Area of Law: Fraud and Fraud Recovery
Answer # 1520
Co-ordinate civil and criminal casesRegion: Ontario Answer # 1520
Stop and decide what result you want
It is usually such a shock to discover that you are a victim of crime that the victim may react before taking the time to think. Considering exactly what the situation is, and finding out what options are available is the best thing a victim can do before taking action.
What the victim does should be based on what outcome they are trying to achieve:
- If the victim wants to try and recover their money, then starting a civil tracing process and a civil recovery lawsuit is what should be done first.
- If the victim has decided to write off the loss, and they are interested in having the fraudster arrested and punished for the crime, then the victim should immediately report the fraud to police.
- If the victim wants to recover their money and also wants the fraudster to be punished in Criminal Court, then it is necessary to coordinate these processes in the right order, so that the victim has the best chances of getting their money back.
Setting proper goals for themselves is the most important decision a fraud victim will make because if the fraudster is put on notice that the fraud has been discovered, the chances of recovering the stolen money are greatly reduced. Before contacting the fraudster, refer to the following Legal Line topics:
Evaluate cost and return for civil tracing and freezing applications
Civil tracing investigations and applications for asset freezing orders are expensive and are not always granted by the civil courts. Fraud victims need to evaluate whether it is worth it to invest more money to try and get back what was taken. Because of the costs involved, it may not be worth it for the victim to try to trace and freeze their money immediately. Sometimes, the victim’s best option is to allow the police to investigate and start the criminal prosecution. It is important for the fraud victim to get proper advice from a fraud recovery lawyer at an early stage in the process because once the victim or the police communicate with the fraudster, the ability of the victim to investigate the fraud quietly and surprise the fraudster is gone.
Coordinating and comparing civil and criminal prosecutions
The following is an overview of how the criminal and civil prosecution systems function.
Prepare a brief
The first step before an investigation begins is to prepare an investigation brief to be filed with a complaint to police. Generally, investigation briefs that are to be filed with the police contain mostly the same information that is used in Civil Court to prepare a Statement of Claim. Because the information is mostly the same, and since most victims are not familiar with these processes, it is a good idea for the fraud victim’s civil lawyer to help them prepare their brief.
The brief should contain:
- summaries of witness information, and the documents which support these statements, and
- any electronic and paper documents relating to the fraud. Documents relating to the transfer of funds and representations made by the fraudster are most important.
Police and civil investigations
Fraud victims should also be aware that the investigation processes for the police and for the civil case are similar. For the police it generally includes:
- criminal record checks through police data banks,
- obtaining documents through production orders from financial institutions,
- obtaining evidence through search warrants, and
- analysis of evidence through computer forensics and interviews.
The civil investigation process often includes:
- background investigations through private investigators,
- obtaining documents through tracing applications (Norwich applications) from financial institutions and/or others,
- obtaining evidence through civil search warrants (Anton Piller Orders), and
- analysis of evidence through computer forensics and interviews.
If a criminal complaint is made before fraud victims bring a motion for an Anton Piller Order, they should ensure it is not taking place at the same time that police apply for a criminal search warrant.
Start civil and/or criminal process
Once the initial investigation is completed, a civil case should be started with a Statement of Claim. The criminal process is started by the police swearing an ‘information’ (which is a document stating who the accused is and what the charges are).
Depending on the situation, the victim may decide to start the civil process before a contacting the police. Once the victim files a Statement of Claim, it is then the responsibility of the frauster to file a Statement of Defence. The Statement of Defence can provide information about how the fraudster is justifying their actions, and it may influence whether the police actively investigate and prosecute a fraudster in a timely way.
If the fraudster does not file a defence, the victim can make a motion to the Court for default judgment (which means the Court can make a decision without hearing the fraudster’s side). The victim can potentially win the case simply because the fraudster failed to file a defence. The Court often views this type of behaviour as an indication that the fraudster is guilty and is trying to avoid taking responsibility for their actions.
File a complaint with police
If the victim files a complaint with the police, and the police believe there is reason to investigate, it may result in charges being laid against the fraudster. At that point, the fraudster can try to resolve the matter by:
- pleading guilty,
- presenting an informal resolution, or
- denying the allegations and going to trial.
Locating the fraudster
It is important for fraud victims to note that if a fraudster cannot be located for the purposes of the civil justice system, service of a Statement of Claim can be made through:
- a court order for substituted service at the last known address of the fraudster,
- through an email address, or
- through another person.
