Court Information

Ontario Court of Justice College Park - Toronto

Date: 2016-07-11

Parties

Between:

Her Majesty the Queen

— And —

Kristin Davies

Judicial Officer and Counsel

Before: Justice William B. Horkins

Counsel:

• D. Ishak, for the Crown
• M. Segal, for the accused Kristin Davies

Procedural History

Plea entered: November 9, 2015

Sentence Hearing: June 3, 2016

Reasons for Sentence Delivered: July 11, 2016

Reasons for Sentence

Overview

[1] For nine years Kristin Davies worked as the Operations Manager for a brokerage firm, Toll Cross Securities. Her annual compensation was in the range of $70,000. Beginning in 2011 she systematically took advantage of her position of trust to steal approximately $175,000 from her employer by diverting deposit funds to her own bank account. This fraud continued over a span of about a year and a half. Ironically, when irregularities were suspected, she was assigned to investigate. Eventually she confessed to her criminal activity and the matter was turned over to the police.

[2] It would seem that what triggered the accused's decision to steal from her employer were certain financial and personal reverses flowing from matrimonial issues that left her solely responsible for not just herself but for her two children both of whom were and are pursuing post-secondary studies.

[3] Ms. Davies is of otherwise good character. She is a mature 52 year old single mother of two young adult children. She has an unrelated criminal record, a conviction for impaired driving from fifteen years ago. She has a higher education and has worked in the financial services business for many years. She is presently in good health, having survived a bout with cancer a decade ago and she hopes to make restitution when and if she is able to do so.

[4] There has been no restitution made as yet.

[5] The Crown seeks a custodial sentence of 12 to 15 months in jail and an Order for full restitution. The accused asks that her sentence be served in the community pursuant to a Conditional Sentence Order (CSO). The Crown is opposed submitting that a CSO would fail to adequately address the need for denunciation and deterrence.

General Principles

[6] Many years ago our Court of Appeal clearly articulated the general principle that breach of trust employee thefts should attract jail sentences except in special circumstances.

[7] The Criminal Code sentencing provisions in s. 718 deem an abuse of a position of trust to be an aggravating circumstance.

[8] The guidelines drawn from the appellate case law make it very clear that in cases of trusted employee embezzlements of large amounts of money, taken through multiple transactions spread over time, sentencing courts should generally consider a significant custodial sentence in order to satisfy the need for both denunciation and general deterrence. Despite these appellate guidelines there have been several examples of Conditional Sentences being granted in exceptional circumstances.

[9] In 2012 Parliament amended the Criminal Code to prohibit Conditional Sentences in cases of Fraud Over $5000. The time frame of this offence straddles the coming into force of that change of law and the Crown very fairly concedes, for the purposes of this case, that this accused is not statute barred from consideration for a Conditional Sentence Order. Having said that, the amendments to the Code are a factor as they evidence Parliaments view that these are matters of significant gravity.

[10] In 2007 Justice Casey Hill, in R v Williams, sentenced 60 year old Beverly Williams to 18 months in jail for stealing approximately $195,000 from her employer over a three year period of time. Ms. Williams was actually a Trustee of the school board. She was a first offender of previously good character, and a cancer survivor. She was convicted following trial and a Conditional Sentence was expressly found to be not appropriate.

[11] In his characteristic fashion, Justice Hill took the opportunity to outline very completely the applicable authorities. His judgement provides an excellent summary of the general principles and the relevant case law up to that point in time:

21 "Fraud over $5000 is a serious offence, attracting a maximum sanction of 10 years in jail": R. v. Bogart (2002), 167 C.C.C. (3d) 390 (Ont. C.A.) at 396 (leave to appeal refused [2002] S.C.C.A. No. 398).

22 Section 718.2 of the Criminal Code provides that a breach of trust is deemed to be an aggravating circumstance in sentencing warranting an increase in sentence.

