On March 19, 2014, Toronto police arrested 3 York University employees in connection with an alleged fraudulent billing scheme. The alleged fraud is reported to have cost York University close to $2 million over a 7 year period. The University became aware of the matter through a whistleblower, and immediately engaged an external accounting firm to conduct a forensic audit, the results of which were provided to the police and led to the arrests. The charges have not yet been proven in court.  Fortunately, it appears that York University has been able to recover the amount at issue, although few details have been released regarding how the University was able to recover the funds. One report indicated that Fidelity Insurance played a role in the recovery.

Recovery of misappropriated funds can be a difficult undertaking. The funds have often been used or placed in locations that are difficult to trace. One proactive option for companies to consider is fidelity insurance. This type of insurance covers financial losses sustained from an employee’s dishonest or fraudulent acts, and can be carefully tailored to a company’s specific business. Fidelity insurance coverage will require certain conditions to be met, most significantly that the employee: (1) intended to cause the direct financial loss and (2) to either personally profit or cause a profit to be realized by another party at the expense of the employer. Despite these hurdles, fidelity insurance remains a useful option for mitigating against employee-related fraud.