Court File and Parties

Court File No.: Toronto

Date: 2015-12-22

Ontario Court of Justice

Between:

Her Majesty the Queen

— and —

Laurence Honickman

Before: Justice Fergus O'Donnell

Reasons for judgment released on: 22 December, 2015

Counsel:

Ms. M. Schwartz for the Crown

Mr. L. Honickman on his own behalf

Judgment

Fergus O'Donnell, J.:

Overview

[1] These are my reasons on a Crown application for forfeiture of the funds in three bank accounts that are alleged to be the proceeds of crime arising from a series of financial frauds perpetrated by Laurence Honickman in 2013-2014. At the end of the hearing, I ordered forfeiture under s. 462.37 of the Criminal Code, with reasons to follow.

The Pleas

[2] On 6 February, 2015 Laurence Honickman pleaded guilty to eight charges of fraud and three charges of failure to comply before Justice Vaillancourt of the Ontario Court of Justice in North York.

[3] The charges to which Mr. Honickman pleaded guilty can best be summarized as follows:

Charge	Date	Victim(s)/details	Amount
Fraud over	1-8 May, 2013	Donald Todd & London Life	$10,000.00 No actual loss. Payment stopped.
Fraud over	22-29 April, 2013	Larry Shriner & London Life	$10,000.00 loss to CIBC
Fraud over	18 April-2 May, 2013	Delores Brown & London Life	$10,000.00 loss to CIBC.
Fraud over	24 April-2 May, 2013	William Ross Reucassel & London Life	$10,000.00 loss to CIBC. For unknown reasons a second $10,000 fraudulent cheque was never tendered.
Fraud over	1-16 October, 2013	Bernard Kafka & London Life	$8,500.00 loss to London Life.
Fraud over	11-19 June, 2013	Florina Sinopoli and London Life	$37,000.00. No loss; victim stopped payment.
Fraud over	3 July-29 October, 2013	William Paul and Janet Lewis	$21,000.00. This loss was borne by London Life.
Fail to comply with probation	3 July-29 October, 2013	Keep the peace and be of good behaviour
Attempt fraud over	22 August, 2014	Robert Appiah	$25,000.00
Breach recognizance	22 August, 2014	Not to act as insurance agent or investment advisor or to solicit funds from the public.
Fail to comply with undertaking	22 August, 2014	Not to act as insurance agent or investment advisor or to solicit funds from the public.

[4] The Crown proceeded by way of indictment and Mr. Honickman elected to be tried in the provincial court and pleaded guilty to each of the charges.

The Facts

[5] The admitted facts demonstrated that Mr. Honickman had been hired as a contracted salesperson for London Life in 2004. His contract with London Life was terminated in March, 2009 for breach of contract. Since 2011, Mr. Honickman had been prohibited by Ontario's Financial Services Commission from dealing with insurance products or services.

[6] The nature of several of the offences was very similar. For example, Mr. Honickman would contact London Life, claim to be one of the clients named in the charges, have the client's address on file with London Life changed and then ask for a dividend cheque or loan to be issued out of their insurance policy and mailed to the new address. In some cases the fraud was discovered before the cheque cleared; in other cases the fraud was discovered and the cashing bank suffered the loss.

[7] In other cases Mr. Honickman portrayed himself as an advisor for London Life and extracted cheques from the victims by misrepresentation, which cheques he then converted to his own benefit.

[8] Robert Appiah was the victim of the last of the financial offences. Mr. Appiah's wife died. She had obtained a life insurance policy through Mr. Honickman when he was an agent for Equitable Life. Mr. Appiah called Mr. Honickman after his wife died and told Mr. Honickman of her death. Mr. Honickman said he would take care of all of the paper work for the claim and said that he would require several signed blank cheques for that purpose. Mr. Appiah provided those cheques. Mr. Honickman entered fraudulent details on one of those blank cheques, making it payable to himself in the amount of $25,000 and tried to cash it, but it was returned as NSF. A couple of weeks later, Mr. Honickman deposited another of those cheques, drawn on a different account of Mr. Appiah's and similarly forged, and succeeded in cashing it in the amount of $25,000. Mr. Honickman transferred a portion of the proceeds of that cheque to the National Bank of Canada.

[9] On 19 October, 2012, before entering upon this string of substantial frauds, Mr. Honickman was convicted of possession of child pornography and placed on probation for three years with a requirement that he keep the peace and be of good behaviour. Scheming to defraud people is obviously a breach of that requirement.

