Resources for Debtors
Offences under the Bankruptcy and Insolvency Act (BIA) and the Criminal Code

What are the offences?

The most common offences committed under the BIA and the Criminal Code are when the bankrupt:

  • Fraudulently disposes of property before or after the bankruptcy;
  • Makes false entries in a statement of account or hides, destroys or falsifies a document related to his/her property or affairs;
  • Obtains credit or any other good through false representations;
  • Conceals or fraudulently removes property, or conceals claims or debts;
  • Obtains credit or engages in trade without informing the people involved that he/she is bankrupt;Footnote 1
  • Refuses to respond fully and truthfully to questions posed during an examination held in accordance with the BIA.

See the Bankruptcy and Insolvency Act (sections 198 to 201) and the Criminal Code for a complete list of offences.

How are offences discovered?

Between April 1, 2011 and March 31, 2012, the OSB made 148 requests for investigations.

The Office of the Superintendent of Bankruptcy (OSB) identifies possible offences through its detection programs or through complaints received from creditors, trustees or the public. Learn more about the rights and responsibilities of creditors, trustees and the OSB

When the OSB has reason to believe that an offence has been committed, it sends the file to one of its three special investigation units. The investigation units work closely with the Royal Canadian Mounted Police (RCMP). In some cases, files are transferred to the RCMP.

Can I report offences?

If you suspect fraudulent activities in connection with a bankruptcy file, contact the OSB at the following toll-free number: 1-877-376-9902. Your comments or complaints will be registered and reviewed by a bankruptcy analyst, who will conduct any necessary verifications or inquiries.

What are the penalties?

Penalties are determined on a case-by-case basis. Below are summaries of some cases of abuse and fraud, as well as penalties imposed by the Court.

Consult the list of criminal/penal sentences rendered since 2010

Case summaries

Summaries are written for ease of understanding. Users wishing full information on the cases should consult the court decision. The court decision prevails.


Criminal/penal case
Court No.: Not available (2012)
OSB No.: 31-1375147

Background

A man earning about $2,000 a month was spending about $5,000 each time he went to a casino, which he did regularly. During his examination under oath with the Office of the Superintendent of Bankruptcy, he admitted that he obtained money to gamble by applying for credit in his sister’s name, sometimes without telling her, and lying about her income. Another way he obtained cash was by forging his sister’s signature on cheques and depositing them into her bank account. He would then withdraw funds against the deposits before the cheques bounced. When he filed for bankruptcy, he had debts totalling $174,000.

Summary of offences of the bankruptFootnote 2

  • Bankrupt, by deceit, falsehood or other fraudulent means, defrauded the public or any person, whether ascertained or not, of any property, money or valuable security or any service.
  • Bankrupt did not fully and truthfully answer questions at an examination held pursuant to the Act.

Court decision

The bankrupt pleaded guilty to the above-mentioned offences. He received a 12-month conditional sentence for each offence, to be served concurrently. Restitution Orders totalling $77,000, payable by the bankrupt to the trustee for the benefit of the estate, were also issued.

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Criminal/penal case
Court No.: 500-73-003584-113 (2012)
OSB No.: 41-1195802

Background

A man was employed by a bakery and earned less than $15,000 a year. When he already had debts of nearly $40,000, he incurred additional debts of $115,000 in one year. He obtained $250,000 in cash advances and various merchandise. He made debt payments in the amount of $260,000, of which $105,000 was refused. On one application for a credit-card, he declared annual income of $42,000. At the time of his bankruptcy, he had 18 credit card, two bank accounts and a line of credit; his debts totalled $156,000. He attributed his financial difficulties to his low income and overindebtedness.

Summary of offences of the bankruptFootnote 2

  • Bankrupt used deceit, falsehood or other fraudulent means to defraud various credit-card companies of different amounts of money.

