Court File and Parties

Court File No.: Toronto 325443 Date: 2012-02-29 Ontario Court of Justice

Between: Her Majesty the Queen — and — Vinothan Sriranganathan

Before: Justice P. Robertson

Heard on: December 1 and 23, 2011 and January 26, 2012

Reasons for Judgment released: February 29, 2012

Counsel:

• S. Lee, for the Crown
• D. Embry, for the accused Vinothan Sriranganathan

Judgment

ROBERTSON, J.:

The Charges and Facts

[1] The accused has entered pleas of guilt to three charges:

1. Mischief Under $5,000 by interference with the lawful use of an ATM
2. Possession of the Forgery Device, i.e. a skimmer device
3. Possession of a credit card obtained by crime, a bank card not in his own name

[2] The facts are simple. The accused and another individual were observed manipulating an ATM. Their activities were reported to police who determined that a skimmer device and a pinhole camera had been installed on the ATM. Video surveillance captured the installation and subsequent investigation located the accused's fingerprints on the ATM and the card reader or skimmer. The skimmer device and pinhole camera are designed to steal debit card data and record the Personal Identification Numbers (PIN) of legitimate bank customers, the purpose of which is to subsequently gain access to their accounts and/or to use the data to purchase items.

[3] The accused was arrested in the vicinity of the ATM. A search incident to arrest revealed that the accused was in possession of a credit card, not in his name and which subsequent investigation, determined was obtained by crime.

[4] The accused is 26, has no criminal record and spent 2 days in pre-trial custody.

Sentencing Submissions

[5] The crown seeks a suspended sentence and 12 months probation on terms.

[6] The defence seeks a conditional discharge. It agrees with the appropriateness of the probationary period with the same terms as submitted by the crown.

[7] Following submissions I asked counsel to provide me with case law to support their respective positions. I did so as I felt that neither sentence was within the appropriate range but wished to give counsel the opportunity to support their respective positions.

[8] On December 23, 2011 I received casebooks from both counsel and heard further submissions on sentence.

[9] Both counsel submitted that there were few cases which are directly relevant to the circumstances of this case as most reported decisions regarding installation of skimming devices, of which there are few, dealt with broader schemes involving more ATMs, often resulting in significant financial loss to the financial institutions involved. The cases nevertheless are helpful in identifying the potential impact of such crimes on victims of hacked accounts and on the banking system in general.

[10] Although every case turns on its own facts, no case provided, which admittedly were generally more serious, resulted in either a conditional discharge or a suspended sentence; all cases resulted in incarceration – to be served in an institution or in the community, through a conditional sentence.

[11] On January 26, I determined that the victim of this offence had not been notified of their right to provide a Victim Impact Statement and so the matter was further adjourned to allow the crown to inquiry as to whether the victim wished to do so. I have today received that statement which has been made an exhibit.

[12] Having reviewed the cases provided as well as others referred to in those cases, having received the original and subsequent submissions of counsel as to sentence, and having reviewed the Victim Impact Statement, I do not agree that either a conditional discharge or a suspended sentence is an appropriate sentence.

[13] The following is my reasons.

Sentencing Analysis

Mitigating and Aggravating Factors

[14] Any sentence starts with a consideration of the mitigating and aggravating factors.

[15] The mitigating factors are:

a) The accused has plead guilty. The defence notified the crown in advance of the trial date and the witnesses were not required to attend court. In addition to a sign of remorse, the guilty plea has saved the witnesses of the necessity of coming to court.

b) The accused is 26. He is youthful, although not a youth. He is a local truck driver. He is a refugee claimant seeking to bring his mother and brother from Sri Lanka.

c) The accused is a first offender, having no criminal record.

d) Only a single installation was involved. Although the crown submits material found in the accused's automobile would suggest a larger or more extensive involvement, the offence is the accused's involvement in the installation and monitoring of a single installation.

e) The accused served 2 days in pre-trial custody before obtaining bail.

[16] The aggravating factors are:

a) This is a sophisticated crime involving the installation of a device to record data and personal information of banking customers. These devices are not readily available and can only be acquired through one's association with illegitimate sources that have the resources to acquire the professionally manufactured devices designed specifically to replicate the colour, texture and appearance of the ATMs of specific banks. By replicating the legitimate appearance of the individual bank's equipment, customers are unaware of their victimization until their accounts have already been depleted.

b) The accused involvement in the criminal activity is pre-planned. To have become involved, the accused would have had to have met with those higher up on the chain to be entrusted with the skimmer and pinhole camera, to have received instructions on its installation and instruction on monitoring the ATM's activity before re-attending to remove the device once the data is recorded. The common pattern in these cases is to install the skimmer device and then monitor from a location nearby, the ATM's use for a period of time, before returning to collect the data and remove the device for future use. Consistent with that pattern, the accused was observed attending at the ATM on three occasions, was seen loitering in the area of the ATM after the device was installed and had on him when arrested, a credit card, provided to him to use to test the device. The accused did not spontaneously come upon his criminal activity.

