Court Information
Ontario Court of Justice
Date: October 18, 2018
Court File No.: 17-15003812 and 17-15002193
Toronto Region – Old City Hall
Parties
Between:
Her Majesty the Queen
— And —
Richard Joseph Lebel
Before: Justice H. Pringle
Heard on: July 18, 2018 and September 21, 2018
Reasons for Judgment released on: October 18, 2018
Counsel
Tara Cassidy — counsel for the Crown
Chris O'Connor — counsel for the accused
Judgment
PRINGLE J.:
Circumstances of the Offence
[1] For over 5½ years, Mr. Lebel stole from his employer, IDS Management Inc. As the Director of Systems and Infrastructure, he was trusted to make technology purchases for the company. He exploited that trust by buying computer hardware and software that IDS did not require. The purchases, once they arrived, were never logged in. Instead, the defendant sold the illegal computer equipment online, using a sophisticated network he set up to transact with his customers.
[2] This house of cards came crashing down after a management audit, in February 2016, uncovered log discrepancies and the defendant's unauthorized use of the corporate Amex card. He was fired the next month and police were contacted. Experiencing depression and suicidal ideation, Mr. Lebel was hospitalized and placed on suicide watch. Upon being discharged, he turned himself into police custody. Mr. Lebel was released on bail in 2016 and has remained on this release without incident to date.
[3] The total loss to the company, globally, was $162,480.29. The impact of the company's loss was cushioned, somewhat, by insurance reimbursing $135,000 of their loss. IDS loss is a total of $27,480.29.
Circumstances of the Offender
[4] Mr. Lebel pled guilty before me, to one count of Fraud Over $5000, admitting to defrauding his employer between 2010 and 2016. The Crown proceeded by indictment, and his case adjourned to allow for preparation of a Pre-Sentence Report. Once received, that report commended Mr. Lebel as a good candidate for community supervision.
[5] The report and Mr. Lebel's letter to the court establish his criminal offending was fueled by addiction. More particularly, Mr. Lebel is a gambling addict. He has also habitually abused both cocaine and alcohol, on a long-term basis. Mr. Lebel also has mental health issues that, upon being diagnosed following his arrest, required psychiatric treatment and medication.
[6] Growing up, the defendant's upbringing was relatively normal, at least from a surface perspective. Underneath that façade of normalcy, however, was a dysfunctional family. Mr. Lebel perceived his father as not the type of man who demonstrated emotion and, rightly or wrongly, felt his mother to be disconnected from her children. His parents separated when the defendant was 16. I am sure this emotional discord Mr. Lebel felt in his family life was attributable, at least in part, to his parents' marriage falling apart.
[7] After the separation, the defendant lived with his mother and his behaviour quickly disintegrated in a number of ways. He was having trouble at school and had begun using drugs. He was sent to live with his father, where his behaviour stabilized until his older brother suddenly died. Mr. Lebel shut down emotionally. His mother, who believed her son was suffering from depression, was unable to get him to accept help.
[8] As a young adult, Mr. Lebel found his way into the field of computers. But his father began to note worrisome signs. Mr. Lebel was always working, but always broke. Increasingly, his parents had to intervene and pay unpaid bills. Although they did not know it at the time, the defendant had developed a serious gambling addiction.
[9] In 2010, Mr. Lebel began a stable relationship with his former partner and the mother of his two children. She was a stable and positive influence on him. Always gainfully employed, in 2010 he began working for IDS Management Inc. Still, the defendant could not control the gambling addiction. His financial affairs were in disarray. He covered up the situation with lies upon lies, ultimately causing the relationship with the mother of his children to dissolve.
[10] By 2013, the defendant was drinking alcohol and using cocaine frequently. During the general timeframe of his employment, he began stealing from his employer IDS. The PSR author aptly described this:
He started using (cocaine) again periodically until his use became more frequent in 2015, leading to increased feelings of depression as noted. He was also using alcohol more frequently to 'numb the pain'. According to the subject his failing relationship and stealing from his employer 'weighed extremely heavy on him'. Each time he had access to more money he would think it would be 'different this time'; however, the cycle of substance abuse, gambling and stealing from his employer continued and he sunk even deeper into a state of depression.
