Court of Appeal for Ontario
Before: Weiler, Tulloch and van Rensburg JJ.A.
Between:
Her Majesty the Queen Respondent
and
Domenic Piccinini Appellant
Counsel: Jill Presser and Cate Martell, for the appellant Michael Perlin, for the respondent
Heard: June 5, 2015
On appeal from the sentence imposed on March 5, 2013 by Justice Bruce Durno of the Superior Court of Justice.
Endorsement
1The appellant and two co-accused pleaded guilty to fraud over $5,000, fraud for the benefit of a criminal organization and money laundering by “transferring possession of proceeds of crime”. A fourth accused was found guilty after trial and sentenced separately. The appellant was sentenced to a total of six years imprisonment (prior to credit for pre-sentence custody) and a $500,000 fine in lieu of forfeiture. The appellant seeks leave to appeal his sentence. The first ground of appeal concerns the amount of credit for pre-trial custody and is conceded by the Crown. The second ground of appeal and central issue is whether the sentencing judge erred in imposing a fine in lieu of forfeiture. A subsidiary issue is whether the amount of the fine imposed, $500,000, is arbitrary and unsupported by the evidence.
2The offences arose from a telephone scam (a “grandparent fraud”) that targeted elderly individuals in the United States. The scam ran out of a “boiler room” – a rented house - in Mississauga. The appellant and his co-accused, as well as three other people, used lists of names and phone numbers to call prospective victims. The caller would pose as the victim’s grandchild, claiming to have been arrested in Canada, and needing money for bail. Other callers in the boiler room would play the roles of police officers or lawyers. The victims were directed on how to send the required money to certain locations around the world using Western Union, and addressed to recipients – “runners” – identified by the callers. In a “call-back”, the victim would provide the caller with the money transfer control number (MTCN) provided by Western Union, which was then communicated to the runner and used to collect the funds at the other end.
3The appellant was the “main boss” of the organization; his domestic partner was second in command. The appellant paid rent on the house. He paid a weekly commission to the co-accused who made the phone calls. The appellant had the master phone list and provided the list of prospective victims to the callers. He directed the various locations around the world where the funds were to be transferred by the victims via Western Union.
4The fraudulent activities took place over a six month period before the appellant and the others were arrested. Approximately $45,000 was seized from the appellant’s home and person at the time of the arrest. The police were unable to trace the majority of the funds and the total amount of the fraud was never established. For the purpose of the guilty plea and sentencing it was agreed that the total amount of the fraud was $900,000: the sum of $7,500 multiplied by the number of days the scheme was carried out.
5At the hearing of the appeal we gave effect to the first ground of appeal. The sentencing took place before the Supreme Court of Canada decision in R. v. Summers, 2014 SCC 26. The parties agreed that the appellant was entitled to 1.5:1 days credit for each day of pre-sentence custody. We therefore varied the appellant’s custodial sentence to credit him with 1,116 days of pre-sentence custody instead of 864 days. His sentence was reduced by 252 days. As a result of the variation, the appellant had already passed his statutory release date, and we ordered his immediate release.
6We reserved the second ground of appeal and indicated we would give reasons shortly. These are those reasons.
7The appellant argues that there was no evidence that he had possession or control over $500,000; in the alternative, the appellant asserts that the sentencing judge ought to have exercised his discretion to impose a fine that was limited to the amount of the actual benefit he received.
8Section 462.37 of the Criminal Code provides, in respect of certain designated offences, for the forfeiture of “property of an offender” that is the proceeds of crime. Fraud over $5,000 is a designated offence. It is admitted in this case that the fraud generated proceeds of $900,000.
9Pursuant to s. 462.37(3), a fine in lieu of forfeiture may be imposed if the sentencing court is satisfied that the property at issue “cannot be made subject to a forfeiture order, because it cannot be located, has been transferred to a third party, is located outside Canada, has been substantially diminished in value, or has been comingled with other property that cannot be divided without difficulty”.
10In imposing a fine in lieu of forfeiture, the court must be satisfied that the subject of the fine is or was the “property of the offender”. In R. v. Dwyer, 2013 ONCA 34, at paras. 23 and 24, this court held that it was not sufficient for the Crown to point to the amount of the fraud and the amount recovered and to conclude that the accused had possession or control of the balance. The sentencing judge may not infer that because an offender directed a fraud, he or she necessarily possessed, controlled or benefitted from the fruits of that fraud. The court must be satisfied on a balance of probabilities that the offender at some point had actual possession of or control over the targeted property.
