud. The banking 

industry pays approximately $200 

per client to purchase insurance 

in the event of a breach in their 

system. That doesn’t include 

all the internal expenses for the 

resources that continually protect 

their system and their client 

information. 

Fraud in the insurance 

industry accounts for 10 to 

15 percent of your insurance 

premium, which translates 

into over $3 billion annually 

and is continuing to rise. 

• A large retail chain with access 

to purchase products online has 

its system hacked; all customers 

buying online that day have their 

credit card information stolen. 

The cost to the company, not 

only in actual costs but in loss 

of reputation, can impact their 

operations for years to come. 

• Online reporting of claims to 

insurance companies and police 

forces in some centres will have 

some benefits from a service 

standpoint, but will create 

opportunity for fraud. People who 

have to speak with an individual 

directly or over the phone show 

fewer tendencies to provide false 

information. 

There are positive sides to the 

triggers. For example, technology— 

while creating some opportunities— 

also will provide benefits in the years 

to come with respect to combating 

insurance fraud. The industry is 

continually striving toward a more 

centralized reporting to track 

insurance fraud more effectively 

across the county. 

Arson 

Some insurance fraud causes severe 

consequences. With the light of 

a match, everything changes, but 

some people don’t understand the 

ramifications of that act. Arson not 

only results in a loss to property, it 

also can cause loss of life. 

We read it in the headlines. It 

happens more often that we realize, 

but not all arsons reach the media. 

• “Arson cause of deadly bathhouse 

blaze” 

• “Two face arson charges in 

Wasaga Beach fire” 

• “Woman charged with arson to 

endanger life in house fire” 

In addition to loss of life and 

property, arson results in other 

costs not specifically related to 

a policyholder’s premium, such as 

police and fire service and costs to 

our community services. 

Then there is the situation where 

the fire department is responding to 

a car fire that has been set on purpose 

when they get a call to attend to 

a house fire. The local fire department 

will not be able to respond as quickly, 

which results in more damage to the 

house. The impacts of those costs are 

not usually measured. 

What can insurance buyers do to 

reduce insurance fraud? 

Everyone has a responsibility. In the 

last 2 years, many tips have come 

from the public through the Bureau’s 

crime tips hotline. About 30 tips 

come in each month; some have 

started major investigations. 

What is your view on insurance 

fraud? Are you the moralist, the realist, 

the conformist, or the critic? 

For further information on fraud 

statistics and alerts, please visit 

www.ibc.ca. s 

Donna Cheeseman is Vice President 

of BFL Canada insurance Services inc. 

Voice 604 678-5469 

dcheeseman@bflcanada.ca 

www.bflcanada.ca 


When they engage 

in certain financial 

activities, Notaries 

in British Columbia have 

obligations under the Proceeds 

of Crime (Money Laundering) 

and Terrorist Financing Act. 

The activities include 

• the purchase or sale of securities, 

real property, or business assets 

or entities, or the transfer of funds 

or securities by any means; and 

• the receipt or payment of funds 

other than professional fees, 

disbursements, expenses, or bail. 

They must report certain financial 

transactions to Financial Transactions 

and Reports Analysis Centre of 

Canada (FINTRAC), including 

suspicious transactions, terrorist 

property, and cash transactions of 

$10,000 or more. These reports to 

FINTRAC may serve as intelligence to 

assist in investigations or prosecutions 

in Canada and abroad. 

BC Notaries also have 

various client identification 

and record-keeping 

requirements, and the 

obligation to establish 

a compliance regime. 

BC Notaries also have various 

client identification and record-keeping 

requirements, and the obligation to 

establish a compliance regime. The 

compliance measures contribute to 

the detection and deterrence of money 

laundering and terrorist financing 

and to other threats to the security of 

Canada. 

Parvine Khunkhun 

Canada’s Anti-Money- 

Laundering Regime 

©iStockphoto.com/mathieukor 

Potential Money-Laundering 

Vulnerability 

Along with other legal professionals 

in British Columbia, Notaries provide 

services that potentially can be used 

as vehicles for money laundering. 

In most cases, money launderers 

take advantage of these services in 

the layering and integration stage 

of money laundering. The services 

include real estate transactions—the 

buying, selling, and maintenance 

of property. Money launderers will 

purchase real estate and register it 

under the name of a trust—the trust 

account of a legal professional—to 

make the funds appear legitimate, as 

well as to confuse the link between 

the money launderer and the proceeds 

of crime. 

Property transfers may be used 

to conceal the transfer of illegal 

funds—the layering stage of money 

laundering. After passing through this 


process, the real estate transaction 

represents the final investment of the 

proceeds, signifying the integration 

stage. 

The exchange of property also 

can occur at the international level, 

whereby money launderers arrange for 

the “sale” of a property to a foreign 

investor who is actually working 

through one or several offshore 

companies. The “sale” price is inflated 

above the acquisition cost so the 

money received from the sale appears 

to be the capital gain from the real 

estate “deal.” 

Essentially, any attempt 

to maintain secrecy… 

could be suspicious. 

Underinvoicing is another 

approach. In this scenario, the 

property seller agrees to a purchase 

price below the actual value cited 

in the paperwork. The difference in 

the amount of the purchase price is 

paid “under the table” to the money 

launderer. The remainder of the 

purchase price is then paid by cash, 

again “under the table.” The property 

is subsequently resold for the full 

market value and the money regained 

appears to be a capital gain instead of 

the proceeds of crime. Paying taxes on 

the capital gain makes it seem more 

legitimate. 

Another method is through the 

placement of deposits. Here, the 

money launderer will place a deposit 

on a house available for purchase, then 

pull out of the deal shortly thereafter. 

The legal professional will receive 

a reduction of commission, normally 5 

percent less, due to the failed deal. The 

launderer will then recover the deposit 

through a legitimate cheque issued by 

the legal professional. 

Indicators 

How can you tell if a transaction 

is related to money laundering? It 

may not always be clear. In some 

instances, the use of cash may 

make perfect sense. In others, the 

use of a third party to conduct 

a transaction also may make sense. 

In certain circumstances, however, 

these situations might give rise to 

suspicions. 

Indicators—“red flags” that help 

in determining whether the transaction 

warrants heightened scrutiny—include 

the following. 

• A client who does not reside 

in the area where the legal 

professional’s office is located 

• A client who appears reluctant to 

discuss his or her financial affairs. 

Anonymity or the provision of 

minimal identifying information 

is central to a successful money- 

laundering operation. 

• A client with a history of 

changing legal professionals and 

accountants on a frequent basis 

• A client who appears uncertain 

as to the location of company 

records 

• A client purportedly running 

a company that does not appear 

to have any employees, if that is 

unusual for the type of business 

in question 

Essentially, any attempt to 

maintain secrecy, whether it be with 

respect to the activities of the client 

or the actual individual conducting the 

transactions, could be suspicious. 

A full list of indicators can be 

found in FINTRAC’s Guideline 2: 

Suspicious Transactions. The guideline 

can be accessed by visiting FINTRAC’s 

Website. 

www.fintrac-canafe.gc.ca 

Parvine Khunkhun is a Regional 

Compliance officer with the Financial 

Transactions and Reports Analysis 

Centre of Canada (FiNTRAC). Her 

area of responsibility includes the 

Financial Entities, BC Notaries, and 

Dealers of Precious Metals and Stones 

Sector in the Western Region. FiNTRAC 

is Canada’s financial intelligence 

unit, a specialized agency created 

to collect, analyze, and disclose 

financial information and intelligence 

on suspected money laundering and 

terrorist activities financing. 


At a time when mortgage 

fraud is on the rise, it is 

important for licensed 

professionals like Notaries or 

lawyers to look into the mirror 

of life periodically and ask 

“Why did they pick me?” 

Today’s mortgage fraud is not 

as we knew it a few years ago. It has 

taken on a new life as it advanced 

from the “Fraud for Shelter” or “One 

Off” frauds perpetrated by couples, 

to very sophisticated schemes 

involving organized criminal groups. 

Fraud for Shelter is often a case 

where the bad becomes good as the 

purchasers who legitimately want 

to own a home cheat “just a little” 

through such things as family loans 

being reported as gifts. That is still 

illegal and falls within the definition 

of Obtaining Credit by a False 

Pretence. The lending institution likely 

would not fund the mortgage, if it 

knew the truth. That type of mortgage 

fraud, however, is not at the heart of 

the current mortgage fraud problems. 

The more serious problem is 

the increasing number of organized 

criminal groups who have moved into 

the mortgage fraud arena for one very 

basic reason—to make money. 

Colin Parcher 

DON’T BECOME A VICTIM— OR WORSE 

“Why did 

they pick me?” 

The activities of these groups are 

referred to as the “Fraud for Profit” 

schemes where homes are often 

used for illegal purposes such as 

marijuana grow-ops, methamphetamine 

laboratories, or other criminal activity. 

The organized criminal groups often 

use a “straw buyer”—an individual 

paid to apply for the mortgage loan or 

who allows the use of his or her name 

and information to buy a house. The 

application for the mortgage, which is 

often at or over the actual value, will 

be supported by fictitious documents, 

then funded by a legitimate financial 

institution. The financial institution now 

becomes the victim of the fraud. 

Once compromised, the 

licensed professional is 

vulnerable because his or 

her professional designation 

is virtually held hostage. 

Once the mortgage is in place, 

the criminal element will make the 

required payments on the fraudulent 

mortgage. Making mortgage payments 

in this manner, to a legitimate financial 

institution, becomes an excellent 

method of laundering the profits 

from illegal activities such as growing 

and exporting marijuana, importing 

and exporting narcotics, or any other 

criminal activity that results in the large 

sums of cash that perpetrators must 

move into circulation without attracting 

attention from law enforcement 

agencies to themselves or their group. 

To facilitate their fraudulent 

activities, the organized crime groups 

often will have associates obtain the 

required designation or licensing to 

assist in the fraudulent activities or, 

in the alternative, they will target 

licensed professionals and attempt to 

compromise them. Once compromised, 

the licensed professional is vulnerable 

because his or her professional 

designation is virtually held hostage. 

In the Federal Bureau of 

Investigation’s May 2005 “Report 

to the Public,” it was estimated that 

80 percent of mortgage fraud losses 

involve industry insiders such as 

appraisers, accountants, lawyers, 

Realtors, mortgage brokers, and other 

mortgage professionals. 

The reason those groups want 

a Notary or lawyer in their pocket is 

simple: Those professionals validate 

the process. After all, who is going to 

question the facts when the paper has 

gone through a respected professional 

such as a member of The Society of 

Notaries Public or the Law Society? 

That brings me back to my original 

question: “Why did they pick me?” 


In a recent case originating in 

North Vancouver, a real estate sales 

representative located in another 

Metro Vancouver municipality received 

an electronic message—through his 

Realtor Website, from an individual 

he did not know—offering the Realtor 

a listing on a seven-acre property. The 

Realtor responded and subsequently 

secured a listing for the property 

for over $1 million. Within days, 

a contract of purchase of sale was 

signed and the property sold. 

The underlying problem in this 

case was a Realtor who really thought 

it was Christmas in July when he was 

able to double-end a million-dollar 

property in only a few days. 

Only when asked, “Why did they 

pick you?” did reality ring home. 

In another case, two individuals 

with Metro Vancouver addresses 

secured a mortgage for $850,000 on 

a property in Metro Vancouver, then 

travelled to a law office in a small city 

4 hours away to sign the mortgage 

documents. 

Why would they drive an 8-hour 

round trip to do that? Aren’t there 

enough Notaries or lawyers in the 

Metro Vancouver area? 

There may be a justifiable reason, 

such as the couple was en-route 

somewhere else and that town was on 

the way . . . or were they trying to hide 

something? 

In both cases, I would suggest 

that the professionals let earning 

fees cloud their thought process and 

allowed them to become trapped by 

a cagey crook. 

As a professional, you must 

be aware that there are unsavory 

individuals in the world who think 

nothing of putting your employment 

future at risk to satisfy their needs. 

When clients appear out of thin air, 

a few simple questions should be asked. 

• Is the client from your area? 

If not, why is he or she coming 

to you? 

• How did the individual learn 

about you? 

THIS IS NOT 

A ZIPPER. 

• Is it a referral? If so, from whom? 

• Was the referring person ever 

a client? 

• Is a previously unknown client 

suddenly bringing you repeat 

business? 

If you do not know your client, get 

to know the person. That may save you 

from becoming a victim—or worse, 

party to an offence. 

