$9.8M stolen from FACTOR bank account, Canadian provider of music grants alleges

A major Canadian music funder alleges that nearly $10 million of federal government money was stolen from its bank account, in a case that will go before a judge in Toronto on Friday morning.

The Foundation Assisting Canadian Talent on Recordings (FACTOR) says in documents filed with the Ontario Superior Court of Justice Commercial List that someone outside the organization gained access to its Scotiabank account and took nearly $9.8 million in June, representing almost one-fifth of its annual funding to Canada's music industry.

The non-profit alleges the funds were wired to a numbered company in Quebec, and then to a cryptocurrency platform, where the money was converted to crypto and used to buy crypto-mining hardware.

FACTOR's lawyers say in court documents that the alleged fraud occurred "as a result of gross negligence on the part of Scotiabank," noting there were "multiple red flags" that should have alerted the bank to the unauthorized transfer.

FACTOR is asking the court to direct Scotiabank and the customers allegedly involved in the transaction to refund the money, while the bank and the Quebec man behind the numbered company are pushing for a formal discovery process to reveal pertinent documentation, which would take much longer and could entail a jury trial.

Founded in 1982, FACTOR supports Canada's English-language music industry by offering a wide range of grants for musicians, record labels, event organizers, awards shows and others in the industry, with funding from the federal government and private radio broadcasters.

The organization has helped artists achieve success beyond Canada's borders — from rising stars like tenor and composer Jeremy Dutcher and musician Debby Friday to international success stories like Nickelback and Tegan and Sara, who were buoyed by funding early in their careers.

In the 2022-23 fiscal year, FACTOR offered more than $51 million in total funding to more than 3,000 projects across Canada.

Ebonnie Rowe, founder of Honey Jam, a non-profit artist development program, said her jaw dropped when she heard about the missing funds.

"I was stunned, shocked. I don't think any of us have ever heard of something like this happening at this magnitude from an organization like this," she said.

Honey Jam, which works with emerging female musicians and has been credited with helping discover and develop such artists as Nelly Furtado, Jully Black and Haviah Mighty, has received FACTOR funding for the last 16 years.

Rowe said the organization's support is essential for arts and culture in Canada — and for some artists, it's their only source of financial support.

"We are all praying that it comes to a resolution, that the money is recovered and that all will be well in the end," she said.

The court filings state that FACTOR's accountant, Marna Aianova, was the only person with official access to log in to the organization's bank account.