SKN | Inside the Surrey Fraud Case: What the CIBC and Coast Capital Lawsuit Signals for Public-Sector Controls

Key Takeaways

• The City of Surrey alleges more than $2.5 million in public funds were diverted over seven years through internal manipulation.
• Funds were allegedly deposited into accounts held at CIBC and Coast Capital Savings.
• The case raises broader questions around bank-side controls and municipal oversight.”
• For financial institutions, reputational and compliance exposure may matter as much as legal liability.

A Lawsuit That Goes Beyond One Alleged Employee

The City of Surrey has launched civil proceedings against Canadian Imperial Bank of Commerce and Coast Capital Savings, seeking to recover more than $2.5 million allegedly siphoned off through a long-running cheque fraud scheme.

At the center of the claim is Sunny Catlin, a former accounting clerk in Surrey’s finance department, who is accused of manipulating deposit documentation to redirect legitimate security-deposit payments into accounts linked to herself, a controlled company, and her mother. The allegations have not yet been tested in court, but the scale and duration of the alleged activity immediately elevate the case beyond an isolated internal breach.

Seven Years, 183 Cheques, One Control Failure After Another

According to the notice of civil claim filed in the British Columbia Supreme Court, the city has identified 183 allegedly fraudulent cheques issued between February 2017 and January 2024. The length of time involved is striking.

For governance professionals, this timeline points to layered failures. Internal segregation of duties, reconciliation processes, and audit triggers appear to have been insufficient to detect repeated anomalies. Once funds left municipal accounts, the lawsuit argues, they were accepted and deposited by financial institutions without adequate scrutiny.

Why the Banks Matter in This Case

The city’s decision to pursue the banks directly reflects a broader legal and regulatory reality. Large-scale fraud cases increasingly test where institutional responsibility begins and ends once suspicious funds enter the banking system.

While neither CIBC nor Coast Capital have yet filed responses, the lawsuit implicitly questions whether transaction monitoring, know-your-customer controls, and unusual deposit patterns should have triggered earlier intervention. Even if legal liability is ultimately limited, reputational exposure is not.

Criminal Proceedings Run in Parallel

Catlin was charged in November with breach of trust by a public officer, theft, fraud, and forgery. She is scheduled to appear in Surrey Provincial Court later this month. The criminal case will focus on individual culpability, while the civil action addresses financial recovery and institutional accountability.

This parallel-track approach is increasingly common in complex fraud cases, particularly where public funds are involved.

What This Means for Public Bodies and Banks Alike

For municipalities, the Surrey case is a cautionary tale about long-duration internal fraud and the cost of complacency in finance departments. For banks, it highlights how legacy deposit processes, especially involving cheques and public-sector clients, remain a point of vulnerability even in an era of advanced digital monitoring.

The outcome will be closely watched by compliance teams, insurers, and public administrators across Canada.

CBBA Perspective

This lawsuit is not just about recovering money. It is about accountability across the full financial chain. As public institutions and banks operate under rising scrutiny, tolerance for “nobody noticed” defenses is diminishing. Whether or not the claims succeed in court, the case reinforces a central truth: in modern finance, duration is often the biggest red flag of all.

For a confidential discussion on fraud risk, institutional controls, and governance exposure in complex organizations, contact our senior advisory team.

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