Court decision

The bankrupt pleaded guilty to 20 counts of fraud. He was sentenced to two years less a day, to be served in the community, with the following conditions:

  • remain at home 24 hours a day for the first six months, and between 11:00 p.m. and 6:00 a.m. for the next 18 months less a day;
  • perform 200 hours of community service within 12 months;
  • not possess any credit cards.

In addition, three years of probation and prohibition against possessing any credit cards will begin at the end of the sentence.

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Criminal/penal case
Court No.: 09-20023 (2012)
OSB No.: 41-299316

Background

A man accumulated debts of more than $450,000 in nine months. He far exceeded his credit limits by obtaining cash advances and making payments using not sufficient funds (NSF) cheques. He obtained a loan for a motorcycle and a tent trailer; and purchased electronics, as well as clothing, furniture and jewellery, using credit he never repaid. Moreover, he spent $10,000 in Atlantic City and purchased airline tickets to a foreign country. At the time of his bankruptcy, he had 29 credit cards. He attributed his bankruptcy to the loss of his job and to gambling problems.

Summary of offences of the bankruptFootnote 2

  • Bankrupt used deceit, falsehood or other fraudulent means to defraud various credit-card companies of different amounts of money.

Court decision

The bankrupt pleaded guilty to 23 counts of fraud. The Court suspended his discharge and ordered him to repay $151,000 to the financial institutions. The bankrupt will also be on probation for two years.

Criminal/penal case
Court No.: 500-73-003491103 (2012)
OSB No.: 41-1150260

Background

Having already accumulated debts of $2,000, a man incurred additional debts prior to losing his job. He continued to take on debts, knowing that he could not pay his creditors. He applied to increase his credit limits, which he very quickly reached. Ten months later, he had about 30 credit cards or lines of credit, and debts exceeding $196,000. He declared bankruptcy, attributing his financial problems to the fact that he was unemployed.

Summary of offences of the bankruptFootnote 2

  • Bankrupt used deceit, falsehood or other fraudulent means to defraud various credit-card companies of different amounts of money.

Court decision

The bankrupt pleaded guilty to one count of fraud covering all of his offences. He was sentenced to 18 months, to be served in the community, with a number of conditions.

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Criminal/penal case
Court No.: Not available (2011)
OSB No.: 32-1011077

Background

An unemployed man obtained a total of $132,000, using credit cards and lines of credit, to supplement his family income while sending another $104,000 to support relatives overseas. He also gave money to his wife to go to the casino. He would make minimum payments to his creditors so that he could keep borrowing money. He filed for bankruptcy with debts of $244,000.

Summary of offences of the bankruptFootnote 3

  • Bankrupt disposed of property obtained on credit and not paid for.

Court decision

The bankrupt pleaded guilty to 16 counts of fraud. He was sentenced to a fine of $1,350 for each count, for a total of $21,600, with 12 months to pay.

Criminal/penal case
Court No.: Not available (2011)
OSB No.: 31-1021329

Background

A bankrupt had not provided her trustee with a statement of income and expenses, nor proof of her income, as required by the Bankruptcy and Insolvency Act. She had also written a cheque to the trustee that her account could not cover. Stating that she was in financial hardship, the bankrupt asked permission to cash a Registered Retirement Savings Plan (RRSP) that was exempt from seizure during her bankruptcy. The institution holding the RRSP asked for proof that she had been discharged from her bankruptcy or permission from her trustee. She had not been discharged from her bankruptcy nor did she have permission from her trustee, so she gave the institution a falsified letter of discharge, forging the signature of her trustee. The falsified letter included the bankrupt’s phone number as the contact number and she identified herself as a trustee when she received a call from the institution holding the RRSP. The institution contacted the trustee office, which confirmed that the bankrupt had not been discharged.

Summary of offences of the bankruptFootnote 3

  • Bankrupt used a forged document.

Court decision

The Court ordered a suspended sentence with one year of probation and 25 hours of community service. The bankrupt did not appear for her bankruptcy discharge hearing and remains undischarged.

