ACC5032: Asset Tracing and Recovery: Money Laundering Analysis Report

This report analyzes a case of financial fraud involving Triple A Solutions Inc. and its sole proprietor, Mr. Allen, who issued shares based on false expectations and misused company funds. The report outlines an investigative methodology, including assessing the business environment, evaluating compliance with laws, and analyzing financial performance. It highlights non-compliance issues, such as breach of fiduciary duty and unjust enrichment, and discusses legal and procedural considerations. The analysis covers shareholder rights, the application of criminal and civil codes, and the potential for asset seizure and recovery. The report provides guidance on resolving investor grievances and references relevant Canadian corporate and criminal law, emphasizing the importance of proving fraudulent behavior and the impact on investors, along with the actions of the senior officers.

ACC5032: Asset Tracing and Recovery
Money laundering and
asset tracing

ACC5032: Asset Tracing and Recovery
TABLE OF CONTENTS
Plan Outline................................................................................................................................1
Detail Investigative Methodology..............................................................................................1
Determination of business environment and activities..........................................................1
Evaluation of compliance of applicable laws of the company...............................................1
Assessment of current financial performance and future aspects of business.......................2
Noncompliance of laws..........................................................................................................3
Guidance will be provided to resolving grievances of investor.............................................3
Legal and procedural consideration...........................................................................................3
References..................................................................................................................................6

ACC5032: Asset Tracing and Recovery
PLAN OUTLINE
The present case is relating to Triple A Solutions Inc. held by Mr. Allen as a sole proprietor.
He issued shares by providing false future expectations for the business. Further, there is a
clear indication that money of a business is used for the personal purpose which is not ethical
and non-consideration of laws applicable to companies incorporated in Canada. To
investigate the current case following outline will be followed:
 Determination of business environment and activities
 Evaluation of compliance of applicable laws of the company
 Assessment of current financial performance and future aspects of business
 Noncompliance of laws
 Resolving grievances of investor
DETAIL INVESTIGATIVE METHODOLOGY
The current case is related to the scam as Mr. Allen has planned for a confidence game in
which he had designed a fraudulent scheme to deceive investors with the objective to make
quick profits. In order to provide concluding evidence following investigative methodology
will be applied in the current case.
Determination of business environment and activities
Initially, the business environment and activities of Triple A Solutions Inc. will be evaluated
to understand the objectives and planning of the company. For this purpose, industry reports
will be considered and check whether business activities are conducted in a regulatory
manner or not (Ivanova, 2016). Further, a business valuation will be done to determine the
worth of assets in against of their obligations (Downer, Cooper and Faseruk, 2018). This is
done because investigation requires evidence regarding the non-compliance by Mr. Allen in
alignment with business operations and decisions.
Evaluation of compliance of applicable laws of the company
After assessing business activities of Triple A Solutions Inc., compliance of laws by the
company will be considered as there are severe contradictions of laws. It could be clearly
assessed in the present case that Mr. Allen has applied window dressing concept in order to
replace poorly performing securities with high performing one in order to provide the
appearance of having a robust set of investment. It is because payment is not done to
investors due to insufficient funds and Mr. Allen is continuously purchasing the personal
1

ACC5032: Asset Tracing and Recovery
property. Further, funds of the company are not used properly as account of Triple A Inc. has
been electronically wired to Barclay Bank account no. in the Cayman Islands and even the
commercial business checking account in which large checking deposits were made, was
electronically wired to Lloyd Bank account in Costa Rica. Therefore the same will be
scrutinized to determine the trail of funding and its utilisation.
Assessment of current financial performance and future aspects of business
In the present case also Common shareholder is having right to assess books of accounts as
well as sue against the company in case they feel their rights have been violated. In the
present case specified right will be applied in order to assess the optimistic projected
statement of revenue provided to present the financial performance of the company. Through
this method, the transparency of transactions relating to business operations could be
evaluated.
Application of Procedural Consideration relating to pleading fraud: A summarized statement
is required to be provided which comprises material facts on which the party relies in order to
claim or defence (Lafarre and Van der Elst, 2018). Further, the evidence which proves the
facts is not required to be provided in the same. Pleading requires specified facts relating to a
misrepresentation that when and where it was made, damages incurred due to fraud. It has
been concluded in the case of Region Plaza Inc. v. Hamilton-Wentworth (1990) 12 OR(3d)
750 (HCJ)that in case the plaintiff does not provide the facts and information relating to
misrepresentation in order to conclude the breach of duty or conspiracy to intentionally injury
than it is inappropriate to make allegations in statement of claim. Shareholders could provide
the financial statements along with notice through which they get information relating to the
merger of the company with another company in order to prove that the decision of
investment was impacted by above facts in a significant manner (Mjakuškina and Lapiņa,
2018).
2

ACC5032: Asset Tracing and Recovery
Noncompliance of laws
By considering the above aspects, it can be noticed that major non-compliance is related to
the planning of scam, breach of fiduciary duty and unjust enrichment. Therefore, on the basis
of legal considerations evidence will be collected against Mr. Allen to prove Noncompliance
of laws on his part.
For collecting evidence, law enforcement representatives could attain search warrant from the
court in order to take further steps which comprises search and seizure facts and proofs
relating to fraud from private property. Moreover, these representatives could request for the
development of order to support a criminal investigation. The specified order is not same as
search warrant and requires an individual to (other than a person under inquiry) provide a
specimen of information or data to law enforcement representatives within stated time and
place in the required manner.
Guidance will be provided to resolving grievances of investor
In accordance with Canadian corporate statute, in case shareholders are having a belief that
the actions of the corporation are unfairly prejudicial to its interest that shareholder could
apply to could for an order compelling the directors to comply with corporation’s article, by-
laws or governing statute. Further, derivative action can be taken by shareholder through
which shareholder can take action against the sole proprietor of the company (Morioka and
Carvalho,2016). Further, oppression remedy could also be claimed by shareholders in case
the company has acted in manner which was oppressive or unfair in specified circumstances.
Even the right of seizure of assets or proceeds in support of the victim of fraud is available.
LEGAL AND PROCEDURAL CONSIDERATION
A range of options is available for victims of fraudulent conduct by the Canadian legal
system. In accordance with Canada Business Corporation Act 1985, director and officers of
corporations are liable to exercise the care, diligence, and skill which a reasonably prudent
person would apply in similar circumstances. Assistance can be taken from the decision of in
Air Canada v. M&L Travel Ltd, which comprises a breach of trust by a company operating as
a travel agency and transferred money from trust account to company’s general operating
account inappropriate manner (Hunter, 2017).
3

