Breanna Needham 2024-10-21 Breanna Needham 2024-10-21

Protecting Yourself from Scams and Other Shady Schemes

Protect yourself from scams and other shady schemes. Remember: If it sounds too good to be true, it likely is.

Focus on Fraud Prevention: Part 2

In Canada, government agencies have again been sounding the alarm, warning that various financial scams and fraudulent schemes are on the rise. According to information shared by the Royal Canadian Mounted Police (RCMP), fraud-related schemes cost Canadians a shocking $567 million dollars in 2023 alone, a figure which has increased $37 million dollars from 2022, and $187 million dollars since 2021. Unfortunately, the perpetrators of these schemes often target the most vulnerable Canadians, elders and those with disabilities, and are intent on separating them from their hard-earned savings.

Types of Scams

There are a number of scams that are routinely used by fraudsters, including Ponzi schemes and other ‘investment-related’ scams where the rate of return on the initial investment is promised to be significantly higher than investment opportunities offered by banks or other legitimate institutions. This purported high rate of return is usually coupled with the promise of a very short timeline for the return on the investment, often in an emerging area with little or low regulation, such as cryptocurrency.

Social Media and Schemes

Social media and the proliferation of instant communication with potential targets has provided scammers with new outlets through which to target and access potential victims. Along with email traffic, individuals now receive text messages, direct messages (DMs), and targeted posts from individuals engaged in fraudulent conduct, all with the singular goal of parting Canadians from their funds.

In addition to providing a multitude of targets, misinformation on social media has also increased, with a variety of “get rich quick” schemes posing as financial information for the unwitting. For example, in late August of 2024, American media outlets reported on the viral “free money” trend on TikTok and X (formerly known as Twitter) which creators called the “Chase Bank Glitch.” The social media trend instructed viewers to commit a form of cheque fraud by depositing a fraudulent cheque for a large sum of money and then withdrawing the cash from their bank account before the cheque could clear. A technical issue with Chase Bank’s computer systems allowed bank account holders to withdraw the balance deposited from the fraudulent cheque immediately after deposit, rather than requiring a waiting period. The trend caught on quickly, with a large number of individuals posting about their newly obtained “free money.”

Along with offering users “how to guides” for committing various schemes under the guise of financial information, social media platforms are replete with videos and memes glamourizing the life of individuals who engage in this form of unlawful conduct. A popular video template on TikTok, for example, pans through short clips of luxurious vehicles, jewelry, and exotic destinations with captivating background music, all while informing the viewer that these images could form part of their lives, too, after they “started committing tax fraud.”

Protecting Yourself and Your Finances

We live in a world where scams, shenanigans, and other forms of fraud have, unfortunately, become commonplace. The real question is: Can anything be done to protect individuals and their finances from this misconduct? The answer is yes.

The top three most reported types of fraud are identity fraud, service fraud, and phishing scams. Each of these scams are designed to lure the victim into disclosing confidential and sensitive information about themselves, such as their social insurance number, electronic passwords, PINs, or bank account numbers. It is important to remain vigilant about protecting this information. The simplest way to protect yourself is to avoid sharing these details, especially over the phone or via text message to an individual who claims to represent a financial institution or bank. When in doubt, hang up and call the number on the back of your banking card. In some cases, a quick trip into a local bank branch can save thousands of dollars and countless headaches.

Conclusion

If you are ever approached by an individual inviting you to invest in a “funds” or “opportunity” with the promise of large or quick returns, skepticism is the best course of action. Even if the individual has what they claim are legitimate documents for the investment opportunity, a promissory note or other document may not be the protection it appears to be if things go wrong and the money is gone. In situations like this, consult a lawyer to review any contracts or documents before you sign them and before you provide any funds.

At the end of the day, fraudsters will always find fresh and creative ways to try to lure new targets into their schemes. The key to avoid becoming a victim is to protect your personal information and seek out independent legal advice before committing to any type of agreement.

Remember: If a financial opportunity, investment, or program sounds too good to be true, it likely is.

If you have questions about fraud, fraud prevention, fraud investigations, or civil fraud litigation, contact Luceo Legal for more information.

This article provides general information only about legal issues and developments; it is not intended to provide specific legal advice.

Breanna Needham 2024-05-14 Breanna Needham 2024-05-14

Luceo Legal Launch Party Photos

Thank you to everyone who came out to light it up at the Luceo Legal launch party! Photos by: Chloë Ellingson

Thank you to everyone who came out to light it up at the Luceo Legal launch party!

