IT DISCUSSES FRAUDULENT BUSINESS TRANSACTIONS OCCURRING IN ONTARIO, CANADA. ALL THE CASES INVOLVE MUNICIPAL REPRESENTATIVES AND EMPLOYEES. AN OBVIOUS FORM OF FRAUDULENT TRANSACTION BY ELECTED REPRESENTATIVES IS THE MISAPPROPRIATION OF FUNDS OF THE MUNICIPALITY FOR THE BENEFIT OF THE ELECTED REPRESENTATIVE. FOR EXAMPLE, IN A CASE WHERE MEMBERS OF A COUNCIL ILLEGALLY VOTED THEMSELVES WAGES, IT WAS HELD THAT AN ACTION WOULD LIE AGAINST THEM TO PAY THE MONEY BACK. ALSO, WHEN MEMBERS OF A COUNCIL HAVE COMMITTED AN UNAUTHORIZED ACT THEY MAY NOT SUBSEQUENTLY RATIFY THAT ACT AT A COUNCIL MEETING. GENERALLY, WHEN A POSSIBLE CONFLICT OF INTEREST AND DUTY ARISES, IT MUST BE DISCLOSED FULLY BEFORE ANY ACTION IS TAKEN BY THE COUNCIL. A REVIEW OF OTHER CASES REVEALS THAT IN ORDER FOR A MUNICIPALITY TO BE HELD LIABLE FOR THE FRAUDULENT TRANSACTIONS OR REPRESENTATIONS OF AN EMPLOYEE OR ELECTED REPRESENTATIVE, A FORMAL CORPORATE ACT BY THE MUNICIPALITY MUST OCCUR WITH RESPECT TO SUCH ACTS OR REPRESENTATIONS. ALTHOUGH PRINCIPLES APPLICABLE TO FRAUDULENT TRANSACTIONS GENERALLY APPLY TO EMPLOYEE AND OFFICIAL FRAUD, VARIATIONS FROM THE GENERAL RULES EXIST DUE TO STATUTORY LAW, SUCH AS THE REQUIREMENT THAT STATUTORY DUTIES BE PERFORMED, THE NECESSITY OF THE MUNICIPALITY ACTING FORMALLY OR RECEIVING BENEFIT SO AS TO OBLIGATE ITSELF, AND EXCUSING THE MUNICIPALITY FROM LIABILITY WHERE AN EMPLOYEE OR OFFICIAL IS PERFORMING A PUBLIC ACT REQUIRED BY STATUTE. CASE NOTES ARE INCLUDED. (PRG)