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Why Canadian Businesses Fail

By Kevin Bousquet

What would happen if you were given a key to a race car for which you had only the manual (a written plan), but you had no previous driving experience? 

You take your new race car out on to the track and find yourself surrounded by other race car drivers on fast moving track.  You try to follow the manual (your written plan), but you discover it’s useless without practical driving experience.

Within moments, you crash into a wall and bring down other race car drivers with you.  You suffer injuries that affect you and others for a very long time.

Banks, lenders, and business development organizations wonder why new start-up businesses in Canada continue to crash into the wall at record rates.  Even with the most perfect written business plan, many lenders no longer lend to new start-up businesses simply because the risk for failure is too high.   

A friend of mine was recently laid off from a job she had for many years.  Like most people she went on unemployment benefits while she struggled to look for work.  Realising her hope for employment in Canada was bleak she decided to start her own business.  She had no previous experience running a business.    

She discovered a government-sponsored program that would allow her to receive unemployment benefits while starting her own business.  The only catch to the deal was she would have to attend and complete the unemployment business training course on how to properly start her own business, or her unemployment benefits would be cut off.

While taking the class she came to me almost weekly seeking help with her business plan. I soon realised that her course was very focused on the written business plan, with very little practical training involved.

Every business scholar and successful entrepreneur would agree that a written business plan is crucial to the start-up process.  Before a building can be built there has to be a solid blueprint.  Essentials to a business plan are strategies such as the mission statement, target market, industry analysis, competition, marketing, financial projections and so on. 

There is, however, a limit to what can be learned in a classroom setting, without hands-on experience or through the examples of successful entrepreneurs. 

If government lenders, banks and others continue to focus exclusively on well-written business plans, they might as well attach a bankruptcy application form to each loan application.

There are many reasons why businesses fail, and in most cases failure has little to do with not following the actual business plan.

CANADA’S BUSINESS TAX SYSTEM

A new small business owner may not be properly prepared to handle Canada’s tax system.  

After a year or so in business, the owner can expect government envelopes to begin arriving almost daily in the mail.

All levels of government will be looking for their money. There will be Municipal, Provincial and Federal taxes, plus GST.  If your business qualifies you may also be subject to Retail Sales Tax and Workman’s Compensation dues.

Hiring an employee or two will launch the new business owner into Canada’s complicated and expensive payroll system.   Many business associations continue to lobby against Canada’s excessive business payroll tax.  They maintain the expensive payroll system alone is prohibiting new start-ups from providing job opportunities.  They say this is the true reason why there are few jobs available in Canada.  Entrepreneurs simply don’t want to do business here because of our tax system.

A business owner can expect that more than 50% of every dollar earned will be paid out in tax.  This means the tax man is your partner and you may not even know it.    That is of course if you’re a business that actually pays tax as many don’t.   If you do you may find yourself competing with competitors undermining your prices whom have given up and illegally joined the underground economy. 

Understanding Canada’s business tax system and how to manage and pay business tax on time can make the difference between success and failure.

Other Challenges

And what about other aspects of business that may not be covered in the business plan?  For example:

·        Renting space; dealing with commercial landlords who seek long term leases with hidden personal guarantees that may prevent your business from growing when you can’t break out of a lease. 

·        financing equipment and vehicles successfully

·         finding the right insurance for the business and its employees

·        Coping with suppliers or customers who don’t pay.   

·        Dealing with bad debt, insurance claims, lawyers, accountants, customs and freight brokers.

·        entering into contracts

·         Learning how to hire and fire employees, and discovering their rights under the employment legislation

Some of these issues alone are documented business killers. 

What is the Answer?

In the early days of the Internet there was a Dot Com Venture Capital boom.  Millions of dollars were being invested by Venture Capitalists and private lenders into new start-ups.  Some deals went well; others were disastrous.

During this time, I read about a few Venture Capital firms who made the decision to nurture the business in which they were investing on many different levels. 

For example, the new start-ups were not only well-financed by lenders/investors, they were provided with office space sometimes in the same building as the lender or on the same floor.   The owners and staff were given basic business training paid for by the lender/investors.   They virtually had a professional venture capitalist holding their hand each step of the way. 

Imagine one of Canada’s leading banks lending to new start-ups under a new training program.  Before a potential loan applicant could even get an appointment to see a loan rep, they would have to complete a joint government and bank sponsored professional business course. 

A course available day, nights, or weekends to accommodate any schedule, taught by qualified business professionals who were not only teachers but were successful entrepreneurs in their own right.  Entrepreneurs who focus not only on the written business plan but who could teach on all the expected struggles of running a Canadian business.  A course that could cover various aspects of industry, such as retail, construction, manufacturing, technology etc.

In Canada we have subsidized housing for those who cannot afford to pay expensive rent. Imagine government-subsidized commercial space for new businesses trying to grow.  

 Why should we expect the government to pay or assist with such training?

Every new business created is a new tax payer to our system.  A company who will pay the government 50% or more on every dollar earned.   Each employee who works at the new company will also pay an array of other taxes. An employee who is making money will also spend money into the economy.

The failure of a company, from a government standpoint, is the death of a tax payer.  It is in the government’s best interest to keep businesses alive and offer incentives for business to be created and to grow, so that jobs can be created.    

Giving out government grants to new start ups using well-designed business plans to the untrained and unqualified only increases the financial coffers of bankruptcy trustees.  

The Author:

Kevin Bousquet is the president of The Corpa Group Inc; a Private Investigation and Due Diligence firm working for the Venture Capital Industry.

In January of this year I spent a few days in this wonderful city mostly touring the attraction sites.   Rather than taking taxi cabs everywhere I bought day passes on the tour buses and used that for my mode of transportation to get around the city.  

 I was completely fascinated (or should I say disturbed) that the bus tour guides, when talking about Canal Street, went out of their way to tell  everyone that Canal Street was a great place to buy counterfeit watches, purses and videos.   I couldn’t believe how out in the open the comment was, virtually every time I rode the bus.  In fact, all the tour guides made mention of a large basement-type warehouse that was the biggest on the street, filled with fake products.

My visit to Canal street was everything I expected it to be, but worse.   Tiny shops with backrooms full of fake Gucci, Coach and Fendi purses.  If you wanted a fake watch all you had to do was ask.   Either the watch vendor had them hidden or he could merely ask someone to bring them over in a canvas bag.   Everything fake was for the asking and buying.

While I can spot a fake Rolex and Gucci watch, the Breitling Bentley watches were good copies and were selling like hot cakes.   Women were lining up to get in the back rooms to look at purses, so clearly business was good for every vendor.

There had to be at least 100 people walking around with canvas bags selling watches, sun glasses and DVDs.  At the time I visited, the movie American Gangster was still in the theatres.  You could have bought an illegal copy of the DVD for $5.00 out of a canvas bag.

In only two other countries have I ever seen street vendor counterfeiting and piracy this bad; Japan and Thailand.  

When I got back to Toronto I was talking about the experience for weeks to people in my business.   It was like New York had given up and Canal Street Counterfeiting was the new tourist attraction.

I’ve worked for many manufactures and distributors (and their legal counsel) who have fallen victim to counterfeiting, piracy, and copyright violations.  Companies who have had to close factories and offices, and lay off staff.  Even legitimate retailers in the same industry are affected – unable to compete with these fakes.   While consumers look for fake bargains many legitimate companies suffer.

The money from this crime stays undergound, just like drug money.  It remains tax free to these vendors and will very often remain in the crime element.  Very often the products themselves are made in hidden sweat shops in Asia.

The PI industry has been fundamental in fighting counterfeiting and piracy and will continue to be.  Every company that has fallen victim has either directly or indirectly retained a PI firm to assist in the problem.    PIs usually act for the manufacture or their legal counsel.  They identify who the vendor is by working under the pretext of being a customer.  They buy products and then ultimately swear an affidavit to get the civil sheriff out to seize the goods. 

In the early to mid ’90s the streets of Toronto had the same problem.  Vendors were everywhere on the streets selling counterfeit products.    But back then it was very much a civil problem.  The police only got involved to keep the peace during the civil seizures of products.  They rarely laid criminal charges on the vendors.   

It was primarily up to the manufactures themselves to hire lawyers and private investigators to seek out the street vendors and  find the bulk of the counterfeit product.  Once the vendor had been identified  the necessary paperwork had to be filed so the civil court Sheriff could go out and do a seizure, and serve a law suit on the vendor.

Even more frustrating for the manufacturer was the fact that the Sheriff was only allowed to seize goods on behalf of the manufacturer named in the order.   This meant that if the Sheriff was acting for only one watch manufacturer (for example) he could only seize that one brand name.  All other fake brand names would remain unseized.  It was ridiculous.

