ONTARIO COURT OF JUSTICE
BETWEEN:
HER MAJESTY THE QUEEN
— AND —
M.A.
Before Justice Fergus ODonnell
Heard on miscellaneous dates between 30 January and 30 September, 2014
Reasons for judgment delivered on 12 November, 2014
Ms. Michelle Schwartz for the Crown
Ms. Sonya Shikhman for the defendant, M.A.
ODonnell, J.:
1.
Overview
M.A. worked for a bank. He stole from that bank. Quite a lot of money. Just over $11,000. He has pleaded guilty to three counts of fraud. Based on its view of the facts, the Crown says the appropriate punishment is a six month conditional sentence, or in layman’s language “house arrest” or home confinement. M.A.'s lawyer, Ms. Shikhman, says that the unique circumstances of this case should lead to an absolute or conditional discharge.
The intricate details of M.A.'s crimes are not that important, although the general nature of the crimes is: breach of trust by employees is a serious matter. M.A. had been employed by the bank for about a year-and-a-half as a financial services adviser when he came to the attention of the bank's internal investigations unit on 23 February, 2012 as a result of an unauthorized transaction on a customer's account. The transaction had been posted by M.A.. As is often the case in matters like this, one inquiry led to another, which led to another, and so on. In general terms, M.A. used a real client's name to open a new account, unbeknownst to the client and under M.A.'s control, the so-called "Southern" account. M.A. started by transferring the proceeds of a dormant investment into this Southern account and subsequently transferred funds illicitly from other clients' accounts into "his" account. On occasion, he had to steal from one client to cover up, for example when a previous victim asked about an account discrepancy caused by M.A.'s larceny. M.A. seemed to select clients who were distant or uninvolved and those for whom the relatively small individual amounts might be less likely to draw attention. He used "his" Southern account to make $866.20 in purchases and $9,144.25 in withdrawals, for a total of $10,010.45. The bank asserted a total loss of $11,267.53. There is a rather substantial discrepancy of $1,257.08 between the two figures: apparently $10,000 in transactions resulted in "bank fees" of one-eighth of that amount.
All these things leading to other things and so on ultimately led to M.A. being interviewed by the bank on 12 March, 2012, which led to his confession, which ended with his dismissal that same day. For all its brevity, the bank's investigation was thorough. Computer records and log-on IDs and surveillance footage tied to specific transactions created a web of evidence from which M.A. likely had no escape. For all its relative complexity, the scheme was probably doomed to failure from its inception. Seventeen days from the start of the formal investigation to the dismissal. Banks work faster than courts.
Banks, of course, have a somewhat simpler task. If one is running a bank, it is obvious that one can't really afford to keep staff members who steal from the bank or its clients. The decision about how to punish someone in the criminal justice system for the same misconduct is rather more complicated. That is especially true when the person claims that he stole from the bank in order to pay off a Syrian militia that was threatening to kidnap and rape his sister because she had posted some improvident internet comments about the Syrian regime.
I use the term "regime" advisedly. Courts generally try to stay away from matters of political dispute, but we are presumably well past the point where reasonable people would insist on the less judgmental word "government" to describe the leadership in Damascus. I use the term "militia" generically. Some militias are highly-disciplined, entirely legitimate supplementary military forces, some "militias" are off-the books state enforcers who give a government deniability for its darker misdeeds, some militias are thugs. The militia described by M.A. in his testimony was more of the second and third category.
Background
M.A. testified. He is now thirty years old. He came to Canada seven years ago and has studied English and business while here. Before working at the bank he had worked at a call centre and as a financial planner. He took home about $590 a week from his job at the bank. He and his fiancée paid $900/month in rent, plus loan, car-loan and insurance payments that left him with about $500 or $600 for other expenses. They shared a two-bedroom apartment with another person to save on rent.
M.A. explained why he opened the fake account and siphoned money from others into it. The Syrian revolution had begun in March, 2011. His family had a long-term reputation as being opposed to the Assad regime. He and his sister, who is still in Syria, were active on Facebook. His sister attended anti-government demonstrations there. At trial he filed several pages of Facebook posts, in Arabic, that he said showed his life being threatened if he returned to Syria. He had not had the messages translated into English because he could not afford an independent translation. The Crown did not suggest that his characterization of the messages was untrue.
