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.

Just Posted

PHOTO: Rainbow Block Party at Red Deer’s West Park

The Trans and Non-Binary Aid Society hosted a Rainbow Block Party at… Continue reading

Blood donations needed in Central Alberta: Canadian Blood Services

357 donors are needed before Aug. 26 at the Red Deer clinic

WATCH: Annual Family Picnic at Central Spray and Play

Blue Grass Sod Farms Ltd. held the Annual Family Picnic at the… Continue reading

Photos: Smoky conditions in Red Deer

Red Deer and area is experiencing high risk air quality.See related: Red… Continue reading

Committee to decide how millions in Humboldt Broncos donations are split

SASKATOON — Lawyers for the families of some of those who died… Continue reading

Boy, 11, dies after being struck by payloader on southern Alberta ranch

BOW ISLAND, Alta. — A boy has died after an accident on… Continue reading

Liberals look at creating federal holiday to mark legacy of residential schools

OTTAWA — The federal Liberal government wants to establish a holiday to… Continue reading

Thousands of police officers expected at regimental funeral in Fredericton

FREDERICTON — Thousands of police officers and first responders from across the… Continue reading

B.C. declares state of emergency over wildfires

VICTORIA — The British Columbia government has declared a provincial state of… Continue reading

As service refusals make headlines, experts say businesses usually in the wrong

Two Canadian businesses that recently made headlines for refusing customers have learned… Continue reading

Irregular asylum claims increased in July after two months of decline

OTTAWA — The number of irregular border crossers in Canada went up… Continue reading

Most Read


Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month