Manufacturers had to team up with the same law firm so the civil Sheriff could raid the vendor and take just about everything in one raid.

While the manufacturers continue to try and sue these vendors, the civil judgments are worthless.  How do you  collect from a vendor working for cash?  There is simply no financial recovery.

The city of Toronto has pretty much cleaned up the problem from vendors selling counterfeit products in the open.  But many products can still be found in Toronto’s China Town. All you have to do is ask.  

It would seem that today, public law enforcement has become more involved in charging and prosecuting manufacturers and sellers of counterfeit products.   It is certainly not to the satisfaction of most victims and their associations who continue to fight the problem.

As long as there is no law in place that prevents the consumer from buying the fake products the problem will never be resolved.  

About a month after my trip I read that the New York Mayor’s office had raided dozens of storefronts on Canal Street.  They seized counterfeit goods with an estimated street value of more than $1 million.

Mayor Bloomberg and Police Commissioner Raymond W. Kelly, obtained a temporary restraining order to shut down the storefronts.  Forty-two undercover purchases were made in various storefronts. The investigation uncovered counterfeits of such brands as Coach, Gucci, Dolce & Gabbana, Dior, Prada, Rolex, Fendi, Burberry, Calvin Klein, Dora the Explorer and Oakley.   

While I applaud the raid, I wonder – how long will it be until they all come back?   Will there ever be a law that will stop people from buying the fake stuff in the first place?    Will we ever see a tourist held up at customs because he or she was found to possess a fake watch, purse, or a pair of sunglasses ? 

It’s doubtful !

By Private Investigator – Kevin D. Bousquet

While I admit to joining the klan of facebook.com I find the site very dangerous in the way of personal privacy and people should be very concerned and warned.  

I have written articles and even did a tv show on how impersonation is out of control. People who have had their lives destroyed because someone got a hold of their personal information and applied for credit in their name.

I interviewed a lady on my tv show who woke up one morning to a collection agency phone call.  She discovered that someone impersonated her identity and managed to purchase two houses in her name in Gretzky’s home town of Brantford Ontario.   She had no idea that someone had used her identity by applying for credit in her name.    It took  years for her to get her life back.

Yet people who register on facebook post their name and their date of birth right out in the open for anyone to see. 

Many on facebook will argue they use their privacy settings and only close friends see personal information.  This is great for those who actually use their privacy settings.  

There are  networks after networks of interest groups that allow people who you may not directly know to see your personal information.  They are allowed to see it because your privacy settings have allowed people in the same network to see your personal data.   

Many assume because they have an interest in common with someone, skiing, music, church, city events that a person in that network is not going to compromise their data.  Do you really know everyone in your network? 

Yet bigger city networks like “Toronto” or joining a network where in the city where you reside can be a great place for would be fraudsters to take your personal information and apply for credit.   

Your Name & Date of Birth is all it takes 

People need to realise that all it takes is your name and date of birth to steal your identity.

Facebook A Great Place To Harvest  

The word to be aware of is “harvesting”.  Right now I can go on facebook and within less that an hour I can harvest names and dates of birth of dozens after dozens of people.  If I really tried I could probaby average 100 names and dates of birth in an hour.   People who I don’t know,  who are not in any network.   

Personal data out in the open makes you vulnerable to attack by fraudsters to get your data to apply for credit in your name.   Problem is people don’t realise just how bad the problem is.  There is no recourse, you’re on your own trying to clean up your life if you’re impersonated.   Don’t expect the police to do it for you and don’t expect that the fraudster will actually get caught.   Act proactive rather then reacting to a crisis later.   

Impersonation fraud is the biggest growing crime on a world wide level.   If you have a home you could also be a victim of mortgage fraud or have your house sold right from under you with the aid of the data you gave up on facebook.com

Teenagers and children are the best targets.  Kids who have not yet established credit ratings.  A nice clean name, date of birth and address is all a fraudster needs to start applying for credit in your child’s name.  

The Federal Trade Commission just did a warning to the public that over 400,000 children and have already had their identity stolen and many don’t even know it yet. This will include teenagers.

If your address is posted all the better.   If they get a hold of your Social Insurance Number or Social Security Number you’re done like dinner you may never get your life back. 

You’ll spend years trying to clean up your credit rating convincing creditors and collection agencies that you’re you and not the fraudster who managed to swindle thousands from banks and credit agencies using your name.  

There was just a news article recently where a victim of impersonation was reported dead to the government, yet he was alive and well.  He spent months just trying to convince the government he was not dead and his problems continue.  

You could find the IRS or Revenue Canada knocking on your door or even the police or perhaps immigration. 

The answers to virtually all verification questions asked by a bank or credit agency to prove you are you can be answered on facebook.com 

Let’s start with the most common question that all credit card companies ask to verify you? “What’s your mother’s maiden name”?   Your dog’s name, where did you attend school.  Your previous addresses.   Take a look at the verification questions used by web based email services like hotmail.com when you sign up.   Many of these questions could be answered by looking on facebook.com.

There may be those who may want to use your name and date of birth to commit a crime or get a job when they don’t have status to work in the country.   

Ask yourself could  someone easily recreate your resume from facebook depending on the information you posted? 

 I am fascinated by those who post their resume.  Where you went to school, what degrees you have, your past jobs, your marital status.  Your interests, where you volunteer, you associations and degrees.  Even your religious beliefs.  

What about child predators seeking to hurt and exploit children.   People continue to  post pictures of their children, some have posted where they go to school or daycare and even what time they are picked up.  Your toddler could even be at risk.   

The security risks to openly

posted personal data are endless.

If you give away too much personal information your jugglar vein is exposed waiting for the kill.  If you’re impersonated there are only two things in the world that can prove you’re you.  Your DNA and your fingerprints.  You’ll spend a lifetime trying to get your life back.

Be careful what personal information you give up on any website.

Kevin Bousquet is a Private Investigator and President of Corpa Investigation www.corpa.com a 17 year old firm specialising in fraud investigation. 

He has his own tv show on Persona Cable which can be seen on the internet at http://www.resourceschannel.com/programs-undercover.html 

Pretext Privacy & Private Investigators (short version) 

Bill C-299

Copyright – Kevin D. Bousquet  

This is a reduced version of this article. 

The full version can also be found on this blog:

http://corpainvestigation.wordpress.com/

If you are feeling the pain of trying to collect on a debt, a child support order or a court ordered monetary award, your problems are about to get worse.   

If you are trying to locate a missing friend, family member or a birth parent in an adoption situation, or if you’re trying to find that person who skipped out owing you money, it’s about to get even harder. 

If you have been a victim of fraud or crime, or are in a business that needs to be protected from crime, such as theft or fraud, you had better put on your suit of armour; it’s going to become a bigger battle than you ever anticipated.  

If you are charged with a criminal offence, or have been wrongfully convicted, it may surprise you to know that those in your defense team are gradually having their tools taken away from them.

Perhaps your car insurance premiums increasing and out of control, yet you wonder, why don’t insurance companies do something about rampant insurance fraud?  

Welcome to Bill C-299, a private member’s bill, which is, seeks to ban the most effective anti-crime tool used by private investigators – the use of pretext (or false pretence)
and/or deception to glean information that may otherwise remain hidden.    

Alberta Conservative M.P., James Rajotte wants to amend the Criminal Code as it relates to pretext (or false pretence) with his Bill C-299. If passed, this bill will make it illegal to obtain, or counsel others to obtain personal information on false pretences or to sell or disclose such information obtained by similar means.  

The Bill will amend the criminal offence of “personation with intent,” to include fraudulent impersonation with intent to obtain any record containing personal information about a third party.

Rajotte’s bill also seeks to make amendments to the Competition Act and most importantly the Canada Evidence Act. This would ensure that any evidence obtained by false pretence would be not admissible in court. 

Even though private and public investigators do not use pretexts for fraudulent means – in fact, provincial regulators allow the use of pretexts for a lawful purpose – Rajotte’s Bill will effectively strip both public and private investigators of a valuable investigative technique.    

Rajotte is not without support in the private sector. Joe L. Lai, an associate in the Business Law Department of the Toronto law firm, Fraser Milner Casgrain, wrote an article to Lawyers Weekly about Bill C-299 in November 2006.

In his article he stated that pretexting could be regarded as being “morally offensive,” and confirmed that buyers of personal information include law firms, financial institutions, collection agencies, private investigation firms and research companies.  

Lai’s interpretation is that Bill C-299 speaks to the perception that pretexting is morally blameworthy and offensive to society, requiring either deterrence or compensation for victims. 

The concerns over pretext, impersonation and private investigators stem from the recent Hewlett Packard scandal in the U.S. In order to determine the source of illegal information leaks to the media, Hewlett Packard hired private investigators to obtain confidential information on Directors of the company, company employees, and journalists. 