[11] This depression worsened and, after being caught out by his employer, his desire to commit suicide led to hospitalization. Once out of hospital, Mr. Lebel surrendered himself to police.
[12] These years of deceit impacted Mr. Lebel's family. The PSR showed his family to be mistrustful of him, a mistrust he rightfully earned over the years. When he finally admitted to the gambling addiction and years of stealing, he was met with some closed doors. Once released from hospital, in an attempt to make Mr. Lebel own the effects of his behaviour, his family directed him to live at a homeless shelter rather than take him in. This he did. A letter from the shelter manager described the defendant's attitude to his change in fate:
Richard has been extremely humbled by this situation. He has gone from being a homeowner, with a wife and children, a good job and a steady income to an Ontario Works recipient, living hand to mouth, paying monthly rent in a rooming house and being afforded zero luxuries. Richard accepts this current fate as part of his punishment and makes no attempts to get anything beyond his monthly entitlements. Richard attends the shelter daily for coffee and support. While here he helps out in any way possible, be it taking out the garbage or wiping down the counter or helping sort food and sometimes even being a listening ear to others in crisis.
[13] The defendant now lives in a rooming house and has begun re-building relations with his family. He hopes, one day, to re-establish a relationship with his children. At this point his former partner, understandably cautious, has not permitted contact with them.
[14] It has been over two years since Mr. Lebel gambled or used drugs. This is no small feat. He sought counseling, of his own volition, to address his addictive behaviours. His suicide attempt led to a diagnosis of anxiety disorder, for which he is now prescribed medication, and a concurrent substance disorder. Following his release from hospital, he followed up with a crisis worker over 10 times between May 2016 and November 2017.
[15] From September 2016 to November 2016, the defendant attended group therapy sessions with Four Counties Addiction Services Team. Upon securing employment in November 2016, he stopped group therapy but continued attending individual sessions until January 11, 2018. Since that point, the defendant largely stopped scheduling counseling sessions, reporting no desire to use drugs or to gamble. He remains open to re-commencing if directed by probation or the Court. He continued to take prescribed medication for his anxiety disorder. His mother, supportive and in attendance at court throughout proceedings before me, told the PSR author she has seen a "big change" in her son, as a result of the counseling.
Position of the Parties
[16] The Crown seeks between eight to ten months in jail, followed by two years of probation. She seeks an ancillary order under s. 380.2 for five years, prohibiting him from having employment or volunteering where he would have authority over the real property of another person. This request was fairly modified so that the language of s. 380.2 could be mirrored in a probation order, giving the probation officer flexibility to recommend a variation if appropriate. The Crown also seeks an s. 738 restitution order.
[17] The defendant's position is a conditional sentence order of between twelve and eighteen months, plus three years of probation. The terms of that probation are jointly submitted and I will impose them. He opposes the s. 380.2 order, which will bar Mr. Lebel from many forms of employment and limit his ability to make restitution and financially support his two children. Finally, the defendant agrees a restitution order is appropriate.
Applicable Sentencing Principles
[18] Given the nature of this offence, the principle of general denunciation bears primary weight here. As the Court of Appeal held in R. v. Dobis (2002), 157 O.A.C. 83 at paras. 47 and 51, "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…."
[19] Similarly, MacDonnell J. in R. v. Ghandi, 2018 ONSC 941 at para. 25 said,
It is well-established that the paramount objective of sentencing in cases of large-scale fraud committed by persons in positions of trust is general deterrence. In R. v. Bogart, [2002] O.J. No. 3039 (Ont. C.A.), Laskin J.A. stated, at paragraph 30, that in such cases mitigating factors and even rehabilitation become secondary. He noted that the Court of Appeal has recognized that most major frauds are committed by well-educated persons of previous good character, but that 'the sentences in such cases are not really concerned with rehabilitation. Instead, they are concerned with general deterrence and with warning such persons that substantial penitentiary sentences will follow this type of crime, to say nothing of the serious disgrace to them and everyone connected with them and their probable financial ruin.' [Emphasis added by Laskin J.A.]
[20] It naturally follows that in such cases, rehabilitation as informed by prior good character receives less emphasis in sentence determination. It is precisely that prior good character that enables frauds of this nature to be perpetuated. In addition to general deterrence, the principles of denunciation and the promotion of a sense of responsibility and accountability in offenders bear compelling weight. So, too, is the need to repair harm done to victims of the offence. The fact that a relationship of trust was exploited to commit the offence, repeatedly and over time in Mr. Lebel's case, is a statutorily aggravating feature.
