ONTARIO COURT OF JUSTICE
BETWEEN:
HIS MAJESTY THE KING
— AND —
PETER LAVORATO AND GIOVANNI IMBESI
Before Justice T. Lipson
Heard on April 22-25, June 27,2025
Reasons for Judgment released on September 26, 2025
L. Mehkeri ............................................................................................................ for the Crown
M. Muia .................................................................................. for the accused Peter Lavorato
M. Mann …………………………………………………………… for the accused Giovanni Imbesi
LIPSON J.:
REASONS FOR JUDGMENT
Overview of the case
1Peter Lavorato entered pleas of not guilty to three counts of fraud over $5000. His co-accused Giovanni Imbesi entered a plea of not guilty to one count of fraud over $5000.
2Peter Lavorato, and the Crown’s main witness, Richard Mandarino, were long-time acquaintances. They met in high school and became close friends during college, where they studied business administration at Seneca College. They often commuted together and shared a mutual interest in sports and sports gambling.
3After college, they lost touch but reconnected around 2014–2015. Their renewed friendship involved regular meetings, often for lunch. Mr. Lavorato would also settle Mr. Mandarino's gambling debts with a bookie and be reimbursed by him later. Mr. Mandarino described Mr. Lavorato as a “runner” in an illegal sports betting operation. Mr. Mandarino understood Mr. Lavorato’s role as a “runner” as follows: “It’s an individual who has people who bet on the website, and it’s their responsibility to either collect the money that’s owed or pay the money that’s owed at the end of every week.” Mr. Lavorato testified “I would see my bookie on a weekly basis and would settle my own affairs as well as those of Richard. I’d cover him, and he’d pay me back. That’s how it worked.”
4Mr. Lavorato further testified that he charged Mandarino interest on these loans and that Mandarino always repaid him on time until August 2017.
5Mr. Mandarino was employed as an accountant with a firm called Walsh Construction. He was also addicted to gambling. Mr. Mandarino had access to accounting systems in the company and he used these accounting systems to create and process fraudulent invoices and unauthorized cheques. He manipulated journal entries to hide fraudulent payments. Mr. Mandarino did all of this to both “clear” his gambling debts and keep money from his company for other personal use.
6Mr. Mandarino testified that he and Mr. Lavorato agreed to a scheme to clear his gambling debts as well as obtain extra funds for personal use. Mr. Mandarino would issue fraudulent company cheques to Mr. Lavorato for supposed work or services performed for the company. There was no work or services performed by Mr. Lavorato or his company for Walsh Construction. According to Mr. Mandarino, they agreed to split the proceeds 50/50 after remitting 15% for income tax and 13% for HST. Any debts that Mandarino owed would be taken from his 50 per cent share. Mr. Mandarino testified that Mr. Lavorato knew the cheques came from his employer’s account and that Lavorato suggested using his company Ventava Inc as the payee.
7Mr. Mandarino testified that he instructed Mr. Lavorato to record the funds properly in his business books. He testified, “I do recall- remember him, telling him to do that to make sure that everything was kosher on his end, and not, not to do anything else with this, to record it properly…”
8Mr. Mandarino testified that he issued two fraudulent cheques to Peter Lavorato’s company, Ventava Inc., as part of their agreement to convert company funds into cash. Two cheques were issued to Ventava Inc. The first cheque was issued on May 23, 2017, for $127,829.48. The second cheque was issued on August 16, 2017, for $126,923.13. Mr. Mandarino admitted to manipulating Walsh Construction’s accounting system to generate these cheques and that Ventava was not entitled to this money from Walsh Construction.
9Mr. Lavorato and Mr. Imbesi, according to Mr. Lavorato, had known each other for over 30 years and were close friends. Richard Mandarino testified that Giovanni Imbesi became involved in the fraudulent cheque scheme through Peter Lavorato. Mandarino stated that he did not have a direct relationship with Imbesi and had only met him a few times, primarily when Lavorato was unavailable to collect gambling debts. He testified that it was Peter Lavorato who told him that Mr. Imbesi wanted to participate in the cheque scheme. Mr. Mandarino created a cheque made out to GBSI (Imbesi’s company) based on this communication from Lavorato. Mr. Mandarino issued a cheque for $120, 921.30 dated July 5, 2017, to Mr. Imbesi’s company GBSI. It was deposited to the bank account of GBSI on July 10, 2017. All instructions and coordination regarding the cheque were relayed through Lavorato. Mr. Mandarino had no direct dealings with Mr. Imbesi in relation to the cheque.
10Mr. Mandarino testified that after issuing the second fraudulent cheque to Ventava Inc on August 16, 2017, he received a bank draft for $88,000 from Peter Lavorato. He explained that this payment was meant to reconcile both the second Ventana cheque and the earlier GBSI cheque (linked to Mr. Imbesi) which had been flagged by the bank and not split as originally intended. Mr. Mandarino testified, “So the secondary cheque to Ventava, when we did the calculations of both, less the debts, that the net difference and that was agreed upon, which is why it happened.” Not all of the $88,500 went toward gambling debts but into his joint bank account with his wife. Mr. Mandarino told her it was a “windfall” from Walsh Construction.
11Mr. Mandarino pled guilty to wire fraud in the United States. The charges stemmed from his role in this fraudulent scheme involving the issuance of unauthorized cheques from Walsh Construction accounts to the accused and others. He is facing a custodial sentence of 26 months. His cooperation with Canadian authorities was at the time of his sentencing hearing and at the time of this trial was a condition in his plea agreement with U.S. authorities.
