CRIMINAL CODE OFFENCES
FRAUD AND FALSE PRETENCES
CRIMINAL CODE OFFENCESFRAUD AND FALSE PRETENCES |
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FUNCTIONAL COMPETENCY
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TABLE OF CONTENTS
Given scenarios involving fraud, false pretence and related offences, use the analysis model to identify the offence, the elements of the offence, any parties to the offence, arrest powers and punishments prescribed in the criminal code.
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Fraud and related crimes, frequently called white collar crimes, are one of the fastest growing areas of crime in Canada. It represents an economic loss to the Canadian public of millions of dollars.
There are over fifty fraud or fraudulent type offences in the Criminal Code, covering a very wide range of activities. By far the most common of these is fraud involving cheques, credit cards and other money making schemes. No doubt as our population continues to age, these crimes will flourish, if not increase, because experience shows that the elderly are prime targets.
All of these offences have their roots in some type of deceit or false pretence, through which people are deprived of money, goods or property.
This module will review the most important of these crimes, helping you understand the nature of the crimes and the elements which comprise them.
When researching any offence, it is important to take a systematic approach to ensure all pertinent questions are answered. The model presented represents such a system, and will ensure a thorough investigation.
First we will present, describe and explain each step in the model, and then apply it to various fraud or false pretence offences.
Following that, you will be tested with a series of scenarios involving different types of fraud.
This process may not be applied in the same detail in every offence, but the general concept will. Once you have worked through several offences, and have a good understanding of the model, the procedure will become second nature to you.
Let's start by reviewing the analysis model for Criminal Code offences which was presented in earlier modules. If you need a refresher, scan down before getting into the offence of fraud/false pretence.
This is a refresher only, so if you are comfortable with your knowledge of the model and process, skip these pages and move straight to the application section.
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CRIMINAL CODE OFFENCES MODEL |
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Here is a summary of the questions that need to be answered.
If you can answer all of these questions, and quote the authorities where they apply, you will have complete information regarding the offence. Your challenge then is to develop and present the evidence that supports each step and question.
Several steps in the model were covered in separate modules, which you should already have completed. These are: Parties to an Offence, Elements of an Offence, Powers of Arrest and Arrest Limitations.
If you need further update, take this short walk-through the model to clarify the intent and process of each step.
ANALYSIS MODEL - WALK-THROUGH
Step 1: initial investigation - the investigation gets under way with a complaint to the detachment or to yourself, or an observation by yourself or someone else. This causes you to make some preliminary inquiries to determine the nature of the problem and whether or not an offence has been, or is being committed.
Step 2: define the offence - for this you must refer to the applicable statute, to determine whether or not an offence has really been committed and if there is enough initial information to proceed further.
In addition to defining the offence, it would be timely to determine what type of offence it is. If you do not determine the type of offence here, then you would do so under step 7.
If you are satisfied an offence has been committed, proceed to step 3.
Step 3: elements to prove - remember each offence can be broken down into a number of elements that need to be proved to constitute the offence.
Step 4: identify the parties and accessories after the fact - it is important to identify exactly who is involved in the offence and to what degree. This includes the perpetrator, aider, abettor and counselor. You will also have to identify any possible accessories after the fact, which are different from parties to the offence.
Step 5: can you arrest? - you must check your authorities to determine if you have the power to arrest, if limitations apply and whether or not an arrest is warranted. In cases of uncertainty, you would discuss this with your immediate supervisor.
Step 6: proving actus reus & mens rea - somewhere in the procedure you must determine that you can prove both these basic elements unless they are specifically excluded.
Step 7: type of offence - if you have not already determined the type of offence in step 2, now is the time to do so. Are you dealing with a summary conviction, indictable or a dual procedure offence?
Step 8: punishment - it is useful to know the punishment for all parties and accessories to the offence. You should be able to state the section authorizing the punishment in each case.
Step 9: next step? - you should now be able to determine the next step in the case. Are you going to lay a charge, make an arrest, take statements? What you do next depends on what questions remain unanswered and what alternative solutions might be available.
ANALYSIS MODEL - APPLICATION
The following situation is typical of what you might encounter as a police officer. This example will walk you through the model applying each step in succession.