Before you accept business from 

clients you don’t know, ask yourself 

one last question: Is the fee I will 

make on this transaction worth my 

professional designation? s 

Colin Parcher is the Executive Director, 

investigative Services, with the British 

Columbia Financial institutions 

Commission (FiCoM), the provincial 

regulator whose mandate includes 

oversight of the mortgage broker 

industry in British Columbia. Mr. Parcher 

has 35 years in law enforcement, 

the last 12 with FiCoM investigating 

mortgage fraud. 

It’s actually an intricate system of wedges, hooks, 

and hollows. Similar to how we’re not just accountants. 

We’re a partner–driven accounting network with 

over 1,000 offi ces in more than 100 countries. 

BDO. More than you think. 

Assurance | Accounting | Taxation | Advisory Services 

Suky Cheema, CA 

Partner 

604 688 5421 

www.bdo.ca 

BDO Canada LLP, a Canadian limited liability partnership, is a 

member of BDO International Limited, a UK company limited by 

guarantee, and forms part of the international BDO network of 

independent member fi rms. BDO is the brand name for the BDO 

network and for each of the BDO Member Firms. 


it was May 22. i was leaving 

my office around 10 pm. 

I had been reviewing my files for 

the next day’s real estate completions 

and logged-in to my online banking 

to view my trust account. It was late 

enough in the day that transactions 

for that day had been posted. I log 

in frequently to see when mortgages 

have funded, to confirm deposits are 

entered correctly by the bank or by 

my staff, and to maintain a general 

feel for what’s going on. 

Two transactions caught my eye. 

They seemed like strange amounts. 

One was for $12,828.68 and the other 

was $19,985.32. 

Because I look at my statement 

online frequently, I usually know what 

cheques are being processed. Those 

two cheques caused me to investigate 

further. 

The second thing I noticed was 

that the cheque numbering was out of 

David Watts 

Cheque Forgery 

and other Security Breeches 

sequence. I looked though my records 

and realized I had not written those 

cheques; they had been forged and 

successfully negotiated by my bank, 

and the monies removed from my 

trust account. 

I immediately reported the 

incident to The Society of Notaries 

Public of British Columbia, my bank, 

and the Vancouver Police Department. 

I was able to catch this theft before 

any harm took place. 

While this experience 

was with my trust account, 

the same can happen 

to any personal 

or business bank account. 

While this experience was with my 

trust account, the same can happen to 

any personal or business bank account. 

A BC Notary’s Trust Account 

As a BC Notary, I am responsible for 

the large sums of money changing 

hands in the process of transferring real 

estate. For that reason, I am constantly 

reviewing my bank accounts. I know the 

activity I expect to see; it is fairly easy 

to spot irregularities. 

The trust account of a Notary 

Public or real estate lawyer would 

seem like a pretty good target for 

someone trying to steal larger amounts 

of money. Our trust accounts are the 

bank accounts where we put clients’ 

funds that are being used for their real 

estate transactions. 

In a typical purchase, we receive 

• the excess deposit from the 

purchaser's initial deposit with 

the Realtor; 

• the funds from a mortgage 

funding; and 

• a net amount due from the client 

to complete the transaction. 


In a sale or refinance, we receive 

the sale or mortgage proceeds that 

are used to pay out existing mortgages 

and any outstanding taxes or other 

charges. The net proceeds are directed 

to our client. 

Transactions are typically paid 

out within 1 or 2 days, although it 

can take longer. Several transactions 

occur within a month, so this process 

is multiplied. Because of the large 

number of transactions—and, more 

important, the fact that they are 

clients’ funds—our rules demand that 

Notary trust accounts be reconciled to 

the penny each month. Some Notaries 

reconcile their trust account once 

a week. 

With online banking and the 

conveyancing software that many of us 

use, such as Notary Office or ProSuite, 

it is a fairly straightforward process. 

With conveyancing transactions, 

we usually process the following 

cheques. 

• Purchase amount cheques 

• Mortgage payouts 

• Sale proceeds 

• Strata management 

documentation 

• Title insurance fees 

• Insurance agent’s fees 

• Payments for our accounts 

Details of the Forgeries 

The hard-copy forged cheques had 

several inconsistencies. 

• They were printed on paper with 

images of airplanes, formallooking 

Seals, and holograms, 

which my cheques do not have. 

• They contained wording—“CDN 

FUNDS” and “Void after 90 

days”—that is not present on my 

cheques. 

• The signature was similar to mine, 

but not that close. 

The bank was very good 

about the whole incident. 

The bank was very good about 

the whole incident. They immediately 

credited my account for the amounts 

that had been withdrawn and put a flag 

on my account to note the fraudulent 

irregularities and to request verification 

for any future doubts as to authenticity. 

I immediately opened a new account 

and maintained the old account long 

enough to have all previously written 

cheques pass though it. 

I was very lucky to spot the forged 

cheques when I did, likely within 24 

hours of their being presented. Had 

I not checked my bank account online, 

I wouldn’t have seen my account 

statement until the end of the month. 

Over the next 6 weeks, several 

more forged cheques were posted to 

my old account. In each case, the 

bank immediately credited my account 

when I reported the incident; in some 

of the cases, they did that without my 

reporting it. 

If my trust account had been short 

of funds, I could have faced several 

problems. Had any cheques been 

returned due to Non Sufficient Funds 

(NSF), significant service charges 

would have been incurred and I would 

have had to invest time to rectify the 

situation. 

how Did They Get 

My Banking Information? 

I mail a lot of cheques. I assume 

someone got one of my cheques, 

either by stealing it from the mail or 

taking a copy somewhere along the 

way, then he or she input my numbers 

and coding into commercial chequeprinting 

software to create forged 

cheques. Had the forgeries been 

on more realistic paper, in correct 

numerical sequence, and in smaller or 

larger amounts, they would have been 

much more difficult to spot. 

That sort of crime can happen to 

anyone who has ever put a cheque into 

the mail. 


©iStockphoto.com/bluestocking

Land 

Lines 

surveys 

Kenneth Waller AScT, RSIS 

Phone: 604 465-2142 

Fax: 604 465-1469 

kennw@telus.net 

Site 

Improvements 

Surveys 

For Mortgages 

Security Tips 

To minimize the risk of cheque frauds 

or other types of banking fraud/thefts, 

here are a few easy steps you can take. 

• For almost all banking 

transactions, you can transfer 

or receive funds electronically. 

Payroll, Canada Pension Plan, tax 

refunds, and other such receipts 

can be processed electronically 

and deposited directly to your 

account. 

• Bill payments and most any other 

transfers of funds can be set up 

for payment by electronic transfer 

directly from a chequing account, 

or a credit card number can be 

provided to allow charges directly. 

Many utility or other regular 

invoices have an option where 

you can receive your statements 

via email, rather than by post. 

As well as being much more 

convenient, think of all the paper that 

is saved and the impact of all that mail 

not having to travel in airplanes and 

vehicles to get to you. It’s always good 

to be environmentally conscious. Don’t 

print what you don’t need. 

When using electronic methods of 

transfer, here are some common-sense 

safeguards. 

1. Never tell anyone your PIN 

number. 

“Phishing” for information 

2. Keep your passwords safe. 

3. Don’t publish or tell anyone 

your birth date, your mother’s 

maiden name, or other identifying 

information commonly used. 

4. Use good passwords that contain 

numbers, letters, and symbols, 

like “C@n@D@,” “W@yne99,” 

or “L84cl@55,” rather than 

“Canucks” or “Fluffy.” 

5. Check your online banking 

transactions on a regular basis. 

It only takes a second to log-in 

when you go online. It’s a good 

idea to check your accounts at 

least once a week, if not more 

frequently. If you are unsure 

about anything or see something 

suspicious, call your bank 

immediately. 

6. We all receive “phishing” 

emails from random places that 

say, “Your account has been 

compromised. Click here to check 

your balance or change your 

password…” Your bank will never 

send you anything online to ask you 

to change your password or update 

your account information. When 

you originally set up your online 

banking, you had to go into your 

bank branch. Any updates should 

take place only at the branch. 

7. When people steal account 

information or attempt identity 


©iStockphoto.com/Radiant Byte

There are many ways 

that creative criminals try 

to steal from people… 

theft, it is often from our garbage. 

When you are disposing of 

anything that shows personal or 

sensitive information, tear it up 

or shred it. I may be paranoid, 

but I often tear up papers and put 

the pieces in different garbage 

cans that I know will not end up 

together. 

There are many ways that creative 

criminals try to steal from people— 

compromised credit cards, debit cards, 

and other frauds and thievery. We 

must take steps to protect ourselves 

and make it harder for crooks to get 

our information. 

Resources 

Take a moment to review your 

processes. Should you change your 

bank password to one that is more 

secure? Perhaps you could set up 

automatic payments and arrange to 

receive paperless statements. 

While no system is 100 percent 

safe, you probably can be more 

proactive in your security measures to 

protect yourself. 

Check out these additional resources. 

RCMP Scams and Fraud 

http://www.rcmp-grc.gc.ca/scamsfraudes/index-eng.htm 

Bank of Canada Fight Fraud 

on the Front Lines 

http://bankofcanada.ca/en/banknotes/ 

fraud/fraud.html 

Royal Bank of Canada Fraud Prevention 

Month Tips 

http://www.rbc.com/privacysecurity/ 

ca/alert-fraud-prevention-month.html s 

David Watts is a Notary Public 

practising in Downtown Vancouver. 

1602 – 675 West Hastings Street 

Vancouver, British Columbia 

Voice: 604 665-7787 

www.davidnotary.com 

twitter: @davidnotary 

#350 – 522 Seventh Street 

New Westminster, BC 

V3M 5T5 

Telephone (604) 524-8688 

Facsimile (604) 526-0455 

Email info@mti-cga.com 

Estate Services 

Executor Accounts / Forensic Investigations 

Distribution schedules / Tax Filings & Clearances 

#845 – 1200 West 73rd Avenue 

Vancouver, British Columbia V6P 6G5 

t: 604.266.8287 

f: 604.266.3034 

info@appraisal.bc.ca 

www.appraisal.bc.ca 

We Value 

Canada 

Canada’s most 

authoritative voice in 

real property valuation! 

When the market’s changing, whom can you trust? 

Call the experts: AIC professionals. 

We’re Canada’s leading authority in real property valuation. 

Designated AIC members can help you make smarter choices 

with in-depth analysis, market insights and practical solutions — 

from acquisition and development to management and disposal. 

Get the real property experts working for you. 

Consult an AIC professional. 

Look for members who hold the AACI, P.App, or CRA designation. 


The word fraud 

immediately catches 

everyone’s attention and 

for many, especially the elderly, 

the reaction is one of fear. 

As a number of us are aware, fraud 

can take many forms and to truly 

understand it, we need some 

definitions. 

In this article, I write about “title 

fraud”—fraud or forgery related to 

transferring someone’s title to land and/ 

or creating a mortgage on a person’s 

title. Similarly, “Mortgage Title Fraud” 

means fraud or forgery used in creating 

a mortgage on a person’s title. 

Fraud in the context of this article 

does not mean value fraud, where 

property value is driven up by a series 

of fraudulent transfers to facilitate 

obtaining a fraudulent mortgage based 

on the inflated apparent value. Nor am 

I writing about fraudulent mortgages 

acquired as a result of fraudulent 

misrepresentations on mortgage 

applications. Credit card fraud is not 

the same as title fraud and thus is not 

included in this article. 

Some individuals and corporations 

find it is to their business advantage 

to lump all fraud together to create 

a need to buy their products. Such 

persons—by including identity theft, 

One of the reasons for the current 

intense interest in title fraud in British 

Columbia is Gill v. Bucholtz 1 (the 

Gill case), which was decided by the 

British Columbia Court of Appeal on 

April 6, 2009. A companion case, Re. 

Oehlerking Estate 2 (the Oehlerking 

case), was decided by the same court 

on the same date. The Supreme Court 

of Canada dismissed an application 

for leave to appeal in the Oehlerking 

case on October 22, 2009. Both 

cases involved fraudulent transfers and 

subsequent fraudulent mortgages. For 

the sake of simplicity, I will refer to 

1 Gill v. Bucholtz, 2009 BCCA 137 

Ian C. B. Smith 

Fraud and the 

Land Title Assurance Funds 

in British Columbia 

debit and credit card fraud, Internet 

and email fraud, investment fraud, 

telephone fraud, and other kinds 

of fraud together—go on to make 

assertions that fraud is becoming the 

crime of the 21st century. 

