Court File and Parties

Court File No.: Region of Durham: 998 10 25055

Date: 2013-01-18

Ontario Court of Justice

Between:

Her Majesty the Queen

— And —

Rajitha Kanagarajah, Ramanan Kenegarajah, A.N., and K.N.

Before: Justice J. De Filippis

Heard on: December 3 & 28, 2012

Reasons for Sentence released on: January 18, 2013

Counsel

For the Crown: M. Flagg

For the accused Rajitha Kanagarajah: J. Rekai

For the accused Ramanan Kenegarajah: R. Pillay

For the accused A.N.: D. Basile

For the accused K.N.: J. Bloomenfeld

De Filippis, J.

Introduction

[1] The four defendants were tried on an Information containing over 100 fraud related counts in a hearing that lasted 28 days in which I heard from 47 witnesses and received 134 exhibits, including six volumes of documents. The Crown seeks prison sentences for all offenders as well as forfeiture of property and restitution totalling approximately 1.7 million dollars. Two defendants have been in custody for almost three years. The Defence seeks a sentence of time served for those individuals and a conditional sentence for the other two. The Defence opposes the other orders sought by the Crown. The issues raised include how to account for multiple convictions, the calculation of pre-sentence custody, and the effect of a previously obtained pardon.

[2] Ramanan Kenegarajah (whose surname once was Kanagarajah) is the brother of Rajitha Kanagarajah. K.N. is married to A.N.. The two men, K.N. and Kenegarajah, were found guilty of most charges they faced. The two women, Kanagarajah and A.N., were found guilty of a few counts. A fifth person, Hariharan Nesarajah, the husband of Kanagarajah, was acquitted of all charges. Written reasons explaining this verdict was delivered on October 12, 2012. See: R. v. Kanagarajah et al., 2012 ONCJ 636

[3] The defendants are to be sentenced for the following crimes: Kenegarajah and K.N. (i.e. the two men) were jointly found guilty of the following 73 offences:

• One count of fraud on the public, over $5000.00, between 2001 and 2010;
• One count of money laundering between 1997 and 2010;
• One count of fraud against Citibank between 2001 and 2010
• Eight counts of fraud against specific financial institutions between 2001 and 2010;
• One count of being a member of a criminal organization, between 2005 and 2010 (along with Kanagarajah and A.N.);
• One count of fraud against MCAP on May 23, 2007;
• One count of fraud against TD Bank on September 30, 2008
• One count of fraud against Home Trust on December 3, 2008
• One count of fraud on Avis Car Rental between 2009 and 2010;
• One count of possession of a Sears credit card in the name of Decruz, obtained by the commission of an offence, between September 9, 2009 and March 1, 2010;
• Thirty three counts of possession of specific credit cards, obtained by the commission of an offence, on March 3, 2010;
• Two counts of possession of property by crime (money, furniture, electronics, and appliances), on March 3, 2010;
• One count of possession of identification information intended to be used in a fraudulent manner, on March 3, 2010;
• One count of fraudulent possession of credit card data that enables the use of credit cards, on March 3, 2010;
• Nineteen counts of fraudulent possession of credit card data, with specific names and financial institutions, on March 3, 2010

[4] In addition, K.N. was convicted of obstructing a peace officer by giving a false name.

[5] Kanagarajah and A.N. (i.e. the two women) were both convicted of participating in a criminal organization (along with the two men). Kanagarajah was also found guilty of fraud against Home Trust on December 3, 2008 (along with the two men). A.N. was also found guilty of two counts of possession of property by crime (money, furniture, electronics, and appliances) on March 3, 2010 (along with the two men).

[6] I have determined that the appropriate total sentence, including pre-sentence custody, for each offender is as follows:

• Ramanan Kenegarajah: 6 years in jail
• K.N.: 5.5 years in jail
• Rajitha Kanagarajah: 18 month conditional sentence with house arrest
• A.N.: 18 month conditional sentence with house arrest

[7] In addition, I have ordered the forfeiture of the property identified later in these reasons.

Overview of the Crimes

[8] In my reasons for judgment I set out the evidence in detail. What follows is an overview of my findings of fact to give context to the sentence.

[9] The bulk of the incriminating evidence against the defendants was obtained by the Durham Regional Police Service in an investigation that commenced a few months before the defendants were arrested on March 3, 2010. The immediate cause of that investigation was a complaint by Dr. Wayne Niou, a resident of British Columbia, that credit card accounts had been opened in his name without his consent. One of these credit cards had been used in Durham Region. At this time, Det. Caplan, of the Durham Regional Police had been looking into credit card fraud. He acted on the complaint and eventually found a connection to K.N. and Kenegarajah. Further inquiries revealed that in 2001 K.N. worked for American Express and was involved in creating 21 suspicious accounts and being involved in "bust out frauds".

[10] A "bust out" fraud typically involves the following: An account and a credit profile is created with a low credit limit. In the short term, the cardholder makes small purchases and small payments, followed eventually by large purchases and cash advances. The "cardholder," who is either a fictitious person or a real individual whose personal information has been stolen, or alternatively the financial institution, would be left with a large unpaid balance and no recourse to collect the debt. Collection efforts are rendered pointless because the "cardholder's" address was invariably a post office box, which itself had been rented in one of the fictitious names.

