Licence Appeal Tribunal

Safety, Licensing Appeals and Standards Tribunals Ontario

Tribunal d’appel en matière de permis Tribunaux de la sécurité, des appels en matière de permis et des normes Ontario

Citation: Lisa Marie Devoe o/a M.E. Convenience v. Registrar, Alcohol, Cannabis and Gaming Regulation and Public Protection Act, 1996, 2019 ONLAT 12101/GCA

Date: 2019-10-17

Appeal under s. 13(2) of the Gaming Control Act, 1992, S.O. 1992, c. 24 and Regulations, as amended, from a Notice of Proposal to Refuse Registration

between:

Lisa Marie Devoe o/a M.E. Convenience Applicant

and

Registrar, Alcohol, Cannabis and Gaming Regulation and Public Protection Act, 1996 Respondent

DECISION AND ORDER

ADJUDICATOR: Harriet Lewis

APPEARANCES: For the Applicant: Lisa Marie Devoe, Self Represented For the Respondent: Faye Kidman, Counsel

HEARD: In Barrie Ontario, September 5, 2019

REASONS FOR DECISION AND ORDER

OVERVIEW:

1The Appellant Lisa Marie Devoe (“Devoe”) is the owner and operator of M.E. Convenience, a convenience store in Oro-Medonte Ontario. In October 2018, Devoe applied for a licence as a Gaming Supplier under the Gaming Control Act,1992 (“the Act”), with the intention of selling lottery tickets at the convenience store.

2Devoe completed an application for registration as a “Seller” under the Act, as well as the required personal disclosure form. Among the facts disclosed by Devoe were details concerning her 2011 conviction for fraud over $5,000 under the Criminal Code (Canada). She pleaded guilty to the charges.

3In addition, Devoe disclosed that in 2012 she had filed for bankruptcy, with an outstanding debt of $61,896.95. She was discharged in 2016. Devoe argues that her fraud occurred some time ago, that in committing the fraud she made a terrible mistake, that she has learned from the experience and will not make the same mistake again. She believes she should be entitled to become a Gaming Supplier/Seller of lottery tickets.

4After investigating the details of Devoe’s criminal conviction and bankruptcy, the Registrar has determined that there are reasonable grounds to believe that Devoe will not act as a Gaming Supplier in accordance with law, or with integrity, honesty or in the public interest. In a Notice of Proposed Order to Refuse Registration dated April 9, 2019 (“the Proposal”) the Deputy Registrar on behalf of the Registrar, proposes to refuse Devoe’s registration.

Issue:

5The issue to be decided on this appeal is: Are there reasonable grounds for the Registrar to believe that the appellant will not act in accordance with law, or with integrity, honesty or in the public interest, having regard to the appellant’s past conduct?

6Based on the evidence before me at this hearing, and for the reasons which follow, I confirm the proposed order to refuse the appellant’s registration.

Evidence:

7The Respondent called the following witnesses:

i. Thomas Kudelka, Ontario Provincial Police Sergeant, Investigations Unit, Alcohol and Gaming Commission, Ontario

ii. Frank Cuda, Deputy Registrar, Alcohol and Gaming Commission of Ontario

8Sergeant Kudelka has been a police officer since 1995 and has served with the Ontario Provincial Police since 2001. He was seconded to the Alcohol and Gaming Commission in November 2018 to perform background checks on applicants for licences. He provided his evidence in a straightforward and credible manner, referring only occasionally to notes taken immediately following a visit to Devoe’s home on December 10, 2018.

9He testified that his investigation consisted of a review of documents pertaining to Devoe’s criminal record, her driver’s licence and a CPIC report, followed by an interview meeting with her. That meeting consisted both of general conversation about her circumstances and specific formal questions. The questions focussed on details of Devoe’s fraud and conviction.

10Sergeant Kudelka noted that the Devoe home was undergoing a major renovation at the time of his visit. He found Devoe to be co-operative, forthcoming, and genuinely remorseful for her actions. She was very emotional during the interview, explaining that at the time of her fraud, her marriage was a troubled one, her husband was injured and unable to work, and that they were struggling financially. She was solely responsible for the upkeep of the home and for her three children.

