What is wire fraud in Canada?

What is wire fraud in Canada?

Wire fraud involves the transfer of money from an individual or organization to a person using telecommunications (the phone) or electronic communications (emails or text messages). Wire payments can be difficult to track and recover because the funds are considered to be the property of the recipient once the transfer is final, which happens in seconds.

A wire fraud could be perpetrated by someone representing himself as a company employee who provides wire transfer instructions (usually via email) to pay a large sum for a transaction. The recipient believes it is a legitimate email so they electronically transfer the funds to the fraudulent account.

Police report that fraudsters are getting bolder and more sophisticated in their efforts to trick individuals.

Who is liable after a wire fraud?

In the aftermath of a crime committed through electronics or the phone, there is often a dispute about who bears responsibility for the financial loss. The law on liability in wire transfer fraud is developing, with victims or firms often being held liable if they failed to act prudently in detecting and preventing the fraud.

Is wire fraud in the Criminal Code?

“Wire fraud” is an American term and is not used in our Criminal Code. According to the U.S. Department of Justice, “the elements of wire fraud under Section 1343 directly parallel those of the mail fraud statute, but require the use of an interstate telephone call or electronic communication made in furtherance of the scheme.”

It explains the four essential elements of wire fraud are:

• the defendant voluntarily and intentionally participated in a scheme to defraud another out of money;
• the defendant did so with the intent to defraud;
• it was reasonably foreseeable that interstate wire communications would be used; and
• interstate wire communications were used.

According to Canada’s Federal Court, the American definition of wire fraud “in some aspects … is broader than our Criminal Code offence [for fraud] … 380(1)(a) of the Criminal Code requires that there be actual fraud whereas the U.S. provision does not require the completion of the fraudulent activity. Under U.S. law, the intent to defraud is sufficient to establish guilt. On the other hand … the Canadian provision is broader in that it covers all manners of fraud and not just fraud in the areas of ‘wire, radio or television communication in interstate or foreign commerce.’”

Section 380 (1) of the Code states that anyone can be found guilty of fraud if they “by deceit, falsehood or other fraudulent means, whether or not it is a false pretence within the meaning of this Act, defraud the public or any person, whether ascertained or not, of any property, money or valuable security or any service.”

What is the penalty for wire fraud in Canada?

The penalty for any type of fraud depends on the amount of money involved. If the fraud was worth more than $5,000, the offender faces up to 14 years in prison. If the fraud was worth less than $5,000, the maximum penalty drops to two years in jail.

How common is fraud in Canada?

According to the Canadian Centre for Cyber Security, “fraud and scams are almost certainly the most common form of cybercrime that Canadians will experience … as cybercriminals attempt to steal personal, financial, and corporate information via the Internet.” The Centre adds that there were 70,878 reports of fraud in Canada in 2022.

That year, the Canadian Anti-Fraud Centre received fraud and cybercrime reports totalling $530 million in victim losses, the RCMP states, which is “nearly a 40 per cent increase from the unprecedented $380 million in losses in 2021.”

The force adds that “the increase in financial loss isn't tied to an increase in reporting – the Canadian Anti-Fraud Centre estimates that only five to 10 per cent of people report fraud.”

A 2023 Ipsos poll shows that fraud is quite common in Canada, as nearly half (43 per cent) of Canadians claim to have knowingly been victimized by fraud or scams at some point in their lifetime.

“And contrary to conventional stereotypes, older Canadians (55+) are among the least likely to report having knowingly been victimized by fraud or scams at some point in their lifetime (31 per cent vs. 50 per cent aged 18-54),” Ipsos adds.

Who are the victims of wire fraud?

Anyone can fall victim to a fraud perpetrated over the phone or online, even financial managers of large Canadian cities.

According to a 2022 news report, the City of Ottawa was defrauded of $558,000 “because the city ‘was impacted by an illegal action perpetrated against a partnering agency.’”

“While the information about why the city lost the money was vague,” the story notes that “the city is now working with the Ottawa Police and its financial institution to recover the funds.”

The report adds that the city was been a victim of fraud in 2018 when a former city treasurer was targeted in a “whaling” scam by a man posing as the city manager.

According to IBM, “Whaling attacks aim to steal large sums of money from an organization by tricking a high-level official into making, authorizing or ordering a wire transfer to a fraudulent vendor or bank account.”

The news report adds that a Florida man convinced a city manager to send $128,000 to a bogus firm. The Floridian was convicted of fraud and sentenced to 12.5 years in state prison.

Financial managers of other Canadian cities have also fallen prey to scammers. In late 2023 scammers infiltrated the email accounts of a construction company contracted for an affordable housing project in Sudbury, Ont., and duped a city member into sending $1.5 million to a fake bank account, according to a news report.

What evidence is needed to convict?

Fraud is a form of theft and the charge can be brought for an act of deceit, falsehood or for employing other fraudulent means. To convince the court that an accused should be convicted, the prosecution must prove that the accused committed an intentional act to defraud the victim and those actions resulted in the victim’s financial loss.

A criminal lawyer may be able to argue that the lines are sometimes blurred between legitimate business practices and what is a criminal action, or that the accused made an honest mistake. Since the Crown’s evidence will depend on financial records and documents, a lawyer can analyze those for inconsistencies, which may weaken the prosecution’s case.

An experienced lawyer can also ensure that investigators did not breach the rights of the accused as guaranteed by The Canadian Charter of Rights and Freedoms.

Contact me for assistance

People accused of any type of fraud should consult with a criminal defence lawyer to ensure their testimony and evidence are given proper consideration by the court. People in the Ottawa area can contact me for a free consultation about any criminal law matter.