R. v. Singh, 2022 ONCJ 654

CITATION: R. v. Singh, 2022 ONCJ 654

DATE: 2022-05-09

Toronto

ONTARIO COURT OF JUSTICE

BETWEEN:

HER MAJESTY THE QUEEN

— AND —

DAVID SINGH

Before Justice Mara Greene

Reasons for Sentence released May 9, 2022

N. Gilks….….………..…………………………… for the Ontario Securities Commission

W. Gilmour………………………………………………..……………………….David Singh

M. Greene, J:

Introduction

[1] On November 9, 2021 I found Mr. Singh guilty of three offences under Ontario Securities Act. Mr. Singh’s sentencing was adjourned so that a pre-sentence report could be prepared. This matter was then adjourned again to allow counsel for Mr. Singh to obtain documentation in relation to a medical issue that Mr. Singh has. Counsel for the Security Commission is seeking a sentence in the four to five year range along with restitution in the amount of just under five million dollars. Mr. Singh argued for a non-custodial sentence.

Circumstances of the offence

[2] Mr. Singh was found guilty after trial of three offences under the Ontario Securitas Act (OSA). I found him guilty of trading while not registered to do so (section 25(1) of the OSA), of failing to file a prospectus when he was required to do so (s.53(1) of the OSA) and fraud (s.126(1)(b) of the OSA). Essentially, I found that Mr. Singh operated two companies, Greenview and Rockfort. These companies were set up to use investors’ money to fund residential mortgages where the income generated from the interest attached to the mortgages was to be paid out to the investors. The investors were able to invest with Mr. Singh through the purchase of shares in these corporations. I found that Mr. Singh, as the owner and operating mind of these corporations, was required to register with the OSC and he failed to do so. I also found that he was required to file a prospectus and failed to do so. In relation to the fraud charge, counsel for the OSC argued that Mr. Singh committed several different fraudulent acts in relation to his two companies. I found that Mr. Singh committed fraud by inducing investors to purchase shares in his company on the understanding that his companies were obtaining mortgages and that income would be generated from the interest on these mortgages. Mr. Singh’s corporations, however, did not hold any mortgage and Mr. Singh was well aware of this fact. I also found that he had no intention of seeking out mortgages. Ultimately, I found that Mr. Singh held out his companies as mortgage investment corporations, took money from investors on the pre-text of investing in mortgages but then intentionally failed to do so. I also found that Mr. Singh made material misrepresentations in his company’s offering memorandum that were intentionally made in order to bolster the reputation of his companies and lure in investors.

[3] When I released my judgment finding Mr. Singh guilty of these three offences under the OSA, I did not reach a final conclusion on the quantum of the fraud, nor did I determine how much money from the fraudulent companies Mr. Singh diverted to himself for personal use. This was left to be addressed through evidence at the sentencing hearing.

[4] At the sentencing hearing, counsel filed an agreed statement of fact and Ms. Toledano testified about how much money was lost and where the money invested in Mr. Singh’s corporations went. Ultimately, once the evidence was presented to the court, counsel for Ms. Singh made no argument about the quantum of the money invested and lost in Mr. Singh’s companies and conceded the admissibly of the charts drafted by Ms. Toledano outlining how much money was invested in Rockfort and Greenview, and therefore put at risk, and how much money was paid back. I also have the material about the investors that are seeking restitution for the money lost and the harm they have suffered as a result of this fraud. Based on this evidence, I am satisfied beyond a reasonable doubt that 78 people invested in Greenview and Rockfort for a total of $5,657,896.64 of which $4,859,552.58 has not been repaid to the investors. 65 of these investors are seeking restitution for the money lost. In other words, in excess of five million dollars was put at risk because of Mr. Singh’s fraudulent conduct.

[5] I am also satisfied beyond a reasonable doubt that many investors lost significant sums of money, often in excess of $100,000.00. Many lost their life savings, leaving them without the ability to retire with anything other than being supported by CPP. Some of the victims lost their homes. One victim was saving up to put her children through university. Now all this money is lost. Others borrowed significant sums of money in order to invest with Mr. Singh. These victims now have to work second and third jobs or borrow more money from friends and families to pay back these loans. The impact of this fraud on its victims has been significant.

