If an employee has embezzled money using fake invoices, you must move silently and quickly. To recover the stolen funds in Ontario, businesses often apply for an emergency Mareva Injunction at the Superior Court of Justice to freeze the fraudster’s bank accounts and personal assets before they can hide the money.
Discovering that a trusted employee has been stealing from your business is a devastating blow. One of the most common forms of corporate theft in Ontario is the fake vendor scheme. An employee in your accounting or procurement department sets up a shell company, issues fake invoices for services that never happened, and funnels your hard-earned corporate funds directly into their own pockets.
When this happens, you find yourself at the complex intersection of employment law and commercial litigation. 📌 Simply firing the employee is not enough; you want your money back. If you alert them to your suspicions too early, they will likely transfer the stolen funds offshore or spend it. Securing a civil judgment for fraud requires aggressive, immediate legal action with the help of a specialized Ontario litigation firm.
Step-by-Step Process for Suing an Embezzling Employee in Ontario
To successfully sue an ex-employee and recover stolen assets, you must build a bulletproof evidentiary trail while preventing the thief from destroying evidence.
Step 1: Conduct a Covert Internal Investigation
Before making any accusations, you must gather hard evidence. Hire an external forensic accountant to trace the fake vendor payments. Secure the employee’s work computer, emails, and server access logs without alerting them. You need clear documentation proving that the employee created the fake vendor and authorized the fraudulent cheques or wire transfers.
Step 2: Apply for a Mareva Injunction (Asset Freeze)
Once you have solid evidence, your lawyer will rush to the Superior Court of Justice to request a Mareva Injunction. 🔒 This is an “ex parte” order, meaning the employee is not told about the court hearing. If the judge grants the injunction, it immediately freezes the employee’s personal bank accounts, real estate, and investments across Ontario, preventing them from hiding the stolen funds.
Step 3: Terminate the Employee for Just Cause
With the freezing order securely in place, you can now safely terminate the employee. Because they committed severe financial misconduct and breached their fiduciary duty, you are generally allowed to fire them for “just cause” under Ontario employment law. This means you do not owe them any severance or notice pay.
Step 4: File a Civil Statement of Claim for Fraud
Simultaneously with the termination, you will officially serve the employee with a Statement of Claim. 📄 This civil lawsuit will sue them for civil fraud, breach of contract, and breach of fiduciary duty. You will demand full repayment of the stolen funds, plus legal costs and potentially punitive damages for their malicious behaviour.
Step 5: Obtain Judgment and Enforce Collection
If the evidence is overwhelming, the employee may settle the case by signing over their frozen assets to your company. If they fight it and you win at trial, the court will issue a final judgment. You can then use this judgment to legally seize their frozen bank accounts, force the sale of their house, or garnish any future wages they earn at other jobs until the debt is paid.
How Much Does it Cost in Ontario?
Civil fraud litigation is highly technical and requires significant upfront resources, but it is often the only way to recover substantial stolen amounts.
- Forensic Accountant Fees: Uncovering the fake invoice scheme typically costs between $5,000 and $15,000 CAD.
- Mareva Injunction Legal Fees: Preparing an emergency freezing order is incredibly intensive for a law firm. Expect to spend $15,000 to $30,000+ CAD just for this initial emergency step.
- Court Filing Fees: The standard Superior Court fee to issue a Statement of Claim is $243 CAD.
- Total Trial Costs: If the case goes all the way to a full trial, total legal fees can exceed $75,000 to $150,000 CAD, though much of this can be recovered from the fraudster’s assets if you win.
| Forensic Accounting Investigation | $5,000 – $15,000 CAD |
| Emergency Asset Freeze (Lawyer) | $15,000 – $30,000+ CAD |
| Full Fraud Litigation Trial | $75,000 – $150,000 CAD |
How Long Does the Process Take?
The initial phase is incredibly fast. A covert investigation and a Mareva Injunction can often be executed within 1 to 3 weeks. However, the actual lawsuit to get a final court judgment takes much longer. Depending on court backlogs in cities like Toronto or Mississauga, a civil fraud lawsuit can take 1.5 to 3 years to reach a final trial.
Frequently Asked Questions (FAQ)
Should I call the police or sue civilly?
You can do both. However, the police (criminal system) focus on putting the fraudster in jail, not necessarily getting your money back. A civil lawsuit is the most effective way for your business to directly recover the stolen funds.
What if the employee already spent all the money?
If the money is gone and they have no assets (like a house or cars), recovering the funds will be extremely difficult. This is why conducting a secret investigation and freezing their assets immediately is critical.
What is a Norwich Order?
A Norwich Order is a special court order in Ontario that forces third parties, like the employee’s bank, to hand over financial records. It helps you trace exactly where the stolen money went without alerting the employee.
Do I still owe them unpaid vacation pay?
Under the Ontario Employment Standards Act, even if an employee is fired for stealing, they generally must still be paid their accrued vacation pay. However, your lawyer can request that this small amount be offset against the massive debt they owe you.
Leave a Reply