[10] On 10 September, 2013, Mr. Honickman was released on an undertaking for one of the offences with a condition that he not act as an agent of insurance products or as a financial adviser, etc. His conduct in relation to Mr. Appiah was a clear breach of that undertaking.

[11] On 29 October, 2013, Mr. Honickman was granted bail on some of the first set of charges, with a condition that he not act as an agent of insurance products or as a financial advisor, etc. His conduct in relation to Mr. Appiah was a clear breach of that condition.

[12] Mr. Honickman admitted the facts without qualification, as "absolutely" correct.

The Sentence and Restitution Order

[13] On sentence the Crown sought a year in jail less credit for pre-sentence custody, suggesting that Mr. Honickman ought not to receive enhanced credit for his time in custody since the breaches. Mr. Honickman sought an intermittent sentence on top of his pre-sentence custody, which amounted to 122 real days. The trial judge granted credit for the equivalent of six months of pre-sentence custody (183 days) and imposed an additional ninety days to be served intermittently, followed by three years of probation. Given what had been represented to the court, the probation order only required restitution of two thousand dollars to Mr. Appiah, with restitution to London Life and the CIBC to be dealt with on a free-standing order.

[14] With respect to restitution, the Crown initially asked for restitution in favour of Mr. Appiah in the amount of twenty-five thousand dollars as part of the probation order, leaving restitution in favour of London Life (twenty-nine thousand and five hundred dollars) and CIBC (thirty thousand dollars) to be part of a stand-alone order in light of their significant financial heft in comparison to the widowed Mr. Appiah.

[15] Mr. Honickman told the sentencing judge that "some or most of the money" in relation to Mr. Appiah had been recovered. Whether or not that was in fact true is information that would have been within Mr. Honickman's knowledge. He also pointed to a synopsis in his disclosure material, which said that twenty-three thousand dollars had been recovered. In the end result I am satisfied that this was not true and that there was no reason demonstrated for Mr. Honickman ever to have believed it was true. If there is one person in this whole scenario who is minutely familiar with the to-s and fro-s of the money involved, I am certain that Mr. Honickman is that person.

The Forfeiture Application

[16] On 25 March, 2015 the Crown brought an application under s. 462.37 of the Criminal Code to forfeit the contents of three accounts held by Mr. Honickman (one in conjunction with his wife) at the Tangerine Bank and the National Bank of Canada. Those accounts had been ordered restrained by McWatt, J. of the Superior Court of Justice on 24 November, 2014. As of the time of the restraint application the accounts had values of $534.10 and $14.600.00 and $5,615.57 for a total value at that time of $20,749.67.

[17] The s. 462.37 application that ended up before me was one of three extant proceedings relating to the same funds. Mr. Honickman had himself commenced an application in the Superior Court to revoke Justice McWatt's restraint order under the Criminal Code. In addition, the government of Ontario, acting under its civil authority under the Civil Remedies Act, S.O. 2001, c. 28, had brought an application for forfeiture of the accounts.

[18] Mr. Honickman was not represented by counsel when he appeared before me, but there were various references to him consulting with counsel in the background.

[19] Given the symbiotic relationship among the three outstanding court proceedings and the various postponements occasioned in the Superior Court (since one of the two possible outcomes here would likely make the two Superior Court proceedings moot), I gave my decision and issued a forfeiture order at the time of the last hearing before me, with reasons to follow. These are those reasons.

[20] The proceedings before me had a somewhat fitful history and seemed at times to have been designed to remind me of some of my own more significant losses as a lawyer in proceeds of crime cases in the Court of Appeal. As it was not clear that Mr. Honickman's wife had been properly served with the s. 462.37 application, I required the Crown to ensure that she was properly served. If Ms. Honickman was not properly served, it would be open to her to bring an application for relief from forfeiture under s. 462.42 of the Criminal Code, which would have the potential to make the proceedings before me at least inefficient and potentially pointless. Also, insofar as there was a discrepancy between the extent of a particular loss alleged by the Crown on the guilty plea and the extent of the loss alleged on the s. 462.37 application, I pointed the parties to the decision of the Court of Appeal for Ontario in R. v. West, et al., dealing with the extent to which the Crown is entitled to rely on hearsay evidence in applications of this nature. West was a case dealing with a forfeiture application under s. 490 of the Criminal Code. For the purpose of the present case, I proceeded on the basis that the guidance of the Court of Appeal in that case was equally applicable to an application under s. 462.37, although I stress that that point was not actually argued before me. My concern was that if the Crown purported to proceed on hearsay evidence on pivotal points, any forfeiture outcome before me would be patently reversible, and would result in a new hearing being required, a lesson I learned the hard way while serving a different role in West, supra.

