Businesses beware. If your company is the victim of a crime, don’t expect police to always rush to the rescue and catch the culprits.
Onerous new privacy laws, budget squeezes and new technology are conspiring to make life increasingly difficult for the police – and businesses who rely on them for protection.
As Insp. Joe Loran of the commercial crimes section for the RCMP in the Edmonton area told me: “Investigations today are taking longer.”
Naturally, there are agencies ready to fill the void. Private investigators, accountants and lawyers are seizing the opportunity.
Alan McKenzie, a claims adjuster with ING Western Union, an Alberta-based insurance firm, said that his company recently used the services of a private investigator to nab three young men who had falsely claimed to be injured in a car accident.
The adjustor suspected their personal-injury claims were exaggerated. So, he had an investigator monitor the culprits, who were caught jumping over garbage bins and lifting heavy materials at their construction jobs, obviously suffering fewer injuries than they had claimed.
Insurance fraud is a multi-billion-dollar industry. Why wouldn’t the police investigate the ING case? Do we have two-tiered justice in Canada?
Not exactly. But Staff Sgt. Jim Fair, of the Calgary Police Service commercial crimes unit, said: “It’s unfortunate, but sometimes we have to put a bit of the burden back to the victim,” where the certainty of an offence is in doubt or the investigation is complex. Financial crimes that require extensive forensic audits are often too much for the police. “For individuals that’s a hardship; for big companies, (such audits are) part of doing business,” said Fair.
This situation is not new. Private investigators, especially in the insurance business, have been around for decades.
Nevertheless, there are hints that police investigations are getting harder to conduct and, therefore, the burden on the victims is growing.
None of the officers I spoke with would tell me as much directly, but other people I interviewed, including Mark Gruschynski, a P.I. with Covert Investigations Inc. of Edmonton, suggested the threshold of pain required to get the attention of police resources is increasing. Gruschynski’s job for corporate clients often involves deciphering “the good company from the bad company.” His commercial clients are spending considerably more money today than they were a few years ago.
I suggest that this is a sign of decreasing confidence in police protection or increasing incidence of trouble (or both). Don’t think that I blame the overstretched, underpaid police themselves. Today, criminals have more ways than ever to hide evidence or move money out of the country.
Additionally, new stress has been placed on police departments across the country by regulations. For example, police departments now have entire units dedicated solely to interpreting increasingly complex privacy laws. The latest law, instituted in 2000, while noble in concept, is as onerous in practice as its name is to remember: The Personal Information Protection and Electronic Documents Act (PIPEDA). Const. David Hathaway of the Calgary Police Service told me he recently had a lengthy discussion, and made two extra phone calls, simply to discuss whether details of a file in question were allowed to be divulged. The relatively new privacy legislation comes with a price, and that price might be a case backlog.
“Let’s just say, 20 years ago we would not have had this conversation,” he said, referring to why he could not divulge to me the name of someone who took a cheque made out to Business Edge and cashed it without authorization. (Hathaway’s reasoning had something to do with the bank being the “offended party,” even though the cheque was removed from OUR office without our permission.)
I’ve heard rumours that commercial crime sections of police departments in Alberta now ignore files involving less than $10,000 in losses. The Vancouver Police have admitted as much publicly, but police (in Calgary and Edmonton, at least) will not confess to having such an arbitrary minimum.
Our police do say, however, that they skim off the easiest, most obvious cases first, and as things get more complex, the chance of a police department investigating becomes increasingly unlikely, unless the alleged crime is of sufficient seriousness in size (big bucks) or scope (such as gang involvement).
But there are many complex ways to commit fraud, and that’s why there are many people in the marketplace filling in where the cops leave off.
Allison Associated is a firm that specializes in difficult commercial investigations. President Mike Fluker said that bankruptcy manipulation is one common situation where the complexity of the crime often demands the specialized services he provides.
“In many cases, if a company is ‘going south,’ the directors, managers, the key players – or a key player – is going to know,” Fluker said. “In order to protect themselves, they may divert funds, which rightfully would belong to the creditors.”
This is the kind of complaint that the police sometimes seem to overlook, even when millions of dollars are at stake. When an investigation is based on nothing more than a hunch, such as the opulent lifestyle of the “bankrupt” owner, the police can’t be expected to dedicate scarce and valuable resources. Presented with evidence, on the other hand, they will move decisively.
New, improved encryption technology and privacy- protection laws are now in place to avert electronic abuses and crimes from happening in the first place, but these systems can be used against the companies and individuals they are intended to protect.
This fact hit close to home, and sent me on my original quest for more information when our company faced a small but suspicious incident. As I mentioned above, one of Business Edge’s customer payments was intercepted by a third party, who managed to deposit our cheque into his or her personal bank account.
Apparently, the processing department of the depositor’s bank, CIBC, failed to notice that the depositor was cashing a cheque made out to us.
Banks must be processing these cheques by rote, if not automatically (a CIBC spokesperson did not or could not answer my question about how such cheques are processed).
In our case, it naturally took a few weeks for us to realize what had happened – when we called the customer about being late with payment. But we may never know the whole story because neither the police nor bank will tell us who cashed our cheque, citing PIPEDA. We, like many other companies, are left to our own devices, receiving no help from either the bank or police.
It seems these new laws are protecting the wrong people, while sucking up valuable law-enforcement resources.
Const. Hathaway said that 20 years ago, it would have been a simple matter for him to give us the cheque-casher’s name. And 20 years ago, if we had recognized the name, we would have simply asked him for an explanation. It would have likely been settled in minutes.
But in this modern era of electronic privacy, we would have to hire a P.I. and lawyer, consume vast amounts of law-enforcement and bank resources (not to mention Business Edge resources) simply to find out who wronged us out of our $42.
I hope former New York mayor Rudy Giuliani was wrong. Maybe the people who are willing to commit the small offences today are not the same ones committing the serious crimes tomorrow. But I fear the regulatory burdens we are placing on police today will make their job harder tomorrow, when the small-time crooks learn how to do their nefarious business big-time.