As a suggestion, you might want to have a copy of the model handy as you work through this or any other case. Once you have applied the steps a few times, you won't need the model any more.
THE SCENARIO
A real estate salesman circulates a letter throughout the community, offering to provide free residential appraisals to people who are considering selling their homes. After conducting the appraisal the resident receives a $50.00 invoice for professional services. One of the home owners involved has complained and refused to pay for the appraisal of his house.
Now, let's analyze this case using the analysis model.
STEP 1: Initial Investigation
Your inquiries reveal that a large number of people in the community have received this service and actually paid the requested $50.00 fee. Others had just refused and not reported the incident.
STEP 2: Define the offences
As a starting point, check the index of your Criminal Code under "false pretence". You can also get to it by starting with "fraud", but it is a little more complicated.
What section defines this offence?
Does this describe what happened in our scenario?
Before going further, we should examine this definition in more detail, because it is critical to the investigation. Let's review the key points of the definition:
The following point by point analysis will bring the offence into focus.
No, because false pretence must be either past or present. A promise of a future intention is not a false pretence within the meaning of this section.
Yes it did, because several people had their house appraised.
Not necessarily, unless you could prove the writer knew the cheque was not good, at the time it was written. If the incident was an honest mistake, there is no false pretence.
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Summary A false pretence is a representation of a past or present fact, made by words or otherwise, which is known by the person making it to be false, with a fraudulent intent to induce someone to act on it. |
Does this apply in our scenario? Yes it does! The salesman induced someone to act on a letter which he knew to be false, so there was fraudulent intent and it qualifies as a false pretence.
STEP 3: Elements of the offence
Under what section was the offence committed?
Now we move to Sub-section 362(1), which outlines the actual offence. Read Paragraph 362(1)(a) and, in your own words, list the elements of the offence.
Paragraph 362(1)(a) limits what can be included in a false pretence to items that can be stolen. If something cannot be stolen, such as rent, labour, services and debts, they cannot be included in a false pretence charge.
For example, a person purchases a sweater at a clothing store and writes a cheque, knowing full well there is no money in the account. Is this a false pretence under Paragraph 362(1)(a)?
Yes it is, because the sweater is something that can be stolen and the cheque was an intentional misrepresentation of ability to pay.
At this point we should divert for a few moments and discuss the issue of NSF cheques. This is one of the most common false pretence offences you will encounter and it would be well to clarify that issue now.
Read Sub-section 362(4) of the Criminal Code of Canada.
You probably noted that this sub-section is designed specifically to deal with NSF cheques. It places the onus of proof on the person writing the cheque, to show reasonable belief at the time of writing, that the cheque would have been honoured. This "reverse onus" takes effect the instant it is dishonoured due to insufficient funds.
This is a controversial issue which has been challenged (R. v. Driscoll (1987), 38 CCC (3d) 28 Alt, Ca). Some courts have deemed it to be a violation of the constitutional rights, contrary to Sub-section 11(d) of the Canadian Charter of Rights and Freedoms, which guarantees presumption of innocence until proven guilty.
The Canada Evidence Act (Section 29), provides authority to obtain documentary evidence of "no funds", or "NSF" cheques.
Let's return now to Sub-section 362(1) and our analysis of false pretence.
Paragraph 362(1)(b) refers to obtaining credit by false pretence. This paragraph is designed to compliment paragraph (1)(a), which limits the offence to items that can be stolen. Paragraph (1)(b) extends the offence to include credit which is one of those intangibles.
For example, a person applies for, and gets a credit card from an oil company. The application form indicates a substantial bank account, whereas in fact there are no funds. Would this be a false pretence? Yes it would, provided you could show a fraudulent intent in obtaining the credit.
Note the definition of "credit" taken from case law:
The credit of an individual is the trust placed in him by those who deal with him, that he is of the ability to meet his debts.
Now read Paragraph 362(1)(c).
This section deals with making a false statement on behalf of oneself, someone else, or a company, for the purpose of procuring any of the items or services listed in (c)(i to vi). N.B. for this paragraph to apply, the statement must be "in writing".