[11] The American Express investigation discovered a link between K.N. and an address in Ontario. On December 21, 2001, a search warrant was executed at 21 Rockport Drive. The door to this home was opened by a woman who identified herself with a valid Ontario Driver's Licence as Rajitha Kanagarajah (the sister of Kenegarajah). A new Mercedes Benz was parked at the house. The motor vehicle had been leased by the Rajitha Kanagarajah with one of the 21 suspicious accounts that K.N. had created. Among the items seized at the home was gold and silver Jewellery, a rolex watch, gift certificates from various retailers totalling $2,641.65, identification in the name of K.N. and A.N., and financial records pertaining to several bank accounts that contained over $200,000.00 in cash or Guanteed Income Certificates.

[12] Several weeks later, a man purporting to be K.N. surrendered to police. It was soon learned that his true identity was Kanagaramanan Kanagarajah (now known as Ramanan Kenegarajah). As a result, the latter eventually pled guilty to personation and attempt to obstruct justice.

[13] It appears no further attempts were made by police to locate K.N.. However, in July 2007, the RCMP in Burnaby, British Columbia, looked into reports that two men, known as "K.N." and "Ramanan, were involved in financial impropriety at a Hindu temple. It was later confirmed that these men were K.N. and Kenegarajah. On April 24, 2008, the latter was followed to a drive 40 kilometres from his home to a shopping mall in Vancouver. He made two cash withdrawals from a Scotiabank ATM machine and returned to his vehicle and drove in the direction of his home. Kenegarajah was stopped en route by the RCMP and produced a driver's licence with the name Kanag Kanagaraj and an address of 11753 Sheppard Avenue. He was found in possession of six credit cards in other persons' names and $1,960 in twenty dollar bills.

[14] At about the same time that Det. Caplan became aware of the aforementioned AMEX and RCMP investigations, he had established a connection between the defendants, several motor vehicles, and a number of residential properties. The relevant motor vehicles are an Audi, a Buick Enclave, and a Land Rover. The properties in question are located at: Condominium Unit 311 at 11753 Sheppard Ave., East, Toronto, 1640 Pennel Drive, Oshawa, 47 Portelli Cres, 87 Portelli Crescent, and B[…] Drive, all in Ajax. Kanagarajah and her husband resided at the Sheppard Ave. condominium unit. K.N. and his wife, A.N., lived at B[…] Drive, along with Kenegarajah. The other homes were occupied by tenants.

[15] The 87 Portelli Crescent property was owned by Sri Gnanasundram. It was purchased in 2007 for $355,636.22 with monthly mortgage payments in the amount of $1,805.45. The B[…] Drive property was purchased in 2007 Vivehy Vigneswaran, Thavanesan Rasiah, and Rakjumar Rasiah. These three individuals obtained the property through the assignment the Agreement of Purchase and Sale between the builder and the original purchaser, Sri Gnanasundram. The purchase price was $599,863.43. The 1640 Pennel Drive was owned by Rajitha Kanagarajah and purchased in 2008 for $360,076.00 Mortgage with monthly mortgage payments in the amount of $1,882.22.

[16] The home at 87 Portelli was rented to Avery Broderick at $1,795/month. Kenegarajah visited him a few times a year, as the "representative" of the home owner and picked up mail addressed to Gnanasundram.

[17] The real estate transaction for B[…] Drive was handled by a lawyer named Thangavel Kesevan, who has since been disbarred for his role making false and misleading misrepresentations to mortgage lenders in twelve other real estate transactions. Kesavan confirmed that the property was obtained from Sri Gnanasundram (who also owned the nearby home at 87 Portelli Cres). Vigneswaran identified this person as the aunt of K.N.. It is clear that Vigneswaran and the two other purchasers of the property are straw men the beneficial owner, namely, Nesahn.

[18] In support of her successful application for the $334,800 mortgage on 1640 Pennel Drive, Rajitha Kanagarajah presented a letter confirming she earned $118,000 annually as the operations manager of a company called World Golden Stone Inc. This letter is a forgery. Kanagarajah tendered or knowingly allowed K.N. and Kenegarajah to tender this letter. In any event, the home was rented to Bill Aivalis at $1,500/month and on several occasions he met Kanagarajah at a restaurant near her home on Sheppard Avenue and paid the rent directly to her.

[19] After reviewing the land registry documents and files for certain dormant investigations, the Durham Regional Police Service instituted a surveillance program with respect to the defendants, especially, Kenegarajah and K.N.. This program was aided by GPS tracking devices that had been installed on the Land Rover and Audi motor vehicles. Regular surveillance in the two months preceding the arrests on March 3, 2010 soon revealed a pattern of activity by the two men. On a number of weekday mornings, K.N. and Kenegarajah, operating the Land Rover or Buick Enclave departed B[…] Drive in Ajax and dropped off children at a Montessori school in Markham. They then travelled to various banks and retail stores in the Greater Toronto Area, stopping throughout the day at the condo building at 11753 Sheppard, at B[…] and other residences. The two men were never observed to go to work and earn income from a legitimate place of employment or business. Instead they visited numerous post office boxes and banks, used of credit cards in other people's names to purchase items and withdraw cash at automated banking machines, and paid small amounts on account of those credit cards.

[20] On March 3, 2010 search warrants were executed at several locations, including the Sheppard Ave . condominium occupied by Kanagarajah and her husband and B[…] Drive, the residence of K.N., A.N., and Kenegarajah.

