Court File and Parties
Date: July 13, 2023 Information No.: 19-691 Ontario Court of Justice
His Majesty the King
v.
Chandramattie Dave and Ravindra Dave
Reasons for Sentence
Before the Honourable Justice P.F. Monahan on July 13, 2023, at Brampton, Ontario
Appearances: D. Emami, Counsel for the Ontario Securities Commission J. Wright, Counsel for the Defendants
Reasons for Sentence
Introduction
The defendant, Chandramattie Dave, who I will refer to hereafter as “Rita,” meaning no disrespect, and Ravindra Dave, who I will refer to hereafter as Ravindra – again, meaning no disrespect – have pled guilty to trading in securities while prohibited from doing so by an order dated August 27, 2015, of the Ontario Securities Commission hereafter referred to sometimes as the “OSC”, contrary to s. 122(1)(c) of the Securities Act.
The facts were read in a few minutes ago, and I will not go through all of them. I will summarize some of those facts in these reasons.
The trading of securities in this case involved acts in furtherance of trade, in respect of the sale of Waypoint memberships, and Checkpoint travel cooperative shares. The term “trade” is defined under the Securities Act as “including any act, advertisement, solicitation, conduct or negotiation, directly or indirectly, in furtherance of a trade.”
Waypoint Vacation Cooperative Program, which I will refer to as “Waypoint,” is a company that enables individuals to purchase a cooperative membership and receive points to use for vacation purposes. Waypoint was founded and promoted by a securities and tax lawyer, who practiced on Bay Street in the City of Toronto for more than 25 years, known as Stephen Elliott. A Waypoint membership included the distribution of a “patronage dividend Class A preference Waypoint share or shares.” While the disposition of these patronage dividends may be exempt from prospectus and registration requirements under the Securities Act, the sale of these patronage dividends constituted a trade under the Securities Act.
There was also something called the “Checkpoint Program,” which was used to finance the purchase or purchases of Waypoint memberships. It also involved the sale of Checkpoint shares, which are securities under the Securities Act. $280,000 worth of memberships were sold through the Wealth-E Group. Elliott, directly or indirectly, through something called Wealth-E Group, involved Ravindra, Rita, and their ex-son-in-law, who I will refer to simply as Mr. Deen.
Ravindra participated in seminars for the Wealth-E Group. Rita completed documents on behalf of investors, and explained some of the background documents to them. Elliott asked her to do so and promised to pay her, but he did not do so. Ravindra signed a promissory note on behalf of 9440674 Canada Inc., which had as its sole director and officer, the ex-son-in-law of Rita and Ravindra, namely Mr. Deen. The promissory note was for $60,000, and payable to an investor. The note was paid in full. Ravindra discussed the Waypoint and Checkpoint programs with Elliott in March of 2017, and expected to receive a referral fee. He never received any referral fees, but did receive $2,250 from the numbered company described above for services rendered. He also participated in providing seminars for the Wealth-E Group.
It is agreed that the conduct of both Rita and Ravindra involved acts in furtherance of a trade, which were contrary to an OSC order that they were subject to.
By way of further background, Rita was a mutual fund dealer and limited market dealer from February 21, 2000 to January 30, 2006. During the time of the Waypoint events, and continuing to this day, she was on a lifetime market ban after entering into a settlement agreement with the OSC after acknowledging breaches of s. 25(1), 53(1), and 126.1(b) of the Securities Act. Ravindra is the ex-husband of Rita. He has never been registered with the Ontario Securities Commission in any capacity. At the time of the Waypoint events, and continuing to this day, he was on a 20-year market ban after acknowledging breaches of s. 25(1), s. 53(1) and s. 126.1(b) of the Securities Act.
Position of the Parties
The OSC seeks a fine of $15,000, or such other amount as the court may determine appropriate for each of the defendants, plus probation for two years. The defendants seek a suspended sentence plus probation for two years. The terms of the probation are agreed on as between the Ontario Securities Commission and the defence.