Photos by: Chloë Ellingson (@chloeellingson)

Breanna Needham 2024-05-08 Breanna Needham 2024-05-08

So, You’ve Been Served With a Statement of Claim. Now What?

If you have been provided with a Statement of Claim with your name or the name of your business on the first page, you need to address it as soon as possible. Once you or your business have been named in a Statement of Claim and served (provided) with a copy, the clock starts ticking on your time to deliver a response.

Learn About Litigation: Part 1

What is a Statement of Claim?

A Statement of Claim is a type of originating process in Ontario. It is used to start a civil lawsuit in the Ontario Superior Court of Justice (except in Small Claims Court, where a similar document, called a “Plaintiff’s Claim,” is used).

A Statement of Claim is one of the most important parts of a lawsuit because it sets the parameters for a proceeding. In the Statement of Claim, the Plaintiff outlines the claim and the relief that the court is being asked to provide, along with the material facts that the Plaintiff relies on to support the causes of action (legal claims) alleged, as well as the Plaintiff’s claim for damages (money) or other relief sought.

What Should You Do if You’ve Been Served with a Statement of Claim?

If you have been served with a Statement of Claim, the first thing you should do is contact a lawyer as soon as possible.

The Rules of Civil Procedure, RRO 1990, Reg 1994, which is a piece of legislation that governs the rules for most civil court proceedings in Ontario, include timelines for the steps that take place in litigation. One of these steps is the timing for delivering a response to a Statement of Claim, which is called a Statement of Defence.

A Statement of Claim in Ontario will include the following language on the first (or second) page:

IF YOU WISH TO DEFEND THIS PROCEEDING, you or an Ontario lawyer acting for you must prepare a statement of defence in Form 18A prescribed by the Rules of Civil Procedure, serve it on the plaintiff’s lawyer, or, where the plaintiff does not have a lawyer, serve it on the plaintiff and file it, with proof of service in this court office, WITHIN TWENTY DAYS after this statement of claim is served on you, if you are served in Ontario.

While the language on the form for a Statement of Claim includes a twenty-day timeline for someone who is served in Ontario, you should seek the advice of a lawyer as soon as possible, and well before the twenty-day time-period expires.

What Happens if I Ignore a Statement of Claim?

It is important to speak to a lawyer and respond to a Statement of Claim as soon as possible after you are served.

A Statement of Claim does not go away if you ignore it. If you fail to respond to a Statement of Claim, you may be noted in default, which can result in the Plaintiff obtaining a default judgment against you for its claim for damages and other relief, all without your participation in the lawsuit.

The risk of ignoring a Statement of Claim is described in the Statement of Claim form in Ontario, which includes the following language on the first (or) second page:

IF YOU FAIL TO DEFEND THIS PROCEEDING, JUDGMENT MAY BE GIVEN AGAINST YOU IN YOUR ABSENCE AND WITHOUT FURTHER NOTICE TO YOU. IF YOU WISH TO DEFEND THIS PROCEEDING BUT ARE UNABLE TO PAY LEGAL FEES, LEGAL AID MAY BE AVAILABLE TO YOU BY CONTACTING A LOCAL LEGAL AID OFFICE.

A lawyer can assist you with responding to a Statement of Claim with defence pleadings (documents), such as a Notice of Intent to Defend, if appropriate, and a Statement of Defence. These are formal court materials that have to be completed with particular requirements and in compliance with the Rules of Civil Procedure. You should not try to prepare these documents on your own, as they require a variety of legal considerations for their content and are unlikely to be appropriately addressed and adequately completed without a lawyer.

Conclusion

If you have been served with a Statement of Claim, seek legal advice and speak to a lawyer as soon as possible.

If you have questions about business disputes or commercial litigation, contact info@luceo.legal for more information and to discuss your options.

This article provides general information only about legal issues and developments; it is not intended to provide specific legal advice.

Breanna Needham 2024-04-30 Breanna Needham 2024-04-30

The Cost of Occupational Fraud: From the 2024 ACFE Report

Focus on Fraud Prevention: Part 1

Businesses and organizations worldwide lose an estimated five percent of their revenue to occupational fraud each year, for an estimated total of $5 trillion lost globally on an annual basis, according to the recently published Occupational Fraud 2024: A Report to the Nations. The Report is a comprehensive global study by The Association of Certified Fraud Examiners (ACFE) that addresses the real cost of fraudulent schemes for businesses.

An important part of dealing with fraud in any business is learning how fraud is committed and detected. The Report reviews the typical perpetrators of occupational fraud, including how occupational fraud is committed and by whom, as well as how businesses can work to detect, identify, and prevent occupational fraud. To create the Report, the ACFE reviewed 1,921 cases from 138 countries and territories, with a total loss of $3.1 billion. Of the cases reviewed, the average loss per case was $1,662,000.00, and 22% of cases had losses that exceeded $1 million.