[6] I also heard evidence through Ms. Toledano with reference to the bank documents filed at trial, that, at a minimum, two million dollars invested with Greenview and Rockfort was paid to Mr. Singh for his personal gain. I accept this evidence and find that it has been established beyond a reasonable doubt that at least two million dollars of the money secured from investors in Greenview and Rockfort were used to pay off Mr. Singh’s personal expenses.

[7] The money trail from investments in Greenview and Rockfort to Mr. Singh’s personal pocket is not a simple one and involved the use of intermediary companies. In my view, the money trail as described by Ms. Toledano and confirmed by the bank documents, evidence of witnesses at trial and emails between Mr. Singh and Mr. Missaghi, when considered together establish that Mr. Singh used this money for his personal expenses.

[8] I will briefly summarize how I reached this conclusion. Ms. Toledano testified about a company called Infinity. This company was solely owned by Mr. Singh. The bank documents filed at trial establish that 93% of Infinity’s income came from Rockfort and Greenview. This was money allegedly paid out for “management services” albeit there is no evidence that this company did any actual management for Greenview and Rockfort. I note that on the evidence before me, Rockfort and Greenview had little to manage as they did not hold any mortgages and did not earn any income. In other words, money was diverted from Greenview and Rockfort to Infinity without Infinity doing anything to earn this money. Infinity, in turn, directly paid for many of Mr. Singh’s expenses. These expenses can only be viewed as being personal expenses as they include payment to the school his children attended, payment to Mr. Singh’s personal credit cards, lease payments on Mr. Singh’s vehicle and payments on his life insurance policy.

[9] Documents filed at the trial also confirmed that Greenview transferred $76,000.00 into the bank account of 2571314 LTD. There is no evidence before me that would support the inference that Greenview and this numbered company did any work together to justify this large transfer of funds. This numbered company wrote cheques to a Toronto Montessori school with the names of Julia and Mikayla Singh on them. According to Mr. Yu, these are Mr. Singh’s daughters. The only reasonable inference from this evidence is that this numbered company was paying personal expenses for Mr. Singh.

[10] Another personal expense that Mr. Singh paid using funds from Greenview and Rockfort was money owed to Mr. Missaghi who held what Ms. Gilks called a “black market mortgage” on Mr. Singh’s residence. Numerous emails between Mr. Missaghi and Mr. Singh were filed at trial confirming that Mr. Singh owed Mr. Missaghi this money and was working to pay it back. Pursuant to the records filed at trial, Greenview paid large sums of money to companies owned or controlled by Mr. Missaghi (Mansteel New Liskeard and Canada Investment Corporation). There is no evidence that these companies did any legitimate business with Greenview to justify these payments. The only inference that can be drawn from this evidence is that Mr. Singh owed Mr. Missaghi money and that he paid that money back through transfers from his companies to companies owned and/or controlled by Mr. Missaghi. The total sum of money paid to Mr. Missaghi through these companies was $1,197,909.87.

Circumstances of the offender

[11] The majority of the information provided to me about Mr. Singh comes from a presentence report (PSR) prepared for this sentencing. Some of the material filed at trial and in support of the adjournment applications has provided me with some additional information about him.

[12] Mr. Singh is 69 years old having been born in 1952 in Guyana. He has 12 siblings, two of whom have passed away. Mr. Singh’s father was a farmer, and it was expected that Mr. Singh would also take up farming. Mr. Singh, however, was not interested in farming and wanted to pursue a more academic career. Mr. Singh advised that his childhood was not a happy one. His family struggled financially, and Mr. Singh’s aspirations were not supported by his father. When Mr. Singh was 17 years old, he moved out of his family home and taught school to children in a nearby village.

[13] At the age of 20, Mr. Singh emigrated to Canada. His first few years here were difficult as Mr. Singh tried to attend school while working to cover his expenses. Despite facing numerous challenges during his first years in Canada, Mr. Singh managed to graduate from college, get married and raise three children. These children are now all in their 40s. Mr. Singh’s first marriage ended in 1999. Sometime later, Mr. Singh remarried and has two children from this union, aged 12 and 20. In 2017 this second marriage ended.

