Area of Law: Criminal Law
Answer # 1811
Power of Attorney fraudRegion: Ontario Answer # 1811
What is a Power of Attorney?
A Power of Attorney or “POA” is a written document in which a person gives someone else the power to make certain decisions on their behalf, if they become unable to make those decisions themselves. Although the person you give this power to is called your Attorney, it does not mean that they are your lawyer. Most often, your Attorney is your spouse, a relative, or a close friend.
There are two main types of powers of Attorney:
- Power of Attorney for Property – gives someone the power to make decisions about your property and finances, such as banking matters, managing your investments, running your business, buying and selling real estate on your behalf, or paying your monthly bills.
- Power of Attorney for Personal Care – gives someone the power to make decisions about your personal care.
Powers of Attorney have different meanings and limits on decision-making authority depending on what is written in the document, where you live, as well as where your property is situated, as the laws governing POAs differ in each province and territory in Canada.
The person giving the POA is called the grantor, and the person to whom the power to manage the affairs is given is called the Attorney. In all cases, the Attorney must make decisions that are in the grantor’s best interests. This is called fiduciary duty.
For more information about Powers of Attorney, refer to the Wills, Estates and Powers of Attorney section.
What is Power of Attorney fraud?
Power of Attorney fraud refers to frauds committed with respect to Powers of Attorney for Property.
When planning for their future, people often use POAs in case there comes a time that they become mentally incapable of making their own financial decisions. Power of Attorney fraud occurs when someone is financially taken advantage of by the person they have named as their Attorney to manage their finances. This is often a family member, friend, or caregiver.
Power of Attorney fraud can occur for many reasons including that the granter is vulnerable, elderly, possibly alone, ill, and reliant on someone else for a great deal of care. The Attorney will often isolate the victim, cutting off all other contact from friends and family, in order to take advantage. The grantor could be confined to a hospital or nursing home. Unfortunately, Power of Attorney fraud, often called financial abuse, is one of the most common forms of elder abuse in Canada.
Common types of Power of Attorney fraud
Fraud committed in obtaining POA
Fraud in obtaining the Power of Attorney can occur when the POA:
- is obtained as a result of the exerting of undue influence over the grantor, or under suspicious circumstances,
- fraudulently obtained (e.g. the fraudster could pose as a financial advisor); or
- documents are forged.
Fraud committed using POA
Frauds committed using the POA include:
- emptying the grantor’s bank account and using the money for the Attorney’s personal use, not for the grantor’s use,
- theft of grantor’s pension cheques or possessions,
- making unauthorized, questionable or even speculative investment decisions on behalf of the grantor,
- acting in a manner when handling financial matters on behalf of the grantor, which may contribute to unnecessary expenses, or damages from inaction,
- misappropriation of the grantor’s assets,
- mortgaging or selling a grantor’s home, or other asset without the grantor’s knowledge or consent, or
- other violations of fiduciary duty.
Power of Attorney fraud is criminal
Because of the nature of the crimes, Power of Attorney fraud can often result in theft, forgery, and fraud charges under the Criminal Code.
Section 331 of the Criminal Code deals with Theft by Persons Holding Power of Attorney:
- Every one commits theft who, being entrusted, whether solely or jointly with another person, with a power of Attorney for the sale, mortgage, pledge or other disposition of real or personal property, fraudulently sells, mortgages, pledges or otherwise disposes of the property or any part of it, or fraudulently converts the proceeds of a sale, mortgage, pledge or other disposition of the property, or any part of the proceeds, to a purpose other than that for which he was entrusted by the power of Attorney.
Role of the Public Guardian and Trustee
The Office of the Public Guardian and Trustee has procedures for reporting abuses of a POA, and remedies available, such as appointing a substitute decision-maker. For more information, refer to topic #732 Losing capacity and the right to make decisions.
How to avoid Power of Attorney fraud
There are things you can do to avoid or stop financial abuse and POA fraud. This includes:
- naming two people who can act jointly as your Attorneys,
- never joining bank accounts or other assets with your Attorney,
- having your monthly expenses come out automatically,
- if you suspect fraud, call your financial institution and ask about any questionable activity,
- keeping all valuables, financial and legal documents that the Attorney does not have permission to deal with in a safe place, and tell someone else you trust where to find that information, and
- having regular conversations with your Attorney about your financial affairs.
If you are mentally capable to handle your own finances and you suspect fraud, cancel your POA and put a hold on any finances that are still under your control, such as at the bank. Begin your own investigation of your finances. Try not to alert the Attorney as they may do more harm if they find out that you suspect fraud.
Civil case for recovery of your loss
If you discover you are a victim of fraud, it is a good idea to contact a fraud recovery expert for advice.
If you have been charged with a fraud or any criminal offence, and need to hire a criminal defence lawyer, contact our preferred expert, The Criminal Law Team .
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