Principles of Sentencing for Regulatory Offences
The Ontario Court of Appeal in the case of Ontario Securities Commission v. Tiffin et al., 2020 ONCA 217, summarized the principles of sentencing for regulatory offences. As the Ontario Court of Appeal observed in that case, regulatory offences are prosecuted to ensure compliance with the legislator’s public interest goals. Criminal offences, on the other hand, are prosecuted because they are inherent abhorrent.
The objectives of sentencing for regulatory offences are “multi-factorial,” as indicated by the Court of Appeal in Tiffin at paragraph 52. However, the principle of deterrence is a paramount consideration in regulatory sentencing.
The Ontario Court of Appeal in Tiffin referred to the Supreme Court of Canada’s judgment in R. v. Wholesale Travel Group Inc., [1991] 3 S.C.R. 154, to the effect that regulatory offences must provide for significant penalties. Imprisonment will rarely be sought, but must be available as a sanction, as indicated by the Supreme Court in Wholesale Travel.
Also important in the regulatory context is the goal of proportionality, which seeks to ensure that the sentence corresponds to the degree of responsibility of the offender. Moral blameworthiness can also be a factor in the regulatory context, as well as the principle of restraint: see Tiffin at paragraphs 54 and 55.
To summarize, the Ontario Court of Appeal in Tiffin said that regulatory offences require greater emphasis on deterrence, while still considering proportionality and restraint.
Discussion and Analysis
Both the prosecution and the defence seek two years probation for each of the defendants on agreed upon terms. As mentioned above, the central difference between the prosecution and the defence on this sentencing is whether, as the OSC submits, a fine should be imposed on one or both of the defendants, or whether, as the defence submits, there should be a suspended sentence.
In order to determine whether a fine should be imposed on either of the defendants, the court needs to consider the financial and health circumstances of the defendants, as the question of the ability to pay is a relevant consideration. Based on the materials put before me, it is clear to me that both defendants are impecunious and in poor health, with no reasonable prospect of having any significant funds in the future to pay a fine that might be imposed.
Rita is 62 years of age and separated from Ravindra. She has been unemployed since March 2016. Her average five-year income, based on her tax returns, is about $8800 a year, which all derives from public assistance. She lives on social assistance of about $730 a month. As I understand it, she lives with her children. Her only bank account had $7.51 in it in May 2023. She suffers from various serious medical ailments, which her counsel describes as “debilitating” and which submission I accept.
Ravindra is 66 years of age. He was working until December 2022 in a warehouse. He was making about $25,000 a year. He has been on unpaid sick leave since that time. He receives about $1300 a month from CPP and old age security. He had a quadruple bypass in September of 2022, when he was in hospital for 11 days. He has ischemic heart disease and diabetes. As of April 2023, a doctor indicated that his return to work date was “unknown” and he must see a doctor every month. I am also advised by counsel that he is basically living at various locations, sleeping on couches of friends wherever he can do so, and has no permanent residence. Again, I accept his counsel’s submissions that he is unable to earn a living, and unlikely to be able to do so at any time in the future.
Separate and apart from the financial and medical evidence concerning Rita and Ravindra, there is a significant mitigating feature relating to legal advice received by Ravindra and Rita. In particular, when Ravindra first met Elliott, he told him of the OSC settlement agreement from August 2015 and the related order, which affected both Rita and Ravindra. Elliott told Ravindra that the Waypoint and Checkpoint programs were about vacations and points, and had nothing to do with securities. Ravindra wrote to Elliott by email, dated November 13, 2017, asking for a letter of opinion regarding Waypoint. He said in that email that, “This is very important to us, as we do not want any other strike with the OSC. If not, I am done.” In response, Elliott gave him a written legal opinion from another law firm, which said, among other things, that Waypoint was not subject to the Ontario Securities law. The opinion concerned a different person and was provided by a different lawyer other than Elliott. But it related to a person who, in my view, was similarly situated from a legal perspective to Ravindra and Rita.
