R. v. Eizenga, 2011 ONCA 113

CITATION: R. v. Eizenga, 2011 ONCA 113

DATE: 20110209

DOCKET: C49991

COURT OF APPEAL FOR ONTARIO

Weiler, Laskin and Goudge JJ.A.

BETWEEN

Her Majesty the Queen

Respondent

and

Mark Eizenga

Appellant

Daniel A. Stein, for the appellant

Gregory J. Tweney, for the respondent

Heard: September 24, 2010

On appeal from the conviction entered by Justice John L. Getliffe of the Ontario Court of Justice on November 4, 2005, and the sentence imposed on July 17, 2007, with reasons reported at 2007 ONCJ 372.

Weiler J.A.:

[1] The appellant Mark Allan Eizenga pled guilty to one count of fraud over $5000. Following his plea, his counsel advised the court that he and Eizenga had reviewed the Crown’s draft of the facts and were “satisfied that the essence of the count that he’s pleaded to will be substantiated by the facts”. The draft that Eizenga and his counsel had seen was consistent with facts that Eizenga had already admitted to in an agreement he had reached with the Ontario Securities Commission (“OSC”).

[2] Although Eizenga was represented at the time he pled guilty, he was unrepresented at his sentencing hearing some 19 months later. At that time, he made submissions challenging a number of the Crown’s factual assertions. Many of his disagreements directly contradicted what he had admitted in his agreement with the OSC; other assertions had to do with minimizing his legal liability. In response to questions from the trial judge, Eizenga said he didn’t believe he was guilty. The trial judge indicated he would not exercise his discretion to strike the plea. He held that “[t]he elements of the offence pleaded to are clearly apparent” and “[b]y anyone’s arithmetic” Eizenga had perpetrated a massive fraud on the investing public and breached the trust of those persons who invested money with him. The trial judge sentenced Eizenga to 8 years’ imprisonment and ordered him to pay restitution to the victims of the fraud in the amount of $35,639,395.05.

[3] Eizenga appeals. The issues raised in relation to his conviction are:

• Was the guilty plea valid?

• Was Eizenga’s right to a fair trial infringed because (a) the trial judge did not hear from Eizenga before deciding he would not strike the plea or (b) he did not provide sufficient assistance to Eizenga when he was unrepresented?

• What facts was the trial judge entitled to rely on in sentencing Eizenga?

[4] I would dismiss the conviction appeal. At the time Eizenga entered his plea, he was represented by experienced counsel and so there was a presumption that his plea was valid. For the reasons that follow, I would hold that this presumption has not been rebutted, and that the trial judge was correct in finding that the plea met the requirements of a valid plea, namely that it was voluntary, unequivocal and informed. Having regard to the record as a whole, Eizenga has failed to convince this court on a balance of probabilities that the plea is invalid and should be set aside. I would reject Eizenga’s submission that the plea was equivocal in that it was conditional on an agreed statement of facts being worked out as well as not informed. The trial judge’s decision not to strike Eizenga’s plea was a valid exercise of his discretion, given the history of the proceedings and the fact that Eizenga never asked to withdraw his guilty plea although he was aware he could do so. While Eizenga was not represented by counsel at the sentencing hearing, the hearing was fair. Furthermore, although Eizenga took issue with certain facts, the facts that were undisputed satisfy every element of the offence of fraud, and his disagreements with how the Crown characterized the facts do not affect his legal liability.

[5] I next address Eizenga’s application for leave to appeal his sentence. Eizenga’s primary contention is that the restitution order should be quashed because the trial judge did not consider his ability to pay restitution. In addition, he submits that the order was disproportionate to his involvement in the fraudulent scheme as he transferred $17.6 million to his deceased co-accused. Finally, Eizenga submits that the trial judge failed to consider whether, having regard to Eizenga’s sentence of imprisonment, the overall sentence was fit.

[6] I would agree with these submissions. Given the trial judge’s errors in principle, I would hold that the restitution order is excessive, that it renders the overall sentence unfit and that it must be set aside.

[7] It therefore falls to this court to decide whether, as part of a fit sentence, a restitution order is appropriate and, if so, in what amount. For the reasons that follow, I would hold that a restitution order is appropriate. I would, however, vary the amount of the restitution order to $20 million. This figure reflects Eizenga’s degree of criminal responsibility in a massive fraud that involved a significant breach of trust. It also reflects both the funds that Eizenga transferred offshore whose disposition is unaccounted for and amounts that Eizenga admits to taking as ‘income’.

I. The Conviction Appeal

a. History and Procedural Background

[8] In assessing the validity of Eizenga's guilty plea, I have considered the background to the plea, the record of the court proceedings both on September 27, 2005, and when the plea was entered on November 4, 2005, and the lengthy history that followed. That history includes Eizenga’s statement to the author of his pre-sentence report that he “accepts responsibility for the offence as he was in charge of the company.” The pre-sentence report is dated June 5, 2007, a week before Eizenga’s sentencing hearing on June 12, 2007, at which he disputed many of the Crown’s allegations. For the sake of completeness a summary of these events is detailed below.

i. The Charges

[9] Following an investigation that began in September 1998, Eizenga and James Edward Sylvester (“James Sylvester”) were jointly charged on May 8, 2003, with one count of fraud exceeding $5000 contrary to s. 380(1) of the Criminal Code, and one count of theft over $5000 contrary to s. 334 of the Criminal Code. The information alleged that the two offences were committed sometime between January 12, 1995 and December 31, 1998, but otherwise provided no other details relating to the offences.

[10] The fraud and theft charges arose out of allegations surrounding a group of corporations that Eizenga controlled called the Saxton Group.[^1] The Saxton Group encompassed a large network of related companies that included at least: (1) 34 offering corporations that sold securities to the public; (2) Saxton Investments Ltd. (“Saxton Investments”), the main managing entity; (3) Saxton LMD, a private company owned by Eizenga and his wife, Lisa; and (4) various Cuban businesses operating under the name Sussex Admiral Group Limited (later Sussex Group Ltd.), of which Eizenga was once president. Overall, Eizenga incorporated at least 40 corporations in Ontario and two in the Bahamas. The Saxton Group’s core business was the development and manufacturing of beverage and food products in Cuba and elsewhere the Caribbean.

[11] The Saxton Group marketed and sold shares in the offering corporations to the investing public, improperly exploiting the “seed capital” prospectus exemption so that Saxton would not have to give full disclosure of information to investors. Saxton misrepresented these shares to investors as “GICs”, “Fixed Dividend Accounts” and “Equity Dividend Accounts”, suggesting they were low-risk investments when they were not. Although the investors had to sign a subscription agreement which had a clause acknowledging that they had received and reviewed an Offering Memorandum, very few of them ever received one.

[12] The money that was raised by the offering corporations was transferred to Saxton Investments. The funds were pooled and then diverted, directly or indirectly, to the Cuban and other offshore operations; some money was also diverted to Saxton LMD. Personal real estate, automobiles, and other assets that were owned or enjoyed by Eizenga and his family were paid for by either Saxton Investments or Saxton LMD cheques.

[13] Investors were promised a high rate of return; however, there is no evidence that the Saxton Group ever made enough profit from its Caribbean operations to meet that rate of return. When investors redeemed their investment or realized their interest, it was taken directly from the funds that other investors had put in.

ii. Ontario Securities Commission Agreement

[14] On August 29, 2005, Eizenga signed a settlement agreement with the OSC (“OSC Settlement Agreement”). Section 4 of the agreement provides:

4. For the purposes of this proceeding, and of any other proceeding commenced by a securities regulatory agency, Eizenga agrees with the facts set out in Part III of this settlement agreement.

[15] Section 47 of the agreement provides:

47. Staff and Eizenga agree that if this settlement agreement is approved by the Commission, neither Staff nor Eizenga will make any public statement inconsistent with this settlement agreement.

[16] In the OSC Settlement Agreement, among other facts, Eizenga admitted to the following:

• he controlled the Saxton companies and made all key business and management decisions relating to the distribution of securities while purporting to rely on a prospectus exemption that, in fact, was not available in the circumstances (paras. 8-11, 19);

• he “approved all promotional and investor relations material distributed by Saxton” (paras. 19, 21, 28);

• he controlled the monies raised through the distribution of securities, and he possessed the authority to independently sign cheques and control the flow of funds from the offering corporations to Saxton Investments and from Saxton Investments to other parties (para. 23-25);

• he made misrepresentations to salespeople, investors, and prospective investors about the true nature and risk of the investment (paras. 28-29);

• Saxton distributed quarterly account statements to investors purporting a rate of return that had been promised to investors, even though there “were no financial statements or record of any revenue generation by the Saxton operations” and thus no means to establish these net financial results (paras. 30-34);

• after receiving legal advice that the distribution of Saxton securities likely infringed Ontario securities law, and in the face of OSC inquiries in 1998, Eizenga continued to solicit investors and distribute securities (paras. 35-37).

iii. The Guilty Plea

[17] Eizenga initially elected for a trial by judge and jury at the Superior Court of Justice. However, prior to the preliminary hearing being held, a number of discussions took place between counsel and the court in the form of case management and focus hearings, which resulted in the case being moved to the Ontario Court of Justice.

