What Is the Difference When a Person Is Charged With Fraud Under $5,000 Versus When a Person Is Charged With Fraud Over $5,000?
A Fraud Over $5,000 Charge Prosecuted As An Indictable Offence Carries a Maximum Penalty of Fourteen (14) Years In Jail. A Fraud Under $5,000 Charge Prosecuted As a Summary Conviction Offence Carries a Maximum Penalty of Two (2) Years Less a Day In Jail or $5,000 Fine or Both.
Understanding the Charge of Fraud Including Potential Penalties and Available Defence Strategies
As a crime of dishonesty, fraud can have a long lasting impact upon the employment opportunities, the personal reputation, and even the psychological self-worth, of a convicted person; and accordingly, defending a fraud charge involves much more than just a desire to avoid criminal penalties.
The Criminal Code, R.S.C. 1985, c. C-46, categorizes a fraud charge as either fraud under $5,000 or fraud over $5,000 based upon the value of the resulting harm arising from the fraud. Specifically, the Criminal Code states:
380 (1) Every one who, by deceit, falsehood or other fraudulent means, whether or not it is a false pretence within the meaning of this Act, defrauds the public or any person, whether ascertained or not, of any property, money or valuable security or any service,
(a) is guilty of an indictable offence and liable to a term of imprisonment not exceeding fourteen years, where the subject-matter of the offence is a testamentary instrument or the value of the subject-matter of the offence exceeds five thousand dollars; or
(b) is guilty
(i) of an indictable offence and is liable to imprisonment for a term not exceeding two years, or
(ii) of an offence punishable on summary conviction,
where the value of the subject-matter of the offence does not exceed five thousand dollars.
Of course, as with all Criminal Code matters, an element of intent, known as mens rea, meaning "a guilty mind" must be proven; and accordingly for a conviction for fraud to arise, the prosecutor holds the burden of proving that the person charged with fraud, intended to commit fraud. Simply said, fraud happens by something other than an unintentional accident. With this said, there may be concerns for fraud where a deal simply went bad for reasons that were something other than fraudulent. For example, when a business person is negotiating with a customer and makes various promises and then fails to deliver upon those promises, such a situation may be fraudulent if the business person was without any genuine intent during the negotiations to deliver upon the promises; however, it is also possible that the promises were made without fraudulent intentions and that subsequently, the promises became unfulfilled for reasons other than a fraudulent intent. With this said, fraudulent intent can arise constructively where a person engages in irresponsible risks with the property or money of another person despite a belief that all will turn out satisfactorily. In the case of R. v. Leclair, 2020 ONCA 230, the Court of Appeal reiterated the criminal mind elements requiring proof within a fraud case where it was said:
1. subjective knowledge of the prohibited act, be it an act of deceit, a falsehood or some other fraudulent means; and
2. subjective knowledge that the prohibited act could have, as a consequence, the deprivation of another (which deprivation may consist in knowledge that the victim’s pecuniary interests are put at risk).
 As McLachlin J. wrote, at pp. 23-24, a person cannot escape criminal responsibility “because of a sanguine belief that all will come out right in the end. Many frauds are perpetrated by people…who sincerely believe that their act of placing other people’s property at risk will not ultimately result in actual loss to those persons.”
The potential penalty for fraud depends on the value of the money or property involved in the alleged fraud and whether the prosecutor chooses to proceed with the charge as an indictable offence proceeding or a summary conviction proceeding. As interestingly notable, if a fraud charge proceeds as an indictable offence, then only a lawyer may provide legal representation services on behalf of the accused person; however, if a fraud charge proceeds as a summary conviction offence, then either a lawyer or a paralegal may provide legal representation services.
For a fraud charge prosecuted as an indictable offence, a maximum fourteen (14) year term of imprisonment is expressly stated; however, for a fraud charge prosecuted as a summary conviction offence, the penalty is unstated; and accordingly, reference to the General Penalty, per section 787(1), as applicable to a summary conviction offence is necessary. Specifically, section 787(1) states:
787 (1) Unless otherwise provided by law, every person who is convicted of an offence punishable on summary conviction is liable to a fine of not more than $5,000 or to a term of imprisonment of not more than two years less a day, or to both.
As shown per section 787(1) above, the potential General Penalty for a fraud prosecuted as a summary conviction offence is a fine up to $5,000 or two years less a day imprisonment or both.
When determining a proper punishment following a conviction for fraud, a court reviews many factors; including, among other things, the prescribed aggravating factors are:
Sentencing — aggravating circumstances
380.1 (1) Without limiting the generality of section 718.2, where a court imposes a sentence for an offence referred to in section 380, 382, 382.1 or 400, it shall consider the following as aggravating circumstances:
(a) the magnitude, complexity, duration or degree of planning of the fraud committed was significant;
(b) the offence adversely affected, or had the potential to adversely affect, the stability of the Canadian economy or financial system or any financial market in Canada or investor confidence in such a financial market;
(c) the offence involved a large number of victims;
(c.1) the offence had a significant impact on the victims given their personal circumstances including their age, health and financial situation;
(d) in committing the offence, the offender took advantage of the high regard in which the offender was held in the community;
(e) the offender did not comply with a licensing requirement, or professional standard, that is normally applicable to the activity or conduct that forms the subject-matter of the offence; and
(f) the offender concealed or destroyed records related to the fraud or to the disbursement of the proceeds of the fraud.
In addition to the potential for a significant fine and imprisonment, a conviction for fraud may result in a criminal record that adversely affects future employment opportunities as well as travel privileges into the United States. Accordingly, a strategic defence against fraud allegations is worthy and warranted.
Fraud, as a crime of dishonesty, can carry a lifelong stigma upon conviction; and accordingly, strongly fighting a charge of fraud is often a well worthy effort deserving of professional legal representation.