For example, a person goes to the bank and obtains a loan for $2,000.00. On the application he claims to own a $4,000.00 car which he intends to use as collateral. In fact he does not own a car. Is this a false pretence?
Yes it is under sub-paragraph 362(1)(c)(iii). He made a false statement for the purpose of securing a loan.
The last paragraph of 362(1) is (d), knowing that a false statement in writing has been made as per 362(1)(c).
For example, let's suppose the person who obtained a $2,000.00 loan in the previous example, had taken a friend to the bank with him. That friend knew full well, that the statement about owning a $4,000.00 car was false. Would the friend be guilty of a false pretence?
Yes he would, under Paragraph 362(1)(d).
Considering all that, is our real estate salesman guilty of a false pretence under Paragraph 362(1)(a), (b), (c) or (d)? Make your decision before continuing.
STEP 4: Parties to the offence
Your investigation reveals that the salesman in this case and his partner, have been working this scheme for several months. Prior to this, they had done the same thing in another city, but had closed their operation before charges could be brought against them.
Who are the parties to this offence, and what is the role of each?
STEP 5: Powers of arrest
STEP 6: Actus reus & mens rea.
STEP 7: Type of offence.
STEP 8: Punishments.
Compare your answers to those given. This will help you identify any concerns with the offence of false pretence.
Appendix - Definitions "A" at the end of this module contains the definition of the key words associated with the offences of fraud and false pretence. Refer to this whenever required as a convenient reference.
The next portion of this module deals with fraud, which is closely related to false pretence.
This is a very common, and increasing area of crime, so knowing the distinctions between these two offences, will be a significant advantage in your investigations.
The criminal code does not define fraud, but case law does. It is defined as:
If a man by deceit or falsehood deprives another of something that is his right to have, then it is fraud.
The offence is described in Sub-section 380(1) and (2)of the Criminal Code. For the moment we will be dealing only with Sub-section 380(1).
The elements of the offence are:
Note: this last element is essential to the offence. If the victim is not deprived of property, money or a valuable security, then it is not fraud. To convict for fraud, the crown must establish and prove dishonest deprivation. In other words, someone must have been deprived of property, money or a valuable security, and there must have been an element of dishonesty.
See Appendix "A" for definitions of property and valuable security.
The punishments for fraud are covered in Paragraphs 380(1)(a) and (b).
Because of the similarities between false pretence and fraud cases, it might be helpful to review these by comparing the key points of each. Chart 1 below, provides that comparison.
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Fraud |
False Pretence |
| Representations can be past, present or future | Representations must be past or present only |
| Items obtained must be money, property, valuable security or any services | Items must be tangible, capable of being stolen |
| Presumption in Sub-section 362(4) does not apply | Sub-section. 362(4) applies only to false pretence |
| Does not require false pretence | Involves only false pretence as per Sub-section. 361(1) |
There are three more fraud related offences that are quite common and you should know about. These are:
We will examine each of these separately, so you will be able to recognize the offences when they occur.
Sub-section 366(1) is the forgery section in the Criminal Code.
The majority of forgery investigations will involve cheques, but remember, any legitimate document can be forged. Other documents that are commonly forged are: driver's licenses, invoices, prescriptions, wills, examination papers, diplomas, stocks, bonds and other financial documents.
Forgery does not include bank notes and counterfeit money, as these are addressed separately in Section 406 of the Criminal Code.
What is the definition of a "document"? For this, turn to Section 321, or review that definition in Appendix "A".
Sub-section 366(2) defines "making a false document". Note the three criteria in that section.
Considering all these factors, we can summarize forgery as:
Knowingly making a false document or altering a genuine one with the intent to effect an unlawful purpose.
Punishment
Now turn to section 367 C.C. Read the punishment for forgery, and paraphrase in your own words.
This offence is frequently committed by the same person who forged the document in the first place.
Read Sub-section 368(1) and, using your own words, list the elements of this offence and the penalty.
Although it is possible to convict a person of both forgery and uttering, this is seldom done in practice. The usual course of action is to proceed with the uttering charge, where less evidence is required to obtain a conviction.