c) Although the accused was not the mastermind of the scheme or likely even an individual very high up in the organization, by agreeing to become involved, he was nevertheless knowingly joining in a criminal enterprise with others, was aware of the objective of the broader group and was aware or should have been aware of the potential devastating effects of their activities. He was in essence, knowingly, a member of a criminal organization.

d) The prevalence of this type of crime is increasing. This was a common theme of all of the cases I was referred to by both the crown and the defence. In the Victim Impact Statement of Interac Association, the exponential growth of debit card fraud resulting from skimming is demonstrated in the increasing loss due to this activity. In 2003 the loss was $44 million with 29,000 debit cards exploited. The loss has continued to increase despite industry safeguards. In 2010 the loss due to skimming had grown to $119 million with over 205,000 debit cards exploited.

e) Although in this case, the devices installed malfunctioned and were seized by police before any loss could occur, the potential for loss was very significant - to those customers whose cards would have been skimmed, to the bank specifically and to the integrity of the banking system in general.

The Victims of Skimming Crimes:

First there is the primary victim, those whose cards have been skimmed. They will suffer both the inconvenience of the fact their cards will not work and the embarrassment that their cards cannot be used to pay for goods and services. If their accounts have been accessed and funds taken, there will be a delay to replace those funds while the bank conducts an investigation, during which the cardholders may be unable to meet basic living requirements, such as paying their rent or mortgage payments.

Then there is the secondary victim, the individual bank, which must investigate the loss and ultimately, reimburse the cardholder for the fraudulently obtained funds.

The final victim is the attack on the integrity of the banking system in general.

f) The attack on the banking system is perhaps most important. The crime has a direct impact on the public's faith in the security of the electronic banking system, a system which relies heavily on the customer's use of ATMs. In R. v. Slade [2006] N.S.J. 445 (N.S.S.C.), Justice MacDonald of the Nova Scotia Supreme Court commented on this aspect:

"In my view, this type of offence goes right to the reliance the average member of the public has in its electronic banking system. The ability of this type of activity to throw havoc into our banking system is tremendous and dangerous."

It was also commented on by Justice Van de Veen of the Alberta Provincial Court in R. v. Marano [2007] A.J. 425 at para. 16:

"The nature of the offence before the Court is extremely serious. The scheme facilitated by the accused strikes at the very foundation of modern monetary technology heavily relied upon by the public at large to secure necessities of daily life on an ongoing basis."

In R. v. Sandranathan [2007] O.J. 2326, a case heard in this court by Wong, J., in a Victim Impact Statement provided by the bank, in that case the CIBC, as to the impact of skimming and bank card fraud has on the banking system as a whole, the bank had this to say:

"This issue (card fraud) adds to a diminished belief in the structure and stability of the convenience card process. The lifeblood of any financial institution is its customer base, and if there is a lack of faith from clients in any of its systems, including the convenience card sector, the economy as a whole is eventually impacted."

Sentencing Principles

[17] The key sentencing principles in this case are specific and general deterrence and rehabilitation.

[18] The increasing prevalence of this type of crime, its potential significant impact on the integrity of the banking system and its possible effects on the personal finances of individual bank customers demonstrates a strong need for deterrence.

[19] Although the accused was far more likely a foot soldier as opposed to a general or even a captain in the scheme, the success of any campaign is dependent on each of those individuals doing their job, all aware of the objectives of the whole. The accused though a lonely foot soldier, was nevertheless involved and played his part in a pre-planned organized attack on the banking system and its customers, knowing the wrath that such an attack could inflict.

[20] Neither a conditional discharge nor a suspended sentence would reflect the degree of deterrence, specific or general, that is needed in this case. No cases have been referred to me where a conditional discharge for this type of offence has been granted.

[21] That is also true for a suspended sentence, with the exception of the co-accused in this case. This raises the issue of parity in that the accused does not appear to be in any different position as the co-accused. He was granted a suspended sentence. It does appear that that case was resolved before Marshall, J. in the absence of any sentencing authorities and without any input from the victim. This additional information greatly assisted the court in understanding the significant potential impact of this criminal activity. In light of the review of that material, I am satisfied that a suspended sentence is not an appropriate sentence in this case. Incarceration is the appropriate sentence for this offence.

Conditional Sentence vs. Institutional Incarceration

[22] The real issue for this court is whether the offence and the circumstances of the offender require the sentence be served in jail or whether a conditional sentence is appropriate.

[23] The period of incarceration appropriate in this case is in the range applicable to conditional sentences. Further there is no evidence to suggest that the safety of the community would be endangered by the offender serving his sentence in the community, given that the accused has no criminal record, has remained on bail since his release without breach and appears to have been engaged in the lower end of the criminal enterprise. In assessing the risk I considered both the likelihood of re-offence and the gravity of damage should the accused re-offend. Although the gravity could be severe, the likelihood of re-offence is low.

[24] Satisfaction of the pre-requisites to the imposition of a conditional sentence of course doesn't end the matter. For a conditional sentence to be appropriate it must still be consistent with the sentencing principles set out under section 718 to 718.2 of the Criminal Code.

