Sask. court ruling offers insight into RM of Edenwold’s efforts to recover scammed funds

A shot of the outside of the RM of Edenwold.

A recent court ruling has allowed the Rural Municipality (RM) of Edenwold to recover a large portion of the funds it lost to an unknown fraudster over the summer.

The RM had transferred $497,613.28 into an account which it believed belonged to the Wastewater Management Authority (WCRM), but in reality, was in the control of an unknown fraudulent party.

After the fraud was discovered, the RM applied to the court for a declaration that it had a right to the funds, some of which were held in an account with the Bank of Montreal (BMO).

The order dictated that the funds must be returned to the RM and that BMO, along with any other financial or investment institution aware of the court order, must release information regarding the funds and account owner.

In his decision published in late October, Court of King’s Bench Justice Andrew Davis ruled that the funds held by BMO would have to be returned to the RM.

On Oct. 22, the RM announced that it had successfully recovered $377,375.03 of the lost funds.

• RM of Edenwold recovers majority of funds lost to fraud scheme

Additionally, Davis ordered BMO to disclose the name of the individual or entity who owns the account the funds were transferred to in order to order to assist the RM in recovering more of the lost funds.

However, the court stopped short in granting an overarching order that would grant the RM the continual power to request account information from more banks in the future as it continues the search for its lost funds.

The RM argued that it would not abuse the power granted in this case. Regardless, Davis ruled that the order would be limited to BMO.

“While I do not doubt the RM’s good faith, I remain concerned about the consequences of such an open-ended order that could enmesh persons or entities who were denied process at the time the order was made,” he wrote.

With the decision, the RM will need to return to court and make a new application if it discovers its lost funds have been transferred to another bank or institution.

“However, I am mindful of the RM’s interest in seeing such applications addressed in an efficient manner. I am prepared to remain seized with this matter, solely for the purpose of facilitating future applications for orders targeting other institutions or entities,” Davis wrote.

‘Somewhat bizarre’

Justice Davis did express some mild bewilderment regarding how the money ended up being transferred in the first place.

According to the decision, the RM proceeded to transfer nearly half a million dollars following a “somewhat bizarre” exchange of emails with the fraudulent party posing as WCRM.

“The communications were in ungrammatical English, in contrast to WCRM’s previous written communications, and they exhibited a level of urgency out of keeping with the context,” Davis wrote.

Regardless, the break from protocol made it evidently clear the RM was the victim of fraud. Going further, Davis wrote that similar cases have become more common in recent years.

Davis’s decision does reference Creative Saskatchewan v Royal Bank of Canada, which saw the crown corporation lose $331,000 to a scammer posing as a client.

The crown then applied to the courts for RBC to return the money after the fraud was discovered.

As of February 2024, Creative Saskatchewan had retrieved just over $118,000 of its funds.

• Creative Saskatchewan recovers portion of $331,000 lost to fraud, province says