FRAUDULENTLY OBTAINING FOOD AND LODGING
Read Sub-section 364(1) and (2), which describe this offence in detail. In your own words describe six types of evidence considered proof of fraud in this offence.
Note the expanded definition of the word "cheque" in Sub-section 364(3).
What is the punishment for this offence?
That concludes our discussion of fraud and false pretence. Review the following summary, then if you feel confident you can analyze these offences, proceed to the criterion test for this module.
If you are still uncertain about any concept or issue, review that portion of the module and/or refer your concern to your facilitator for clarification. You might also want to discuss the issue with a colleague to compare ideas.
SUMMARY - FRAUD & FALSE PRETENCE
False pretence - definition
CRITERION TEST: FRAUD & FALSE PRETENCE
Following are five hypothetical scenarios involving fraud related offences. Read each one carefully, then answer all the questions that follow.
Scenario #1.
Joe has been working at the same firm for a number of years, and is unhappy at not receiving a pay raise. On one payday he changes the amount of this pay cheque from $350.00 to $850.00, and attempts to cash it at the local bank. The bank teller becomes suspicious and alerts the manager, who then calls the police. On being questioned, Joe admits that he did in fact change the amount.
- What criminal offence was committed?
- What are the elements of the offence?
- Who are the parties to the offence if any?
- State your authority to arrest and any limitations:
- What type of offence was committed?
- What is the punishment for this offence for the perpetrator? Other parties?
Scenario #2
Jean goes to her local book store with her friend Mary, and buys a book. She pays by cheque and a few weeks later the cheque is returned, marked "account closed". During your investigation you find that the account had been closed several months earlier and Jean was fully aware of this at the time she wrote the cheque. You also discover that Mary had urged Jean to write the cheque and had told the clerk that Jean had a valid account and her cheques were always accepted. You are able to prove that Mary knew this was false.
- What criminal offence has been committed?
- What are the elements of the offence?
- Who are the parties to the offence if any?
- State your authority to arrest and any limitations.
- What type of offence was committed?
- What is the punishment for this offence for the perpetrator? Other parties?
Scenario #3
Betty attends a local real estate presentation where she meets Henry who convinces her to invest in a land development scheme in Florida. Henry's partner Bob, who is also the proposed developer, produces some impressive photographs of lush, green land. They solicit a down payment of $2,000.00 to hold a lot for Betty, who quickly writes a cheque for that amount. She later discovers that Henry and his partner are no longer around, and she has nothing to show for her purchase.
- What criminal offence has been committed?
- What are the elements of the offence?
- Who are the parties to the offence if any?
- State your authority to arrest and any limitations.
- What type of offence was committed?
- What is the punishment for this offence for the perpetrator? Other parties?
Scenario #4
Mr. and Mrs. Martin register at an expensive hotel in Toronto, ostensibly to attend a convention being held there. For convenience they arrange to charge everything to their room, and over the next few days run up expenses of $1150.00. Four days after arriving, they leave the hotel quietly through the garage and disappear.
- What criminal offence has been committed?
- What are the elements of the offence?
- Who are the parties to the offence if any?
- State your authority to arrest and any limitations.
- What type of offence was committed?
- What is the punishment for this offence for the perpetrator? Other parties?
Scenario #5
Johnny goes to a local furniture store with his nephew, Billy, and purchases a complete entertainment system valued at $5,300.00. He convinces the salesman to bill him for the item and completes a credit form with fictitious information. Nephew Billy then confirms the information on the credit form, fully aware that it is false. The credit form is approved and they load the sound system into their van, never to be heard from again.
- What criminal offence has been committed by Johnny?
- What are the elements of the offence?
- Who are the parties to the offence if any?
- Do you have the power to arrest, and if so what is your authority?
- What type of offence was committed?
- What is the punishment for this offence for the perpetrator? Other parties?
- Is Billy guilty of any offence? If so explain.
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| Document: |
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| False pretence: |
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| Forgery: |
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| Fraud: |
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| Property: |
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© GRC-RCMP
ecdp1018.doc
July 23, 1997
Revised: July 14, 2000
Acquiring and Analyzing Information