11Devoe’s acts of fraud occurred while she was employed at H & R Block. She created a series of fabricated tax returns showing a refund owing to the parties allegedly completing the returns. The fraudulent tax returns resulted in H& R Block issuing refunds which were received and cashed by Devoe. The total amount of the fraud claimed by H& R Block was some $51,500.

12When her actions were discovered, and charges were laid, Devoe pleaded guilty and received a conditional sentence of 18 months served under house arrest. She was also sentenced to make restitution of the monies obtained by fraud.

13Devoe told Sergeant Kudelka that although she did not believe she was responsible for the entire amount of the loss, she had pleaded guilty “for personal reasons”, specifically because of her fear of incarceration and loss of custody of her children. Devoe advised Sergeant Kudelka that as of the interview date, she had made some payments towards the restitution order; she believed around eight or nine thousand dollars.

14The Respondent’s second witness was Mr. Frank Cuda. Mr. Cuda is the Manager of Gaming Eligibility and a Deputy Registrar at the Alcohol and Gaming Commission of Ontario. He testified that the overarching purpose of the Act is to protect a vulnerable public and maintain public confidence in the province’s gaming system. The legislative purpose of the Act is considered when assessing applicants for registration. He noted that under the Act, applicants for registration are not entitled to registration as of right, but rather as a privilege.

15As in all cases, when Devoe’s application was made, credit and criminal record searches were conducted. When answers on her questionnaire gave rise to concerns about past conduct and financial stability, a further investigation was warranted and Sergeant Kudelka was assigned the case.

16As described by Mr. Cuda, the sale of lottery tickets is a cash-intensive business. Concern about fraud by sellers arises not so much at the point of sale of the tickets, but at the time when ticket holders check to see if they have a winning ticket and claim a payout. At that point, it is essential to ensure that winners receive their winnings. Because there are approximately 10,000 lottery sales locations and 6,000 registered Sellers in Ontario, the ability to police the system is limited.

17While there are now self-serve electronic terminals available for some lottery tickets, the system still relies on sellers and their employees to properly pay out winnings when the tickets are presented for checking and/or payout. Mr. Cuda stressed that the public needs to have confidence that persons selling and paying out on winning lottery tickets are honest and beyond reproach.

18Mr. Cuda described some of the steps that have been taken to mitigate potential risk to the public at the point of checking and redeeming winnings from lottery tickets. For example, ticket holders can check their own tickets through terminals in many ticket outlets. Machines used to check tickets make a sound when there is a winning ticket. All tickets checked by sellers must be returned to the ticket holder, and winning tickets with a value of $500 or more must be redeemed at the Ontario Lottery and Gaming Commission offices. These and other steps have reduced the risk of sellers defrauding a customer who presents a winning ticket.

19Although Devoe’s fraud was some time ago, Mr. Cuda remains concerned about the nature of the fraud and the fact that it involved a breach of trust. He takes the position that the breach of trust was not only against H & R Block, but also against those customers who provided the firm with their personal information for the preparation of their tax returns. He expressed concern that Devoe had not only devised a scheme to defraud her employer but had used her access to her customers’ personal information to carry out her fraud. No documentary evidence of any of the specific incidents of fraud was provided at the hearing.

20Mr. Cuda acknowledged that having a criminal record is not an absolute ban to registration. However, in cases where trust has been breached, the public is particularly vulnerable, and registration is refused. Mr. Cuda noted that in this case there was a carefully planned and complicated scheme to defraud, a breach of trust by a managerial employee, and a continuation of fraudulent behavior over time until the fraud was discovered. He does not interpret Devoe’s guilty plea as a mitigating factor in these circumstances, but rather a calculated action which would allow her to avoid incarceration.

21Devoe testified on her own behalf and called no other witnesses.

22Although at times she expressed emotion, she provided her evidence in a clear and straightforward manner.

23Devoe is a trained dental assistant and has worked on and off in that capacity for several years. She is the mother of three children, all of whom are now adults. One of her children lives at home. Devoe stated that she now lives in a stable common law relationship in a home which she owns.

24In addition to her convenience store, Devoe owns and operates a metal fabrication business, Metal Enterprise, which she purchased in 2017. In November 2018, she purchased the convenience store which had been empty for some time. She believes that her financial situation is now stable.