Those individuals lump title fraud 

with the other kinds of fraud, which 

may lead an unsuspecting landowner 

to the conclusion that title fraud is 

commonplace, which it is not. 

Mortgage title fraud involving 

the registration of fraudulent 

mortgages in land title 

offices…is extremely rare. 

2 Re. Oehlerking Estate 2009 BCCA 138 

these 2 cases as the Gill decision and 

will discuss them below. 

Before I proceed, it is very 

important to note historically the 

frequency of mortgage title or title fraud 

in British Columbia. Mortgage title fraud 

involving the registration of fraudulent 

mortgages in land title offices, similar 

to the Gill decision, is extremely rare. 

Counsel in the Gill decision stated that 

fact in the Court of Appeal. 

No hard statistics on mortgage 

title fraud are available, other than 

those reported from the Land Title and 

Survey Authority in an article in The 

Vancouver Sun on April 8, 2009, by 

Fiona Anderson, 3 “With seven claims 

made against the Assurance Fund 

since 2006, involving $1.6 million in 

fraudulent mortgages, the Land Title 

and Survey Authority of BC (LTSA), 

which is responsible for overseeing the 

fund, decided to appeal the lower court 

decisions” (in Gill and Oehlerking). 

To provide some context for this 

statement, during the period of 3 

years since 2006, land title offices 

registered approximately 3 million 

transactions from which only 7 claims 

involving fraudulent mortgages were 

made against the Land Title Act 

Assurance Funds. 

To be correct, when reference is 

made to the Assurance Fund in today’s 

3 The Vancouver Sun, April 8, 2009 D3 


context, the description applies to 

1 of 2 Assurance Funds established 

under the Land Title Act. There is the 

Provincial Fund for all claims prior to 

January 20, 2005, and the Land Title 

and Survey Assurance Fund for all 

claims after that date. 

The Assurance Funds are designed 

to provide compensation solely for 

a loss attributable to a malfunction of 

the land title system. A malfunction 

consists of making an unauthorized 

entry in the title register or in the 

failure to make a required entry. 

I will have more to say later about 

the impact of fraud on the Assurance 

Funds. 

The Gill Decision 

and the Assurance Fund 

The Court of Appeal decision in Gill 

held that a mortgage granted by 

a registered owner who acquired title 

by fraud cannot pass any interest in 

the land to the mortgagee and thus 

the mortgage was void. The court 

ordered the mortgages cancelled 

as encumbrances against the true 

owner’s title. The consequence of this 

decision for registered owners of land 

who have lost their title as a result 

of fraud is that they get back their 

title, free and clear of the mortgages 

granted to the fraudster. 

If the true owners had not been 

successful on appeal, they would have 

had to pursue the fraudster and if they 

were unsuccessful in recovering from 

him or her, they would be required 

to proceed against the Land Title 

Assurance Fund to recover damages 

to pay out the mortgagee. Clearly, 

the decision was a positive result for 

homeowners in British Columbia. 

For mortgagees, the result was 

negative. If, in the fact situation of 

Gill, you have a fraudulent title holder 

granting a mortgage, the mortgage 

is void; the loss will be suffered by 

the lender and the Assurance Funds 

will not be liable. The reason the 

Assurance Funds are not liable is that 

the loss is a result of a void mortgage 

and not a result of a malfunction 

of the land title system. That 

shouldn’t be a dramatic revelation 

for mortgagees because the Court of 

Appeal decision in Credit Foncier v. 

Bennett4 has been around for over 

45 years. I will discuss Credit Foncier 

below. 

The Impact of the Gill Decision 

Should be Minimal 

It is my position that this decision 

should not have a large impact on 

conveyancing practice for a number 

of reasons. 

1. The Credit Foncier case stands 

for the proposition that a forged 

mortgage (where someone forges 

the landowner’s signature to 

a mortgage) is a nullity by virtue 

of the forgery and remains so 

despite registration. As the 

mortgage was a nullity despite 

registration, the loss suffered 

by the mortgagee was not 

attributable to a failure of the 

land title system. Accordingly, 

no claim was made against the 

Assurance Fund. 

The law related to forged mortgages 

established by the BC Court 

of Appeal in Credit Foncier is 

unaffected by the Gill decision. 

Mortgagees have been subject 

to the risks of forged mortgages 

as a result of the Credit Foncier 

decision for over 45 years. 

I am not aware of any special 

antiforgery procedures introduced 

by mortgagees as a result of Credit 

Foncier. In 2008, the Supreme 

Court of BC in Homewood Mortgage 

Investments Ltd. v. Lee 5 confirmed 

that Credit Foncier remains the law 

in British Columbia. 

2. The Gill decision in which the 

mortgagor is the fraudster in his 

role as registered owner of the 

property is a variation of Credit 

Foncier. In the Gill situation, the 

mortgage is not forged but rather 

it is the title that has been issued 

as a result of a forgery. In light of 

the manifest infrequency of title 

fraud, Gill represents a miniscule 

increase in risk for a mortgagee. 

4 Credit Foncier v. Bennett (1963) 43 WWR 

545 

5 Homewood Mortgage Investments Ltd. 

v. Lee 2008 BCSC 512 

3. Notaries and lawyers have been 

paying out on pending numbers 

with a check search on mortgages 

and conveyances for years. 

Those practitioners have by this 

procedure accepted the risk of 

a caveat or certificate of pending 

litigation being filed prior to 

completion of registration. The 

acceptance of this very small risk 

is similar in extent to the risk 

posed to mortgagees by the Gill 

decision. 

4. As mentioned above, title fraud 

is historically an infrequent 

occurrence. The number of court 

cases involving title fraud confirm 

that fact. Until the Gill decision 

in 2009, there had been only 

2 cases in BC dealing with the 

same issue—Kwan v. Kinsey 6 in 

1979 and CMIC Mortgage Inv. 

Corp. v. Virdi 7 in 2006—both 

of which the Court of Appeal in 

Gill found to be wrongly decided. 

Over the 30 years since Kwan, 

well over 19 million registrations 

have taken place in land title 

offices across British Columbia. 

During the same period of time, 

only the 3 title fraud cases have 

occurred. 

The Spectre of Fraud and Other Views 

on the Consequences of Gill 

Two commentators on the Gill 

decision have put forward views 

different from those contained in this 

article. 

Charles McKee, in a letter to the 

Editor in the Advocate, states “the 

court seems to have taken away the 

rights against the Assurance Fund of 

many thousands of homeowners whose 

interests are long-term leases.” 8 In my 

reply in the Advocate to Mr. McKee’s 

letter, I indicate my disagreement with 

this statement and others contained 

in his letter. 9 I end my reply as 

follows, “However, as Hamar Foster 

6 Kwan v. Kinsey (1979) 15 BCLR 31, 57 

B.C.L.R. (4TH )545 (S.C.) 

7 CMIC Mortgage Inv. Corp. v. Virdi 2006 

BCSC 1126 

8 See “Letters to the Editor” Charles McKee 

(2009) 67 Advocate 703 

9 See “Grumble” Ian Smith (2010) 68 

Advocate 133. 


suggests at the end of his article 

(p. 42), perhaps Mr. McKee’s approach 

is determined by what may be good 

business for First American Title or 

indeed First Canadian Title.” 10 

In a recent Continuing Legal 

Education Society of BC paper, “Title 

Insurance,” 11 the writer considers the 

current risks of fraud and the impact 

of the Gill decision. After reading the 

paper, I concluded it is important 

to keep in mind that a possibility 

of fraud is quite different from the 

reality of fraud. One can conjure up 

possibilities of how mortgage title 

fraud might occur but, fortunately, 

those possibilities do not translate 

into reality in light of our past 

experience with title fraud in BC, 

the nature of the BC real property 

and land title systems, and their 

usage predominately by Notaries and 

lawyers. 

Assurance Fund Claims Related to 

Fraud in British Columbia and Other 

Jurisdictions 

In the past 19 years, the land title 

system in BC registered 15 million 

transactions. During that time, only 

3 claims of landownership fraud and 

14 fraud claims related to lesser 

interests in land such as discharges 

of mortgage were paid from the 

Assurance Funds. This low number 

of paid claims is consistent with the 

frequency of assurance fund payments 

made from other provincial assurance 

funds across Canada. 

In Alberta, for example, from 

1989 to 2006 there were 14 payouts 

from their assurance fund, 8 of which 

related to mortgage title fraud. 12 

Based on the number of registrations 

taking place in the land title system, 

assurance fund payment records, and 

my discussions with my colleagues 

across Canada as a former Director 

10 See “Grumble,” page 135. 

11 Christine Elliott, “Title Insurance” Real 

Estate Deals: Making and Breaking Them 

in Challenging Times, The Continuing Legal 

Education Society of British Columbia, 

June 2009. 

12 The Alberta land title legislation provides for 

indefeasibility of mortgages and accordingly, 

the Assurance Fund provisions compensate 

for loss as a result of mortgage title fraud. 

of Land Titles, it is fair to say the 

small number of title fraud claims 

and payouts in British Columbia is 

consistent with other provincial 

jurisdictions. 

In the past 19 years, the land 

title system in BC registered 

15 million transactions. 

Land Title System Barriers to Fraud 

It is important to understand that the 

land title system in BC does put up 

barriers that have been successful 

in the past to prevent fraud. I’m not 

about to specify with particularity 

how the frauds were prevented but 

some general examples should be 

convincing. 

a. As conveyancers in BC know, 

registration of documents in land 

title offices requires compliance 

with the technical requirements 

of the Land Title Act legislation, 

common law related to land 

titles, and the law generally. Such 

technical requirements are set 

out in various places, including 

the Land Title Practice Manual13 and consist, for example, of 

getting the correct names on the 

documents, having the Duplicate 

Certificate on file, payment of 

Property Transfer Tax, and in 

the case of a condominium, 

depositing a Certificate of 

Payment with the transfer 

documents. 

I know of several cases where 

failure to comply with these 

technical requirements resulted in 

land titles defecting documents 

that in turn revealed and 

prevented ongoing title frauds. 

b. Officer certification, witnessing of 

land title documents, and Notary- 

and lawyer-only submission of 

electronic documents limit the 

opportunity and put further 

hurdles in the path of potential 

fraudsters to make it harder 

13 Land Title Practice Manual, 3rd Edition, 

(Vancouver, BC: The Continuing Legal 

Education Society of British Columbia, 

2009). 

to perpetrate a title fraud. By 

contrast, in Ontario where their 

land title documents do not 

require officer certification and 

their electronic system until 2008 

was not limited to lawyer-only 

submission, they suffered a larger 

number of title frauds than did 

British Columbia. 

c. As a result of training and 

communication on the 

characteristics of attempted title 

fraud, land-title staff have been 

able to stop a number of inprogress 

title frauds through the 

examination of documents and 

other tools. 

d. Through the use of registrar’s 

caveats, fraudulent dealings 

on properties have been halted 

immediately. 

e. Communication among Notaries, 

lawyers, the police, and land 

title registrars and staff also have 

resulted in halting ongoing title 

frauds. 

As the above examples suggest, 

the risk of title fraud has in the past 

been reduced by the BC real property 

conveyancing and land title systems. 

What Can Mortgagees and their 

Notaries and Lawyers Do to Reduce 

the Risk of Fraud? 

It is interesting to note that in at 

least 4 of the recent mortgage fraud 

cases of which I have knowledge, 

mortgage brokers were involved in 

arranging the transaction on behalf 

of the mortgagees. In the Oehlerking 

case, $47,428.20 of the principal 

mortgage amount of $320,000 was 

deducted by the mortgagee Get 

Acceptance Corporation for their fees 

and expenses. That was in addition 

to withholding the first 3 months’ 

payments under the mortgage, which 

were the only payments made under 

the mortgage. 

One wonders the extent of due 

diligence involved in determining 

whether a mortgagee is dealing 

with the true owner when there are 

substantial mortgage broker fees to be 

had just for getting mortgage monies 

out the door. 


In the Supreme Court in the 

Oehlerking case, however, Mr Justice 

Barrow states, “In the matter at hand, 

substantial evidence and written 

argument were devoted to the issue of 

whether Get Acceptance Corporation 

‘participated in the fraud’ as that 

phrase is understood in the context of 

section 23(2) of the Land Title Act... 

neither the plaintiff nor the Land Title 

and Survey Authority pressed the issue 

and I am satisfied that Get did not 

participate in the fraud and thus the 

analysis in Gill v. Bucholtz applies, 

with the result that the mortgage is 

a valid charge on title to the lands.” 14 

Many lenders engage in sufficient 

due diligence to determine whether 

their borrowers are going to be able 

to service the mortgage. Part of 

the due diligence process involves 

reviewing income tax returns and 

related documents presented by 

the borrowers. I would submit that 

a process where the lender deals 

face to face with the borrower will 

substantially reduce, if not eliminate, 

the possibility of mortgage title fraud. 