12In his testimony, Mr. Lavorato denied knowing the cheques issued by Mr. Mandarino from Walsh Construction were fraudulent. He testified that he believed Mandarino was a part-owner of Walsh Construction and had lawful authority to issue the cheques. He did not participate in or understand the manipulation of Walsh’s accounting systems. Mr. Lavorato believed the cheques were legitimate repayments for loans he had made to Mandarino to cover Mandarino’s gambling debts. He testified that Mr. Mandarino always repaid him on time and showed no signs of financial distress until much later. He saw no “red flags” in the issuance of the Walsh cheques to him or Mr. Mandarino's conduct that would have prompted his suspicion. Mr. Lavorato explained that he asked Mandarino how repayment for his gambling debts by cheque would work. Mr. Mandarino explained the need to remit HST and income tax. Lavorato followed this advice and relied on his accountant to handle remittances. He did not attempt to conceal these transactions. The cheques were deposited into his business account and reported.
13With respect to Mr. Imbesi’s involvement, Mr. Mandarino testified that the cheque issued to GBSI (Imbesi’s company) was facilitated by Lavorato. He stated that he did not deal directly with Imbesi. All communication went through Lavorato. Mr. Mandarino claimed that Lavorato told him that Imbesi wanted to participate in the scheme. Mandarino said he instructed Lavorato to tell Imbesi to remit HST and income tax to make the transaction appear legitimate. He also testified that the funds from the GBSI cheque were not withdrawn immediately due to concerns about scrutiny from the bank, and that he did not receive any money from that cheque. The cheque was held at the bank and later cleared after he called the bank. He claimed he did not receive any funds from the GBSI cheque due to risk of detection. The GBSI cheque was used to repay loans to Lavorato.
14Mr. Lavorato testified that Mandarino approached him asking to cash a cheque so that he could pay his workers in cash. Mr. Lavorato said he was already making money from Mandarino through loans and suggested involving Mr. Imbesi instead, as a way to help his financially struggling friend. Mr. Lavorato described Imbesi as being “like a brother” and someone he had supported financially for years. Mr. Lavorato claimed that he never told Mandarino that Imbesi wanted to be part of a cheque cashing scheme. He said the idea was to let Imbesi benefit from the transaction, not to involve him in fraud. Lavorato also testified that Mr. Mandarino later told him to treat the GBSI cheque as repayment for loans, and that he (Lavorato) did not believe the cheque was fraudulent.
Positions of the Parties Regarding Mr. Lavorato’s Alleged Criminal Liability
15The Crown submits that Mr. Lavorato knowingly participated in the fraudulent cheque scheme orchestrated by Mr. Mandarino. Mr. Lavorato received two cheques totalling $254,752.61 from Walsh Construction which he deposited into his company Ventava’s account. The Crown argues that Mr. Lavorato had no legitimate entitlement to those funds and that his conduct constituted fraud over $5000.
16The Crown relies on the evidence of Mr. Mandarino who testified that he told Mr. Lavorato about the fraudulent nature of the cheques and that their primary purpose was to pay off Mandarino's gambling debts. According to Mr. Mandarino, Mr. Lavorato instructed him to make the cheques payable to Ventava Inc. Mr. Lavorato remitted income tax and HST on the funds which the Crown submits was done to make the transactions appear legitimate. The Crown asserts that these remittances were knowingly false and part of a scheme to avoid detection.
17The Crown submits that even if Mr. Lavorato did not possess actual knowledge, he was wilfully blind as to the fraudulent scheme. The Crown argues that there were several red flags which the defendant deliberately ignored. They included the unusually large cheque amounts, the cheques being from a US based company with no connection to Mr. Lavorato and the remittance of taxes on what Mr. Lavorato claimed were loan repayments. The Crown submits that a reasonable person would view Mr. Lavorato’s conduct as dishonest. His actions of accepting large cheques, remitting taxes and involving a third party, Mr. Imbesi, demonstrate a fraudulent intent.
18The defence submits that Mr. Lavorato lacked knowledge and intent to commit fraud. Counsel for Mr. Lavorato contends that he believed the funds he received were legitimate loan repayment from Mr. Mandarino, whom he thought was a part-owner of Walsh Construction. The defence submits that Mr. Lavorato was credible when he testified that he had no reason to suspect that the cheques were fraudulent. He believed that Mr. Mandarino had the authority to issue the cheques and he had always repaid his loans reliably. Mr. Lavorato deposited the cheques openly in his business account and taxes were remitted on his accountant’s advice.
19The defence vigorously challenges the credibility of Mr. Mandarino describing him as a liar and fraudster with a motive to shift blame. It is submitted that Mr. Mandarino's testimony was inconsistent and speculative, particularly regarding his alleged conversations with Mr. Lavorato about the fraudulent nature of the cheques. Mr. Lavorato had no access to Walsh Construction’s internal systems and did not participate in falsifying records. He relied on Mr. Mandarino's representations and had no reason to doubt his legitimacy. The defence also pointed to Mr. Lavorato’s lack of sophistication in business and accounting matters. Defence counsel submits that Mr. Lavorato’s conduct, while perhaps naïve, was not fraudulent.
Positions of the Parties with respect to Mr. Imbesi’s Criminal Liability
20The Crown alleges that Giovanni Imbesi was a knowing participant in a fraudulent scheme orchestrated by Richard Mandarino. This theory of liability is based on the doctrine of wilful blindness, asserting that Mr. Imbesi either knew or deliberately avoided confirming that the funds he received were the proceeds of fraud.
21Mr. Imbesi’s company, GBSI, received a cheque for $120, 921.30 from Walsh Construction. The Crown submits that GBSI had no contractual relationship with Walsh Construction and performed no work for that company. The cheque bore a Chicago address and was signed by an individual named “Timothy”. Mr. Imbesi was instructed by Mr. Lavorato to remit income tax and HST on the funds, despite no taxable services being rendered. The Crown argues that these circumstances establish Mr. Imbesi’s wilful blindness to the fraudulent nature of the transaction. The Crown relies, in part, on the testimony of Mr. Mandarino who stated that Mr. Lavorato informed that Mr. Imbesi wished to participate in the scheme. It seeks to admit this evidence under the co-conspirator exception to the hearsay rule. The Crown submits that the false remittance of taxes was a deliberate attempt to legitimize the transaction and avoid detection.