[21] The evidence uncovered by the surveillance program and the execution of the search warrants shows that K.N. and Kenegarajah were occupied full time in the operation of a large and sophisticated bust out fraud scheme. This required daily visits to retail outlets and banks. The sheer scale of this operation is evidenced by the ledgers seized from the Land Rover and property seized upon arrest and pursuant to search warrants. Among the material seized was personal data with respect to dozens of individuals and financial institutions, more than 50 credit cards in numerous different names, over $110,000.00 cash, about 80 cell phones, as well as electronics and luxury items. One of the BlackBerry smart phones seized revealed that over 1000 calls had been placed to six financial institutions that provide credit cards. It is obvious that this evidence is simply a snap shot of the activity of these two men. It reveals the tip of an iceberg that stretches back in time. It is inconceivable that K.N. and Kenegarajah could have abruptly started the scheme that was discovered. This must have entailed years of effort, beginning with minor frauds and building upon their experience, to create an extraordinary enterprise. This can also be seen in the actions of Kenegarajah in 2008 in British Columbia.

[22] The total losses sustained by various financial institutions, from 2001 until the arrests, amount to $1,764,126.28, as follows:

• AMEX Canada: $601,393.00
• CIBC: $620,855.62
• Canadian Tire: $37,548.43
• Capital One Canada: $4,881.42
• JP Morgan Canada: $354,559.03
• MBNA Canada: $144,888.78

[23] During this same ten year period, the approximate total income reported, by the defendants, to the Canada Revenue Agency, is as follows:

• N.K.: $43, 000.00
• Ramanan Kenegarajah $12,500.00
• A.N.: $210,000.00
• Rajitha Kanagarajah: $17,500.00

[24] The properties purchased in Ontario includes 311-11753 Sheppard Ave., B[…] Drive, 47 Portelli, 87 Portelli, and1640 Pennell. The condominium unit was legally owned by K.N. and the others were functionally owned by K.N. and Kenegarajah, through proxies. It is also obvious that K.N. and Kenegarajah intended to acquire additional property. The visits by the K.N. and Kenegarajah to Greenpark Homes, where they were ultimately arrested, as well as the documents seized from them as incidents of arrest attest to this fact.

[25] Having regard to the total losses sustained by financial institutions and the income reported by the defendants over the decade in question, the only reasonable conclusion is that the real estate was acquired with the ill-gotten gains and that much of the jewellery, furniture, appliances, and other property seized by police on March 3, 2010 is the proceeds of crime. In this regard, K.N. and Kenegarajah engaged in a fraud upon the public and money laundering over many years. Moreover, along with Kanagarajah and A.N., they formed a criminal organization that had as its criminal purpose the facilitation of credit card fraud and identity theft.

[26] Counsel for both women asked me to acknowledge that in Sri Lankan culture the role of women is to obey their husbands. The Crown objects that there is no evidence of this. I accept this objection but note that while I found the two women participated in certain crimes (and benefited by the activities of the men), the role of the men and women is dramatically different. There is no question that the men were the leaders of the enterprise and actively involved on a daily basis. By comparison, the role of the women is minor.

Victim Impact Statements

[27] The Crown filed statements from one individual and two institutional victims. The statements filed by the two banks were objected to by Defence counsel on the basis that they constituted a "lecture" rather than a victim impact statement. The statements contain general assertions about credit card fraud in Canada as well as statistics documenting the extent of the problem. They also include information about impact of crimes in question on the two banks. I have focussed on the latter and appreciate the context provided by the former.

[28] Paul Morgan is the Senior Inspector, Fraud Loss Prevention and Investigations, for the Canadian Imperial Bank of Commerce. He provided an account of the impact of the crimes on the bank. His statement set out the extent of credit card fraud in Canada and the considerable resources spent by financial institutions to combat this increasing problem. In this particular case, the victim bank suffered a loss of $620, 855.62. Rick Neals is the Director for Global Security at Amex Bank of Canada. He reported that in this particular case, Amex suffered a loss of $461,393.00 due to fraud and spent $140,000.00 in staff and other costs to investigate and rectify the problems created by that fraud.

[29] The individual impact statement was prepared by Dr. Niou, the British Columbia resident whose complaint was the immediate cause of the investigation in the resent case. The following is an excerpt from his statement:

This letter is written to attest to the degree and length of the impact of the crimes that has been committed against me. In November of 2009, I was contacted by the Capital One credit card company to attempt to validate a credit card application in my name. I was very surprised as I had not applied for any such credit card. After some discussion with their agent, I realized that I had been a victim of identity theft. According to the credit card company, it was my onus to call up the various credit bureaus and credit card companies. This was the beginning of a long frustrating journey to clear my name and good standing. In the months following this initial phone call, I had called around to numerous agencies and credit bureaus. …..In all, there were fraudulent cards issued by Canadian Tire, Bank of Montreal, American Express and 3 cards by Chase Morgan (One of which was the Sears credit card). Detailed information on these credit cards will be provided to you on request. It was discovered that the there were at least $16, 000 owed on the 3 Chase Morgan credit cards. During my interactions with the credit card companies, multiple phone calls, faxes, affidavits and emails were made. I must have spent upwards of over 20 hours to attempt to clear my name and credit. It was a most frustrating and stressful experience as not all the contacts were helpful. I felt violated in the worst way as I was the victim in this.