The private investigators used pretexts and impersonation to obtain the private phone records of some Hewlett Packard directors suspected of the information leaks. The private investigators have been indicted on felony counts of identity theft, conspiracy, unlawfully accessing computer data, and fraudulently obtaining phone records, and now face penalties that could involve imprisonment. 

The fallout from the Hewlett Packard scandal has found its way into Canada in the form of Bill C-299. The bill, if passed, will make any evidence that was obtained by pretext inadmissible in court. If passed, in its current form, every Canadian will feel its effects – not just private investigators. Canadians will wake up to a dysfunctional justice system, deprived of due process when key evidence remains hidden, and key witnesses become unavailable. 

Pretext – What is it? How is it used?

Public law enforcement agencies use pretext or deception every single day to catch criminals: undercover police officers posing as someone they are not; pretext phone calls to determine if a suspect is at home; package deliveries to ID a suspect; and sting operations where a police officer poses as someone other then a police officer are common methods. 

Pretext, deception and trickery are essential tools used in law enforcement. What would happen if these methods became illegal in public law enforcement?  The hands of law enforcement would be effectively tied because the evidence obtained using pretext would not be admissible in a court. A world where public law enforcement could not use pretext, trickery, disguises, undercover or deception will be a world of crime.   

In the private sector, investigators use these tools to obtain relevant information that would otherwise remain obscure.

Pretext aids private investigators in matters involving child support, enforcing court Orders and Judgements, investigating fraud and theft in the workplace, enforcing intellectual property rights, providing a full  and complete defence for criminal defendants, providing full disclosure of facts to civil litigants, investigating insurance and bank fraud, and locating missing persons and children.  

There is a huge difference between using pretext with the intent to commit a crime, and using pretex to investigate or solve a crime, yet the Hewlett Packard scandal has caused lawmakers and regulators to treat the virtuous and the criminal with indifference.   

It’s not just Private investigators who use pretext as an important tool.  Any journalist who has ever investigated consumer fraud has probably, in one form or another, used pretext or deception to obtain information.

Journalists and the media have used pretext and trickery for years, even to set up sting operations to catch would be criminals.  We watch news reports where reporters and journalists work undercover posing as a customer trying to buy a gun off the street, or a stolen car, or maybe to catch a car salesman known for rolling back mileage odometers on used cars. 

Posing as someone they are not, investigative journalists try to catch persons doing something wrong, and then expose this activity to the public (is there form of pretexting a lie?)

Private investigators have been using pretext and deception to catch criminals right back to the days of Sherlock Holmes.

Disguises, deception, trickery and lawful pretext have always been common and essential methods of investigation.

Usually, pretexts are used to discover a person’s address, employment, or assets in order to assist in the administration of justice – to find witnesses, serve legal papers, or to collect judgments.     

Pretext & The Law

Most private investigators would not condone the use of impersonation but they would condone the use of lawful pretext.

In most Provinces and States, licensed private investigators have been allowed to use lawful pretext, and regulators are perfectly aware that lawful pretext is a tool of the trade. In
Ontario, for example, regulations exist that specifically govern how private investigators may use pretext.

For example, a private investigator is not allowed to represent him or herself as a licensed profession, policeman, fireman, ambulance attendant, government worker, etc.   The insurance industry, financial community and legal profession agree that private investigators are an important part of the legal process.

Canada’s privacy legislation, The Personal Information Protection and Electronic Documents Act (PIPEDA), recognized the special role played by private investigators; in 2004 the federal government passed a regulation under PIPEDA conferring upon qualified private investigation agencies “Investigative Body Status”.

This regulation allows qualified investigation agencies to collect, use and disclose the personal information of an individual with that person’s consent. Pretext is one means of collecting information without consent.  

The Consequences of Bill C-299

Law abiding citizens may believe that Bill C-299 is a great piece of legislation – until they become victims and enter into our court system. The unintended, but unavoidable result of this flawed legislation is further protections for deadbeats and criminals. 

Canada is plagued by crimes of identity theft and mortgage fraud. The undergound economy remains out of control at alarming rates.   Yet the government response is to eliminate the tools that private sectors use to thwart these crimes
and to recover stolen goods.  Private Investigators are an answer to these problems not their cause.      

A new and growing scam which, is similar to mortgage fraud, involves criminals registering a loan on your vehicle and skipping out with the money. 

Innocent victims wake up to find their vehicle has be seized because a fraudster registered a loan against the vehicle and absconded with the money.  Police are involved in investigating these crimes, but so is the private sector. 

Private investigators investigate these crimes on behalf of banks insurance companies and their legal counsel.  

Private Investigators continue to be instrmental in investigating mortgage fraud and identity theft on behalf of  insurance companies.

The Legal Community Already in Big Trouble

Millons of people have judgments, court orders, child support orders or even criminal compensation awards that are completely worthless and will never be collected, because the debtor hides their money or simply refuses to pay.  

Legal avenues to find bank accounts, employment and income information, and real property are few, and closing fast.  

How is anyone expected to find a debtor’s bank accounts and assets if banks can’t cooperate, government databases are off limits, and debtors lie under oath?

If a debtor is trying to hide money or assets, there is usually no other way to find them, except by pretext and lawful deception.

In one lawful pretext call to a family member a PI mght be able to establish a place of employment  in less then a few minutes so a garnishment can be served.  The alternative is expensive surveillance costing thousands of dollars.  

If private investigators, or even victims themselves, are not allowed to use trickery or pretext to obtain vital information, how does a successful litigant satisfy a judgment?   

Members of the general public will soon realise it is not worth the time and expense to enter into our court system if they can’t collect on their awards.  Everyone who works in the legal community will be affected.  

A Common Sense Solution

At a time when fraud and white-collar crime are rampant, victims are being stripped of the resources necessary to detect, investigate, and prosecute crime. At a time when child support and judgment creditors go unpaid, victims are being stripped of the resources necessary to collect court awards.

The doors are closing rapidly all in the name of privacy.  There is no consideration given or exceptions made for those who fight fraud, collect our debts, our child support or catch our criminals.    

Canada and the U.S. need a holistic approach to these vital concerns.  When retained in a civil or criminal proceeding, to enforce a court order or to collect a court award, Private investigators should have access to government records and databases.  

In some Provinces private investigators are allowed access to motor vehicle information when involved in investigating insurance fraud yet in other Provinces like Quebec for example the doors have been closed. 

When investigating unlawful activity, private investigators should be allowed to use lawful pretexts and deceptions to obtain contact information or employment informatin.

Without the safeguards for the legitimate clients of private investigators, Canadians will pay a dreadful price. Banks will increase interest rates, insurance premiums will rise, more people will be unable to afford auto insurance, more Canadians will be wrongfully convicted, and more litigants will lose cases they rightfully should win.

Court ordered monetary awards will continue to be worthless. The administration of justice both civilly and criminally will fall into disrepute.     

Privacy advocates continue to applaud privacy legislation and will no doubt support pretext legislation.  But how will they react when they themselves become victims of crime, wrongfully accused, or discover the impossibilities of trying to collecting a debt, judgment or child support order.   

There is no better time then right now to be a criminal and in particular committing the crime of fraud. The privacy of criminals, debtors and those who are participants in the underground economy who refuse to pay income tax are now protected under federal acts. 

The tools available to private sector investigators to catch, collect or prosecute these people are constantly being legislated out of existence. 

If Bill C-299 is passed as currently drafted, many who work in the private sector will find themselves in a jail long before their targets of investigation.   

About the Author:

Kevin Bousquet has been a licensed PI since 1986. He is a graduate in Law Enforcement, The Law Clerk Admin Program and a Certified Fraud Examiner with the Association of Certified Fraud Examiners.

He is president of The Corpa Group Inc www.corpa.com a licensed Private Investigation agency established in 1991 working on behalf of major corporations, insurance companies and their legal counsel.  

Kevin Bousquet can be seen giving lectures advocating on ways to combat fraud and changes to Adoption in Ontario with the Adoption Counsel of Ontario.

Kevin Bousquet has his own TV show “Undercover With Kevin Bousquet” where shows depict real life examples of fraud, victimization, and the work conducted by the Private Sector. His show can be seen satellite, persona cable or streamed on the Internet at:

www.resourceschannel.com/programs-undercover.html

Pretext Privacy & Private Investigators  (Full Version)

Bill C-299

Copyright – Kevin D. Bousquet

www.resourceschannel.com/programs-undercover.html

If you are feeling the pain of trying to collect on a debt, a child support order or a court ordered monetary award, your problems are about to get worse.

If you are trying to locate a missing friend, family member or a birth parent in an adoption situation, or trying to find that person who skipped out owing you money, it’s about to get even harder.