22The defence submits that Mr. Imbesi had no knowledge of or involvement in a fraudulent scheme. It is submitted that he was unwittingly drawn into the matter at the request of Mr. Lavorato and had no reason to suspect that the cheque was illegitimate.
23The defence points to the evidence that Mr. Imbesi was asked by Mr. Lavorato to deposit a cheque as a favour to Mr. Mandarino, who claimed he needed to pay workers in cash. It is submitted that Mr. Imbesi was not told the cheque was fraudulent and had no prior dealings with Walsh Construction. The remittance of the income tax and HST was done on Mr. Lavorato’s advice and was not indicative of any fraudulent intent. The defence submits that that no direct evidence links Mr. Imbesi to knowledge of the fraud or any agreement to participate in it. The defence submits that Mr. Mandarino's evidence is neither credible nor reliable. Mr. Mandarino is an unsavoury witness with a history of deceit and a motive to minimize his own culpability. It is submitted that Mr. Mandarino's statements about Mr. Imbesi’s involvement are speculative, inconsistent and uncorroborated.
24The defence submits that the Crown has failed to prove the requisite mens rea-either knowledge or wilful blindness- beyond a reasonable doubt.
Applicable Legal Principles
Presumption of Innocence and Burden of Proof
25Mr Lavorato and Mr. Imbesi are presumed to be innocent of the charges against them. This presumption continues unless and until the Crown has proven their guilt beyond a reasonable doubt. Neither accused was under any obligation to testify during the trial. Neither accused has to prove anything, including his innocence.
26The burden of proof rests on the Crown alone. The Crown must prove the offences beyond a reasonable doubt. This standard of proof means that the Court must not convict Mr. Lavorato or Mr. Imbesi if he is probably guilty or likely guilty. Reasonable doubt falls much closer to absolute certainty than to proof on a balance of probabilities. However, reasonable doubt does not require proof to an absolute certainty. That would be nearly impossible: R. v Lifchus, [1977] S.C.J. No. 77.
Credibility
27The credibility of the witnesses is an important issue in this case.
28Mr. Lavorato testified in his own defence. I am guided by the following analytic framework in R. v W(D), 1991 CanLII 93 (SCC), [1991] 1 S.C.R. 742 for the assessment of the accused’s testimony. First, if I believe the evidence of the accused, I must acquit. Secondly, if I do not believe the testimony of the accused, but am left in reasonable doubt by it, I must acquit. Thirdly, even if I am not left in doubt by the evidence of the accused, I must ask myself whether, on the basis of the evidence I do accept, I am convinced beyond a reasonable doubt by the evidence of the guilt of the accused. The defence emphasizes that Lavorato testified credibly, consistently, and transparently. The Crown argues that Lavorato’s explanations are implausible and inconsistent with the evidence, particularly regarding his understanding of Mandarino's role and the nature of the funds.
29It is important to remember that a criminal trial is not a credibility contest. It is a trial to determine whether the Crown has proved the guilt of the accused on the specific charges beyond a reasonable doubt. It is, therefore, wrong to decide a criminal case where there is conflicting evidence about whether the accused is guilty, simply by deciding which version of events is preferred. Mere disbelief of the evidence offered by the accused to show his innocence should not be treated as proof of the guilt of the accused. The evidence must be considered as a whole.
30The defence submits that it is dangerous to base a conviction on the unconfirmed testimony of Mr. Mandarino in deciding whether the Crown has proven the guilt of the accused beyond a reasonable doubt. The Crown does not disagree that a Vetrovec warning is appropriate. A Vetrovec warning is a caution to treat the evidence of an unsavoury witness with care unless corroborated by independent evidence: R. v. Vetrovec, 1982 CanLII 20 (SCC), [1982] 1 S.C.R. 811
Elements of the Offence of Fraud
31The leading authority on the elements of fraud is R. v. Theroux, 1993 CanLII 134 (SCC), [1993] 2 SCR 5. The Crown must prove the following beyond a reasonable doubt: an act of deceit, falsehood or other fraudulent means; deprivation or risk of deprivation to another, here Walsh Construction. Those elements comprise the actus reus of the offence of fraud.
32With respect to the mens rea, the Crown must prove beyond a reasonable doubt that each accused had a subjective knowledge that the prohibited act could cause deprivation or risk of deprivation. This does not require proof that the accused knew the conduct was wrong not does it require proof that the accused personally felt that the conduct was wrong. Further, an accused’s subjective belief can from be inferred from the act itself, barring some explanation casting doubt on such inference. The Crown also need not prove that the prohibited act was dishonest.
33The Crown argues that Lavorato’s conduct—accepting large cheques from a company he had no dealings with, remitting false taxes, and facilitating similar conduct by Imbesi—meets these criteria. The defence contends that Lavorato lacked both knowledge and intent, believing the funds were legitimate loan repayments.
34The third element that the Crown must prove is that the accused was aware of the prohibited act.
35This does not require proof that the accused knew the conduct was wrong nor does it require proof that the accused personally felt that the conduct was wrong. Further, an accused’s subjective awareness can be inferred from the act itself, barring some explanation casting doubt on such inference.
36The Crown also need not prove that the accused knew that the prohibited act was dishonest. In R. v. Eizenga, 2011 ONCA 113 at para. 81, the Ontario Court of Appeal (citing Theroux, in part) stated as follows:
With respect to the mens rea, the Court [SCC] specifically rejected a definition that required subjective awareness of dishonesty and a belief that actual deprivation (as opposed to risk of deprivation) will result. The Court held at para 23: “[T]he accused’s belief that the conduct is not wrong or that no one will in the end be hurt affords no defence to a charge of fraud.”