Position of the Parties

[30] Counsel for the Crown, Kenegarajah and K.N. agree that a penitentiary sentence is warranted for these two men. However, the parties differ on the length of that sentence and the calculation for pre-sentence custody. The Crown suggests a sentence of 8 years for these defendants, less pre-sentence custody at a credit of 1to 1. Since the two men have been in custody for almost three years, this means an additional five years in jail. Defence counsel argue that the appropriate range is 3 – 5 years and that the credit for pre-sentence custody should be 1.5 to 1. On this basis, they submit that K.N. and Kenegarajah should now be released on a sentence that notes the time served.

[31] The Crown seeks a sentence of 18 months jail with respect to Kanagarajah and 15 months in the case of A.N.. Counsel for these two women suggest that a conditional sentence of 6 – 9 months is appropriate.

[32] The Crown has applied for forfeiture of much of the property seized by police and an order that K.N. and Kenegarajah make restitution of in the amount of $1,764,126.28 to the above mentioned financial institutions.

Principles of Sentencing

[33] The overarching principle of sentencing is that of proportionality. In R. v. Nasogaluak, 2010 SCC 6, LeBel J., made the following comments (at paras 39ff):

The objectives and principles of sentencing were recently codified in ss. 718 to 718.2 of the Criminal Code to bring greater consistency and clarity to sentencing decisions. Judges are now directed in s. 718 to consider the fundamental purpose of sentencing as that of contributing, along with crime prevention measures, to "respect for the law and the maintenance of a just, peaceful and safe society". This purpose is met by the imposition of "just sanctions" that reflect the usual array of sentencing objectives, as set out in the same provision: denunciation, general and specific deterrence, separation of offenders, rehabilitation, reparation, and a recent addition: the promotion of a sense of responsibility in the offender and acknowledgement of the harm caused to the victim and to the community.

The objectives of sentencing are given sharper focus in s. 718.1, which mandates that a sentence be "proportionate to the gravity of the offence and the degree of responsibility of the offender". Thus, whatever weight a judge may wish to accord to the objectives listed above, the resulting sentence must respect the fundamental principle of proportionality. ....But what does proportionality mean in the context of sentencing?

For one, it requires that a sentence not exceed what is just and appropriate, given the moral blameworthiness of the offender and the gravity of the offence. In this sense, the principle serves a limiting or restraining function. However, the rights-based, protective angle of proportionality is counter-balanced by its alignment with the "just desserts" philosophy of sentencing, which seeks to ensure that offenders are held responsible for their actions and that the sentence properly reflects and condemns their role in the offence and the harm they caused…. The two perspectives on proportionality thus converge in a sentence that both speaks out against the offence and punishes the offender no more than is necessary.

Sentencing for Multiple Convictions

[34] Counsel for Kenegarajah and K.N. assert that the finding of guilt with respect to the global count of fraud on the public (between 2001 and 2010) encompasses all other offences for which these defendants were found guilty and that the latter should be stayed, except for the criminal organization count, which is statutorily consecutive. In this regard, Mr. Pillay pointed to following written submission by the Crown with respect to the verdict (Reply Submissions, paragraph 7):

From the beginning of this case, the Crown made it clear that it was alleging a single, continuing, ongoing general scheme of enterprise fraud by (all of) these defendants involving the misappropriation of credit card information to obtain cash and to purchase merchandise. The alleged offences spanned the entire period in the various counts complained of (2001-2010) and occurred in more than one location. One additional critical fact occurred in 2010: the defendants got caught.

[35] The Crown takes the position that while totality and proportionality are important sentencing principles K.N. and Kenegarajah should receive consecutive sentences for the various categories of offences of which they have been convicted, such as fraud, money laundering, possession of credit cards, participating in the activities of a criminal organization, and so on.

[36] The issue of what to do with multiple convictions was addressed in R v Harvey-Langton 2012 MBPC 64:

1. First determine whether any or all of the sentences are to be served concurrently or consecutively or a combination of both.

2. If treated as concurrent, then, although all circumstances of the offender and the offence must be taken into account in arriving at a sentence, the final sentence for multiple concurrent offences should, absent exceptional circumstances, be higher than the sentence that the judge would have awarded that offender for one count of that offence. This has come to be known as the "no free ride principle."

3. If treated as consecutive offences, after assigning a sentence to each offence, the judge must take one last look at the total cumulative length of the sentence with a view to determining whether the total sentence is so high as to be a "crushing punishment" on this offender. This is often referred to as the totality principle. It must be remembered that the totality principle considerations under s. 718.2 (c) of the Criminal Code apply only when consecutive sentences are imposed. When a judge sentences an accused to concurrent sentences, no such considerations arise.

4. If the judge is of the view that the overall sentence is too high, it is within their discretion to reduce the sentence by using a variety of techniques. One of those techniques is to make some of the multiple offences concurrent to each other. This use of the concurrency principle is for the sole purpose of reducing an excessive sentence as a result of that "last look."

[37] With respect to the issue of whether a sentence should be consecutive or concurrent, the court in R. v. Wozny, 2010 MBCA 115 (para 46) stated that:

While this is often not a simple issue to decide, the general rule is that if the offences are sufficiently interrelated to form part of one single, continuous criminal transaction, a concurrent sentence is called for. However, if the offences are separate and distinct, then a consecutive sentence is to be imposed. Many of the aforementioned cases ( Grant , Golden , Draper , and Maroti ) make this clear. But this is only the general or basic rule.

