Crimes of Dishonesty I: False Pretences In the Criminal Code

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Crimes of Dishonesty I False Pretences In the Criminal Code

A Winnipeg property developer is charged with taking over $425,000 for work he allegedly never did . He was charged with the crime of ‘false pretences’, which can be found at section 362 of the Criminal Code. The developer allegedly used white-out on the job site locations on invoices, and changes them to different addresses where no work was performed. This allegedly took place between 2009 and 2015.

The crime of ‘false pretences’ is not one most people have heard of. It is committed in a number of different situations. A false pretence is a representation of a matter of fact, present or past, made by words or otherwise, known by the person who makes it to be false. The representation must be made with fraudulent intent to induce the person to whom it is made to ask on it (s.361(1). But, to understand it, we need to understand the offence of ‘theft’ which is found in section 322 of the Criminal Code.

Theft happens when someone fraudulently and ‘without colour of right’ takes, or converts to his use or to the use of another person anything, whether animate or inanimate, with intent. The “intent” necessary for theft to be committed is set out in the subsections to 322, they are: (a) to deprive, temporarily or absolutely, the owner of it, or a person who has a special property or interest in it, of the thing or of his property or interest in it; (b) to pledge it or deposit it as security; (c) to part with it under a condition with respect to its return that the person who parts with it may be unable to perform; or, (d) to deal with it in such a manner that it cannot be restored in the condition in which it was at the time it was taken or converted.

The first occasion, in 362(1)(a), in which the offence of ‘false pretences’ may be committed is where someone, by a false pretence or statement obtains anything in respect of which the offence of theft may be committed. It applies whether the thing is obtained directly or by way of a contract. It applied when someone causes that thing to be delivered to another person. An example of this can be found in the case of a man who was convicted of obtaining false pretences under this in 2011 . The man paid people by cheques written on a bank account which had insufficient funds in it.

362(1)(b) provides that the offence of false pretences is committed when someone obtains credit by a false pretence or by fraud. Three people were charged under this section when they obtained $333,795 as a business loan which they allegedly used for personal purposes rather than their business.

[1] https://www.cbc.ca/news/canada/manitoba/jeff-rabb-winpark-dorchester-charged-misusing-funds-1.5308735

[2] https://www.canlii.org/en/nl/nlsctd/doc/2011/2011nltd17/2011nltd17.html

[3] https://www.newswire.ca/news-releases/three-gta-residents-charged-in-333k-canada-small-business-loan-fraud-695015471.html

362(1)(c) covers when a person knowingly makes, or causes to be made, a false statement in writing, intending that it should be relied upon with respect to that person’s financial condition or ability to pay. This may be committed directly or indirectly. The purpose of the statement must be for the purpose of procuring, for themselves or another person that the person is interested in, any of the following: (i) the delivery of personal property, (ii) the payment of money, (iii) the making of a loan, (iv) the grant or extension of credit, (v) the discount of an account receivable, or (vi) the making, accepting, discounting or endorsing of a bill of exchange, cheque, draft or promissory note.

The offence may also be committed, under s.362(1)(d) when a person procures anything in the list in 362(1)(c) when they knows that a false statement has been made about the person’s financial condition or means or ability to pay for anything mentioned, on the strength of that statement.

Altogether, the offence of ‘false pretences’ may be committed in a number of ways, which we’ve seen above. People are charged with this offence for relatively small amounts, even under $5,000, as happened in Champion (although the overall thefts were much more). People are also charged with false pretences for much larger schemes, such as two Mississauga residents who were charged under s.362 for allegedly fraudulently borrowing over $1,100,000 on false pretences.

The offence is often coupled with others, as is the case in the examples we give above. The law recognizes the number of situations which can lead to a charge of false pretences. As a result, in some circumstances, where the value of what is obtained does not exceed $5,000 the maximum sentence is 2 years. In that case the offence can also be prosecuted on summary conviction (s.362(2)). Where the offence is charged under 362(1)(b), 362(1)(c), or 362(1)(d), the maximum sentence is 10 years (s.362(3)), although these can now also be prosecuted as a summary conviction. The same penalties apply when someone obtains a benefit under a ‘testamentary instrument’ (e.g. a will) over $5,000 (s.362(2)(a)).

To note, there’s an automatic presumption that anything obtained by means of a cheque drawn on an account with insufficient funds is obtained by false pretences (s.362(4)). However, the presumption can be rebutted. It can be rebutted by satisfying a court, by evidence, that when the accused issues the cheque, they reasonably believed it would be honored if presented for payment within a reasonable time after it was issued.