[21] The proper application of these principles coupled with a breach of trust means, generally, that this type of fraud will typically be met by a significant jail sentence.
Range of Sentence
[22] The sentences sought by both Crown and defence are within the appropriate range of sentence. Neither party suggests otherwise, and the Crown correctly did not suggest a CSO was statute-barred. From my own review of range, this type of offence can attract a suspended sentence (see R. v. Jainarayan, 2017 ONSC 6086) to upper-end reformatory or even lower-end penitentiary sentences. Generally speaking, a fraud committed by breaching an employer's trust must attract incarceration.
[23] Both counsel, who took a careful and thorough approach to this sentencing, presented me with a number of relevant authorities. As must always be the case, no one decision bound my analysis, but all provided insight into the individual issues at bar.
[24] In R. v. Piccinini, 2018 ONCA 433, the appellant was a bookkeeper who breached her employer's trust over the course of three years, stealing almost $50,000 from him. She had expressed "limited remorse", and, after a contested trial, was sentenced to one year in custody. The Court of Appeal for Ontario found no principled basis to interfere with this sentence.
[25] Similarly, in R. v. Silva, 2015 ONCA 301, the Court of Appeal upheld a sentence of ten months in jail where the offender had pled guilty to defrauding her employer of over $300,000 over the course of thirteen months. Although the appellate judgment does not detail many facts, clearly no funds were recovered and remorse was evidenced in the fact that the appellant reported herself to her employer. The Court of Appeal characterized the ten month sentence as "very lenient".
[26] MacDonnell J., in R. v. Ghandi, supra, sentenced a bookkeeper who stole through breach of trust to a global sentence of 3.5 years. The facts of Ghandi are distinguishable, although I have relied upon MacDonnell J.'s analysis of the applicable sentencing principles here. The defendant in Ghandi, a bookkeeper, stole approximately $360,000 from her employer over 5½ years. After being discovered, fired, and arrested, the defendant defrauded a new employer of approximately $470,000 while on bail for the first fraud. The frauds were detrimental to the victims, one of whom had to delay retirement and obtain loans to keep business afloat. Her motive was greed, and the defendant had a prior conviction for Theft Over $1000. The sentencing judge noted that, had her fraudulent behaviour stopped at the first fraud, an upper reformatory sentence would have been appropriate.
[27] Precedent establishes that the difference between imprisonment in jail and in the community is often the presence, or absence, of "exceptional mitigating circumstances". For example, in R. v. Dobis, supra, at para. 54, the Court of Appeal for Ontario rejected a conditional sentence, observing "…there are none of the extreme personal mitigating circumstances that were central to the decisions to impose conditional sentences in two large scale fraud cases, Underys, supra [1], ('the many mitigating circumstances of the offender': para. 4), and Bunn, supra [2], ('The respondent was the sole provider and caregiver for both his wife, who suffered from multiple sclerosis and had been confined to a wheelchair for years, and their teenage daughter': p. 517)."
[28] In parsing out why conditional sentences have been imposed in some breach of trust fraud cases, Hill J. concluded in R. v. Atwal, 2016 ONSC 3668, [2016] O.J. No. 3109 (S.C.J.) that:
While a conditional sentence, with properly tailored punitive conditions, can effect a measure of general deterrence and denunciation, many of these cases where a conditional sentence was appropriate involved pleas of guilt and/or certain exceptional mitigating circumstances.
[29] Mr. O'Connor, for the defence, provided a number of cases where the presence of exceptional mitigating circumstances grounded a conditional sentence for breach of trust fraud. In R. v. Corner, 2005 O.J. No. 3590, an account executive stole approximately $160,000 from her employer over the course of years. Like Mr. Lebel, she had a serious alcohol problem and a significant gambling addiction. Unlike Mr. Lebel, she confessed to her crimes before being found out. Victim impact was grave, since her fraud affected not just the company but many innocent employees.