[18] On September 27, 2005, Eizenga’s counsel Mr. William Trudell informed the court that Eizenga had advised him that he intended to plead guilty for the record. Mr. Trudell stated that his client’s “instructions [were] clear” that he wanted to plead guilty. He also advised that he and Crown counsel intended to negotiate an agreed statement of facts. Mr. Trudell stated: “We hope that it becomes an agreed statement of facts and we’re going to be working towards that.” He advised that Mr. Eizenga would get “independent legal advice after the facts have been worked on”. Counsel did not suggest that the purpose of getting independent legal advice had anything to do with the elements of the offence before the court or that the plea was in any way conditional on a future agreed statement of facts. The trial judge would later note in his reasons for sentence that the purpose of having Eizenga get independent legal advice was related solely to an issue involving the Canada Revenue Agency.[^2] The formal plea hearing was put off until November 4, 2005.

[19] On November 4, 2005, Eizenga appeared at his plea hearing at the Ontario Court of Justice. Mr. Trudell advised the court that his client wished to re-elect to be before the Ontario Court of Justice, and the Crown consented. Eizenga then pled guilty to fraud over $5000. The following exchange occurred:

THE COURT: Now as I understand that Mr. Trudell, in keeping with your comments that you’re satisfied that your client has entered this plea after reviewing the facts eventually that will be confirmed before the Court, then you’re satisfied the gravamen of the offence supports the plea?

MR. TRUDELL: Ah, Your Honour, I am and my client has reviewed the Crown’s draft of the agreed statement of facts and so he’s aware of the allegation, but we’re satisfied that the essence of the count that he’s pleaded to will be substantiated by the facts that you have before you, sir.

[20] As a result of the guilty plea, the Crown withdrew the theft over $5000 charge. The matter was put over to be spoken to on December 2, 2005, so that Mr. Trudell and the Crown could negotiate an agreed statement of facts for the sentencing hearing, which was scheduled for March 6, 2006.

iv. The record following the guilty plea

[21] Following Eizenga’s guilty plea on November 4, 2005, the plea was maintained for over a year and a half throughout the many court appearances detailed below:

• December 2, 2005: an agent of Mr. Trudell appeared to obtain an adjournment. The case was rescheduled for December 20, 2005.

• December 20, 2005: Crown counsel advised the court that he spoke with Mr. Trudell “for the first time about the facts and we’re not together yet.” The Crown also advised that both parties wanted the matter adjourned to January 20, 2006, so that they could “continue the e-mail process by which we are exchanging drafts of the facts that we’re trying to arrive at.”

• January 20, 2006: Crown counsel advised that he and defence counsel were “reasonably close upon the statement of facts and we figured by the end of today, we will be there.” Mr. Trudell also acknowledged that he and Crown counsel were “very, very close to finalizing the agreed statement of facts”. Crown counsel “anticipated that the facts will be finished today” and sent the most recent version to Mr. Trudell’s office, so that Eizenga could receive independent legal advice. Mr. Trudell stated that “there are just some things in the agreed statement of facts that we have to be very careful of, but we’re 99 percent there”. The matter was adjourned to March 29, 2006.

• March 29, 2006: Mr. Trudell advised the court that he and the Crown had “been working very hard” to put together an agreed statement of facts, in order to avoid a Gardiner hearing (pursuant to R. v. Gardiner, [1982] 2 S.C.R. 368) or other contested hearing. He advised that “we’re almost there in terms of the agreed statement of facts” and that Eizenga had been sent to a Toronto firm for independent legal advice. Mr. Trudell had to put together a brief for the Toronto firm, so he requested an adjournment. He anticipated that all matters could be resolved by then. The court adjourned the matter to June 23, 2006.

• May 16, 2006: Mr. Trudell appeared before the court to ask that he be removed as counsel of record. He advised the court that there was a collapse of the solicitor-client relationship. The court granted his request and removed Mr. Trudell as Eizenga’s counsel of record.

• June 23, 2006: Eizenga personally advised the court that he had spoken to a few lawyers and was in the process of retaining one of them. The matter was adjourned to August 25, 2006, to give time for Eizenga to “get matters together”.

• August 25, 2006: Eizenga advised that he was still “working on the retainer”, but that otherwise his counsel was now Ms. Anida Chiodo. The matter was rescheduled for September 22, 2006.

• September 22, 2006: Eizenga advised that he was “still working on the retainer.” The matter was adjourned again to November 27, 2006, to give time to Eizenga to get a hold of his lawyer and to “finish off this retainer”.

• November 27, 2006: Ms. Bella Petrouchinova, acting on behalf of Ms. Chiodo, requested an adjournment. Ms. Petrouchinova explained that Eizenga had retained Ms. Chiodo only very recently, and there were eight boxes of disclosure to sort through. Crown counsel stated that for the purposes of the sentencing hearing, he was “intent on proceeding with the last draft of the facts that was provided to Mr. Trudell that was given to Mr. Eizenga to take to other counsel for independent legal advice.” Crown counsel advised the court that he would ensure that Ms. Chiodo received a copy of that last draft. The matter was adjourned so that Ms. Chiodo could review the disclosure and court transcripts.

• January 12, 2007: Ms. Chiodo appeared before the court and advised that she was retained only for the limited purpose of (a) reviewing the transcript with the view to consider whether there was a basis in law to strike the plea that was entered in 2005, and (b) arriving at an agreed statement of facts with the Crown if an application to strike the plea was unsuccessful. She explained that she was not retained to assist in a Gardiner hearing or to deal with any issues regarding aggravating factors in the statement of facts that Eizenga disputed. Eizenga confirmed the scope of her retainer in court. Ms. Chiodo also advised that she had not received all the transcripts yet and that Eizenga was not in a position to agree to anything in the Crown’s statement of facts. Crown counsel advised the court that if the parties could not come to an agreed statement of facts, then they might have to proceed to a Gardiner hearing. Ms. Chiodo then stated that she would be content to continue discussions with the Crown in order to arrive at an agreed statement of facts, but if that did not happen by the next court appearance, then she would bring an application to strike the plea. The matter was adjourned to January 15, 2007, and then again to March 2, 2007.

[22] At the hearing on March 2, 2007, Ms. Petrouchinova appeared in court again on behalf of Ms. Chiodo. She advised that there had been a significant breakdown in communication between Ms. Chiodo and Eizenga, “which has not made it possible for her to receive the significant input she requires on the agreed statement of facts.” Ms. Petrouchinova advised the court that Ms. Chiodo had not received any input from Eizenga, could not proceed in any fashion, and therefore requested that she be removed as counsel of record. Eizenga then stated in court that since Ms. Chiodo was not retained to represent him in a Gardiner hearing, it was understandable that she be removed as counsel of record. The trial judge granted the application to remove Ms. Chiodo from the record, set the matter over to another date for facts and sentence, and ordered a pre-sentence report to be prepared.

[23] Crown counsel then advised the court that when he and Mr. Trudell were negotiating the agreed statement of facts, the statement had been “distilled from a 150 page document down to about a 40 page document”. He advised the court that on November 1, 2005, Mr. Trudell told him that he would send the defence’s proposed changes to the Crown; Eizenga would then get independent legal advice once the agreed facts are “complete”. On January 20, 2006, Crown counsel sent back a copy of the agreed statement of facts incorporating “all the changes that Mr. Trudell had requested on Eizenga’s behalf.” The Crown did not hear back until March 21, 2006, when Mr. Trudell told him that he sent Eizenga out for independent legal advice.

[24] The Crown took the position that there had been an agreed statement of facts between the parties in March 2006. Mr. Trudell’s correspondence in November 2005 meant that he was going to send Eizenga out for independent legal advice only when the facts were agreed upon. The Crown submitted that when Mr. Trudell told him on March 21, 2006, that Eizenga was now looking for independent legal advice, it implied that Eizenga had agreed to the version of the statement of facts that had incorporated the defence’s proposed changes.

[25] Eizenga stated in court that he did not agree to any statement of fact either before or after Mr. Trudell told him to seek independent legal advice. The trial judge then advised Eizenga that he would have the opportunity to oppose the facts as read in by the Crown on June 12, 2007, during submissions on sentence.

v. The pre-sentence report

[26] A pre-sentence report was prepared and dated June 5, 2007. The officer who prepared the report noted that Eizenga “accepts responsibility for the offence as he was in charge of the company. He was at a loss to explain where the reported $42 million [sic] disappeared.”

vi. The sentencing hearing

[27] The sentencing hearing finally began on June 12, 2007. Crown counsel read the statement of facts into the record and Eizenga responded with point-by-point disagreements on the Crown’s facts. Eizenga then stated that he wanted to “challenge” the victim impact statements as well.

[28] In his reply, Crown counsel noted that many of Eizenga’s disagreements with the facts were in direct contradiction to what he had previously admitted to in the OSC Settlement Agreement. In particular, Eizenga had admitted that he directed the implementation of the business plan at the Saxton Group, that he controlled the money, that there were no financial statements or record of any revenue generation, that Saxton operated at a loss, and that Eizenga continued to solicit investors and distribute securities after failing to respond to OSC inquiries.

[29] Crown counsel also reminded the court that he and Mr. Trudell had negotiated the statement of facts that was read into the record, and that the Crown had incorporated all the changes that the defence wanted. The Crown submitted that the version that was forwarded to Mr. Trudell can be assumed to be an agreed statement of facts, and that it was not open for Eizenga to now retract those facts nor back away from the admissions he made in the OSC Settlement Agreement.