37Recklessness as to the consequences of the prohibited act also attracts criminal responsibility: Theroux at para. 20. Furthermore, subjective awareness can be inferred from the act itself, barring some explanation casting doubt on such inference: Theroux at para. 18.
38It is not a defence to claim reliance on some advice, such as from an accountant, as justification for the conduct. In Eizenga at paras. 49 to 52, the Court of Appeal stated that reliance on the advice of another would be a mistake of law and not a defence.
39The Crown must prove that the accused knew or was reckless as to the possibility of economic harm to the victim: R. v. Zlatic, 1993 CanLII 135 (SCC), [1993] 2 SCR 29. The accused need not have any specific intention to cause harm and indeed may have genuinely hoped none would result.
40The Crown submits that even if the court is left with a reasonable doubt with respect to whether Mr. Lavorato had subjective knowledge of the falsification of records at Walsh Construction by Mr. Mandarino, he did possess subjective knowledge that he was a participant in a fraud perpetrated by “other fraudulent means”. Mr Lavorato took cheques he was not entitled to, used a portion to pay Mr. Mandarino's illegal gambling debt, used a portion for personal gain, and then set aside a portion for false tax remittance to make the transaction seem more legitimate. The Crown argues that applying the objective test from Theroux, a reasonable person would view the matter as a dishonest dealing.
41The Crown also submits that the evidence at trial supports a finding that Mr. Lavorato was, at the very least, wilfully blind to the fact that he was engaged in dishonest dealing. The criminal law treats wilful blindness as equivalent to knowledge. It is a form of subjective mens rea. It is a culpable mental state wherein the court presumes knowledge because of the accused’s deliberate ignorance of the reality of his or her actions. A finding of wilful blindness involves an affirmative answer to the question: “Did the accused shut his eyes because he knew or strongly suspected that looking would fix him with knowledge?”: R. v. Jorgensen, 1995 CanLII 85 (SCC), [1995] 4 SCR 55 at para 87. Wilful blindness is more than mere recklessness. The criminal law treats wilful blindness as equivalent to actual knowledge.
42The Crown argues that Lavorato’s failure to inquire about the source of the cheques, the legitimacy of the remitted taxes, the identity of the issuing company (WCC Construction Canada, ULC), and the lack of any work performed, demonstrates deliberate ignorance. The defence argues that Lavorato had no reason to suspect wrongdoing, trusted Mandarino, and acted on advice from his accountant. His conduct was consistent with naivete, not criminal intent. Mr. Imbesi argues that he relied on Mr. Lavorato and had no reason to question the legitimacy of the cheque his company received.
Co-Conspirator’s Exception to the Hearsay Rule
43This exception allows statements made by one conspirator to be admissible against another if: 1. A conspiracy or common criminal enterprise is proven beyond a reasonable doubt. 2. The accused was a member of the conspiracy on a balance of probabilities. 3.The statement was made in furtherance of the conspiracy: R. v. Carter, 1982 CanLII 35 (SCC), [1982]1 S.C.R. 938
44The Crown seeks to admit Lavorato’s alleged statement to Mandarino that Imbesi wanted to participate in the scheme. The defence challenges the reliability of this evidence and argues that it is inadmissible hearsay unsupported by independent proof of a conspiracy.
Analysis
45There is no dispute that Mr. Mandarino was an employee of Walsh Construction and that he unlawfully issued cheques on the bank account of Walsh Construction. These cheques are detailed in a spreadsheet filed as exhibit 4. The cheques were written in favour of various companies including Peter Lavorato’s company Ventava Inc and Giovanni Imbesi’s company GBSI. Two cheques totalling 254,752.61 were drawn on the bank account of Ventava and written in favour of Ventava.
46The court heard evidence from Walsh employees, Tim Brescia and Colin Laughlin, which established beyond a reasonable doubt that Ventava and GBSI were not entitled to any funds from Walsh because they were not legitimate vendors for Walsh and had never done any work for the company. There is no dispute that these witnesses established that Mr. Mandarino created false entries in the accounting software of Walsh Construction to avoid detection.
47There is no evidence that either accused was personally involved in falsifying the accounting records at Walsh. There is no evidence that either had specific knowledge of the exact means used by Mr. Mandarino to manipulate the accounting entries at Walsh.
48Crown and defence agree that the main issue for the court to decide is whether the Crown has proven beyond a reasonable doubt that Mr. Lavorato and Mr Imbesi possessed knowledge of the fraudulent nature of the cheques they received through Mr. Mandarino.
49The Crown argues that both accused knew that they were not able to lawfully possess any money from Walsh Construction. At the very least, says the Crown, both accused were wilfully blind to that fact.
50The Crown submits that to take money from Walsh Construction, to which they had no colour of right, for personal gains, represents a dishonest dealing. On Mr. Mandarino's advice, Mr. Lavorato set aside funds to generate false income tax and HST remittances, which the Crown argues was done to make the funds deposited to Ventava’s account seem legitimate and avoid detection. Mr. Lavorato communicated to Mr. Imbesi that he should do the same. The Crown submits that this is further evidence that both accused knowingly misappropriated funds from Walsh Construction.
51It is the position of the defence that Mr. Lavorato was owed money by Mr. Mandarino. He believed Mr. Mandarino to be part owner of the company and had the lawful authority to disburse and direct funds accordingly.