The Report provides key information for businesses to consider in reviewing their anti-fraud procedures and programs, as well as considerations for fraud prevention practices and protocols.

How is Occupational Fraud Committed?

There are three key categories of occupational fraud in the cases reviewed in the Report:

Asset Misappropriation: When members of an organization (for example, employees) steal or misuse business resources. Asset misappropriation schemes include (but are not limited to) conduct such as billing schemes (22% of cases, with a median loss of $100,000.00) and theft of non-cash assets (22% of cases). This is “by far” the largest category of occupational fraud, accounting for 89% of cases.
Corruption: This category includes misconduct such as bribery, conflict of interest, and extortion. Corruption was present in 48% of cases reviewed for the Report.
Financial Statement Fraud: This includes intentionally implemented material misstatements or omissions in an organization’s financial statements. While this type of conduct is less common, it has the highest cost, with an estimated median loss of $766,000.00.

It’s important to note that the fraudulent schemes are not always limited to one category, and there is often overlap with at least one other type of occupational fraud. For example, in the Report, the ACFE notes that only 1% of cases involved solely financial statement fraud, indicating that a perpetrator of financial statement fraud has likely engaged in other types of schemes as well.

Who are the Fraudsters?

Most perpetrators of occupational fraud are employees (37%) or managers (41%), with those with the longest tenure creating the greatest losses, and schemes involving multiple perpetrators causing increasingly more loss. However, despite there being less perpetrators at higher levels, fraudulent schemes by owners and executives come with the highest cost for businesses.

Almost half of all of the cases reviewed for the Report were schemes committed by employees who had a tenure at the organization between one and five years. The departments with the greatest risk of occupational fraud schemes include operations, accounting, sales, customer service, executive/upper management, purchasing, administrative support, and finance.

How Important is Early Fraud Detection?

The ACFE found that a typical fraud case continues for a year prior to being detected, despite the fact that 89% of those committing fraud displayed at least one typical red flag in their conduct, with multiple red flags present in over half of all cases.

The longer a perpetrator is able to continue to commit fraud for, the higher the cost to the organization. For example, the Report notes that billing, cheque, and payment tampering, expense reimbursement schemes, financial statement fraud, payroll, and skimming schemes typically lasted for 18 months before being detected.

The Report includes key considerations for businesses in implementing fraud detection practices, with a focus on the importance of whistleblower programs and other fraud reporting mechanisms, Reporting programs resulted in fraud detection in almost half of the cases reviewed.

How does Fraud Prevention Make a Difference?

More than half of the occupational fraud cases reviewed occurred due to a lack of internal controls or an insufficiency (override) of the existing internal controls. The importance of fraud prevention cannot be overstated, particularly as 57% of organizations were unable to recover any of the loss; only 13% of the cases reviewed included a full recovery.

Most perpetrators take steps to conceal their misconduct and any evidence of wrongdoing. Only 11% of cases reviewed by the ACFE for the Report did not include concealment. Organizations without a fraud awareness training program lost nearly twice as much, as compared to those organizations with a training and awareness program.

The ACFE found that small businesses (with less than 100 employees) were less likely to have fraud prevention practices in place, leaving them far more vulnerable than their larger counterparts.

Conclusion

Fraud is a regrettable reality for almost all businesses, whether it is discovered or remains undetected. Fraud prevention and detection is imperative for businesses of all sizes, from startups to established organizations, and businesses should regularly review their anti-fraud practices and protocols to ensure that they continue to remain efficient and effective.

If you have questions about occupational fraud, fraud prevention, fraud investigations, civil fraud litigation, are in need of a set of policies and procedures, or are looking for team training to help bolster a culture of compliance, contact Luceo Legal for more information.

This article provides general information only about legal issues and developments; it is not intended to provide specific legal advice.

Breanna Needham 2024-04-09 Breanna Needham 2024-04-09

Starting Off Right for Startups

Whether just at inception, or well into the growth and establishment phase, startups have specific legal needs that often differ from those of other businesses. Managing risk and engaging legal counsel before potential problems become real issues is an important part of ensuring the long-term success of any startup….

Start Right for Startups: Part 1

The Risks

Startups are special – not only to their founders, but also when it comes to the challenges they face. Many startups are focused on growth potential and engagement, with the more technical and legal items on the back burner. However, without access to legal expertise from inception, many startups risk later challenges which can be detrimental, including contract disputes, intellectual property loss, employment-related problems, compliance issues, and more.

