The Art of Looking the other Way

Posted on by Pete Cross

Fraud has many formulations and iterations; corruption, cronyism, nepotism, parochialism, patronage, influence peddling, and outright theft. In this country it has become dispiritingly common place. The blatancy apparent in whichever direction we look. Is this dwindling of basic economic honesty beginning to fester, to grow, and create a doubt. Is there a sense that our democracy and our economy may be crumbling from the bottom up, slowly but methodically. Not by a directed sense of purpose, but rather by our obsessively looking the other way.

Outwardly, those in government corridors, put on a stern and concerned face when confronted with financial matters that go wrong. They give us solace and point to our economic stability, point to our formidable banking institutions, and of course our stable democratic government. But are we rotting through incompetence, disinterest and a lack of investigative desire? Are we being effected not suddenly by a heart attack of malfeasance, but instead a slow eating cancer of general ineptitude.

Fraud, even in its most basic clear cut form is continually around us. Just consider that in a recent survey by Price Waterhouse Coopers it was estimated that half of the companies in Canada report being victims of fraud. When the Covid “waves” hit, how do we ignore and countenance that during the much celebrated Liberal CERB benefit program over $500 million was paid out to persons who were multi-collecting; from CERB, the Canada Revenue Agency, or the Employment and Social Development Canada office.

In terms of just the CERB payments, a recent House Finance committee heard further discouraging testimony that the Auditor General can not even look into the fraudulent obtained payments– for another year– even though they have known about it since 2020. The CRA confirmed that they are not expecting to make a dent in the wrongful payments until 2023, probably about the same time that Federal government workers will actually have to go back to the office. Apparently, we are waiting on the Canada Revenue Agency to get their act together.

Is it a minor problem? You decide. CERB was budgeted to cost $24 billion –it came in at $81.6 billion. In July 2020 Employment and Social Development Canada knew already that $442 million was sent out to 221,320 people in the form of those double payments.

One must always “follow the money.” Where the money goes is where you will find people looking to take benefit from it and see it as an opportunity. The structure of these particular Covid programs created enticing pots of gold. Very little deception was needed.

Since Canada seems “reluctant” to undertake any kind of investigation or go after those that ripped the system, one wondered whether this was a North America wide malaise. Did this exceptional level of forgiveness for the under-handed equally permeate all of the liberal governmental establishments in the U.S. and Canada. As it turns out the American response to the potential for fraud that they too are now uncovering was in fact distinctly different.

In fact, the contrast in our two countries, even though they were running similarly intended programs is startling. If we reflect on the differences in approach and put Canada up to the mirror, our fermenting complacency boldly looks back at us.

Of course, the money amounts in the U.S. are staggering due to the size of their population versus Canada. The PPP as it was called in the U.S. was almost a carbon copy to that of CERB in Canada. (PPP was the Paycheck Protection Plan) The Canadians and the Americans also had more than one plan in effect. For instance, the U.S. also had the Covid disaster relief fund, and the unemployment relief fund.

Before one looks at the numbers, remember that the overall justification in Canada was at the onset of Covid, also echoed by the U.S. government. In Canada sacrificing “security for speed”, getting out the cheques to the populace was more important than the “security” of the system and the quick dispensation of the monies. The U.S. authorities also admit that most of the money was and is, “unrecoverable”.

Unlike Canadians, the Americans are a little more harsh in their language. They have no hesitancy in saying the program was: ” an invitation to fraudsters”, and the “largest fraud in U.S history”. That according to the official who was overseeing the payouts.

The Americans estimate that 10% of the monies paid out under their PPP was fraudulent. (We have seen estimates in this country under CERB of up to 30%). The Americans paid out $800 billion, therefore they estimate that $80 billion was paid out to fraudsters.

In addition, they estimate that $90 billion at a minimum and up to a maximum of $400 billion was taken from the secondary unemployment relief fund. Another $80 billion from a third program, the Covid disaster relief fund. Interestingly, they estimate that at least 1/2 of the stolen funds from the unemployment relief fund were stolen by “international fraudsters”.