If you have been a victim of fraud or crime, or are in a business that needs to be protected from crime, such as theft or fraud, you had better put on your suit of amour; it’s going to become a bigger battle than you ever anticipated.

If you are charged with a criminal offence, or have been wrongfully convicted, it may surprise you to know that those in your defense team are gradually having their tools taken away from them.

Maybe your biggest concern is that your monthly insurance premiums are increasing every year to the point of running out of control.

Welcome to the introduction of Bill C-299, which is seeking to ban the method of pretext (or false pretence) and/or deception used by private investigators and other related industries.

Alberta Conservative James Rajotte seeks to make amendments to the Criminal Code as it relates to pretext (or false pretence) with his Bill C-299. If passed, the bill would make it illegal to obtain, or counsel others to obtain personal information on false pretence, “or” by fraud or to sell or disclose such information obtained by similar means.

Also added to the criminal offence of “personation with intent,” is fraudulent impersonation with intent to obtain any record containing personal information about a third party.

The private sector and in particular Private Investigators do not pretext for a “fraudulent means.” They do, in fact, pretext for a lawful means, as they are allowed to do so in the acts and regulations that govern them. Rajotte’s bill also seeks to make amendments to the Competition Act and most importantly the Canada Evidence Act. This would ensure that any evidence obtained by false pretence would be not admissible in court.

Joe L. Lai, an associate in the Business Law Department of the Toronto law firm, Fraser Milner Casgrain, wrote an article to Lawyers Weekly about Bill C-299 in November 2006. In his article he stated that pretexting could be regarded as being “morally offensive,” and confirmed that buyers of personal information include law firms, financial institutions, collection agencies, private investigation firms and research companies.

His interpretation is that the Bill speaks to Canada’s perception of pretexting as morally blameworthy and offensive to the public and societal sensibilities, thus requiring either deterrence or compensation for victims.

One would wonder if Mr. Lai has ever himself been a victim – a victim of crime, or of being unable to collect a debt, a judgment, or a child support order? Does he know the frustration of being wrongfully charged or accused, and being unable to find or subpoena a sensitive witness, because the subpoena can not be served discreetly without the use of lawful pretext. Will the clients of his law firm and the legal community ultimately feel the same frustrations?

The concerns over pretext and private investigators stem from a recent Hewlett Packard scandal in the U.S., which continues to cause controversy. In order to determine the source of information leaks which were finding their way to the media, Hewlett Packard hired private investigators to obtain confidential information on journalists, and employees and board members in their company.

One of the most controversial issues in this case is the use of pretext and impersonation to obtain the phone records and calling data of various people suspected of the board room leaks.

The private investigators have been indicted on felony counts of identity theft, conspiracy, unlawfully accessing computer data, and fraudulently obtaining phone records. All of them are now facing penalties that could involve imprisonment.

The backwash from this scandal has now found its way into Canada in the form of Bill C-299. The bill, if passed, will make any evidence that was obtained by pretext inadmissible in court. The passing of the pretext bill in its current form could cause civil unrest to the point that everyone will feel its effects – not just private investigators, but all those in the private sector who fight crime and collect our debts. Even the media could be affected. The general public will discover a justice system and due process that will fail them.

With respect to the HP Scandal it might be asked, what lawful methods could have been used by Hewlett Packard to investigate their boardroom leaks?  Was it possible for the company to involve a law enforcement authority to investigate suspected leaks?   What methods or laws are in place that would allow directors of public companies to find the source of their information leaks — leaks that affect the price of stock and could ultimately lead to insider trading, thus prejudicing innocent public shareholders?

Can owners of public companies quickly apply for court orders to obtain confidential information on individuals who are suspected of leaks? The answer is no at least not quickly. Was there a legal avenue in place to obtain these phone records?   

While the world points fingers at the scandal, no one has yet reported on how this situation could have been solved and the scandal avoided.

The law, as it relates to impersonation being used by private investigators, appears to be very confusing. Many lawyers who blog on the internet argue that it will be difficult to demonstrate criminal intent and actually convict Pi’s in court in the U.S.

What is Pretext and How is it Used Today?

Public law enforcement agencies use pretext or deception every single day to catch criminals. Working undercover posing as someone they are not, making phone calls to the homes of suspect of criminals, pretending to deliver a package so they can determine if an accused person is at home, so that a warrant can be executed, setting up sting operations where a police officer poses as someone other then a police officer. Public records speak of the RCMP going through a suspect’s garbage, without a warrant, leading to the arrest of criminals.

Pretext, deception and trickery are essential tools used in law enforcement. What would happen if pretext, deception and undercover operations became illegal in public law enforcement?

Suppose an undercover police officer called the residence of a suspected criminal, pretending he was a friend of a suspect, or perhaps saying he was with a delivery company trying to deliver a parcel? As a result of that pretext, he could perhaps obtain a personal cell phone number and other information about the wanted criminal, with the intent of eventually making an arrest based on the information he obtained.

What would happen if the above situation was regarded as an illegal pretext – because the officer used a pretext on someone to get the information he needed? The result would be that the criminal could not be arrested, charged or convicted because pretext was considered illegal and not admissible in a court.

If we were to imagine a world where public law enforcement could not use pretext, trickery, disguises, undercover or deception, it would be a world of crime and chaos out of control. All aspects of our safety could be jeopardized. And what about the private sector using pretext? Private investigators, bill collectors, private bailiffs all use these methods to obtain the information they need.

There is a huge difference between using impersonation and pretext. Yet the scandal has caused law makers and regulators to blend the two into legislation.

Paparazzi vs Ethical Journalism

Any journalist who has ever investigated consumer fraud has probably, in one form or another, used pretext or deception to obtain information. Journalists and the media have been known to use pretext, trickery or even to set up sting operations to catch would be criminals. And what about the recent NBC sting operations to catch pedophiles via chat rooms, setting up a woman to pose as an under-aged girl? Should those pedophiles be set free because they were caught under a lie or a pretext?

For years the paparazzi in Canada and the United States have been vicious in their tactics to obtain any dirt that will sell on celebrities. Going though garbage, surveillance, illegal trespass and telephone taps are just of the few tactics we read how they invade privacy everyday. Yet the closest thing to a scandal has been an investigation where it was suggested that the death of Princess Diana might have been caused by the paparazzi.

We watch news reports where reporters and journalists work undercover posing as a customer trying to buy a gun off the street, or a stolen car, or maybe to catch a car salesman known for rolling back mileage odometers on used cars. They lie and say they are someone else. They try and catch the person doing something wrong, under a sting, ruse or a pretext and report it to the public.

Like the mainstream media there are ethical members and there are unethical members who do not follow laws or have any code of ethic.  Every profession has their bad apples.

We watch U.S. reality TV shows like the “The Dog” a licensed Bounty Hunter in the United States. While at his office he calls a fugitive’s home saying they have won a brand new vacuum cleaner asking where it should be delivered to.

As a result of his lie (or pretext) he obtains personal information like a phone number and later apprehends the fugitive he was looking for. While we do not have Bounty Hunters in Canada they are part of the “private sector” in the United States. What would happen if the arrest was considered unlawful as a result of illegal pretext or deception? Could the fugitive be set free?  

While most Private investigators in Canada would not condone impersonation as means to obtain information, they would very likely condone the use of lawful pretext because their governing legislation allows them to use it.

Private investigators have been using pretext and deception to catch criminals right back to the days of Sherlock Holmes. Disguises, deception, trickery and lawful pretext have always been common and essential methods of investigation. It’s not just Private investigators who use pretext as an important tool, but also process servers, who serve documents of the court.

Private bailiffs and collectors make pretext telephone calls at the homes of debtors, to obtain work phone numbers in order to recover vehicles and equipment. These pretexts usually have the objective of trying to find out a person’s personal information such as a phone number, a work number or a place of employment. It could be to serve a document, collect a debt, recover property, enforce a court order or judgment.

A Private investigator or Process Server might call your house saying they are a delivery company, an old friend or employer, they may act as a marketing survey company all trying to get personal information. A few days later you’re served with legal papers (such as a divorce petition, a support order, or a law suit). You may find that your vehicle that you owed payments on was seized right out of the parking lot of your home or your place of work. All as a result of the personal information you gave away under some form of trickery or pretext.

Pretext in the private sector is now under scrutiny to the point that any kind of pretext or deception whatsoever could be come completely illegal and not admissible in court.

Pretext, Impersonation & The Law

In most Provinces and States, licensed private investigators have been allowed to use lawful pretext, and the bodies of government that regulate private investigators are perfectly aware that lawful pretext is in a part of the practice. We know this because laws or regulations continue to exist that specifically govern how private investigators may use pretext.