[30] Eizenga then stated the following:

I directed the company. I made the decisions. Perhaps I made the wrong decisions. I brought on professional people that were licensed to manage sales people and I made the decision to entrust that portion to them. I decided to bring on the accountants. Bring on other people with more experience and was I at the head? I was at the helm. I was directing the company. There’s no disagreement. [Emphasis added.]

[31] The trial judge asked Eizenga if he still took the position that he was guilty, and Eizenga responded: “I feel very guilty. I feel very badly about what has happened.” The trial judge inquired further, and Eizenga stated, “I don’t believe I’m guilty.”

[32] The trial judge responded by saying that Eizenga’s new position flew “in the face of written documentation”. He stated that he was now in the difficult position to consider whether or not to strike the accused’s plea. The Crown reminded the court that the Crown’s statement of facts was consistent with much of what Eizenga admitted to in his settlement agreement with the OSC.

[33] After hearing this submission, the trial judge held that it would be contrary to “the proper administration of justice to strike the plea at this late date. There’s been no suggestion whatsoever from any direction that the plea was in any jeopardy ... the matter on this of striking the plea is brought up by myself [and] ... that door is closed”.

[34] The Crown then made submissions as to the appropriate sentence, citing case law involving massive fraud schemes. He argued for a nine-year sentence with a restitution order for all of those individuals set out in the investor list, which was filed as an exhibit.

[35] In response to the Crown’s submissions, Eizenga acknowledged that he made monthly drawings from the Saxton coffers as income:

When the accountant said, you know, you shouldn’t be taking out your income in drawings and doing it at the end of the year, you should take it out as a monthly draw, we changed it. I took out a monthly draw.

I took out – what I took out in income, I declared it and it was in keeping with the amount that was taken out by the Court appointed managers over their four years was period about the same [sic]. People like Rick Fangeat and Luke McGee took out very generous amounts as well and it was taken into income. I did not perceive that I can – that it’s my company, my money and I want to make a point of that before I get into individual cases. [Emphasis added]

[36] He also clarified that he accepted responsibility “for my role and for the sales people that were involved”. Later he stated again: “I know that as the head of Saxton, ultimately I’m responsible for what happened or what didn’t happened [sic] and I – I accept that.”

[37] Eizenga then cited a long list of mitigating factors: he had already been dealt with severely by the OSC, he felt remorse, he had no criminal record, he had health problems, the fraud charge wreaked havoc on his family life, and he cooperated with law and regulatory enforcement agencies. He argued for either an absolute or conditional discharge.

vii. The reasons on sentence

[38] In his reasons for sentence dated July 17, 2007, the trial judge summarized the procedural history of the case, including what had happened at the sentencing hearing on June 12, 2007.

[39] He held that Eizenga’s disagreement over the Crown’s statement of facts was “nothing more than the extreme rationalization and an obvious self-serving interpretation” that was contradicted by the settlement agreement that Eizenga had entered into with the Ontario Securities Commission. The trial judge quoted large portions of the OSC Settlement Agreement and found that the agreement was consistent with the Crown’s statement of facts.

[40] The trial judge noted that the Crown alleged that the fraud encompassed $40 million from 799 investors and Eizenga alleged that the true amount was $37 million from no more than 400 investors. The trial judge held that, in any case, “[b]y anyone’s arithmetic this was a massive fraud” on the investing public and a major breach of trust. He held: “The elements of the offence pleaded to are clearly apparent.” The trial judge noted that Eizenga never brought an application before the court to strike or question the guilty plea. Indeed, Eizenga had stated that he “feels guilty” and was sorry for the loss to investors.

b. Was the guilty plea valid?

i. A valid guilty plea must be voluntary, unequivocal and informed

[41] Section 606 of the Criminal Code governs pleas. The relevant portion provides:

Pleas permitted

606. (1) An accused who is called on to plead may plead guilty or not guilty, or the special pleas authorized by this Part and no others.

Conditions for accepting guilty plea

(1.1) A court may accept a plea of guilty only if it is satisfied that the accused

(a) is making the plea voluntarily; and

(b) understands

(i) that the plea is an admission of the essential elements of the offence,

(ii) the nature and consequences of the plea, and

(iii) that the court is not bound by any agreement made between the accused and the prosecutor.

Validity of plea

(1.2) The failure of the court to fully inquire whether the conditions set out in subsection (1.1) are met does not affect the validity of the plea.

Allowing time

(3) An accused is not entitled as of right to have his trial postponed but the court may, if it considers that the accused should be allowed further time to plead, move to quash or prepare for his defence or for any other reason, adjourn the trial to a later time in the session or sittings of the court, or to the next of any subsequent session or sittings of the court, on such terms as the court considers proper.

[42] It is not open to an accused person to enter a conditional plea of guilt. Section 606(1) only allows an accused person to “plead guilty or not guilty, or the special pleas authorized by this Part and no others” (emphasis added). See also R. v. Lucas (1983), 9 C.C.C. (3d) 71 (Ont. C.A.). A guilty plea must be unequivocal.

[43] A guilty plea is an admission of guilt to all the legal ingredients necessary to constitute the crime charged: Lucas at p. 76. That admission means that the accused waives his or her right to require the Crown to prove its case beyond a reasonable doubt and also constitutes a waiver of any related procedural safeguards, some of which are constitutionally protected: R. v. T.(R.) (1992), 10 O.R. (3d) 514 (C.A.), at p. 519.

[44] A trial judge has the discretion to accept or not to accept a guilty plea. Up until the time of sentencing, a trial judge also has the discretion to permit an accused person to withdraw a guilty plea and to enter a new one. Provided the trial judge has exercised his or her discretion judicially, an appellate court will not lightly interfere: R. v. Adgey, [1975] 2 S.C.R. 426.

ii. Eizenga’s plea was voluntary

[45] Eizenga asserts that his plea was involuntary. However, a plea entered in open court is presumed to be voluntary unless the contrary is shown: R. v. T.(R.) at p. 520. Nothing in the record suggests that Eizenga’s plea was involuntary. Eizenga was present in court and pled guilty. He did not express any disagreement when Mr. Trudell informed the court that Eizenga had reviewed the Crown’s draft of the agreed statement of facts and understood the allegations. He said nothing when Mr. Trudell assured the court that Eizenga was admitting enough to substantiate the gravamen or essential elements of the fraud charge. Eizenga has not filed an affidavit as fresh evidence that any discussions off the record rendered his plea involuntary, nor does he submit that he was under any disability which affected the voluntariness of his plea. Mr. Trudell was a very experienced defence lawyer and the appellant makes no claim of ineffective assistance of counsel. Eizenga has therefore not displaced the presumption that his plea was voluntary.

iii. Eizenga’s plea was unequivocal and informed

[46] In addition to the requirement of voluntariness, s. 606(1.1)(b) of the Criminal Code states that a court may accept a plea of guilty only if it is satisfied that the accused understands he or she is admitting to the essential elements of the offence and the nature and consequences of the plea. In other words the plea must be informed.

[47] To assist the court in coming to a conclusion that an accused’s guilty plea is informed, the Crown should read in a statement of alleged facts to justify the plea that has been entered and ask the accused to admit that those facts are substantially correct: R. v. Corkum (1984), 1984 ABCA 226, 64 A.R. 354 (C.A.). However, this procedure is not required by s. 606. In fact, s. 606(1.2) provides that the omission of the court to enquire into whether the accused understands that he or she is admitting to the essential elements of the offence and understands the nature and consequences of his or her plea does not affect the plea’s validity. Thus in the case at bar, the Crown’s failure to read in an agreed statement of alleged facts and to obtain Eizenga’s admission that those facts were substantially correct at the time he pled guilty did not, in and of itself, affect the validity of his plea.

[48] Eizenga alleges that his plea was conditional on an agreed statement of facts being worked out with the Crown and that no agreement was ever reached. He submits that as a result, his plea of guilt was equivocal and was not informed.

[49] However, there is nothing on the record that suggests that the guilty plea was ever predicated on there being an agreed statement of facts. There was never any guarantee that the statement of facts would be as Eizenga wanted it. Indeed, the parties had always contemplated that Eizenga may contest the facts at the sentencing hearing. At the court appearance on September 27, 2005, in Eizenga’s presence, Mr. Trudell informed the court that having an undisputed statement of facts was only an aspiration to be worked on by counsel after the plea was entered:

MR. TRUDELL: My friend [Crown counsel Mr. Forrester] and I and my associates will work diligently between now and then starting this afternoon on a statement of facts that will assist the Court. We hope that it becomes an agreed statement of facts and we’re going to be working towards that. Mr. Eizenga has indicated to me that his intention is to plead guilty – is that correct sir?

EIZENGA: Yes.

MR. TRUDELL: He’s indicating “yes” for the record. ... So I’m asking that it go to November 4th, plea will be entered on that day, facts will be put before you on that day – hopefully agreed and then we’re going to ask that it go further. [Emphasis added.]

[50] The appellant’s submission that his guilty plea was premised on the condition that the facts would be agreed upon is therefore unsupported by the record.