It is my understanding that as 

a result of the Gill decision, many 

mortgagees have amended their 

mortgage instructions to require 

Notaries and solicitors to determine 

if there have been any recent transfers 

or mortgages that would indicate 

fraud. Such a determination in 

British Columbia can be made just by 

looking at the face of the title search 

print, to see when the application for 

registration was received for the most 

recent transfer. 

I suggest that if the application 

for transfer was filed within the last 

6 months or some other appropriate 

period of time to be determined, then 

a followup inquiry with respect to the 

possibility of title fraud is required. 

Such a followup inquiry in the case 

of Gill and Oehlerking would have 

revealed the frauds that were being 

attempted. Similarly, I believe that 

14 Oehlerking Estate, 2008 BCSC 1648 para. 

9. This case was appealed to the Court of 

Appeal as set out earlier. This observation 

by Mr. Justice Barrow on participation in the 

fraud was, however, not further argued in 

the Court of Appeal. 

in the remaining 5 of the 7 mortgage 

frauds mentioned above, such an 

inquiry should have revealed the 

frauds while they were still in progress. 

The determination of recent 

transfers or mortgages is an entirely 

straightforward process requiring 

a review of the existing title that is 

already in the Notary’s or lawyer’s file. 

Given the extremely rare occurrence of 

fraud, such determinations generally 

will require only a quick look at 

the title and routinely will result in 

a checkmark on the list of required 

steps to complete a conveyance. 

Mortgagees who engage 

in sufficient due diligence 

by getting to know their 

borrowers and by following 

appropriate practices will all 

but eliminate the possibility 

of mortgage fraud. 

Conclusions 

As I have pointed out, based on past 

experience, the incidence of title 

fraud in British Columbia is extremely 

low. The claims experience of the 

Land Title Assurance Funds support 

this position. The Gill decision is 

a variation on the Credit Foncier case 

that, although decided over 45 years 

ago, does not appear to have changed 

the approach to mortgage loans of 

lenders or their legal advisors. 

The Gill decision as a variation 

on the Credit Foncier case represents 

a miniscule increase in risk for 

mortgagees in light of the infrequency 

of title fraud in BC. Accordingly, 

in a mortgage title fraud case like 

Gill in the future, no claim could be 

made against the Assurance Funds 

because the loss to the mortgagee 

occurred as a result of a void or 

fraudulent mortgage, not as a result of 

a malfunction of the land title system. 

For years, Notaries and lawyers 

have been prepared to accept the 

risk of a caveat or certificate of 

pending litigation being filed prior to 

final registration of their mortgage 

or transfer by paying out on pending 

numbers with a check search of the 

title. The acceptance of this very small 

risk is similar in extent to the risk posed 

to mortgagees by the Gill decision. 

BC Notaries and lawyers can 

minimize any risk the Gill decision 

represents to their mortgagee clients 

by reviewing their title search print in 

the manner suggested and making the 

appropriate followup inquiries. 

Mortgagees who engage in 

sufficient due diligence by getting to 

know their borrowers and by following 

appropriate practices will all but 

eliminate the possibility of mortgage 

fraud. Previous experience resulting 

in virtually nonexistent fraud losses 

substantiates that approach. 

Critical analysis of contemporary 

commentary on the risks of title fraud, 

in part with a view to determining 

whether the commentator has vested 

interest in inflating the risk of fraud, 

assists in a realistic appraisal of the 

future incidence of title fraud. 

Although history has shown that 

title fraud is rare, there are bound to 

be occurrences of it in the future. The 

risks can be minimized, however, as 

outlined above, so that title fraud is 

even more infrequent. 

It is important to be vigilant for 

the indicia of fraud, to communicate 

among the players in the land 

business—Notaries, lawyers, financial 

institutions, police departments, land 

title registrars and staff, and Realtors, 

and to introduce new legislation and 

technology to reduce title fraud to 

an even more rare occurrence in the 

future in British Columbia. s 

Ian Smith is a former Director of Land 

Titles for British Columbia who retired 

in June of 2009. He was Director of 

Land Titles for 5 years and a Registrar 

of Land Titles for 23 years. Prior to 

joining Land Titles, ian practised law in 

Victoria for 11 years. ian is a member 

of the Editorial Board of the Land Title 

Practice Manual and was a member of 

the 2007 Law Society Task Force on Title 

insurance. 

iancbsmith@shaw.ca 


Fraudulent 

Conveyances 

in British Columbia, the 

Fraudulent Conveyance 

Act is the statute designed 

to give a remedy to creditors 

frustrated in collecting their 

debts by a debtor disposing 

of property. 

It creates an action that permits 

a creditor to impugn or set aside 

a transfer of property, where that 

property has been transferred in an 

effort to defeat the legitimate claims 

of creditors. 

Our law relating to fraudulent 

conveyances dates back to the English 

Middle Ages. When England became 

a trading nation, commercial laws 

were developed to resolve the trade 

disputes. Throughout history, it seems, 

debtors have been tempted to convey 

their property to friends or family, 

hoping to avoid their creditors by 

putting their property out of reach. 

As early as 1571, the Statute 

of Elizabeth, the first Fraudulent 

Conveyance Act, was passed. Since 

that time our courts have developed 

a large body of case law, which largely 

supports the claims of “creditors 

and others” to set aside fraudulent 

conveyances. 

Trevor Todd 

Judith Milliken QC 

Our law requires a debtor to 

honour his or her legal obligations 

first, before transferring property to 

others—usually family or friends—thus 

attempting to put it out of reach of 

legal claimants. 

In Freeman v. Pope (1870), L.R. 5 

Ch. App 538, this principle is stated as 

follows: “persons must be just before 

they are generous, and that debts must 

be paid before gifts can be made.” 

Throughout history, it seems, 

debtors have been tempted 

to convey their property 

to friends or family, hoping 

to avoid their creditors 

by putting their property 

out of reach. 

What is a Fraudulent Conveyance? 

A fraudulent conveyance is a transfer 

of an interest in property, in 

circumstances where 

a. the transfer hinders or impairs 

the rights of a creditor or other 

claimant to satisfy a claim against 

the transferor (debtor) of the 

property; and 

b. the transferor intends such 

a purpose in making the transfer. 

Burden of Proof 

In an action to set aside a fraudulent 

conveyance, the plaintiff (creditor) 

has the burden of proving the transfer 

was done with the intention of 

defrauding “creditors or others.” 

Intention is a state of mind 

and a question of fact that must 

be proven in court. Because the 

defendant’s intention is not usually 

directly known, however, the case law 

permits a plaintiff creditor to rely on 

circumstantial evidence to raise an 

inference of fraud that the defendant 

debtor must then rebut. 

The courts have identified 

a number of suspicious circumstances, 

known as the “badges of fraud,” that 

may raise this inference of fraud. The 

more suspicious the circumstances, 

the stronger the inference of 

fraudulent intent. 

It is not necessary to prove 

numerous badges of fraud, as a single 

badge may be sufficient to give rise 

to an intent to defraud, deceit, or 

delay creditors in the absence of an 

explanation from the defendant. Re. 

Fancy (1984) 46 O.R. (2d) 153 

The courts will examine all the 

circumstances surrounding the 

conveyance of the property to 

determine if there are any “badges 

of fraud.” 


The Supreme Court of Canada, in 

Koop v. Smith (1915) 51 S.C.R. 355, 

held that the burden of establishing 

the bona fides (good faith) of the 

transaction in such a situation shifts 

from a plaintiff (creditor) to the 

defendant (debtor), and that care is 

required in scrutinizing the testimony 

of the parties to the transaction. 

In examining transfers made 

between near relations under 

suspicious circumstances, the 

Supreme Court went on to rule that 

the principle of res ipsa loquitor 

applies—that is, the facts speak for 

themselves. Thus, the court ruled, in 

such a situation the defendant must 

establish the transfer was bona fides 

by presenting corroborative evidence, 

independent of the testimony of 

interested parties. 

Badges of Fraud 

Suspicious circumstances that our 

courts may characterize as “badges of 

fraud” include the following. 

1. There was secrecy surrounding 

the transaction. 

2. Cash payments were made. 

3. No change of possession occurred 

after the conveyance. 

4. There was a transfer to 

a non-arm’s-length person. 

5. The transferor has few remaining 

assets. 

6. The transfer was effected with 

unusual haste. 

7. Grossly inadequate consideration 

was paid. 

8. A benefit was retained by the 

transferor under the settlement. 

9. The transfer was made in the 

face of potential litigation. 

10. There was a lack of accurate 

documentation to support the 

transaction. 

These “badges of fraud” are 

enumerated in Bank of Montréal v. 

Vandine (1953) 1 D.L.R. 456; Prodigy 

Graphics Group Inc. v. Fitz-Andrews, 

(2000) O.J. No. 1203 (Ont. S. C. J.); 

and Ferguson v. Lastewka et al (1946) 

O. R. 577. 

Legal or Equitable Claim Necessary 

Both the original Statute of Elizabeth 

and our modern Fraudulent 

Conveyance Act provide a statutory 

remedy to “creditors and others” 

and their words have been broadly 

interpreted. 

Specifically in Hossay v. Newman, 

22 E. T. R. (2d) 150 (BCCA), our 

court adopted the reasoning of the 

Alberta Supreme Court in Dower v. 

Alberta Public Trustee (1962) 35 D. 

L.R. (2d) 29. The court found that the 

words “creditors and others” in the 

Statute of Elizabeth should be given 

a broad interpretation, but should 

include only such persons who have 

“legal or equitable” claims against the 

grantor or settler. 

The transfer may be set 

aside if the defendants 

simply foresaw potential 

creditors who might be 

defeated by the conveyance. 

In the Hossay decision, the 

plaintiff was an adult son of the 

deceased. He was effectively 

disinherited. 

Shortly before his death, the 

father placed his major assets in joint 

tenancy with one of the defendants. 

The result was that the deceased’s 

assets passed to the defendant by 

operation of law and did not form part 

of the testator’s estate. 

The plaintiff argued the transfer 

of the deceased’s assets into joint 

tenancy was a fraudulent conveyance 

made to defeat his claim under the 

Wills Variation Act. Since a WVA claim 

can only be maintained against the 

deceased’s estate, the plaintiff sought 

to set aside the transfer to bring the 

assets back into the estate of his late 

father. 

The court dismissed the plaintiff’s 

claim on the basis that he did not have 

any legal or equitable claim against his 

father during his lifetime. The son’s 

claim arose solely on death under 

the provisions of the Wills Variation 

Act and, as a result, the son did 

not come within the meaning of the 

words “creditors or others” under the 

Fraudulent Conveyance Act. 

Presumably, it would be otherwise 

for a claim brought by a spouse. In 

contrast to a child of a deceased, 

a spouse likely does have a legal or 

equitable claim against the other 

spouse, during his or her lifetime. 

For example, a spouse might have an 

equitable claim of unjust enrichment 

or constructive trust, or a legal claim 

under the provisions of the Divorce 

Act, or under provincial family law. 

Creditors Need Not Exist 

at Time of Conveyance 

In Canadian Imperial Bank of 

Commerce v. Boukalis (1987) 34 

D.L.R. (4th ) 481, at page 487 (BCCA), 

the court stated, “A conveyance can 

be set aside even if there were no 

creditors when it was made.” 

The transfer may be set aside if 

the defendants simply foresaw potential 

creditors who might be defeated by the 

conveyance. Newlands Sawmills Ltd. v. 

Bateman 31 B.C.R. 351 

This is especially so where 

a potential debtor embarks on a risky 

business venture knowing there might 

likely be future creditors, should the 

business fail. 

Until recent years, the law provided for 

imprisonment for carrying out a fraudulent 

conveyance. 


Dishonest Intention Not Required 

For the Fraudulent Conveyance Act 

to apply, it is not necessary to prove 

any dishonest intention on the part 

of the defendant. What is required is 

simply proof of an intention to move 

the property out of reach of potential 

creditors. Royal Bank of Canada v. 

