The first national study of its kind, business advisory and accounting firm MNP LLP has released Fraud Aware 2019: National Study on Reported Fraud cases in Canada which compiles data from over 200 criminal convictions of fraud to glean critical insights about how organizations can reduce the instances of this type of crime in Canada.
Fraud is happening from coast to coast but there are pockets of higher prevalence, the report revealed.
The most convictions and the largest reported losses due to fraud were seen in Ontario, Quebec, Alberta and British Columbia.
Ontario led the way with the most frauds at 122 and B.C. had the largest total losses with $14.3 million.
The resource-rich province of Alberta had the highest media monetary fraud at $1.25 million, with Newfoundland and Labrador close behind ($1.01 million).
The top fraud schemes were stock price manipulation, Ponzi schemes, GST fraud, investment fraud, cash misappropriation, mortgage fraud and tax evasion, but two types were the runaway leaders in terms of costliest frauds – 15 Ponzi schemes led to $549 million in losses, and two cases of stock price manipulation totalled $87 million.
Of the 206 prosecuted cases reviewed, the majority of the fraud schemes lasted about three years.
Underscoring the need for proactivity when it comes to fighting fraud, the report revealed that, although restitution was ordered in 70 per cent of fraud convictions, it amounted to only 29 per cent of the fraud losses.
Despite the often-lasting impact of fraud on businesses and organizations, many frauds are never reported or ever reach the criminal justice system.
The civil justice process is often timelier and routinely more effective at recovering fraud losses.
Less than five percent of fraud is reported.
To that end, one alarming area of research in the report was sentencing.
The maximum penalties for fraud have increased since 2012, yet the data showed that longer prison sentences are not yet being imposed.
The report found that individuals over the age of 65 – many of whom hold positions of trust and power with an organization – executed the largest frauds in Canada.
Fraud is committed, by and large, out of greed, which was the motivation for 63 per cent of the frauds researched.
Other motivators included gambling, financial hardships, drug addiction and relationships.
