The most widely read magazine for Canadian lawyers
Issue link: https://digital.canadianlawyermag.com/i/50832
the two could take several years to complete. As leader of the forensic account- ing and fraud investigations practice at Farber Financial Group, Jonathan Cooperman has been involved in many Ponzi scheme cases. He says his main goal is to assist lawyers with effectively helping victims of the schemes recover their money. "Victims of Ponzi schemes want to know two things: what hap- pened to their money and how can they get it back," says Cooperman. "But time is of the essence to recover that money." With the easy flow of money inter- nationally, cash moves very quickly. If you don't act fast then fraudsters can launder money or encumber those assets that were created by the fraud. He cites as an example one recent case he worked on wherein by the time the vic- tims organized themselves and agreed on a legal process, many of the assets and properties became encumbered by third parties. "While it's not impossible to get those encumbrances reversed, it slows down the process," he says. First and foremost, says Cooperman, "lawyers need to help co-ordinate the victim involvement, manage their expectations, and also make the victims understand they will need to pay for the services of that professional team for the initial recovery." Secondly, lawyers must recognize the complexities involved in tracking and recovering monies and ensure they have the right team of experts in place. Ideally, the lawyer heading the team will have a diverse background in busi- ness. The team of experts will include computer and digital forensic experts, forensic accounting experts, and those experienced in international tracing who preferably have solid connections in foreign jurisdictions, he says. "In one case we handled, we needed gam- bling experts," says Cooperman. "So the expert team is really important." He also notes that Ponzi scheme perpetrators often gain the confi- dence of investors through boasting the investment is through a trust fund at a major bank. But usually all they have at the bank is a personal account, www. C ANADIAN Law ye rmag.com NO VEMBER / DECEMBER 2010 53 ntitled-2 1 10/22/10 9:27:24 AM says Cooperman. He points to a recent study by the Association of Certified Fraud Examiners that found a typical organization loses five per cent of its annual revenue to fraud. Applied to the estimated 2009 gross world product, the figure translates to a potential global fraud loss of more than $2.9 trillion. As well, the organization found most frauds last a median time of 18 months before being detected, although many large Ponzi schemes have taken years to discover. Evidently recognizing that white-collar fraud is not going to wane — and perhaps also that the number of Ponzi schemes are expected to rise over the next decade — the federal gov- ernment has introduced bill C-21 that increases sentencing for such offences. But David Neave, a lawyer with Blake Cassels & Graydon LLP in Vancouver who worked as an RCMP officer inves- tigating Ponzis before becoming a law- yer, acknowledges the Criminal Code already has significant teeth. "On a seri- ous offence, sentencing has been his- torically light in Canada with respect to criminal fraud cases," he says. "I think now the courts are becoming more aware of the damages these frauds are causing" particularly in light of some of the well-known Ponzi schemes that have received much public attention, he says. Yet the police need more resources in order to be able to curb white-collar crime. "They need forensic accounting expertise right down to sophisticated computer systems to be able to trace people and money," he says. "You need well-educated and well-motivated police officers to investigate these properly." He adds he's pleased to see more class action lawsuits being initi- ated across Canada by law firms seek- ing restitution from Ponzi scheme per- petrators for the victims. "It's a good option to proceed civilly and recover something," he says. As well, it can enable lawyers to implement the roster of experts used in any related criminal prosecution. NEW PUBLICATION EXTRAORDINARY DAMAGES IN CANADIAN EMPLOYMENT LAW Natalie C. MacDonald Confused about the state of extraordinary damages after Keays v. Honda? You are not alone. Employment lawyer, writer, and commentator Natalie C. MacDonald is here to help with the first comprehensive analysis of this constantly evolving area of employment law. "This book will serve to assist the Bench, Bar and those 'in transition' for many years to come." The Honourable Mr. Justice Randall Scott Echlin Superior Court of Justice (Ontario) ORDER # 982303-68898 $230 Hardcover June 2010 approx. 600 pages 978-0-7798-2303-1 Shipping and handling are extra. Price subject to change without notice and subject to applicable taxes. AVAILABLE RISK-FREE FOR 30 DAYS Order online at www.carswell.com Call Toll-Free: 1-800-387-5164 In Toronto: 416-609-3800