Clarke 2009 BCSC 481 

In a judgment released February 

2, 2010, Abakhan & Associates Inc. 

v. Braydon Investments Ltd 2009 

BCCA 521, the Court of Appeal 

upheld the trial judgment. At trial, 

the judge had set aside a conveyance 

as fraudulent in spite of finding 

that the debtor had no dishonest 

intent and had acted on professional 

advice to effect legitimate business 

purposes. Certainly there were 

bona fide business reasons for the 

transfer. Nevertheless, once the debtor 

admitted an ancillary purpose was 

to shield the assets from potential 

creditors, the trial judge found the 

conveyance to be fraudulent. 

Similarly, in Chan v. Stanwood 

2002 BCCA 474, the court upheld 

a finding of fraudulent conveyance 

where the defendants, on the advice 

of professionals, transferred their 

exigible—easily collectible—assets 

into shares in holding companies 

that were not “effectively exigible.” 

This exchange of exigible assets for 

preferred shares delayed, hindered, 

or defaulted the creditors, and the 

defendants did so by design. That 

design or purpose constituted the 

fraudulent intent required by the Act. 

Conclusion 

There are centuries of jurisprudence 

relating to fraudulent conveyances. 

Historically, our courts have always 

interpreted the statute liberally and 

in favour of creditors. Most recently, 

our courts have ruled there need 

not be a dishonest intention proven. 

Even a transfer made with advice 

for legitimate ends such as limiting 

personal liability may be set aside 

when a transfer is also intended to 

help frustrate the claims of creditors. 

We can expect that more 

and more “estate planning” type 

arrangements may be challenged 

as fraudulent conveyances by 

disappointed spouses who would 

otherwise have a substantial Wills 

Variation Act claim. s 

Trevor Todd restricts his practice 

to Wills, estates, and estate litigation. 

He has practised law for 33 years and 

is a past chair of the Wills and Trusts 

(Vancouver) Subsection, BC Branch of the 

Canadian Bar Association, and a past 

president of the Trial Lawyers Association 

of BC. Trevor frequently lectures 

to the Trial Lawyers, CLE, and the BC 

Notaries and also teaches estate law 

to new Notaries. His Website includes 30 

articles on various topics of estate law. 

Judith Milliken QC has practised law for 

32 years in the areas of commercial law, 

criminal law, and most recently estate 

litigation. She practises estate litigation 

together with her husband Trevor Todd. 

Frank L. kitto registry services Ltd. 

Serving all your registry needs in Victoria 

• Land Titles 

• Companies 

• Manufactured Homes 

Leta C. Best 

lbest@notaries.bc.ca 

Photo: www.franceslitman.com 

• Personal Property 

• Ships 

• Court 

And for your notarial needs: 

kitto & Best 

notaries puBLic 

Serving you since 1958 

Real Estate and Manufactured Home Transfers 

Mortgages • Affidavits • Notarizing 

Powers of Attorney • Wills 

Representation Agreements 

100 – 895 Fort Street, Victoria, BC V8W 1H7 

PO Box 1057, Victoria, BC V8W 2S6 

53 rd Year 

Anniversary 

of Serving 

Victorians 

Let us do the 

running for you! 

Registry 250 384-8054 Notary 250 384-8051 Fax 250 381-5552 


British Columbia is huge— 

millions of hectares, all of 

it now packaged into distinct 

and legally recognized bits. 

In all, BC boasts about 1.9 

million active land titles and they’re 

active, indeed. British Columbians are 

a mobile bunch. In the past 20 years, 

the provincial land title system has 

processed 15 million transactions— 

titles cycling and recycling through 

new hands and permutations. Few of 

these changeovers have been tainted 

by fraud, whether through forged 

documents or bypassed safeguards. 

But bad things can and do happen. 

Witness the Martin Wirick case where 

a Vancouver lawyer and developer 

working together in over 100 real estate 

transactions defrauded individuals of 

about $31 million—the largest “legal” 

fraud in Canadian history. Here in BC, 

the longheld Torrens System of “open 

and complete” owner/title registration 

has done much to fend off attempts at 

fraud. 

Thankfully, such frauds are rare. 

Our goal is to make them extinct or 

very, very endangered. 

Fraud withers under the unblinking 

eye of reliable and timely information. 

Knowledge is power. To work at its 

best, especially in the fast-moving 

real estate arena, knowledge must be 

immediate, comprehensive, and “on 

top of it all.” 

Rudy Nielsen 

Torrens + Technology = 

Reduced Risk of Fraud 

Enter online technology. 

To add to the current information 

provided by our Property Valuator 

and Title Search Plus products, the 

Landcor team is developing a product 

that rates the risk for fraud in any 

real estate transaction. This product 

will score fraud indicators from the 

property, the neighbourhood, and the 

people involved, to give real estate 

professionals a consolidated view of 

the key fraud factors. Our reports 

are easily accessible, fast, accurate, 

trustworthy, and cost-effective. 

In the past 20 years, 

the provincial land-title 

system has processed 

15 million transactions— 

titles cycling and recycling 

through new hands 

and permutations. 

Our business is busy. In 2009, 

Landcor saw 165,000 real estate 

transactions worth almost $62 billion. 

Our system delivered more than 

26,000 custom reports to our clients. 

Whatever reporting tools you 

chose, use them. They are excellent 

defences against fraud. s 

Rudy Nielsen, Ri(BC) FRi, is one of 

British Columbia’s leading real estate 

evaluators and appraisers. Licensed as 

a Realtor in 1964, Rudy opened his first 

real estate office in 1972 and obtained 

his diploma in urban Land Economics 

in Appraising from the university of 

British Columbia in 1972. Recognizing 

an unmet need for fast and accurate 

electronic real estate appraisals, 

he set out to create an Automated 

Valuation Model (AVM). After many 

years of research, programming, 

and design, Rudy founded Landcor 

Data Corporation in 1987, an in-house, 

state-of-the-art system to offer easy 

and accurate real estate analysis and 

valuation. He looks forward to taking 

Landcor to the next level and making 

the products available coast to coast. 

Landcor Data Corporation 

www.landcor.com 


LAND FRAuD: 

Tell the Truth 

and Do Your Research 

Land fraud can happen 

in different ways. 

Several accounts from real 

life incidents are described here. 

The identities of the victims and the 

perpetrators and several details have 

been disguised to protect privacy 

issues. 

“Misappropriation” describes an 

attempt to acquire property by 

a trustee, and may be fraudulent. 

“Mischief” describes ambiguous 

language in legislation that requires 

interpretation to reinforce intentions 

rather than let the language 

undermine the intended purpose. 

Common law principles appear to 

apply and the courts often introduce 

remedies to correct defects. 

“Misrepresentation” generally includes 

words or conduct conveying a false 

or misleading impression. The 

misrepresentation may be 

• fraudulent because the 

information was known to be false 

with intent to deceive; 

• an innocent statement or action 

made in the honest belief it was 

true; or 

• negligent because the statement 

was made carelessly or recklessly 

with no reasonable grounds for 

believing it was true. 

How can “misrepresentation” 

happen? Fortunately, the real estate 

industry adopted a Disclosure 

Statement form some years ago. 

A properly completed statement 

protects the purchaser against wrong 

information. A properly completed 

Disclosure Statement also protects the 

vendor and Realtor. 

When a Disclosure Statement 

is presented to a prospective 

purchaser, the “buyer 

Beware” onus shifts to the 

purchaser for any identified 

defects that may exist. 

When a Disclosure Statement is 

presented to a prospective purchaser, 

the “buyer Beware” onus shifts to the 

purchaser for any identified defects 

that may exist. Defects that have not 

been disclosed may cause serious 

problems for the vendor. The vendor 

may be forced into proving innocence 

at additional cost. 

Most real estate transactions 

involve a home purchase. The issues 

are reasonably simple for most single 

family residences. The issues become 

more complicated for strata title 

properties. When large acreages in 

unorganized territories (outside city or 

municipal boundaries) are involved, 

the rules may change. 

Bill Pekonen 

Most Crown-Granted lands required 

sufficient public access before the land 

could be purchased from the Province. 

Exactly what is meant by “sufficient 

highway access” may vary according 

to circumstances. Some land surveys 

were more complete than others. The 

Crown Grant also stipulates the number 

of acres included in a parcel. Many 

court cases have developed over poorly 

defined issues. 

Consider the following examples. 

Albert advertised a farm for 

sale including 320 acres under 

irrigation producing 1650 tons 

of hay. Bob purchased the farm 

relying partly on that information 

as income production. It turned 

out that only 263 acres were under 

irrigation, producing much less hay. 

Under questioning in court, Albert 

finally admitted the information 

Handyman’s Special: A bright and airy 

home on the edge of town, perfect for the 

handyman or the retired fixer-upper. Open 

concept home is close to road (real close, 

that is). 


©iStockphoto.com/stayorgo

was false and that the income from 

previous hay sales was also false. 

Albert was required to pay damages. 

The Realtor was also involved, and 

partly responsible because he did 

not verify the information provided 

verbally by the vendor. 

Both could have avoided the 

problem by having the actual size 

of the fields verified by a legal 

survey. Even an initial research 

of the original Crown Grant and 

previous surveys in the area might 

have revealed the problem. 

Charlie represented to Dugald 

that a higher than actual number 

of calves were sold at a price per 

pound that was 20 percent higher 

than actually received. Charlie 

admitted under questioning that he 

knew the information was false. This 

admission proved costly for Charlie. 

Edward claimed the water well 

had been producing 5000 gallons 

per minute when in fact a recent 

test indicated only a stable 1200 

GPM. Edward also concealed 

information from a separate test 

report that the water contained 

hazardous levels of sodium. 

Elevated sodium was not suitable 

for the existing soil type. 

Adding to the problems, the 

vendor’s evidence was not accepted 

as reliable because the vendor was not 

considered to be a credible witness. 

In another twist, the vendor’s opinion 

was based on hypothetical situations 

that did not meet the preponderance 

of probabilities; the vendor’s expert 

witness relied on erroneous facts and 

lacked supporting material information; 

the tests necessary to form a reliable 

opinion were not performed. 

All elements of deceit were 

overwhelmingly supported by the 

evidence. The purchasers were 

successful in obtaining awards for 

damages. 

In each of those examples, 

the purchasers were looking for an 

operating ranch with established 

income and prospects. The purchasers 

could have saved a lot of grief by 

conducting adequate research before 

completing the sale agreement. 

Another situation involves a public 

road and public trail that existed for 

several decades before a railway was 

surveyed and constructed. The surveyor 

for the railway did not show the highway 

crossing. The railway company closed 

the public crossing. That appears to be 

an example of “mischief.” 

The closure caused many problems 

for Frank when he attempted to 

subdivide the 120-acre property into 

3 parcels of 40 acres each for his three 

children for estate-planning purposes. 

The purchaser may benefit 

at the expense of the vendor. 

After all is said and done, 

it is the vendor who sets 

the asking price. 

The common law principle appears 

to apply because where statutory 

rights infringe upon the rights of other 

persons, they must be exercised 

reasonably, to do as little mischief 

as possible. It appears that similar 

situations need to be resolved by the 

courts in the event reasonable solutions 

to mitigate the problem are not found. 

But before discussions can take place, 

historical research is a “must.” 

A mistake made by only one of 

the parties to a contract regarding its 

terms or objects could amount to fraud 

if that party seeks to take advantage in 

the hopes of gaining a windfall. When 

written agreements exist, both parties 

must do everything possible to live 

up to the agreement, however strange 

the conditions may seem. Numerous 

recent court decisions stress that 

fairness and equity must be applied to 

prevent a windfall to one party at the 

disadvantage of the other party. 

Sometimes, new facts may 

negatively affect the land value. In that 

case, it seems to be a good idea to 

bring a mistake to the other party’s 

attention to avoid future problems with 

accusations of misrepresentation. 

Conversely, the facts may 

positively add to land value because 

obvious facts were overlooked along 

the way. The purchaser may benefit 

at the expense of the vendor. After 

all is said and done, it is the vendor 

who sets the asking price. Good facts 

can be considered as good bargaining 

chips. But those facts must not 

misrepresent the situation. 

The common intentions of parties 

at the time of acquisition or transfer 

of land is of utmost significance to 

preserve fairness. When one party is 

aware of any mistake and attempts to 

take advantage of that mistake for his 

or her own benefit, a court application 

for rectification or rescission may 

become necessary. 

It seems to be important that 

both parties obtain objective historical 

information about the land and other 

issues to avoid costly legal and court 

costs. Adequate research is definitely 

a cost-effective expenditure when 

compared with legal and court costs. 