Many large law firms aren’t able to meet the specific needs of startups, whether due to cost, inefficiency, or incongruency on pace. Startup founders often end up in a position where they feel that they have no choice but to press on, leaving legal issues to be dealt with later or as they arise. Many founders end up in situations where they are relying on template legal documents, agreeing to contracts without independent legal advice, and guessing on sensitive issues that could lead to later exposure – both for the startup, and in some cases, the founder personally.

Preventing Problems

Startups are more than just small businesses; their innovation sets them apart. While large institutions and organizations often have policies and procedures in place to address common concerns (like conflicts of interest and confidentiality), as well as in-house counsel to review agreements and advise on the legal implications of business decisions, many startups do not have the same protective measures or access to advice in place. A comprehensive approach to legal advice can often seem inaccessible, even if a founder does have the time to focus on problem prevention and risk management as a priority.

The reality is that most startups face different challenges than other businesses which are larger or have more traditional structures. It’s important for founders to know that their hard work won’t later go to waste or be put at risk because of an unforeseen legal issue, or a problem that was present but not addressed appropriately due to a lack of access to advice. Virtual in-house legal counsel can help address the gaps that startups face as they work to grow.

Why Have Virtual In-House Counsel?

While a traditional legal retainer with a large firm doesn’t make sense for most startups and small businesses, access to virtual in-house legal counsel can help bridge the gap and manage risk. The benefits include access to a wide range of legal advice for businesses without their own dedicated in-house counsel (or those that have a full-time in-house counsel, but need assistance on specific requests), such as:

· Providing research, analysis, and advice on potential legal issues;

· Representing companies with outside disputes (litigation, arbitration, mediation, and contentious negotiations);

· Reviewing contracts and agreements; and,

· Advising on privacy, compliance, or other related business and legal issues.

Conclusion

Access to legal advice can make a difference for startups at all stages when it comes to managing risk, addressing disputes, and other important issues that many startups face. Building a strong foundation for a startup requires not only innovation, but effective implementation to help ensure a successful future. With the right assistance in place, startups can flourish, and founders can have peace of mind with the knowledge that potential issues are being addressed before they become real problems.

If you have questions about risk management for startups and small businesses, or the Start Right for Start Ups program offered by Luceo Legal, contact info@luceo.legal for more information.

G B 2024-03-31 G B 2024-03-31

Breanna Needham and Luceo Legal Featured in the Globe and Mail

Breanna Needham and Luceo Legal are featured in Robyn Doolittle’s Legal Moves article in the Globe and Mail, where Breanna shares details about the firm’s approach to client service…

Breanna Needham and Luceo Legal are featured in Robyn Doolittle’s Legal Moves article in the Globe and Mail, where Breanna shares details about the firm’s approach to client service:

“The goal is to deliver tailored solutions for clients to tackle the challenges they face, not only when they’re dealing with litigation, but also to address managing risk and preventing problems before they happen.”

The full Legal Moves article is available on the Globe and Mail’s website.

To learn more about Luceo Legal’s approach to litigation, investigations, and risk management, reach out to Breanna at info@luceo.legal for more information.

G B 2024-03-27 G B 2024-03-27

Doing Business in the Age of the Side-Hustle

Focus on Risk Management: Part 1

Whether you’re a fan or not: side-hustle culture is here to stay. The prevalence of potential conflicts of interest and problems relating to protecting confidential information has been growing with the rising popularity of this new approach to a small business on the side. Clearly defining the parameters for both businesses and their employees is the key to successfully managing risk in the side-hustle era.

The Risks

It’s not an uncommon occurrence, and particularly with the rising cost of living, more and more Canadians are starting side-hustles. The proliferation of this new approach to starting a small business is popular way to both make ends meet and strive for success that can have many benefits, but also has potential downsides, too.

In recent news, the Government of Canada faced challenges on this front with the widely reported discovery that the CEO of Dalian Enterprises, which received approximately $7.9 million for its work on the ArriveCan app, was also an employee of the Department of National Defence.[1] An investigation is currently ongoing. This is not the first time (and will not be the last) that an employee has been caught in what appears to be a conflict because of a side-hustle.