A Vetrovec warning is required in the assessment of Mr. Mandarino’s credibility
52I begin with my assessment of the evidence of Mr. Mandarino. I agree with the position of the defence that Mr. Mandarino was an unsavoury witness. His evidence was marked by internal inconsistencies and vague recollections, particularly concerning the very conversations he claimed to have had with Mr. Lavorato about the fraudulent cheques. Mr. Mandarino explained that Mr. Lavorato’s involvement “would have” resulted from a discussion between the two men. He could not recall when it happened, where it happened, how the conversation went, what was said or not said. When asked about the conversation in his statement to the police on September 29, 2023, Mr. Mandarino said, “I don’t know how it would have come about. I just think it’s fair to assume that I would have told him what I was doing and at one point he may, Mr. Lavorato, may have said, can we do one too.” When asked in chief about the conversation, Mr. Mandarino replied that he was “assuming I told him what I was doing, and we agreed to introduce his company to clear out the debts as well. He told the court that “it’s very hard to remember exactly how the conversation happened”. He had no recollection of the discussion of what the amount of each cheque was supposed to be. He did not have a recollection of Mr. Lavorato asking him to issue a cheque to Ventava, yet he asserted it was Mr. Lavorato who told him to make the cheque payable to Ventava Inc. Mr. Mandarino agreed in cross-examination that it was possible that it was his idea to settle his debts with Mr. Lavorato using the cheques from Walsh Construction.
53I agree with the need for a Vetrovec warning regarding Mr. Mandarino's testimony. At the time of trial, Mr. Mandarino was the subject of an ongoing prosecution in Chicago. He pled guilty to wire fraud in relation to his involvement in the fraud on Walsh Construction. He has yet to be formally sentenced but the sentencing judge views Mr. Mandarino's cooperation with Canadian authorities as a mitigating factor. Mr. Mandarino has a vested interested in testifying in this trial. As Mr. Mandarino himself admitted, he hoped that his participation in this trial and cooperation with the authorities would mitigate his sentence. He wishes to avoid a lengthy jail sentence by testifying in this proceeding. He said, “Well I’m doing all my best to, to have the less sentence as possible, absolutely. I mean who wouldn’t?” Mr. Mandarino anticipates receiving a sentence of 26 months which is predicated in part on his cooperation with authorities in the prosecution against Mr. Lavorato and Mr. Imbesi.
54Mr. Mandarino admitted that his gambling addiction has led him to lie and be dishonest with his employers and his wife. He admitted that lying was a part of his gambling addiction and that he would create elaborate stories about the money he would spend or the money he received. He admitted lying to Mr. Brescia about how the fraudulent cheque scheme came to be. He planted the idea with Mr. Brescia and later prosecutors in the US that his life was at risk and that he was in danger because he got involved with bad people. At trial Mr. Mandarino said he did not mean his actual physical life was at risk but rather it was emotional and financial risk he was facing. He implicated another individual named John Aquino as the one who had the idea to have the debt paid back by getting a cheque from Walsh Construction. Yet he agreed that he told Mr. Brescia that he already had a plan in place about getting the cheques when he went to see Mr. Aquino. He made no mention to Mr. Brescia about any role played by Mr. Lavorato.
55While I appreciate that I may rely on Mr. Mandarino's testimony, even if it is not confirmed by other evidence, the proper course is to look for independent evidence tending to show that Mr. Mandarino's testimony implicating the accused is true. By “independent”, I mean from a source not connected to Mr. Mandarino.
56I treat Mr. Mandarino's testimony with considerable caution. With this proposition firmly in mind, I turn to determine whether the Crown has proven the requisite elements of fraud beyond a reasonable doubt.
Has the Crown proven the elements of fraud beyond a reasonable doubt?
57According to Theroux, the offence of fraud has four elements:
An act of deceit, a falsehood or some other fraudulent means
Deprivation or risk of deprivation to another caused by the prohibited act
Subjective knowledge of the prohibited act; and
Subjective knowledge that the prohibited act could cause deprivation or risk of deprivation to another
1. An act of deceit, a falsehood or some other fraudulent means
58The focus with respect to this inquiry is on “other fraudulent means”. The analysis with respect to whether an act consisted of “other fraudulent means” is an objective analysis. Reference is to be made to what reasonable people would consider to be a dishonest dealing.
59The Crown submits that Mr. Lavorato was a party to Mr. Mandarino's acts of deception at Walsh Construction. It relies on the testimony of Mr. Mandarino who claimed that he explained to Lavorato what he was doing with the cheques. Mr. Lavorato denied that this occurred. Only Mr. Mandarino and Mr. Lavorato known the truth.
60There is no independent evidence to support Mr. Mandarino's assertion. I am unable to safely rely on Mr. Mandarino's evidence alone in this regard for the reasons set out earlier. I am unable to conclude beyond a reasonable doubt that Mr. Lavorato had direct knowledge of Mr. Mandarino’s falsification of records at Walsh Construction. However, it is also the case that Mr. Lavorato was not entitled to funds from Walsh Construction but did take possession of them for payment of Mandarino's gambling debt, directed a portion to their personal use and directed that a portion to be set aside for false income tax and HST remittances to avoid detection. On an objective analysis, a reasonable person would regard this as a dishonest dealing. As stated in R v Zlatic, 1993 CanLII 135 (SCC), [1993] 2 SCR 29, the dishonesty of “other fraudulent means, has at his heart, the wrongful use of something which another person has an interest, in such a manner that this other’s interest is extinguished or put at risk. In this case, the Crown has established beyond a reasonable doubt that the accused engaged in conduct properly characterized as “other fraudulent means”.
2. Deprivation or risk of deprivation to another caused by the prohibited act
61The second element of the offence of fraud requires that the prohibited act caused deprivation or a risk of deprivation. There is no dispute that the taking of funds from Walsh Construction caused economic deprivation to Walsh Construction.
3. Subjective Knowledge of the prohibited act
62The Crown must prove beyond a reasonable doubt that Mr. Lavorato was aware of the prohibited act. I am required to apply the principles regarding this essential element which were outlined earlier in the section of these reasons dealing with this issue.
