Her Majesty the Queen v. Leo-Mensah [Indexed as: R. v. Leo-Mensah]
101 O.R. (3d) 366
2010 ONCA 139
Court of Appeal for Ontario,
Weiler, Gillese and MacFarland JJ.A.
February 24, 2010
Criminal law -- Fraud -- Sentence -- Accused convicted of fraud and two counts of income tax evasion -- Trial judge erring by failing to consider that value of fraud over $1 million and perpetrated over three years -- Accused having pivotal role in scheme in which clients given fraudulent charitable receipts so that almost $3.62 million improperly [page367] refunded to clients -- Trial judge also erring by giving excessive weight on separated accused's childcare obligations in absence of evidence of extent of obligations and children living with their mother -- Given magnitude of fraud, breach of trust and abuse of charitable donations appropriate range of sentence usually penitentiary sentence -- Reincarceration appropriate as original sentence imposed of one day (in addition to credit of 22 months for pre-trial custody) and global fine being so far below appropriate range of sentence -- Crown appeal allowed and two years' incarceration and separate fines imposed on each count of income tax evasion.
Taxation -- Income tax -- Evasion -- Sentence -- Sentencing judge erring in sentencing accused to one day in jail (in addition to credit of 22 months for pre-trial custody) and global fine of $145,766 for fraud over $5,000 and two counts of income tax evasion -- Accused having pivotal role in scheme in which hundreds of clients given fraudulent charitable receipts -- Fraud perpetrated over three-year period and resulting in improper tax refunds to clients of almost $3.28 million and involving blatant abuse of charitable donations scheme under Income Tax Act -- Trial judge erring by giving excessive weight to separated accused's childcare obligations in absence of evidence of their extent -- Trial judge failing to give adequate weight to duration and value of fraud and accused's primary role in scheme -- Sentence imposed so far beyond range of appropriate sentence that appropriate to reincarcerate accused -- Sentence varied to two years' incarceration and separate fines for each count of income tax evasion.
The accused pleaded guilty to one count of fraud over $5,000 and two counts of income tax evasion. He provided false charitable donation receipts to hundreds of clients of his income tax return preparation business and failed to report the income he derived from his fraudulent activity. Over a three- year period, almost $3.28 million was improperly refunded to accused's clients, and he personally evaded income tax totalling $145,766. The sentencing judge gave the accused a two-for-one credit for 11 months of pre-trial custody and sentenced him to one day in jail and a global fine of $145,766, concurrent on all charges. The Crown appealed.
Held, the appeal should be allowed.
The trial judge failed to consider, as an aggravating factor, that the value of the fraud exceeded $1 million. She erred in placing significant emphasis on the accused's childcare obligations in the absence of any evidence as to the extent of those obligations. Given the magnitude of the fraud, the breach of trust, the blatant abuse of the charitable donations scheme under the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) and the accused's pivotal role in the scam, the sentence fell below the established range for large-scale frauds that, as a norm, is a penitentiary sentence. There is usually a reluctance to reincarcerate accused persons, but the sentence imposed here is so far below the accepted range that it is appropriate in this case. Finally, separate fines should be imposed for each income tax offence and should not be made concurrent. The sentence was varied to a further two years' incarceration and separate fines in the amount of $42,457 and $103,309 for each count of income tax evasion.
APPEAL by the Crown from the sentence imposed by Ray J., [2009] O.J. No. 5868 (C.J.) for fraud over $5,000 and for income tax evasion.
Cases referred to R. v. Pierce (1997), 1997 CanLII 3020 (ON CA), 32 O.R. (3d) 321, [1997] O.J. No. 715, 97 O.A.C. 253, 114 C.C.C. (3d) 23, 5 C.R. (5th) 171, 34 W.C.B. (2d) 89 (C.A.) [Leave to appeal to S.C.C. refused [1997] 3 S.C.R. xiii, [1997] S.C.C.A. No. 225], distd [page368] Other cases referred to R. v. Bogart (2002), 2002 CanLII 41073 (ON CA), 61 O.R. (3d) 75, [2002] O.J. No. 3039, 162 O.A.C. 347, 167 C.C.C. (3d) 390, 54 W.C.B. (2d) 712 (C.A.) [Leave to appeal to S.C.C. refused [2003] 1 S.C.R. vi, [2002] S.C.C.A. No. 398]; R. v. F. (D.G.) (2010), 98 O.R. (3d) 241, [2010] O.J. No. 127, 2010 ONCA 27, 250 C.C.C. (3d) 291; R. v. Ward, 1980 CanLII 2882 (ON CA), [1980] O.J. No. 1439, 56 C.C.C. (2d) 15 (C.A.) Statutes referred to Criminal Code, R.S.C. 1985, c. C-46, s. 380(1)(a) Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), s. 239(1)(d)
Beverly J. Wilton and Ghazala Zaman, for appellant. Paul Leo-Mensah, acting in person.
The judgment of the court was delivered by
[1] GILLESE J.A.: -- Mr. Leo-Mensah operated a business through which he, or those whom he employed, prepared and submitted his clients' income tax returns. As part of the tax services that he provided, Mr. Leo-Mensah provided false charitable donation receipts to his clients. He either submitted the receipts to the CRA upon request or provided them to his clients.