For example, a private investigator is not allowed to represent him or herself as a licensed profession, policeman, fireman, ambulance attendant, government worker, etc,. The fact that pretext is regulated is a clear indication that governments of the world recognize that pretext exists and is allowed to be used lawfully. It is an essential tool for investigation.

To ask why we need Private investigators when we have the police is the same as asking why we need private security guards, private bailiffs, collectors, and insurance adjusters. Without them our protection would be compromised to the point that crime would run rampant. We would be unable to properly complete various processes in our judicial system, be it civil or criminal, without the private sector.

The public needs to be reminded that there many parts of the civil and criminal justice system as it relates to due process that are the responsibility of the private sector.  It is either the responsibilty of the private sector or simply areas where police and/or public law enforcement do not normally get involved.    

In order to adequately determine what a private investigator does, the public first has to have remove the PI stereotype that PI’s battle everyday.

The most common stereotype is that private investigators are one or two-man operations doing nothing but infidelity divorce investigations, and following cheating spouses. With the changed divorce laws, there is no longer a requirement to prove adultery.

The public needs to be aware that this area of investigation is very small and has only been specialized by a small percentage of investigation firms.

Fraud is completely out of control to the point that most fraud units, be it municipal provincial or federal, are backlogged, some as much as a year. Victims of fraud in all aspects have felt the frustrations of trying to catch, prosecute and collect their losses from the criminals who have victimized them.

There are more in the private sector fighting fraud then in public policing. Certainly in the city of Toronto, for example, there are more private investigators (and in-house bank and insurance fraud units) then the combined staff of the Toronto Police Fraud Unit and their Major Crime Units.

Information Brokers vs Licensed PIs

People need to be reminded that there is a difference between unlicensed Information brokers who sell searches without any questions asked, than licensed PI agencies. It is unregulated information brokers that are destroying private sector and causing governments to close the door on lawful access to information.

PI’s are licensed by government bodies. They have independent acts and regulations which govern what they can and can not do. They face fines or imprisonment for violating any legislation. It is a regulated profession. In most states and provinces the legislation is enforced by the police.

A large number of private investigators are, in fact, themselves ex-police officers or ex-law enforcement of some kind. In Canada, this includes retired and ex-members of the Provincial Police forces, the RCMP and Municipal forces.

Upon his retirement, William J. McCormack, one of Toronto’s most highly respected Toronto Police Chiefs, formed an alliance as ‘senior consultant and advisor’ to MKD International, a Toronto private investigation and security firm.

The biggest client of the private Investigation profession is the insurance industry who continue to lose the battle on insurance fraud. Billions of dollars are spent by insurance companies hiring private investigators who conduct insurance fraud investigations. Virtually all insurance companies have claim departments that are currently hiring private Investigation firms. This includes all aspects of insurance: automotive, casualty, disability, corporate liability, property, marine, and surety, just to name a few.

If you were to spend a ‘day in the life’ with the majority of investigation firms in North America, it would be instantly discovered that 60% or more of investigation firms are working for insurance companies, and/or their legal counsel, fighting fraud. This also includes claims relating to mortgage and bank fraud.

The remaining percentage includes banks, trust companies and finance companies who hire PI’s in relation to fraud and collection. The legal community, (both criminal and civil) who seek litigation support, use private investigators in almost every area of law. Lawyers, insurance adjusters and their claim departments would agree that private investigators are an important part of the process when it comes to investigating insurance fraud, or claim investigation and inquires in general.

When Canada initially drafted its privacy legislation, The Personal Information Protection and Electronic Documents Act (PIPEDA), it initially left behind a number of organizations in the private sector, and did not give them “Investigative Body Status”. It was initially interpreted that anyone who did not have “Investigative Body Status” could not investigate someone without their consent.

This interpretation included private investigators and insurance adjusters. Imagine a private investigator doing an insurance disability investigation for an insurance company that suspected one of their claimants was faking an injury. The legislation, in its initial stages, could have been interpreted to state that the private investigator must ask the claimant’s permission to investigate, follow and video tape the cheating claimant.

It’s possible the PI would have had to disclose the report to the person investigated, if requested. Even insurance adjusters were affected. Imagine an insurance adjuster doing a suspicious fire investigation not being able to investigate a suspect, unless he told the suspect in advance and asked his permission to investigate him, and then later having to reveal his report to the suspect, if asked.

Thousands of dollars were spent by various associations to amend the legislation to give private investigators and other bodies “Investigative Body Status.” In the spring of 2004, various investigative and insurance associations successfully managed to get changes in the legislation. Licensed Private investigators who were good standing members of professional PI associations were allowed to investigate without consent and not disclose their reports, with various exceptions.

While all of the exceptions can be listed by viewing a copy PPIEDA, in layman’s terms the most important ones were:

To collect a debt

Investigating a Breech of an Agreement or Contravention of Law

To comply with a subpoena or warrant issued or an order of the court

Working on behalf of a lawyer

In order to understand the importance of the Private Investigation industry, here are some examples of the work conducted by PIs. These are areas that are primarly conducted by PI’s or the private sector.  Also listed below are also some of the problems with the current privacy legislation, and the up-coming proposed pretext legislation:

Adoption

Since the very beginning, private investigators have been used not only to find birth parents but to reunite families. PPIEDA has (neglected, failed or properly defined) to allow an adoption investigation as an exception. One could easily conclude that adoption investigation (trying to find birth parents, missing family members etc.,) is an invasion privacy and a violation of the act. PI’s use pretext as means to prevent alerting other family members, during a search for birth parents. For example, a PI might pretext saying he is completing a family tree or a missing heir inquiry. Pretext legislation could make it difficult for PI’s to locate family members discreetly for their clients.

Background Investigation

Corporations hire private investigation firms to conduct pre-employment background investigation. Private investigators are not allowed to report on a person’s criminal background without consent. To obtain this information from police source without consent would be illegal.

There is continued controversy as to whether an employer is even allowed to ask for a criminal record check. Certainly, if an employer suspects he has a criminal working for him, it is unlawful to conduct a criminal search after the criminal employee has been hired without consent.

Articles have been written which say that we may see the day when employers are no longer allowed to ask for Social Insurance or Social Security Numbers.

Child Support

Millions of individuals have child support orders they can’t collect. Their failure to collect on these orders is primarily as result of the debtor not having assets in his/her name. The debtors may work for cash in a cash profession; they drive with a suspended license, and they don’t have a bank account in their name. They are, from a collection stand-point, untouchable.

Trying to find collectable assets is an investigative task. How can we collect from a person who is working for cash as part of the underground economy? A private investigator hired by a recipient might use a very expensive surveillance, following an individual into work – which can cost a single parent upwards of $65.00 an hour and $0.65 per kilometer, with average retainer requests usually in the thousands of dollars.

Alternatively, a private investigator, under pretext, might call the residence of a dead-beat parent (or someone who knows the dead-beat parent). The pretext might be that of doing a marketing survey, trying to get a work telephone number.

Once the work phone number is obtained, inexpensive inquiries can be made to confirm the place of employment in which the client can then contact the family responsibility office to issue garnishments. In less than an hour of pretext phone calls, a private investigator can inexpensively obtain the employment information of a dead beat parent.

The current pretext proposals would define obtaining a work or home phone number as being a pretext to get “personal information” or in this case the place of employment. The way the information was obtained would be considered illegal and inadmissible in any family court proceeding. A garnishment could easily be appealed. This would leave only the method of expensive surveillance to investigate those working in a cash profession, as there is no public search that would identify this type of information.

Corporations hire private investigators

Corporations hire PIs on a regular basis to investigate theft, employee issues, collection, white collar crime, insider trading etc., PI’s often conduct background or due diligence investigations to ensure deals are safe and without surprises before they close.

Copyright, Trademark Industrial Design

It is a matter of media public record that major corporations like Gucci, Cartier, Rolex and Walt Disney have hired PIs to investigate infractions of their trademark, either directly or through their legal counsel. PIs investigate unauthorized manufacturers and distributors who unlawfully manufacture, sell and distribute these products.

With the technological sophistication of scanners and photocopiers, virtually all industries can find themselves victims of piracy in some form.

To investigate the culprits, private investigators will use trickery such as posing as a potential customer and video taping suspects. They may make pretext calls to the homes of suspects, trying to find work numbers as to where illegal items might be manufactured or distributed. PIs then work with court bailiffs to enforce orders and seize property.

Criminal Defense & The Wrongfully Accused

Someone charged with a criminal offense may require a PI to track down witnesses, take a statements, or set up a sting operation to add other accused persons to the criminal matter. Defense lawyers hire private investigators constantly to aid in defense trials.

Defense investigations very often involve pretext in tracking down witnesses who themselves may be criminals, or by video taping, and sting operations. There are many documented cases where PIs have been the only salvation of a wrongfully accused person.