11The appellant points out that in Dwyer, the court found that the accused did not have control over the entire amount of proceeds from a mortgage fraud that had been paid into a lawyer’s trust account but only the sum for which the accused had signed a direction to the lawyer (the court also referred to other supporting documents such as cheques).1 The appellant submits that a direction or similar type of documentation is required in order to determine the necessary control over the proceeds of fraud sufficient to justify a fine in lieu of forfeiture.
12The appellant contends that the sentencing judge erred in concluding that he exercised control over $500,000 of the proceeds of the fraud. At its highest, the appellant orchestrated the fraud, and he had control over the “boiler room”, but this did not mean that he had control over the funds that were generated by the fraud. The appellant contends that the evidence was capable of establishing that the appellant controlled only $86,400, the commission paid to the appellant’s two co-accused who made the phone calls.
13In the present case, the sentencing judge was aware that a fine had to be based on evidence of the amount over which the appellant exercised control. He stated:
While he did not personally direct what happened to the money, [Piccinini] was in control of the entire operation, from where the money was to go, to the name of the supposed bail bondsperson, he provided the information. In my view he clearly had control of the proceeds. He was directing where it went; it was not like Dwyer where there was a gap and no evidence when it is his operation.
14Not only was the appellant admittedly in control of the criminal organization that perpetrated the fraud in question, the evidence supported that he exercised control over the funds provided by the victims, which were the proceeds of the fraud. Each day he told his employees which Western Union location would be used as a destination for the funds, and the name of the person who was to retrieve the transferred funds (the runner). The appellant would obtain the MTCN provided by the victim and pass it on to the runner, who would claim the money at the other end. The appellant was the person who sent the runner to pick up the money. Whether or not the appellant personally received the money at the other end is irrelevant; the appellant clearly controlled the funds from when they left each victim until they were received.
15In addition to the appellant’s control over the proceeds of the fraud, the appellant’s lifestyle, finances and expenses supported the finding that he had control over the funds. He had no other source of income; he funded the operating expenses of the criminal organization; he paid employees a small percentage of the gross proceeds; and he provided no explanation of what happened to the funds.
16We therefore agree with the Crown that the evidence supported the sentencing judge’s finding that the appellant controlled the full amount that the offences grossed.
17Finally, we do not accept the appellant’s argument that the sentencing judge erred in ordering a fine of $500,000, in the absence of evidence that he had profited by that amount. The appellant contends that the sentencing judge ought to have determined his actual benefit from the proceeds of the fraud and imposed a fine in that amount. The appellant points to the language of s. 462.37(3) which provides that the sentencing judge “may” order a fine in lieu of forfeiture. The appellant argues that the sentencing judge has discretion to impose a fine in cases where the purpose of the legislation is met; that is, in order to deprive the offender of his profit.
18We do not agree with the appellant’s argument. In R. v. Lavigne, 2006 SCC 10, the Supreme Courtrecognized that the sentencing judge has a limited discretion to determine whether a fine in lieu of forfeiture is to be imposed, and to determine the “value of the property”: at para. 35. While the court may decide not to impose a fine in certain circumstances (including for example if the offender did not profit from the crime and if it was an isolated crime committed by an offender acting alone), once a decision is made to impose a fine, the amount of the fine is required to be “equal to” the value of the property over which the offender had possession or control: Lavigneat paras. 28, 34, 35, 43 and 44.
19The “value of the property” as we have already discussed, is the value of the property that was possessed or controlled by the appellant. It is not the benefit received by the appellant: see R. v. Siddiqi, 2015 ONCA 374, where this court noted at para. 6, that the sentencing judge was not required to find “that [the accused] personally benefitted from the funds he transferred to [a] third party, on a dollar-for-dollar basis, to impose a fine in lieu of forfeiture that included the amount of the transferred funds”.
20In the present case, the sentencing judge concluded that the value of the property over which the appellant had control was “at least” $500,000. He imposed a fine for this amount, rather than the entire proceeds that the appellant controlled, in order that the total amount of the fines imposed on all of the offenders did not exceed the gross proceeds of the fraud. If the sentencing judge was not entitled to apportion the amount (an argument raised by the appellant in his factum, but specifically abandoned in oral argument), this only benefited the appellant, and is not challenged by the respondent. It is therefore unnecessary to consider this issue in the present appeal.
21Accordingly, leave to appeal is granted. The appeal is allowed on the issue of pre-sentence custody. The appeal of the fine in lieu of forfeiture is dismissed.
“K.M. Weiler J.A.”
“M. Tulloch J.A.”
“K. van Rensburg J.A.”