M.A. testified to his understanding of what was going on in Syria in his absence. The family of a friend of his sister's was loyal to the Assad regime and was involved with a government-connected group that used kidnapping as a means of raising money, which M.A. said was a common practice in Syria. His sister's Facebook postings drew threats, so she withdrew from Facebook, but people came to the house, and were told that his sister was not there. These were not nice people, said M.A.. The family had M.A.’s sister staying with a friend. There was a demand for money, failing which the group would find her and kidnap her and rape her.
M.A. said that when he learned of this threat, he tried to find a way to raise money. His family did not have access to funds in Syria because they had sent their savings to M.A. in Canada to invest in a cafe on the Danforth. He had just invested the money in the cafe shortly before the extortion demand and was unable to extract the money from the business. He has since sold his interest for $6,700, he said, and has put that toward restitution. That was about an eighty per-cent loss from the original investment.
M.A. said that he transferred money to his family in Syria by various stratagems because sending money through formal channels is complicated. Through contacts he would learn of friends of friends who were travelling to Syria and would send cash with them. That would cost him perhaps $50 or $100, plus some internal transfer charges inside Syria if the travellers were not from his city. He also managed an exchange with an international student who could not get funds out of Syria to pay for his expenses here, so he gave money to M.A.'s family in Syria in exchange for M.A. giving him $3,500 here.
I was provided with "corroboration" of M.A.'s tale about his sister's jeopardy in Syria through letters from his sister and his mother and a letter from the student with whom he did the $3,500 currency exchange. Obviously, these letters were not tested through cross-examination of the declarants as M.A.'s family is in Syria and the student had left Canada by the time of the trial. Indeed, although Ms. Shikhman took steps to confirm the veracity of the family letters, the simple reality is that one could not even absolutely confirm the identity of the person with whom one is speaking by such means.
That being said, the rules for admissibility of evidence on a sentencing hearing are relaxed and I note that there are certain features of these documents that reassure me about their validity. For example, the student who confirmed the $3,500 money transfer was in Canada for about a month-and-a-half after the defence delivered his letter to the Crown, which is consistent with the defence being open to that student being independently interviewed by the Crown. Also, the narrative set out, for example, in M.A.'s mother's letter sounds plausible. Her explanation for being unable to have the letter notarized in the current atmosphere in Syria is entirely believable. Societies rent by civil war and mindless, widespread bloodshed are seldom places in which fine distinctions are drawn between friend and foe and the image of local lawyers being unwilling to affix their seal to a letter condemning a local warlord for extortion is a detail that smacks of the truth.
While I think that the Crown made some valid points in cross-examination of M.A., I do not believe that those points either individually or collectively fundamentally undermine his evidence. For example, the Crown went through M.A.'s debit card transactions from the Southern account in some detail, pointing out expenses for movies, restaurants, a couple of clubs, some taxis and the like, i.e. expenses on things other than paying his sister's supposed ransom. What this shows is that M.A. commingled his fraudulent funds and his legitimate funds. I do not believe that it fundamentally undermines his explanation for why he committed the frauds in the first place. It is fair to say that M.A. could have minded his expenses more carefully and saved a tenner here or twenty dollars there. It is also fair to say that with a take-home income of around $30,000 a year he was not among the poorest of the poor who come through the doors of this courthouse. However, it is equally fair to say that on that income he had no real possibility of quickly coming up with $14,000 or so to pay off a band of larcenous thugs back home. That sum would be the entirety of six months' take-home pay, before rent, loan payments, food, etc. It is also not realistic that he could have borrowed the money. His own employer, a bank, had earlier refused to lend him more than $5,000. It makes sense, as he testified, that his friends and acquaintances, at a similar life-stage to him, were not in a position to pony up $14,000. His explanation about his father's money being tied up in the cafe and about that venture resulting in an eighty per-cent loss is certainly consistent with the general prospects of small business start-ups. His description of the informal mechanisms of money transfer between countries, of the impracticalities of more formal mechanisms and of the substantial exchange rate advantages compared to more formal mechanisms all ring true. Indeed, M.A. did not even have to give that answer for me to believe it. As soon as the Crown asked him in cross-examination why he did not use money orders or Western Union to send money home to Syria, before M.A. gave his explanation I had typed the word "SERIOUSLY?" in capital letters immediately after the question.