Experienced legal counsel can 

explain what types of evidence are 

required with respect to the issues 

under consideration that will convince 

a Justice of the Courts to make a fair 

ruling. A typical objective research 

report gathers different facts from 

a variety of official records. The facts 

speak for themselves without the need 

to express opinions or conclusions. s 

Footnote 

Description Reference: Barron’s 

Canadian Law Dictionary, 6th Edition. 

Any personal opinions expressed in 

this article are not to be construed 

as legal advice. In the event that 

any of these circumstances apply to 

the reader, it is recommended that 

competent legal advice be obtained. 

Bill Pekonen has more than 40 years 

of research and consulting experience 

in taxation and real estate matters. 

Bill has won numerous awards for 

well-researched articles. A graduate 

of uBC diploma program in urban 

Land Economics, he operated a public 

practice as a tax accountant and real 

estate consultant. in preparation for this 

article, Bill reviewed more than 135 court 

decisions. Most of the court decisions 

related to British Columbia issues. 

Voice: 604 270-8726 


Real Estate Agents 

Vigilant for Fraud 

Federal laws and regulations 

dealing with money 

laundering and antiterrorist 

financing state that real estate 

agents and brokers must collect 

and verify personal information 

from buyers and sellers. 

More important, real estate agents 

are responsible for tracking the source 

of funds received during the course of 

a real estate transaction, such as the 

deposit. 

Passed in 2007, these regulations 

are part of federal legislation (Bill C-25) 

that requires a number of industries, 

Alyson Fair 

including real estate, to do more to help 

stop money laundering and terrorist 

financing. The regulations are enforced 

by the federal agency known as the 

Financial Transactions and Reports 

Analysis Centre of Canada—FINTRAC. 

Real estate agents are 

required to ask for proof 

of the identity of all 

buyers or sellers involved 

in a Canadian real estate 

transaction. 

“Since 2001, real estate agents 

have had legal obligations under the 

federal government’s push to prevent 

©iStockphoto.com/aldomurillo 

criminal activity and terrorism,” says 

Georges Pahud, President of The 

Canadian Real Estate Association 

and a Realtor in Vancouver. “In 

the first phase of compliance, real 

estate agents were required to 

report only suspicious transactions 

or transactions involving more than 

$10,000 in cash. Now, verified 

personal information must be kept 

of the buyer and seller for each 

and every real estate transaction in 

Canada in which a real estate agent 

is involved. That personal information 

includes details such as occupation.” 

Real estate agents are required 

to ask for proof of the identity of 

all buyers or sellers involved in 

a Canadian real estate transaction. 

• If the client is a corporation, 

the information must include 

corporate documentation and 

the names of the corporation’s 

directors. 

• Real estate agents must ascertain 

whether a third party is involved 

in the transaction. That also 

applies when the buyer is 

represented by a real estate agent 

and the seller is not, or visa versa. 

• People buying or selling privately 

will be asked by the agent 

representing the other party 

involved in the transaction to 

provide proof of identity. A record 

of that proof will be kept on file 

by the real estate agent involved. 


• A real estate agent dealing with 

a client that he or she never 

meets must verify the client’s 

personal information. The broker 

office involved can do that 

through a service agreement 

with an agent or person who 

can receive the mandate in the 

area where the client is located. 

That agent or specified person 

must meet the client, verify the 

client’s identification, and provide 

the ID information to the broker 

office that is handling the real 

estate transaction. 

“There are buyers, sellers, or 

investors from other countries who rely 

on expertise here rather than visiting 

the property themselves,” explains 

Pahud. “It is the law in this country 

that they meet with an official agent of 

the Canadian broker and provide proof 

of identity.” 

In addition, real estate agents 

must complete a report on the receipt 

of all funds received during the real 

estate transaction, not just those of 

$10,000 or more. 

To comply with the federal 

regulations, real estate agents are 

required to keep this identification and 

receipt-of-funds information on file for 

5 years and provide it to FINTRAC if 

requested. The individual broker office 

will be responsible for the safekeeping 

of the information and must respond to 

any information request from FINTRAC. 

In 2009, over 465,000 transactions 

were reported through the Multiple 

Listing Service ® operated by local real 

estate boards and associations. 

The Canadian Real Estate 

Association (CREA) is one of 

Canada’s largest single industry trade 

associations, representing more than 

98,000 Realtors working through 

more than 100 real estate boards and 

associations. CREA’s primary mission 

is to represent members at the federal 

level, and to defend the public’s right 

to own and enjoy property. s 

Alyson Fair is Publicist for 

The Canadian Real Estate Association. 

Voice: 613 237-7111, ext. 2284 

afair@crea.ca 

www.crea.ca 

Rent This Space! 

Call: 604 985-9250 

scrivener@notaries.bc.ca 

Summer 2010 Deadline: June 14 


Fraudsters 

in the Family Circle 

Agnes Smith 1 was 87 years 

old when her son Frank 

insisted she sign a Power 

of Attorney and took it to the 

bank. 

Frank transferred all of Agnes’s 

savings into his own accounts, then 

cashed them out. Frank subsequently 

left town, leaving his mother without 

any funds except her small government 

pension. Agnes was so distraught 

from both the fraud and theft that 

her health suffered significantly and 

she sank into a deep depression from 

which she has never recovered. 

Li Leung was 79 years old. Li 

trusted his nephew Yin to help him 

protect his finances. Because Li’s 

English was not very good, Yin would 

help “translate” financial documents 

and assist with banking. Instead, it 

turned out that Li was not signing 

up for safe and secure investments. 

Rather, he was signing a guarantee for 

Yin’s new computer business. When 

Yin went of out business 6 months 

later, Li lost his home. 

Parminder Singh was 92 years old 

when her private home-care worker 

Leilani started blocking her mail and 

keeping the phone out of Parminder’s 

1 Names have been changed; the stories are 

an amalgam of cases. 

Grace Balbutin 

reach. Leilani convinced Parminder to 

give her some personal information, 

which Leilani used to apply for several 

credit cards. She then proceeded to 

run up more than $60,000 in debt at 

18 percent interest. 

Those are examples of how 

intelligent, older adults can be 

victims of various forms of financial 

abuse. Multiple barriers, including 

lack of knowledge about legal and 

financial instruments, lack of access 

to supportive services, and the 

complexity of elder abuse make stories 

such as these all too common. 

With the “Age Tsunami” 

ready to break on Canadian 

shores, we know there will 

be an increase in elder 

abuse in the near future. 

With the “Age Tsunami” ready to 

break on Canadian shores, we know 

there will be an increase in elder 

abuse in the near future. Already 

there are more seniors in Canada than 

there are children. By approximately 

2030, one out of every four British 

Columbians will be over the age of 65. 

Financial abuse is already the 

most commonly reported form of elder 

abuse in Canada, although so many 

aspects of elder abuse are hidden from 

public view. It is likely that, as in the 

cases above, other forms of insidious 

abuse are also present but less visible. 

What can be done about financial 

elder abuse in British Columbia, 

particularly in times of declining 

services both in access to justice and 

seniors’ services? In short, need is on 

the rise and services are on a sharp 

decline. 

The BC Centre for Elder Advocacy 

and Support (formerly known as the 

BC Coalition to Eliminate Abuse of 

Seniors) has been working hard in BC 

for more than 15 years to educate 

the public about this problem and to 

provide services to assist seniors who 

have been abused. 

With the support of funders such 

as the Law Foundation of British 

Columbia, the BC Notary Foundation, 

the New Horizons Program (HRSDC), 

and Victim Services and Crime 

Prevention Division of the Ministry of 

Public Safety and Solicitor General, 

BC CEAS has been able to add some 

exciting new initiatives and programs 

to its longterm programs and services. 

BC CEAS is now able to provide 

• expanded community 

development; 

• broader services on its 

longstanding toll-free provincewide 

Seniors Help and 

Information Line; 


• an enriched Legal Advocacy 

Program; 

• a Victim Services Program; and 

• the BC Elder Law Clinic. 

The second such facility in 

Canada, this new legal clinic for 

older adults operates outside the 

government legal aid system and is 

funded by the Law Foundation of BC. 

The most common problem presenting 

on our toll free line and to our Elder 

Law Clinic is financial abuse. Often, 

however, when we are able to spend 

more time supporting the older adult 

and trust is established, we see that 

financial abuse is often only one 

component of many forms of abuse to 

which the older adult is subjected. 

BC CEAS is taking significant 

steps to address financial abuse issues 

along a continuum of services, from 

prevention and education to individual 

client work and legal representation. 

In particular, BC CEAS is developing 

specific workshops called “Financial 

Literacy and Financial Abuse 

Prevention 101.” 

The workshops educate on issues 

of Powers of Attorney and substitute 

decision-making, identity theft and 

other forms of theft, banking issues, 

scams, and “myth-conceptions.” This 

new workshop builds on and replaces 

our ABCs of Fraud workshops 

and contains new information on 

a broader range of financial-abuseprevention 

topics. 

The original parameters of this 

project included developing workshops 

for older adults, to be delivered by 

older adults. There has been such 

public interest and need for the project 

that it has been expanded to include 

education materials for professionals 

and others involved in the financial 

lives of older adults. Materials include 

information about resources and 

practice tips for various professions. 

“Notaries play a particularly 

important role in the lives of BC 

seniors,” says Joan Braun, Executive 

Director of BC CEAS. “Due to their 

community-integrated and clientfocused 

approach, many BC Notaries 

can help a financially abused older 

adult find the support and services 

that he or she needs.” 

Former Chair of the Board 

and current National Director of 

the Canadian Centre on Elder Law 

Laura Watts adds, “BC CEAS plays 

a central and critical role in the 

fight against elder abuse. Notaries 

have been engaged in that fight for 

many years, as well. They are natural 

collaborators in this work.” 

“Notaries play a particularly 

important role in the lives 

of BC seniors,” 

says Joan Braun, Executive 

Director of BC CEAS. 

The Financial Literacy 101 

workshops and modules will create 

much-needed educational information 

and tools. That is only one stream in 

a rising tide of need. 

BC CEAS is grateful to be able to 

provide the services it does but given 

the demographic tsunami coming, we 

know that a stronger and higher levy 

will need to be built—and quickly. s 

Grace Balbutin, Manager of outreach 

and Community Programs for BC CEAS, 

oversees outreach and communications 

activities for the elder law clinic. 

BC CEAS provides information and 

workshops on financial and other 

elder abuse issues. We work in 

partnership and collaboration with other 

organizations and groups concerned 

with elder abuse issues. 

www.bcceas.ca 

Enquiries are welcomed at our office. 

604 688-1927 

Toll-free Seniors Help and information 

Line: 1-888-437-1940 

Local calls: 

604 437-1940: 10 am to 3 pm 

A provincial nonprofit charitable 

organization, BC CEAS gratefully 

accepts donations for its important 

work. 

Editor’s 

Next Issue: Summer 2010 

Getting . . . 

and Staying . . . 

Organized! 

Some of the Benefits of Getting 

Organized . . . 

• Reduced stress 

• Increased ability 

to concentrate 

• Improved personal 

professional satisfaction 

BC Notaries, Alex Ning, 

Brenda Balogh, and Michael Kravetz 

In the Summer Cover Story, 

BC Notaries Alex Ning, Brenda 

Balogh, and Michael Kravetz 

talk about Organization—how it 

increases productivity, creates a 

happier office environment, and 

saves time! Other articles reveal 

clever strategies and tools you can 

implement in your daily life to 

get—and stay—organized! 

The Mix section always showcases 

interesting and timely articles. 

To send us photographs, please . . . 

• go to www.graffiki.ca, and 

• click on "Send A File." 

From the top box, delete the words "Your 

e-mail." In that now-empty box, type your 

email address. 

Send up to 5 photos at once. 

Repeat as necessary. 

Advertising Deadline: June 14 

scrivener@notaries.bc.ca 

604 985-9250 

www.notaries.bc.ca/scrivener 


CRIMES AGAINST ThE ELDERLy: 

Fraud via the 

Power of Attorney 

People often imagine 

typical crimes against 

the elderly to be robbery 

and assault by some unknown 

individual, and physical or 

mental abuse by a caregiver. 

Those are not the only instances 

of elder abuse. Police are seeing an 

increasing number of complaints in 

the financial exploitation of the elderly 

through the mismanagement of their 

assets. These incidents usually occur 

when individuals are given legal 

guardianship or Power of Attorney 

over the victim’s finances. 