[14] Mr. Singh has a strong relationship with his siblings and has been an excellent brother. According to the presentence report, Mr. Singh, at great expense to himself, assisted in moving many of his siblings to Canada. Mr. Singh also helped financially support the widows of his two deceased siblings. In addition to all the assistance Mr. Singh has provided to his family over the years, Mr. Singh has a long history of giving back to his broader community. Mr. Singh has made significant financial contributions to a host of different charitable organizations both in Canada and overseas.

[15] His Holiness Swami Bhajanananda of Bharat Sevashram Sangha speaks very highly of Mr. Singh describing him as a great family man who is committed to Guyanese culture. According to his Holiness Swami Bhajanananda of Bharat Sevashram Sangh, Mr. Singh has been involved in many events supporting his temple and he has been given awards for his humanitarian work in various communities.

[16] Mr. Singh has numerous degrees, largely in the area of finance and administration. He began his career as a financial analyst and later as a financial planner while still attending school to improve his education. In 1989 Mr. .Singh created Fortune Financial which he operated successfully for ten years. By 1998 this company had 750 representatives, seven dozen offices in ten provinces and was managing eight billion dollars in assets. In 1996 Mr. Singh started another company called Infinity Mutual Funds which managed $1.5 billion in assets.

[17] Mr. Singh told the author of the presentence report that in 1997 he received an administrative slap on the wrist from the OSC due to his failure to properly manage an employee who became engaged in a private investment scheme. In relation to his three prior sanctions from the OSC in the late 1990s where he was suspended from trading for five years, Mr. Singh told the author of the presentence report that he received incorrect advice and was the “sacrificial lamb”.

[18] Mr. Singh told the author of the presentence report that he sold his companies in 1999 for $88 million but did not receive any of the proceeds from this sale due to complications in the release of funds.

[19] Mr. Singh then suffered an additional financial set back in early 2000s when he started a charity that caused him difficulty with the CRA. The CRA alleged that Mr. Singh issued tax receipts for amounts greater than what was donated. Mr. Singh was held responsible for the tax losses. While Mr. Singh was not prosecuted for these alleged false receipts, the CRA did place liens on his home.

[20] Since selling his businesses in 1999, Mr. Singh has engaged in a host of entrepreneurial activities including purchasing a banquet hall for his wife to manage, starting a mortgage lending business and presenting seminars on health and finance.

[21] Mr. Singh has won several awards including Entrepreneur of the Year and the Ontario Premier’s award.

[22] Just prior to the pandemic, Mr. Singh was working as a ride share driver. This work ended when the pandemic hit. More recently he has started an online business. Mr. Singh described it as a financial education institute which is a subscription-based website. Mr. Singh told the author of the presentence report that it is the number one source of financial knowledge for Canadians.

[23] Mr. Singh advised the author of the presentence report that he has no physical health issues. He went on to state that while he has no mental health diagnosis, he has had moments of depression during this trial. I am also mindful that I heard evidence on an earlier adjournment application that Mr. Singh was suffering from anxiety and potentially depressive episodes that interfered with his ability to review his disclosure. This resulted in an adjournment of one of his trial dates. Mr. Singh also suffers from psoriasis. He is involved in a medical trial for a new medication for this. I understand that this medication can be provided in the jail.

Analysis

[24] Counsel for the OSC argued that, in light of all the aggravating factors in this case, a sentence of four to five years less a day and a restitution order in the amount of $4,859,552.58 should be imposed. Mr. Singh is seeking a non-custodial sentence. Mr. Singh argued that he is willing to make full restitution once he can afford to do so and given his commitment to the community at large and his desire to take responsibility for the loss suffered by the victims, a community-based sentence should be imposed.

[25] Mr. Singh must be sentenced for all three offences. I will focus, however, on the sentence for the fraud charge. This is because it is the most serious of the charges and because counsel for the OSC agrees that any sentence imposed for the other two offences should run concurrently to the sentence for the fraud offence.

