TORONTO: The Integrated Bankruptcy Enforcement Unit, comprised of the RCMP Greater Toronto Area Financial Crime Section and the Ontario Region Special Investigation Unit of the Office of the Superintendent of Bankruptcy (OSB SIU), charged Manoharan Sinnadurai, 61, of Brampton, with offences under the Criminal Code (CC) and Bankruptcy and Insolvency Act (BIA). The allegations relate to fraud and the abuse of the bankruptcy process.
An investigation was launched in February 2012, after the RCMP / OSB SIU received information of possible wrongdoing by Sinnadurai, specifically his potential involvement in ‘bust-out’ fraud against his creditors. He allegedly acquired about $177,000 in four months from seven financial institutions through the use of credit cards, cheques and bank drafts.
As a result of this investigation, Sinnadurai has been charged with ‘fraud over $5,000’ and two counts of ‘fraudulent disposition of property.’
‘Bust-out’ fraud is a scheme that involves an individual acquiring credit from financial institutions and businesses offering credit cards. The credit levels are maintained in such a way that provides the creditor with the level of comfort that would allow them to provide increased amounts of credit – sometimes by only paying minimum amounts as suggested on the credit statement.
The available credit is exhausted by large cash advances and purchases then bogus payments are made to ‘pay off’ the debt in full. The credit limit is restored by the creditor and the fraudster takes advantage of this opportunity to again exhaust the available credit before the payments are found to be bogus.
The end result is the fraudulent debtor has received up to twice the amount of the prescribed credit limit. No further payments are made to the account and the debtor declares bankruptcy.
The RCMP and the OSB SIUs say they will continue to combine their efforts to investigate allegations of criminal wrongdoing related to bankruptcy and insolvency matters in order to protect the integrity of the insolvency system in Canada.