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Criminal/penal case
Court No.: Not available (2011)
OSB No.: 31-1049678

Background

A first-time bankrupt had total debts of $631,000. He gambled at casinos regularly, but when he lost his job he could no longer make minimum payments on his credit cards. He admitted to selling goods that he bought on credit but did not pay for, and using the money to gamble. The goods included appliances, electronics, jewellery and alcohol.

Summary of offences of the bankruptFootnote 3

  • Bankrupt sold an item bought on credit but not paid for.

Court decision

The Court ordered a suspended sentence with 18 months of probation. The bankrupt is to serve the first six months of probation under house arrest, followed by a curfew for the next six months. During the last 12 months of probation, he is to complete 150 hours of community service. While on probation, the bankrupt is not allowed to have or apply for credit cards or lines of credit, and is required to attend counselling sessions for his gambling addiction. He is also required to pay $66,000 to the bankruptcy estate.

Criminal/penal case
Court No.: Not available (2011)
OSB No.: 31-1059856

Background

A first-time bankrupt had assets of $6,300 and debts totalling $403,600. He earned $2,350 a month. During his examination under oath with the Office of the Superintendent of Bankruptcy, he stated that over two to three months he withdrew over $200,000 through cash advances. He stated that he obtained this amount of credit through a friend, who would accompany him to banks and help him with his language barrier. The bankrupt claimed that he gave the money to the friend as an investment in an import/export business, but had nothing in writing to prove it. The bankrupt further claimed that when he returned from his honeymoon he discovered that his business partner had taken from him $30,000 worth of furniture bought on credit, but the bankrupt did not file a police report. The bankrupt stated that this friend has left the country. As part of his total debts, the bankrupt also owed $80,000 for wedding and honeymoon expenses and $63,000 for leasing two luxury cars.

Summary of offences of the bankruptFootnote 3

  • Bankrupt did not fully and truthfully answer questions at an examination held pursuant to the Act.

Court decision

The bankrupt pleaded guilty to the above-mentioned offence. Other charges were withdrawn on condition that all circumstances be considered in sentencing. He was sentenced to a 12-month conditional sentence, including six months under house arrest and 50 hours of community service. He must also pay $135,400 to the trustee, including at least $6,000 during the 12-month conditional sentence.

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Criminal/penal case
Court No.: 500-73-003342-090 (2011)
OSB No.: 41-1061087

Background

Having already accumulated $45,000 in debts, an individual on social insurance incurred additional debts of nearly $200,000 in less than one year. The woman made false statements on her credit-card applications by claiming that she worked for a clothing company. At the time of her bankruptcy, she had incurred debts with about 20 credit companies. She attributed her bankruptcy to her accumulated debts and lack of employment.

Summary of offences of the bankruptFootnote 2

  • Bankrupt used deceit, falsehood or other fraudulent means to defraud various credit-card companies of different amounts of money.

Court decision

The bankrupt was found guilty of 14 counts of fraud and sentenced to two years of probation, with the following conditions:

  • not possess any credit or debit cards that are not in her name;
  • not seek to obtain any credit cards;
  • repay $50,000.

Criminal/penal case
Court Nos.: 500-73-003422-108 and 500-73-003421-100 (2011)
OSB No.: 41-1107434

Background

An unemployed individual obtained $350,000 in cash advances and made purchases totalling $54,000 over a six-month period. More than $30,000 of these purchases were made at the same convenience store. In addition, the man spent $8,500 to buy airline tickets. At the time of his bankruptcy, he had incurred debts with 38 credit companies. The bankrupt attributed his bankruptcy to a gambling problem.

Summary of offences of the bankruptFootnote 2

  • Bankrupt used deceit, falsehood or other fraudulent means to defraud various credit-card companies of different amounts of money.

