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Welfare (Ontario Works) Law
(01 January 2016)

Chapter 12 - Fraud and Prosecutions


  1. Background and Comment
  2. Fraud
    (a) Overview
    (b) Elements of Criminal Fraud
    . Overview
    . Case Law
    (c) "Provincial" Fraud and Aiding & Abetting
    (d) Fraud Investigation Process
    (e) Analysis and Case Commentary
    . Overview
    . D'Amour
    . Related Cases
    (f) Avoiding Fraud Charges
  3. Eligibility Review Officer (ERO) Investigations
    (a) Overview
    (b) Entry and Demand
    . Clarification
    . Entry
    . Demands
    (c) Warrant Searches
    (d) "General" Investigative and Demand Authority
    (e) Conflict Between "Entry and Demand" and "General Investigative and Demand Authority"?
    (f) Misuse of Consent to Disclose and Verify Information
    (g) Government Information-Sharing Authorities
    (h) Legal Privilege
    (i) Provincial "Obstruction" Offence
  4. Fraud Control Units
  5. Charter
    (a) Overview
    (b) Evidence Exclusion [s.24(2)]
    (c) Right to Liberty [s.7]
    (d) Unreasonable Search and Seizure (Privacy) [s.8]
    (e) A Case in Point: R v D'Amour
    . The Facts
    . Search and Seizure [s.8]
    . Right to Liberty [s.7]

________________________________________


1. Background and Comment

Historically, welfare recipients are subject to criminal punishment out of proportion to the amounts of money involved. Single mothers who defraud for $5,000 can expect jail time comparable to that for white collar fraud or embezzlement going into the millions of dollars. Despite the reality that welfare assistance rates are hopelessly inadequate to live on (the single person maximum basic assistance is $585 per month) - fraud in the name of feeding children is held, dollar for dollar, to be far more blameworthy than fraud in the name of wanton greed.

The practical vulnerability of welfare recipients to fraud charges is further magnified by the fact that they are subject to an unparalleled level of scrutiny into their personal and financial affairs at both the eligibility stage (see Ch.5 "Information Eligibility"), and through further investigative levels (see s.3 "Eligibility Review Officer Investigations" and s.5 "Fraud Control Units", below).

The harsh treatment of welfare recipients was taken to an extreme on 01 April 2000 when a lifetime ban against receipt of any form of provincial social assistance was established for any welfare or ODSP-related conviction committed from that date forward. The ban was the subject of much public debate and an inquest around the death of Kimberly Rogers in Sudbury - and was opposed by public health boards, municipalities, and some police forces. The ban when applied to ODSP recipients (ie. the "proven" medically disabled) was plainly inhumane.

Thankfully, the ban was lifted by the new Liberal government in early 2004.

That said, the issue of fraud and welfare offences still looms large for claimants. The interface of welfare law with criminal law is therefore crucial. Unfortunately, the limited experience of most criminal practitioners with the field, the poverty of the accused, and the perceived legal complexity of the social assistance regime - all combine to dampen legal progress in the area.

Further, the Canadian Charter of Rights and Freedoms - so effective otherwise at protecting the procedural rights of criminal defendants, has proven toothless to protect welfare recipients - with the fruit of all the overly-intrusive information and evidence-gathering tactics used by welfare authorities (again, see Ch.5 "Information Eligibility") being fed directly into fraud prosecutions (see s.5 "Charter Issues", below) without constitutional impediment.

Practically all information exchanges between a claimant and welfare are recorded and are available as a source of evidence for criminal or other prosecution, and practically all personal financial and other documentation is available for the same purpose despite the legal privacy rights otherwise enjoyed by those lucky enough not to need social assistance.


2. Fraud

(a) Overview

While middle-class taxpayers happily conceal income as though it were a national sport and small retailers double-book their way to PST and GST tax fraud with only the rare risk of audit or investigation (and the even rarer risk of provincial or federal non-criminal prosecution) welfare recipients face ongoing and constant investigation to a degree unparalleled by any identifiable class of people, with the exception of penetentiary inmates.