23 The most important factor in sentencing persons who have occupied positions of trust is the factor of general deterrence: R. v. Scott, [2007] O.J. No. 1154 (C.A.) at para. 2; R. v. Phronimadis, [2006] O.J. No. 3992 (C.A.) at para. 4; R. v. Taipow, [2005] O.J. No. 4643 (C.A.) at para. 5; R. v. Dobis (2002), 163 C.C.C. (3d) 259 (Ont. C.A.) at 272-3; R. v. Pierce (1997), 114 C.C.C. (3d) 23 (Ont. C.A.) at 36-7 (leave to appeal refused [1997] S.C.C.A. No. 225, [1997] 3 S.C.R. xiii); R. v. List, [1978] O.J. No. 751 (C.A.) at para. 6; R. v. McEachern (1978), 42 C.C.C. (2d) 189 (Ont. C.A.) at 191; R. v. Coffin (2006), 2006 QCCA 471, 210 C.C.C. (3d) 227 (Que. C.A.) at para. 49; R. v. Steeves and Connors (2005), 2005 NBCA 85, 200 C.C.C. (3d) 282 (N.B.C.A.) at 283, 285; R. v. McKinnon, 2005 ABCA 8, [2005] A.J. No. 12 (C.A.) at para. 63; R. v. Paul, 2003 MBCA 153, [2003] M.J. No. 447 (C.A.) at para. 4; R. v. Gauthier (1998), 131 C.C.C. (3d) 177 (P.E.I.C.A.) at 187-8, 189 (per dissent). "Mitigating factors and even rehabilitation become secondary": R. v. Bogart, at 398.

24 General deterrence tends to have greater impact in the case of embezzlement-type crimes, whether fraud or theft - criminal conduct where persons "usually plan and deliberate about it to some extent": R. v. Dobis, at 272-3; R. v. Wismayer (1997), 115 C.C.C. (3d) 18 (Ont. C.A.) at 38; R. v. Gray (1995), 76 O.A.C. 387 (C.A.) at 398-9; R. v. McKinnon, at para. 60; R. v. Gauthier, at 189 (dissent); R. v. Hoy, [1998] B.C.J. No. 1649 (C.A.) at para. 6; R. v. Reid, 2004 YKCA 4, [2004] Y.J. No. 3 (C.A.) at para. 13. Put differently, "law-abiding persons, with good employment records and families ... are the ones most likely to be deterred by the threat of severe penalties": R. v. Proulx (2000), 2000 SCC 5, 140 C.C.C. (3d) 449 (S.C.C.) at 503.

25 … One need only look across a representative sample of fraud sentencing jurisprudence, to see that it is frequently those with successful employment and comfortable income, persons "with spotless reputations" (R. v. Coffin, at fn. 26), who, through a character flaw, succumb to supplementing their compensation through dishonest means. General deterrence remains a paramount consideration even for first offenders of otherwise good character. "[M]ost people who get caught stealing from their employer are unlikely to reoffend": R. v. Pierce, at 36; R. v. Bertram, [1990] O.J. No. 2013 (C.A.) at 3; R. v. Clarke, [2004] O.J. No. 3438 (C.A.) at para. 16; R. v. Gauthier, at 189 (dissent); R. v. Barrick (1985), 81 Cr. App. R. 78 (C.A.) at 81.

26 In these cases, in addition to general deterrence, "denunciation ... and accountability for one's actions" are the controlling principles of sentencing: R. v. Gosal, [2006] O.J. No. 2651 (C.A.) at para. 7; R. v. Scott, at para. 2; R. v. Poutney, [2006] O.J. No. 2964 (C.A.) at para. 5.

27 The sentencing option of a conditional sentence is not excluded from consideration in breach of trust fraud cases: R. v. Dobis, at 273 and see for example, R. v. Bunn (2000), 2000 SCC 9, 140 C.C.C. (3d) 505 (S.C.C.); R. v. Burkart (2006), 2006 BCCA 446, 214 C.C.C. (3d) 226 (B.C.C.A.); R. v. Gauthier; R. v. Steeves and Connors; R. v. Robinson, [2003] O.J. No. 4722 (S.C.J.); R. v. Tulloch, [2002] O.J. No. 5446 (S.C.J.). Many of these cases include exceptional mitigating circumstances. A conditional sentence, with properly tailored punitive conditions, can effect a measure of general deterrence and denunciation.