In the criminal justice system, the fraudster must be located and arrested for the process to commence. If the fraudster cannot be located by the police, the police can issue a warrant for arrest – and the process is then stalled until an arrest takes place.
Civil Discovery and Crown Disclosure
In a civil case, after the Statements of Claim and Defence have been filed, there is an opportunity for the parties to ask each other questions and find out what each other’s case consists of. This is called discovery. During the discovery process there is no right to silence for the fraudster as there is no risk of incarceration (being jailed). Therefore, the fraudster is required to produce all documents related to the fraud including those that prove the fraudster’s involvement. In addition, the fraudster must answer questions relating to statements made in the statements of claim and defence, and things found in the documents that have been produced. A fraudster is required to answer questions and give information even if it proves they are guilty of the fraud.
Disclosure in a criminal case is different from discovery in a civil case. In the criminal system an accused fraudster has the right to silence and is not required to produce any documents. In fact, the onus is on the Crown prosecutor to produce all evidence (such as documents and witnesses) for examination by the fraudster at a preliminary hearing if one is elected.
Using civil discovery evidence and criminal disclosure evidence
It is important for fraud victims to note that fraudsters cannot avoid civil discovery because they have been charged criminally. However, there is a safeguard to fraudsters forced to give evidence against themselves in the civil process in that the evidence cannot be used in the criminal process without leave of the court (known as the deemed undertaking rule). This means that if a fraud victim wants to provide evidence from the civil case for use in the criminal case, the victim must ask the Court for permission. If the court approves the victim’s request, the Crown prosecutor can use evidence from the civil system to challenge a fraudster who tells a different story at the criminal trial.
Evidence obtained from criminal search warrant: Under the Criminal Code, fraud victims can make an application to the Court to have access to evidence in control of the police to determine whether a copy should be made for use in the civil discovery phase of the civil case.
Evidence obtained in civil case: The police and Crown prosecutor can get access to any evidence of the civil proceeding through a number of ways, such as the fraud victim filing the evidence in a motion in a civil proceeding. Once filed, the evidence becomes part of the public record and the police can get access to.
Civil and criminal trials
Burden of proof
The most significant difference between civil and criminal trials is the burden of proof. In a civil case, the fraud victim plaintiff is required to prove their case on the balance of probabilities. In a criminal case, the Crown prosecutor has a greater burden of proof and must prove their case beyond a reasonable doubt.
Discovery transcripts vs. right to silence
Another significant difference is that if fraudsters do not give evidence in the civil trial, the fraudster’s discovery transcript can be read into evidence. In the criminal system, the fraudster’s right to silence means they are not required to testify.
Focus of trial
The focus of the trial is another important consideration. In a civil case, the focus is on the fraud victim and their loss. In a criminal case the focus is on the accused and ensuring their rights are respected before being convicted. In addition, in the criminal process fraud victims are often limited to providing victim impact statements, but in the civil case the fraud victim controls the process and decides who will testify in their case and what evidence will be called.
Civil court orders and criminal restitution orders
In a criminal case, recovering money from a fraud is obtained by a criminal restitution order. Once the fraudster has completed probation, a fraud victim is required to register the restitution order as a civil judgment – or it expires.
If the fraud victim is intending to pursue a civil action for recovery (and not writing off the debt), it is recommended that a Statement of Claim be filed because:
- a criminal restitution order must usually must be registered as a civil judgment,
- civil claims for fraud must be filed before the limitation period expires (it starts to run from the date of discovery of the loss), and
- often the limitation period for the civil action expires before the criminal process is finished.
After a civil claim is filed, the fraud victim can decide whether to pursue the civil case right away or wait for the criminal process to be completed first.
Fraud victims are not allowed to threaten to have criminal charges laid against the fraudster as a way of recovering their money. This is called extortion and is a criminal offence under the Criminal Code. However, Crown prosecutors in fraud cases will often:
- trade prison sentences in exchange for conditional sentences (house arrest) if the fraudster makes a full payment of the loss, or
- reduce the prison sentence being sought by the Crown in exchange for partial payment of the loss.
This means that even though it is illegal for fraud victims to use threats of criminal charges for recover of money, trading freedom for money by Crown prosecutors is legal. Fraud victims should keep this in mind when coordinating their civil case and the criminal complaint.
If you discover you are a victim of fraud, it is a good idea to contact a fraud recovery expert for advice.
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