About a third of the $1.5M Sudbury lost to fraud 'appears to not be recoverable,' lawyer says

The City of Greater Sudbury was before a Toronto judge on Friday as it continues legal action over the $1.5 million it lost to fraud in December, and said about two-thirds of the money has been recovered.

The city's lawyer, Catherine Francis, said that through co-operation with the Bank of Nova Scotia and Royal Bank of Canada, it has recovered $1,040,259. 

However, she said, some $400,000 "appears to not be recoverable" as funds were dispersed to dozens of other bank accounts, some of them outside Canada's jurisdiction. 

The fraud stems from the city's $1.5-million payment to someone who claimed to be the contractor on the Lorraine Street Transitional Housing project.

Disclosure orders aimed at banks

On Friday, Francis asked Ontario Superior Court Justice Barbara Conway to issue disclosure orders for several banks, including JP Morgan & Co., to help trace the funds that haven't been recovered. 

The orders would help track down where money is going and aid in the process of freezing assets if investigations confirm those funds are linked to the fraud. 

Conway said that in some cases, the banks are outside of her jurisdiction. Francis still asked her to issue disclosure orders, even if they're not enforceable. 

Conway said she thought that "might be a bit far reaching." But Francis said, "I'm not sure how else we'll obtain this information." 

In the end, it was agreed that some disclosure orders would be issued.

The city's legal action began Jan. 15 in Toronto when it filed a statement of claim to retrieve the funds. Its next court appearance is March 6. 

The city previously told CBC the fraud won't impact the timelines for the completion of the Lorraine Street project.