[38] I accept the Crown's submissions about how to deal with the multiple convictions in this case. I do not consider the Crown's written submission referred to by Mr. Pillay to be inconsistent with this approach. The two men were involved in one multi-faceted course of criminal conduct that involved a fraud on the public and money laundering. The criminal organization count is statutorily required to be consecutive (see s. 467.11(1)). The offences against particular financial institutions and the many credit card and identity theft crimes are interrelated and supported this criminal enterprise. Accordingly, the sentences will be imposed in accordance with the categories of offences set out later in these reasons.

[39] Kanagarajah and A.N. were both convicted of participating in a criminal organization. Kanagarajah was also found guilty of fraud against Home Trust on December 3, 2008 (along with the two men). The sentences for these offences will be consecutive. A.N. was also found guilty of two counts of possession of property by crime (money, furniture, electronics, and appliances) on March 3, 2010. Sentences for the latter will be concurrent and consecutive to the criminal organization count.

Effect of Pardon

[40] As already noted, Kenegarajah convicted on February 1, 2001 of Personation and Attempt to Obstruct Justice by surrendering to police in the name of K.N.. On April 24, 2008 he obtained a pardon for these offences. Two years later, he legally changed his name. At about this time he also applied for landed immigrant status on humanitarian and compassionate grounds, citing, in part, his love and financial support of his niece, including covering tuition at private Montesorri school. I have no doubt that this financial support came from the crimes he has been convicted of.

[41] Canadian law provides for several types of pardons. Kenegrarajah obtained an administrative pardon pursuant to the Criminal Records Act. Since Kenegarajah has now been found guilty of numerous indictable offences, he immediately and automatically loses the benefit of the pardon. This arises because section 7.2 of the Criminal Records Act provides that "A pardon granted to a person ceases to have effect if the person is subsequently convicted of an indictable offence. ...". See: R. v. Poupart, 2010 QCCA 1956 and R v Gamble 2011 ONJC 513.

Credit for Pre-sentence Custody

[42] Kenegarajah and K.N. submit that 1:5 to 1 is the appropriate credit for pre-sentence custody. On this basis the men have served the equivalent of 51 months (i.e. 34 months actually served x 1.5) or four years and three months. Defence counsel submit that the global fraud count should attract a sentence of three years and nine months in jail and six months consecutive for criminal organization count; in other words, time served.

[43] Crown counsel in suggesting a total sentence of 8 years less pre-sentence custody at a credit of 1 to 1 proposes the following sentence: 5 years for the global fraud and two years concurrent on all other fraud charges; 6 months consecutive for money laundering; two years consecutive for participating in a criminal organization and six months consecutive (concurrent among counts) for all other possession, identity theft and related counts.

[44] The background to this debate is an amendment to the Criminal Code contained in section 719 . Subsection (3) states that a court shall limit any credit for pre-sentence custody to a maximum of one day for each day spent in custody. Subsection (3.1) allows for a credit up to 1.5 to 1 "if the circumstances justify it" (and the person was not detained before trial because of a prior criminal record).

[45] Defence counsel ground their argument on several factors: They rely upon the decision of Justice Green in R v Johnson 2011 ONCJ 77, which dealt with the constitutionality of the aforementioned amendment to the Code. In this regard, counsel for K.N. and Kenegarajah point to the lack of rehabilitation programs and remission during pre-sentence custody. Moreover, they point to the length of the pre-sentence custody in this case (34 months) and also filed statistics from the correctional facility that reveal the two defendants were confined to their cells for a total of 142 days during this time.

[46] I do not consider the lack of rehabilitation programs to be a factor in this particular case. In committing the crimes, the defendants did not succumb to temptation because of addiction, mental health concerns or other issues that are subject to therapeutic intervention. The motive was greed - pure and simple. This desire is probably as old as humanity itself. I am not aware of any treatment program to deal with it.

[47] Parliament must be taken to have known about the lack of remission in the case of pre-sentence custody. It follows that this factor, in itself, cannot be a justification for an enhanced credit. However, it is reasonable to conclude that what Parliament had in mind is the normal case. Other considerations may apply in extraordinary circumstances. Thus, for example, an enhanced credit to account for lack of remission may be appropriate where the pre-sentence custody is exceptionally lengthy. With almost 3 years of pre-sentence custody, this is such a case. Crown counsel noted that the 34 month delay is due, in large part, to a late re-election by the accused to have a trial in the Ontario Court of Justice, rather than having a preliminary hearing in this court. This is a valid observation. The extra time required for trial could not readily be accommodated into the schedules of the court and six counsel. This meant the 28 days of trial took 18 months to complete. However, the re-election was a legitimate action taken by the defendants after two of them obtained new counsel. There was no posturing on the part of the Defence; the delay was an inevitable and predictable consequence of the Defence actions but it was not the motive or intention.

[48] Lockdowns can occur for several reasons, including searches for weapons and drugs and staff shortages. The former are conducted for the safety of prisoners and staff. It must also be noted the 142 days represents the total period of hours and days in lockdown; it does not mean consecutive days confined to the cell. In cases where the pre-sentence detention is shorter, and the total lockdown time shorter, the latter might not be a significant factor in sentencing. But that is not this case; the equivalent of 142 days confined to one's cell is not something I should ignore.

[49] The extraordinary pre-sentence custody, the impact on remission, and the significant amount of time spent in lockdown justify an enhanced credit for pre-sentence custody. In these circumstances it is appropriate to grant a credit of 1.5 to 1. Accordingly, I consider K.N. and Kenegarajah to have served the equivalent of 51 months in pre-sentence custody (i.e. 34 months x 1.5).