[30] The defendant in Corner had made $2000 in restitution and was truly remorseful. She had taken no counseling to address her addictions, and struggled to maintain abstinence on her own: on the day she pled guilty, she relapsed and gambled away $400. She pled guilty, albeit in the Superior Court of Justice, and received a conditional sentence. At para. 20, Durno J. referring to the need for a sentence to be proportionate to both the gravity of the offence and the degree of responsibility of the offender, said:
This is a serious offence. Her degree of responsibility is moderate, since I accept that her actions after they commenced were driven by gambling addiction. The need for general deterrence is reduced in situations where the motivation was an addiction. Reference R. v. Horvath (1997), 117 C.C.C. (3d) 110 (Sask. C.A.) that I have been referred to today, which also spoke of an individual with a very serious gambling problem.
At para. 22, he continued,
I must also stress general deterrence to others who would be tempted to steal from their employers, although I accept the comments made in Horvath with respect to the relevance of general deterrence for someone who commits an offence because of an addiction.
[31] Rutherford J. in R. v. Kioussis, 2011 ONCJ 823, sentenced a former law clerk and office manager to a conditional sentence for Fraud Over. The accused had taken funds from her employer and altered the company software program to cover it up. The total loss was $600,000 over years. $700,000 in restitution had been made prior to sentencing. While this was mitigating, the impact on her victim, a lawyer, was tremendous. He was forced into bankruptcy, sued by 28 clients, and saw sanctions placed on his own law licence.
[32] The accused had pled guilty, which no doubt had significant impact on the sentencing result. She had no criminal record and the offence was not motivated by greed. Further, the offending had roots in mental health issues, including major depression and severe anxiety.
[33] Finally, in R. v. Adams, 2009 ONCJ 383, a case from this court and this community, Green J. sentenced the defendant to a conditional sentence for a breach of trust fraud. The defendant, who pled guilty, did so after hearing a day of preliminary inquiry evidence. She admitted that in her capacity as the company's bookkeeper, she stole funds for herself and manipulated the accounting system to cover her fraud. She also mis-used the company's credit card. Her offending went on for over six years.
[34] However, the defendant also had a history of clinical depression and had attempted suicide in the past. To stabilize herself, she began seeing a psychiatrist for depression and anxiety. No restitution had been made, but the desire to do so was present. There was a favourable PSR and the accused, who was a first offender, was lucky to have solid community support. Green J. concluded that balancing the principles of sentencing, including the primacy of general deterrence and the grave victim impact, a conditional sentence was the correct disposition.
Aggravating and Mitigating Factors
[35] Breach of trust is a statutorily aggravating factor, as codified in s. 718.2, and it applies in full force here. Typically, in fraud cases, aggravating features will include the nature and extent of the financial loss, the degree of trust the employer had invested in the offender, whether the fraud was perpetuated over a long period of time, where restitution seems unlikely, and the impact on victims: see R. v. Williams, [2007] O.J. No. 1604 (S.C.J.) at para. 30.
[36] Many of those factors are present here. The quantum of money stolen was a significant sum and it was stolen over the course of years. The defendant did not voluntarily stop committing the fraud, either; it ceased only because his employer found him out. Mr. Lebel, with purchasing power for the company, clearly had his employer's trust and betrayed that trust for his own financial gain by making illicit purchases and re-selling the items online.
[37] There was no victim impact statement tendered, but that does not lead me to conclude Mr. Lebel's employer suffered only the articulated monetary loss. Of course they did. The financial loss was significant and would have necessarily impacted on the company's ability to function. In addition, no fraud is an island and each fraud will have, as Rutherford J. observed at para. 34 of Kioussis, a "ripple effect" beyond its intended target:
The community must be assured that Courts deal seriously with people who take advantage of their employers for their own financial gain. The operation of any business, large or small, in our society relies on employees of business organizations to act honestly in order that business and commerce function in society. When employees act dishonestly their actions not only impact the employer and the operation of the business but can impact the community at large. Often when a business enterprise is defrauded there will be a ripple effect throughout the community whereby others are financially impacted. The community must have confidence that Courts recognize this consequence and adequately address it by imposing firm sanctions.