[51] Although Eizenga took issue with the Crown’s precise version of the facts two years later at the sentencing hearing, this does not rebut the presumption that, at the time that he pled guilty, he was properly informed and fully understood the nature of the fraud charge. Before Eizenga entered his plea, the charges were read to him. When an accused personally enters a plea, as Eizenga did in this case, it tends to demonstrate the unequivocal character of the plea: see R. v. T.(R.) at pp. 520-521; R. v. Eastmond, [2001] O.J. No. 4353 (C.A.), at para. 6; and R. v. Moser (2002), 163 C.C.C. (3d) 286 (Ont. S.C.), at para. 32. Where, as here, Eizenga was represented by counsel at the time of his plea, then in the absence of any unusual circumstances (such as a challenge to the competence or professionalism of trial counsel) the court may infer that counsel took the necessary steps to ensure that his client understood the nature and consequences of a guilty plea. See Eastmond at paras. 6-7; R. v. Dallaire, [2001] O.J. No. 1722 (C.A.), at para. 2; R. v. Thissen, [1998] O.J. No. 1982 (C.A.), at para. 6; and Moser at paras. 34, 37-39.

[52] Furthermore, as indicated earlier, the Crown’s allegation of fraud largely reflected Eizenga’s agreement with the OSC. Eizenga was certainly informed. At the time of his plea on November 4, 2005, he knew the Crown’s position on the facts; he was also aware that, in response to his request, changes to some of the details were being worked out between the Crown and Mr. Trudell, who was acting as his agent. On November 4, 2005, Mr. Trudell stated that he would send the defence’s proposed changes to the Crown. When Mr. Trudell delivered these proposed changes to the Crown, Crown counsel sent back a copy of the agreed statement of facts on January 20, 2006, incorporating all the changes that Mr. Trudell had requested on Eizenga’s behalf. Eizenga was then sent to get independent legal advice. Although Eizenga was aware that he could bring a motion to strike his plea, he never did so.

[53] At Eizenga’s sentencing hearing on June 12, 2007, the sentencing judge commented that the purpose of allowing Eizenga to obtain independent legal advice was not in relation to the guilty plea or the agreed statement of facts but to Canada Revenue Agency issues. In effect, the trial judge was saying that his original understanding that the plea was unequivocal was confirmed by correspondence between the Crown and defence as to the purpose for obtaining legal advice. Assuming that there was no evidence before the court as to the purpose for which Eizenga was sent for independent legal advice, there was no evidence that the purpose was to confirm the guilty plea. The presumption that the plea was unequivocal would therefore apply.

[54] In my opinion, however, nothing turns on the purpose for which Eizenga was sent for further legal advice. The fact that Eizenga sought and obtained further legal advice means that he was aware of the contents of the document that had been worked out. . While Eizenga would have us infer that he expressed disagreement to Mr. Trudell respecting the document, there is no evidence supporting this inference. Nor did he bring a motion to strike his plea although he was aware that this was one of his options.

[55] The effect of a plea of guilt entered with an indication that an agreed statement of facts is to come is discussed in R. v. Newman (1993), 12 O.R. (3d) 481 (C.A.). [^3] As in the case at bar, the appellant’s contention in Newman was that there was no consensus between himself and the Crown as to the scope and reach of the facts to which the guilty plea applied. The only issue was whether the plea was informed. In effect, the court placed the onus on the appellant of establishing two things: (1) that he did not appreciate the consequences of the actions of his trial counsel, and (2) that despite pleading guilty he did not accept as accurate a necessary factual foundation for the offence. The court held at p. 487:

If the appellant was deprived of the effective right to counsel, and if we were satisfied that his plea of guilty embraced a factual foundation that he was not prepared to accept for the purposes of the sentencing procedures, it would be a matter of concern to this court, with or without the Charter. If we were of the view that the sentencing procedures were so unsatisfactory that the appellant was deprived of a fair trial and the result was unreliable because the accused did not accept the agreed statement of facts as accurate, then the obvious remedy is to permit the appellant to withdraw his plea of guilty.

[56] In the end, the court was not persuaded that there was any lack of competence on the part of counsel for the accused. The court further held that an evidentiary threshold must be met in order to set aside a plea of guilt and the accused had failed to meet it. The court stated at pp. 490-91:

[H]e would have to swear that he would not have pleaded guilty to such a statement of facts had it been available to him prior to his plea. I think that the appellant was simply trying to improve on his situation…

[57] Eizenga does not meet either of the two criteria articulated by the Court of Appeal in Newman for setting aside a guilty plea. First, Eizenga makes no allegation that he was deprived of the effective assistance of counsel. Second, the evidentiary threshold required to set aside his plea of guilt has not been met. He has not filed an affidavit as fresh evidence stating that he would not have pled guilty to the agreed statement of facts put forward by the Crown had it been available to him prior to his plea, nor does the record support such an assertion. I would add that an accused’s bald assertion that he or she did not have a full understanding of the nature of the charges and consequences of entering a guilty plea will not suffice to set aside a guilty plea when it is not supported by the circumstances and the accused’s subsequent actions: see R. v. T.(R.).

[58] The jurisprudence which Eizenga has put forward illustrates the requirements in Newman. Negligent or improper conduct on the part of counsel for the accused is at the heart of four of the seven decisions cited by Eizenga in which the court permitted a guilty plea to be withdrawn. In R. v. Yarlasky (2005), 195 O.A.C. 188 (C.A.), defence counsel recommended a guilty plea and did not tell the accused that she had a possible defence to the charge against her. In R. v. N.C. (2001), 151 O.A.C. 249 (C.A.), the accused was charged with sexual interference; however, his counsel did not explain to him that by pleading guilty to inappropriately touching his granddaughter, he was admitting that his touching had a sexual purpose, a necessary element to the offence charged against him. Similarly, in R. v. Mitchell (1997), 97 O.A.C. 69 (C.A.), counsel did not explain the elements of intimidation to the accused prior to advising him to plead guilty. In R. v. Lamoureux (1984), 13 C.C.C. (3d) 101 (Que. C.A.), the appellant’s counsel pressured him to plead guilty. In a fifth decision, R. v. Rajaeefard (1996), 27 O.R. (3d) 323 (C.A.), the trial judge improperly pressured the accused to plead guilty.

[59] The case before us, however, is distinguishable in that ineffective assistance of counsel is not alleged and there was no pressure by the trial judge on Eizenga to plead guilty.

[60] The cases put forward by Eizenga to illustrate the second requirement, that there be a credible evidentiary basis on which to set aside the plea, are also distinguishable.

[61] In R. v. Yarlasky (1999), 140 C.C.C. (3d) 281 (Ont. C.A.), the accused pled guilty to defrauding a town of monies by failing to disclose a change of address which would have disentitled her to the benefits received. Immediately after her plea she added that she did not pick up the cheque intentionally and that she had not had the chance to change her address. The Court of Appeal allowed the accused’s appeal on the basis that her plea was not unequivocal and could not stand.

[62] Here, during the many months following Eizenga’s plea of guilty, he was well aware of the statement of facts that had been worked out between the Crown and Mr. Trudell. Although Eizenga considered bringing a motion to strike his guilty plea as Ms. Chiodo, who succeeded Mr. Trudell as counsel, confirmed in open court, he did not do so. Eizenga chose not to pursue an option he knew he had. Indeed, Eizenga’s comment to the author of the pre-sentence report a week before his sentencing hearing indicates that he accepted responsibility for his crime.

[63] In R. v. K. (S.) (1995), 24 O.R. (3d) 199 (C.A.), the accused pled guilty but had always maintained his innocence to the charges against him and steadfastly did so afterwards. That is not this case here. Eizenga admitted his guilt to the OSC and never refuted the veracity of the admissions made in the OSC Settlement Agreement. It was only at his sentencing hearing on June 12, 2007, that he made some submissions that contradicted the agreement. Even then, he did not say that his admissions to the OSC were untrue or explain why he was now taking a contrary position on the facts.

[64] Eizenga submits that the trial judge was not entitled to rely on the OSC Settlement Agreement in any way. Quite apart from the fact that the Crown’s statement of facts had incorporated all the changes that Eizenga and his counsel had put forward, Eizenga’s admission to certain facts at the sentencing hearing are sufficient to ground his guilty plea regardless of whether the OSC Settlement Agreement can be used in court (see below, “The Undisputed Facts on which Eizenga was Sentenced”). However, I will summarily address Eizenga’s four submissions relating to the OSC Settlement Agreement:

(1) Eizenga submits that he did not adopt the settlement agreement as a statement made by him but by both him and others for the purposes of settlement. However, most of the facts given in the agreement speak specifically to Eizenga’s personal actions and misrepresentations that he personally made. He therefore cannot be said to be making these statements on behalf of others.

(2) Eizenga points out that the OSC Settlement Agreement contains an explicit proviso that the facts contained in the agreement are admitted for the purposes of the OSC proceedings and not any other proceeding. I note that clause 47 of the OSC Settlement Agreement also forbids Eizenga from making “any public statement inconsistent with this settlement agreement.” Clearly, statements made in open court at a sentencing hearing are public statements. I also note that on a number of points Eizenga provides no explanation as to why his position on the facts now contradicts his position in the OSC Settlement Agreement.

(3) The agreement contained an exculpatory paragraph which appellant’s counsel characterizes as describing Eizenga’s intentions as well meaning and his actions as unintentional. The appellant’s counsel submits in his factum that the OSC Settlement Agreement contained an exculpatory paragraph that described Eizenga’s role as well meaning and his consequences as unintentional. However, he fails to cite which paragraph in the agreement this was. I can find no paragraph that can be described as exculpatory in this fashion. To the contrary, the OSC Settlement Agreement, read as a whole, leaves the inference Eizenga’s actions were intentional. In any case, the law with respect to fraud is that the accused’s belief that the conduct is not wrong or that no one will be hurt in the end affords no defence to a fraud charge. See R. v. Théroux, [1993] 2 S.C.R. 5.