False pretences is not an offence everybody knows about. There are lots of ways it can be committed. There are many different sentences depending on the section you’re charge dunder and the circumstances of your offence. There are defences too, but many aspects of the offence and defences are quite technical. The offences include elements like the ‘colour of right’, which are ‘terms of art’. It’s crucial to have knowledgable counsel who has expertise and experience in the offence you’re charged with.

From the Horse’s Mouth

Here are the Criminal Code provisions we talk about above:

Theft

322 (1) Every one commits theft who fraudulently and without colour of right takes, or fraudulently and without colour of right converts to his use or to the use of another person, anything, whether animate or inanimate, with intent

(a) to deprive, temporarily or absolutely, the owner of it, or a person who has a special property or interest in it, of the thing or of his property or interest in it;

(b) to pledge it or deposit it as security;

(c) to part with it under a condition with respect to its return that the person who parts with it may be unable to perform; or

(d) to deal with it in such a manner that it cannot be restored in the condition in which it was at the time it was taken or converted.

Time when theft completed

(2) A person commits theft when, with intent to steal anything, he moves it or causes it to move or to be moved, or begins to cause it to become movable.

Secrecy

(3) A taking or conversion of anything may be fraudulent notwithstanding that it is effected without secrecy or attempt at concealment.

Purpose of taking

(4) For the purposes of this Act, the question whether anything that is converted is taken for the purpose of conversion, or whether it is, at the time it is converted, in the lawful possession of the person who converts it is not material.

Wild living creature

(5) For the purposes of this section, a person who has a wild living creature in captivity shall be deemed to have a special property or interest in it while it is in captivity and after it has escaped from captivity.

False Pretences

False pretence

361 (1) A false pretence is a representation of a matter of fact either present or past, made by words or otherwise, that is known by the person who makes it to be false and that is made with a fraudulent intent to induce the person to whom it is made to act on it.

Exaggeration

(2) Exaggerated commendation or depreciation of the quality of anything is not a false pretence unless it is carried to such an extent that it amounts to a fraudulent misrepresentation of fact.

Question of fact

(3) For the purposes of subsection (2), it is a question of fact whether commendation or depreciation amounts to a fraudulent misrepresentation of fact.

R.S., c. C-34, s. 319

False pretence or false statement

362 (1) Every one commits an offence who

(a) by a false pretence, whether directly or through the medium of a contract obtained by a false pretence, obtains anything in respect of which the offence of theft may be committed or causes it to be delivered to another person;

(b) obtains credit by a false pretence or by fraud;

(c) knowingly makes or causes to be made, directly or indirectly, a false statement in writing with intent that it should be relied on, with respect to the financial condition or means or ability to pay of himself or herself or any person or organization that he or she is interested in or that he or she acts for, for the purpose of procuring, in any form whatever, whether for his or her benefit or the benefit of that person or organization,

(i) the delivery of personal property,

(ii) the payment of money,

(iii) the making of a loan,

(iv) the grant or extension of credit,

(v) the discount of an account receivable, or

(vi) the making, accepting, discounting or endorsing of a bill of exchange, cheque, draft or promissory note; or

(d) knowing that a false statement in writing has been made with respect to the financial condition or means or ability to pay of himself or herself or another person or organization that he or she is interested in or that he or she acts for, procures on the faith of that statement, whether for his or her benefit or for the benefit of that person or organization, anything mentioned in subparagraphs (c)(i) to (vi).

Punishment

(2) Every one who commits an offence under paragraph (1)(a)

(a) if the property obtained is a testamentary instrument or the value of what is obtained is more than $5,000, is guilty of

(i) an indictable offence and liable to imprisonment for a term of not more than 10 years,

or

(ii) an offence punishable on summary conviction; or

(b) if the value of what is obtained is not more than $5,000, 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,

Idem

(3) Every person who commits an offence under paragraph (1)‍(b), (c) or (d) is guilty of

(a) an indictable offence and liable to imprisonment for a term of not more than 10 years; or

(b) an offence punishable on summary conviction.

Presumption from cheque issued without funds

(4) Where, in proceedings under paragraph (1)(a), it is shown that anything was obtained by the accused by means of a cheque that, when presented for payment within a reasonable time, was dishonoured on the ground that no funds or insufficient funds were on deposit to the credit of the accused in the bank or other institution on which the cheque was drawn, it shall be presumed to have been obtained by a false pretence, unless the court is satisfied by evidence that when the accused issued the cheque he believed on reasonable grounds that it would be honoured if presented for payment within a reasonable time after it was issued.

Definition of cheque

(5) In this section, cheque includes, in addition to its ordinary meaning, a bill of exchange drawn on any institution that makes it a business practice to honour bills of exchange or any particular kind thereof drawn on it by depositors.

R.S., 1985, c. C-46, s. 362 R.S., 1985, c. 27 (1st Supp.), s. 52 1994, c. 44, s. 22 2003, c. 21, s. 5

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