COURT OF APPEAL FOR ONTARIO

CITATION: R. v. McGill, 2016 ONCA 139

DATE: 20160222

DOCKET: C60340

Gillese, Watt and Tulloch JJ.A.

BETWEEN

Her Majesty the Queen

Appellant

and

Terrance McGill

Respondent

Benita Wassenaar, for the appellant

Frances Brennan, for the respondent

Heard: February 5, 2016

On appeal from the sentence imposed on March 20, 2015 by Justice Johanne N. Morissette of the Superior Court of Justice, sitting with a jury.

ENDORSEMENT

[1] This is a Crown appeal against sentence.

Background in Brief

[2] Terrance McGill (the "respondent") was a mortgage broker, operating a mortgage business called TA McGill Mortgage Services Inc. in Sarnia, Ontario. Beginning in August 2005 and for several years thereafter, he participated in a Ponzi scheme. Investments in the scheme totalled $3,418,550 Canadian and $250,000 U.S. With the possible exception of $200,000, the funds were not used for investment purposes.

[3] John Paul Baron was the mastermind behind the scheme. He orchestrated it and took the primary benefit of it. He attracted and advised the first two investors, Lucio Sandrin and Ross Montagano. Sandrin and Montagano were the only victims who paid money directly to Baron.

[4] The respondent's reputation in the community enabled him to recruit a large number of "investors" into the scheme. They were told that they could earn high interest rates by investing in a company called Forex Baron. The monies obtained were transferred between accounts controlled by the respondent, the respondent's wife and Baron. The victims received "interest payments" to sustain the ruse. Although the extent of the respondent's gain is unclear, at a minimum he earned fees on mortgages that several victims took out in order to fund their investments.

[5] The scheme collapsed in June 2007 and payments to the victims ceased. They received a letter dated June 20, 2007 from Baron saying payments were being postponed because funds had been frozen overseas. The respondent and Baron met with the victims at a Holiday Inn and required them to hand in their original documents and sign new agreements. Various letters and emails were sent to the victims in an effort to keep them quiet.

[6] In April 2009, the respondent wrote to the victims urging them to sue Forex Baron and "James Johnson", a bogus investment manager. Even after the collapse, funds were obtained from additional victims.

[7] The offences have had a significant impact on the lives of the 22 victims. Several lost their homes. Some have declared bankruptcy and others have had their retirement years ruined.

[8] The respondent was charged with 28 counts of fraud over $5,000. He was acquitted on the three counts that related to Sandrin and Montagano and convicted of the remaining 25 counts.

[9] The sentencing judge found that the respondent entered into the scheme "for pure greed", that he aided and abetted by "covering up" the fraudulent scheme, and that the offences have had a horribly devastating impact on the lives of the many victims and their families. She also noted that the offences were very serious and a breach of trust.

[10] The sentencing judge described the respondent as being a victim of Baron and imposed a 23-month conditional sentence. She also made restitution orders totaling over $2 million.

[11] The respondent has served ten and a half months of the conditional sentence.

[12] The Crown seeks leave to appeal against sentence. It submits that the sentencing judge erred in principle and that the sentence imposed was demonstrably unfit. It asks for the imposition of a penitentiary sentence in the range of four to five years.

ANALYSIS

[13] In our view, the sentencing judge erred in principle, that error had an impact on the sentence imposed and the sentence is demonstrably unfit.

[14] The sentencing judge erred in principle in characterizing the respondent as a victim. That characterization is inconsistent with the jury's verdict. In convicting the respondent on 25 of 28 counts, it is implicit that the jury rejected the respondent's evidence that he thought the investments were legitimate.

[15] In holding that the 23-month conditional sentence is demonstrably unfit, we echo the comments of this court in R. v. Dobis (2002), 2002 32815 (ON CA), 58 O.R. (3d) 536, at para. 42:

There is a real need to emphasize denunciation and, especially, general deterrence in the realm of large-scale frauds committed by persons in positions of trust with devastating consequences for their victims, which is how I would characterize the offences in this case.

[16] Given the size of the fraud, the lengthy time period over which it took place, the motivation of greed, the breach of trust, the number of victims, and the devastating impact on those victims, a penitentiary sentence was required. Baron was sentenced to six years in prison for his role in these offences. It was Baron who instigated the scheme and took the majority of the benefits from it. Given the respondent's lesser degree of culpability, in our view, a fit sentence is four years' imprisonment.

DISPOSITION

[17] For these reasons, leave to appeal sentence is granted, the appeal is allowed and the sentence imposed at trial is varied to a term of four years' imprisonment in a federal penitentiary, less credit on a one to one basis for the ten and a half months that the respondent has served of his conditional sentence. The respondent shall have forty-eight hours from the release of this endorsement and the order that gives effect to it, to surrender into custody, failing which a warrant shall issue for his apprehension.

"E.E. Gillese J.A."

"David Watt J.A."

"M. Tulloch J.A."