Unlike Canadians, the Americans seem upset. They have set up the Pandemic Response Accountability Committee which is headed by General Mike Horowitz. This group has been given a mandate of 10 years to pursue the fraudsters.

Their results so far are in their words “minimal”, with only 178 people “convicted” so far. One wonders if in this country in the last thirty years if we have charged that many with significant fraud. What the investigators have uncovered is that the size and scope of the fraud may be overwhelming, continually expressing surprise on”how blatant it was”.

Using AI programming they are now scanning over 150 million records to identify patterns of fraud, such as the gas station in Houston whose phone number was used for over 150 applications for PPP. The perpetrators are appearing and being charged in increasing numbers; David Hines in Miami took them for $3.9 million; another person $7.2 million, some spending their financial gains on Lamborghini vehicles and mansions. A California couple stole $18 million and eventually pled guilty– the husband getting 17 years in prison, while his wife got 6 years. Yes, in the U.S. they also go to jail.

They have found that the service provider BlueVine, who was contracted to help the government dole out the funds and gave out $4.5 billion bragged about processing applications in less than 5 minutes. They estimate that a stolen identity or a fraudulent single identity could translate into a possible $30,000 in possible claims and benefits. The perpetrators would steal legitimate company names from the internet, inflate the number of employees or create the employees and then apply for the business loans.

One of the more blatant fraudsters was Danielle Miller out of Boston. Taking names from the state website and applying for Covid relief loans allowed her in 40 minutes make $100,000.

There is another myth that is also now also being dispelled. In speaking with experts in the fraud industry and in talking with private businesses they are quickly finding that “trade offs between speed and security” is simply not true. As one person pointed out, if this were true, why wouldn’t large private industries with a consumer facing business and who featured rapid response; why are they not going bankrupt? They describe it as categorically “false” narrative that speed necessitates neglect and oversight.

Of course, maybe none of this could happen in Canada, maybe we are much too honest here.

Auditor General Karen Hogan released a report which included the fact that the Employment and Social Development Canada (ESDC) and the Canada Revenue Agency (CRA) “focused on delivering the benefit quickly…both organizations understood the rules…” and they “relied on applicants good faith”.

Let’s remember that the Canadian CERB program allowed anyone over the age of 15, who made a minimum of $5,000 in 2019, could apply for $2,000 for a period of 28 weeks; following an extension of the program in August 2020. If that was not enough, once the CERB ended for these folks, the government then directed them to a revamped Employment Insurance Program.

The Auditor General admitted that a “pre-payment screening structure could have been put in place” and that telling the government agencies to “ignore warnings or red flags” of fraud may not have been a good thing. The CRA did open a “snitch line”. The thinking must have been, if they couldn’t find the fraud, maybe the public could lead them to it.

The Canadian Anti-Fraud Centre by the end of January 2021 had 8500 cases of CERB related identity theft.

In a 2020 FINTRAC Report made public in November 2021, that the CERB program was “knowingly and actively defrauded ” by scammers, organized crime, and that payments were made to people engaged in illegal or suspicious financial activity”.

Have we learned anything? In 1991 in Vancouver, Murray Pezim was investigated for fraud, the classic pump and dump strategy in mining stocks. In 2022 the U.S. Securities firm (not the Canadian authorities) charged David Siddoo for employing the same system. In 2021 the Cullen Commission exposed billions of dollars in money laundering. Really, nothing has changed.

In this country we are structurally not set up to look for fraud, or any variation of fraud. And if we aren’t looking we are sure to never find anything. The RCMP were recently investigating Trudeau and the Aga Khan who were allegedly influence peddling through elaborate vacations– and lo and behold they found that there are no rules that really apply.

The RCMP which should be the first stop in large scale fraud investigations in this country, as an organization has proven itself time and time again as incapable in the field of economic crime. Investigations in this country are talked about in years, not days, weeks or months. The solution is either that this type of crime is pulled from their organizational mandate, or they need to be dismantled and re-built and resourced to 2021 standards.

