In an unreported judgment Pallotta v. Cengarle, Court file CV-16-56337 released on February 27, 2020, Faieta J. found real estate lawyer Licio Cengarle vicariously liable for his clerk’s mortgage fraud scheme as well as for breach of trust. This case is a cautionary tale for professionals and employers about the need for internal controls.
Continue Reading Ignorance of Fraud is No Defence: Employer Vicariously Liable for Rogue Employee
A recent decision from the Ontario Superior Court demonstrates the overlap between civil and criminal findings, and how an employer can use a criminal verdict to recover additional damages in a civil claim. In Atlas
Continue Reading Employee’s Silence about Fraud Leads to $20 Million Civil Judgment for Employer
Recently Canadian singer Alanis Morissette became the latest well-publicized victim of fraud at the hands of one she employed and trusted: http://www.bbc.co.uk/news/amp/36316327. She joins a long list of celebrities who have suffered fraud at the hands of those employed to trust, amongst them the Beatles, Beyoncé, David Bowie, Billy Joel, Bob Dylan, Leonard Cohen, Elvis, the Rolling Stones.
Continue Reading Jagged Little Pill: What “You Oughta Know” Regarding Agency Fraud
Senior executives are sometimes indemnified against costs and expenses incurred as a result of legal proceedings that might be brought against such employees. Indemnification of this kind provides the executives with a level of security in which they can make necessary, often difficult decisions required in their roles without fear of being exposed to liability, should they become a target of legal proceedings. Absent specific and careful language, however, these indemnity clauses can leave employers vulnerable to paying costs and expenses associated with dismissing senior employees who are alleged to have committed fraud or other misconduct while employed.
Continue Reading How to attract strong candidates for executive positions while protecting against executive misconduct
Employees are often reluctant to report suspected misconduct because they fear retaliation from those that are engaged in the misconduct. This often prevents companies from discovering employee-related fraud at its early stages. While employer surveillance can go a long way to discovering wrongdoing in the workplace, employees are in a better position to know what their colleagues are doing and employers should have mechanisms in place to encourage their employees to report wrongdoing. In a previous post, we referenced the recent $2 million alleged fraud by several York University employees. The University eventually became aware of the situation through a whistleblower, but by that time, it had been ongoing for over 7 years. This illustrates the importance of having transparent whistleblower protection policies that provide employees with a safe route for registering issues or complaints of wrongdoing within the company. Such protection policies will encourage early reporting to the employer and facilitate earlier discovery of wrongdoing thereby reducing the potential losses incurred. In addition, employees will be less likely to make the complaint externally, for example, directly to the media, if they know that their complaint will be taken seriously by the employer and properly investigated.
Continue Reading Whistleblower protection: The importance of internal policies
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
Continue Reading Fidelity insurance remains a useful tool for employee-related fraud
Employee surveillance is an excellent and available method by which companies can protect against fraud. Monitoring of company-supplied hardware, software and access is perfectly legal and arguably compelling in Canada. Many still act under the mistaken belief that when it comes to personal communications such as e-mail and social media forums such as Facebook and Twitter, anything intended as private and personal is protected.
In truth, such privacy is very limited. The legal rubric underlying such an assumption is “reasonable expectation of privacy”, an expression borrowed for global adaptation from the 4th Amendment to the US Constitution, and protected in the Canadian Charter. Historically, personal communications and the privacy protections afforded them were sacrosanct. In addition to the medium of ‘snail mail’ being confidential in its own right—the sealed envelope—most jurisdictions honoured the British-based “Royal Mail Rule” premised upon the opening of personal mail as verboten.
Continue Reading Anti-fraud monitoring: The employer’s right of surveillance
In this age of technology, the risk of departing employee theft and fraud has increased substantially. Departing employees are no longer limited to removing printed confidential business information, but can abscond with business information, trade secrets, client contacts, and other similar material using, for example, an external disk drive or an external email account.
How can companies protect themselves from departing employee related theft and fraud?
Continue Reading Departing employee data fraud on the rise