Small Toronto Employment Agency Forced to Close After Check Fraud: TD Bank's Response Questioned

By Leira Aquino

Apr 28, 2024 10:25 PM EDT

Small Toronto Employment Agency Forced to Close After Check Fraud: TD Bank's Response Questioned — The HD Group of Companies, a Toronto-based employment agency, closed down due to substantial financial losses caused by check fraud. The ex-owners worked with Toronto-Dominion Bank (TD) for two years to resolve fraud issues but were unhappy with the bank’s initial response.
(Photo : Joe Raedle/Getty Images)

A Toronto-based employment agency, the HD Group of Companies, was forced to shut its doors due to significant financial losses resulting from check fraud, The Globe and Mail reported.

Yashpal Dhaliwal and Lakhdeep Kaur, former owners of HD Group of Companies, revealed that their company fell victim to check fraud, with workers cashing the same checks multiple times. This led to losses amounting to hundreds of thousands of dollars, ultimately resulting in the closure of their business.

TD Bank's Response Under Scrutiny

The issue surfaced when Kaur, the company's former chief financial officer, discovered discrepancies in the company's bank statements, with checks dating back several years being deposited multiple times.

"I'm like, why is it clearing checks from 2019? It's 2021," she stated, as The Globe and Mail reported.

The former owners, Dhaliwal and Kaur, had been working with Toronto-Dominion Bank (TD) for two years to address the fraud.

However, they expressed dissatisfaction with TD's initial response and eventually filed a lawsuit in 2022 seeking damages for the alleged losses.

TD's defense in court pointed to the bank services agreement signed by HD Group, which waived TD's responsibility.

This legal contention raises questions about the extent of a bank's liability in fraud, especially when businesses face substantial financial harm.

Challenges, Impact on Small Businesses

The nature of the temporary workforce and the operational dynamics of HD Group made it challenging to implement secure payment methods.

Due to the workforce's characteristics, direct deposit and email transfers were not viable options, so the company explored alternatives like cash transactions, which posed significant security risks.

Dan Kelly, president of the Canadian Federation of Independent Business, emphasized that banks must improve their systems to prevent such fraud, placing the onus on financial institutions to safeguard businesses against financial losses caused by fraudulent activities.