Court decision

The bankrupt was found guilty of 34 counts of fraud. He was sentenced to two years less a day, to be served in the community, with the following conditions:

  • remain at home 24 hours a day for the first 12 months, and between 10:00 p.m. and 7:00 a.m. for the next 12 months less a day;
  • perform 240 hours of community service within 12 months;
  • refrain from going to casinos or any other place where there might be gambling;
  • not take any steps to obtain credit cards.

This is to be followed by two years of probation.

Criminal/penal case
Court No.: 500-73-003292-097 (2011)
OSB No.: 41-1021240

Background

Having already accumulated $9,000 in debts, a woman incurred additional debts of nearly $100,000 in three months, knowing full well how precarious her financial situation was. The woman wrote a number of not sufficient funds (NSF) cheques to try to repay her debts. In particular, she made two deposits that were later cancelled because the issuer’s bank account could not be found. She didn’t use her credit cards any further, and declared bankruptcy four months later. She attributed her bankruptcy to abusive use of credit and gambling.

Summary of offences of the bankrupt Footnote 2

  • Bankrupt used deceit, falsehood or other fraudulent means to defraud various credit-card companies of different amounts of money.

Court decision

The bankrupt was found guilty of 13 counts of fraud. She received a suspended sentence of two years less a day, with the following conditions:

  • remain in the court district, except with written permission from the Court or the supervisor;
  • inform the Court or the supervisor of any change of address or name, and quickly advise them of any change of employment or profession;
  • refrain from going to any establishment where there is gambling for money.

In addition, two years of probation will begin at the end of the sentence.

Criminal/penal case
Court Nos.: 500-73-003436-108 and 500-73-003435-100 (2011)
OSB No.: 41-1037204

Background

Following his separation, a man sold his house and spent the $85,000 in equity at the casino. His credit-card debts went from $1,500 to more than $137,000 in nine months. Among other things, he purchased construction materials, furniture and electrical appliances. At the time of his bankruptcy, he had no assets. He attributed his bankruptcy to his separation and gambling.

Summary of offences of the bankrupt Footnote 2

  • Bankrupt used deceit, falsehood or other fraudulent means to defraud various credit-card companies of different amounts of money.

Court decision

The bankrupt was found guilty of 14 counts of fraud. He was sentenced to 12 months, to be served in the community, with the following conditions:

  • remain at home 24 hours a day for the first four months, and between 11:00 p.m. and 7:00 a.m. for the next eight months;
  • refrain from going to casinos;
  • perform 150 hours of community service within eight months.

In addition, 12 months of probation and prohibition against going to casinos will begin at the end of the sentence.

Criminal/penal case
Court No.: Not available (2010)
OSB No.: 31-444132

Background

The bankrupt sold his home two days before he filed for bankruptcy. In his accounting to the trustee, he claimed to have received $43,000 from the transaction. When examined by the official receiver from the Office of the Superintendent of Bankruptcy, however, he said he had received $10,000 from the sale of the property. Upon further investigation, the trustee discovered that the bankrupt had, in fact, received some $135,600 from the transaction. When he filed for bankruptcy, he reported assets of $1,700 and debts of $250,400.

Summary of offences of the bankruptFootnote 3

  • Bankrupt did not fully and truthfully answer questions at an examination held pursuant to the Act.

Court decision

The bankrupt pleaded guilty to one count under s. 198(1)(b) of the BIA for refusing or neglecting to answer fully and truthfully questions under oath when examined by the official receiver. He was found guilty and given a conditional discharge, and sentenced to probation for one year and 75 hours of community service.

Criminal/penal case
Court No.: 4811-998-09-12003743-00 (2010)
OSB No.: 31-956876

Background

The bankrupt had applied for credit cards and personal lines of credit from a number of institutions, giving false information regarding his employment status and earnings. Through these credit sources, he obtained cash advances and did not repay them. He also bought items on retail credit and resold them without paying for them. He said he used the money for gambling, but revealed that he made large payments to family and friends. When he filed for bankruptcy, he reportedly owed about $265,000 and held assets of $4,600.