63The Crown relies on the direct evidence of Mr. Mandarino who testified that he “would have” told Mr. Lavorato that he was manipulating cheques from his employer in order to clear his gambling debts. He also claimed that it was Mr. Lavorato who told him to make the cheque payable to Ventava inc. Mr. Mandarino testified there was a specific agreement in place in which Lavorato would remit 15% of the cheque as income tax, 13% for HST and the remainder of the funds would be split equally between Mandarino and Lavorato. Mr. Mandarino testified that he never said or did anything to lead Mr. Lavorato to believe that he was entitled to money from Walsh. The Crown argues that the steps admitted by Mr. Lavorato with respect to the setting aside of HST and taxes were taken to avoid detection and constitute strong evidence of his subjective knowledge of a dishonest act.
64As submitted by the Crown, it is true that there is confirmation for Mr. Mandarino’s account of his fraudulent activity. His testimony about the manner in which he falsified the records at Walsh Construction was corroborated by the evidence of Walsh employees Brescia and Laughlin. His testimony about the use of random invoices in support of his entries for Ventava and GBSI was supported by the records of Walsh Construction. His explanation of how he used a ledger normally reserved for HST because it was seldom checked was corroborated by Brescia and Laughlin. Mr. Mandarino’s testimony about the creation of false vendors was consistent with the records of Walsh entered into evidence. His testimony about other fraudulent cheques he issued and parties he worked with to do so is corroborated by the records of the falsified cheques investigation in exhibit 4. His testimony about his gambling addiction is confirmed by Mr. Lavorato.
65As indicated earlier in these reasons, I approach Mr. Mandarino's testimony, where uncorroborated by independent evidence, with great caution. There is no corroboration that he told Mr. Lavorato about the cheque scheme. While the financial records and testimony from Walsh Construction staff confirm that the fraud occurred, this evidence does not speak directly to Mr. Lavorato’s knowledge of the fraud.
66I agree with the Crown that there is good reason to believe that Mandarino would have communicated to Lavorato the nature of the fraudulent cheque scheme he was committing against Walsh Construction, if not for any other reason, to explain to Mr. Lavorato why Mandarino was instructing him to set aside funds for HST and income tax. However, Mr. Mandarino's inability to recall the specifics of conversations with Mr. Lavorato on this issue as well as the other dangers present in accepting his testimony as outlined earlier, do not lead the court to conclude beyond a reasonable doubt that Mr. Lavorato had subjective knowledge of the falsification of records which Mandarino perpetrated at Walsh Construction.
67I am not satisfied beyond a reasonable doubt that the Crown has proven that Mr. Lavorato knew the exact nature of the fraudulent cheque scheme employed by Mr. Mandarino.
Wilful Blindness
68I am satisfied beyond a reasonable doubt that Mr. Lavorato, at the very least, was wilfully blind to the fact he was engaging in a dishonest dealing.
69I first set out the details of Mr. Lavorato’s defence.
70In his testimony Mr Lavorato denied any knowledge or suspicion that the cheques were fraudulent. He believed that Mandarino was a part owner of Walsh Construction. He further testified that he understood the funds to be legitimate repayment of the loan and saw nothing unusual about their deposit into his business account.
71Mr. Lavorato said that when the two became close in college Mandarino would tell him things about his dad, his businesses and things he was involved in. He had visited Mandarino's family home and knew they had money and were comfortable and that Mr. Mandarino's family paid for his education. He knows Mr. Mandarino's father and that he has a successful career and business and worked on properties and developments.
72Mr. Lavorato explained that he would see his bookie on a weekly basis and would settle his own affairs as well as those of Mr. Mandarino. Mr. Lavorato would cover Mr. Mandarino with the bookie and Mr. Mandarino would pay Mr. Lavorato back. Mr. Lavorato charged interest on the money borrowed by Mr. Mandarino.
73Mr. Lavorato testified that he believed Mr. Mandarino had part ownership with his father in a construction company. Mr. Mandarino often spoke of jobs coming up and jobs he was closing. Mr. Mandarino's father was in the industry. He met Mandarino in the parking lot of Walsh Construction. Mr. Mandarino was frequently going on vacations and looking to purchase vacation properties. Mr. Mandarino referred to “his company”. Mr. Mandarino asked Mr. Lavorato to meet with Herman Ayala, a business associate, to collect funds. Mr. Lavorato noted that the location he was sent to was a business called New Alliance and appeared to be legitimate. Mr. Mandarino told Mr. Lavorato he needed to pay workers in cash for a job he had coming up which resulted in the cheque to Mr. Imbesi. Mr Mandarino produced cheques from Walsh Construction to pay off his loans to Mr. Mandarino, saying he was tight on cash but could pay through his business. Mr. Mandarino never seemed stressed about money or the amounts he was gambling. Mr. Mandarino claimed he could not pay from his personal accounts as he was keeping his gambling a secret from his wife. Mr. Mandarino never said that he was an accountant and just an employee of Walsh Construction.
74Mr. Lavorato testified that there nothing that caused him to question or arouse suspicion about Mr. Mandarino's employment or financial situation. Mr. Lavorato said he trusted Mr. Mandarino. When he received the first cheque, he only looked at it to confirm the amount and his company name. When the bank teller alerted him that the company address was from the US, Mr. Lavorato’s reaction was that the company must be “making a shit ton of money for them to be branching off into the States.” It did not trigger any need to ask Mr. Mandarino.