Debt Collection Skip Tracing & Recovery of Assets

PIs use pretext and databases to find witnesses, parties to litigation and missing debtors. Banks, trust companies, lawyers and insurance companies hire PIs to collect debts, serve documents and to aid in executing judgments. Recipients who have child support orders use PIs to find where would be payers live and work. Collection agencies also have in-house skip tracers to find debtors who owe money on behalf of banks and other entities. Pretext is almost mandatory in this type of investigation.

A PI might call a home of a debtor in attempts to obtain an alternative home number or a work number. The PI might pose over the phone as a sale person or attempt to conduct some form of a question and answer survey. This is done to obtain personal information so creditors and other parties can complete there litigation process. Without pretext in this area of investigation finding individuals would be non existent.

Honesty Shopping

Private investigators are retained on behalf of retail head offices to pose as a customer at retail outlets. The private investigator goes into the retail outlet and purchases two items of clothing with the exact same price. The private investigator then watches the employee to see if both items are accurately processed through the cash register. This could also involve wearing a hidden video camera or even installing a hidden video camera in a discreet place in a retail outlet.

A similar form of deception is used owners of bar, and night clubs who hire PIs to to monitor their bar tenders to see if all drink orders are being purchased through the cash register. A PI will pose as a customer and continually watch the transactions processes or not processed the cash register.

Insurance Investigation

While the insurance community continues to be the biggest client to Private investigators they are in fact loosing the battle of insurance fraud. This loosing battle is one of the main reason consumers continue to find their monthly premiums increasing at alarming rates every year.

While PIs are involved in all aspect of insurance investigation they are most commonly involved in doing surveillance video taping on would be cheaters. Insurance claimant’s who are represented by a lawyers are already well protected under other legislation that would prohibit any PI (or any third party for that matter) of contacting the claimant at home or at work without their lawyer present.

Pretext and or trickery in insurance claim investigation is almost non existent. However video taping cheating claimants continues to be a sensitive and controversial topic. Privacy advocates continue to fight that a residence should include the front and backyards as it has been legislated in many parts of the world. This is known as “the residence or any part there of” issue. If changed a private investigator sitting on surveillance watching a cheating claimant’s home will be refrained from video taping any movement if the claimant is in his backyard or front yard for example.

So if while on surveillance a PI observed a claimant faking an injury jumping on a trampoline with his children on the front lawn of his home the video tape will be in admissible. The PI could find himself in charged, fined or imprisoned jail for taking the video no matter how obvious. This would also make it difficult for PI’s who investigate claimants who my be working from home. A claimant for example who is fixing cars in his driveway for cash movingand bending and not reporting the income. All of these observations at a household will soon be illegal and inadmissible.

It’s believed that the legislation change will be right around the corner. While PIs are allowed to follow and video tape claimants who are suspected of faking their injuries, there has been a case before that went before Privacy Commissioner where an employer suspected an employee of faking an injury and being unlawfully on benefits. When the PI confirmed the employee was faking benefits by way of video taping the employee complained it was a violation of privacy. While the evidence held and the PI was not reprimanded it was recommend at the hearing that surveillance only be conducted “as a last resort”. It should only be contemplated if all other avenues of collecting personal information have been exhausted. The decision to undertake video surveillance should be made at a very senior level of the organization.

Any seasoned insurance investigator would agree with the recommendations but most would argue what personal information is there that can be obtained when the doors to obtain personal information are closing. How can we observe movements if we can’t follow?

Missing Persons & Children

Private investigators have been instrumental in finding our missing children. Many child abduction cases involve the parent who does not have formal custody kidnapping the child. Child abduction cases involve finding the parent who has abducted the child. This involves a great deal of pretext where a Private investigator will concentrate on finding other family members who under the right pretext might give up the new home phone number, cell phone or work phone number of the parent who abducted the child.

The PI might call up family members saying he is a potential employer checking references, sending a parcel etc… Many are unaware that a great deal of tracking down our missing children is conducted via phone inquiry and via lawful pretext. It is expect that a parent who has abducted child will not have his or her name in any published phone book or anything that might be a part of public record. It will be other family members and friends what will lead to the address of the parent who has abducted the child.

Undercover Investigation

Private investigators are hired by industry to work undercover. They pose as one of the employees and report to management on internal and theft, drugs, just to name a few. Questions about pretext and deception would arise as to if a PI is working undercover if he or she is in fact violating privacy or pretext laws.

Underground Economy

Private investigators have been investigating the underground economy from the very beginning. People work in the underground economy for many reasons, to evade taxes, creditors, child support, or mostly commonly are simply involved in crime and being paid in cash.

Virtually the only way to show that a person wakes up every morning and goes to work at a job for cash is to have them followed. The controversy of surveillance and video taping continues.

The PI might alternatively make pretext inquiries with the suspect or family members to obtain a work number where the person might be working. There are number of lawful pretexts that can be conducted by PIs to try to bring out a work number with family, friends or relatives.

Vehicle Theft

The are a number of PI agencies that specialize in vehicle theft investigations on behalf of banks, finance companies and private bailiffs. PIs continue to be instrumental in not only finding stolen vehicles but identifying theft rings that usually involve organized crime. Many insurance companies have in house theft investigators that are working in the private sector most of them are ex-police officers.

The Back Fire of Privacy Legislation

If you’re a law abiding citizen, paying your debts and taxes this is a great piece of legislation. But the backfire of the legislation is protecting our criminals and debtors. Private investigators and the private sector require access to government services and private services that hold confidential information on people and companies. Important tools like access to driver’s record information, access to the computerized land registrary system, the use of the credit bureau in judgment debtor and collection situations just to name a few.

But the legislation continues to backfire. The public is in panic over crimes like impersonation, bank fraud, mortgage fraud and insurance fraud all things the private sector investigates every single day. They are the answer to the problem not the cause. All of the tools that hold personal data are needed to investigate but are slowly cutting off the private sector slowly over time.

In Provinces like Quebec and Alberta, PI’s have no access to government motor vehicle information. They can’t even run a license plate to follow an insurance claimant or a driver’s record to see previous driving infractions.

How are we expected to do insurance claim investigation if there is  no access to vehicle or driver information? How is a PI supposed to help a person enforce a judgment or child support order when for the most part credit bureaus make it virtually impossible for PIs to have access even if they have a certified copy of a Judgment or Support Order? The credit bureaus are already under scrutiny by the media because of impersonation and credit card fraud concerns.

Mortgage Fraud is out of control rest assure it will be a matter of time before the computerized land registry system will panic and close to the private sector. It will only be lawyers and real estate agents who will be allowed access. How do we then conduct mortgage fraud investigations when we can’t even do a title search on suspects that might own other properties?

The newest growing scam which is similar to mortgage fraud is where fraudsters register a loan on your vehicle and skips out with the money. Someone who owns a luxury car for example wakes up one morning and finds their vehicle has be seized because a fraudster registered a loan against the vehicle and absconded with the money. The bank bailiff then seizes the vehicle right in your driveway.

Insurance companies are going crazy with this new scam and many don’t even understand how it the scam works. All they know is that claims are coming out of the woodwork.

While the police are involved in investigating these crimes so is the private sector. In order to investigate this crime the private sector needs continued access to both the Driver Record information and the Personal Property Security Registration system. PI’s in Ontario have been fortunate to have continued access driver vehicle information but this crime is a Canada wide problem and access is required in every Province not just a few.

Many in the private sector are convinced these bodies of information will also panic and again cut off them off. It is the private sector that investigates these crimes on behalf of banks, insurance companies and their legal counsel.

There are not enough police in the world to combat this problem. The information bodies continue to panic because of privacy concerns and then close the door on the very industry that help to resolve to the problem.

Legal Community Already In Trouble

The legal is community is in big trouble they just haven’t realized it yet. Sooner or later would be Plaintiffs and the general public are going to realize that when they sue in court attempting to recover their losses even if they win their case if defendant simply refuses to pay there is every likelihood their court ordered judgment or monetary award could be nothing more then a worthless piece of paper.

Millions of people have judgments, court orders, child support orders or even criminal compensation awards that are completely worthless and may never be collected. The public continues to be under the illusion that when they win these awards that if the defendant (now called the debtor) refuses to pay that the person will be thrown in jail. It doesn’t work that way. You’re essentially on your own trying to collect it.

While costly lawyers can sometimes help trying to collect on these awards it is without any doubt an “investigative mission” to discover assets not a legal one. If you’re trying to enforce your award you’re on your own trying to find a bank account, employment, or non leased/financed vehicle so you can collect your money. All the doors to find this type of information are closing fast in the name of privacy and this includes law firms.

How is anyone expected to find not only the bank account on a person but the actual branch so a garnishment can be issued? Even then there is virtually no way of discovering if there is money in the account before you spend the money on legals to complete the garnishment.

