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Criminal - Fraud. R v Gour
The criminal case of R v Gour (Ont CA, 2014) is interesting for it's holding that in some cases, even outside of contract, the failure of a defendant to disclose facts material to the parties' relationship may constitute fraud:[7] The appellant submits that the trial judge erred by concluding that the appellant’s failure to disclose a material fact – that his canvassers were not volunteers – was relevant in establishing the offence of fraud.
[8] We disagree. Based on R. v. Theroux, 1993 CanLII 134 (SCC), [1993] 2 S.C.R. 5 and R. v. Zlatic, 1993 CanLII 135 (SCC), [1993] 2 S.C.R. 29, which held that the words “other fraudulent means” in the offence of fraud proscribed in s. 380(1) of the Criminal Code allow convictions grounded in non-disclosure of important facts, we have no hesitation affirming the trial judge’s key conclusions:1. the failure to disclose the handsome commissions being paid to these apparent “volunteers” constituted the hiding of a fundamental and essential element of this fundraiser-contributor relationship; and
2. this failure to disclose was such as to mislead the reasonable contributor. [9] We hasten to add that non-disclosure of the status (volunteer v. employee) of a canvasser will not be relevant in every charitable fundraising context. That would be too sweeping a proposition. However, in this case there was extensive evidence that the appellant operated his team of canvassers in a manner calculated to mislead the public. His conduct went beyond mere use of the word “volunteer”. He also instructed them to state that all money would be disbursed to the families of the affected children and to deny that they were being paid, and he provided pamphlets that claimed that the charity had no paid staff. In these circumstances, the combination of material non-disclosure and outright lying supports the trial judge’s conclusion that a reasonable contributor would have been misled. . R v Riesberry
In the criminal case of R v Riesberry (SCC, 2015) the Supreme Court of Canada articulated the elements of criminal fraud as follows:[20] Like virtually all offences, fraud consists of two main components, the prohibited act (actus reus) and the required state of mind (mens rea). Mr. Riesberry’s submission focuses on one of the two aspects of the actus reus. Those two aspects are:1. . . . an act of deceit, a falsehood, or some other fraudulent means; and
2. deprivation caused by the prohibited act, which may consist in actual loss or the placing of the victim’s pecuniary interests at risk. (R. v. Théroux, 1993 CanLII 134 (SCC), [1993] 2 S.C.R. 5, at p. 20; R. v. Zlatic, 1993 CanLII 135 (SCC), [1993] 2 S.C.R. 29, at p. 43)
[21] The issue here concerns the aspect of deprivation. Mr. Riesberry contends that there was no evidence that his fraudulent conduct caused any risk of deprivation or that at least any such risk was too remote from his conduct. He submits that the Crown did not establish that anyone betting on the race had been induced to bet by, or would not have bet but for, his fraudulent conduct.
[22] I cannot accept this position. Contrary to Mr. Riesberry’s contention, proof of fraud does not always depend on showing that the alleged victim relied on the fraudulent conduct or was induced by it to act to his or her detriment. What is required in all cases is proof that there is a sufficient causal connection between the fraudulent act and the victim’s risk of deprivation. In some cases, this causal link may be established by showing that the victim of the fraud acted to his or her detriment as a result of relying on or being induced to act by the accused’s fraudulent conduct. But this is not the only way the causal link may be established.
[23] We should first be clear about what Mr. Riesberry’s fraudulent conduct was before turning to the question of whether it caused a risk of deprivation. Fraudulent conduct for the purposes of a fraud prosecution is not limited to deception, such as deception by misrepresentations of fact. Rather, fraud requires proof of “deceit, falsehood or other fraudulent means”: s. 380(1). The term “other fraudulent means” encompasses “all other means which can properly be stigmatized as dishonest:” R. v. Olan, 1978 CanLII 9 (SCC), [1978] 2 S.C.R. 1175, at p. 1180. The House of Lords made the same point in Scott v. Metropolitan Police Commissioner, [1975] A.C. 819, a case approved by the Court in Olan (p. 1181). Fraud, according to Viscount Dilhorne in Scott, may consist of depriving “a person dishonestly of something which is his or of something to which he is or would or might but for the perpetration of the fraud be entitled”: p. 839. And as Lord Diplock said, the fraudulent means “need not involve fraudulent misrepresentation such as is needed to constitute the civil tort of deceit”: ibid., at p. 841.
[24] It follows that where the alleged fraudulent act is not in the nature of deceit or falsehood, such as a misrepresentation of fact, the causal link between the dishonest conduct and the deprivation may not depend on showing that the victim relied on or was induced to act by the fraudulent act. This is such a case.
[25] Mr. Riesberry injected and attempted to inject the racehorses with performance enhancing substances. The use of such drugs is prohibited and trainers such as Mr. Riesberry are prohibited even from possessing loaded syringes at a racetrack. This conduct constituted “other fraudulent means” because in the highly regulated setting in which he acted, that conduct can “properly be stigmatized as dishonest”: Olan, at p. 1180. He carried out these dishonest acts for the purpose of affecting the outcome of two horse races on which members of the public placed bets. His dishonest acts, therefore, were intended to and in one case actually did result in the possibility that a horse that might otherwise have won would not. The conduct therefore caused a risk of deprivation to the betting public: it created the risk of betting on a horse that, but for Mr. Riesberry’s dishonest acts, might have won and led to a payout to the persons betting on that horse. To return to Viscount Dilhorne’s words in Scott, Mr. Riesberry’s dishonest conduct created a risk that bettors would be deprived dishonestly of something which, but for the dishonest act, they might have obtained.
[26] There is a direct causal relationship between Mr. Riesberry’s dishonest acts and the risk of financial deprivation to the betting public. Simply put, a rigged race creates a risk of prejudice to the economic interests of bettors. Provided that a causal link exists, the absence of inducement or reliance is irrelevant. I agree with the Court of Appeal that Mr. Riesberry’s reliance on Vézina and Côté v. The Queen, 1986 CanLII 93 (SCC), [1986] 1 S.C.R. 2, is misplaced. That case made it clear that[f]raud consists of being dishonest for the purpose of obtaining an advantage and which results in prejudice or a risk of prejudice to someone’s ‘property, money or valuable security’. There is no need to target a victim . . . and the victim may not be ascertained. [p. 19] . R. v. Leclair
In R. v. Leclair (Ont CA, 2020) the Court of Appeal set out the mens rea for criminal fraud:[3] R. v. Théroux, 1993 CanLII 134 (SCC), [1993] 2 S.C.R. 5, makes clear, at p. 20, that the mens rea of fraud is established by proof of:1. subjective knowledge of the prohibited act, be it an act of deceit, a falsehood or some other fraudulent means; and
2. subjective knowledge that the prohibited act could have, as a consequence, the deprivation of another (which deprivation may consist in knowledge that the victim’s pecuniary interests are put at risk). . R. v. Khan
In R. v. Khan (Ont CA, 2022) the Court of Appeal noted that criminal fraud need not require actual deprivation, as risk of it is enough:[69] In the section of his decision dealing with the tax fraud, the trial judge explained that the two essential elements of fraud are dishonesty and deprivation. With respect to deprivation, relying on R. v. Olan, 1978 CanLII 9 (SCC), [1978] 2 S.C.R. 1175, at p. 1182, the trial judge correctly stated: “It is enough to show that the victim sustained detriment, prejudice or risk of prejudice or deprivation to their economic interests.” He also correctly observed that, where quantifying the alleged tax loss is difficult, “the mere creation of a financial risk to another by dishonesty constitutes the offence of fraud.”
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