Fraud

In 2008, lawyers reported that 10% of all claims involve fraud. Industry Canada suggests fraud is growing rapidly. In the US there are reports of internet fraud quadrupling to about 31,299 cases. In the context of estate litigation, fraud arises when someone exercises undue influence which amounts to coercion to procure a will, limitations periods and fraudulent concealment, improvident depletion of an estate to escape creditors or others, and defalcation by an executor or power of attorney in breach of his fiduciary duty. In civil litigation, fraud involves dishonest dealing resulting in damages to another party.

Does A Constructive Trust Trump the Bankruptcy and Insolvency Act?

In the words of the Court of Appeal at paragraph 34, "those funds should be the subject of a constructive trust in favour of DSLC Capital Corp. in order to prevent the unjust enrichment of Credifinance Securities Limited." But, this is the end of the story. Let’s start at the beginning. DSLC Capital Corp. (DSLC) sought to invest in Credifinance Securities Limited (Credifinance) thinking that it was a member in good standing with the Investment Industry Regulatory Organization of Canada (IIROC). DSLC’s plan was to become a part owner of Credifinance so that DSLC could sell securities and other investments to its existing network of investors. Based on representations of the principal of Credifinance, DSLC loaned Credifinance $400,000 and, by share subscription agreement, proceeded to purchase a minority ownership interest in Credifinance.
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Scams on the Internet having impact on lawyer

In this column I write mostly about estate or commercial disputes. But given my recent unsuccessful attempts to defang a financial predator, I am taking this opportunity to alert people to fraudsters seeking to take advantage of the unsuspecting. There are people who pretend to be lawyers and use the Internet to scam the naïve and inexperienced. Others pretend to be clients and use unsuspecting lawyers as pawns in fraudulent schemes. These financial predators promise money or business opportunity.
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Victims of Fraud and Bankruptcy

Gregory Sidlofsky of our office represented a company that was deceived into loaning money to a company called Credifinance Securities Limited. After we were able to tie up part of the proceeds of the loan, Credifinance declared bankruptcy. In our efforts to recover what remained of the loan, we argued that a constructive trust ought to be imposed on $310,500 in the fraudster’s account that could be traced to the loan. The purpose of the constructive trust was to prevent the unjust enrichment of the bankrupt estate. This case went to Ontario’s Court of Appeal and a review of that decision is helpful to those facing a similar dilemma.
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