Sometimes a credit bureau search can give leads but this door is already closed on some agencies. Don’t look to the banks to give up confidential information on their customers. The banks continue to have tightened their reigns because of fraud concerns. Depending on the Province where you live you might be able to do a vehicle search to find vehicles in a person’s name. A lien search also has to be conducted to make sure there are no liens on the vehicle so it can be seized. It’s just around the corner that access to these doors will be closed if not completely.

If Private investigators are not allowed to use pretext to obtain personal information such as a home address or employment how do we find employment on our debtors? A credit bureau search might help if access is available.

What if the person is a participant in the underground economy working at a job for cash? The only way this can be found out is via a pretext call (trying to get a work number from someone at the household) or to follow the person into work at expensive surveillance rates. There is no other way in the world to know where a person is working under the table then to follow them.

If PI’s are allowed to use expensive surveillance to follow debtors into to work this is costly and will create more controversial privacy concerns.

Lawyers will argue in this article that they can perform expensive judgment debtor examinations where debtors are compelled to come into an examination and reveal their assets under oath. If the debtor fails to show up the debtor can be committed to jail. Very often debtors who have been ordered into examinations do nothing more then lie and cover their tracks either before or after the examination.

While a debtor can be committed to jail for not attending the examination the public needs to know that the debtor is in fact being committed to jail for failing to comply with the order to attend. It has nothing to do with not paying. The process which is known as Warrant of Committal is not a collection process it’s a punishment process for not showing up to the examination when ordered. It still may not lead to any money beig collected.

Our monetary awards in our court system continue to become worthless pieces of paper.

Recipients continue to feel the pain trying to find their defendant/debtors and collect. There is simply one road block after the other being unable investigate the assets of debtors.

Legal clients continue to spend thousands into our court system walking away with an expensive legal bill and a monetary award they can’t collect. The public will continue to loose faith in lawyers and a justice system that continues to fail them.

The televised O.J. Simpson case is a classic example. These civil plaintiffs who have won their judgment against Simpson continue to chase him with one road block after the next.

The Resolve

For every door that is closed the must be an opening to obtain information via lawful means. Policies have to be in place that allow for sensitive data to be released for people who have judgments, payment orders or third parties that are working under the direction of a lawyer or insurance company.

For example if someone has a judgment or has a support order that individual should be able to retain a collection agency, PI Firm, lawyer or a Forensic Accountant to be able to conduct a credit search on the debtor that might give leads for bank accounts and employment. The credit bureaus cold require that they must be provided with a certified copy of the judgment or the order before the search is conducted. If a PI has retainer letter from an insurance company or a lawyer they should be able to do a motor vehicle search or a driver’s record search in any Province without restriction.

Those who hold government or private record data can enter into “authorized requestor contracts” with the private sector.  Companies who have satisfied that they require the personal data for a lawful purpose.   The credit bureaus for example have established such contracts with some industries (like collection agencies for example) but many industries are not allowed access. 

As part of the contract process surprise audits could be conducted to confirm the data is being used pursuant to the contract.   Motor vehicle record departments have such a contract process but many Provinces and States are closed to the private sector regardless of the reason.

Pretext should be regulated allowing for the private sector to obtain basic details like names, addresses, employment and a phone number in aid of investigating a crime or collecting a debt.  One should not be allowed to impersonate a person or company.

Legislation is already in place to protect telephone calling data concerns as in the HP Scandal. 

Unanswered Questions 

How do we expect a single mother of three starving for child support to find the bank account bank branch on the father of her children that just refuses to pay? Would we ever see the day that a judgment or a support order could just be served at the head office of a major bank? Would bank head offices when provided with a garnishment search our their branches for accounts and register the garnishment for us? The banks would appose any attempt by parliament to implement such a strategy.

What are the legal options then? Does the information system go underground? Do we move to a police state. Would the example of our mother of three have to befriend a bank teller to give her the information illegally?

The doors are closing rapidly all in the name of privacy. With no consideration or exceptions for those who fight fraud, collect our debts, our child support or catch our criminals.

Who will find are missing birth parents are family members? How we investigate lies, infidelity? Who will find our witnesses, missing children, birth parents are missing vehicles and/or stolen property? Who will be allowed to investigate for defense and the wrongfully convicted? The continued and growing restrictions will affect every person either now or in the future right across the globe.

A Percentage of Crime Not Investigated by Police

There are certain areas of crime fighting that are exclusively in the hands of the private sector or the private sector has a bigger role in the investigation and apprehension. 

This percentage of crime is where government and/or public law enforcement have decided it is best (or makes more economical financial sense) for the police not to be involved full time. 

Things like retail theft, casino fraud, insurance fraud, bank fraud,  copyright and trademark fraud just to name a few. 

These crimes are INVESTIGATED by the private sector but are ultimately REPORTED to police.     

An example would be private sector employees working in a fraud unit in a bank or a special investigative unit in an insurance company.  These departments do their own investigation then report the crimes to police.

If the doors continue to close on the private sector there will be certain crimes in our justice system which will run out of control simply because the police don’t investigate and the private sector can’t because of legislation and limited access to information.

It is a world wide fact that law enforcment is loosing the battle on fraud on regardless of where you live in the world.  It has nothing to do with poor policing or penalties. They are simply out numbered and will continue to be with computerization. 

This is why the only fraud programs that are working are proactive prevention programs (stoping the fraud before it can happen) not enforcement and punishment.  Many experts on fraud would argue that policng and punishment are no longer a deterient to this crime.  Would be criminals jump at the chance to defraud for a million and go to jail for less then a year.  Fraud has become a  lecurtive business opportunity that can be conducted on a world wide scale.  

What Can We Expect

Banks will increase insurance rates going into loans, knowing perfectly well there is a poor likelihood of collection if their customer defaults or defrauds them. Underwriters of insurance policies and their actuaries will take into account the investigative restrictions when they write insurance policies. Insurance premiums will increase out of control to the point that only the wealthy will be able to afford insurance.

All aspects of insurance will be affected not just popular automotive and injury policies. With the increase premiums we can expect to find more individuals without insurance once again making it more difficult for victims to collect their losses either via insurance or through the courts.

Defense Lawyers and accused persons who retain PI’s will be restricted to what PI’s can and can’t do in aiding a defense Investigation. Defense lawyers will maintain their accused clients are in a disadvantage and will ask judges to throw matters out and set their clients free.

Certainly with the new pretext legislation we can expect that Crown Attorneys will see Defense lawyers file motion after motion requesting the courts set their clients free as a result of a pretext being used.

Are we to believe that public law enforcement by itself will be able to tackle the civil unrest after the have the doors are closed on the private sector? Police forces and their specialized crime units are statistically backlogged out of control.

Privacy advocates will continue to applaud privacy legislation and will no doubt support pretext legislation. But will they will support the legislation when they themselves have have been personally victimized by crime, wrongfully convicted, or discover the impossibilities of trying to collect a debt, judgment or child support order.

What submissions or ideas do the privacy advocates have that will allow the public and/or victims to obtain personal information when it relates to due process in our justice system?

Fraud is the worst it has been in the history of man kind. With computerization, the internet, and the sophistication of scanners and copying machines the problems will remain out of control at alarming rates.

Fighting crime can not be resolved by public law enforcement alone. Should every security guard in our malls and buildings be replaced by police ?

There is no better time then right now to be a criminal and in particular committing the crime of fraud. Would you rather have ten thousand or a hundred thousand fighting the war on crime?

Our criminals, debtors and those who refuse to pay income tax are now untouchable under the protection of federal acts. The private sector that would seek to catch, collect or prosecute these people will continue to be legislated having their tools removed from them year after year with no exceptions.

We should all be supportive of privacy legislation yet we must also be aware of the backfire. There has to be legislated exceptions to give victims rights to by pass the protection of personal data when it comes to the examples given.

Many are intimidated by the work conducted by PIs only up until they need the help of one or anyone in the private sector for that matter. Once you feel the pain of being a victim of crime, wrongful prosecution, or have a judgment, child support order or a debt that can’t be collected you will feel the frustrations of the private sector that would serve to help you but can’t.

Private investigators, security guards, forensic accountants, insurance adjusters, and employees of in house bank fraud departments may find themselves in a jail long before their targets of investigation. Their punishment for their methods may be more then the offences they were investigating.

About the Author:

Kevin Bousquet has been a licensed PI since 1986. He is a graduate in Law Enforcement, The Law Clerk Admin Program and a Certified Fraud Examiner with the Association of Certified Fraud Examiners.

He is president of The Corpa Group Inc a licensed Private Investigation agency established in 1991 working on behalf of major corporations, insurance companies and their legal counsel.

