What is criminal breach of trust in fraud?

What is criminal breach of trust in fraud?

If someone abuses a position of authority for their own benefit and against the interests of the person to whom they owe the duty of trust, they could be charged with criminal breach of trust.

According to s. 336 of the Criminal Code, “Every one who, being a trustee of anything for the use or benefit, whether in whole or in part, of another person, or for a public or charitable purpose, converts, with intent to defraud and in contravention of his trust, that thing or any part of it to a use that is not authorized by the trust is guilty of an indictable offence and liable to imprisonment for a term not exceeding fourteen years.”

I defended a grocery store employee who was entrusted with the password for the safe on the premises. When it was determined that he had taken money without authorization, that became a breach of trust because he used his insider’s knowledge to carry out the crime that a regular person would not have been able to complete.

Breach of trust can cover years

In 2017 a former finance director of a B.C. police force was ordered by the courts to repay more than $300,000 she embezzled during a 10-year period, according to a news story. She was ordered to pay $312,417, as well as the city’s court costs of $15,000.

In addition, the story states the sentence stipulates that she cannot be released from the order by declaring bankruptcy, with the city given a “constructive trust” over any of her assets acquired by the misappropriated funds.

The story explains she acquired the funds by preparing petty cash vouchers that contained “false and misleading information” and made misleading entries in the record-keeping system.

According to this CBC story, three years later she was charged with criminal breach of trust, fraud over $5,000 and theft over $5,000.

Breach of trust brought school ‘to its knees’

A former accountant at a post-secondary school in Newfoundland was sentenced to three years in prison on multiple charges for defrauding her then-employer of more than $500,000 over a period of almost five years, according to a CBC story.

She forged bank statements and sent email transfers of money to herself, according to CBC, and used the money to pay bills and take a trip to Disney.

The fraud "brought the school to its knees,” the Crown's lawyer said at the hearing, adding “all the money went to support a lifestyle she could not afford,” according to the story.

The school has recovered a portion of the financial loss and additional action is being taken for further recovery, the story states.

Churches not immune to breaches of trust

Members of two churches in the northern Ontario town of Kapuskasing were charged with criminal breach of trust after OPP officers concluded a lengthy investigation involving numerous unauthorized money transactions at the two places of worship, according to a news story.

The investigation began when a member of the Diocese made his suspicions known to police, the report adds, with an internal audit finding that more than $200,000 was illegally used in numerous unauthorized transactions.    

Four people were arrested and two were charged with criminal breach of trust with their court date upcoming, the story states.

Public officials and breach of trust

Public officials accused of breaching the public’s trust are charged under s. 122 of the Code, which states: “Every official who, in connection with the duties of his office, commits fraud or a breach of trust is guilty of an indictable offence and liable to imprisonment for a term not exceeding five years, whether or not the fraud or breach of trust would be an offence if it were committed in relation to a private person.”

A 2006 Supreme Court of Canada judgment added to that, spelling out when a public official should be considered to have committed a breach of trust. Court documents state “the offence of breach of trust by a public officer is established where the Crown proves beyond a reasonable doubt that:

• the accused is an official;
• the accused was acting in connection with the duties of his or her office;
• the accused breached the standard of responsibility and conduct demanded of him or her by the nature of the office;
• the accused’s conduct represented a serious and marked departure from the standards expected of an individual in the accused’s position of public trust; and
• the accused acted with the intention to use his or her public office for a purpose other than the public good, for example, a dishonest, partial, corrupt, or oppressive purpose.”

The judgment outlines why this charge is taken so seriously by the judiciary.

“The crime of breach of trust by a public officer … is both ancient and important. It gives concrete expression to the duty of holders of public office to use their offices for the public good. This duty lies at the heart of good governance. It is essential to retaining the confidence of the public in those who exercise state power.”

Former MP accused of breach of trust

A former Liberal MP was charged with four counts of breach of trust and one count of fraud over $5,000 after the RCMP was alerted to “suspicious transactions” when he served in Parliament, according to a news release from the force.

“It is alleged that [he] failed to report his receipt of millions in personal loans to the Ethics Commissioner, in circumstances that constitute a criminal breach of trust. It is further alleged that [he] solicited loans for his own personal benefit in connection with the use of his public office, and that he administered his government-funded constituency office budget for his own personal benefit, under circumstances which constituted a criminal fraud or breach of trust,” the release states.

According to a CBC story, the MP announced his resignation after the charges were laid and did not run in the federal election the next year. The story states the prime minister’s office said he was resigning to seek treatment for a gambling addiction that led him to rack up "significant personal debts."

Former chief guilty of breach of trust

A 64-year-old former chief of a First Nation in Saskatchewan was given a three-year prison sentence after being found guilty of fraud, theft over $5,000 and breach of trust, according to a news story. During his two-year term as chief, he misappropriated $260,000 of band funds, the story states, with the judge describing his actions as “unacceptable” and “selfish.”

Since the chief was in a position of breach of trust, the judge said the sentence for the crime must discourage others from similar activities. “[He] did not steal from strangers,” the judgment reads. “He took funds that could have been used for important programs.”

Penalties for breaching trust

Those found guilty of criminal breach of trust are usually fined and required to repay the amount stolen. They may also face a prison term of up to 14 years. The Code also prohibits the retention of the proceeds of crime.

The focus of the sanction for criminal breach of trust is denunciation and general deterrence. A judgment from the Court of Quebec sums that up well. The case involved a former prosecutor for the attorney general who was sentenced to three years in prison for breach of trust after he was found to be taking bribes.

The judge in the case noted: “In matters involving breach of trust and bribery by an officer of the court (such as a criminal and penal prosecutor) in the performance of his duties, the courts must give priority to the objectives of denunciation and general deterrence and to society's condemnation, while respecting the principle of moderation, such that a clear message is given that dishonesty in the administration of justice will not be tolerated because it offends our common values, undermines the foundations of democracy, and erodes the trust of citizens in their institutions and in the rule of law.

“The mission of criminal and penal prosecutors mirrors society's interest in seeing justice served. Their duty is not only to protect the public, but also to honour and express the meaning of justice in the community,” the judge adds.

How can I help you?

Facing fraud allegations can seriously affect your job, reputation, and personal freedom. Before speaking with the police, contact me for a free consultation. As an Ottawa-based fraud lawyer, I'm ready to strategize your defence, clarify plea implications, and address your charges' details. Leveraging credible circumstances, I aim to have your charges dismissed. Should a trial proceed, I'll fight tirelessly daily on your behalf. Reach me at 613.863.8595 for a free consultation.