Large Fraud Sentencing & Considerations

Oct 7, 2020 | Criminal

 What is the sentence for large frauds in Ontario?

A conviction for fraud of more than $5,000 carries a wide range of possible sentences.  Section 380(1) of the Criminal Code sets out that the maximum sentence for the offence is 14 years in prison, while section 380(1.1) says there’s a 2-year minimum sentence if the fraud is worth more than $1,000,000. As we will see, that minimum sentence may be unconstitutional, and in any event knowing the maximum possible penalty doesn’t tell us much about the punishment people actually get when they are convicted of the offence. The possibilities range from probation, to house arrest, to intermittent (weekend) jail sentence, all the way to over 10 years in a federal penitentiary.

In this article, we’ll look at the range of sentence for large frauds that involve a breach of trust (meaning the accused was someone in a special position of trust or authority like an accountant, lawyer, or an executive) and investor frauds or “Ponzi schemes”. These are serious frauds – and the Ontario Court of Appeal has provided recent guidelines on the sentences that should apply.

Is there a mandatory minimum sentence for fraud in Canada?

Yes – for the moment, there is. Section 380(1.1) creates a 2-year minimum sentence for frauds that exceed $1,000,000. In recent years, the Supreme Court of Canada and other courts have struck down several mandatory minimum sentences. As it stands, the mandatory minimum sentence for frauds over $1,000,000 has not been struck down and remains on the books.

The Ontario Court of Appeal addressed the issue in R. v. Plange (2019 ONCA 646). At trial, the sentencing judge struck down the minimum, finding it was unconstitutional, and imposed a 13 month sentence (instead of 2-years). The Court of Appeal held that the trial judge was wrong to strike down the minimum for the reasons that he did, but only because the issue had not been argued by the parties at trial, not because the minimum is actually constitutional. The Court held that Plange actually deserved a three year sentence for what he did, and declined to rule whether the minimum sentence was constitutional.

However, there is still reason to believe the minimum is constitutionally vulnerable, and someone who is facing a finding of guilt that triggers the section will want to think about challenging it. Justice Doherty wrote a separate set of concurring reasons in Plange that held the minimum sentence is unconstitutional, because one can imagine examples of cases where it would be cruel and unusual punishment to sentence someone to 2-years in jail for a fraud technically worth more than $1,000,000 – for example, what if someonecommitted a fraud, but didn’t know how much it was worth, and who turned himself in, pleaded guilty, and cooperated with the police. This “hypothetical” case is enough to establish the minimum should be struck down, and Justice Dohery’s decision, although not binding on trial courts, provides a ready-made example that can be given to trial judges.

The Range of Sentence for Large Breach of Trust Frauds in Ontario

Because the possible range of sentence is so broad, we have to look at case law and sentencing decisions to try to piece together the general range of sentence people receive when they are convicted of fraud offences. Three Ontario Court of Appeal decisions from the last 10 years suggest that for breach of trust frauds worth more than ~$100,000, sentence will often be between 18 months and 4 years.

In the first case, R. v. Castro, 2010 ONCA 718, the Court of Appeal affirmed a trial judge’s decision to sentence a paralegal who stole about $150,000 from his clients to 23 months in jail. The Court explained that for frauds on the “lower end of the large-scale range, i.e. less than $200,000”, if there are few or no mitigating factors, there will usually be a jail sentence of 18 to 23 months.

Castro is consistent with the Court of Appeal’s more recent decision R. v. Lawrence, 2018 ONCA 676, where an individual who used his job at the Canadian Mint to steal and sell commemorative gold pucks for $130,000 was sentenced to 2 ½ years in prison.

When frauds get into the million dollar figures, you can expect to be serving years in prison. In R. v. Dieckman, 2017 ONCA 575, the Court sentenced a convicted felon who was apart of a five year long scheme to defraud the Canada Revenue Agency of over $5 million to four years in prison. The Court commented that when individuals perpetrate large scale frauds that are motivated by greed, they can expect significant penitentiary sentences, even if there are strong mitigating factors.

Below are some more examples of sentencing decisions in fraud cases.

Trial Decisions
Name Facts Sentence
R. v. Watts, 2016 ONSC 4843 The accused prepared taxes for people. He invented non-existent business losses and falsified tax liabilities. Revenue Canada paid out $2.7 million improperly because of his actions. The accused netted $300,000 on the scheme.

 

6 years 
R. v. Gandhi, 2018 ONSC 941 The accused pled guilty to two different frauds committed as a book keeper for different employers. One employer was defrauded of $320,000. The other of $470,000.

 

3.5 years (18 months for the first fraud and 2 years for the second)
R. v. Kassam, 2017 ONSC 74 The accused pretended he had a law degree from the United States and was hired as a legal assistant. He acted without authority and held himself out as a lawyer in court. He forged a cheque in his own name from his employer’s trust account. He had a criminal record for fraud.

 

3 years
R. v. Lall, [2007] O.J. No. 5213 The accused was an auditor with the CRA. He defrauded $143,000 by filling tax returns and claiming refunds and benefits on behalf of deceased people. He pled guilty, had no criminal record, and had issues with alcohol and gambling

 

18 months 
R. v. Roberts, 2017 ONSC 1071 The accused pled guilty to fraud. She was a branch manager at a bank. She opened a series of fraudulent accounts and misused bank funds by depositing them in her account. The amount totaled approximately $277,000.

 

R. v. Davies, 2016 ONCJ 427 The accused was a manager at a company and used her position to divert funds that should have gone to the company to her personal bank account. She took $175,000 over the course of one year.

 

9 months 

Can you get house arrest or conditional sentences for breach of trust frauds?

Conditional sentences, which are jail sentences that can be served “in the community” through house arrest and other conditions, are available for fraud (assuming the mandatory minimum mentioned above either isn’t triggered or isn’t constitutional). Conditional sentences are not the norm for larger scale frauds that involve breaches of trust, but they do exist in cases where you can show significant mitigating factors.

The table below has example cases where conditional sentences were ordered for fraud. Note that in these cases, there are usually compelling mitigating factors, such as extreme challenges faced by the accused (including mental health struggles), full and early cooperation with the authorities, and restitution of some or all of the misappropriated funds or assets.

R. v. Auckbaraulle, 2018 ONSC 2498 The accused was an Accounts Payable clerk and issued fraudulent cheques totaling $80,370 to fake businesses. There was no evidence of financial gain on her part and she had no criminal record. No money had been repaid. The complainant was suffering through an abusive relationship at the time of the fraud, and had suffered a stroke and a heart attack while awaiting trial.

 

2 year conditional sentence
R. v. Lebel, 2018 ONCJ 748 The accused stole $162,000 from his employer by purchasing equipment that wasn’t needed and then selling it online. He had a gambling, cocaine and alcohol addiction. He was hospitalized for depression and suicidal thoughts and then forced to live in a shelter.

 

2 year conditional sentence 
R. v. Stirling, 2016 ONCJ 691 The accused defrauded a minor league baseball association of $468,000. He was 66 years old with no criminal record. He started taking the money after he lost his job. He had reported his own crime, pled guilty, made partial restitution, and was the caregiver for his elderly mother, who greatly depended on him.

 

2 year conditional sentence

 

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