Fraud Under the Criminal Code
Fraud is defined in section 380(1) of the Criminal Code. The offence is committed when a person, by deceit, falsehood, or other fraudulent means, defrauds the public or any person of any property, money, valuable security, or service. The definition is deliberately broad — it captures everything from writing a bad cheque to orchestrating a multi-million dollar Ponzi scheme.
The Criminal Code does not require that the victim actually suffered a loss. A risk of deprivation — putting someone’s economic interests in jeopardy — is sufficient. This means the Crown can secure a conviction even where the fraud was detected before any money changed hands, as long as the accused’s conduct created a real risk of economic prejudice.
What the Crown Must Prove
To convict on a fraud charge, the Crown must prove three elements beyond a reasonable doubt:
1. A prohibited act. The Crown must prove the accused engaged in deceit, falsehood, or “other fraudulent means.” Deceit includes lying to obtain money or property. Falsehood includes forging documents, creating false records, or misrepresenting material facts. “Other fraudulent means” is a residual category that captures dishonest conduct that does not neatly fit into deceit or falsehood — such as unauthorized use of a credit card or diversion of funds.
2. Deprivation. The Crown must prove that the victim suffered an actual loss or that the accused’s conduct put the victim’s economic interests at risk. The deprivation can be monetary loss, loss of property, loss of a service, or prejudice to an economic interest.
3. Knowledge. The Crown must prove the accused knew that their conduct was dishonest and that it would or could cause deprivation to the victim. This is the subjective mental element of the offence. The accused must have been aware of the facts that made their conduct fraudulent. If the accused honestly believed their conduct was legitimate — even if that belief was mistaken or unreasonable — the knowledge element is not made out.
Fraud Under vs. Fraud Over $5,000
The Criminal Code divides fraud into two categories based on the value of the subject matter of the offence.
Fraud under $5,000 (section 380(1)(b)) is a hybrid offence. If the Crown proceeds by indictment, the maximum sentence is two years imprisonment. By summary conviction, the maximum is two years less a day. There is no mandatory minimum, and the full range of sentencing options is available.
Fraud over $5,000 (section 380(1)(a)) is also hybrid, but the maximum penalty by indictment is 14 years imprisonment. The Crown almost always proceeds by indictment for fraud over $5,000, and the sentencing range is significantly higher. Courts consider the total value of the fraud, the degree of planning and sophistication, the number of victims, and the impact on the victims when determining sentence.
Fraud Over $1 Million: Mandatory Minimum
For fraud exceeding $1 million, section 380.1(1.1) of the Criminal Code imposes a mandatory minimum sentence of two years imprisonment. This is one of the few mandatory minimums in the fraud provisions and reflects Parliament’s view that large-scale fraud warrants a custodial sentence regardless of the offender’s personal circumstances.
In addition to the mandatory minimum, section 380.1 sets out a list of aggravating factors that the court must consider: the magnitude, complexity, duration, and degree of planning of the fraud; the impact on the victims (including financial, psychological, and health consequences); the offender’s position of trust or authority; and whether the fraud affected a large number of victims.
Types of Fraud
Fraud charges in Ontario arise from a wide range of conduct. The most common types include:
Mortgage fraud involves using false or misleading information to obtain a mortgage — inflated appraisals, falsified income documents, straw buyers, or undisclosed liabilities. The value involved is almost always over $5,000, and often well into six or seven figures.
Bank fraud encompasses fraudulently obtaining funds from financial institutions through false pretences, forged documents, or unauthorized transactions. Banks have dedicated fraud investigation units, and the documentary evidence in these cases is typically extensive.
Identity fraud (section 403) involves using another person’s identity information to commit an indictable offence, obtain property, or cause disadvantage. Related offences include identity theft (section 402.2) and trafficking in identity information. The maximum sentence is 10 years by indictment.
Credit card fraud involves the unauthorized use of credit card information to make purchases or obtain cash advances. It is prosecuted under the general fraud provision and, depending on the total value, as fraud under or over $5,000.
Insurance fraud includes filing false claims, staging accidents, or inflating the value of legitimate claims. These cases often involve multiple accused persons and extensive documentary evidence.
Defence Strategies
Fraud cases are document-heavy and complex. Defence strategies target the specific elements the Crown must prove.