The Application Before Me Rather Than Before the Trial (Plea) Judge

[21] The Crown's s. 462.37 forfeiture application was initially returnable before the trial judge on 25 March, 2015 but was ultimately adjourned. By the time of its return to court, the trial judge was embroiled in a very long trial that required him to preside outside the region for a prolonged period of time. The matter then appeared on my docket and I carried it to conclusion.

[22] Section 462.37 of the Criminal Code speaks of an application being brought before the court that is sentencing the offender. I was not that court. The first question is whether or not I have the jurisdiction to make the order the Crown seeks.

[23] I think the short answer, in light of Justice Vaillancourt's prolonged absence outside the jurisdiction, is to be found in sections 669.1 and 669.2 of the Criminal Code. While reasonable minds might differ over which of the two provisions confers jurisdiction (i.e. on whether or not Justice Vaillancourt had "heard evidence"), it seems to me that there is no gainsaying the conclusion that the combined effect of those sections authorizes me to handle the matter in his absence. The circumstances described in those sections are fairly open-ended and, in my view, clearly encompass a judge's unavailability not only because of illness or death but where the exigencies of court administration, the burdens of other duties and the requirement to provide timely justice render it appropriate. It also bears noting that a forfeiture application is almost entirely distinct and separate from a sentencing proceeding, as the Supreme Court of Canada has noted in cases such as R. v. Craig, 2009 SCC 35. In my experience, it is not at all unheard of for forfeiture proceedings to continue some time after sentence has been imposed. Finally, this is not an unduly complicated or nuanced matter that cries out for the judge who took the plea to continue with the matter in order to avoid undue repetition or an unjust outcome to the parties.

[24] I should note that I do not purport to act under the residual disposal provision in s. 462.43 of the Criminal Code: "judge" as used in that section and as defined in s. 462.3(1) for the purposes of Part XII.2 of the Criminal Code, does not include a judge of this court.

The Divergence Between the "Facts" on the Plea And The Facts Proved Before Me

[25] I accept entirely that the divergence with respect to the extent of Mr. Appiah's loss was rooted in an erroneous document generated by the police, which stated that $23,000 of the $25,000 lost had been recovered. This is no trivial error and I can appreciate the trial judge's frustration with it. I can also, however, appreciate the rushed nature of the proceedings as reflected in the transcripts before the trial judge, in the sense that the Crown and defendant were trying to get the matter dealt with before the trial judge disappeared from the scene for a prolonged period of time. I should also state that I do not believe for one second that Mr. Honickman was in any way disadvantaged by the state's error or, for that matter, that he was actually misled by it. The notion that Mr. Honickman honestly believed that the vast majority of the money he stole from Mr. Appiah had been recovered is laughable and I heard no evidence from him to counter the implausibility of that.

The Evidence On The Forfeiture Hearing

[26] At the forfeiture hearing the Crown called Detective Constable Stephen Fryer, the officer in charge of the case, and Mr. Robert Appiah, Mr. Honickman's victim.

[27] Detective Constable Fryer had also filed an affidavit in support of the forfeiture application which stated that, "the following money from Mr. Appiah's account and the insurance proceeds was traced into the following three bank accounts held by Laurence Honickman" and then lists the three accounts and their details.

[28] That same affidavit and D.C. Fryer's testimony asserted that the understanding at the time of the plea that Mr. Appiah had recovered $23,000 of the $25,000 defrauded was not correct.

[29] In light of the issue concerning the requirement for non-hearsay evidence on applications of this nature, the Crown also called Mr. Appiah, who provided direct, first-hand testimony that he had not, in fact, recovered the $23,000 referred to in the police synopsis.

[30] In light of the evidentiary record, there is no reasonable conclusion open to me other than that Mr. Appiah was never reimbursed the $23,000 that the synopsis implies he had been reimbursed.

The Nature of Proceeds of Crime

[31] It bears noting that "proceeds of crime" as defined in the Criminal Code is a concept of tremendous potential breadth. Section 462.3(1) defines proceeds as:

"any property, benefit or advantage, within or outside Canada, obtained or derived directly or indirectly as a result of (a) the commission in Canada of a designated offence, (b)…."

[32] "Designated offence" is itself almost all-encompassing, including any indictable offence under the Criminal Code or other federal statute, other than a few that have been specifically excluded by regulation.

