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Name and Title
Christopher Gaytan
Partner
Associate
Year of Call

2017 (Ontario)
2006 (Mexico)

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Publications
Description

Christopher Gaytan

Complex economic crimes carried out by insiders are a growing concern for many global businesses — but when fraud has been identified, it is crucial for counsel to act quickly and connect with their counterparts in other jurisdictions, says Toronto commercial litigator Christopher Gaytan.

According to PwC’s 2018 Global Economic Crime and Fraud Survey, 49 per cent of global organizations indicate they have experienced economic crime in the past two years — with just over half of all frauds perpetrated by people working inside the organization.

Gaytan, an associate with Shibley Righton LLP’s Toronto office, says in corporate fraud cases, there are generally three elements, or a ‘fraud triangle’ in place that can explain the reasoning behind the fraud — pressure, opportunity and rationalization.

“Pressure is usually the financial aspect — a person wants to obtain a financial benefit or maintain a lifestyle that they previously had,” he tells AdvocateDaily.com.

“Opportunity is usually when they are in a position where they can take advantage, such as an insider,” Gaytan says. “If you have the information, you know how the business works, putting you in a privileged position where you have the access and ability to act in secret.

“The third element is the rationalization that most fraudsters don’t see themselves as criminals. They usually believe they are victims of circumstances, or they say, for example, ‘I just did what I was asked to do,’ or they tend to minimize the harm done by the crime,” he adds.

Ultimately, Gaytan says many organizations may not be aware that they have fallen victim to fraud until they implement a significant change to their corporate structure or they go through an audit.

An example of this trend — and of the complexity of fraud cases in general — was recently seen in a global case that spanned a number of jurisdictions, including Ontario, involving a South American pension fund, in which Gaytan recently acted as co-counsel for the plaintiff.

In this case, he says, a number of fraudulent investments in Ontario were in place for years, and a few members of the then board of directors were aware of the fraudulent scheme. These insiders were working together with outsiders to perpetrate the fraud. It wasn’t until the full board underwent a complete changeover and contemplated an audit that the significant problem was discovered and external legal counsel was retained.

“The court, in this case, found that the fraud was committed with the knowledge of the insiders — members of the board of directors. These insiders helped parties to channel investments and divest funds to offshore accounts. Of course, most of these investments were misleading and fraudulent, and they were facilitated by unregulated intermediaries who were here in Ontario, and they paid secret kickbacks to the insiders in South America,” says Gaytan.

“This case clearly shows that there is an opportunity for insiders to commit fraud, and then they find the proper parties elsewhere to commit these fraudulent activities.”

The 2018 Ontario Superior Court decision in the case is currently under appeal.

Gaytan says this type of corporate fraud is complex as it often involves an international network of individuals whose goal is to make it as challenging as possible to detect.

“Once the lawyers come into place, it is really hard to follow the path of these funds and to find out who was involved,” he says.

As such, one of the best ways to tackle this type of fraud case is to have local representation in each applicable jurisdiction, Gaytan says.

“In our case, we had lawyers in Ontario, but we worked together with lawyers in South America, which is where this pension fund is located. We also have lawyers in the United States, Europe and Central America. We know there was some activity in those jurisdictions. So, we basically have lawyers in every country where we know the funds went through,” he says.

While increasing employee awareness of the growing problem of fraud is one key to prevention, Gaytan says companies also need to implement more structure within the organization, boost compliance, ethics, and make legal improvements.

However, once a fraud has been identified, lawyers need to be brought in quickly, he says.

“One of the first things that a lawyer should do is consider putting Mareva injunctions in place, which is to try to freeze all the accounts and assets of the firm and/or individuals that are involved, and also try to consider Anton Piller orders, which basically give you the right to search the premises,” says Gaytan.

“It’s vital to act fast before any potential evidence can be destroyed, and to put all of these orders in place,” he says.

 


Date_Published
2019-10-17
Description

Christopher Gaytan

While judgments from criminal cases can be considered in related civil matters, they cannot be relied on by themselves to reach a decision, as a full civil trial may be necessary to assess the evidence, says Toronto commercial litigator Christopher Gaytan.

To illustrate his point, Gaytan points to a recent Ontario Court of Appeal decision that overturned a $20-million summary judgment award granted by a motion judge.

According to court documents, a man was convicted of defrauding his former firm out of more than $5,000. The sentencing judge found the appellant’s participation in the fraudulent scheme amounted to a “gross breach of his fiduciary duty.” Relying solely on the criminal verdict and the findings of the sentencing judge, the company moved for summary judgment in its civil action against the man, asking for $20 million.

The motion judge determined that the sentencing judge’s findings were entitled to “very considerable weight” in the civil proceeding, the decision states. He concluded that the appellant was a fiduciary because the sentencing judge described him as such, and accordingly, the motion judge held that the appellant breached his fiduciary duty through his participation in the fraudulent scheme, and granted judgment for $20 million.

“It’s a very interesting decision because a civil summary judgment was overturned when it was based on a criminal conviction, even though the standard of proof required for criminal conviction is beyond reasonable doubt and civil cases are decided on balance of probabilities, which is basically 'more probable than not,'” says Gaytan, an associate with Shibley Righton LLP’s Toronto office.

