Area of Law: Fraud and Fraud Recovery
Answer # 1518
Things to consider before contacting the policeRegion: Ontario Answer # 1518
Take some time to calm down and plan
A common first reaction when someone discovers they have been the victim of a fraud is to become very upset and want to immediately confront the fraudster and demand their money back. Other victims are inclined to call the local police and make a report. Before taking either of these steps, it is advisable to calm down and figure out a plan. If the victim alerts the fraudster that the crime has been discovered, the fraudster may spend or hide the money, making it impossible for the victim to recover their losses. The first step should be to speak with a friend or professional advisor to sort out what happened and what your options are.
Common reasons why fraud victims contact police before hiring a lawyer
Fraud victims often report the fraud to the police before contacting a fraud recovery expert because they believe:
- the police will provide them with a free investigation,
- the Crown prosecutor will provide them with a free prosecution, and
- they will obtain justice because the fraudster will have a criminal record, get probation, and/or possibly be jailed.
Even in those cases where charges are laid by the police, there is no guarantee of a conviction. Part of the reason for the low conviction rate is the lack of time available for Crown prosecutors to prosecute complicated financial cases.
Assessment of fraud case by an expert
In cases involving large amounts of money, and where there is a high likelihood of recovery (such as the when fraudster and the money are both in the jurisdiction), it is advisable for victims to have their case assessed by lawyers specializing in fraud recovery. In such circumstances, it is usually a good idea to file a civil lawsuit before making a criminal complaint to the police.
In addition, if the civil case is started before contacting the police, the fraudster may offer to settle the civil case in order to receive a reduced punishment in the criminal case.
Things to consider before contacting the police
If the amount is small and the victim decides that it is not worth spending more money than was taken, it is probably best to contact the police right away. If a complaint is made to the police, they will usually contact the fraudster as part of their initial investigation.
If the amount is significant, the victim may decide to try and get their money back. In such cases, having the police contact the fraudster can prevent the victim from recovering their money. The primary focus of the police is to discover crimes, make arrests, and hopefully discourage the person from committing more crimes. Consequently, recovery of the victim’s money is not their primary concern. Victims of fraud should consider the following things before contacting the police.
1. If contacted, the fraudster may try to hide what they did
The victim’s first step in fraud recovery is usually to go to court (without the fraudster having notice) in order to have the fraudster’s assets frozen. However, once the police contact the fraudster the fraudster will immediately be figuring out what they have to do to get away with the crime. The fraudster may then have time to do many things, such as:
- hide the money,
- give the money to someone else for safekeeping, and
- destroy evidence linking them to the fraud.
In most cases, the police will not take steps to trace the fraudster’s spending, freeze the fraudster’s assets or trace any money transfers. These processes and investigations take time and cost money. Our police services do not have the resources to undertake such tasks.
2. Criminal trials focus on punishment not recovery of victim’s money
The primary purpose of the criminal justice system is to punish people for committing crimes. The victim has a limited role in the criminal process. They usually act as witnesses and may have an opportunity to submit a witness impact statement. Judges, Crown prosecutors and the police are not focused on recovering the victim’s money.
3. Police have limited resources allocated to fraud cases
Resources for fraud cases are very limited in comparison to funding other types of criminal investigations. Therefore, the police investigation of a fraud can be much slower than a private investigation funded by the victim. Fraud cases can take some time to investigate for many reasons, including:
- fraudsters try and hide what they did well in advance of the fraud being discovered,
- frauds are often committed over a prolonged period of time, and
- many accomplices can be involved.
In order to take the case to trial and be successful, the evidence has to be collected and kept safe. In addition, the fraudster has to be kept in the dark about what steps the victim is taking. The longer the investigation and evidence gather takes, the more likely the fraudster will spend or hid the money. Therefore, for the purpose of fraud recovery, private investigations are almost always more successful than police investigations.
4. Police appointment needed to make a fraud complaint
It is also important to know that the victim needs to convince the police that a fraud has been committed before they will investigate and possibly arrest the alleged fraudster. In order to meet with the police and present their case, victims need to make an appointment. A victim cannot simply walk into a police station and expect to spend a few hours discussing their situation with an officer. The appointments usually come with a time-limit. The victim must then convince the police that a crime has likely been committed.
The police will not investigate if:
- they have decided the situation is civil in nature (not criminal), such as a business disagreement,
- they do not think it is within their authority to do so. For example, if the fraud was committed in another country and by a citizen of that foreign country, it is likely that Canadian police services do not have jurisdiction to investigate,
- the police feel that the victim was also responsible for the situation.
Before going to the police, it is a good idea for the victim to organize the case they are going to present, such as:
- listing the events of what took place in chronological order,
- providing a copy of relevant documents and labelling them, and
- giving the names and contact information of witnesses or possible accomplices.
5. Criminal restitution is less than the victim’s loss
A criminal restitution order is an order of the Criminal Court for the offender (fraudster) to pay the victim for financial losses the victim suffered because of the crime (fraud) committed by the offender.
Fraud victims should understand that the Criminal Courts do not have to make an order for restitution. In addition, even where orders are made, the amount ordered to be paid is usually far less than the amount of the victim’s loss. In addition, fraudsters do not usually comply with restitution orders, so the victim goes unpaid. If the victim attempts to enforce the order, they should know that once the fraudster’s probation period is ended, the restitution order also expires. In order to enforce the order, the victim must first register it as a civil judgment before it expires. In cases where the amount of the loss is small, and their is a strong chance that a restitution order will be made, contacting the police is probably the best course of action for the victim to take.
However, if the amount of the claim is large, a restitution order, if awarded, will likely be far less than the amount of the loss.
6. Limitation period – the victim may run out of time to sue the fraudster
It is important for fraud victims to know that if they delay too long before taking action, or spend too much time dealing with a police complaint, they may run out of time to start a civil lawsuit. Limitation periods vary from two to six years, but in most provinces, a lawsuit must be started within two years of the loss being discovered.
Since criminal matters often take more than two years to be resolved, it is important for the fraud victim to start their civil action as soon as they decide that it is the course of action they want to take.
7. No right to remain silent in civil cases
Because there is no right to remain silent in civil cases, the fraudster will be forced to:
- give evidence that he or she may have avoided giving in a criminal trial, and
- provide documents requested.
If the fraudster gives evidence about the fraud that is different from the evidence produced in the civil case, the evidence obtained in the civil lawsuit can be used to impeach or discredit the fraudster in a criminal case. Therefore, it is very helpful to question the fraudster during the discovery process of a civil case before the criminal case begins. This then is another reason for the victim to consider what their recovery plan should be before contacting the police.
In some cases, with or without knowing that it is illegal, fraud victims try to extort repayment from the fraudster. Extortion under the Criminal Code makes it an offence to threaten to make a criminal complaint in order to force the fraudster to pay a civil debt. However, it is not a criminal offence for fraud victims to inform a fraudster that they may proceed with both a civil action and a criminal complaint.
Before issuing a claim, contacting police or alerting the fraudster …
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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