Sentences for Credit Card Fraud and Identity Theft

[50] Kenegarajah and K.N. rely heavily on the decision of the Court of Appeal for Ontario in R. v. Drabinsky and Gottlieb, 2011 ONCA 582 which they describe as the "high water mark for sentencing in fraud". It is their submission that this case, while serious, pales in comparison to the fraud perpetuated by Drabinsky and Gotlieb. The later received sentences of 5 years and 4 years, respectively, for a fraud in the millions of dollars.

[51] I accept the importance of the cases relied upon by Defence counsel but also note that they were decided under the previous fraud provisions with a lower maximum punishment. In any event, in Drabinsky at paras. 160, 173 the court observed:

….this court and all other provincial appellate courts have repeatedly held that denunciation and general deterrence must dominate sentencing for large scale commercial frauds. Denunciation and general deterrence most often find expression in the length of the jail term imposed.

We agree that cases properly characterized as "scams" will normally call for significantly longer sentences than frauds committed in the course of the operation of a legitimate business.

[52] In R v Cunsolo [2012] O.J. 66, Justice Hill considered Drabinsky and observed that a sentence of six years is within the correct range of sentences for major frauds and sentences in the 3 to 5-year range are common. He identified the following mitigating factors in cases of major fraud; substantial recovery of the proceeds of dishonest conduct, pre-sentence restitution, and whether the motive was a medical condition or addiction (rather than greed). None of these factors are present in the case under consideration. On the other hand these aggravating factors are present; a sophisticated scheme of planning and deception, a large number of dishonest transactions, a lengthy period of dishonesty, a significant loss, greed, and substantial benefits from the crimes.

[53] Crown and Defence counsel sparred over the issue of remorse. In this regard, the Crown pointed out that this was a "no admissions, prove your case trial" that lasted 28 days. Mr. Bloomenfeld submitted that it was unseemly for the Crown to object that "the accused had the temerity to mount a vigorous defence" and both he and Mr. Pillay cautioned against punishing them for doing so. I accept this caution: The right to trial is a fundamental principle of criminal justice and must not be eroded by sentences that appear to be a penalty for the losing side. On the other hand, genuine remorse says something relevant about a defendant's character and is an important mitigating factor. Such remorse can be established by a guilty plea and/or apology. Neither is present in this case and that mitigating factor is not available to temper the sentence that is otherwise appropriate.

Conditional Sentences

[54] The Crown seeks a reformatory sentence for A.N. and Kanagarajah. Defence counsel submit that a conditional sentence is appropriate.

[55] Section 742.1 of the Code lists four criteria that a court must consider before deciding to impose a conditional sentence: (1) the offender must be convicted of an offence that is not punishable by a minimum term of imprisonment; (2) the court must impose a term of imprisonment of less than two years; (3) the safety of the community would not be endangered by the offender serving the sentence in the community; and (4) a conditional sentence would be consistent with the fundamental purpose and principles of sentencing set out in ss. 718 to 718.2 . The first two criteria are not obstacles in this case; the only issue is the third and fourth pre-requisite.

[56] It has not been seriously suggested by the Crown that A.N. and Kanagarajah would endanger the safety of the community if their sentences were served under house arrest. In any event, there is little evidence of this. Moreover, it is my practice not to impose conditional sentences without the electronic supervision program. Thus, I have greater confidence that the provisions of house arrest will be observed and this mitigates the risk of harm to the community. The real issue is whether a conditional sentence is in accord with the principles of sentencing; as noted, the most important ones in this case are denunciation and deterrence. Such considerations require that jail be considered. However, as the Supreme Court of Canada has observed, a conditional sentence can meet the demands of denunciation and deterrence in the right circumstances (see R v Proulx 2000 SCC 5).

Ramanan Kenegarajah and K.N.

[57] Mr. Pillay advised as follows with respect to Kenegarajah: He is 38 years old and was born in the northern part of Sri Lanka. He is a member of the Tamil minority and grew up during the conflicts between the Tamil Tigers and the Sri Lankan government. He has one sister, the co-defendant in this matter, Kanagarajah. His father was a court clerk in the capital city of Columbo and his mother was a housewife. At the age of 14 his hand was injured by gunfire during an air strike and he spent two months in hospital. One year later he was shot in the leg during another air strike and spend one month in hospital. In the 1990's, at the age of 16, he came to Canada. He learned to speak English while working at various jobs and eventually became a truck driver. However two workplace accidents aggravated the injury to his hand and in 2009 he stopped working. He was unemployed until his arrest in this matter. While in custody, his father passed away and his mother moved to India. This has made his detention especially difficult and he has not slept well. The long period of detention ruined his relationship with a woman, who has since married another man.

[58] Mr. Bloomenfeld advised as follows with respect to K.N.: He is 41 years old, married to the co-defendant, A.N., with two children. He was born in Sri Lanka and came to Canada as a refugee at the age of 16. He learned English while working at a variety of jobs, including at American Express, and eventually became a trucking and shipping broker. K.N. has not seen his children, now aged 11 and 9, for almost three years. Mr. Bloomenfeld asserts that everything K.N. owned was seized by police and when released he will only have "the clothes he was arrested in". His wife and children now survive on social assistance.