Maybe, the general public is willing to let their rage to continue to bubble away just below the surface. The Liberals and the NDP are counting on it. Is it that we are so complacent, so ensconced in our own sphere of security and relative prosperity that we just shrug it off, politically helpless, morally and ethically spent.

Photo courtesy of Flickr Creative Commons by Ryan Steele – Some Rights Reserved

Collusion, tampering, obstruction…only in the U.S you say?

Posted on by Pete Cross

The Donald is struggling, twisting and turning in the winds of feral politics– his family, and financial skeletons exposed and being rattled as a bright light is being shone on all things Trump. We marvel and tune in every night to be updated on the latest insanity.

Trump has been battling hard, in this “post-truth era”, where ridiculous statements are blended and bent into truths, where any factual examination is pushed aside in favour of  the strident comment. Where objective facts are less influential in shaping public opinion than appeals to emotion and personal belief.

He has fired many, threatened to fire others, and has been tampering and belittling the Justice Department, the FBI and the Intelligence agencies in torrential bursts on Twitter.  He has fired the head of the FBI for not showing “loyalty” to him and continues to pursue Special counsel Mueller and the Deputy head of the Department of Justice Rosenstein.

Yet, for all his shenanigans, he has not prevailed, the hounds are still at the gates. The Mueller investigation carries on, in secrecy, seemingly oblivious to the rants of their President. The resulting outcome has yet to be revealed, but it seems unlikely that Trump will come out unscathed. We can only hope that someone continues to keep him away from the nuclear codes.

The President of the United States has been stymied by both an independent and highly resistant judicial and investigative arms, and a highly mobilized 5th Estate.  Freedom of the press is highly guarded in the U.S., supported and backed on many occasions by their most Supreme Court. Justices Black, Marshall, and Douglas wrote, in an infamous test in the courts concerning freedom of the press –” the courts lack the power to suppress any press publication no matter how grave a threat to security”

As much as we often dislike the Americans for their gung-ho bravado, their rights to bear arms, and their often fierce patriotism, one must have some admiration for their ability to pursue, once finally convinced of a wrong doing.  No one is above the law, even the President himself. And this is not the first time, we don’t have to go back very far to Clinton and Nixon, both of whom went down for their indiscretions exposed by a media and subsequent judicial examination.

Which leads us to wonder what about Canada? We are a bland nation in comparison, which maybe good depending on one’s point of view.  This is a nation which is complacent, its peoples often accused of feverishly pursuing the government pension rather than displaying an entrepreneurial spirit.  We are slow to demand answers, more wanting to believe rather than disbelieve our leaders. The political fire and brimstone, often seen to the south of us, seems dramatically lacking in this country.

We never seem comfortable rocking the boat, we thrive in offering support, counselling, “moving forward” and “working together”.  We are populated by the polyester crowd, both in dress and thought.  Does this make us immune to bad and dangerous politicians like Trump? Do we have a swamp to drain, or are we in nirvana?

If our politicians were corrupt ; if our Prime Minister or some of his cohorts were doing something illegal;  if our Prime Minister was trying to alter the Justice system in his or her political favour; would they be exposed?  Would our 5th Estate be there, would they be asking the tough questions even under threat of being ostracized by their political leaders. Would our police and judicial arms swing into action?

There does not seem to be any reason for confidence.

Lets refresh our memories.

When the verdict was reached in the Colten Boushie case in Saskatchewan, both the Prime Minister and the Solicitor General of Canada were implicitly critical of the jury; as they sided with the indigenous voices of the day crying racism. They incorrectly scapegoated the pre-emptory juror challenges. Despite legal criticisms, they were undeterred in their wanting to assuage their indigenous constituency–so in the last month or so, the same  Solicitor General has now put forward proposals  to do away with those pre-emptory challenges. The Boushie family, when asked to comment, approved.

It seems clear that our elected leaders are not hesitant to interfere with the judicial system in order to further their political goals.

