March is Fraud Awareness Month. Our firm often reminds fraud victims that they cannot reasonably rely on Canada’s criminal system for recovery or justice in fraud matters. In the Scotia v. Rosario Rosado case recently released, a judge imposed a punitive order of $200,000 on a fraud valued at $350,000. Victims should assess whether their interest is better served with a punitive order payable to them as opposed to relying on the criminal system for justice.

Case Summary:

Scotia v. Rosario Rosado, 2024 ONSC 4395
Judgment: August 8, 2024

The Plaintiff, Bank of Nova Scotia, advanced $350,000 to Rosado in March 2022 under a professional student credit line, believing he was enrolled in the Doctor of Dental Surgery program at the University of Toronto’s Faculty of Dentistry. Rosado provided seemingly authentic documentation: an acceptance letter, confirmation of enrollment, and a Scotia Professional Student Plan application. All these documents were later proven fraudulent.

When the bank discovered the deception, Rosado had already defaulted on repayments. As of January 2024, the outstanding debt stood at $378,118.60, including interest. Despite multiple demands, Rosado failed to repay the bank, leading to litigation.

Unable initially to serve Rosado personally, the bank successfully applied for substituted service. Rosado still did not respond or file a defence, and the bank noted him in default.

A Court in Toronto found that the deemed admissions from the default, supported by affidavit evidence, demonstrated the elements of fraud: false representation, reliance by the bank, and resulting loss. Justice Charney highlighted the severity of Rosado’s conduct, describing it as “high-handed, malicious, arbitrary or highly reprehensible misconduct that departs markedly from ordinary standards of decent behaviour.”

The Court ordered Rosado to repay the $355,357.41. The Court also imposed punitive damages order of $200,000, representing approximately 57% of the fraudulently obtained loan. The decision cites similar cases, reinforcing the appropriateness of punitive orders in fraud cases.

Additionally, the Court ordered Rosado to account for the use of the funds and for Rosado to disgorge of anything he earned with the stolen funds. The Court also gave Scotia the option to chose between a constructive trust or damages if it traced the stolen funds.

Our commentary: historically Canadian courts have awarded lenient punitive orders in fraud cases – often only 10 to 20% of the loss. More recently Canadian Courts have increased punitive orders to the realm of 50% of the loss – see our case of Gennett Lumber Co. v. Harvey et al., 2019 ONSC 1345.

Default judgments may appear to be some people to be academic in the sense that the bank now has to find Rosado and enforce the order. A fraud victim may ask themselves whether they are throwing good money after bad attempting to enforce a judgment of this type.

We had a similar scenario reported in the decision of 2363523 Ontario Inc. v. Nowack, 2016 ONSC 2518. A court issued default judgment in a $3M investment fraud. We asked the Court to issue an ‘accounting’ order against the rogue. We had Steven Nowack located and served. Nowack refused to account. Ultimately Nowack was found in contempt of court and sentenced to 30 days jail. Upon his release from jail, Nowack was ordered to account for the stolen funds and attend back before the Court to determine if he still was going to refuse to account – at the risk of going back to jail.

Inquiries: At Investigation Counsel, we only act for victims. We are Canada’s only boutique victim focused fraud recovery firm. We investigate and litigate fraud recovery cases each and every day.

If you discover you are a victim of fraud, contact us to have your case assessed and a strategy for recovery mapped out before contacting police or alerting the fraudster. The Courts grant tracing and freezing orders much quicker through the civil process than the criminal process, and even if a criminal complaint is made, the police most often do not disclose their findings with victims.

We also promote victim advocacy and academic discussion through various private and public professional associations and organizations. If you have an interest in the topics discussed herein, we welcome your inquiries.

March 31, 2025