13. Criminal Liability
It is important to understand that the Canadian Criminal Code () is a federal statute that applies in all provinces and territories. This means that the Parliament of Canada enacts criminal laws and the Provinces administer the laws through provincial court systems.
Indictable, Summary, and Hybrid
Crimes in Canada fall under the following three categories: indictable, summary, and hybrid. Severe crimes such as murder, extortion, arson, and robbery are classified as indictable offenses and may result, upon conviction, in lengthy prison terms up to and including a life sentence. Less severe crimes such as simple assault are considered summary offences and are punishable up to a maximum of 6 months in prison. Hybrid offices are crimes that fall in between severe and summary and the maximum sentence for these forms of criminal offences is up to 18 months in prison.
White-collar crime is a term used to describe nonviolent crimes committed by people in their professional capacity, or by organizations. These crimes are committed for financial gain, often through deception. White-collar crimes are not typical street crimes, like burglary or robbery, and they are not personal crimes, like murder or sexual assault. White-collar criminals frequently commit their crimes on the job and while sitting at a desk. For example, Garth Drabinsky was sentenced to seven years in prison in 2009 for defrauding shareholders of Live Entertainment Corporation of Canada (a company he founded) of $500 million. ()
White collar crimes are characterized by deceit, concealment, or violation of trust. They are typically committed by business professionals. They generally involve fraud, and the employees committing the crimes are motivated by the desire for financial gains or fear of losing business standing, money, or property. Fraud is the intentional misrepresentation of material facts for monetary gain. This type of crime is not dependent on threats or violence.
Common Business Crimes
Fraud is the use of deception to acquire money or property. Examples of fraud may include a person or business offering ‘insider’ (confidential) tips, an unregistered business or operator offering investment products, theft of property or other assets, financial records misrepresentation, and a person or business defrauding investors and/or issuing fraudulent investment products or services. According to , 47% of Canadian organizations had experienced some form of fraud in the previous 24 months. Global Economic Crime and Fraud Survey 2020 estimates that fraud cost Canadian businesses more than $30 million in 2017.” ()
Section 380 of the Canadian Criminal Code (CCC) defines fraud and identifies the penalties for engaging in fraud (). Fraud over $5000.00 may result in a sentence of up to fourteen years in prison. There are many types of fraud, but one of the most well-known is embezzlement. Embezzlement occurs when someone takes property that was in his or her possession lawfully and then converts it to his or her own use. Embezzlement often happens by people who are in a position of trust over the assets of another person. This includes financial advisors, brokers, accountants, lawyers, and guardians. Embezzlement strategies can involve forgery, which is counterfeiting a document or someone else’s signature.
Financial institution fraud is fraud against banks and other similar institutions, such as credit unions. The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) investigates financial institution fraud. Cases of financial institution fraud can involve people and organizations who commit money laundering, suspicious transactions enabling or enacting money laundering schemes or providing financial support to terrorist organizations, and mass marketing fraud (the use of telephone, mail, internet, email or other technological means to perpetrate or disguise illegal transactions).
Money laundering is one of the costliest forms of business crime and refers to taking “dirty” money, or money obtained through criminal activities, and passing it through otherwise legitimate businesses so that it appears “clean” in order to disguise its illegal origins. The RCMP estimates that in excess of $15 billion each year is laundered in Canada ().
Ponzi schemes (also known as pyramid schemes) are investing scams that promise investors low-risk
investment opportunities with a high rate of return. The high rates are paid to initial investors with money acquired from the acquisition of new investors. The performance of the market is not a factor in the investors’ rate of return. Those at the top of the pyramid may receive something that appears to be a return on their investment (ROI), but those at the bottom do not. Those who operate Ponzi schemes generally solicit investors, and those who invest in such schemes expect a legitimate ROI. However, the head of the Ponzi scheme keeps his early investors happy by bringing in new investors, whose money he gives to the old investors as their ROI. This allows the Ponzi scheme to continue, because it appears from the outside that investors are receiving a legitimate ROI. The problem is that the capital contributions eventually disappear, since they are never invested but are simply used by the head for his own purposes, including paying investors with fake ROI payments as necessary.
Pyramids will eventually collapse under their own unsustainable structure. In 2022, Charles DeBono from Barrie, Ontario, was convicted of defrauding investors in his company Kis Media Ventures of between $23 million to $48 million between 2012 and 2017. Investors believed they were investing in point- of-sale (POS) terminals serving high volume businesses and were promised a steady return on their investment, but the POS equipment didn’t exist. Early investors were paid by later investors (enabling the Ponzi scheme) until 2017 when the payments ceased. DeBono transferred funds extracted through the scheme to accounts in the Dominican Republic (DR) between 2016 and 2017 and he attempted to flee justice by relocating to the DR under an assumed name. He was deported from the DR in 2020 to face fraud charges. ()
Section 322 of the Canada Criminal Code distinguishes between two categories of theft (taking or assuming the use of another person’s property without their consent or permission): theft over $5000.00 and theft under $5000.00. The maximum penalty for theft under $5000.00 is up to two years less-a-day imprisonment while the maximum penalty for theft over $5000.00 is up to ten years in prison. ()
Antitrust laws do not allow activities that restrain trade or promote market domination. These laws are in place to provide guidance and supervision of mergers and acquisitions of companies to prevent market abuse. In Canada, antitrust is governed by the Competition Act (). The purpose of the act is to encourage competition and to avoid monopolies, or the control of one organization over a specific market: “…in order to ensure that small and medium-sized enterprises have an equitable opportunity to participate in the Canadian economy and in order to provide consumers with competitive prices and product choices”. Monopolies reduce competition and, as a result, can have a detrimental impact on consumer prices and the economy.
Bribery occurs when monetary payments, goods, services, information, or anything of value is exchanged for favorable or desired actions. You can be charged with bribery for offering a bribe or taking a bribe. Bribery is illegal within Canada and in many other jurisdictions. The Corruption of Foreign Public Officials Act (CFPOA) prohibits bribery payments by Canadian citizens or companies to foreign government officials with an intent to influence foreign business decisions or activities to obtain a benefit or favourable outcome (). One example of bribery would be a situation in which a pharmaceutical company offers special benefits to individuals who agree to prescribe their medications.
Spamming; sending unsolicited commercial email or instant messages – spam, is illegal. While the onus is on consumers to avail themselves of whatever programs they can to block spam, laws are in place to discourage the sending of spam. The following points are outlined in the Canadian Anti-Spam Legislation (CASL):
- It is prohibited to send or cause or permit to be sent to an electronic address a commercial electronic message unless (a) the person to whom the message is sent has consented to receive it, whether the consent is express or implied.
- The message must be in a form that conforms to the prescribed requirements and must
- (a) set out prescribed information that identifies the person who sent the message and the person — if different — on whose behalf it is sent;
- (b) set out information enabling the person to whom the message is sent to readily contact one of the persons referred to in paragraph (a); and
- (c) set out an unsubscribe mechanism
The intention of CASL is to protect Canadian consumers and businesses from potential threats and misuse of digital technology.