(4) Eizenga submits that because the OSC has broad investigative powers to protect the public, such as the authority to compel testimony under oath, any evidence arising out of an exercise of the OSC’s powers should be inadmissible at a criminal proceeding and therefore Eizenga’s settlement agreement cannot be used in any way.[^4] This is a generic overbroad submission. The question of how an agreement can be evidence derived from the exercise of the OSC’s powers is not answered by Eizenga’s bald submission that the settlement agreement was a product of his “compelled cooperation” with the OSC. The agreement was signed by Eizenga and witnessed by his counsel. Apart from Eizenga’s bald submission, there is no evidence on the record to the contrary. The agreement was evidence of Eizenga’s prior agreement to certain facts, was used by him as the basis for his submissions and forms part of the evidentiary record respecting the validity of his guilty plea.

[65] I would hold that Eizenga has not discharged his burden of rebutting the presumption that his plea was unequivocal and informed.

iv. The sentencing hearing was fair

[66] I would also hold that the proceedings were fair. At the sentencing hearing, the trial judge provided Eizenga with adequate assistance as a self-represented litigant, and his decision not to engage in a further plea inquiry is of no import because overall the plea was valid.

[67] The assistance a trial judge is obligated to provide to a self-represented litigant is part of a trial judge’s larger duty to ensure that an accused person receives a fair trial. How far a trial judge needs to go in assisting an accused must be determined contextually, having regard to the nature of the charges, the sophistication of the litigant, whether the litigant has expressed a desire for assistance, the stage of the proceedings and the overall circumstances of the case. The overall question to be answered is whether the proceedings were fair.

[68] Eizenga alleges that the trial judge ought to have: (1) explained the meaning of a valid plea to him; (2) informed him that he had the right to lead evidence and make submissions; and (3) heard from Eizenga before concluding that he would not allow the plea to be withdrawn.

[69] My response to the first two submissions is: (1) Eizenga had legal counsel at the time he entered his plea and there is nothing on the record to support the submission that he did not understand the meaning of his plea; and (2) Eizenga was told at his court appearance on March 2, 2007, that he would have the opportunity to oppose the facts as read in by the Crown and he availed himself of that opportunity at the sentencing hearing on June 12, 2007.

[70] The third submission, namely that the trial judge ought to have heard from Eizenga before closing the door on his inquiry into the plea, requires more elaboration. In the absence of special circumstances, there are strong policy reasons for dismissing an accused person’s request to withdraw a guilty plea when the appropriate time for making such a request has clearly passed and there is no indication that the plea was invalid. A guilty plea is a waiver of the accused’s right to a trial: Korponay v. Canada (Attorney General), [1982] 1 S.C.R. 41, at p. 49; R. v. T.(R.). at p. 519. The Crown stops devoting resources to the file and the evidence is no longer fresh. In the absence of special circumstances, it would be prejudicial to the public’s interest in certainty, finality and the expeditious resolution of criminal matters to allow an accused to withdraw his plea: see R. v. Duong, 2006 BCCA 325, at paras. 9-10.

[71] Here the special circumstances alleged are Eizenga’s dispute with some of the facts in the agreed statement of facts. As discussed below, the trial judge did not err in concluding that there were sufficient undisputed facts to support each element of the offence of fraud and, as a result, the validity of the plea is not in doubt. As this court stated in R. v. T.(R.) at p. 525, “It would hardly serve the interests of justice to quash the convictions and permit the withdrawal of the guilty pleas based on an inadequate inquiry in the validity of the pleas at trial when, after a full inquiry in this court, their validity was established.”

[72] Eizenga did not ask the trial judge to withdraw his plea. Assuming that the trial judge ought to have heard from Eizenga before deciding to end his self-initiated inquiry into the plea, the proceedings that followed established the validity of the guilty plea. Overall, Eizenga’s right to a fair trial was not infringed.

v. The undisputed facts on which Eizenga was sentenced

[73] The respondent advises that the statement of facts that the Crown filed as an exhibit on March 2, 2007, and read into the record at the sentencing hearing on June 12, 2007, was an Agreed Statement of Facts that Crown trial counsel and Mr. Trudell had negotiated (“ASF”). Also within the exhibits is a document filed by Eizenga, titled, “Changes for the Disputed ASF With Supporting Documentation” (“the Changes Document”). The contents of this document details Eizenga’s point-by-point disagreements with the ASF.

[74] Eizenga wrote in the preamble of the Changes Document, “There are many points [in the ASF] that contain transactions that I do not contest, but the interpretations and characterizations of the factual transactions are not true.” In the Changes Document, if he agreed with a paragraph in the ASF he put OK beside it. For some paragraphs of the ASF, Eizenga partially agreed with the facts but added some qualifications. Eizenga’s oral submissions at the sentencing hearing on June 12, 2007, largely echo what he expressed in the Changes Document.

[75] The trial judge heard submissions from both parties with respect to the facts, and found that “[t]he elements of the offence pleaded to are clearly apparent.”

[76] I have compared the ASF with both Eizenga’s statements in the Changes Document and the transcript of his submissions at the sentencing hearing. My review of these submissions and the record as a whole leads me to the same conclusion as the trial judge, namely that there were still enough undisputed facts to satisfy every element of the fraud offence to which Eizenga pled.

[77] Below is a list of a number of major facts that Eizenga did not dispute at the sentencing hearing. I have also noted certain submissions that Eizenga made with respect to the facts and will deal with those separately.

Saxton Group’s Corporate Structure

• Eizenga incorporated at least 40 Ontario corporations. At least 34 of them distributed securities to the public, relying on either the “seed capital” prospectus exemption or the “private company” prospectus exemption. (ASF paras. 7, 17, 18)

• After incorporating these 40 companies, Eizenga maintained majority control of each corporation and passed bylaws exempting them from the audit requirements of the Business Corporations Act, R.S.O. 1990, c. 16, (ASF para. 9)

• He was the sole officer and shareholder of Saxton LMD from December 1995 to August 1997, when his wife became president and he transferred his interest in the company to her. Eizenga remained the lone director of Saxton LMD. (ASF para. 11)

• Many of the Saxton companies that distributed securities had a variation of “Saxton Export” as their name. For each of these Saxton Export companies, Eizenga passed and signed bylaws that restricted the information that shareholders could access. For example, he signed a bylaw that stated: “No shareholder shall be entitled to discovery of any information respecting any details or conduct of the Corporation’s business or affairs”. (ASF para. 14)

• The Saxton companies never held any shareholder meetings prior to the OSC’s intervention in late 1998. (ASF para. 16)

• In 1998, Eizenga told the OSC that he was the president of the Saxton Group and managed day-to-day operations. (ASF para. 29)

• Eizenga signed Management Service Agreements on behalf of both the Saxton Export companies and Saxton Investments. These agreements allowed investors’ funds that were invested into the various Saxton Export companies to be pooled into Saxton Investments. Eizenga had the authority to manage the business affairs of each Saxton company. His powers included maintaining bank accounts, making investment decisions, raising funds, and loaning funds. (However, in the Changes Document and at the sentencing hearing, Eizenga argued that under the Management Service Agreements, it was Saxton Investments, (and not him personally,) that managed the funds.) (ASF para. 38)

Breaches of Securities Legislation

• Eizenga did not dispute two of the four ways[^5] in which the Crown said he breached Ontario securities law, namely: (1) that he exploited the Seed Capital Exemption 36 times over 40 months, when the law only permitted him to use it once every 12 months; and (2) that the majority of Saxton investors did not qualify for “sophisticated investor” status. (ASF para. 25)

• Eizenga told a chartered accountant that he had obtained a legal opinion on the seed capital prospectus exemption. This was in fact not true. (ASF para. 17)

• Saxton Group advertised its investments via a telephone advertising campaign using a toll free number and a paid telephone solicitor, contrary to Ontario securities law, which prohibits advertising of securities distributed under the seed capital exemption. Eizenga admitted that he was the signatory of one of the cheques paying the telephone solicitor. (He only disagreed that Saxton ever advertised in a magazine.) (ASF para. 53)

Misrepresentations Regarding the Security and Eligibility of the Investments

• Some of the investments that Saxton offered were represented as Guaranteed Investment Certificates (“GICs”). Financial products known as GICs are commonly available in Canada and are insured by the Canadian Deposit Insurance Corporation (“CDIC”). They must meet the CDIC’s eligibility requirements for coverage in order to be considered a GIC. Saxton’s GICs were not insured by CDIC. (The only disagreement that Eizenga expressed with respect to these facts was a bald assertion that he did not know that investors were misled. He said that Saxton’s “GICs” were “guaranteed” by the company and that he never represented Saxton’s product as being insured by the CDIC.) (ASF paras. 40-44)

• Saxton mailed literature to investors asserting that the investments that Saxton sold were RRSP eligible. Investors received statements from the RRSP trustee bank, Laurentian Bank, which stated that the domestic content of the investment was 100% Canadian, even though the vast majority of the content was offshore. This gave investors the false impression that their money was still in Canada. (At sentencing, Eizenga stated that it was only later established that Saxton was not an RRSP eligible investment because most of its business activities were off shore. In other words, he claimed that he did not know that Saxton’s investments were not RRSP eligible. Eizenga’s submission was belied by the fact he did not dispute that he once told Rob Davies that “once they [the Saxton companies] go public it would correct the RRSP issue. If they went public before Revenue Canada looked at it, it would be OK.”) (ASF paras. 49, 51-52)