When I became a judge I was not issued a crystal ball or magic lie detector. Any judge or investigator who believes he is any more skilled than the average person at divining whether or not a person is telling the truth is a fool. Like every other person listening to a story, we must pay attention to the internal and external logic of the story, its consistency and even, to a limited extent, the demeanour of the narrator. I say that demeanour has limited value because some witnesses are excellent actors and because even with honest witnesses many factors, some cultural, some personal, can significantly affect how each witness will present, so a trier of fact must be alive to the limitations of demeanour. However, there are occasionally points in a person's evidence where one feels that one does have a particular insight into their true selves. For example, when M.A. testified about his use of the Southern account debit card for personal purchases, I believe his shame was genuine. When he testified about the availability of options other than fraud to save his sister, his description of the inner conflict between his values and his sister's jeopardy struck me as real.
On all the evidence I believe that M.A.'s testimony about the motivation for his frauds is more likely true than fabricated. If this were a case in which the equities were so close that it was hard to determine whether or not M.A. spoke the truth about his motivation, it would be a case in which I would much prefer to err by giving him the benefit of the doubt than by disbelieving him.
Analysis
In light of that conclusion, what can be said of the appropriate sentence? The Crown seeks a conditional sentence of six months' imprisonment in the community. The defence seeks a discharge, ideally an absolute discharge, although Ms. Shikhman appears somewhat grudgingly to suggest that a conditional discharge with a smallish amount of community service might be apt.
The Crown bases its sentencing position on its scepticism about the truth of M.A.'s motivation for the fraud. If it were true that M.A. had committed the frauds for personal gain or mostly for personal gain, I do not think there is much that could be said against the Crown's position. As a general proposition, the Crown is correct that general deterrence must play a central role in sentencing for frauds involving breaches of trust. That is a well-enough established proposition that it requires no authority to be stated for it. For a first offender who has pleaded guilty to a breach of trust fraud of this nature, a conditional sentence of imprisonment would not be outside the range. I have, however, concluded that M.A. did commit the frauds in order to save his sister, although his use of the debit cards for personal expenses clouds the details to some extent.
Section 718.1 of the Criminal Code defines the fundamental principle that a sentence must be "proportionate to the gravity of the offence and the degree of responsibility of the offender". A sentence must deter and denounce unlawful conduct, provide reparations to victims and rehabilitate offenders while creating a sense of responsibility in them.
Section 730 of the Criminal Code allows a sentencing court to discharge a defendant either absolutely or on conditions where a discharge would be in the best interests of the defendant and would not be contrary to the public interest.
In twenty-seven years in criminal law, I have yet to come upon a case where a discharge would not be in the defendant's best interest. In R. v. Sanchez-Pino, 1973 CanLII 794 (ON CA), [1973] O.J. No. 1903 (C.A.), Arnup J.A., detailed some of the factors that go into that first assessment (at paragraph 17):
The granting of some form of discharge must be “in the best interests of the accused”. I take this to mean that deterrence of the offender himself is not a relevant consideration, in the circumstances, except to the extent required by conditions in a probation order. Nor is his rehabilitation through correctional or treatment centres, except to the same extent. Normally he will be a person of good character, or at least of such character that the entry of a conviction against him may have significant repercussions.