[2] In 2003, 2004 and 2005, he submitted 801 tax returns, claiming approximately $11.7 million in false charitable donations. As a result of these false claims, tax refunds in the amount of approximately $3.28 million were paid out by the CRA to Mr. Leo-Mensah's clients.
[3] Mr. Leo-Mensah failed to report the income that he derived from his fraudulent activity. As a result, he evaded income tax of $42,457 in 2004 and $103,309 in 2005. He failed to file an income tax return for 2006.
[4] Mr. Leo-Mensah pleaded guilty to one count of fraud (Criminal Code, R.S.C. 1985, c. C-46, s. 380(1)(a)) and two counts of income tax evasion (Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), s. 239(1)(d)). After being given credit on a two-for-one basis for 11 months of pre-trial custody, he was sentenced to one day in jail and fined $145,766, concurrent on all charges (the "global fine").
[5] The Crown seeks leave to appeal sentence and, if leave is granted, asks that the sentence be increased. It argues that the sentence imposed was manifestly unfit given the seriousness of the offences. [page369]
[6] Mr. Leo-Mensah responds by arguing that he was not the mastermind behind the scheme, that others participated in it and should be held accountable, and that he was duped by pastors into believing that the scheme resulted in money being given to needy children in Africa.
[7] For the reasons that follow, I would grant leave to appeal and allow the appeal. Analysis
[8] In my view, the sentencing judge erred in three respects.
[9] First, it appears that she failed to consider, as an aggravating factor, that the value of the fraud committed exceeded $1 million. This she was obliged to do pursuant to s. 380.1(1)(a) of the Criminal Code.
[10] Second, the sentencing judge appears to have placed significant emphasis on Mr. Leo-Mensah's childcare obligations when determining his sentence. She likened his circumstances to those of the accused in R. v. Pierce (1997), 1997 CanLII 3020 (ON CA), 32 O.R. (3d) 321, [1997] O.J. No. 715 (C.A.), leave to appeal to S.C.C. refused [1997] 3 S.C.R. xiii, [1997] S.C.C.A. No. 225. Unlike the situation in Pierce, however, in the present case there was no evidence before the court on the extent of the respondent's childcare obligations. At the time of his arrest, the respondent was separated from his spouse and his four children continued to live with their mother.
[11] Third, given the magnitude of the fraud, the breach of trust, blatant abuse of the charitable donations scheme under the Income Tax Act and Mr. Leo-Mensah's pivotal role in the scam, the sentence imposed falls below the range that has been established by this court for large-scale fraud cases. The amount and duration of the fraud perpetrated by the respondent is significant, amounting to almost $3.28 million over a three- year period and involving hundreds of fraudulent tax returns. In R. v. Bogart (2002), 2002 CanLII 41073 (ON CA), 61 O.R. (3d) 75, [2002] O.J. No. 3039 (C.A.), leave to appeal to S.C.C. refused [2003] 1 S.C.R. vi, [2002] S.C.C.A. No. 398, this court established that a penitentiary sentence is the norm, not the exception, in cases of large-scale fraud and in which there are no extraordinary mitigating circumstances.
[12] I would note, as well, that in accordance with R. v. Ward, 1980 CanLII 2882 (ON CA), [1980] O.J. No. 1439, 56 C.C.C. (2d) 15 (C.A.), separate fines are to be imposed for each offence and such fines are not to be made concurrent.
[13] It will be apparent that I do not accept that Mr. Leo- Mensah was but a dupe in this matter. The sentencing judge found that he planned and organized the scheme in order to defraud the [page370] Government of Canada. She stated that Mr. Leo-Mensah "was the instigator and the primary participant in this scheme and his degree of moral culpability or responsibility for the offences is very high".
[14] I see no reason to interfere with these findings. If there are other people who participated in the fraudulent activity, the respondent is free to provide that information to the authorities who may take legal action against them. The fact that others may also be guilty of offences does not diminish the respondent's culpability, however. There is an inadequate record to determine the veracity of the respondent's claim that he was motivated by a desire to help needy children in Africa. Assuming that to be the case, however, it does not justify or excuse the wrongdoing that he committed.
[15] While this court has been reluctant to reincarcerate an offender who has served the sentence originally imposed and been released into the community, reincarceration is warranted where the original sentence was so far below that which was required that the interests of justice require the court intervene: see R. v. F. (D.G.) (2010), 98 O.R. (3d) 241, [2010] O.J. No. 127, 2010 ONCA 27, at paras. 33-34. In my view, this is such a case and a period of reincarceration is necessary. Disposition
[16] Accordingly, I would grant leave to appeal sentence and allow the appeal. I would sentence the respondent to a further two-year period of incarceration and substitute for the global fine, separate fines for each of the two income tax offences, namely, a fine of $42,457 for the conviction for income tax evasion in 2004 and a fine of $103,309 for the conviction for income tax evasion in 2005.
Appeal allowed.