The risks and potential consequences are even greater if an employee in a conflict of interest because of a side-hustle is also a found to be a fiduciary at a primary employer. For example, in Canadian National Railway Company v Holmes et al,[2] Canadian National Railway Company’s (“CN”) CEO received an anonymous letter advising that an employee, Chris Holmes, was causing CN to enter into contracts with his companies. In his role with CN, Mr. Holmes had the authority to hire contractors and approve invoices. While still employed with CN, Mr. Holmes created several corporations, which he then caused CN to hire using the authority that he had in his employment role. He did not disclose to CN that he was involved with the companies. CN commenced litigation against Mr. Holmes, who (along with his companies) was found to be liable to CN for breach of fiduciary duty, breach of contract, breach of confidence, and deceit.[3] Mr. Holmes’ spouse, who was a director of the companies, was also found liable for conspiracy.[4] The Court noted, “It is no answer for Holmes to say that CN suffered no damage because it would have had to pay more elsewhere for the work Holmes and his companies performed...”[5]

Preventing Problems

On the business side, while large institutions and organizations often have policies and procedures to address conflicts of interest and confidentiality (among other considerations), many start-ups, as well as small and medium-sized businesses, do not have the same protective measures in place. A comprehensive approach to prevention, including policies, procedures, and team training, can help to both prevent problems from arising and create parameters for addressing issues when they do occur.

From an employee perspective, it’s important to know that the side-hustle that an owner is putting their hard work and limited free time into is not only viable, but also not potentially put at risk through a conflict of interest or other issue which may arise with their primary employer. A review of the side-hustle’s scope and procedures as they relate to the owner’s primary employment can help ensure a safer future for the small business.

Why Have Policies and Procedures?

While an employee manual or code of conduct might not always be the most exciting topic, they are important documents that every business, no matter how large or small, should have. When tailored for a business’ specific needs, these policies, procedures, and best practices help to achieve one or more of the following goals:

· managing potential liabilities and exposure;

· preventing potential problems, such as reputational risk and civil claims;

· establishing a culture of transparency and compliance;

· improving compliance practices by identifying and understanding potential misconduct;

· setting expectations for employees, contractors, business units, and teams; and,

· establishing processes and procedures to avoid common pitfalls.

Conclusion

Policies and procedures to address side-hustles, potential conflicts of interest, preservation of confidentiality, protection of confidential information, and other important business considerations can help mitigate potential risks and are essential tools for an effective approach to risk management. They provide businesses of all sizes with peace of mind to address potential issues before they become real problems. With the right roadmap, a bespoke set of policies and procedures create a foundation for the future.

If you have questions about side-hustle culture, are in need of a set of policies and procedures, or are looking for team training to help bolster a culture of compliance, contact Luceo Legal for more information on the best way to manage and reduce risk.

[1] CTV News, DND suspends contracts with ArriveCan contractor after learning CEO is a DND employee, February 28, 2024, available at: https://www.ctvnews.ca/politics/dnd-suspends-contracts-with-arrivecan-contractor-after-learning-ceo-is-a-dnd-employee-1.6788617 .

[2] Canadian National Railway Company v Holmes et al, 2022 ONSC 1682.

[3] Canadian National Railway Company v Holmes et al, 2022 ONSC 1682 at para 11.

[4] Ms. Flynn’s attempt to appeal the decision was dismissed by the Ontario Court of Appeal: Canadian National Railway Company v Holmes, 2023 ONCA 800.

[5] Canadian National Railway Company v Holmes et al, 2022 ONSC 1682 at para 12.

G B 2024-03-21 G B 2024-03-21

Breanna Needham Featured on the Dear Beth Podcast

Breanna Needham, the founder of Luceo Legal, contributed to the Dear Beth…A Women in Law Podcast on the topic of the next frontier for improved equity, diversity, and belonging in the legal profession, including how to make the profession one that better represents the public it serves…

“There is a disconnect between talking the talk and actually walking the walk that needs to be addressed because continuing to just talk is not going to move the dial. It is my great hope that, as time goes on, and in the future, and for everybody who is joining the profession that we see this move away from the myth of the meritocracy by both implementing real, concrete measures to advance equity, diversity, and inclusion, and by addressing the importance of intersectionality.”

Dear Beth is “[a] podcast about what women in the legal profession experience. The hurdles they encounter, the challenges they fact, but also the heroic and inspiring ways they are shifting paradigms and dismantling the status quo.”

Episode 6 of Dear Beth, “Think (Much) Bigger)” includes reflections by Justice Hollins on why she advocates for greater awareness about mental health in the legal profession, and on what it means to think and dream big. Ashala Naidu also describes how she is creating a culture of wellness, inclusivity, and support. In the Letters segment, Dr. Judy Jaunzems-Fernuk, Well-being Coordinator in the College of Law at the University of Saskatchewan, addresses the importance and essential nature of self-care, mental health, and wellness for lawyers.