In the present case, I do not believe there is any serious need for specific deterrence against M.A. beyond that which has been accomplished through his loss of employment and the court process, including a probation order. The requirements of rehabilitation and especially reparation can likewise be achieved through the terms of a probation order. He is a mature first offender. A criminal conviction would not only have the significant impacts on employment and travel that apply to all offenders; in his case, given his lack of fixed status in Canada, a conviction could have serious negative consequences. I stress that those consequences do not likely include his removal to Syria, an outcome virtually inconceivable in the present circumstances of that benighted country, but they do include the very real risk of him being kept in a state of limbo for a prolonged period of time if convictions are entered.1
The question here is whether or not a discharge would be contrary to the public interest. Justice Arnup continues, again at paragraph 17:
It must not be “contrary to the public interest” to grant some form of discharge. One element thereby brought in will be the necessity or otherwise of a sentence which will be a deterrent to others who may be minded to commit a like offence – a standard part of the criteria for sentencing.
As we know, general deterrence is a central concern in breach of trust fraud cases. Any assessment of whether or not a particular sentence could fail to have the necessary deterrent impact on other potential fraudsters necessarily presumes that the targets of the deterrent message are fully informed of the facts of the case and the circumstances of the offender. It would be odious to deny an individual defendant an appropriate sentence because of fear that others might misunderstand why it was imposed. The potential deterrent value of a criminal conviction in breach of trust cases to some extent lies in the fact that many of those offences are facilitated by the defendant's good character, which good character has put him or her in the position of trust from which he or she could perpetrate the fraud in the first place. The theory, at least, is that people in those positions will refrain from fraud for fear of losing their good name and incurring the consequences of a criminal record.2 Of course, while general deterrence is a serious concern, it cannot overwhelm the other principles of sentence, especially insofar as there is much scholarly material to suggest that a person's sense of the likelihood of detection is probably the greatest deterrent factor in most cases, not the consequences of detection such as a criminal record. In addition, the importance of general deterrence cannot be allowed to lead to an unjust result for a particular defendant in an exceptional case such as this where the motivation for the fraud is as horrific and so far beyond the personal imagining of the vast majority of Canadians as I have found.3
In this case, the question I must ask is whether some employee contemplating defrauding his employer might decide to run the risk because he perceived that M.A. "got off lightly". I doubt that the prospect of a $10,000 windfall would be seen by most rational actors as a worthwhile reward when measured against the risk of detection, loss of employment, loss of future advancement, the stress of the court system, legal fees, risk of loss of status in Canada, probationary conditions and the fact that any discharge would remain on the police databases for a minimum of several years, being the length of the probation plus three years. I doubt that there will be a spree of employee frauds based on that justification.
I refer to probationary conditions because in my view the idea that M.A. should receive an absolute discharge is a ludicrous proposition about which I shall say no more.
M.A. is a mature first offender who has pleaded guilty. Other than in the one year period after his dismissal from the bank, he has kept himself occupied with school and/or work. The officer-in-charge felt M.A. had learned his lesson with the loss of a promising job. I consider M.A.’s pre-sentence report to be favourable. I note that the author of the report described M.A. as having little insight into his offences and their impact, but when I drill down to determine the objective foundations for that conclusion, I am not at all convinced. I think it is fair to say that M.A. felt that he was caught between a rock and a hard place. He might have made some comment about the impact of the situation on him. If his story is true, as I believe it to be, such feelings are entirely understandable. I do not believe, however, that any such comment displays a lack of insight and the comments about the nature of the victims’ finances strike me, not as justification, but rather as explanation for why he selected those accounts rather than other accounts.
All things considered, I cannot see how the granting of a conditional discharge with suitable probationary terms to M.A., in the specific circumstances of this case could be described as being contrary to the public interest in light of the facts as I have found them. Faced with a Sophie's choice between two evils, he chose what he perceived to be the lesser of the two. I recognize that the Crown expressed concern about M.A.'s answer to the question of whether he would commit an offence like this if he were ever in the same position again, but I must ask myself what the "right" answer to that question would be. I was actually impressed by the honesty of his answer and it in no way undermines my view of the appropriate sentence. It is essential that I not lose sight of the factual underpinnings of this case. The defence of necessity was not argued before me, but M.A.’s motivation does make this case very much different from the vast majority of employee frauds. The sometimes overused word “exceptional” fits here.
Disposition
On each of the three charges to which you have pled I am satisfied that you should be granted a conditional discharge with two years’ probation, concurrent on each count. The terms of the probation order are that:
1. You shall report to probation today and thereafter as required by your probation officer.
2. Your reporting requirement ends when you have satisfied your probation officer that you have paid the restitution order in full and that you have completed the community service hours.