• Saxton agreed to buy surety bond insurance coverage from Liberty Insurance, but Saxton never paid the insurance premium. Liberty Insurance sent a cancellation notice to Saxton dated April 5, 1998. Eizenga proof-read and signed a letter dated April 14, 1998, that was sent to existing investors, stating: “We have successfully negotiated with Liberty Insurance to issue Surety Bonds that fully guarantee our capital base and provide an additional level of security to shareholders.” This letter was sent out to all existing investors. (Eizenga’s only dispute with this fact was the Crown’s additional claim that the letter was used as a sales tool to solicit new investors. However, Eizenga admitted that neither he nor Saxton ever informed Saxton’s investors or sales representatives that the surety bonds had been cancelled.) (ASF paras. 74-75)

• In the spring of 1998, Eizenga met with a prospective investor named John Bradford, and told Mr. Bradford that Saxton’s investment products were insured by Liberty Insurance Company. Mr. Bradford invested $34,689.78. (ASF para. 76)

Other Misrepresentations

• In the Changes Document and at sentencing, Eizenga did not dispute the statement at ASF para. 55 that “the funds used to pay interest and dividends to investors came from the invested funds and not from any revenues generated by a Saxton business.” His only disagreement was the Crown’s suggestion that all of the Saxton businesses were unprofitable. Eizenga argued instead that “some divisions were still at the capital intensive phase [unprofitable] and other divisions were earning a profit”.

• Eizenga also did not explicitly deny that he paid off investors using other investors’ money (ASF para. 62). He only took issue with the Crown’s assertion that none of these payments to investors were from profits or revenue earned by any Saxton business venture.

• Investors received quarterly statements from the Saxton Group indicating the amount they had invested and the purported increase in value of their investments. For example, the last Saxton quarterly statement was sent out on June 30, 1998, when Eizenga was Chairman of the Board and majority shareholder. The total value of the “Opening Balance” listed in this quarterly statement, indicating the value of all of the investments at the start of the quarterly period, was $43,028,165.76. The next column showed the increase in market value over the quarterly period: $1,760,542.98. The final column showed the new market value of the investments, at $45,109,528.80. The quarterly statement therefore suggested a 3.95% increase in value over the course of the quarterly period, or an annual rate of 15.81%. However, there were no financial records of any revenue generation by the Saxton operations, and thus no means to establish the net results given in these quarterly statements. The increase was calculated by a computer at an interest rate that the investors had been promised. (At sentencing, Eizenga did not dispute the numbers of the last quarterly statement, or that it was delivered to investors. His only disagreement was that he had control over sending out the quarterly statements. He claimed that he was just 1 of 6 board members, and that he had limited duties and no voting rights. He also claimed that some divisions of Saxton were profitable.) (ASF paras. 62, 65)

• Eizenga did not dispute that he took responsibility in the OSC Settlement Agreement for “things that I said to people and for things that sales representatives under Saxton [said]”. Specifically, he did not disclaim making the following misrepresentations to investors:

1. That the Saxton investment was guaranteed;

2. That the government guaranteed the investment;

3. That the Laurentian Bank held their money; and

4. That it was guaranteed by surety bonds or gold deposits. (ASF para. 66)

• At sentencing, Eizenga admitted that he told sales representatives that Saxton had an interest in gold, even though Saxton’s interest was really in unrefined gold dore (which is worth considerably less than refined gold). He argued only that this representation was “not meant to be misleading” because Optimax Securities Corporation, the company from which he was getting the gold dore, had also referred to it as just “gold”. (I note, however, that the letters from Optimax Securities Corporation that Eizenga filed as exhibits at the sentencing hearing clearly state that the interest was in “gold dore”). In any case, it was not disputed that Eizenga was aware that Saxton did not have an interest in actual gold, and that he did not attempt to clarify this with his sales representatives. (ASF 78-82, 152)

The Use of Funds

• At sentencing, Eizenga maintained that the gross amount raised from investors was $37 million, not $40 million as stated by the Crown. Of this amount, $5.145 million was used to pay administrative expenses and commissions to salespeople, and about $23 million went directly back into “operations”. Of the $23 million, $17.6 million was transferred from Saxton Investments to a company owned by his deceased co-accused James Sylvester. Eizenga never explained why these funds were transferred other than to say that the funds were transferred pursuant to an agreement he had with James Sylvester. I note that this admission illustrates that Eizenga had control over the funds of Saxton Investments. (ASF paras. 84-85)

• $3.8 million was used for operating various Caribbean businesses in which Saxton had an interest (i.e. Sussex Group Ltd.). Notably, Eizenga agreed that $5.8 million was transferred from Saxton Investments in Canada to Saxton SA in the Bahamas. (ASF paras. 86-87, 89)

• Only a small portion of the funds Saxton collected was given back to investors in the form of interest payments, dividends or redemptions, although the exact amount of the returned funds was disputed. (ASF para. 57 stated that investors got back $4.5 million through dividend, interest and redemption payments. Eizenga disagreed, and referred the court to a table stating that while $4.5 million was redeemed through Saxton Investments, $5.7 million was redeemed overall.)

• Eizenga wrote out a large number of cheques from the Saxton Investments bank accounts for personal expenses including home furniture, mortgage payments, house renovations and improvements, landscaping, swimming pool maintenance, babysitting costs and real estate transactions. He also made cheques out for cash and to himself (ASF paras. 111-112). However, he submits that he was entitled to income from the corporations.

vi. Eizenga’s disagreements with the ASF do not affect his legal liability

[78] Eizenga’s disagreements with the ASF, as expressed in the Changes Document and in his oral submissions at the sentencing hearing, can be grouped into five broad categories: (1) he acted on the legal advice of his lawyers; (2) he believed that no one would be hurt by his conduct; (3) some of the investors’ funds went into a legitimate operating business in Cuba that made money; (4) the corporate entity did the acts in question and not him personally; and (5) he was entitled to withdraw personal income from the corporations. None of these disagreements draw into question the validity of his guilty plea.

[79] First, it was not open to Eizenga to advance what amounts to a mistake of law defence based on the legal advice that he received. It is well established that reliance on legal advice is a mistake of law which affords no defence to the commission of an offence: R. v. Pea (2008), 93 O.R. (3d) 67 (C.A.), at para. 17; R. v. Pontes, [1995] 3 S.C.R. 44, at paras. 33-34; R. v. Kotch (1990), 1990 ABCA 348, 61 C.C.C. (3d) 132 (Alta. C.A.), at p. 138; and R. v. Stucky (2009), 2009 ONCA 151, 240 C.C.C. (3d) 141 (Ont. C.A.), leave to appeal discontinued at [2009] S.C.C.A. No. 186. Thus, Eizenga’s reliance on legal advice concerning the use of the seed capital exemption or the RRSP eligibility of the investments was no defence.

[80] Given that Eizenga was in the business of finance and received an education in the area, his bald assertions—for example, he claims that he did not know investors would be misled into thinking GICs were guaranteed by the CDIC like the ones sold by banks across Canada—have no air of reality.

[81] Second, Eizenga’s assertion that he believed that no one would be hurt by his conduct is no defence, because a subjective intent to mislead is not an essential element of the offence of fraud. Instead, all that is required is subjective knowledge of the prohibited act, and that the act could have as a consequence the deprivation of another. In Théroux and R. v. Zlatic, [1993] 2 S.C.R. 29, the Supreme Court of Canada considered the essential elements of fraud under s. 380(1)(a) of the Criminal Code. The Court held that the actus reus of fraud is established by proof of: (1) the prohibited act, be it an act of deceit, a falsehood or some other fraudulent means; and (2) deprivation caused by the prohibited act, which may consist in actual loss or the placing of the victim’s pecuniary interests at risk. What constitutes a lie, deceitful act, or other fraudulent act is judged on the objective facts by reference to what a reasonable person would consider a dishonest act: Théroux at p. 16. With respect to the mens rea, the Court 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 pp. 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.” Recklessness as to the consequences of the prohibited act also attracts criminal responsibility: Théroux at p. 20. Furthermore, subjective awareness can be inferred from the act itself, barring some explanation casting doubt on such inference: Théroux at p. 18.

[82] From the view of a reasonable person, Eizenga’s acts described above were dishonest. Eizenga’s subjective awareness of the consequences can be inferred from the acts themselves. At the very least they disclose a recklessness as to how his representations would be perceived by investors. These misrepresentations led to the deprivation of hundreds of investors who transferred their money to Saxton in the mistaken belief that their investments were safe, when they were not.

[83] Third, at the sentencing hearing Eizenga filed various documentary exhibits that detailed what happened to Saxton’s Cuban operations (i.e. Sussex Group Ltd.) after he left Saxton in 1998. In 2002, the court appointed an Interim Manager, Horwath Orenstein Consultants Inc. (“HOCI”), to oversee a restructuring of Sussex Group Ltd. By 2006, pursuant to directions from the court, HOCI had sold off most of Sussex Group Ltd.’s assets and seemed to be preparing a wind-up of the company. Eizenga submits that these documents showed that Sussex Group Ltd. “continued to operate as a profitable business”. He argues that the Saxton Group’s Cuban operations were “not a Ponzi scheme”, that the funds from Saxton’s investors “were neither exhausted nor lost” and therefore that “[t]he basis for the guilty plea did not exist.”