75Mr. Lavorato explained that when Mr. Mandarino suggested paying back the loan through his business, he inquired how that works. Mr. Mandarino explained that when depositing the funds into his business account, Mr. Lavorato would owe HST and income tax, both of which Mr. Mandarino would ensure where included on top of the loan payment and interest. Mr. Lavorato testified that he trusted Mr. Mandarino given his position and that Mr. Lavorato’s accountant had always told him to collect HST and not spend it so it could be paid back to the government. He explained that this accountant remitted his taxes and HST for hm. He also said that Ventava did not generate a lot of income. It was averaging $15,000-20,000. He hired a lawyer to assist him in opening his business and hired an accountant to take care of Ventava’s accounting needs. He stressed in his testimony that he is not a sophisticated individual.
76Mr. Lavorato testified that he was upset, shocked and angry with Mandarino due to the extent of Mandarino’s gambling debts which grew to $250,000. Mr. Lavorato did lend Mr. Mandarino $88,000 which was paid back. Mr. Lavorato was not aware that Mr. Mandarino was gambling and accumulating other debt elsewhere. He felt lied to and betrayed that his friend had hid this from him. Mandarino was not able to cover his debts and would need to get money from his parents. At this point, Mr. Lavorato realized the extent of Mr. Mandarino financial problems. He cut ties with Mr. Mandarino due to the lies and betrayal. Mr. Lavorato considered Mandarino to be his friend whom he trusted.
77In summary, Mr. Lavorato portrayed himself as an unsophisticated individual who naively assumed that Mr. Mandarino was a part owner of Walsh Construction and had lawful authority to issue the cheques he did.
78I do not believe for a moment that Mr. Lavorato is an unsophisticated individual or was he naïve in his dealings with Mr. Mandarino. Mr. Lavorato has a two-year business administration diploma. I found him to be an intelligent witness who possesses considerable “street smarts”. His main source of income comes from gambling at the casino where his discipline at the baccarat tables netted him a six-figure income annually. He paid no tax on his income from gambling nor on his loan interest income. His other source of income came from interest on providing loans to repay gambling debts. An example of this is a very lucrative financial arrangement which he had in place with Mr. Mandarino in regard to the repayment of Mr. Mandarino’s gambling loans. Mr. Lavorato charged him interest payments between 15% to 18% payable in full within one year regardless of how quickly Mandarin paid the debt. Mr. Lavorato was firmly established as a “runner” in the world of illegal sports betting. I agree with the submission of the Crown that it is hard to understand how Mr. Lavorato would have been upset with a reliable and lucrative client like Mandarino for having acquired more debt.
79Despite paying no tax on his gambling earnings or interest earned from private loans, Mr. Lavorato remitted HST and taxes on the amounts he was receiving from Walsh. I am satisfied that he was doing this to make the transaction appear legitimate because he knew it was unlawful.
80I do not believe Mr. Lavorato’s testimony that he did not deliberately refrain from making inquiries about the cheques he received from Mr. Mandarino. There is a compelling body of circumstantial evidence in support of the Crown’s position that Mr. Lavorato was, at the very least, wilfully blind to the fact that obtaining cheques from Walsh Construction constituted a dishonest dealing which risked depriving Walsh Construction of funds. That evidence includes these uncontroverted facts:
-Mr. Lavorato did no work for Walsh Construction and was not entitled to the funds issued to him. He had no relationship with the company.
-The cheques were from a company called Walsh Construction Canada, ULC, with an address in Chicago and signed by an individual named Timothy
-Mandarino instructed him to remit income tax and HST to the CRA which he was not required to remit, as though he had earned this income from Walsh and as though he charged HST to Walsh
-Mandarino's typical weekly gambling loan repayments to Mr. Lavorato were anywhere from a couple of thousand to upwards of 10-15,000. The cheques from Walsh Construction represented in the area of a 700% increase in funds which Mandarino would typically turn over to Lavorato. Also the cheques were significant
-Mandarino always paid his gambling debts to Lavorato in cash, never before this by cheques.
-Corporate funds from Walsh were directed towards the payment of debts accrued through an illegal sports-betting website
-Mr. Lavorato made no effort to verify who “WCC Construction” was, why Mr. Mandarino could issue such cheques or why he was remitting tax on loan repayments.
81I do not believe that Mr. Mandarino ever purported to have an ownership interest in Walsh Construction in his dealings with Mr. Lavorato. The accused said he assumed as much even though he made no effort to verify what “WCC Construction” was, why Mandarino could issue such large cheques and why he was remitting tax on loan repayments.
82Despite their seeming close relationship, Mr. Lavorato testified that Mr. Mandarino never told him what he did for work and that they never got into specifics. Mr. Lavorato’s supposed belief that Mandarino was an owner of Walsh was based on assumptions and at no point did he ever clarify where Mr. Mandarino worked or whether he, in fact, had any ownership in Walsh. I reject Mr. Lavorato’s evidence that he believed Mandarino was the owner of Walsh.
83I accept Mr. Mandarino’s testimony, which is supported by independent evidence, that, in order to repay his considerable gambling debts, he began to generate cheques drawn on the accounts of Walsh Construction and issue them to third parties, including Mr. Lavorato’s company Ventava Inc. Those third parties would then keep a portion of the fraudulent cheque and hen direct a portion in cash to Mandarino who could then pay off his gambling debts. While I am unable to find that Mandarino told the accused about the specifics of his fraudulent cheque scheme, I am satisfied beyond a reasonable doubt that Mr. Lavorato was at the very least wilfully blind to the fact that Mandarino was engaging in a dishonest dealing. Did Mr. Lavorato shut his eyes because he knew or strongly suspected that looking would fix him with knowledge? The answer is that the prosecution has proven beyond a reasonable doubt that he did.
84I would also make these additional findings with respect to Mr. Lavorato’s criminal liability.