28 That said, large-scale frauds by persons in positions of trust will almost inevitably attract a significant custodial sentence. In R. v. Dobis, at 273, the court observed:

This court has said repeatedly that general deterrence is central to the sentencing process in cases involving large scale frauds with serious consequences for the victims: see: McEachern, Bertram and Wood, Gray and Holden, [2000] O.J. No. 3481, supra. Importantly, the court has said the same thing since the introduction of the conditional sentencing regime. Conditional sentences have been rejected in large scale fraud cases such as Pierce, supra, and Ruhland, [1998] O.J. No. 781, supra, and commented on adversely in the leading Ontario case dealing with conditional sentences, R. v. Wismayer (1997), 115 C.C.C. (3d) 18 (Ont. C.A.).

In Pierce, Finlayson J.A. observed, at p. 40:

I would ... refuse the application to permit the appellant to serve the sentence in the community. The abuse of a position of trust or authority in relation to a victim is an express aggravating circumstance set out in the sentencing guidelines under s. 718.2. This factor has traditionally drawn a severe custodial term even with first offenders.

In the Pierce decision, at 29-30, the court stated:

In all of the circumstances, when the competing principles of rehabilitation and general deterrence are considered, the nature of this particular crime with the large amount of money that is involved, all of which is apparently not recovered, it seems to me that a custodial sentence has to follow, that is so even though she has no criminal record. That is so even though this will be the first time in her life that she has experienced jail. I am quite alive to the principle that jail should be the last resort in the difficult matter of sentence. The reason is clear.

This country, from coast to coast and especially the heavy populated urban areas of Southern Ontario, abounds with fraudsmen who would regard a low or a non-custodial sentence in these circumstances as an irresistible temptation to take the risk of spending a few short months in jail (a Canadian jail) in return for attempting the crime of fraud or theft where the prize exceeds $150,000. To some, such a prospect would be almost irresistible. Great care must be taken in the matter of sentence for a criminal offence such as fraud at this level of seriousness, to avoid the prospect that by over-emphasizing the principle of rehabilitation, the crime, to many, would be worth the risk of being caught.

See also R. v. Clarke, at para. 17; R. v. Paul, at para. 15-6; R. v. Steeves and Connors, at 286-7; R. v. McIvor (1996), 1996 ABCA 154, 106 C.C.C. (3d) 285 (Alta. C.A.) at 286.

29 "[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: R. v. Dobis, at 271; R. v. Bertram, at 3; R. v. Wilson, [2003] O.J. No. 1047 (C.A.) at para. 5. Penitentiary sentences in the six-year range have been imposed in cases involving millions of dollars. The Dobis decision, at 273, includes at the lower end of "large-scale frauds", the McEachern case involving $87,000. and the fraud in Pierce in the amount of $270,000., while a $200,000. defalcation was described as a large-scale fraud in R. v. Robinson, at para. 4, 11. By way of jurisdictional comparison, in England, on a guilty plea to theft or fraud of sums between GBP100,000 and GBP200,000 the appropriate sentence is in the range of 2 to 3 years' imprisonment: R. v. Clark, [1997] EWCA Crim 3081 at 4-5.

30 By way of overview and non-exhaustive list only, certain circumstances have, over time, been recognized as aggravating factors in "white collar" breach of trust cases:

(a) The nature and extent of the loss: R. v. Savard (1996), 109 C.C.C. (3d) 471 (Que. C.A.) at 474. The amount of the theft or fraud is one factor only: R. v. Clark, at 4; R. v. Barrick, at 82.

(b) The dishonest attainment of public monies is a serious crime with its own effects even though the institution, on its face, seems able to bear the loss: R. v. Bogart, at 396; R. v. Coffin, at para. 46.

(c) The degree of sophistication of the dishonesty and the degree of planning, skill and deception: R. v. Dobis, at 272; R. v. Clarke, at para. 18; R. v. Wilson, at para. 8; R. v. Steeves and Connors, at 285, 287; R. v. Savard, at 474; R. v. Downey, [2003] O.J. No. 4997 (S.C.J.) at para. 55 (aff'd [2005] O.J. No. 6301 (C.A.)).