There are two main reasons for this. First, the administration of welfare is done by the local level of government which, until recently, has been responsible for 20% of assistance costs. That closeness allows for a greater level of social scrutiny, particularly in small municipalities. Secondly, the pervasive attitude that poverty is somehow a personal, and blameworthy, moral failure.

Some have hoped that the advent of the Canadian Charter of Rights and Freedoms, with its constitutional protections of privacy, against self-incrimination and against unreasonable search and seizure would have changed this situation. However these hopes have proven unfounded. The reality that the poor are effectively compelled by the financial reality of their poverty to disclose intimate financial and personal details of their lives has not softened the hearts of the judiciary. Nor has it dissuaded the pens of legislators - who have so greatly facilitated the ability of investigators to intrude into the private affairs of recipients that there is no detectable remaining area of personal information unshielded from their prying eyes (nor from its use in fraud prosecutions).

As will be seen below, a further insidious aspect of this already significant degradation of privacy and self-incrimination rights is the role of the "eligibility review officer" (ERO) whereby the pretext of administrative "eligibility" assessment is in reality used to facilitate search and seizure powers for criminal fraud investigative purposes - thus circumventing Charter protections. These duplicitous powers are further bolstered by free-standing "obstruction" offences located in the Ontario Works Act, rendering non-compliance with ERO demands and investigations by recipients and third parties alike (that is, their assertion of Charter privacy rights) a prosecutable offence.

This legal 'whip-sawing' of applicant/recipients is further compounded when administrator suspicions arise and an 'updating' meeting is scheduled. If applicant/recipients does not then fully abase and expose (ie. incriminate)themselves at that session (which may be tape-recorded) in such a session then the invariable "administrative" response is to cancel assistance for "failure to provide information". Courts have consistently refused to acknowledge any degree of state coercion in such practices, hiding behind the shallow pretext that this is not compelled state action as the defendant is has 'voluntarily' come to welfare seeking assistance - and that they were 'free' not to do so. Once having chosen to avail themselves of these 'optional' services, sadly the applicant/recipient has thereby exposed themselves to the full range of criminal sanctions without normal protections afforded to those of us who break and enter, commit murder and otherwise engage in activities more apparently deserving of constitutional protection.

Of course, this is not to say that all welfare claimants are saints and do not commit fraud - but it is to point out that the mastery of the duties of a welfare applicant/recipient is not a simple matter. As Mr Justice Archie Campbell J said while reviewing a ruling of the (then) Social Assistance Review Board respecting the General Regulation under the (then) General Welfare Assistance (GWA) Act, Kerr v Metro Toronto 4 OR (3d) 430 (Div Ct):
.... the greatest sympathy for the board in its attempt to interpret a Kafkaesque regulation so complex and ambiguous that it becomes a lawyer's nightmare, ...
While the legislation was re-written in 1997, the same complexity and obscurity remains. Contrary to what many would say, I do not (for the most part) view this as a function of poor drafting but rather an unavoidable result of the intricate and exhaustive degree of examination to which claimants are subjected. For current examples of ambiguities and complexities that still exercise the analytic faculties of lawyers and judges, see the discussions of "Loans as Income" in Ch.6 "Income Rules", or the murky legal definition and status of the "independent minor" in Ch.2 "Claimants".

As this complexity exists in the law, it is not surprising that it is often only as a result of the more detailed questioning by a worker during an "investigation" that a claimant learns of mistakes in their reporting duties, or some arcane intricacy of welfare law that they have run afoul of.

As well, welfare applicants/recipients - as a class - tend to be more prone to illiteracy, poor education, mental illness, learning disabilities, unfamiliarity with the English language, speaking and hearing disorders, etc - all of which impact their ability to comprehend and assess the meaning and requirements of this complex legal regime. And yet we continue to legal facade [CCC s.19] that for a learning disability, Gr.4-educated, sexually-abused, drug-addicted, single mother of three that: 'ignorance of the law is not an excuse' for committing an offence (although on this point see the Maldonado case reviewed below).

