Fraud

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Fraud Laws

 

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What is Fraud?

Fraud:
Deceitful conduct designed to manipulate another person to give something of value by:

  • lying,
  • by repeating something that is or ought to have been known by the fraudulent party as false or suspect or
  • by concealing a fact from the other party which may have saved that party from being cheated.
  • Canadian Laws Dealing With Fraud

     

    No person who engages in telemarketing shall:

    Penalty

    The offence created by Bill C-20 is hybrid; it is punishable by five years imprisonment and/or an unlimited fine for the indictable offence or by a maximum of 1 year imprisonment and/or a $200,000 fine for the summary offence (ss.52.1 (9) Competition Act ) . The Criminal Code offence of fraud is punishable by ten years imprisonment where the value of the suspect/matter of the fraud is at least $5,000. It is punishable by two years imprisonment in other cases.

    Offences by employees or agents
    (7) ... for the prosecution of a corporation ... it is sufficient proof of the offence to establish that it was committed by an employee or agent ... whether or not the employee or agent is identified, unless the corporation ... exercised due diligence to prevent ... the offence.

    Liability of officers and directors
    (8) Where a corporation commits an offence ... any officer or director ... in a position to direct or influence the ... conduct ... is a party to and guilty of the offence ... whether or not the corporation has been prosecuted or convicted, unless the officer or director establishes ... due diligence to prevent the ... offence.

    (9) ... liable (a) on conviction on indictment, to a fine in the discretion of the court or to imprisonment for a term not exceeding five years, or to both; or (b) on summary conviction, to a fine not exceeding $200,000 or to imprisonment for a term not exceeding one year, or to both.

    Sentencing
    (10) In sentencing ... the court shall consider ... the following aggravating factors:

    (a) the use of lists of persons previously deceived by means of telemarketing; (b) characteristics of the persons to whom the telemarketing was directed, including classes of persons who are especially vulnerable to abusive tactics; (c) the amount of the proceeds realized ... (d) previous convictions ... in respect of conduct prohibited by this section; and (e) the manner in which information is conveyed, including the use of abusive tactics.

    Multi-level marketing plans
    55. (1) ... "multi-level marketing plan" means a plan for the supply of a product whereby a participant in the plan receives compensation for the supply of the product to another participant in the plan who, in turn, receives compensation for the supply of the same or another product to other participants in the plan.

    (2) No person ... shall make any representations relating to compensation ... unless ... fair, reasonable and timely disclosure of ...

    (a) compensation actually received by typical participants in the plan; or

    (b) compensation likely to be received by typical participants in the plan, having regard to any relevant considerations, including

    (i) the nature of the product, including its price and availability, (ii) the nature of the relevant market for the product, (iii) the nature of the plan and similar plans, and (iv) whether the person who operates the plan is a corporation, partnership, sole proprietorship or other form of business organization.

    (3) ... liable (a) on conviction on indictment, to a fine in the discretion of the court or to imprisonment for a term not exceeding five years or to both; or (b) on summary conviction, to a fine not exceeding $200,000 or to imprisonment for a term not exceeding one year, or to both.

    Pyramid Selling Schemes
    55.1 (1) ... "scheme of pyramid selling" means a multi-level marketing plan whereby (a) a participant in the plan gives consideration for the right to receive compensation by reason of the recruitment into the plan of another participant in the plan who gives consideration for the same right;
    (b) a participant in the plan gives consideration, as a condition of participating in the plan, for a specified amount of the product, other than a specified amount of the product that is bought at the seller's cost price for the purpose only of facilitating sales;
    (c) a person knowingly supplies the product to a participant in the plan in an amount that is commercially unreasonable; or
    (d) a participant in the plan who is supplied with the product (i) does not have a buy-back guarantee that is exercisable on reasonable commercial terms or a right to return the product in saleable condition on reasonable commercial terms, or
    (ii) is not informed of the existence of the guarantee or right and the manner in which it can be exercised.


    (2) No person shall establish, operate, advertise or promote a scheme of pyramid selling.

    (3) ... liable ... to a fine in the discretion of the court or to imprisonment for a term not exceeding five years or to both; or (b) on summary conviction, to a fine not exceeding $200,000 or to imprisonment for a term not exceeding one year, or to both.

    Obstruction
    64. (1) No person shall in any manner impede or prevent or attempt to impede or prevent any inquiry or examination under this Act. (2) ... liable ... to a fine not exceeding five thousand dollars or to imprisonment for a term not exceeding two years or to both.

    Failure to supply information
    (2) Every person who, without good and sufficient cause, the proof of which lies on that person, contravenes section 114 or 123 is guilty of an offence and liable on summary conviction or on conviction on indictment to a fine not exceeding $50,000.

    Destruction or alteration of records or things
    (3) Every person who destroys or alters ... any record or other thing that is required to be produced ... in respect of a warrant ... liable (a) on summary conviction to a fine not exceeding twenty-five thousand dollars or to imprisonment for a term not exceeding two years or to both; or (b) on conviction on indictment to a fine not exceeding fifty thousand dollars or to imprisonment for a term not exceeding five years or to both.

    Liability of directors
    (4) Where a corporation commits an offence under this section, any officer, director or agent of the corporation who directed, authorized, assented to, acquiesced in or participated in the commission of the offence is a party to and guilty of the offence and is liable to the punishment provided for the offence whether or not the corporation has been prosecuted or convicted.

    Limitation period
    (6) Proceedings in respect of an offence that is declared by this Act to be punishable on summary conviction may be instituted at any time within but not later than two years after the time when the subject-matter of the proceedings arose.

    PART VII.1 DECEPTIVE MARKETING PRACTICES
    Misrepresentations to public
    74.01 (1) A person ... who, for the purpose of promoting, ... the supply or use of a product or ... any business interest, by any means whatever, (a) makes a representation to the public that is false or misleading in a material respect.

    Representation as to reasonable test and publication of testimonials
    74.02 A person ... who, for the purpose of promoting ... any product... or any business interest, makes a representation ... that a test has been made as to the performance, efficacy or length of life of a product by any person, or publishes a testimonial with respect to a product.

    Bait and switch selling
    (2) A person ... who advertises at a bargain price a product that the person does not supply in reasonable quantities having regard to the nature of the market in which the person carries on business, the nature and size of the person's business and the nature of the advertisement.

    Promotional contests
    74.06 A person ... promoting, ... a product ... or any business interest, conducts any contest, lottery, game of chance or skill, or mixed chance and skill, ... where (a) adequate and fair disclosure is not made of the number and approximate value of the prizes, of the area or areas to which they relate and of any fact within the knowledge of the person that affects materially the chances of winning; (b) distribution of the prizes is unduly delayed; or (c) selection of participants or distribution of prizes is not made on the basis of skill or on a random basis in any area to which prizes have been allocated.

    74.1 (1) Where, ... a court determines that a person is engaging in or has engaged in reviewable conduct under this Part, the court may order the person (a) not to engage in the conduct or substantially similar reviewable conduct; ... (c) to pay an administrative monetary penalty, in such manner as the court may specify, in an amount not exceeding (i) in the case of an individual, $50,000 and, for each subsequent order, $100,000, or (ii) in the case of a corporation, $100,000 and, for each subsequent order, $200,000.

    (5) Any evidence of the aggravating or mitigating factors shall be taken into account in determining the amount of an administrative monetary penalty under paragraph (1)(c):

     

     

     

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