Lack of knowledge or intent. This is the most common defence. If the accused did not know the documents were false, did not know the transaction was fraudulent, or genuinely believed their conduct was legitimate, the Crown cannot prove the subjective mental element. In multi-party fraud cases, the accused may have been a peripheral participant who was unaware of the fraudulent aspects of the scheme.
Honest belief. An accused who honestly believed they were entitled to the property or funds — for example, in a business dispute over money owed — may have a defence. The belief does not need to be reasonable; it must be genuinely held.
Identity. In credit card fraud, identity fraud, and online fraud cases, the Crown must prove the accused is the person who committed the fraudulent acts. This can be challenging where the fraud was committed remotely or through intermediaries.
Challenging the paper trail. Fraud cases typically rely on documentary evidence — bank records, invoices, contracts, emails, and accounting records. Defence counsel examine this evidence for gaps, inconsistencies, and alternative interpretations. A transaction that the Crown characterizes as fraudulent may have a legitimate business explanation.
Charter violations. Evidence obtained through unlawful searches of business premises, personal computers, or financial records may be excluded under section 24(2) of the Charter. Search warrants in fraud cases must be specific about the documents being sought, and overly broad warrants can be challenged.
Restitution
Under section 738 of the Criminal Code, the court can order an offender to pay restitution to the victim as part of the sentence. In fraud cases, the Crown frequently seeks restitution for the full amount of the fraud. Restitution orders are enforceable as civil judgments.
Voluntary restitution — paying back the defrauded amount before sentencing — is treated as a mitigating factor by the courts. It demonstrates remorse and reduces the impact of the offence on the victim. Defence counsel often negotiate restitution as part of a resolution that results in a more favourable sentencing outcome. In some cases, voluntary restitution combined with other mitigating factors can support a non-custodial sentence for fraud over $5,000.
Sentencing
Sentencing for fraud varies widely depending on the amount, the circumstances, and the accused’s background.
For fraud under $5,000, first-time offenders frequently receive discharges, fines, suspended sentences, or conditional sentences. Jail is uncommon for low-value fraud by first-time offenders.
For fraud over $5,000, the range includes conditional sentences, house arrest, and custodial sentences. The higher the value and the more sophisticated the scheme, the more likely a jail sentence becomes. Breach of trust — where the accused was in a position of authority or responsibility — is a significant aggravating factor.
For fraud over $1 million, the mandatory minimum is two years imprisonment, and sentences frequently exceed that depending on the aggravating factors.
Collateral Consequences
Fraud is a crime of dishonesty, which carries uniquely severe collateral consequences. Regulated professionals — lawyers, accountants, financial advisors, real estate agents, insurance brokers, doctors, nurses, teachers — must disclose a fraud conviction to their regulatory body. The result is often suspension or revocation of professional credentials.
Beyond professional licensing, a fraud conviction affects employment (many employers conduct criminal record checks), international travel (particularly to the United States), immigration status (fraud is considered a crime involving moral turpitude under U.S. immigration law), and personal reputation. These collateral consequences are often more damaging than the sentence imposed by the court.
Representative Results
The following are representative cases from our practice involving fraud charges:
- R v. G.A. — Client charged in $40,000 fraud had charges withdrawn in Newmarket Court. Client was facing one year of jail time prior to withdrawal of charges due to alleged involvement in fraudulently obtaining government benefits. As a result of the withdrawal, the client has no criminal record whatsoever.
- R v. D.W. — Client charged with fraud over $5,000 had charge stayed in Brampton. The Crown chose not to proceed due to the defence raising issues with respect to proving knowledge of the fraud. The Crown was originally seeking six months in jail.
- R v. S.G. — Client charged with fraud over $5,000 in an alleged bank fraud had charges withdrawn in Newmarket Court. The defence raised deficiencies in the evidence prior to trial and the Crown chose to withdraw the charge rather than proceed.
- R v. W.P. — Client charged with fraud over $5,000, obstruct justice and conspiracy to commit an indictable offence had charges withdrawn in Newmarket Court. The defence raised difficulties proving client’s involvement and knowledge in a case of staged accidents and the Crown chose to withdraw the case rather than proceed.
- R v. M.U. — Client charged with fraud and utter forged documents had charges withdrawn in Oshawa Court. The Crown could not prove that the client was aware that documents tendered to a bank in a mortgage transaction were fraudulent.