A Power of Attorney document 

gives a person the power to act on 

your behalf. Powers of Attorney run the 

gamut from extremely limited (Limited 

Power of Attorney) to providing 

someone complete power over your 

care and finances (Enduring Power of 

Attorney). 

Because you are authorizing 

someone to act on your behalf, you 

should choose someone you trust 

completely, now and for a time when 

you may be incapable. 

Our federal fraud laws are built on 

the premise that exploitive dishonesty 

should be forbidden. A person 

Laurie Salvador 

commits fraud who dishonestly— 

knowingly—induces a person or the 

public to part with any property or to 

suffer a financial loss by deceit, unfair 

nondisclosure, or unfair exploitation. 

“Everyone commits theft who 

misappropriates money or property 

while acting as power of attorney.” 

Section 331 of the Criminal code, 

R.S. 1985, C-34, S. 291 

…you should choose 

someone you trust 

completely, now and 

for a time when you may 

be incapable. 

Deceit 

This is where the owner is deceived 

into willingly parting with property or 

money by someone with the intention of 

permanently depriving the owner of it. 

While deceit means any false 

representation, it does not include an 

expression of opinion that is not made 

as a statement of fact. 

Unfair nondisclosure is where a duty 

to disclose arises from 

• a relationship of trust where the 

victim ought to be able to rely on 

the accused, such as a financial 

planner or religious official; 

• conduct by the perpetrator that 

creates a false impression in the 

victim's mind; or 

• circumstances where 

nondisclosure would create a false 

impression in the mind of any 

reasonable person. 

Exploitation is the 

• exploitation of another's mental 

incapability or ignorance; 

• another's mistake intentionally 

induced by the accused; or 

• another's mistake induced by the 

unlawful conduct of a third party 

in collaboration with the accused. 

People who are deemed 

incompetent by a court lose all their 

rights and seldom regain them, 

unless they can prove total recovery 

from the conditions that led to 

their being judged incompetent. 

That can sometimes lead to others 

abusing their positions as guardians, 

although a person appointed as 

“committee” (a legally appointed 

guardian) must report to the Public 

Guardian and Trustee on a regular 

basis while managing the affairs of the 

incompetent person. 


Upcoming changes to the Power 

of Attorney Act should curb some of the 

misuse we have seen in recent years. 

Who would use a Power of 

Attorney to commit fraud against 

a parent? you might ask. 

Sadly, it does happen. We see it 

more and more often these days. 

Typically, the n’er-do-well son 

comes home to roost just as his 

parents are becoming vulnerable 

through age-related illnesses or 

dementia. 

The parents, happy to see the 

lad after such a long absence—and 

perhaps in a bit of a financial fog—are 

more than willing to give him Power 

of Attorney when he suggests it. They 

are tired of the monthly effort of 

paying bills and are having a hard time 

remembering to keep their affairs up 

to date. 

That is the perfect setting for son 

Billy to prematurely pluck a few plums 

from the inheritance pie. 

Billy can easily justify this in his 

mind because, after all, he is the one 

helping Mom and Dad. He is the one 

who picks up groceries for them and 

takes them to the doctor. His siblings 

who live in the East seem to have little 

to do with Mom and Dad on a regular 

basis. 

By the time the other siblings 

realize what is going on, it is too late. 

Billy has helped himself to the majority 

of the assets, leaving his parents with 

only their government income on which 

to survive. 

In extreme cases, Billy might 

even have used his Power of Attorney 

to transfer the title of their home to 

himself, although technically that is 

illegal unless the Power of Attorney 

document specifies he has the power 

to do that. 

Legal practitioners must be 

vigilant in protecting clients from 

predators. Before a legal professional 

takes instructions for a Power of 

Attorney, the following points must be 

discussed with the client. 

1. The Power of Attorney document 

is effective only while the client 

is alive. Its power stops with the 

client’s death. 

2. The client can revoke (cancel) the 

power at any stage, as long as he 

or she has mental capability. 

3. The power the client is giving 

to another person (the attorney) 

will continue to be in effect after 

the client has lost the mental 

capability to revoke (cancel) the 

document. 

4. The client must appoint the 

attorney using his or her own 

free will and without any undue 

influence of a third party. 

5. The person is giving power to 

another person to manage his or 

her financial affairs. That power 

includes but is not limited to 

• buying and selling property on 

the client’s behalf, including 

the client’s own home, if 

that action is specified in the 

Power of Attorney document; 

• depositing and withdrawing 

money from the client’s 

account(s); 

• paying for services for the 

client with the client’s money; 

• borrowing money on behalf of 

the client, if there is a need 

and a method of repaying the 

loan from the client’s income 

or other resources. 

6. Finally, there is a possibility that 

the attorney might abuse the 

power and steal from the client. 

While that is a criminal offence, 

there is the potential for that to 

happen. Recovery of the money 

and/or property may be difficult. 

In our office, we make it a practice 

to review, with the prospective attorney, 

the “Rules of Engagement” or the 

job description, as we like to call it. 

Verbally, I might even go as far as to 

say, “What this really means is, ‘Don’t 

steal from your parents!’ ” s 

Laurie Salvador is a Notary practising 

in Sidney By The Sea, BC. 

laurie@salvador-davis.com 

Dedicated to caring 

for kids who need help 

Established by Radio Station CKNW, 

the CKNW Orphans’ Fund has been 

operating since 1945. 

• We are dedicated to promoting 

the health and welfare of 

physically, mentally challenged, 

and disadvantaged children in BC. 

• The Fund has awarded millions of 

dollars to special needs children, 

their families, and organizations 

working on their behalf. 

For over 60 years, we have been 

able to assist children to gain 

independence and confidence 

through the generosity of loving 

legacy gifts. 

With your help, we plan to be 

around for many more years. 

For more information, please call 

Shirley Stocker, Executive Director. 

604 331-2711 

cknworphansfund@cknw.com 

CKNW AM 980, a division of Corus 

Entertainment, provides all promotional 

and marketing services for the Fund and 

donates funds to cover administrative costs. 


A 

90-year-old woman receives 

a phone call from an 

agitated young man who 

identifies himself as her grandson. 


RECOVERING FROM CON ARTISTS: 

Seniors Share Their Stories 

He is asking for her help. 

He needs $10,000 to get out of jail. 

After she sends the money—her last 

$10,000—she learns her grandson 

was never in jail and had not called 

her for assistance. 

©iStockphoto.com/CREATISTA 

A door-to-door salesman convinces 

an 82-year-old man that his roof needs 

fixing. A few days and $20,000 later, 

he discovers his roof did not need 

work and that in fact, the “repairs” 

actually damaged his roof. 

A 68-year-old senior applies for 

the part-time job she saw advertised 

in the paper, only to become the 

victim of identity theft because she 

provided her SIN number and driver’s 

licence information to the prospective 

employer. 

The details of each story are 

different but each situation resulted 

in the loss of money and certainly the 

betrayal of trust. 

During a Finding Home dialogue 

called “How To Spot A Wolf In Sheep’s 

Clothing,” a group of seniors shared 

their experiences about con artists, 

the shame and humiliation they felt 

afterward, and their road to recovery. 

1. Ironically, the first step to trusting 

people again is to learn to trust 

yourself. Understand that in the 

future, if you listen to your own 

inner voice, you will be able to 

trust yourself and your choices. 

In almost all cases, the victims 


of a scam can remember having 

“a funny gut feeling” or sensing 

warning signals—red flags, so to 

speak—which they ignored. 

2. It can be tempting to blame 

yourself. After all, you were 

swindled. The trick is to place the 

blame squarely on the con artist. 

3. It is important that you 

understand what made you 

vulnerable in the first place. 

Two risk factors are loneliness 

and unfulfilled dreams. Con 

artists may tune into your feelings 

and give you the impression that 

they genuinely care about you. 

4. If you have fallen prey to a con 

artist, partially because you 

were in need of affection, that 

unpleasant occurrence can be an 

opportunity for you to strengthen 

your appreciation of yourself and 

expand your network of friends to 

include people who will genuinely 

value your friendship. Awareness 

+ Action = Achievement! 

5. The next step is what I call 

“transforming pain into purpose.” 

Some experiences are too painful 

to simply “move on” or “forgive 

and forget.” When I flip-flop from 

the distress of being a victim into 

fantasies of revenge, I know it is 

necessary to transform my pain 

into a positive purpose. I was a 

victim of fraud in 2007. From 

that experience, I created the 

“How To Spot A Wolf In Sheep’s 

Clothing” dialogues. 

Dialogue participants share stories 

and generate their own strategies to 

help them prevent and/or recover from 

fraud and other scams. During one 

session, participants identified the top 

ten red flags that indicate you may be 

dealing with a “wolf.” The colourful 

poster we created as a visual legacy 

of that effort has become a public 

education tool to help create more 

senior-friendly communities. Some 

communities distribute the posters 

throughout their neighbourhoods as an 

effort to “con-artist-proof” their locale. 

The dialogues generate many 

positive comments from participants. 

One senior noted it’s important to 

remember that you did the best you 

could at the time you were duped. 

Another offered that agonizing events 

can become catalysts for growth. 

Through the Finding Home 

dialogues, seniors make new friends, 

learn about community resources, and 

create ideas for projects and programs 

that matter to them. 

…victims of a scam 

can remember having 

“a funny gut feeling” 

or sensing warning signals— 

red flags, so to speak— 

which they ignored. 

Recently, the Finding Home 

Initiative has partnered with the 

Association of Neighbourhood Houses 

of British Columbia on a regional 

Elders Financial Abuse Awareness 

Dialogue Project funded by the 

Government of Canada (HRSDC New 

Horizons for Seniors Program). 

We also are working with 

Immigrant Services Society and 

Afghan seniors; South Vancouver 

Neighbourhood House and Punjabi 

seniors; and the John Braithwaite 

Community Centre/North Shore 

Neighbourhood House and 

multicultural seniors. 

To learn more about the Elders 

Financial Abuse Awareness Dialogue 

Project and how we are working with 

culturally appropriate fables, a senior’s 

council, and community partners, 

please call 604 875-9111, ext. 113. 

Visit our blog for regular updates. 

http://jessiesutherland.ca s 

Jessie Sutherland, MA, is the innovator 

of the Finding Home initiative, a 

Specialist in dialogue design and 

facilitation and the author of the 

book Worldview Skills: 

Transforming Conflict 

From The Inside Out. 

Voice: 604 879-2402 

jessie@findinghome.ca 

www.findinghome.ca 

About The Finding 

Home initiative 

Global changes in the 

economy and in 

the environment and an 

increasing senior, newcomer, 

and urban indigenous 

population are leaving 

many people yearning for 

belonging—a sense of home. 

The Finding Home 

Initiative supports individuals and 

neighbourhoods to foster that 

sense of belonging, build inclusive 

communities, and increase 

effectiveness in responding 

to personal, local, and global 

challenges. 

Our Services 

• Seniors and Neighbourhood 

Dialogues 

• Community Engagement 

and Diversity Training 

• Keynote Addresses and 

Public Speaking 

Thanks to Finding Home . . . 

• Seniors are learning to create 

security for themselves and 

to identify con artists. 

• Youth are connecting with 

each other and making 

valuable contributions to their 

neighbourhoods. 

• Indigenous people and 

newcomers are finding ways 

to connect and learn about 

each other. 

• Neighbourhood Houses 

are learning how to engage 

diverse communities and 

foster a sense of belonging. 

Contact us to learn more. 

Voice: 604 879-2402 

jessie@findinghome.ca 


Finding Home 

How to Belong in a Changing World 

Steeves Manor Dialogue 

How to Spot a Wolf in Sheep’s Clothing 

You May Be Dealing 

with a Wolf . . . 

Ten Red Flags 

They divert attention away 

from themselves. 

Their story does not add up. 

They lavish flattery too fast, 

too soon. 

They seem too good to be true. 

They like a “Pity party”—they 

are always hard done by. 

They lack empathy. 

They scapegoat people. 

They tend to be self-centred— 

it’s all about them. 

They don’t reciprocate. 

They ingratiate themselves 

to the manager or person 

in charge. 

Note: Many people exhibit some of these 

behaviours at various times in their lives 

and they are not predators. 

If the person exhibits several of these red 

flags consistently over time, you may be 

dealing with a predator. 

Dialogues Designed & Facilitated by: 


Finding Home 

How to Belong in a Changing World 

www.findinghome.ca 

What Makes Us Vulnerable? 