Kevin Bousquet can be seen giving lectures advocating on ways to combat fraud and changes to Adoption in Ontario with the Adoption Counsel of
Ontario.

Kevin Bousquet has his own TV show “Undercover With Kevin Bousquet” where shows depict real life examples of fraud, victimization, and the work conducted by the Private Sector. His show can be seen satellite, persona cable or streamed on the Internet at www.resourceschannel.com/programs-undercover.html

(Canadian Institute of Mortgage Brokers and Lenders)  

The Canadian Institute of Mortgage Brokers and Lenders says mortgage fraud is on the rise and costing Canadians hundreds of millions of dollars each year. The most common method used to perpetrate mortgage fraud is to misrepresent the purchase price of a property  

(CBC Marketplace)

Ontario Land Title Registry Office: Responsible for province-wide administration of local l
and title offices. Tesoro was able to walk into a local land title office with forged documents and transfer title to six homes to himself.

In 1999, the province began a pilot project allowing online registration of land titles. By September of 2002, the service was extended to 12 municipalities, including Toronto.   The Ontario government describes it as the first ever self-serve, electronic land registration system in the world. The Ministry of Consumer and Business Services says electronic registration will cut down on frauds like Tesoro’s. Others suggest the system may provide opportunities for a technologically savvy con artist.   (The Law Society of  Upper Canada)

The Law Society of Upper Canada is aware of increasing instances of fraud in relation to mortgage loan transactions. These frauds usually involve either complicit or fraudulent purchasers, and/or real estate agents, mortgage brokers and unfortunately, in some cases, lawyers.Typically, mortgage fraud involves the use of false identities
and the artificial inflation of property values. Both these elements can be present in the same transaction. 

A PROPOSAL TO SOLVE THE MORTGAGE FRAUD PROBLEM THE HOUSE KEY    

Your mortgage and the title of your propery is as sensitive as your credit card number.   Yet the problems of mortgage fraud continue to increase as a result of computerization of the land titles system.  

All of this could be avoided if a property was given some sort of a passcode. 

For example.  

An owner of a home is given a card with an 18 digit code.   This code is kept by the true owner of the property and the government land titles office.   

The filing of the code does not form part of the land titles public record but is filed with the land titles office.    Title cannot be transferred, conveyed, or charged unless the pass codes match between the land titles office and the true property owner when instruments are to be applied to the title of the property.   

This concept would have to be administrated through the government land titles office.  Private corporations who have been selected to computerize the land title data would have to work with the government to administrate the program.    The main resolve to this problem lies in the hands of the registry office and the companies they have selected to computerize their land registry data. A House Key program could be a free or paid service whereby property owners have to voluntarily subscribe to the program to protect their properties.    Insurance companies could insist that property owners subscribe to the program before underwriting any policy be it, property insurance or title insurance.  Alternatively if the program can be enforced, insurance companies could agree to reduced rates if you subscribe to the program.      

Why are other fraud programs failing?   

Proactive vs Reactive   

Kevin Bousquet, a Certified Fraud Examiner and President of The Corpa Group, a 15 year old Private Investigation agency maintains the focus of most fraud programs are on a failing REACTIVE programs.  

Reactive meaning “after the fact”. Reacting to the fraud after it has been perpetrated.  Giving people bandaids after they are bleeding.  

If there are a bunch of fires happening on a street do we go and form associations and clubs trying to lobby the government to hire more firemen?  No, we set up a PROACTIVE program  to stop the fires from happening in the first place.   We do inspections, we make sure home owners are protected ahead of time with fire extinguishers and smoke detectors.    

This problem is no different then protecting your credit card number.  The credit card company has the responsibility to set up passwords, and security procedures to make sure your, you, when the credit card is used. 

This is not a police problem there is not enough police in the world to combat fraud.  Fraud in general is worse then ever before in the history of mankind.  With the growth of the internet there are now more fraudsters and more victims in play. 

With the sophistication of scanners and photocopiers its a mathematical certainty the problem will get worse.  

There is no incentive to even resolve on a proactive level.  Everyone everyone is making money on the problem.  Insurance companies,  lawyers,  forensic accountants,  private investigators all stand to profit from the costs associated from aiding a person after they have been a victim.    This is nothing more then giving a person a band aid when they are already bleeding.   We need to prevent the problem before it can happen and stop handing out bandaids.

Bousquet’s agency continues to be retained by title insurance companies and their legal counsel and states that his case load is increasing more and more each month.  

Victims of mortgage fraud (and fraud in general) are relying on public law enforcement to punish perpetrators and the civil court system to collect their losses. “Both of which will most certainly fail” says Bousquet.    

Municipal Police forces are backlogged over a year on fraud matters, some over two says, Bousquet.      By that time the perpetrator has ample time to get away. Witnesses have probably moved, documentation relating to the matter can become harder to find.   

 “It’s all a big waste of time says Bousquet”.  Law enforcement and punishment through the courts is not a deterrent to this crime.” says Bousquet. 

It’s worth it for these criminals to get some probabation and maybe a little jail time on the weekends to pocket $50,000.00 to $100,000.00 of stolen money.

“If you think you’re going to actually collect your losses through the civil court system you’re well mistaken” says Bousquet.    

Most perpetrators have no assets in their name.   The proceeds from fraud (or any crime for that matter) are seldom deposited in any bank account that could be garnished. 

While victims of fraud may succeed in getting a civil court judgment (or a criminal restitution order) it will most certainly be an uncollectible worthless piece of paper.     

Bousquet says, “the rules of civil collection with a judgment or a restitution order are very simple.   You have to try and collect on a bank account, employment wages, property, or a vehicle that has no lien on it”.  “Good luck and don’t expect the court to help you find these assets in order to collect on them, you’re on your own” says Bousquet.         

These methods of attacking fraud are nothing more then punishment and collection all of which fail without doubt.  At the end of the day the property owner is completely victimized
and in some cases financially ruined forever with their credit record destroyed.     

Bousquet argues that a true fraud program should be towards a PROACTIVE program to stop the act before it can occur.   This starts with password protecting or computerized landtitle system.  

A clear program with the cooperation of the government land titles office and the companies that they are using to computerize the land title data to protect property owner.    

In a password protected system the true property owner is notified every time an instrument is being applied to the title of their property be it a mortgage, lien, transfer or conveyance.  “No different then a password or secret code that may be associated with your credit card” says, Bousquet.   

However the title can not be touched unless the passwords match.

A kind of system where the land registry office must see the true owners secret code when the documents are being filed either at the land registry office or through the computerized system.    

Bousquet has forwarded his ideas to Teraview, a company that has been responsible for computerizing the land title data in Ontario.    

Bousquet maintains mortgage fraud is completely out of control. The true resolve to this problem starts with the government implementing this kind of a program or at least focusing on a Proactive system.     

While many experts are maintaining that people should be checking their credit bureau file on a regular basis.  Bousquet maintains this is still a “reactive view”. It has to start with the government implementing a new proactive  password protected system.  

I find it funny that there are now companies in place that can notify you, call you, or send a letter to you (the true owner) whenever someone even takes a peek at your credit bureau file. Yet the land registry system and the companies who computerise them can’t develop a password protected land title system.    

Real simple…you can’t alter, add, or charge my home unless the password that I filed at the land registry office on the date I purchased matches.

I have just recently did a show on mortgage fraud in follow up to this article.  You can see a recorded version at http://www.resourceschannel.com/programs-undercover.html 

I guess this is a bad time to tell the public that this same type of scam is now being conducted on vehicles in Ontario.

People are having their vehicles seized because fraudsters register liens/loans on vehicles unknown to the true owner.  I’ll be writing about this scam later.

I will also be discussing both of these types of frauds on my show “Undercover with Kevin Bousquet” .Kevin Bousquet is Certified Fraud Examiner and President of The Corpa Group Inc (www.corpa.com). 

Corpa is a 15 year old private investigation agency involved in Fraud, Asset and corporate  Investigation.   Corpa continues to be retained by law firms, banks, insurance companies (and their legal counsel) as it relates to their specialized area of investigation.

Kevin BousquetThe Corpa Group Inc. www.corpa.com 

Kevin Bousquet, Corpa’s President, is currently hosting  a regular weekly show called “Undercover with Kevin Bousquet”  on Natural Resources Television.  You can check the network website for times and channels in your area at www.idnrtv.com. 

The show is Broadcasting NOW on Persona Digital Cable Chanell 945 and Satellite Dish.
Satellite : Anik F1R , Downlink frequency 41.0 Mhz , 1050 Mhz. vertical , Chanell 220

Topics continue to include Fraud in the Work Place, Protecting Your Company Secrets, Corporate Debugging, Legal Issues, Surveillance etc..

You can see recorded shows on his website at:

http://www.corpa.com/livevideopicks.html