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- CIBC ordered to repay Halston Hills housing co-op $2 million in fraud case
CIBC ordered to repay Halston Hills housing co-op $2 million in fraud case
CIBC has been ordered to pay $2 million back to the Halston Hills Housing Cooperative that was defrauded by its president over the course of at least five years.
Lillian Cameron served as the president of the Halston Hills Housing Cooperative from 2008 until she was ousted in 2016, according to a BC Supreme Court decision recently posted online.
Burnaby Now reported in February 2020 that Cameron was sentenced to three years and nine months in prison after she funnelled $2 million of the co-op’s money into her personal account to fund a lavish lifestyle.
Cameron achieved this by forging invoices for three contractors the co-op worked with—Barr Kost Maintenance, Barry Kosturos, and Linear Construction—and writing a cheque that she’d cash out in her own account.
In September 2011, a property management firm raised concerns about the co-op’s financial control procedures, including that some invoices didn’t offer much detail of what work had taken place. Cheques were also made out to Cameron as a reimbursement or cash advance for the expenses.
Following that, the invoices “outlined in detail the work purportedly completed and the amounts due,” according to the ruling. And Cameron no longer named herself as the payee, but would counter-sign the cheque to deposit into her own account.
Over the years, some of Halston Hills’ board members raised questions with Cameron regarding some expenses, but they told the court that they had been satisfied with Cameron’s explanations.
In November 2016, however, CIBC became aware of the fraudulent behaviour and notified the accounting firm that audited Halston Hills’ financial statements, which in turn notified the co-op.
Cameron resigned her position and turned herself in to police.
Since then, the co-op sought a court order for CIBC to return those funds, but the bank pushed back, claiming a “fictitious payee” defence.
The fictitious payee defence argues that the entity—in this case, the Halston Hills Housing Co-op—had not intended to pay the payee named on the cheque. If the argument is successful, then the bank is found not liable for the lost funds.
CIBC acknowledged that Halston Hills cheques that didn’t have Cameron’s signature on them couldn’t fall under the fictitious payee defence, but suggested that those with her signature did.
“The fundamental question before me is whether Ms. Cameron was the guiding or directing mind of the cooperative such that her intention ought to be attributed to Halston Hills,” wrote Justice Peter Edelmann.
And while Cameron was the president of the co-op during the period of the fraudulent cheques, Edelmann found that she was not the guiding mind of Halston Hills.
“Although Ms. Cameron had various duties and responsibilities in her role as president, including in part the coordination and payment of repair and maintenance work at the co-op, the evidence does not establish that she had unfettered decision-making authority,” Edelmann wrote.
“To the contrary, the evidence shows that Ms. Cameron made significant efforts to cover up the various aspects of her fraudulent cheque scheme in an attempt to be seen … as complying with policy and acting within the bounds of her circumscribed authority.”
Edelmann pointed in particular to the lengths she went to create convincing fraudulent invoices from legitimate companies the co-op worked with.
In all, Edelmann ordered CIBC to pay Halston Hills $2,054,229.