[25] Denunciation, general and specific deterrence and rehabilitation are all applicable principles of sentencing in this case. The need for general deterrence is heightened given the increased prevalence of this type of crime and the significant and widespread potential for damage to the banking system. There is a compelling argument that a significant sentence of incarceration is warranted on grounds of general deterrence, to send a strong clear message to those willing to risk exposure to be caught, all for easy gains, while those higher up in the enterprise remain hidden from the authorities.

[26] As regard specific deterrence, the accused appears to have entered an early guilty plea and expressed remorse. He has no record. A severe sentence is unlikely necessary to address specific deterrence.

[27] Although both specific and general deterrence are relevant sentencing principles, I am cognizant that rehabilitation is also of paramount consideration in a case where the accused is a youthful first offender. It is well established that when sentencing such an individual, the paramount considerations are rehabilitation and specific deterrence and that the court should be careful not to overemphasize general deterrence; see R. v. Stein (1974), 15 C.C.C. (2d) 376 (Ont. C.A.) and R. v. Priest (1996), 110 C.C.C. (3d) 289 (Ont. C.A.).

[28] As in all cases, but in this case particularly, there are competing sentencing principles emphasizing the need for a meaningful custodial sentence on one hand and others principles, militating away from sending a first offender to jail.

[29] The aggravating factors point to a sentence geared towards general deterrence and institutional incarceration. These include the significant potential for impact on the banking system by the type of criminal activity engaged in by the accused, including his loose but nevertheless association with others in what can fairly be characterized as a criminal organization. There is also the increasing prevalence of this type of crime which calls for the court to address general deterrence. Does the presence of these factors preclude the imposition of a conditional sentence?

[30] R. v. Ijam 2007 ONCA 597, [2007] O.J. 3395 (Ont. C.A.) is a sentencing case which has some significant parallels with the case at bar. Both involve a youthful first offender. Neither involved an actual loss, although the potential for loss was great and thirdly, both involved an attack on the integrity on the banking or monetary system.

[31] In Ijam the accused had, along with his co-accused, set up a fairly sophisticated counterfeiting operation. They were apprehended before the counterfeited money, some $8,000, could be distributed. The issue before the Court of Appeal was whether a conditional sentence could be impose in light of the aggravating factors which militated against the imposition of conditional sentence and towards a jail term to be served in an institution.

[32] Sharpe, J. speaking for four of the five member Court, stated at para 58:

"….even when there are aggravating factors which might point to the need for a sentence geared to general deterrence, 'a conditional sentence may provide sufficient denunciation and deterrence', and it is an error 'to rule out the possibility of a conditional sentence ab initio simply because aggravating features are present.': R. v. Proulx (2000), 2000 SCC 5, 140 C.C.C. (3d) 449 (S.C.C.)."

[33] In my view this is a close call, but I am prepared to find that in this case, that sufficient deterrence, specific and general, can be fashioned in a conditional sentence, to be followed by a probationary term largely to address the rehabilitative aspects of the sentence.

The Sentence

[34] My sentence is therefore as follows:

[35] You will be sentenced to incarceration for a period of 4 months, to be served conditionally in the community.

[36] In addition to the mandatory terms, for the first three months of the Conditional Sentence Order you will remain confined in your residence except for the purpose of employment, personal medical appointments and religious services, for a single two hour continuous period weekly for the purpose of shopping for necessities and to comply with legal obligations regarding this Conditional Sentence Order. In the discretion of your supervisor, these will be incorporated into a letter of permission to be out of your residence and the letter shall be carried on your person while outside your residence and provided to a police officer upon demand for identification. You may obtain from the supervisor written permission to be outside your residence for any other reason deemed appropriate by the supervisor and again, this permission shall be carried with you when outside your residence and provided to police upon demand for identification.

[37] For the last month of the custodial portion of your Conditional Sentence Order, you will be confined to your residence from 10 pm to 6 am, 7 days a week.

[38] You will perform 25 hours of community service work at a rate of not less than 5 hours per month starting within 30 days of this Order, to be completed to the satisfaction of the supervisor and completed within 4 months.

[39] You will reside at an address approved of by your supervisor.

[40] You will not associate with or have any communication with Marcus Drepaul.

[41] In addition you are not to possess any financial instrument, including but not limited to any bank credit or debit card, not in your own name.

[42] Following the Conditional Sentence Order, you will be placed on probation for 12 months on the following terms: reporting forthwith to your probation officer and thereafter as is required, keep the peace and be of good behaviour, reside at an address approved of by your probation officer, not to possess any financial instrument, including but not limited to any bank credit or debit card, not in your own name and have no contact directly or indirectly with Marcus Drepaul.

[43] At the request of the accused, the shopping period will be each and every Sunday from 10 a.m. to 12 noon, unless a different two hour period is agreed upon by your supervisor.

[44] The predicate offence will be the possession of the forgery device. The sentence on the other two offences will be concurrent to each and concurrent to the predicate offence. The Victim Surcharge will be waived.

[45] Any remaining charges, if any, on this information will be withdrawn at the request of the Crown.

Released: February 29, 2012

Signed: Justice Robertson