85The Crown presented a strong and compelling circumstantial case that Mr. Lavorato was a knowing participant in a fraud perpetrated by “other fraudulent means”. Mr. Lavorato took cheques he was not entitled to, used a portion to pay Mr. Mandarino’s illegal gambling debt, used a portion for personal gain, and then set aside funds for false tax remittance to make the transaction appear legitimate. Mr. Lavorato had no connection to Walsh Construction and was not entitled funds from Walsh since he had not done any work for the company. Nevertheless, he accepted cheques for significant sums of money. Lavorato deposited these cheques in his business account and also forwarded a cheque payable to Mr. Imbesi’s company. Mr. Lavorato remitted income tax and HST to the CRA even though he did not owe the CRA these amounts. The only plausible reason he did so was to make the Walsh payments appear legitimate- that is, to make it look like he was a legitimate vendor who done work for Walsh. Mr. Lavorato instructed his friend Mr. Imbesi to deposit a similar cheque in a large sum into Mr. Imbesi’ business account and make the same false remittances. Mr. Imbesi’s company, like Mr. Lavorato’s company, had not done any work for Walsh Construction, was not a legitimate vendor and was not entitled to the funds. Mr. Lavorato kept large portions of the cheques issued to his company for his personal use. I rejected Mr. Lavorato’s claim that he believed the cheques from Walsh were legitimate. Nor did his evidence raise a reasonable doubt.
86Applying the objective test from Theroux, I am also satisfied beyond a reasonable doubt that a reasonable person would view Mr. Lavorato’s act as dishonest dealing. I find that the Mr. Lavorato knowingly participated in acts of what a reasonable person would consider to be dishonest dealing.
Mr. Imbesi’s Criminal Liability
87Mr. Lavorato testified that Mandarino told him he needed to pay workers in cash and Lavorato suggested Mr. Imbesi could help. Mr. Mandarino agreed. Mr. Lavorato then introduced Mr. Imbesi into the scheme. He told Imbesi to remit taxes and Mandarino had instructed him to do. Mr. Lavorato had no recollection of Mr. Imbesi asking questions about the cheque’s origin.
88Mr. Mandarino testified that Lavorato told him he had a friend who “wanted to participate in what we were doing with the cheques. It was all the same arrangement, agreement. I made sure to tell Peter to…communicate to Giovanni to do the same thing with, you know, we’re going to hold income tax, we’re going to hold HST; it all has to be remitted properly. And all this was done through Peter. I did not do this directly with Giovanni.
89I am satisfied that this utterance is admissible against Mr. Imbesi under the three-part test in R. v. Carter, 1982 CanLII 35 (SCC), [1982] 1 S.C.R. 938. I am satisfied there was a common criminal enterprise between Mr. Mandarino and Mr. Lavorato to fraudulently obtain funds from Mr. Mandarino’s employer. Mr. Imbesi became part of the common enterprise. He knowingly and dishonestly received a cheque from Walsh Construction. His expression of interest in joining the criminal enterprise was in furtherance of the criminal enterprise. This statement is presumptively admissible and presumptively satisfies the requirements of necessity and reliability. There is no other potential source for the evidence and is therefore necessary. I am satisfied that Mandarino’s evidence with respect to this alleged conversation between Mr. Mandarino and Mr. Lavorato is reliable.
90Mr. Lavorato testified that he told Mr. Imbesi that Mandarino “had a couple of side jobs going and needed to pay his guys cash and he would give him something for doing the favour”. There is no evidence that Mr. Imbesi made any inquiry with respect to why the cheque needed to be cashed through him or through Imbesi’s business account rather than his personal account.
91Mr. Lavorato testified that as per his instructions from Mandarino, he also told Imbesi to remit income tax and HST even though the cheque did not represent income or the provision of goods or services. I am satisfied that this was done to make the transaction seem legitimate. I agree with the Crown’s submission that the request to remit false amounts to the CRA would have been highly suspicious to Mr. Imbesi and should have necessitated further inquiry. I am satisfied that Mr. Imbesi was, at the very least, wilfully blind to the fraudulent nature of the $120,921.30.
92I accept Mr. Lavorato’s evidence as true that he had no recollection of Mr. Imbesi asking him about the source of the funds from the cheque, the fact that there was a business address in Chicago and above all why it was necessary to make income tax and HST remittances.
93There is a compelling body of circumstantial evidence that leads the court to infer that Mr. Imbesi was, at the very least, wilfully blind to the fraudulent nature of the funds he received from Walsh:
Imbesi’s company, GBSI, had no contractual relationship with Walsh Construction.
He performed no work, provided no goods or services, and had no prior dealings with the company.
The cheque issued to GBSI was for $120,921.30, a significant amount and warranted further inquiry
The cheque was issued by WCC Construction Canada ULC, with a Chicago address and signed by 'Timothy'.
Mr. Imbesi did not inquire about the source of the funds or the legitimacy of the transaction.
Mr Imbesi remitted HST and income tax on funds for which no services were rendered. As in the case of Mr. Lavorato, I am satisfied that these remittances were done to create a false appearance of legitimacy. This system of remitting HST and income tax should have been highly suspicious to Mr. Imbesi.
Mr. Imbesi was financially vulnerable and likely to accept funds without asking questions.
All instructions and coordination regarding the cheque were relayed through Mr. Lavorato.
Mr. Mandarino testified that he never dealt directly with Imbesi regarding the cheque.
94The evidence falls short of proving beyond a reasonable doubt that Mr. Imbesi had actual knowledge of the fraud. However, the evidence is clear that Mr. Imbesi ignored obvious signs of illegitimacy, failed to ask basic questions and benefitted from the transaction to the financial detriment of Walsh Construction.
95I am satisfied beyond a reasonable doubt that Mr. Imbesi’s knowledge of the fraud is imputed through the doctrine of wilful blindness. He is also guilty of fraud.
96Mr. Lavorato and Mr. Imbesi are found guilty as charged.
Released: September 26, 2025
Justice T. Lipson