While this is to our collective shame, it is also a legal reality that makes it extremely important for applicants, recipients and their advisors to be aware of their rights in the constant eligibility information (and evidence) struggle between themselves and administrators. The excessive demands and practices of administrators in this regard are the subject of Ch.5 "Information Eligibility".

More essentially - if there is any issue of false statements or material non-reporting having been made in past - either intentionally or inadvertently -claimants should consult a criminal lawyer (of course - in a final irony - no legal aid coverage is available for such situations until after a charge is laid).

(b) Elements of Criminal Fraud

. Overview

The classic statement of the broad nature of criminal fraud under s.380 [then s.338] of the Criminal Code is contained in R v Olan, Hudson and Hartnett [1978] 2 SCR 1175, where Dickson CJ, analyzing the Criminal Code terms "deceit, falsehood or other fraudulent means" and "defrauds", stated:
Courts, for good reason, have been loath to attempt anything in the nature of an exhaustive definition of "defraud" but one may safely say, upon the authorities, that two elements are essential, "dishonesty" and "deprivation". To succeed, the Crown must establish dishonest deprivation.

....

The element of deprivation is satisfied on proof of detriment, prejudice, or risk of prejudice to the economic interests of the victim. It is not essential that there be actual economic loss as the outcome of the fraud.
As can be seen this definition of criminal fraud is quite broad and encompasses not just overt intentional misrepresentation, but any behaviour which can be characterized broadly as "dishonest" - even in the absence of economic loss (ie. trying but failing to obtain assistance dishonestly can ground a fraud conviction). Further, it is to be remembered that criminal convictions can be founded on both "acts" and "omissions", so that simple silence in the face of a duty to disclose (such as non-declaration of income) can also ground a conviction.

. Case Law
  • In R v Maldonado [1998] OJ #3209 (QL) OCJPD, a criminal court considered a charge of criminal fraud against a person who received both welfare and student loans at the same time (the case is further discussed on issues of student loans in Ch.6: "Income Rules: Student and Education-Related Income"). The court dismissed the charge, finding that an element of the fraud offence, that of knowing that the government would be deprived of money, was missing - as the defendant did not know that the money was chargeable income, the non-reporting of which would give him further assistance. The court took great care to distinguish this from an 'ignorance of the law' defence, which is barred under the criminal code. The Maldonado case is essential reading for any criminal lawyer facing such a situation.

  • In contrast to Maldonado, in R v Bond [1994] OJ #2185 (QL) (OCJGD) the court was faced with a fraud charge where a recipient had accumulated, but not reported assets in excess of the maximums (although she had reported the monies as income when they were received). The court convicted, holding that any motives of selflessness and frugality were relevant to sentencing (she claimed the savings were for her children), not to the element of deceit required for the conviction. Finding that her non-reporting was - on an objective basis - deceitful, the court convicted.

  • Another case along the information reporting themes of Maldonado and Bond, and plainly more authoritative, is R v Rodney (Ont Sup Ct, 2007). This was a criminal welfare fraud charge against a single mother involving administrator deprivation of just under $50,000 over a roughly five year period. The defendant was convicted on all counts laid with respect to various non-declarations of income and asset dealings (purchase of a residence, line of credit borrowing, and others).

    While the defendant was convicted, the court undertook a detailed analysis of the law respecting information disclosure and it's relationship to the risk of deprivation, a key element on the criteria for criminal fraud. Relying on the post-Bond Supreme Court of Canada case of R v Parise (SCC, 1996) the court stated:
    [42] ....... In respect of “welfare” frauds specifically, the statutory duty to disclose relates only to information that, had it been known to the assistance granting agency, could have reduced the level of assistance provided to the claimant .... The obligation to disclose information relates only to material facts, that is, facts that could have reduced the level of assistance to a claimant. If the conduct alleged (i.e. non-disclosure of certain facts) would not have caused social services to reduce the level of benefits, the offence is not made out. The Supreme Court of Canada in Parise emphasized that the accused’s conduct has to create a risk of deprivation to social services. In that case the trial court had concluded that, even if the accused had properly disclosed her relationship with her boyfriend, there was no reasonable expectation that social services would have stopped or reduced her income assistance because her boyfriend had little or any disposable income to support her. In this case it is clear, had Carla Rodney disclosed the true state of her assets, she would not have been entitled to received the benefits. By concealing these assets, social services granted her applications for assistance. The deprivation to social services was caused by her deceit and falsehood.