[33] The proceeds of crime provisions in the Criminal Code recognize that a very large amount of criminal activity is motivated by greed and profit and that allowing an offender to retain the fruits of his crimes is extremely unsound public policy. The breadth of the definition in the Criminal Code recognizes the fact that profit-motivated criminals in general and money-launderers who work for them in particular can be very creative in concealing, moving, converting and seemingly legitimizing the profits of their crimes. Thus the very broad definition of "proceeds of crime" in the Criminal Code, which very intentionally denies the offender the ability to retain his profits by mere conversion. Thus, if the drug dealer uses his profits to buy collector motor vehicles which he then sells to buy a home, which he then sells to buy diamonds, the diamonds are every bit as much proceeds of the drug trafficking as the original twenty-dollar bills were. The concept of "directly or indirectly" also recognizes both the impracticability of tracing every dollar spent to either a legitimate or illegitimate source and the fact that money is fungible, i.e. every dollar is of exactly the same value as every other dollar and they are, therefore indistinguishable. Thus, it will not lie in an offender's mouth to say that he used his illicit proceeds to pay his rent or to buy groceries long ago consumed but that the money in his investment account is clean, from a legitimate source. The simple answer is that, but for the existence of the illicit funds, those "clean" funds would have to have been spent on rent and food and thus the clean funds only exist because of the illicit profits. Those funds are, therefore, indirectly the proceeds of crime. In any event, if that fallacious argument were to hold sway the offender would be exposed to a fine in lieu of forfeiture with mandatory consecutive jail time in default of payment. In Mr. Honickman's case, for example, if the argument were that the funds in the three accounts was clean and that Mr. Appiah's money had disappeared or been spent on life expenses, then Mr. Honickman would face a fine in lieu of forfeiture and, under s. 462.37(4)(iii) of the Criminal Code, a mandatory consecutive sentence of not less than twelve months in jail and not more than eighteen months in jail.

The Standard For Forfeiture

[34] Section 462.37 of the Criminal Code provides for forfeiture in two distinct scenarios, applying two different standards of proof. Section 462.37(1) makes forfeiture of proceeds of crime mandatory if the Crown can demonstrate on a balance of probabilities that the property is proceeds and that the designated offence of which the person was convicted was "committed in relation to that property".

[35] Section 462.37(2) provides for discretionary forfeiture if the section 462.37(1) pre-requisites are not met but where the Crown is able to prove beyond a reasonable doubt that the property is proceeds of crime (i.e., without the requirement of a link between the proceeds and the designated offence of which the offender has been convicted).

[36] For reasons that are not apparent, the Crown required Mr. Honickman to plead to an attempt fraud charge in relation to Mr. Appiah rather than having him plead to the uttering charge that related directly to the cheque Mr. Honickman successfully (and fraudulently) negotiated. This raises the question of whether or not forfeiture is available for the money in the three accounts under s. 462.37(1).

[37] I am satisfied that forfeiture under s. 462.37(1) is mandated on a number of bases. First, while it might have been more prudent for the Crown to have required Mr. Honickman to plead to the uttering charge, if only to avoid any issue arising in relation to proceeds and an "attempt" charge, that oversight is not at all fatal. The facts on the plea and on the evidence at the forfeiture hearing demonstrate that Mr. Honickman generated a total of $84,500 in proceeds of crime, being made up of the $30,000 loss by the CIBC, the $29,500 loss by London Life and the $25,000 loss by Mr. Appiah. Given the very broad definition of proceeds of crime, the roughly $20,000 in the three accounts, approximately a quarter of the total loss or "proceeds", clearly constitutes proceeds, even if there were no direct linkage back. A dollar is a dollar is a dollar. Mr. Honickman committed the attempted fraud (actually a completed fraud) in relation to $25,000 of Mr. Appiah's money (and $30,000 of the bank's money and $29,500 lost by London Life in the other counts), the proceeds went into his possession (even if some of it later went elsewhere). The evidence clearly demonstrates on a balance of probabilities that the funds in the three accounts are proceeds of any of the three groups of charges.

[38] Even if I were to apply a stricter standard, which I do not believe is required by either the wording of the Criminal Code or by the principles underlying part XII.2 of the Criminal Code, I am satisfied that the Crown would succeed on the more stringent language of s. 462.37(2). Thus, if I have to remove the attempt fraud count from the equation (on the theory that one cannot have proceeds from a mere attempt) and remove the CIBC and London Life losses from consideration under s. 462.37(1), I look to s. 462.37(2).

