Fraudsters scam thousands of dollars from Bridgewater courthouse using fake cheques

Fraud artists passed more than $35,000 in fake cheques in a months-long scheme against the Bridgewater courthouse, an internal provincial investigation revealed. 

The fraud was discovered in October 2023 and reported to police. But the full scope of the problem was not understood until about a year later, after provincial auditors analyzed two bank accounts belonging to the courthouse. 

Documents recently obtained by CBC News through an access to information request outlined the investigation and the changes that were recommended to the way the courthouse pays its bills. 

According to the report from provincial auditors, an examination of the period between April 2023 and January 2024 turned up six fake cheques totalling $20,150. 

Another four fake cheques totalling $15,143 were discovered that were passed outside of that period. 

"The incidence of fraudulent cheques is expected to continue within [Bridgewater Justice Centre], as demonstrated by ongoing fraudulent cheques being detected during the drafting of this report," the investigators wrote. 

No wrongdoing by staff

The Justice Department declined to do an interview to discuss the fraud, but said in a statement that staff "immediately alerted police, conducted an audit, and put new safeguards in place" when the fake cheques were detected.

"The audit determined there was no wrongdoing by Justice Centre staff," the department's email continued. "Most of the funds involved in this fraud were recovered."

Bridgewater Police Deputy Chief Danny Macphee told CBC News the investigation is still ongoing, and they are working with police in Ontario and Alberta to chase the fraudsters.

"With a lot of these frauds, people set up either accounts with fake IDs or fake names," he said.

"That money can be moved multiple times into different bank accounts that are closed basically the second the fraud occurs. So there is a lot of work to those that police officers across the country are dealing with."

"You do a production order for one bank, that leads you to a second bank, to a third and fourth, and sometimes that's through multiple IDs, multiple aliases." 

Most money recovered

According to the auditors, Scotiabank was "lenient" when the fraud was discovered and reimbursed most of the money lost. However, the bank would not reimburse two cheques totalling $6,640.

The Scotiabank account was used mainly for cheques made out to individual citizens. According to the report, the account had written cheques totalling $1,314,430, of which only a small fraction were the fake cheques.

The report found "strong indicators" that someone altered a single authentic cheque to create the fake cheques.

The courthouse also has a chequing account with Royal Bank which it uses mainly for regular vendors. 

The auditors found cheques were the "sole method to disburse funds" within the RBC and Scotiabank accounts, and recommended the courthouse move to payment methods like direct deposit. 

The auditors also found the Bridgewater Justice Centre didn't have clear guidance on how to deal with stale-dated cheques, which are cheques that have not been cashed or deposited within six months of the issue date.

The investigation turned up 24 stale-dated cheques, each valued at more than $8,000. The dates on these cheques ranged from six months to more than six years in the future.  

Common form of payment fraud

According to the Association for Financial Professionals, a U.S.-based organization with branches in Canada, cheques are still widely favoured by businesses and government organizations but are also popular targets for fraud. 

Each year, the association does a survey of its members about payment scams and frauds. More than 60 per cent of respondents to its most recent survey, released on April 15, said they experienced actual or attempted fraud by cheque in the last year. 

"Two years ago, it was 65 per cent. This year, 63 per cent," said Mariam Lamech, the organization's director of survey research. 

"We haven't seen that go away. So that is still very extensive and it's prevailing."

Andrew Deichler, who is director of the enterprise payments practice with the association, said he thinks people are increasingly on their guard against email scams, which sometimes incorporate deep fakes or artificial intelligence to look more realistic. 

"But on the other hand, because it's getting more difficult to fool people in more high-tech, high-cost scams like that, you see other fraudsters kind of reverting to old methods because they know cheque fraud works," Deichler said. 

"They know it's not hard to do."

Deichler said cheques can be stolen out of the mail and faked. He recommends minimizing the use of cheques where possible. 

Safeguards put in place

The province's internal auditors wrote that "corrective measures have not been effective" and the account "remains at risk from future fraudulent cheques." 

The auditors wrote that before the cheque fraud was discovered, courthouse staff were doing a monthly reconciliation of the accounts by comparing bank statements with disbursed cheques.