Has an individual, group or business defrauded you? Are you unable to collect a judgment because the debtor moved their property into another party’s name? You may need the services of a Civil Fraud Lawyer. At McMackin Law we can help.
Civil Fraud has the benefit of only requiring the balance of probabilities. By contrast Criminal Fraud requires there to be Beyond a Reasonable Doubt. Frequently an action occurs in relation to the same act(s) in both Courts.
If a prosecutor charges someone with Fraud, there are no legal fees associated with the criminal process. The prosecutor is paid by the government and may request a restitution order. Unfortunately, restitution is not always granted or obligated.
A case where this occurred was the recent case of R. v. Auckbaraullee, 2019 ONSC 2498. In this case the defendant was a 53-year-old woman that performed a payroll fraud in the sum of $80,000. There were co-conspirators who Ms. Auckbaraullee refused to name involved in this fraud. In the end Justice Garton decided the following was to be the punishment and deterrent:
The problem with this is for the individual or business defrauded there is nothing forcing Ms. Auckbaraullee to pay the restitution order. If restitution were to lead to a reduced sentence it would provide some incentive to make restitution. In this case though Ms. Auckbaraullee did not identify where the funds went or who else was involved. The chance of recovery in this case of the $80,000 is very low as a result.
The leading case on Civil Fraud is Bruno Appliance and Furniture, Inc. v. Hryniak, 2014 SCC 8, [2014] 1 S.C.R. 126. (“Hryniak”) In Hryniak at paragraph 21 Supreme Court Justice Karakatsanis outlines the four elements of Civil Fraud as follows:
It is common for counsel to avoid pleading Fraud and seeking a judgment based on other torts such as Misrepresentation. This is usually done due to their being more severe cost consequences if you claim Fraud and are unsuccessful.
The problem with avoiding pleading Fraud and / or Fraudulent Misrepresentation is the risk that the judgment will not survive bankruptcy. As a result, Fraud Lawyers must carefully consider whether alleging Fraud is in the best long-term interest of their client or not.
The honest and simple truth to this is everywhere. Common cases of fraud include the following:
One of the most common issues we see in Civil Courts is what is known as a Fraudulent Conveyance.
When a party or parties move their assets into another party or parties name or businesses it may give rise to a Fraudulent Conveyance. While moving your property into another name is not typically illegal, this tactic is commonly used by parties involved in lawsuits or who are in possession of the proceeds of crime.
In order to prove a Fraudulent Conveyance, there will typically need to be what is known as a “Badge of Fraud” and an intent to defeat creditors. In many cases this will be rather clear cut. If you bring a lawsuit against Bob in January of 2018 and in February of 2018 he transfers his property into his significant other’s name, it would be hard for Bob to argue that the point of this transaction wasn’t to defeat his creditors.
Typically, a Statement of Claim will be completed, and we will discuss with the Client whether a motion for a Certificate of Pending Litigation should be brought. A Certificate of Pending Litigation is a lien against a Debtors property pending outcome of the action against them. If it is agreed that we are to bring a motion for a Certificate of Pending Litigation, it will likely be brought without notice to the Defendant(s).
The reason for seeking a Certificate of Pending Litigation is to make it very difficult for the Defendant(s) in possession of the property by virtue of the Fraudulent Conveyance to dispose of the property or obtain financing. In these circumstances collection may occur quickly as a Party may need to extend or refinance their mortgage and the banks will likely refuse them based on the registered Certificate of Pending Litigation.
Care must be taken when filing a Certificate of Pending Litigation as if they are obtained under false or unfounded pretenses you may be liable for significant damages.
In almost every circumstance we recommend that the victim file and serve a Statement of Claim at the very least even when a Criminal Proceeding is ongoing. We then will discuss with the victim what the best way to proceed is which varies on a case by case basis. While the Criminal Courts are a useful tool, they are not necessarily the most effective tool in assisting fraud victims to recover their money.
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