How Should Canadians Deal with Franchise Fraud
In an interesting story, Stephen Sibold, a lawyer with Bennet Jones LLP discusses the difference between US and Canadian attidudes to white collar crime, in his articleWant U.S.-style regulation for Securities Fraud? He makes the following point, which I agree with whole heartedly.
"If we wish to "get tough" with criminal misconduct in Canada's capital markets, governments need to begin treating this conduct as a matter of criminal law rather than securities regulatory law.
The recent convictions in the Hollinger case in the United States have, predictably, fuelled debate in Canada as to whether similar cases would have been pursued here - let alone concluded - with the same vigour. Critics frequently cite the absence of a single national securities regulator as the root cause of the perception that Canada does not have as strong - or fearsome - a commitment to enforcing securities laws as does the United States.While the attention of commentators has been focused primarily on the enforcement record of securities regulators, I believe that the more fundamental issue to address is how Canada deals with serious "white-collar" or commercial crime in its capital markets as a matter of criminal law."
Business opportunity and franchise fraud is rampant in Canada. The tip-off is the that the perpetrator is using the corporate bank account as their own piggy bank. This is a criminal fraud, section 380 of the Criminal Code.
But the commercial crime units of the OPP, RCMP or the Competition Bureau simply don't look at where the money has gone - preferring to see this as the purview of the Proceeds of Crimes Units.
This makes very little sense - it can be a criminal offence to take money out of the corporate bank account to pay for individual expenses. The tax returns have to be matched up with the bank withdrawls. Odd payments have to be explained.
We aren't going to get serious enforcement of white collar fraud until the police and crown start focussing on where the money went, not withstanding Stephen Sibold's great article.