[38] Here, the parties disagreed on whether some factors were properly mitigating. Ms. Cassidy, while fairly recognizing that mitigation exists in evidence of rehabilitative efforts made, said more could have been done. She further submitted the motive here, gambling addiction aside, was greed, pure and simple. Mr. O'Connor disagreed on both points. He submitted Mr. Lebel's motive was not the pursuit of a lavish lifestyle but feeding addictions to gambling and cocaine. He also argued that Mr. Lebel's voluntary participation in psychiatric counseling and addictions counseling were both meaningful rehabilitative steps and deserving of real weight.
[39] I agree with Mr. O'Connor here. I found the evidence clearly established Mr. Lebel's gambling addiction to be at the root of his criminal offending. I also found the defendant's two-year abstinence from gambling and drugs to be compelling proof of rehabilitation. His abstinence must be monitored and maintained through counseling. But Mr. Lebel has achieved some control over his addictions and this is no small feat. For many, it is an impossible one. He has strong rehabilitative potential. This is mitigating.
[40] Additional mitigating factors included the fact that Mr. Lebel, at age 40, came before the court as a first offender. He has, slowly, re-built family relationships and this renewed community support attended each court appearance before me.
[41] Mr. Lebel pled guilty, before any trial or preliminary hearing date was set. He admitted his wrongdoing without hesitation or qualification in the Pre-Sentence Report. His plea is a significant mitigating factor. It evidenced remorse and regret. Remorse was also palpably felt in Mr. Lebel's s. 726 allocution, as well as his letter to the court where he displayed insight into his addiction and the impact of his actions. The following passages best illustrate this:
The amount of ignorance and self-delusion is astounding. Rationalizing the irrational behavior by grasping on to the thinnest of straws. Where has this ignorance brought me? A loss of job, career, access to my own children, friends, family, money and potentially my own freedom….
…There's an axiom that I think of now that all is said and done: "Insanity: doing the same thing over and over again and expecting different results" – I think this applies the most to my situation and to those of us with a gambling problem. I knew what I was doing wasn't going to work, but the next morning, I would find some way to rationalize what I was doing, and just knowing it would be different this time. Why didn't I seek help at that point?...
I wake up nearly daily in tears and dealing with the guilt and shame of my actions is all-encompassing. I know I can come through this ordeal a better person, especially with the counselling services I'm currently undertaking, but the damage done will live with me until the end of my life. It's crushing to think of the loss of trust in friends, employees, employers and family. That disappointment they feel because of me is exceptionally strong and difficult to manage.
I so wish I could reach back to that person years ago – stop him and shake him – tell him to get help – and get it before it's too late…..
…I will continue to work with therapists and addiction counselling personnel so I can better understand what brought me to the hell I was living in, and to keep me from ever returning there.
Application of the s. 742.1 Test
[42] Both Crown and defence agree incarceration is required for this offence, but part ways on whether Mr. Lebel should serve his time in jail or in the community. Mr. Lebel is not statutorily barred from a conditional sentence, given the dates alleged in the information and section 11(i) of the Charter.
[43] The applicable test is found in s. 742.1 of the Criminal Code. The offence cannot carry a mandatory minimum and the appropriate sentence must be less than two years. Both of these requirements are met in the case at bar.
[44] Community safety must not be endangered by the offender serving his or her sentence in the community. The Court must assess the offender's risk of re-offending and the gravity of damage occasioned by any re-offending. Finally, a conditional sentence – like all sentences – must be consistent with the fundamental purpose and principles of sentencing in ss. 718 to 718.2. In Adams, supra, Green J. characterized this last aspect as being, "…in essence, whether a conditional sentence is the appropriate disposition".
[45] If Mr. Lebel were to re-offend in the same fashion, the gravity of such re-offence would again be serious. But with Mr. Lebel's addictions in check, and with court-imposed counseling to ensure they remain so, I assess his risk of re-offending as low. He is amenable to community supervision and the PSR established him as a good candidate for it.
[46] I find further support for this conclusion in Mr. Lebel's lack of criminal antecedents, in the two years of good behaviour while on bail, in his re-built community support team now cognizant of the gambling and drug problems, and in his own insight into his addictions and his offending. Conditions can and will be imposed to further minimize this low risk of re-offence.