[84] I would reject these submissions. Eizenga’s assertion that the Saxton Group had invested money in Sussex Group Ltd. in Cuba, and that—years after Eizenga had committed the alleged fraud—Sussex Group Ltd. was profitable under the direction of a court-appointed interim manager does not absolve him of the fraud charge.

[85] Even apart from the fact that Eizenga’s assertions that Saxton investors’ funds can all be traced to Sussex Group Ltd. is belied by the Interim Manager’s report[^6] and that Sussex Group Ltd. was at some time profitable,[^7] if an accused uses deceit, falsehood or other fraudulent means to deprive a victim of property or places the victim’s pecuniary interests at risk, what the accused later does with the victim’s property is immaterial to the determination that fraud has been committed.

[86] The facts that Eizenga admitted to at sentencing confirm that he made misrepresentations and committed various acts of deceit in order to induce investors into giving him their money. He lied about the nature of Saxton’s financial products and the risks associated with them. He gave investors the false impression that they were putting their savings into safe and insured investments. They extended their money to Saxton and suffered very real losses. Nothing that Eizenga has said with respect to Sussex Group Ltd. draws into question whether the facts he has admitted to substantiate the elements of fraud.

[87] Eizenga’s fourth type of disagreement with the Crown’s facts is that he is not personally liable for the actions of the corporate entities. However, this submission is premised on the mistaken belief that the corporate veil cannot be pierced. It is well established that the court will not enforce the separate legal status of a corporation if to do so would be too flagrantly opposed to justice: Kosmopoulos v. Constitution Insurance Co., [1987] 1 S.C.R. 2, at p. 10. More particularly, the courts will disregard the separate legal personality of a corporate entity where it is completely dominated and controlled and being used as a shield for fraudulent or improper conduct: Transamerica Life Insurance Co. of Canada v. Canada Life Assurance Co. (1996), 28 O.R. (3d) 423 (Ct. (Gen. Div.)), at pp. 433-434. Hence, where the accused is the directing mind of a corporate entity and uses the corporation to commit fraudulent acts, as in the present case, the court will not hesitate to pierce the corporate veil. See e.g. Théroux at pp. 11-12; R. v. Guay, [1999] O.J. No. 3494 (S.C.), at para. 72.

[88] Finally, Eizenga argues that pursuant to corporate by-laws and agreements he had with the Saxton companies, he was entitled to use the funds he had obtained from investors by fraudulent misrepresentation. He also argues that the funds were so comingled with legitimate business funds that they lost their identity. These submissions are not based on any legal authority and fly in the face of common sense. Eizenga cannot use the manner in which the money was processed to get around the fact that he benefitted personally from the illegal scheme he devised. The individual investors’ funds did not have to be traced. Eizenga’s misrepresentations caused investors who trusted him to lose their money.

[89] The trial judge was entitled to reject Eizenga’s submissions as to the legal effect of his acts and to characterize those submissions as nothing more than extreme rationalization and a self-serving interpretation of the facts. There is no credible evidentiary basis for the appellant’s submission that there is reason to doubt Eizenga’s guilt on any essential element of the charge. As in Newman, I am of the opinion that at the time of his sentencing hearing, Eizenga was simply trying to improve on his situation.

[90] For the reasons I have given I would dismiss the appeal from conviction.

II. The Sentence Appeal

[91] A restitution order is part of a sentence. Absent an error in principle, failure to consider a relevant factor, or an overemphasis of the appropriate factors, an appellate court will only intervene to vary a sentence imposed at trial if the sentence is demonstrably unfit: R. v. C.A.M., [1996] 1 S.C.R. 500, at para. 90. In the context of a restitution order, the amount ordered to be paid as compensation cannot be excessive or inadequate: R. v. Devgan (1999), 136 C.C.C. (3d) 238 (Ont. C.A.), at paras. 23-28.

[92] If the court concludes that the trial judge has erred in principle, for example, by failing to consider a relevant factor, the court must decide whether the overall sentence is nevertheless fit and proper: see e.g. R. v. Kakekagamick (2006), 211 C.C.C. (3d) 289 (Ont. C.A.), at paras. 73-74. If, as a result of the error, the sentence is no longer fit and proper, the court may vary the sentence within the limits prescribed by law, pursuant to s. 687(1) of the Criminal Code.

[93] Specific reasons for making a restitution order assist the court in determining whether a trial judge has taken all relevant factors into account and whether the sentence is fit and proper. The absence of specific reasons for making a restitution order may lead to the conclusion that the restitution order was imposed as a mechanical afterthought to the sentence of imprisonment and that the overall sentence amounts to excessive punishment. See R. v. Siemens (1999), 136 C.C.C. (3d) 353 (Man. C.A.).

[94] In this case the trial judge gave no specific reasons for imposing a restitution order. The order he imposed was for the full amount in an exhibit filed at the sentencing hearing. This amount was $35,639,395.05.

[95] Eizenga submits that the restitution order should be quashed because the trial judge failed to consider a relevant factor, namely his ability to pay restitution, and the amount ordered undermines his prospects for rehabilitation. In addition, Eizenga submits that the order was disproportionate to his involvement in the fraudulent scheme as he transferred $17.6 million to the deceased co-accused James Sylvester. Finally, Eizenga submits that the trial judge failed to consider whether, having regard to his sentence of imprisonment, the overall sentence was fair.

[96] I would agree with these submissions. Having regard to the trial judge’s errors in principle, I would hold that the restitution order is excessive, that it renders the overall sentence unfit and that it must be set aside. I must, however, go on to consider whether, as part of a fit sentence, a restitution order is nevertheless appropriate and, if so, what amount should be ordered.

[97] The broad objectives of a restitution order are discussed in R. v. Zelensky, [1978] 2 S.C.R. 940, and Devgan at para. 26. These objectives include emphasizing the sanction imposed upon the offender, making the offender responsible for compensating loss to the victims, preventing the accused from profiting from crime, and providing a convenient, rapid and inexpensive means of recovery for the victim. A restitution order is appropriate where the amount that the victims have lost is capable of ready calculation. Conversely, a restitution order is not appropriate where the amount the victims have lost is uncertain and requires the court to interpret written documents or unravel involved commercial transactions. It is also inappropriate where there is a serious contest on legal or factual issues relating to restitution.

[98] At his sentencing hearing, Eizenga stated that the amount raised from investors, the victims of the fraud, was $37 million. I would accept this statement and would hold that, on Eizenga’s own admission, the amount lost by the victims of the fraud is not uncertain.

[99] Among the factors to be considered in deciding whether to make a restitution order are Eizenga’s plea of guilt, the custodial portion of his sentence, the principle of rehabilitation, the magnitude of the fraud, whether it involved a breach of trust, his responsibility for the crime, and his ability to pay, which includes his assets, education and ability to earn income,

[100] As I have indicated, Eizenga’s plea of guilt was valid although he sought to minimize his participation in the crime; the custodial portion of his sentence of eight years was not appealed; he has no prior criminal record and his prospects for rehabilitation appear good; the magnitude of the fraud is at least $37 million; and Eizenga committed a breach of trust.

[101] I would agree with Eizenga’s submission that having regard to the fact that he transferred $17.6 million to his deceased co-accused, James Sylvestre, a restitution order holding Eizenga responsible for the entire $37 million lost by investors would be disproportionate to his involvement in the fraudulent scheme. Eizenga did, however, retain control over $19.4 million.

[102] Eizenga submitted that he should not be responsible for any of the administrative expenses he incurred in furtherance of his illegal scheme, such as salaries and commission paid to his employees. I would not give effect to this submission. It is not Eizenga’s net profit, or how good a manager he was of the money he obtained by misrepresentation, that is determinative of his responsibility. It is the amount of his responsibility for investors’ loss.

[103] Eizenga also submits that he has no money and no ability to pay restitution. The court has very little evidence concerning Eizenga’s ability to make restitution. The pre-sentence report indicated that he was doing periodic consulting work. Eizenga told the trial judge that as a result of the OSC proceedings he had been barred from working in the capital markets for 22 years. He referred to financial hardship and difficulty in obtaining any kind of employment, and stated that he was an undischarged bankrupt. Even accepting Eizenga’s submission, ability to pay is but one factor to consider in making a restitution order. It is not a precondition to making an order.

[104] The decisions on which Eizenga relies in support of his submission that no restitution order should be made on account of his inability to pay, such as R. v. Biegus (1999), 141 C.C.C. (3d) 245 (Ont. C.A.), do not involve a breach of trust. Indeed, in R. v. Yates (2002), 2002 BCCA 583, 169 C.C.C. (3d) 506 (B.C.C.A.), where an egregious breach of trust was involved, the court ordered restitution although there did not appear to be any likelihood of repayment.

[105] Recently in R. v. Castro, 2010 ONCA 718, this court had occasion to discuss two important factors that should be considered when deciding whether to impose a restitution order. They are the nature of the offence and, when money has been taken, what has happened to the money.