ACC5032: Asset Tracing and Recovery
Further, in the current case both criminal and civil proceeding will be referred to as
enumerated below:
Criminal code: It has been explained in detail manner in Section 380(1) of the Criminal Code
of Canada which permits the police to enquire and Crown counsel to take legal action relating
to fraud. The main elements available in any criminal fraud are fraudulent behaviour by the
executor and deprivation to the injured party (Vij, & Bedi, 2016).
Civil code: This will be applied due to a breach of fiduciary duty and unjust enrichment. In
this director or officers of an organization does not accomplish their responsibilities in an
appropriate manner and claims might be brought as per the statutory remedy of an oppression
claim (Amui and et.al.2017). The acts relating to same has been specified in, Canada
Business Corporations Act, RSC 1985, c C-44, Section 241, and the (Ontario) Business
Corporations Act, RSO 1990, c B.16, Section 248.In the given case, funding of business is
used for personal purpose, therefore, the law of search and seizure will also be applied.
Personal assets of Mr. Allen could be claimed in case he has breached the fiduciary duty
while managing operations of the business. Further personal property of Mr. Allen will be
confiscated on the basis of the common law of Canada to cover up the damages of the
investor.
The liability of the default and breach made by Triple A Inc will be ascertained after
considering the actions and intentions of senior officers of the case. The term "senior
officers" has been specified in the Criminal Code as meaning “which refers to a
representative playing significant role in developing policies of the organization and is also
obliged for recognizing an important aspect of the organization's activities. In case of a body
corporate, it comprises a director, its chief executive officer, and its chief financial officer"
(Guillén and Capron, 2016). In the present case, the decisions and transaction made by Mr.
Allen will be assessed in detail manner in order to ascertain the extent of his fault. Further,
the test of civil fraud can also be applied as a false representation has been made to the
shareholders knowingly, without believing in the facts that whether it is true or not. In the
case of Derry v. Peek (1889) 14 A.C. 337 (H.L.) referred to in Gregory v. Jolley, 2001
CanLII 4324 (ONCA), it was concluded that the motive is immaterial (Ellyn, 2015). It is
necessary that the representation must have inducted the victim to perform to its detriment. In
the present case, similar legal proceedings could be applied as fake information relating to the
merger as well as going public was provided to shareholders due to whom they took the
4

ACC5032: Asset Tracing and Recovery
decision of making an investment to earn higher profits in short period. Further, the
information was supported by an optimistic projected statement of revenue provided to
present the financial performance of the company. Thus, these actions enforced the investors
to believe that the company is performing well and they would be able to get a higher return.
Therefore, the breach and fraud conducts of Mr. Allen could be proven by shareholders
through above specified legal and criminal procedures.
5

ACC5032: Asset Tracing and Recovery
REFERENCES
Amui, L. B. L., Jabbour, C. J. C., de Sousa Jabbour, A. B. L., & Kannan, D. (2017).
Sustainability as a dynamic organizational capability: a systematic review and a
future agenda toward a sustainable transition. Journal of Cleaner Production, 142,
308-322.
Downer, P., Cooper, T., & Faseruk, A. (2018). Accounting, Taxation, and Auditing Issues
Following the Legalization of Recreational Marijuana in Canada: Learning from the
American Experience. Journal of Accounting & Finance (2158-3625), 18(6).
Ellyn, I. (2015) Fraud Claims in Business Transaction Litigation – Canada. Retrieved from <
https://www.hg.org/legal-articles/fraud-claims-in-business-transaction-litigation-
canada-31267>
Guillén, M. F., & Capron, L. (2016). State capacity, minority shareholder protections, and
stock market development. Administrative Science Quarterly, 61(1), 125-160.
Hunter. R. (2017). The Asset Tracing and Recovery Review. Fifth Edition. Encompass Print
Solutions, Derbyshire, Great Britain.
Ivanova, M. (2016). Shareholder activism and the ethical harnessing of institutional investors:
The unique case of Share Action. Critical perspectives on international
business, 12(2), 189-214.
Lafarre, A., & Van der Elst, C. (2018). Blockchain technology for corporate governance and
shareholder activism. European Corporate Governance Institute (ECGI)-Law
Working Paper, (390).
Mjakuškina, S., & Lapiņa, I. (2018). Evaluation of Market Surveillance Implementation and
Sustainability. In Global Value Chains, Flexibility and Sustainability (pp. 257-269).
Springer, Singapore.
Morioka, S. N., & de Carvalho, M. M. (2016). A systematic literature review towards a
conceptual framework for integrating sustainability performance into
business. Journal of Cleaner Production, 136, 134-146.
6

ACC5032: Asset Tracing and Recovery
Vij, S., & Bedi, H. S. (2016). Are subjective business performance measures
justified?. International Journal of Productivity and Performance
Management, 65(5), 603-621.
7