In a recent foreign affairs fiasco to India, Justin Trudeau ended up at the same party as Jaspal Atwal, a Canadian convicted of attempted murder in a terrorist style act, and was sidling up for the requisite selfies with both Justin and Sophie.

To explain away this breach of security, the PM put forward a senior government official, Daniel Jean, who not only explained some security measures, but went further and put out a conspiracy theory involving the Indian government. The conspiracy was vehemently denied by the Indian government and now does not seem to stand up to any kind of scrutiny.

The significant part in all of this was that this government official felt the need to assist in taking off the pressure off the  Prime Minister. Was he put up to it?

Is it possible the Security and Intelligence group were trying to aid the PM?  In the worst case scenario the PM office may have directed that this government official to put some spin on this story, throw out a little smoke screen.

Have we forgotten Senator Duffy , paid by the PM Harpers Executive assistant Nigel Wright, who used his own private funds to pay Duffy for what were believed to be fraudulent claims. Duffy was paid $90,000 to cover all the expenses he said he had claimed, and which he could now pay back, along with a promise to go easy on him.

Michael Cohen, paid off Stormy Danials with $130,000, on behalf of Trump. Is the Canadian version of Stormy Daniels Senator Mike Duffy? In typical Canadian fashion Duffy is now back in the Senate readying himself for collecting a government pension.

A two year inquiry into former Prime Minister Brian Mulroney and his connections to a German-Canadian arms lobbyist Karl Heinz-Schreiber found Mulroney accepted $225,000 in cash to hide the transactions.  The inquiry summarized the wrong-doing by saying,  in a typical Canadian spin,  “these dealings do not reflect the highest standards of conduct”.

Mr. Mulroney’s daughter recently ran for the leadership of the Conservative party of Ontario.

The point of this historic review, is that the potential for wrong-doing in this country is a reality.  This country is not immune. But we are not looking.

Our 5th Estate has been deeply wounded, the National Post, the Globe and Mail, CTV, and the smaller papers are burdened by decreasing budgets and are in a deathspin struggle to remain relevant and financially viable.

The CBC clearly has become an arm of the Liberal party, and have been rewarded by increases in their annual budgets. If you are not a believer, the extra money even comes with strings attached; that the CBC develop a 5 year “accountability plan”, with no details given or outlined what this involves.

So that leaves us with the police and the Department of Justice.

In a recent Globe and Mail article, the article notes that Commissioner Lucki has not given any media conferences since her appointment, but was busying herself with finding a home in Ottawa.

However, what was striking was one paragraph, where the author discovers that the government “has been preparing a mandate letter listing the goals she needs to meet in coming years”. It goes on to say that this is unusual, something usually done for the Minister of a particular portfolio, but in this instance “the Federal government wants to lay out exactly what Canadians can expect of their new top cop”.

The days of an independent and viable national police force seem to be rapidly disappearing.  The Liberals have taken the step over the line, the line separating the state from the police.

The mandate of the RCMP is pretty obvious, enforce the laws as constituted.

The Commissioner represents the rank and file of the RCMP and the width and breadth of the investigational and operational policing across this country. In this time of proposed civilian oversight, these could prove to be dangerous times, given the nature of the current crop of politicians who seem to want to wrest control over the direction and scope of the National police force.

Ms. Lucki seems to have been chosen for her amenability to accept direction from the Liberals, one does not get the impression of her pounding the table to defend the rank and file, or standing up to possible governmental interference. Operational policing once again seems to be being pushed into the back seat.

Principals and scruples seem less apparent with our current Prime Minister as he frolics on the beach with Aga Khan. The Solicitor General seems unaware that it is ethically wrong to change the laws to cater to her core political base, a group for whom she once worked.

But no where in sight is anyone who seems concerned.

 

“What people fail to appreciate is that the currency of corruption in elective office is not money, but votes” – William F. Buckley. 

 

Photo courtesy of Flickr Creative Commons by DonkeyHotey – Some Rights Reserved