    [43] Social services must rely on the dishonest conduct or representation. Fraud does not occur where, even though dishonest or misleading representations were made, the victim either knew the true facts or was indifferent to them and did not rely on the misrepresentations.

    ........

    [46] In Theroux McLachlin J. acknowledged the contention between appellate courts but stated “the better view is that the accused’s belief that the conduct is not wrong or that no one will in the end be hurt affords no defence to a charge of fraud”. McLachlin J. made the following comments in Theroux in dealing with the mens rea of fraud:
    To put it another way, following the traditional
    criminal law principal that the mental state necessary to the offence must be determined by reference to the external acts which constitute the actus of the offence, the proper focus in determining the /mens rea/ of fraud is to ask whether the accused intentionally committed the prohibited acts (deceit, falsehood, or other dishonest act) knowing or desiring the consequences proscribed by the offence (deprivation, including the risk of deprivation). The personal feeling of the accused about the morality or honesty of the act or its consequences is no more relevant to the analysis than is the accused’s awareness that the particular acts undertaken constitute a criminal offence.
    [47] For fraud to be established, an accused must intentionally deceive, lie or commit some other fraudulent act knowing that such conduct could cause deprivation. Proof that the accused was merely careless or negligent, not deliberately dishonest is insufficient. In Parise the Supreme Court of Canada reaffirmed the proposition set out in Theroux that the mens rea requirement must be met by proof that the accused knowingly committed a fraudulent act by not reporting the changes in her circumstances. The finding of the trial judge in that case that the accused might reasonably have been expected to report those changes did not meet the /mens rea/ requirement for welfare fraud. Carla Rodney intentionally deceived social services knowing that she needed to do that in order to obtain benefits. Her actions were deliberate, not just merely careless or negligent.
  • In R v Lalonde 22 OR (3d) 275 (OCJGD, 1995) the court applied a "battered wife syndrome" defence, likening it to a defence of necessity (and despite the absence of expert evidence on the issue) to a woman FBA recipient charged with fraud for lying about having a spouse in the house. Further, the court believed that the Director knew of the situation but did nothing about it thinking that the woman would have been eligible for GWA in any event, so that there was no "deprivation". The court characterized this as 'condoning' the situation.

  • As was illustrated in the case of R v Allan (Ont Sup Ct, 2008), not all welfare fraud is committed by recipients or applicants. In this case a first nations welfare administrator pled guilty to fraud for issuing fraudulent OW cheques, and falsifying OW records in a larger scheme that involved up to $1.285 million of fraudulently-obtained funds. Taking into account that the defendant had cooperated with the police in investigation, the court sentenced her to 26 months imprisonment. The sentencing of another defendant involved in the same scheme was the subject of the decision in R v Collins (Ont CA, 2011), where a 10-month sentence was imposed.

  • In Halton (Regional Municipality) v Rezaizadeh (Ont Sup Ct, 2004) a municipality sued all members of a family (mother, father and three adult children) for 'deceit' with respect to both public housing subsidies and welfare assistance that the mother (as applicant) and the children (as dependents) had received. The claim alleged that the father resided with the family (without being declared) and that he had income which was not declared to either the municipality in it's welfare administrator, or in it's housing authority, capacities.

    The defendants did not defend and the municipality moved for default judgment. In a motion of that nature, due to the failure of the defendants to defend themselves, the court is entitled to assume that all allegations made in the Statement of Claim (pleadings) have been proven. However affidavit evidence is only admissible on the issue of damage quantum, not with respect to liability.

    On the basis of the (now deemed factual) pleadings the mother was found liable in deceit both with respect to welfare and housing by way of express false declarations which concealed the father's co-residence. Damages of $45,000 (the combined value of the housing subsidy and welfare during the period of deceit) were awarded against her.

