NorQuest College Successfully Concludes Legal Settlement
of Alleged Fraud and Privacy Breach
NorQuest College was the target of an alleged fraud and misconduct relating to confidential information and financial assets between 2008 and 2012. Once NorQuest discovered the misconduct in early 2013, the college informed the Board of Governors and took swift and decisive steps with the best interests of students, employees, and the public in mind. As a leader in post-secondary education, NorQuest is also committed to sharing its learnings with other institutions to help prevent the following situation from happening to them. From the beginning, NorQuest made a commitment to be diligent, work alongside investigators, and follow due process.
NorQuest Recovers All Information, Assets,
and Funds Related to the Alleged Fraud Through the course of this matter the courts awarded legal remedies rarely given, which enabled the college to recover all confidential employee information and college assets related to the alleged fraud. The colleges 20152016 Financial Statements approved by the Board of Governors on October 24, 2016 report $1.622 million in Other Revenue with a note explaining that the college recovered funds related to an alleged fraud that occurred during the period 2008 to 2012. The $1.622 million includes the total estimated losses and costs. See page 60.
Informing Employees and Stakeholders
Legal counsel advised the college from the beginning of this matter that due to a pending potential criminal investigation by Edmonton Police Service (EPS), ongoing litigation, restrictions around the use of seized records, and emerging evidence of an alleged fraud perpetrated against the college, there was a risk that broad disclosure of the privacy breach would hinder both the criminal and civil investigations. In addition all records were secured. Once NorQuest received confirmation from EPS that providing employees with more information would not impede their current investigation, the college informed all employees and stakeholders of the situation in September 2016. It is important to note that legal counsel deemed the risk of harm to the majority of college employees to be low. From the start, NorQuest worked with the two employees directly targeted by the privacy breach to inform them, protect their privacy, and resolve the situation as quickly as possible. If the
NORQUEST COLLEGE
NorQuests Primary Concern: Protect the People
Targeted and the College as a Whole In early 2013, NorQuest College became aware of a former employee, previously terminated, allegedly sending inappropriate electronic messages. NorQuest worked quickly and decisively to identify and stop the alleged harassment, as there were early indications that information used in the alleged harassment could have originated from internal sources. NorQuest obtained a court order that allowed, without warning, an extensive search of the former employees home and a seizure of all the electronic and personal devices in the home (an Anton Piller order). The extensive nature of the order and subsequent search gave NorQuest College and the individuals directly impacted the assurance that all college and confidential employee information had been recovered. As outlined in public court documents, the Anton Piller Order was executed on March 1, 2013 following discovery of the security breach. The Anton Piller Order, which is an extraordinary remedy, allowed the Bailiff along with a representative from NorQuest College, an independent supervising lawyer, and a forensic IT investigator, to search on a surprise basis the former employees home and immediately seize all personal and electronic devices of the former employee. This led to the recovery of and securing by the Bailiff of the NorQuest College property and information in the possession of the former employee including electronic devices. Only forensic investigators and two NorQuest officials were permitted to view the materials, and only for matters related to the specific legal action. As stipulated in the court order, the Bailiff retained all the seized property and information recovered and no copies of the information could be released to any party without further court order or agreement between legal counsel. The legal remedies NorQuest obtained were unique the college was not only able to quickly secure all the electronic data, but also have a court order restraining the actions of the former employee. These legal actions provide further assurance that confidential and college information that was in the possession of the former employee will always continue to be secure. For example, under the far-reaching terms
NorQuest College Successfully Concludes Legal Settlement of Alleged Fraud and Privacy Breach
college had any evidence or suspicion that other employees
were at risk, NorQuest would have immediately followed up directly with those employees in the same manner.
NorQuest Among 12 per cent of
Organizations to Recover Assets from Alleged Fraud * During the course of these matters, NorQuest College advised the Edmonton Police Service, Office of the Auditor General, Ministry of Advanced Education, and the Office of the Information and Privacy Commissioner of Alberta, and acted under legal advice and court direction. In many cases involving internal fraud and misconduct particularly where there is alleged collusion with outside parties, not only is it difficult to detect, but recoveries of assets lost are rarely successful. NorQuests handling of this matter meant that the college was able to quickly secure all personal information improperly taken, contain the breach, and recover not only the funds lost, but the costs of the associated recovery through various avenues. NorQuest is confident its internal controls and systems are secure following extensive reviews over the past four years. The Office of the Auditor General verified this in their last three reports.
Further Search Findings
The college completed a further search of the seized records, which have been secured since March 2, 2013, to determine if the former employee had accessed other NorQuest information. The results of the search indicate that the vast majority of records were work-related emails or meeting notices. The search did not disclose any personal information that would be considered highly sensitive in nature such as social insurance numbers, banking, or medical information. A very small number of records contained information related to salary, performance, and similar matters. The college will communicate with these individuals as appropriate. There is no evidence to suggest that this information was used in any way by the former employee or that it entered the public domain. *
Report to the Nations on Occupational Fraud and Abuse. 2016 Global Fraud Study
of the March 1, 2013 court order, the former employee
is prohibited and restrained from: A ccessing or making use of any confidential information obtained or created in the course of his employment with NorQuest, and A ccessing or making use of any information obtained by the former employee from NorQuest following the termination of his employment. In addition, under legal obligation, the former employee was required to disclose to the Bailiff the location of any data or information downloaded or copied from NorQuests computer systems, including, without limitation, any data or information forwarded to third parties, and he declared that he did not. Violating this court order in any way would be considered contempt of court, with serious repercussions which could include imprisonment.
Steps Taken to Secure NorQuest College Assets
As governed by the legal parameters, the lengthy and complex review of the seized devices took place over the summer and fall of 2013. Through the course of the review, further alleged misconduct was discovered. NorQuest uncovered an intricate set of allegedly fraudulent transactions dating back to 2008 and totaling approximately $1.2 million, which led to further investigation and legal actions. Through a series of contracts and payments related to the provision of services and equipment to NorQuest, the former employee and a number of external individuals and companies allegedly colluded to defraud the college. NorQuest retained EY to perform forensic accounting investigations. With this information, the college obtained further extraordinary legal remedies of Mareva Injunctions and Norwich Orders in order to freeze assets and require third parties to produce relevant documents and information related to the alleged fraud. NorQuest was able to maximize its efforts to recover not only the funds lost, but the costs of the related recovery through various avenues.