(d) Whether the sole motivation is greed: R. v. Savard, at 474; R. v. Clark, at 5; R. v. Steeves and Connors, at 285, 287.

(e) A lengthy period of dishonesty: R. v. Dobis, at 270; R. v. Wilson, at para. 8-9; R. v. Clarke, at para. 18; R. v. Harding (2007), 2006 SKCA 118, 213 C.C.C. (3d) 543 (Sask. C.A.) at 548; R. v. Reid, at para. 15; R. v. Coffin, at para. 47; R. v. Steeves and Connors, at 285, 287; R. v. Leaf, [2007] EWCA Crim 802 at para. 14-15; R. v. Gulam et al., [2006] EWCA 2320 at para. 11.

(f) The number of dishonest transactions undertaken in the commission of the offence: R. v. Smith, [2004] O.J. No. 4179 (C.A.) at para. 5-6; R. v. Wilson, at para. 9; R. v. Harding, at 548; R. v. Coffin, at para. 47; R. v. McKinnon, at para. 47.

(g) Where there exists little hope of restitution: R. v. Reid, at para. 15.

(h) The offender was caught as opposed to voluntary termination of the criminality: R. v. McKinnon, at para. 47; R. v. Steeves and Connors, at 287; R. v. Gauthier, at 186-7 (dissent); R. v. Gulam et al., at para. 9.

(i) Running the risk that others would fall under suspicion: R. v. Gulam et al., at para. 3.

(j) The impact on victims of the fraud including members of the public, the employer and fellow employees: R. v. Dobis, at 270; R. v. Reid, at para. 3; R. v. Paul, at para. 16.

(k) The "quality and degree of trust reposed in the offender": R. v. Barrick, at 82.

31 In addition to the usual factors mitigating sentence, such as first offender status, a plea of guilt, cooperation and assistance with the authorities, impact of incarceration on a third party as in Bunn, other circumstances in breach of trust fraud cases can serve to ameliorate the harshness of the disposition to be imposed:

(a) "[S]ubstantial recovery" of the proceeds of the dishonest conduct: R. v. Wilson, at para. 9; R. v. Nichols, [2001] O.J. No. 3220 (C.A.) at para. 47, 49 (leave to appeal refused [2001] S.C.C.A. No. 508).

(b) The pre-sentence making of restitution is a mitigating factor: R. v. Pavich, [2000] O.J. No. 4209 (C.A.) at para. 2; R. v. Bogart, at 400; R. v. McKinnon, at para. 22, 88-92; R. v. Francis, [2000] O.J. No. 5043 (C.A.) at para. 2; R. v. Clark, at 5.

(c) Where the dishonesty resulted in personal benefit to the accused, was there a motive mitigating the breach of trust, whether a medical condition, or addiction, or other motivating cause existing other than greed or financial gain: R. v. Poutney, at para. 1, 3; R. v. Davies (2005), 199 C.C.C. (3d) 389 (Ont. C.A.) at 399-401; R. v. Bogart, at 400; R. v. McKinnon, at para. 47; R. v. McIvor, at 286-7; R. v. Harding, at 548-9; R. v. Gulam et al., at para. 8; R. v. Barrick, at 82; R. v. Clark, at 4.

33 A fundamental principle of sentencing is reparation for harm done (s. 718(e)(f) of the Code). Restitution is a discretionary order. The amount of the loss must be clearly calculable. A factor, though not a determinative factor, in considering the reparation of a restitution order, is an assessment of the means of the offender to meet the obligations of court-ordered restitution: R. v. Chambers, [2007] O.J. No. 1198 (C.A.) at para. 2; R. v. Taylor (2003), 180 C.C.C. (3d) 495 (Ont. C.A.) at 497; R. v. Devgan (1999), 136 C.C.C. (3d) 238 (Ont. C.A.) at 246-7; R. v. Biegus (1999), 141 C.C.C. (3d) 245 (Ont. C.A.) at 249-251.

[12] More often than not Conditional Sentences have been found to be too lenient to satisfy the need for denunciation and deterrence in these sorts of cases. But not always. Most departures from the general rule flow from joint submissions in compassionate cases or in cases where the crown acknowledges facing significant challenges in proof. Almost all lenient sentences in these cases are situations where significant restitution has been made or secured.