“Since the burden of proof in criminal proceedings is higher, it may seem the logical thing to allow a summary judgment against him in a related civil action, but this decision shows that is not always the case,” he tells AdvocateDaily.com.

Court documents note the motion judge “erred in principle by failing to consider relevant factors in determining what weight he could give to the sentencing judge’s finding that the appellant was a fiduciary.” Those factors include similarity of the issues to be decided, the identity of the parties, the nature of the earlier proceedings and the opportunity given to the prejudiced party to contest the previous finding.

“That error infected his analysis as to whether there was a genuine issue requiring a trial on the breach of fiduciary duty claim,” the appeal court ruled.

“There wasn’t a submission made to the sentencing judge that directly addressed whether this man exercised a fiduciary duty in the firm,” Gaytan says.

He says this ruling provides an interesting perspective about the weight of the criminal findings in relation to civil proceedings.

“The court held that the criminal findings were admissible, but that it is very important to be careful about the considerations of the weight given to those findings,” Gaytan says.

He says the main lesson is you can’t just rely on a criminal judgment when you’re dealing with a civil action.

While the standard of proof is higher in the criminal court, he says this case shows that you still have to prove your case in civil court.

“This case sets a really strong precedent,” Gaytan says. “Now they have to go back to square one and do the analysis about what constitutes a fiduciary, which is why this case is being sent back to the Ontario Superior Court for a trial.”

 

Date_Published
2019-08-19
Description

Christopher Gaytan

Toronto commercial litigator Christopher Gaytan brings a personal touch to the practice of law.

Although the legal profession maintains a stuffy reputation in both his native Mexico and his adopted home of Canada, Gaytan, an associate with Shibley Righton LLP’s Toronto office, tells AdvocateDaily.com that he likes to dispense with formality as much as possible when meeting clients.

“I want them to feel comfortable and connect with them in a friendly and personal way,” he says, explaining that the approach benefits him professionally as well as personally.

“It makes for a deeper and more rewarding relationship all round,” Gaytan adds. “Lawyers are sometimes too formal, and it can make clients a bit nervous when it comes to talking about their business, which means they don’t want to tell you everything. I find that the personal connection gives me a better understanding of their legal needs.”

Gaytan says he felt destined for a legal career from an early stage, propelled by the recommendations of parents and high school teachers who identified the profession as a strong match for his academic skills.

“They thought I would be a good lawyer, and I took their advice and went for it,” he says.

Initially attracted to criminal law during his studies in Mexico, Gaytan articled with one of the country’s prosecution departments but discovered the area was not for him and switched to commercial litigation with a small law firm.

He explains that it is common practice for Mexican commercial lawyers seeking to broaden their horizons to pursue further legal studies abroad. Gaytan opted for Osgoode Hall Law School, attracted partly by the quality of its international business law master’s program, but also by warm feelings for Canada generated during family vacations.

But his plans changed in 2012 when he met his future wife in Toronto, and then excelled during an internship with Shibley Righton, where he was asked to stay on to work on a major litigation file involving South American investors allegedly defrauded in a $30-millon Canadian scheme.

Gaytan completed the accreditation process to qualify as an Ontario lawyer over the course of four years while working on the fraud case, finally articling with Shibley Righton, before his call to the bar in 2017.

He says the transition from Mexico’s civil law to Ontario’s common law regime has been challenging but rewarding, considering many of his Latin American clients need to have the differences explained to them.

“It’s been interesting to balance both systems and integrate them because my clients are generally based in civil law jurisdictions,” Gaytan says. “At their core, the legal and philosophical principles are basically the same, but the bigger adaptation comes in the new procedures and court systems you have to get used to.”

In addition to his commercial litigation trial and appeal work, Gaytan also operates a smaller professional liability practice, acting for lawyers involved in estate disputes.

 

Date_Published
2019-07-30
Experience
More About
BIO

Chris is a licensed lawyer in both Ontario and Mexico with experience providing a wide range of services to Latin American clients including commercial litigation, and multinational securities fraud recovery practices. Chris has been involved in commercial matters in the viatical settlements industry, land developments, securities brokerage, and cross border investments. 

Chris often works with international clients from Central and South America using his unique bilingual and multinational competency in the practice of law. These skills enable Chris to effectively bridge any cultural gaps and to overcome any language or cultural issues with his Latin American clients. Chris also has developed an expertise in translating legal documents and interpreting from Spanish to English and vice versa.

Chris obtained his LL.B. from the Universidad del Valle de Mexico in 2005 and was admitted to practice law in 2006. In 2012 he earned his LL.M. (Master of Laws) in International Business Law from Osgoode Hall Law School, and after being called to the bar in 2017 he became an associate at Shibley Righton.

In his free time, Chris enjoys playing and watching sports, he is an avid soccer player, he practiced martial arts for 10 years and has completed obstacle course races in Toronto. He also has a passion for travelling, having recently traveled to Dubai, Abu Dhabi, Tehran, Barcelona, Rome and Venice.

Contact Information

T: 416.214.5254
F: 416.214.5454
E: christopher.gaytan@shibleyrighton.com

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Education

Universidad del Valle de Mexico, LL.B, 2005
Osgoode Hall Law School, LL.M. Internation Business Law, 2012

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