3. You shall perform 150 hours of community service at a rate of not less than 10 hours per month, starting not later than sixty days from today
4. You shall make reasonable efforts to obtain and maintain employment and/or education. You shall report all employment to your probation officer within seven days of commencing employment.
5. Cooperate with your probation officer. You shall sign any releases required by your probation officer to confirm your compliance with the terms of this order.
6. You shall make restitution in the amount of $11,267.53 to TD Canada Trust within the first twelve months of the probation order. (I would normally be circumspect about requiring restitution for such a large amount of miscellaneous "bank fees", but insofar as some of those fees would have been paid to other banks and given the significant investigative effort involved here, the cost of which I am certain significantly exceeds the $1200 worth of bank fees, I cannot say that it would be unjust to require restitution for the full amount, which is both readily quantifiable and directly linked to the offences).
The governing authority in relation to the relevance of immigration consequences in criminal sentencing is the decision of the Supreme Court of Canada in R. v. Pham, [2013 SCC 15](https://www.minicounsel.ca/scc/2013/15). A very helpful summary of the principles set out in Pham, along with a helpful demonstration of their application in a particular context can be found in the decision of K.L. Campbell, J. in R. v. James, [2013] O.J. No. 2804 (Ontario Superior Court). Broken down to exceedingly simplistic terms, immigration consequences can be a relevant consideration in sentencing, but they must not be allowed to skew the sentencing process or to lead to an unfit sentence, appreciating that even a minor adjustment in sentence to allow for immigration concerns could in some cases result in an unfit sentence. In the present case, the potential immigration consequences of a conviction for M.A. are significant, but those consequences are only one factor in the sentencing calculation as the underlying cause of the frauds is itself easily capable of bringing a conditional discharge within the range of appropriate sentences in this case.
Footnotes
- The Immigration and Refugee Protection Act creates different immigration consequences for different classes of defendants depending on the type of offence of which they have been convicted (summary conviction vs. hybrid/straight indictable), the maximum penalty available for the offences, the actual length of any jail sentence imposed, and, in the case of pure summary conviction offences, whether or not there has been more than one conviction (arising out of different occurrences). The Act treats hybrid offences as indictable offences regardless of how the Crown elected to proceed. Immigration consequences are based on convictions, not findings of guilt, so the imposition of a discharge makes a difference. The classes of defendants include permanent residents (the former “landed immigrants”, a term that remains in common parlance even though it disappeared from the legislation decades ago), foreign nationals (anyone who is not a Canadian citizen or permanent resident, typically tourists, visa students, employees on work permits, etc.), protected persons (e.g. a convention refugee or a “person in need of protection”) and refugee claimants (people awaiting disposition of their refugee claim). Depending on where a particular defendant falls on the grid as a result of his or her particular characteristics, the defendant will be either admissible or inadmissible to Canada and may or may not have a right of appeal from that determination. Given Canada’s international obligations in relation to refugees, a person in M.A.’s position would be found to be inadmissible as a result of a conviction for these offences and thus ineligible for permanent residency, although that does not mean he would necessarily be removed from Canada.
- As a general rule, the theory has substantial validity. Frauds, by their nature, typically involve some degree of planning and deliberation and, unlike many other crimes, are seldom spontaneous events. An internal or breach of trust fraud is typically committed by a person who has employment and something to lose and, in most cases, will involve an assessment of the potential monetary gain vs. the potential risks. The unique circumstances of the present case, in which M.A. perceived himself as having no viable options, reduce the relevance of that analysis for sentencing purposes.
- The availability of a conditional discharge for a breach-of-trust fraud case in exceptional cases was recognized by the Court of Appeal for Ontario in R. v. Kalonji, 2010 ONCA 111, [2010] O.J. No. 551. The facts recited in the Court of Appeal reasons are fairly sparse, but a review of them suggests to me that M.A.’s motivation for the fraud is at least as compelling a factor as Mr. Kalonji’s background, community work and future aspirations.