Cracking down on white-collar fraud

It seems you can’t pick up a newspaper or turn on the TV these days without another story about investors being ripped off in various Ponzi or other white-collar fraud schemes: Bernard Madoff and Allen Sandford cases in the U.S., Earl Jones in Montreal and now Milowe Allen Brost and Gary Allen Sorenson in Alberta, who have been charged with operating a $100-million Ponzi-type scheme affecting some 3,000 investors.

It seems you can’t pick up a newspaper or turn on the TV these days without another story about investors being ripped off in various Ponzi or other white-collar fraud schemes: Bernard Madoff and Allen Sandford cases in the U.S., Earl Jones in Montreal and now Milowe Allen Brost and Gary Allen Sorenson in Alberta, who have been charged with operating a $100-million Ponzi-type scheme affecting some 3,000 investors.

Not even some of Canada’s most prestigious financial institutions are immune from what seems to be a growing epidemic of white-collar crime. Bank of Montreal and BMO Nesbitt Burns, its brokerage arm, announced recently they are suing one of their own retail investment advisers for $10 million for allegedly stealing clients’ money.

All these cases seem to confirm that investment fraud is a big, and costly, problem.

Last year Phone Busters, the central agency in Canada that collects information on identity theft, telemarketing and advanced fee fraud letters, handled 62,264 calls, seven per cent more than in 2007.

In the first four months of this year it handled 22,493 calls. If that pace continues throughout the year, the number of calls in 2009 will increase 8.3 per cent over 2008.

In 2008, Canadian victims lost $23.9 million to mass-marketing fraud, $9.5 million from identity theft and $3.2 million from advanced fee fraud.

In the first four months of 2009, Canadians lost $6 million, $3.6 million and $485,000 respectively to these three types of fraud.

Those numbers likely are just the tip of the iceberg.

Phone Busters, which lists 24 different types of scams involving everything from vacation, travel and vehicle warranties to pyramid schemes, false charities, and cheque overpayments, believes 95 per cent of frauds are never reported.

Scam artists have been around for years, but experts believe they tend to become more prevalent during recessions and bad economic times.

Fraud also has become easier to perpetrate in recent years with a rise in the use of the Internet, which provides quick, easy and cheap access to literally thousands of potential victims with the push of a computer key.

The seeming increase in white-collar fraud is prompting the federal government and the U.S. Security and Exchange Commission (SEC) to take notice, and action.

Federal Justice Minister Rob Nicholson has announced the government plans to introduce mandatory jail sentences for serious fraud convictions as part of new legislation aimed at white-collar crime.

The new legislation would change the Criminal Code to impose mandatory penalties for fraud, allow courts to consider longer sentences if there are aggravating circumstances, and require the courts to consider restitution for victims.

“This bill acknowledges that those who fall victim to these kinds of fraud have been victimized just as much as the person who has been mugged in an alley,” Nicholson said. “The effects in terms of loss of financial security and confidence as well as the sense of humiliation can be every bit as serious and damaging as physical threats and intimidation.”

The SEC is training more than 300 examiners on ways to spot fraud and is considering creating a fraud school to train staff in detecting market abuses after the SEC failed to stop Madoff’s $65-billion Ponzi scheme over a period of 16 years.

The fraud detection training is being co-ordinated with the Commodity Futures Trading Commission, and the SEC is revamping its enforcement division and forming five specialty units focusing on cases involving asset management, structured products, municipal securities, foreign corrupt practices and market abuse, according to reports from Bloomberg News.

Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors. He can be contacted at boggsyourmoney@rogers.com.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

The interchange at Highway 2 and McKenzie Road at the south end of Gasoline Alley is being redesigned with two roundabouts. Detours will be in place at either end of the overpass during construction, which is expected to begin this month and finish in October. (Graphic from Red Deer County)
Roudabouts coming to McKenzie Road overpass at Gasoline Alley

Project expected to improve traffic flow at busy intersections

A federal strategy to preserve threatened trout could conflict with provincial coal leases in the Eastern Slopes of the Rockies. (Contributed photo by Jeff Lund).
Federal regulations could save Alberta’s bull trout by shutting down mining plans, says biologist

Ottawa’s new strategy identifies a 30-metre protected area along rivers and streams

(Contributed image)
Wolf Creek Public Schools will not participate in curriculum pilot

Central Alberta school jurisdiction joins others across Alberta

Jennifer Lopez, left, and Alex Rodriguez take a selfie as they arrive at the 26th annual Screen Actors Guild Awards in January 2020. VAX Live: The Concert to Reunite the World will showcase Lopez. (Photo by Matt Sayles/Invision/AP, File)
Selena Gomez and J.Lo headline vax concert for poor nations

NEW YORK — Backed by an international concert hosted by Selena Gomez… Continue reading

A vial of the vaccine by Janssen Pharmaceuticals, a company owned by Johnson & Johnson. Federal health officials in the U.S. said early Tuesday they were urging a pause in the use of Johnson & Johnson’s COVID-19 vaccine after reports of six serious blood clots, and officials in Washington state and around the country quickly complied. (Aristide Economopoulos/NJ Advance Media)
How J&J and AstraZeneca differ from the mRNA vaccines from Pfizer and Moderna

Johnson & Johnson’s single-dose COVID-19 vaccine has hit a stumbling block in… Continue reading

An emergency response worker carries an air monitoring device at the site of a crude oil spill at a Trans Mountain Pipeline pump station in Abbotsford, on Sunday, June 14, 2020. THE CANADIAN PRESS/Darryl Dyck
Failed fitting caused 190,000-litre spill at Trans Mountain site in B.C.: TSB

VANCOUVER — A Transportation Safety Board report says the failure of a… Continue reading

Ottawa
Indigenous leaders, experts urge Ottawa to quickly pass UNDRIP bill before election

OTTAWA — Indigenous leaders and legal experts are pushing federal lawmakers to… Continue reading

Visitors to a roadside memorial pay their respects in Portapique, N.S., on Friday, April 24, 2020. The Canadian Red Cross confirmed today it has collected $6.2 million in donations to help the families in rural Nova Scotia affected by the mass shooting last spring that claimed 22 lives. THE CANADIAN PRESS/Andrew Vaughan
Red Cross collects $6.2 million for families affected by Nova Scotia mass shooting

HALIFAX — Canadians and people from around the world donated $6.2 million… Continue reading

Hindu devotees wearing face masks as a precautionary measure against the coronavirus stand in a queue to offer prayers inside a temple dedicated to goddess Kali in Jammu, India, Tuesday, April 13, 2021. New infections have surged in the past month and India has now reported over 13.6 million cases — pushing its toll past Brazil, and making it second only to the United States. In the past 24 hours, over 160,000 new infections have been detected and experts fear that the worst is yet to come. (AP Photo/Channi Anand)
Johnson & Johnson delays shot rollout in Europe

BERLIN — Johnson & Johnson says it is delaying the rollout of… Continue reading

Restaurant workers and restaurant delivery workers wait in line to sign up for Johnson & Johnson's COVID-19 vaccine at a mobile vaccine site, Wednesday, April 7, 2021, in the Sunset Park neighborhood of New York. The mobile vaccination effort includes two buses equipped with four to six vaccinators each, delivering the COVID-19 vaccine directly to communities most in need. (AP Photo/Mark Lennihan)
US recommends ‘pause’ for J&J vaccine over clot reports

WASHINGTON — The U.S. is recommending a “pause” in using the single-dose… Continue reading

FILE-Team Canada’s Meaghan Mikkelson fights for control of the puck with U.S.A.’s Hayley Scamurra during third period of Women’s Rivalry Series hockey action in Vancouver, Wednesday, February 5, 2020. Gina Kingsbury, Hockey Canada’s director of women’s national teams, hopes a Rivalry Series against the United States can happen this winter.THE CANADIAN PRESS/AP/Michael Dwyer
Canadian women’s hockey team to open selection camp in Nova Scotia

Six goaltenders, 15 defenders and 26 forwards will vie for spots on Canada’s 23-player roster

Most Read