    The municipality also tried to locate liability on the three daughters by alleging that their 'failure to correct' their mother's fraudulent statements (at verification meetings they attended) also constituted deceit. While admitting that in some circumstances silence could ground such fraud, the court distinguished that doctrine in the present case and as well on the basis that the pleadings in the Claim did not allege the dates of the meetings where the 'silence' occured, so that causation of damages could not be demonstrated just on the face of the pleadings. Since affidavit evidence was inadmissible to expand on liability, the claims against the daughters were dismissed.

    As to the father, the court noted the absence of any allegations in the pleadings that he had made false statements, nor had he attended any meetings where he may have engaged in fraud by way of silence. Noting additionally that the case was not framed in conspiracy, the court dismissed the action against him as well.

    The case is instructive largely for the elements required to demonstrate the tort of fraud in the welfare context, and to reinforce the pleadings principle [set out in R25.06(8) of the Rules of Civil Procedure] that "(w)here fraud, misrepresentation, breach of trust, malice or intent is alleged, the pleading shall contain full particulars ...".
(c) "Provincial" Fraud and Aiding & Abetting

There are also "provincial" welfare fraud offences 'on the books' [Act s.79], although these are rarely if ever used - the Criminal Code fraud charges [CCC s.380] being preferred as they are broader in scope, penalty and stigma:
s.79(1) Ontario Works Act
No person shall knowingly obtain or receive assistance to which he or she is not entitled under this Act and the regulations.
The elements of the provincial fraud offence are largely the same, though not identical to that in the Criminal Code. The criminal requirement of "dishonesty" is largely replicated in the provincial offence by the requirement that the person "knowingly obtain or receive assistance to which he or she is not entitled". Note however that the "obtain or receive" requirement in the provincial offence apparently only allows conviction where there has been actual "deprivation" (ie. loss by the administrator), which contrasts with the criminal fraud offence.

The provincial statute also has its own "aiding and abetting" offence [cp. to CCC s.21]:
s.79(2)
No person shall knowingly aid or abet another person to obtain or receive assistance to which the other person is not entitled under this Act and the regulations.
Procedures for these charges are governed by the Provincial Offences Act.

The maximum penalty on conviction of either provincial offence is $5,000 fine and/or jail of up to six months [Act s.79(4)].

(d) Fraud Investigation Process

"Fraud control units" may be established by the OWA Director at the provincial level, and by each municipality locally. Fraud investigators are formally considered to be engaging in law enforcement activities, which provides their activities and documentary production almost full immunity from review by recipients or their counsel under the provincial or municipal Freedom of Information (FOI) laws.

However, an interested review of the steps leading to a fraud referral to the police (at least in Toronto) is contained in the D'Amour 2002 Court of Appeal case:
In March 1997, Mr. Woo, a caseworker with the Department, met with the appellant and asked her to provide him with her T4 slips for the years 1994, 1995 and 1996. He made this request because the Department had received documents suggesting that the appellant, contrary to her representations, had been employed while receiving benefits. Under s. 10 of the Act, the Department could withhold benefit cheques if the appellant did not produce the T4 slips. Mr. Woo told the appellant that benefit cheques would be withheld until she provided the requested T4 slips. She subsequently gave the T4 slips to Mr. Woo and received her benefit cheques. The T4 slips confirmed that the appellant had received some $28,000 in undisclosed income.

Mr. Woo referred the appellant's file to Ms. Woods, an eligibility review worker. It was her job to determine eligibility for benefits under the Act and whether any overpayments had been made. Ms. Woods contacted the appellant's employer and confirmed her employment. She prepared a summary reflecting the income earned by the appellant and the consequent benefit overpayments made to the appellant.