[47] Turning to whether a conditional sentence is consistent with the fundamental purpose and principles of sentencing, I find that it is. Exceptional mitigating circumstances have been established. I refer, here, to the combination of the following factors:
- Mr. Lebel's status as a first offender;
- His plea of guilt before setting a trial or preliminary inquiry;
- The remorse expressed in the fact of the plea, to the PSR author, to the Court in writing, and in his allocution to the Court;
- The fact that his criminal offending was driven by a need to feed his addiction to gambling and drugs;
- The community support that Mr. Lebel is most fortunate to have standing beside him again;
- His willingness to comply with court-ordered monthly restitution payments, and;
- The progress he made in counseling, leading to his abstinence from gambling and drugs for two years.
[48] I have given anxious consideration to the need for general deterrence in cases where an employee breaches his or her employer's trust. The sentence I impose must communicate not just to Mr. Lebel, but to others of like mind, that the price for this offending is too steep and that the Court will not condone it. I agree, however, with Justice Durno that where addiction lies at the root of such a fraud, the need for general deterrence is somewhat reduced. Further, at paras. 21 and 22 of R. v. Proulx, 2000 SCC 5, 1 S.C.R. 61, the Supreme Court held general deterrence can and should be well-served through a punitive conditional sentence:
The conditional sentence is a meaningful alternative to incarceration for less serious and non-dangerous offenders. The offenders who meet the criteria of s. 742.1 will serve a sentence under strict surveillance in the community stead of going to prison. These offenders' liberty will be constrained by conditions to be attached to the sentence, as set out in s. 742.3 of the Code. In case of breach of conditions, the offender will be brought back before a judge, pursuant to s. 742.6. If an offender cannot provide a reasonable excuse for breaching the conditions of his or her sentence, the judge may order him or her to serve the remainder of the sentence in jail, as it was intended by Parliament that there be a real threat of incarceration to increase compliance with the conditions of the sentence.
The conditional sentence incorporates some elements of non-custodial measures and some others of incarceration. Because it is served in the community, it will generally be more effective than incarceration at achieving the restorative objectives of rehabilitation, reparations to the victim and community, and the promotion of a sense of responsibility in the offender. However, it is also a punitive sanction capable of achieving the objectives of denunciation and deterrence.
Final Conclusion
[49] I have concluded that imposing a conditional sentence upon Mr. Lebel properly serves the fundamental purpose of sentencing, the principles of sentencing, and will not endanger the community. Therefore, I am imposing a conditional sentence of two years less one day and it will be followed by three years of probation. I will specify the terms of this conditional sentence following further submissions, but for the first eight months of the sentence, Mr. Lebel will be subject to house arrest and for the next eight months of the sentence, Mr. Lebel will be subject to a curfew. There will be a reporting condition, a condition mandating assessment and counseling for drug abuse, for his gambling addiction, and for psychiatric assistance with his anxiety and depressive disorders.
[50] There will be a condition that mirrors the language of s. 380.2, limiting Mr. Lebel's ability to have authority over the property of future employers or through volunteer positions, unless he has the approval of his conditional sentence supervisor and/or probation officer. Since this language duplicates s. 380.2, I am declining to make that order given that I do want Mr. Lebel's supervisor to have some flexibility and decision-making power when it comes to employment prospects. In addition, the defendant will need to make regular restitution payments and I do not want to unreasonably limit his ability to secure employment that will enable him to do so.
[51] This brings me to the fact that, like in Adams and given the lack of restitution so far, I will be ordering restitution payments be made monthly as part of both the conditional sentence order and the probation order. I should add that I am imposing this condition at the invitation of Mr. Lebel's counsel.
[52] A freestanding restitution order will issue for the balance of the losses suffered. It is my hope that restitution made over the duration of the sentence will satisfy the losses suffered by IDS, or come close to it. A freestanding restitution order will then be made for any balance owed to IDS. Another freestanding restitution order will be made in favour of the insurance company, who is properly considered a victim of this fraud by authority of R. v. Popert, 2010 ONCA 89.
[53] Before I formally impose these conditions, I will ask to hear from the parties with respect to the terms of this conditional sentence, including exceptions to house arrest and curfew, and what quantum would constitute a meaningful but realistic monthly restitution payment.
[54] These reasons, finally, would be remiss if I did not thank both Ms. Cassidy and Mr. O'Connor for the care and attention they brought to this sentencing, from start to finish.
Released: October 18, 2018
Signed: Justice H. Pringle