Summary of offences of the bankruptFootnote 3

  • Bankrupt obtained credit or property by making false representations.
  • Bankrupt disposed of property obtained on credit and not paid for.

Court decision

The bankrupt pleaded guilty to six counts under the BIA and was sentenced to two concurrent conditional prison sentences of 12 months to be served as follows: The bankrupt will be subject to house arrest and electronic monitoring for the first six months and an imposed curfew for the remaining six months. He was also ordered to repay $145,757.76 to his creditors.

Criminal/penal case
Court No.: 500-73-002727-077 (2009)
OSB No.: 41-245480

Background

Over a period of five months, an unemployed man accumulated $372,000 in debts with 37 credit-card companies. After making payments totalling $365,000, of which $350,000 was paid with 44 not sufficient funds (NSF) cheques, the man declared bankruptcy.

Summary of offences of the bankruptFootnote 1

  • Bankrupt used deceit, falsehood or other fraudulent means to defraud various credit-card companies of different amounts of money.

Court decision

The bankrupt was found guilty of 25 counts of fraud. He was sentenced to 22 months in prison and two years of probation.

Criminal/penal case
Court No.: Not available (2009)
OSB No.: 31-442408

Background

Three months before filing for bankruptcy, the bankrupt sold a van for $5,000 and property at a Toronto address. The bankrupt admitted he had a gambling problem and indicated that his business slowed down, both of which contributed to his insolvency. When he filed for bankruptcy, he reported that he sold the property for $300,000. Further investigation revealed that the property actually sold for $378,000, which is $78,000 more than what he had declared. In addition, he did not disclose the sale of the vehicle.

Summary of offences of the bankruptFootnote 3

  • Bankrupt made a false entry or knowingly made a material omission in a statement or accounting.

Court decision

The bankrupt was convicted of having committed two offences under s. 198(1)(c) of the BIA and was sentenced to pay a $1,000 fine for each offence. He was given six months to pay these fines and was sentenced to one year of probation.

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Criminal/penal case
Court No.: 540-73-000321-077 (2009)
OSB No.: 41-797669

Background

After accumulating more than $37,000 in debts, an unemployed woman continued to borrow money even though she knew how precarious her financial situation was. She obtained $19,600 in cash advances and made purchases totalling $40,000 over a period of one year. She had 18 different credit cards at the time. When she declared bankruptcy, she blamed her debts on gambling.

Summary of offences of the bankruptFootnote 2

  • Bankrupt used deceit, falsehood or other fraudulent means to defraud various credit-card companies of different amounts of money.

Court decision

The bankrupt was found guilty of 14 counts of fraud. She was given a 12-month suspended sentence, with the following conditions:

  • remain at home 24 hours a day for the first four months;
  • remain at home between 11:00 p.m. and 7:00 a.m. for the next four months, the only authorized absences being for medical reasons and religious activities;
  • not possess or seek to obtain any credit cards; and
  • not go to casinos or any other place where there might be gambling.

In addition, one year of probation will begin at the end of the suspended sentence.

Criminal/penal case
Court No.: 500-73-002842-074 (2009)
OSB No.: 41-334472

Background

An individual worked as a cashier and his wife didn’t work. Even though they had already accumulated debts of $110,000, they continued to make purchases totalling more than $500,000 with their credit cards over a period of six months, contracting debts that they knew they would never be able to pay. At the time of the bankruptcy, the couple had debts with 77 credit card companies.

Summary of offences of the bankruptsFootnote 2

  • Bankrupts used deceit, falsehood or other fraudulent means to defraud various credit-card companies of different amounts of money.

Court decision

The bankrupt was found guilty of 15 counts of fraud. He was sentenced to a prison term of two years less a day, as well as three years of probation following imprisonment.