[106] Like Castro, the nature of the offence in the case at bar was a fraudulent taking of money that involved a breach of trust. The paramount consideration in cases involving breach of trust is the claims of the victims including the impact of the breach of trust on them: see R. v. Fitzgibbon, [1990] 1 S.C.R. 1005, at pp. 1014-15. In Castro, this court stated at para. 30:

In imposing a sentence where the offender has used his or her position to commit a breach of trust, the primary considerations are the protection of the public, general deterrence and the repudiation of the conduct of which the offender was found guilty. Relevant factors include the length of time over which the conduct took place, whether the offence was a sophisticated and well planned scheme, the amount involved, and, most importantly, the impact of the offender’s conduct on the victims. The secondary considerations are specific deterrence, rehabilitation and any mitigating circumstances such as a plea of guilty or co-operation with the authorities (in tracing the funds): Scherer [(1984), 16 C.C.C. (3d) 30 (Ont. C.A.)], per Martin J.A. at para. 34. [Emphasis in original.]

[107] In R. v. Wilder, 2004 BCSC 644, aff’d 2008 BCCA 370, the accused defrauded the Canadian government out of $38 million in taxes. The trial judge sentenced Wilder to make restitution in the amount of $5 million after noting that “the accused has been very careful to divest himself of all of his assets”, making tracing of the funds difficult. The amount of restitution ordered was not based on any specific tracing of profits but instead was calculated to broadly reflect Wilder’s degree of criminal responsibility for the damages suffered by the victim of his fraud. In upholding the restitution order, the British Columbia Court of Appeal found that the trial judge had correctly considered the egregious nature and magnitude of the frauds, Wilder’s means and ability to pay, and the fact that Wilder had personally received some of the missing $38 million.

[108] A similar approach should be taken here, since, like Wilder, the accused was the mastermind of a fraud, the amount of loss to the victims is ascertainable and the accused received some of the defrauded money, but actual tracing of individual investors’ funds is not possible due to the manner in which Eizenga dealt with those funds. In such situations, a restitution order may be made in an amount that generally reflects the culpability of the accused without slavishly relying on tracing or a strict calculation of the accused’s enrichment (as long as the amount ordered does not exceed the amount lost by the victims). This is in keeping with the principle that a restitution order is part of a sentence, and should not serve to displace the civil remedies necessary to ensure full compensation to victims: R. v. Zelensky, [1978] 2 S.C.R. 940; Devgan at para. 26.

[109] Eizenga committed a sophisticated well-planned breach of trust over an extended period of time that defrauded investors out of $37 million. As his counsel concedes, “There is no doubt that Saxton investors suffered greatly.” Thus, the primary consideration in this case is the protection of the public, general deterrence and repudiation of Eizenga’s conduct from which he personally benefitted. For example, Eizenga does not dispute spending at least $700,000 from Saxton accounts on expenses related to a residence in Burlington where he and his wife lived,[^8] plus purchasing at least one Porsche, two Mercedes, one Dodge Ram truck, a boat and two jet skis.[^9]

[110] As in Wilder, Eizenga alleges that he cannot afford to pay as he has disposed of all the money. At the same time, the ultimate disposition of funds, including $5.8 million that Eizenga admits transferring from one of his Canadian companies, Saxton Investments, to another of his companies, Saxton SA in the Bahamas, is not known. The funds have been so co-mingled that tracing is impossible. Eizenga’s claim that he is unable to earn sufficient income to make any restitution and his bald assertion that he has no assets begs the question of what happened to the money. A restitution order, which survives bankruptcy, is the only realistic way in which the victims will recover anything. I would hold that a restitution order is appropriate and, as part of a fit sentence, I would order restitution in the amount of $20 million. I believe this amount best reflects Eizenga’s culpability in the fraud based on the factors discussed above.

[111] Accordingly, I would grant leave to appeal sentence, allow the appeal as to sentence, set aside the restitution order in the amount of $35 million and, in its place, substitute an order for restitution in the amount of $20 million.

[112] I thank both counsel for their thorough and very helpful submissions.

RELEASED: Feb. 9, 2011

“KMW” “Karen M. Weiler J.A.”

“I agree John Laskin J.A.”

“I agree S.T. Goudge J.A.”

[^1]: The name “The Saxton Group” was a business name registered under Saxton Investments Ltd.

[^2]: Counsel for Eizenga asserts that he was not present in court when the reference to obtaining independent legal advice was made. That was not the case.

[^3]: In Newman, Newman pled guilty to one count of conspiring to import cannabis resin. At the plea hearing, in support of the guilty plea, the Crown filed a memorandum summarizing its proposed evidence at trial. The memorandum contained a number of allegations that Newman had expressly told his defence counsel that he would not admit. Crown counsel advised the court that the memorandum was “subject to some probable finessing” by the two parties between the date of the plea and the date of the sentencing hearing. Defence counsel responded by stating:

Yes, sir. I might add for the record, sir, that we would be—in the interim period, of course, we will come up with a concise, precise statement of facts on this particular count that we’ll both put before you. There are certain things that are in issue. But I think by filing that [the memorandum] as an exhibit, that will be sufficient for a conviction to be registered today, sir, or the finding today.

Defence counsel reviewed the Crown’s proposed statement of facts with Newman and Newman expressly instructed him that he would not acknowledge certain allegations. The next day, defence counsel had a meeting with Crown counsel, who took a “take it or leave it approach” and said that he was not prepared to vary the statement of facts. Defence counsel swore that he believed he had advised Newman of this, but Newman provided no further instructions. Defence counsel also swore that it was his best judgment that Newman should still plead guilty, because he was concerned that Newman would not make a good witness if there were to be a trial. He also felt that if Newman pled guilty, he would likely receive a low penitentiary sentence because the pre-sentence report was positive.

Defence counsel signed the agreed statement of facts on behalf of Newman. The agreed statement of facts did not contradict the Crown’s memorandum but indicated that Newman was a more active participant in the conspiracy than the memorandum suggested. At the sentencing hearing, defence counsel began to take issue with some of the matters in the agreed statement of facts. The Crown interjected and said that “the record must be clear that the facts as alleged throughout the agreed statement of facts are facts that are agreed the Crown could prove beyond a reasonable doubt and are the facts that are before this court in terms of the standard” in [R. v. Gardiner, [1982] 2 S.C.R. 368](https://www.minicounsel.ca/scc/1982/30). Defence counsel indicated he was content.

[^4]: I note that the Securities Act, R.S.O. 1990, c. S.5, does not explicitly state that evidence gathered by the OSC is inadmissible at a criminal proceeding. However, s. 17(3) of the OSA provides:

Without the written consent of the person from whom the testimony was obtained, no order shall be made under subsection (1) authorizing the disclosure of testimony given under subsection 13(1) [the OSC’s investigative powers under] to,

(a) a municipal, provincial, federal or other police force or to a member of a police force; or

(b) a person responsible for the enforcement of the criminal law of Canada or of any other country or jurisdiction.

The cases cited by the appellant discuss the broad investigative powers of the OSC, but otherwise do not support the idea that evidence gathered through an exercise of OSC investigative powers is inadmissible at a criminal proceeding.

[^5]: The two alleged breaches with which Eizenga takes issue are: (1) that he gave inadequate disclosure of information about his companies to his investors; and (2) that the Saxton Group incurred considerable promotional and sales expenses, and paid out 5% commissions to sales representatives. Eizenga claims that all new investors had to sign a waiver stating that they had read the Offering Memorandum. He also claims that the Saxton companies exploiting the seed capital exemption did not pay out commissions, because any commissions actually came from the Saxton Group’s management company, Saxton Investments Ltd.

[^6]: I note that the Fifteenth Report of the interim manager of Sussex Group Ltd. (dated August 31, 2006, and filed by Eizenga at the sentencing hearing) reports that the Saxton Group was a creditor of Sussex Group Ltd. only in the amount of $6,744,000.00. This does not nearly account for the total amount that was taken from Saxton’s investors.

[^7]: Eizenga continuously stated at the sentencing hearing that Saxton’s Cuban operations (i.e. Sussex Group Ltd.) were legitimate and were running at a profit. In support of this claim, he filed as exhibits the Interim Manager reports prepared by HOCI from 2002 to 2006. However, HOCI’s reports all unambiguously characterize the financial and business affairs of Sussex Group Ltd. as being in confusion and disarray when HOCI took over as Interim Manager. In the first Interim Manager’s Report, dated April 26, 2002, HOCI wrote: “There appears to have been very limited transparency, responsibility or accountability in respect of the financial operations and management of the Sussex business. ... The businesses are grinding to a halt. Concerns about the misdirection of Sussex funds and assets and inappropriate use of authority have prevailed.”

In examining the company’s accounting records for the purpose of the Stage One Review Report, HOCI found a number of large and inadequately documented transactions, such as a “physical transfer” of $1.2 million in cash from Cuba to Canada and large cash transfers between Sussex personnel. HOCI wrote: “Given the various transfers of money and the large number of cash transactions, it is very difficult to trace the ultimate disposition of the funds.” Furthermore, a document titled, “Sussex Group Limited: Draft Summary of Statements of Operations and Deficit” showed that the company ran at a net loss from at least July 1997 (no earlier records were filed) to September 1998.

[^8]: Eizenga admits making a deposit of $50,000 and a further payment of $477,783.21 towards the Burlington residence, using cheques from Saxton Investments. He further made mortgage payments totalling $113,091.04 from Saxton Investments and Saxton LMD accounts. Finally, he admitted to spending $14,459.50 on bedroom furniture and $113,480.70 was spent on decorations on the Britannia residence and some Saxton offices (ASF paras. 117-120). This totals $768,814.45. The lower $700,000 figure compensates for funds spent on the Saxton offices, unrelated to the Burlington residence.

[^9]: The ASF provides no valuation for these properties.