[13] In order to instruct myself on the appropriate range of sentence in this case I have reviewed a number of similar cases, including those provided to me by counsel for the accused, including:

• R v Reginer — a $300,000 fraud spread over four years, the money spent on luxury items — 18 months jail.

• R v Bandiera — a $400,000 bookkeeper fraud spread over four years — CSO rejected — 5 months jail.

• R v Kohuch — $60,000 fraud on a Hockey association by the treasurer — accused suffering from an untreated mental health disordered — 18 months CSO

• R v Dahaliwhal — $400,000 fraud over four years by hospital executive — 9 months jail

• R v O'Neill — bank employee - $175,000 over 3 years — gambling addiction - $6000 restitution made — 12 months jail

• R v Stirling — Secretary - $146,000 from employer over "several years" — CSO set aside on appeal — 12 months jail

[14] In R v Sampson, my colleague Justice Blouin recently granted a Conditional Sentence Order in a serious employee theft case. Ms. Sampson had redirected approximately $230,000 to her personal account over a period of eight years. Ms. Sampson was a 37 year old single mother of a three year old. This sentence would appear to be an outlier of sorts, a compassionate disposition based the on compelling and legitimate concerns for the welfare of the accused's young child.

[15] Two recent cases out of our Court of Appeal have reinforced the message that meaningful jail sentences should be expected when there is an employee theft of significant proportions.

[16] In R v Collins, an offender with aboriginal heritage defrauded a provincial employment program of close to $100,000. His conduct included the provision of false Identifications. A very strong court, O'Connor ACJO, Rosenberg and Armstrong JJA., reduced his 16 months sentence to a "relatively lenient" 10 months. Even considering the restrained, restorative, Gladue principles the Court stated that the crime was too serious for a Conditional Sentence Order.

[17] In R v Silva, the Court of Appeal considered an employee theft of approximately $300,000 spread over 14 months. There was, as in this case, no recovery. The trial courts 10 month sentence was upheld and described as "by any measure … very lenient."

A Fit Sentence in this Case

[18] The Aggravating Factors:

• Position of trust abused
• Large amount taken, $175,000
• Fairly sophisticated scheme
• Primarily motivated by greed as opposed to need
• Multiple transactions spread over a lengthy period of time
• No restitution and no immediate prospects of restitution

[19] The Mitigating Factors:

• Plea
• Previously good character
• Motivated by concern for her children
• Loss of career prospects
• Strict bail conditions

[20] Balancing all of these factors I cannot conclude that this is a "special" or exceptional case. A balancing of the applicable principles of sentence set out in S. 718 of the Code compels the conclusion that a Conditional Sentence Order is not appropriate. Such a lenient disposition would not just fail to send the appropriate message; it would send an entirely wrong message.

[21] In this case there must be a measured response to the gravity of the accused's criminal behaviour. The sentence must be proportional to the moral fault of the accused and to the harm done. The Courts can not shy away from punishing serious offences with serious consequences otherwise we risk losing the public's confidence in the criminal justice system by creating the impression that there is no meaningful accountability for serious misconduct.

[22] Considering all of the above I have determined that a Conditional Sentence Order is not an appropriate sentence option in this case.

[23] The accused is sentenced to a term of imprisonment of nine months to be followed by a term of probation for two years. The accused will pay full restitution for the amounts stolen.

[24] I will hear from counsel as to the terms of Probation, Restitution and other ancillary Orders.

Released: July 11, 2016

Signed: Justice W.B. Horkins

Footnotes

[1] The victim has been largely restored by insurance and the loss has ultimately settled on the bank that processed the transactions and now holds a judgement against the accused.

[2], [2007] OJ 1604

[3] 2014 ONSC 3808

[4] 2012 ONSC 6015

[5] 2011 ONCJ 620

[6] 2011 ONCJ 560

[7] [2009] OJ 5999

[8] [2010] AJ 1297

[9] [2016] ONCJ 128

[10] 2011 ONCA 182, [2011] OJ 978

[11] [2015] OJ 2242