The bankrupt’s spouse was given a suspended sentence of two years less a day, with the following conditions:

  • remain at home 24 hours a day for the entire period of the suspended sentence, the only authorized absences being for legitimate work, medical reasons and religious worship;
  • not possess any credit cards;
  • perform 100 hours of community service in the following year; and
  • have a telephone line without a call-forwarding mechanism.

She was also given a two-year probationary period during which she must keep the peace.

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Criminal/penal case
Court No.: 500-73-002878-078 (2009)
OSB No.: 41-321646

Background

Whereas the bankrupt had total income of $4,000 in the eight months preceding his bankruptcy, he obtained $85,000 in cash advances in two months and made purchases totalling $15,000 using his credit cards. He paid the credit-card companies using not sufficient funds (NSF) cheques and took advantage of the clearing period to obtain additional cash advances or to make other purchases. In spite of these debts, the bankrupt took a two-month trip. Upon his return, he declared bankruptcy, with debts amounting to more than $95,000.

Summary of offences of the bankruptFootnote 2

  • Bankrupt used deceit, falsehood or other fraudulent means to defraud various credit-card companies of different amounts of money.

Court decision

The bankrupt was found guilty of 15 counts of fraud. He was sentenced to 18 months to be served in the community, with the following conditions:

  • remain at home between 7:00 p.m. and 6:00 a.m. for the first six months, the only authorized absences being for legitimate and paid employment or to go to the hospital or a clinic in an emergency;
  • remain at home for the next six months and respect a curfew of 8:00 p.m. to 6:00 a.m. as per the same conditions;
  • not possess any credit cards;
  • perform 200 hours of community service over a period of 12 months;
  • relinquish his Canadian passport.

In addition, one year of probation will begin at the end of the sentence.

Criminal/penal case
Court No.: 500-73-003134-091 (2009)
OSB No.: 41-33-6182

Background

After owning a convenience store for three months, a man fell into debt. Although he had only been able to pay rent for two months and the store had been robbed twice, he made purchases totalling more than $171,000 over a period of one year before declaring bankruptcy. At that point, the bankrupt had accumulated more than $153,000 in debts with 19 credit card companies.

Summary of offences of the bankruptFootnote 2

  • Bankrupt used deceit, falsehood or other fraudulent means to defraud various credit-card companies of different amounts of money.

Court decision

The bankrupt was found guilty of 17 counts of fraud. He was sentenced to a prison term of 12 months concurrent and two years of probation beginning at the end of his prison sentence. He was also prohibited from possessing any credit cards.

Criminal/penal case
Court No.: 500-73-002895-072 (2009)
OSB No.: 41-833483

Background

A man had a job that provided him with income of $22,000 in nine months. He also owned a company. He accumulated $106,000 in additional debts over a period of five months, including $90,000 in less than one month. His business declared bankruptcy and one month later, he declared personal bankruptcy for a total of $273,000.

Summary of offences of the bankruptFootnote 3

  • Bankrupt used deceit, falsehood or other fraudulent means to defraud various credit-card companies of different amounts of money.

Court decision

The bankrupt was found guilty of eight counts of fraud. He was given a 12-month suspended sentence, with the following conditions:

  • remain at home 24 hours a day for the first four months;
  • remain at home between 11:00 p.m. and 6:00 a.m. for the next four months;
  • not possess or seek to obtain any credit cards;
  • not go to casinos or any other place where there might be gambling; and
  • perform 85 hours of community service during the 12 months.

In addition, two years of probation will begin at the end of the suspended sentence.

Footnotes

  1. 1 A person who is bankrupt and borrows $1,000 or more must inform the lender that he/she is bankrupt
  2. 2 Refer to the Criminal Code, paragraph 380(1)(a) and subparagraph 380(1)(b)(i), for full text.
  3. 3 Refer to the Bankruptcy and Insolvency Act, section 198, for full text.