Criminal Organization Fraud

• Author: Jonathan Shime/Ian Smith/Grace Hession David
• Pages: 179-203

179

Criminal

Organization

Fraud

9

I. Introduction ............................................. 180

II. Material Elements of Proof of a Criminal Organization Fraud ...... 180

A. “Three or More Persons”: Structure and Division

of Labour .......................................... 181

B. “Material Benefit to the Group or Individuals Constituting

the Group”: Sharing of the Profits ...................... 183

C. “One of the Main Purposes”: What If Some of the Business

Dealings of the Criminal Organization Are Legitimate? ..... 184

III. The Link Between the Actus Reus and the MensRea: Knowledge

of a Criminal Organization ................................. 186

IV. Objective Test: Enhancing the Ability of the Criminal Organization

to Commit a Crime ....................................... 191

V. Is It a Criminal Organization or “Just” a Conspiracy? ............ 192

VI. General Sentencing Principles for Criminal Organization Frauds ... 197

A. Consecutive Sentence for Criminal Organization

Conviction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198

B. The Issue of Parole .................................. 201

VII. Conclusion .............................................. 203

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180 Prosecuting and Defending Fraud Cases

I. Introduction

When fraud charges arise from the activities of an alleged criminal organization,

it is likely that the allegations behind the fraud are complex, the quantum is high,

and there are at least three oenders involved. A review of the cases discussed in

this chapter shows that if the people who are charged are “employed” by the entity

that forms the criminal organization, establishing proof of the criminal organiza-

tion becomes somewhat easier for the Crown. Street gangs are proving to be just

as capable of committing a complex and unique criminal organization fraud as the

most polished corporate fraudster. The proof for such a case, whether corporate or

gang related, may involve importing into a criminal prosecution certain business law

concepts such as the doctrine of directing and controlling mind and, in a very limited

sense, the piercing of the corporate veil. Once allegations of a criminal organization

surface, the prosecution and the defence become extremely complex. The purpose of

this chapter is to outline the nature of criminal organization frauds and to highlight

the special issues that are connected with such cases.

II. Material Elements of Proof of a Criminal

Organization Fraud

The definition of a “criminal organization” in the Criminal Code reads as follows:

Definitions

467.1(1) …

“criminal organization” means a group, however organized, that

(a) is composed of three or more persons in or outside Canada; and

(b) has as one of its main purposes or main activities the facilitation or commis-

sion of one or more serious oences that, if committed, would likely result in the

direct or indirect receipt of a material benefit, including a financial benefit, by the

group or by any of the persons who constitute the group.

It does not include a group of persons that forms randomly for the immediate com-

mission of a single oence.

In the seminal case of R v Lindsay,1 FuerstJ summarized the material elements of

proof of a criminal organization as follows:

• The Crown must prove beyond a reasonable doubt that the core of the organiz-

ation is a group of three or more persons (paragraph (a) of the definition “crim-

inal organization” in section 467.1(1)).

1 2005 CanLII 24240, [2005] OTC 583 (Sup Ct J), a’d 2009 ONCA 532, leave to appeal to the

SCC refused, [2009] SCCA No 540 (QL).

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