I understand and appreciate that the legal opinion provided to Ravindra, and, I infer, provided to Rita, does not give rise to a legal defence. It gave rise to a mistake of law. However, in my view, it provides strong support for a finding of diminished moral blameworthiness on the part of Ravindra and Rita, and this affects proportionality. Both defendants had no intention of breaching the OSC order, although they did do so, from a legal and factual perspective.
I note as well that my colleague, Justice B. Brown, in the case of Ontario Securities Commission v. Adams, 2021 ONCJ 66, dealt with a case with many similarities to this one. The defendant in that case was 63 years old and had an OSC settlement agreement, which he had breached. His annual income was $52,000 a year, and he had no medical conditions, other than it is obvious that he must have been living with mental health issues, as he had attempted to commit suicide. Justice Brown rejected the imposition of a fine in that case, saying that:
“It seems somewhat folly for this court to consider as denunciation, general deterrence and specific deterrence, to impose a further financial obligation on Mr. Adams that he may never be able to pay.”
Justice Brown imposed a suspended sentence and probation in that case.
In my view, the case before the court involving Rita and Ravindra is even stronger than the Adams case as concerns the question of whether to impose a fine or a suspended sentence. Rita and Ravindra have far less funds available to them than Mr. Adams did.
I recognize that the regulation of the capital markets is important for the establishment and continued existence of a stable economy. However, notwithstanding that deterrence is paramount for regulatory offences, each case must be decided on its own facts. In this case, I have determined that a suspended sentence and a two-year probation on the terms agreed upon by both parties is a fair, just and appropriate sentence.
I rely primarily on the following when rejecting the imposition of a fine as concerns both defendants:
a) Both Rita and Ravindra appear to me to be impecunious with serious health issues, making it highly unlikely that they will ever be able to pay any significant fine. The principle of restraint is an important consideration as a result in this case.
b) Both counsel advise me that as a condition of this resolution, $2250 was paid into defence counsel’s trust account where it remains. I am advised that if I impose a suspended sentence with no fine that these funds, $2250, will be forfeited to the OSC. I will make it a term of each probation order, for each of the defendants, to forfeit $1125 to the OSC, pursuant to the probation terms.
c) Both defendants attempted to comply with the law here, and received legal advice, incorrect, as it turns out, that their conduct would not be illegal.
d) There was no loss to investors.
e) Rita received no monies and Ravindra received only $2250 for services rendered.
f) They both pled guilty, and a plea of guilt is always seen as a sign of remorse, and they have saved the court and the prosecution significant resources by their plea of guilt.
g) The trade in this case was in furtherance of a trade, rather than an explicit trade.
h) There was no intention to deceive on the part of Rita and Ravindra.
i) Neither defendant has any criminal record, nor do they have any prior convictions for violations of the Securities Act.
j) Both defendants have faced this prosecution for almost four years, and this can be taken into account as deterring them, both specifically and generally, from any future misconduct.
k) The public interest in this case can be protected through the imposition of a suspended sentence and probation, including the forfeiture of the $2250. The terms of the probation will hold the defendants liable for their misconduct, but it will also promote their rehabilitation.
Conclusion
The sentence will be a suspended sentence with two years probation on the terms agreed to, including the forfeiture of the $2250. Those are my reasons.
End of Excerpt of Proceedings
Form 3 Electronic Certificate of Transcript (Subsection 5(2)) Evidence Act
I, Laura Rowsell, certify that this document is a true and accurate transcript of the recording of R. v. Chandramattie Dave and Ravindra Dave, in the Ontario Court of Justice held on July 13, 2023 at 7755 Hurontario Street, Brampton, Ontario, taken from Recording No. 3111_107_20230713_085504__30_MONAHAPA-, which has been certified in Form 1.
Date: July 28, 2023
Laura Rowsell, Authorized Court Transcriptionist #1611571159 orders@courtreporters.ca 905-440-2053 Signed in the province of Ontario, Canada
A certificate in Form 3 is admissible in evidence and is proof, in the absence of evidence to the contrary, that the transcript is a transcript of the certified recording of evidence and proceedings in the proceeding that is identified in the certificate.
Form 3 – Electronic Certificate of Transcript – September 1, 2022