• Loneliness/Isolation 

• Fatigue and feeling 

unappreciated/unloved 

• Inadequate support system 

Life Lessons and Recovery 

• Enhance our compassion and 

increase self-awareness. 

• Know that we did the best 

we could at the time. 

• Develop discernment. 

• Increase our personal power. 

• Strengthen our values. 

• Know that a painful 

experience can be part of 

growth. 

• Remember that every day 

is a new day. 

Strategies to Keep Safe 

• Watch others’ body language. 

• Trust your gut feeling and 

intuition—and speak up. 

• Find a person who believes 

you and is supportive. 

• If necessary, find legal or 

psychological help. 

Sponsored by: 

The Province of British Columbia 

In Kind Contributions by: 

Kitsilano Neighbourhood House 

The WASP Technique 

Stand still, ignore, leave space, 

and eventually the wasp will 

fly away. 

Remember . . . 

Steeves Manor 

Dialogue Participants 

Not everyone is a Wolf. 

• Most people are trustworthy. 

• Don’t miss out on good 

people and the joy of 

difference and diversity. 

• Be open to learning about 

new things. 

• Don’t misinterpret and get 

stuck in prejudices. 

• Enjoy making new friends. 

Justice Institute of British Columbia 


in most legal offices, there 

are paper documents that 

should be seen only by the 

legal professional and his or 

her client. 

Those documents could be copies 

of identification, Wills, Powers of 

Attorney, and more. 

There are several ways to keep 

the documents safe and secure. 

A basic locking file cabinet is an easy 

start. Their locks are usually simple 

in nature, however, and can be easily 

picked or broken. And a metal cabinet 

will not protect against fire or water 

damage. 

Thumbs (Fingers) up for Security . . . 

One way to protect clients’ sensitive 

documents, and your own, is a fire/ 

water/tamper-resistant safe. 

The SentrySafe DA3930 

Fingerprint FIRE-SAFE is a hightech, 

tough solution to protect your 

valuables from fire, water, and theft. 

Technically 

Secure 

Akash Sablok 

With walls almost 100 mm (4") 

thick and tight water seals (ETLcertified), 

it’s going to hold the H2O 

at bay for quite some time. The safe 

offers 2 full hours of UL-classified and 

ETL-verified fire protection, with the 

temp running to 982° Celsius (1800° 

Fahrenheit). 

While most safes have 

a combination lock and/or key lock, 

this one includes one more level of 

entry protection—a biometric scanner. 

The 500 dpi fingerprint scanner can 

store up to seven users (up to two 

fingers each) with one administrator 

override. The sensor’s level meets both 

FBI and CIA security standards and 

cannot be copied or duplicated. 

The fingerprint sensor, keypad, 

and keylock work together to open or 

close six live-locking bolts. The bolts 

lock tightly into the armoured steel of 

the safe. 

The SentrySafe DA3930 comes in 

any colour you want, as long as it’s black 

or gun metal grey. If you want to mount 

the unit into a cabinet, ensure you have 

space for the 61.3 kg (135 lbs) 17.8" x 

16.3" x 19.3" unit. The inside capacity 

is 1.2 cubic feet and measures 13.8" x 

12.6" x 11.9" (H x W x D). 

For those of you who back up your 

documents—sensitive or otherwise— 

onto a portable hard drive or USB 

stick, a safe is a good place to store 

the devices when you are away from 

the office. 

The DA3930 comes with 

a multiposition removable tray that 

allows you to stack your items the way 

you prefer. The unit is large enough to 

hold both letter and A-4-size papers, 

folders, and binders neatly. The unit is 

a bit tight for legal-size paper. 

A compartment on the door is ideal 

for keeping small items such as coins 

and jewellery separate and secure and 

a key rack on the door makes it easy for 

you to organize your important keys so 

they are easy to find. 

I have tested a few brands of safes 

and found SentrySafe to have the best 

quality and, just as important, the best 

service. Their support line is easy to 

reach and they are very helpful. 

The SentrySafe DA3930 is backed 

by a 1-year limited manufacturer’s 

warranty and a lifetime warranty after 

fire replacement. 

www.sentrysafe.com $599 


More Thumbs . . . 

The USB thumb drive has taken over 

recordable CD/DVDs as the portable 

small storage device of choice. 

USB drives are lightweight, easy 

to use, and compatible with almost 

every current computer. That is good 

and bad. Their small size makes them 

easy to lose; their broad compatibility 

makes them easy to copy. 

To resolve these issues, the 

Corsair Flash Padlock 2 USB Drive 

employs 2 security technologies for 

data protection: 1 physical/electronic 

and 1 pure electronic. 

A user-definable personal 

identification number or PIN must 

be entered on the drive’s integrated 

numeric keypad to allow basic entry 

to the drive. Entry to data is Level 2, 

done through the use of secure 256bit 

AES data encryption—currently 

the highest level of data encryption 

available to the consumer. 

The integrated keypad security 

feature will work with all platforms, 

including Windows PCs, Macs, and 

Linux computers, even devices such 

as home entertainment equipment 

and gaming consoles. 

In the event you forget your PIN, 

you can program a new one. When 

you do this on the Padlock 2, the 

enhanced security will erase all the 

contents of the drive first. 

The unit is currently available with 

a capacity of 8 GB and comes with 

a 10-year limited warranty. 

www.corsair.com $80 

Scan, Save it, Forget about it . . . 

If you have some documents you don’t 

want prying eyes to see and they’re 

too large to store in a safe, you can 

scan them into your computer. 

The portable Fujitsu SnapScan 

S1300 Scanner is small enough to 

fit on most desktops, but powerful 

enough to cover all your scanning 

needs. 

You can scan eight pages per 

minute, and output them directly as 

PDFs or an Excel spreadsheet. ABBYY 

FineReader for ScanSnap software 

allows users to be productive by 

quickly transforming their paperwork 

into editable Word and Excel files at 

the push of a button. 

The paper sizes it supports range 

from business cards to legal size (2" x 

2" to 8.5" x 14"). And you can throw 

in up to 10 pages at a time in the ADF 

(automatic document feeder). 

Once your document has been 

scanned, the included software 

does its magic. Blank pages are 

automatically deleted, upsidedown 

pages are turned right side up, and 

pages slightly skewed are set straight. 

Included software consists 

of ScanSnap Organizer 4.1 (PC), 

CardMinder 4.1 (PC), ScanSnap Manager 

(Mac and PC), Cardiris 3.6 (Mac), and 

Scan to Functions for the Mac and PC. 

With the small “Automatic 

Quality” option under Image Quality 

selected, the unit increases the 

resolution on small documents (A6 or 

smaller), helping ensure the fine print 

on small documents remains legible 

and searchable. 

The unit can be powered through 

the USB port of your computer or with 

the included power adapter. 

The S1300 comes with 

a manufacturer’s 1-year limited 

warranty. 

www.fujitsu.ca $299 

Before you Totally Forget About It, 

Shred It . . . 

If you have scanned your paper 

documents into your computer and 

saved them on a secure USB thumb 

or hard drive, you need to dispose 

of the originals properly, especially 

sensitive material. No Notary or legal 

office should be without a shredder. 

Note: Please check with the 

respective governing bodies before 

you destroy the original documents. 

An update to the popular C-120i, 

the new Fellowes C-125i is a top-line 

model that can handle medium-to-high 

levels of shredding. 

The 

unit is jamproof, 

can 

“destroy” 

18 pages at 

a time, and 

makes bits 

and pieces 

out of credit 

cards, CDs, 

and staples. 

Paper is 

cut down to 

0.22" strips, 

making it 

very hard 

for anyone 

to piece 

them back 

together. The 9" throat width accepts 

most letter-size and legal-size 

documents. 

The C125i is perfect for 1 to 5 

users. With its automatic start/stop 

feature “SafeSense,” the shredder 

immediately stops if a hand, necktie, 

or scarf gets too close. 

An Energy Savings System shuts 

down the unit when it is not being 

used, helping reduce energy costs. 

Lots of shredding will fill up the 

14-gallon pullout wastebasket quickly, 

but it is easy to empty. And an indicator 

on top of the unit advises when it is full. 

The unit comes with 

a manufacturer’s 3-year product and 

service and a lifetime cutter warranty. 

www.fellowes.ca $499 s 

Vancouver Notary Akash Sablok, 

AJAC (Automobile Journalists 

Association of Canada), practises with 

his father Tarlok Sablok. Akash writes 

regular technology and automotive 

columns for several publications 

across Canada and appears as a guest 

technology reviewer on TV programs, 

including CityTV’s Breakfast Television 

(BT Vancouver); omni Television (BC); 

TELuS TV – MyTelus: Vancouver Edition; 

and Shaw TV’s Urban Rush. 

akash@sablok.com 


GuEST COLuMN: 

Pondering 

Ponzi Schemes 

one of my first comments 

to the friend describing 

the investment was that 

it sounded like a Ponzi scheme. 

Had I listened to my own advice, 

I would not have ended up a national 

poster boy for Ponzi scheme victims. 

A few years ago, some friends 

from choir introduced me to an 

interesting opportunity: Someone had 

figured out how to take advantage 

of the daily fluctuations of currency 

prices to generate a good return on 

investment. A large pool of investment 

money offered a way to leverage the 

©iStockphoto.com/GeofferyHolman 

Greg Dixon 

investment so individual investors 

would receive a very attractive 

monthly return. The return could 

be compounded so even a modest 

$10,000 investment could buy 

retirement in 5 to 10 years. 

Perhaps CTV was looking 

for someone to denounce 

the fraudsters and play 

the victim card. 

People can and do make money 

day-trading in the various markets, 

although the promised returns here 

were definitely in the realm of being too 

good to be true. Eventually the scheme 

collapsed, leading to investigations 

by the British Columbia Securities 

Commission and the RCMP. I was 

asked to give a statement at the 

Security Commission hearings in 2008, 

to provide an investor’s perspective. 

The British Columbia Securities 

Commission released its findings in 

August of 2009, confirming there 

had been little or no investment in 

foreign-exchange trading on our behalf 

and that most of our money was 

simply gone. Detailed information is 

at http://www.bcsc.bc.ca. Search for 

Manna trading or Legacy trading. 

I first heard about those findings 

when CTV called to ask if I would tell 

my story on Canada AM. I agreed to 

visit CTV’s Vancouver studio at 4 am 

to do a live Interview with Marci Ien 

out of Toronto. 

Perhaps CTV was looking for 

someone to denounce the fraudsters 

and play the victim card. While 

I certainly was disappointed that 

my friends had played a role in this 

scheme, I too had told friends and 

family about the opportunity. When the 

warning bells were ringing, I did not 

talk to my fraud-investigator friend or 

contact the BC Securities Commission. 

Few of the investors did much 

due diligence and some were totally 

naïve about the questionable nature 

of the plan. Many trusted those who 

were keen on the opportunity and 

simply went along with their friends’ 

enthusiasm. At the end of the day, 

we got caught spending way too much 

money on a risky venture that was 

more like buying lottery tickets than 

a real investment. 

Most of the people who get 

caught up in such programs are wellintentioned 

individuals who want to 

help others and to help themselves 

get ahead at the same time. As with 

many referral or multilevel marketing 

opportunities, there is a tendency to 

avoid asking tough questions when the 

idea of easy money is involved. s 

Greg Dixon is a writer, artist, 

photographer, videographer, musician, 

and software engineer who likes to 

travel. 

www.gregdixon.net 


Mortgage transactions 

simplified 

assyst Real Estate. 

Assyst Real Estate. 

The experience of processing over 

700,000 

The same 

mortgage 

proven solution 

transactions 

paired 

with the strength paired of with the TELUS the strength brand. 

The Foundation of the of TELUS our success. brand. 

The Foundation of our success. 

www.telus.AssystRealEstate.com 

www.telus.AssystRealEstate.com

Donna 

Cheeseman 

Innovative &Insurance 

Risk Management Solutions 

BFL is Canada’s largest privately owned and operated commercial insurance 

broker, providing professional insurance and risk management services 

in all industries across Canada. BFL is strategically aligned with the largest 

privately held global firm that provides risk and insurance services to our 

clients in over 100 countries. 

BFL Canada Insurance Services Inc. 

#200 – 1177 West Hastings Street 

Vancouver, British Columbia V6E 2K3 

Phone: 604 669-9600 Fax: 604 683-9316 

Anne Taylor 

International Risk 

and Insurance Services 

Grant Alsop

Download - The Society of Notaries Public of BC

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template ?