[59] As already noted the mitigating factors identified in Cunsolo are not present in this case whereas all the aggravating ones are applicable. The moral culpability of K.N. and Kenegarajah is very high. This is seen in such things as the $8,000.00 watch seized from Kenegarajah and is, perhaps, best captured in one of the photographs seized from B[…] Drive; it depicts a smiling Kenegarajah holding bundles of twenty dollar bills that were, no doubt, fraudulently obtained from ATMs. Even more significant than the amount of the fraud is the nature and scope of the enterprise; It was a well planned system of identity theft and fraud amounting to, what the Crown described as, "electronic bank robbery". The venture had been in operation for years and would have continued as such, had the police not intervened.

[60] In my opinion the range of sentence proposed by Defence counsel with respect to the two men is closer to the mark than that proposed by the Crown. This is a major fraud and as stated in Cunsolo, sentences for such offences attract sentences of 3 to 6 years. However, given the aggravating factors that apply to these defendants I find that the upper end of this range is appropriate. Moreover, I cannot ignore additional aggravating factors that apply to Kenegarajah: He has a criminal record. That he obtained a pardon and applied for landed immigrant status on humanitarian grounds while committing the offences in question is troubling. These important differences between offenders who otherwise played a similar role in the offences means the sentences cannot be the same.

[61] In determining the appropriate jail sentences for K.N. and Kenegarajah, I have grouped the offences in question in categories that reflect the principles discussed in aforementioned section dealing with "Multiple Convictions". The individual sentences also account for the principle of totality. The sentences:

Category 1 - Fraud on the public, over $5000.00, between 2001 and 2010: For K.N., 2.5 years as follows - 30 months pre-sentence custody is noted, plus 1 day; for Kenegarajah, 3 years as follows - 30 months presentence custody is noted, plus 6 months;

Category 2 - Money laundering between 1997 and 2010: For both men, 6 months pre-sentence custody is noted, plus 1 day. This is consecutive to all other sentences.

Category 3 - Being a member of a criminal organization, between 2005 and 2010: For both men, 1 year as follows – 12 months pre-sentence custody is noted, plus 1 day. This is consecutive to all other sentences.

Category 4: Fraud against financial institutions For both men, six months for each of the offences below, as follows – 3 months pre-sentence custody is noted, plus 3 months. This is concurrent within the category but consecutive to all other sentences.

• One count of fraud against Citibank between 2001 and 2010
• Eight counts of fraud against specific financial institutions between 2001 and 2010
• One count of fraud against MCAP on May 23, 2007
• One count of fraud against TD Bank on September 30, 2008
• One count of fraud against Home Trust on December 3, 2008
• One count of fraud on Avis Car Rental between 2009 and 2010;
• One count of possession of a Sears' credit card in the name of Decruz, obtained by the commission of an offence, between September 9, 2009 and March 1, 2010;

Category 5: Identity theft and credit card fraud For both men, six months for each of the offences below. This is concurrent within the category but consecutive to all other sentences.

• Thirty three counts of possession of specific credit cards, obtained by the commission of an offence, on March 3, 2010;
• One count of possession of identification information intended to be used in a fraudulent manner, on March 3, 2010;
• One count of fraudulent possession of credit card data that enables the use of credit cards, on March 3, 2010;
• Nineteen counts of fraudulent possession of credit card data, with specific names and financial institutions, on March 3, 2010

Category 6: Two counts of possession of property by crime (money, furniture, electronics, and appliances), on March 3, 2010 For both men, six months for each offence. This is concurrent within the category but consecutive to all other sentences.

In addition, K.N. is sentenced to 15 days for obstructing a peace officer. This is concurrent.

[62] In the result, the combined sentences for Kenegarajah amount to 6 years and those for K.N. amount to 5.5 years. This means that in addition to the 51 months both men have been in pre-sentence custody, Kenegarajah will serve another 21 months and K.N. will serve another 15 months.

Rajitha Kanagarajah and A.N.

[63] Defence counsel advised that Kanagarajah is 34 years old and came to Canada 13 years ago. She is married with one child. She served six days in pre-sentence custody and house arrest for six months before her bail was made less restrictive.

[64] Defence counsel advised that A.N. is 36 years old and came to Canada in 1999. She is a permanent resident. A.N. is married to K.N. with two children. She served 10 days in pre-sentence custody and seven months of house arrest before her bail was made less restrictive. She now lives on welfare with her children in a small basement apartment. The children were taken by the Children's Aid Society for 45 days after her arrest. Counsel advises that A.N. has been traumatized by these proceedings and the impact it has had on her children. Counsel asks that I consider a conditional sentence of six months less one day so that A.N. can avoid the possibility of deportation.

[65] In my view, the objectives of deterrence and denunciation can be met by a conditional sentence order. I come to this conclusion because of the role played by the two women in contrast to the activities of the two men. Kanagarajah and A.N. participated in the criminal organization and benefited from it but the enterprise was instigated, directed, and operated by Kenegarajah and K.N.. Moreover, the impact of these proceedings has been significant, especially with respect to A.N.. A conditional sentence, with house arrest, effectively denounces the conduct of A.N. and Kenegarajah and deters others like them. Accordingly, the conditional sentence order is as follows:

Kanagarajah: 1 year for being a member of a criminal organization and 6 months consecutive for fraud over $5,000.00

A.N.: 1 year for being a member of a criminal organization and 6 months for the two counts of possession of property obtained by crime. The latter are concurrent to each other and consecutive to the criminal organization count.

[66] I have considered Defence counsel's submission, on behalf of A.N., with respect to the potential immigration consequences of my decision. Having regard to the disparity between what I consider to be a proper sentence and what is needed to accommodate A.N.'s immigration issue, I am unable to take the latter into account; it would be wrong to significantly reduce an otherwise appropriate sentence to avoid incidental consequences.