25She has applied for a Seller licence for the convenience store so that customers will be attracted into the store where she hopes they will make purchases in addition to lottery tickets. She does not expect to make much money from the ticket sales themselves.

26Devoe denies that she used client’s personal information as part of her fraud. She says that she made up fictitious parties and created returns in their names. No evidence to confirm this was provided.

27Devoe also testified that none of the fictitious returns were submitted to Revenue Canada but were used solely for generating refund advances from H & R Block. The refunds came to her in cashable form and were cashed. She denies that the amount of her fraud was the $51,600 for which she was charged. She alleges that when her fraud was discovered, her employer added the amounts of all discrepancies from her location to the amount of her fraud.

28Notwithstanding her disagreement concerning the amount of money she appropriated through the fraud, she testified that she knew that what she was doing was wrong. She said that she had never been in trouble before and “that was not who she is”. She says she took the action she did because of her desperate financial circumstances. At one point there was so little money in the household that the electricity service had been cut off.

29She spoke with emotion about the difficulty she experienced in telling her children about her behaviour and its consequences. She confirmed that she entered a guilty plea, so she could avoid going to jail, but also because she knew she had made a large mistake and had to “own up”. She believes that her charge and its consequences has had a negative affect on her children. Her conviction was made public and it has been difficult for her children to accept that people knew and talked about her crime.

30Devoe has not sought personal counselling in respect to her actions. However, she spoke of the strong relationship she had developed with her parole officer over the period during which they had regular contact which she says was over two and a half years. She had hoped to call her parole officer as a witness but discovered that she had moved out of the province.

31When asked about oversight of a lottery operation should she get a licence, Devoe testified that she would be dividing her time between Metal Enterprise and the convenience store, with one additional full-time employee at the store.

LAW AND ANALYSIS:

32Section 10 of the Act provides that the Registrar shall refuse to register an applicant as a supplier if there are reasonable grounds to believe that the applicant will not act as a supplier in accordance with law, or with integrity, honesty or in the public interest, having regard to the past conduct of the applicant. Section 13 of the Act gives an applicant a right to a hearing, and subsections (8), (9) and (10) allow the Tribunal to confirm or set aside a proposed order, substitute its opinion for that of the Registrar or attach terms to an order for registration.

33In the Proposal, the Registrar states his belief that “there are reasonable grounds to conclude that Devoe will not act as a Gaming Supplier in accordance with law, or with integrity, honesty or in the public interest as a result of her criminal conviction, her bankruptcy and the underlying criminal charges.”

34In both the presentation of evidence and in argument, counsel for the Registrar emphasized the importance of maintaining the integrity of the lottery system with the public as well as the need to ensure that the risk of fraudulent behaviour be managed through prevention.

35I accept the evidence from both the Registrar’s witnesses and Devoe herself that Devoe’s fraud was deliberate and sophisticated. I accept the Registrar’s position that as the branch manager Devoe was in a position of trust vis-à-vis her employer and possibly clients of her employer. I also accept that Devoe would be in a position of trust as a seller of lottery tickets.

36Counsel for the Registrar argued that the way in which an individual behaves when in moments of need or in other personal difficulty is a true test of integrity and that the best indication of future behaviour is past behaviour. While that may not always be so, in this case and in the absence of any supporting evidence to the contrary, I agree that it is reasonable to be concerned about Devoe’s future conduct.

37Devoe’s fraud involved a serious breach of trust and it is reasonable to conclude that her actions have been serious enough to give rise to some continuing concerns regarding her future conduct if permitted to sell lottery tickets.

38I accept Devoe’s assertion that she is remorseful and regrets her past actions. However, other than an expression of remorse, she provided no independent evidence of her character or of recent positive conduct, either through character witnesses or letters of support. She has not undergone any counselling except what was provided by her probation officer years ago.

39In the absence of any independent evidence to the contrary, Devoe’s conduct leading to criminal charges and her conviction, result in my finding that it is reasonable for the Registrar to conclude that Devoe will not act as a Seller in accordance with the law, or with integrity, honesty or in the public interest.

ORDER:

40I order that the Registrar carry out the proposal to refuse the Application of Lisa Marie Devoe o/a M.E. Convenience for registration as a Gaming Supplier in the class of Seller.