Ms. Woods referred the appellant's file to the Fraud Control Unit within the Department. That unit gathers additional information to determine whether overpayments have been made and, if so, what action should be taken to recover those overpayments. The Fraud Control Unit refers files to the Special Review Committee (SRC). The SRC consists of a Crown Attorney, a police officer, a civil lawyer from the City of Toronto's Legal Department and a welfare supervisor. The SRC decides whether there should be recourse to criminal charges, civil proceedings, or a simple recovery of the overpayments. About ten percent of the files reviewed by the Fraud Control Unit that reveal overpayments are referred to the SRC.

The ultimate determination of whether a matter should be referred to the police for fraud prosecution is made by the SRC. Caseworkers and eligibility review workers are not concerned with whether conduct is fraudulent in the criminal sense and do not interact with the police. They determine eligibility and whether overpayments have been made. These workers appreciate, however, that any time an overpayment is discovered there is always the possibility that the file will eventually be referred to the police for criminal prosecution.
(e) Analysis and Case Commentary

. Overview

This last sentence above is a bit obvious. It was the first level case worker that received in inculpatory T4 slips - which directly impeached the earlier representations respecting income by the recipient. Are we to believe that the worker's mind was numb to the possibility of fraud?

It is also obvious that fraud was in mind of the ERO officer who next got the file and who referred the case up to Fraud Control. A review of ERO legislative and regulation authority will show that their powers consist of powers of entry and removal of evidence from premises, demand for inspection, demands for information - supplemented by search warrant request authority for residential dwellings. These are plainly law enforcement powers. Further, obstruction of an ERO investigation is a prosecutable provincial offence. While they may be called "eligibility" review officers, within their field they have more investigative powers than police officers.

The last sentence above-quoted is also revealing of an approach to Charter analysis, as was discussed above, that is rigidly and formalistically tied to the eligibility-fraud distinction. This approach ignores the reality of welfare workers' constant vigilance to fraud, in favour of focussing on the final referral of the matter to the fraud unit or the police. No realistic understanding of the workings of welfare administration accepts that criminal jeopardy - or an administrative consciousness of it - only arises at this later stage. Yet the constitutional and criminal significance of this characterization is that Charter protections only tend to arise when there is "criminal jeopardy" - so the later in the process that fraud concerns are ostensibly located - the later do constitutional criminal evidentiary protections such as s.7 right to silence and s.8 privacy rights engage.

. R v D'Amour

But reading on in D'Amour shows that these protestations don't really matter anyway, because - apparently - criminal prosecution is but an ancillary aspect of the proper administration of the welfare regime:
I accept the respondent's submission that the use of the T4 slips in the criminal prosecution for the fraudulent receipt of benefits did not amount to the use of the document for a purpose different from the enforcement of the Act. The prosecution for fraud, just like a prosecution under the Act, was aimed at preserving the integrity of a benefits program that depended largely on accurate self-reporting of income. Self-reporting can only work if the state can identify and successfully prosecute those who do not honour their obligation to report fully and accurately.
Thus - in D'Amour - criminal prosecution is not a qualitatively distinct legal procedure from welfare administration (contrary to that age-old distinction between the civil and the criminal law). Apparently the criminal justice system is actually a supporting agency of the Ministry of Community and Social Services - aiding in the tidy administration of Ontario's social assistance program. (One wonders if prosecutions for murder and manslaughter are similarly ancillary to the mandate of the provincial Ministry of Health to care for the well-being of its citizens.)

Not only has the court in D'Amour mistaken the early (indeed ubiquitous)presence of the fraud concern in the welfare administrative process, it has gone further to re-categorize criminal fraud itself as an aspect of that same administrative process. In this fashion the engagement of constitutional procedural protections are even further delayed - perhaps forever.

The net impact of the D'Amour case is to declare "open season" on welfare recipients in terms of fraud investigation. Administrators, already heedless of the actual legal range of their information and evidence demand authorities are now bolstered in their practices by the essentially unfettered ability to use the fruits of these intrusions towards the goal of attaining the only higher category of degradation of human rights above poverty possible, that of complete deprivation of liberty: incarceration. One might argue that "death" is a higher degradation but as we have seen in the Kimberly Rogers case it is not necessarily a consequence distinct from poverty.