Forfeiture

[67] The Crown seeks an Order pursuant to s. 462.37(1) of the Criminal Code for the forfeiture of property belonging to K.N. and Kenegarajah that was derived directly or indirectly as a result of the commission of an enterprise crime offence (being members of a criminal organization). This includes forfeiture of the property at 87 Portelli Crescent, Ajax, which was sold by MCAP Service Corporation, the mortgagee. Unlike the other properties in this case, there are surplus proceeds of $41,692.02 (plus any accrued interest).

[68] Police seized property from K.N. and Kenegarajah upon their arrest, from the vehicle they were driving at the time, several safe deposit boxes, and from the two residences that the four defendants lived at. The itemized list of this property is too long to include in these reasons and is set out in greater detail in my reasons for the verdict. For present purposes, the following summary will suffice:

• A total of $110,000.00 in various denominations and currencies seized from all locations;
• B[…] Drive, Ajax, the home of K.N., A.N., and Kenegarajah was essentially emptied of all its contents, including furniture in all rooms, appliances, snow and lawn equipment, exercise equipment, computers, cameras, camcorders, entertainment systems, about a cozen expensive watches, including several Rolex watches, jewellery, numerous Blackberry and I-phones and a dozen bottles of scotch;
• Items seized at 311-11735 Sheppard Avenue, Toronto, the home of Kanagarajah (and Nesarajah) include jewellery, watches, computers, and numerous Blackberry and Iphones;
• The several homes purchased by the defendant's were heavily mortgaged but there remains equity in 87 Portelli Cres, Ajax, in the amount of $41,692.02 (plus any accrued interest)

[69] As already noted, having regard to the losses sustained by financial institutions and the income reported by the defendants over the decade in question, the only reasonable conclusion is that the most of the property seized by the police is the proceeds of crime. The defendant's must not benefit from their crimes and, apart from certain items counsel agree should be returned, I order the that above property be forfeited to the Crown.

Restitution

[70] The Crown seeks an order requiring Kenegarajah and K.N. to each compensate their victims in the amount of $882,063.00.

[71] In R. v. Devgan (1999), 136 C.C.C. (3d) 238 (OCA), the court identified the following factors with respect to the issue of restitution:

1. An order for compensation should be made with restraint and caution;

2. The concept of compensation is essential to the sentencing process:

   • (i) it emphasizes the sanction imposed upon the offender;
   • (ii) it makes the accused responsible for making restitution to the victim;
   • (iii) it prevents the accused from profiting from crime; and
   • (iv) it provides a convenient, rapid and inexpensive means of recovery for the victim;

3. A sentencing judge should consider:

   • (i) the purpose of the aggrieved person in invoking s. 725(1);
   • (ii) whether civil proceedings have been initiated and are being pursued; and
   • (iii) the means of the offender.

4. A compensation order should not be used as a substitute for civil proceedings. Parliament did not intend that compensation orders would displace the civil remedies necessary to ensure full compensation to victims.

5. A compensation order is not the appropriate mechanism to unravel involved commercial transactions;

6. A compensation order should not be granted when it would require the criminal court to interpret written documents to determine the amount of money sought through the order. The loss should be capable of ready calculation.

7. A compensation order should not be granted if the effect of provincial legislation would have to be considered in order to determine what order should be made;

8. Any serious contest on legal or factual issues should signal a denial of recourse to an order;

9. Double recovery can be prevented by the accounting of all sums recovered; and

10. A compensation order may be appropriate where a related civil judgment has been rendered unenforceable as a result of bankruptcy.

[72] As noted in Cunsolo, a restitution order forms part of the sentence imposed upon an offender and therefore whether such an order is an appropriate punishment requires a global view of the imprisonment to be imposed along with any restitution order. Moreover, a restitution order is not intended to undermine the prospects for rehabilitation of the offender. While no single factor or consideration is determinative of whether a restitution order should be made, the defendants present and future ability to pay must be considered.

[73] This would otherwise be an appropriate case to grant the Crown's request: The losses are readily identifiable without the need to resolve contentious evidentiary issues. The victims are entitled to the order and the defendants should be made responsible for their actions. However, I am confident neither defendant has the ability to pay and that they are not likely to be in a position to do so for the foreseeable future. The substantial proceeds of crime in this case were accumulated over 10 years and spent during that time. Apart from the assets set out in my forfeiture order, there is nothing left. In these circumstances, to order K.N. and Kenegarjah to pay the restitution in this case would be crushing and leave little hope rehabilitation.

DNA Order

[74] Section 487.04 states that a DNA order is mandatory for those convicted of participating in a criminal organization. Accordingly, the four defendant's must provide a sample of their DNA to the Crown.

Conclusion

[75] These crimes have caused substantial losses to several financial institutions; a cost that will ultimately be borne by society at large. I have no doubt that but for the two men, A.N. and Kanagarajah would not have become involved in this activity. Kenegarajah and K.N. left a country in turmoil to make a new life in Canada. They are intelligent and resourceful. As Crown counsel pointed out, "this could have been an immigrant success story but they decided to cheat". In so doing, they find themselves in jail, their possessions forfeited, and they will leave prison penniless. K.N.'s wife and two young children now live on welfare in a small basement apartment. This is the legacy of their greed.

Released: January 18, 2013

Signed: "Justice J. De Filippis"