[39] Section 462.37(2) of the Criminal Code was considered by the Court of Appeal for Ontario in R. v. Hape. In that case, I am intimately aware that it was argued by the Crown that the very plain and broad language of s. 462.37(2) of the Criminal Code empowered a sentencing court in an appropriate case to impose forfeiture for proceeds of crime far removed in time from the matters of which the defendant had been convicted, so long as the Crown could prove the criminality and the taint beyond a reasonable doubt. The Court of Appeal demurred, holding that, notwithstanding the almost boundless language of s. 462.37(2) in relation to the provenance of the alleged proceeds of crime, for the Crown to succeed under that provision, it nonetheless must prove some linkage to the criminality of which the defendant was found guilty, i.e. the Crown cannot obtain forfeiture under s. 462.37(2) of proceeds that bears no connection whatsoever to the present prosecution. In particular, the Court of Appeal noted, at paragraph 40:

[40] We also agree with the trial judge's conclusion that s. 462.37(2) contemplates a nexus between the offence which was the subject of the trial giving rise to the conviction and sentencing proceedings and the property the Crown seeks forfeited. That is not to say that the property must be the proceeds of the crime for which the accused was convicted. If that were the case, the property would be properly forfeited under s. 462.37(1). The property must, however, have been the subject matter of the allegations made at trial. If at the end of the trial the property that was the subject matter of the allegations on which the trial was based is determined to fall within the definition of proceeds of crime, but is not the proceeds of the offence for which the accused was convicted at trial, s. 462.37(2) may have application.

[40] Therefore, if one were to consider that the funds in the three accounts were not forfeitable under the heading of an attempt-fraud conviction, it is clear on the language in Hape, supra, that the fraud against Mr. Appiah was very much part of the allegations against Mr. Honickman, as were the CIBC and London Life losses also. There can be no doubt on the evidence before me that those three sets of losses were incurred and that Mr. Honickman's fraud of all, or any, of those amounts enabled him, directly or indirectly, to generate or maintain the balances in the three accounts restrained by Justice McWatt. The proof beyond a reasonable doubt standard in s. 462.37(2) is clearly met.

Conclusion

[41] I am satisfied that the Crown has demonstrated beyond a reasonable doubt that Mr. Appiah was never reimbursed his loss as was represented to the trial judge, that the money in the three restrained accounts is "proceeds of crime" as defined by the Criminal Code and that (a) the restrained funds are subject to forfeiture under the less stringent standard set out in s. 462.37(1) of the Criminal Code, failing which, (b) the more demanding standard set out in s. 462.37(2) is met in any event.

[42] It is for these reasons that I ordered forfeiture.

Released: 22 December, 2015

Footnotes

[1] In light of my comments, the Crown arranged for Mary Honickman to be served with notice of the forfeiture application. She did not attend in response to that notice. Mr. Honickman purported to speak on her behalf. No evidence was called in relation to any innocent explanation or origin in relation to the funds in the three accounts.

[2] One reported example of this can be found in the judgment of Oliphant, J. in R. v. Dew, [2012] MBQB No. 284. Although that decision relates to the forfeiture of offence-related property under the Controlled Drugs and Substances Act, there is no principled distinction to be drawn between the two forfeiture schemes in relation to this point, those two schemes clearly bearing the almost identical imprint of the legislative draftsperson.

[3] No specific explanation for the discrepancy in the synopsis was offered and it would probably be unrealistic to expect one insofar as the difference between "$2,000" and "$23,000" is a single missed digit on a keyboard.

[4] I note that the trial judge did observe at one point that he might have proceeded differently with respect to sentence had he known that the loss was actually greater. I can only take this to mean that if the trial judge had known there was a very large, un-repaid loss to a vulnerable widower, he might have imposed a heavier sentence insofar as good-faith restitution is a mitigating factor on sentence. There is no interpretation I can reasonably place on the trial judge's remarks that would lead me to think that Mr. Honickman's sentence might have been lower if a s. 462.37 forfeiture application was being considered. Section 462.37 forfeitures, it must be remembered, are not punitive in nature, but rather a disgorgement of funds that an offender has no right to retain, so it would be an error in law to set a s. 462.37 order off against a defendant's sentence. See, for example, R. v. Craig, 2009 SCC 23, at paragraphs 34-35.

[5] i.e. any offence that "may" be prosecuted by indictment, thus encompassing hybrid offences.