The entire tone and thrust of the D'Amour case is indicative of the mainstream societal ignorance of the realities of the life of a welfare recipient - who are none but the poor and disabled in our society. I have in past been saddened to see this ignorance reflected in the general bar, but now to see it perpetuated - with such a discriminatory focus - by the province's highest court is simply tragic and disheartening.

. Related Cases

Such issues have been considered in another regulatory context, namely income tax. In R v Ostrowski (Ont Sup Ct, 2008) evidence obtained during an income tax audit was held admissible in subsequent criminal proceedings, Charter s.8 search & seizure and s.7 right to silence protections not applying. Following the Supreme Court of Canada in R v Jarvis (SCC, 2002) the court noted the distinction between an audit function and an investigative function, with the latter having a predominantly penal purpose and being in an adversarial legal context. Further, the court noted from Jarvis that mere suspicion of criminality developed during an audit process did not invoke the Charter.

The court in Ostrowski cited the following test from Jarvis as to when 'the Rubicon was crossed' and a regulatory process converted to a criminal investigation [from Jarvis at para 94]:
a) "Did the authorities have reasonable grounds to lay charges?

Does it appear from the record that a decision to proceed with a criminal investigation could have been made?

b) Was the general conduct of the authorities such that it was consistent with the pursuit of a criminal investigation?

c) Had the auditor transferred his or her files and materials to the investigator?

d) Was the conduct of the auditor such that he or she was effectively acting as an agent for the investigators?

e) Does it appear that the investigators intended to use the auditor as their agent in the collection of evidence?

f) Is the evidence sought relevant to taxpayer liability generally? Or, as is the case with evidence as to the taxpayer's mens rea, is the evidence relevant only to the taxpayer's penal liability?

g) Are there any other circumstances or factors that can lead the trial judges to the conclusion that the compliance audit had in reality become a criminal investigation?"
This test is designed for the income tax context, but it's principles can inform the social assistance situation.

When doing so the central role of EROs in the fraud investigation process is plain and undeniable. We need go no further than the Director's Policy Directive 9.7 ["Controlling Fraud"], where the role of the Eligibility Review Officer (ERO) is defined in direct and central relation to the fraud investigation process.

And yet - in the non-fraud 'administrative-only' areas that an ERO is ostensibly supposed to operate, and where you would expect them to be pivotal figures: ie. Policy Directives 9.1 "Reviewing Eligibility", and 9.3 "Recovery of Overpayments": Eligibility Review Officers are not mentioned, not once.

Ontario Works Policy Directive


(f) Avoiding Fraud Charges

For an extensive discussion of the legal reporting duties faced by applicants and recipients see Ch.5 "Eligibility Information". As is discussed there, the eligibility information and "verification" demands placed on applicants and recipients far exceed their legal duties, and of course the actual legal entitlements of administrators to such eligibility information, especially in documentary evidence form.

That said, in the real world of being 'on welfare' there is a clear tension between the legal entitlements of administrators to eligibility information, the applicant/recipient's "rights of privacy" and the risk of administrative disentitlement and fraud prosecution. Not all applicant/recipients may want to assert their strict privacy rights at the cost of constant battle with their local welfare administrator. For those applicant/recipients the safest approach is what can be characterized as chronic "over-compliance".

Basically: report everything - in writing - and let the administrator decide it's treatment.

Report all income and assets as soon as they are expected and again when received. Let the welfare administrator determine how they are going to treat the money (ie. as chargeable in whole, part or not at all) before it is spent. This rule extends by analogy beyond financial disclosure to all areas of information disclosure: possible spousal relationships, income and assets of all members of the benefit unit (including children), employment-seeking efforts, etc.

Report first, fight later on appeal if necessary.

Do not presume to know the correct legal result of an issue and therefore refrain from disclosing it to welfare. If the claimant disagrees with a determination then that should be appealed (see Ch.10 "Appeals and Other Remedies") to the Social Benefits Tribunal.

These practices will go a long way to protecting claimants from fraud allegations, and if done consistently, then welfare fraud charges would drop dramatically.

Chapter Continues here ...

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