[26] In arguing for a sentence in the four to five year range, counsel for the OSC focused on the range of sentence normally imposed for fraud offences under the Criminal Code. While I agree that these cases are helpful in identifying relevant factors to consider in sentencing fraud offences under the OSA, in my view, I must be careful to not put too much weight on the ranges imposed by the appellate court for frauds under the Criminal Code. This is because, the sentences permissible under the OSA are very different than the permissible sentences under the Criminal Code. The maximum penalty for fraud over $5000.000 in the Criminal Code is 14 years. The maximum penalty for fraud under the OSA is only five years less one day. This difference in maximum penalty suggests that the range of sentences under the OSA, even for large scale, sophisticated frauds, is necessarily lower than the range of sentence imposed for similar offences under the Criminal Code. When I look at counsel for the OSC’s position on sentence in light of the maximum allowable sentence pursuant to the legislation, counsel for the OSC is essentially seeking the maximum penalty for this offence.

[27] In assessing the appropriate sentence, I must first be mindful that the sentence I impose must be proportionate to the gravity of the offence and the degree of responsibility of the offender. Proportionality is best determined by considering all the aggravating and mitigating factors while keeping in mind the objectives of sentencing which include:

a) General and specific deterrence

b) Denunciation

c) Rehabilitation

d) Reparation to society and/or the victim

e) Separation from society where necessary

f) The need to promote a sense of responsibility in offenders, and acknowledgement of the harm done to victims and the community.

[28] How much weight a sentencing judge places on any given objective will depend on the facts of each case. In my view, the governing objectives in this case must be general deterrence and denunciation. This was a sophisticated fraud that took place over years. It is the very kind of offence, where the offender has the time to balance the cost against the benefits of committing the offence. In my view, those involved in securities trading need to know that the penalty for defrauding one’s clients/customers is significant so that they will be deterred from committing similar acts. Given the extensive harm done by Mr. Singh to his victims, it is also paramount that my sentence denounces his conduct and that the public know that there will be a severe consequence for Mr. Singh. The sentence I impose must also instill responsibly in Mr. Singh and acknowledge the harm done to his victims. Given the fact that Mr. Singh comes before the court without any prior convictions for fraud and has a long history of pro-social behaviour, the objective of rehabilitation cannot be ignored. Having said that, given the gravity and nature of this offence, rehabilitation is not the paramount consideration on sentencing in this case.

[29] In the case at bar there are a number of aggravating factors that must be considered. The aggravating factors in the case at bar include:

a. The amount of the fraud – the companies made over $5,000,000.00.

b. The harm done to the victims was significant with an overall loss of over $4,000,000.00 where many victims lost their life savings. Some of the victims are left destitute with no money to live on during their retirement. Others lost their homes, are deep in debt and are working multiple jobs just to get by.

c. This was a complex fraud that went on for a long period of time.

d. This fraud was very sophisticated.

e. There were many victims – over 70.

f. In some instances, Mr. Singh used his position in the community to gain the trust of his investors.

[30] Counsel for the OSC also argued that I should consider Mr. Singh’s prior reprimands by the OSC as an aggravating factor. I am mindful that a prior criminal record is always an aggravating factor in criminal cases but I cannot equate prior reprimands by the OSC with a prior criminal record. Moreover, the reprimands occurred back in the late 1990s, over twenty years ago (albeit 15 years before these offences). In my view, while the prior reprimands are a relevant factor to consider on sentencing, given how dated they are, and the fact that the prior behaviour did not include fraudulent acts, I place very little weight on this evidence.

[31] There are also a host of mitigating factors in this case. They include:

a. Prior to these offences, Mr. Singh led a very pro-social life. He worked hard, donated money to different causes and even won awards for his community engagement.

b. Mr. Singh has a strong sense of responsibility to his community which is evidenced by his contributions to different causes both in Canada and abroad

c. Mr. Singh is a very engaged father and has close relationships with all his children

d. Mr. Singh is a loving and supportive brother, having helped his siblings immigrate to Canada and helped his family out both financially and emotionally.

e. Mr. Singh does have some physical health issues for which he is getting treatment. I understand that he can continue to receive adequate medical care in the penitentiary.

f. Mr. Singh has suffered from anxiety and depression to some degree since being charged with these offences.

g. Mr. Singh was under extreme financial stress at the time of these offences. Counsel for the OSC filed a series of emails between Mr. Singh and Mr. Missaghi to help prove the offence of fraud. When I read Mr. Singh’s emails, I hear a man riddled with anxiety over his financial situation and the fear of losing his home.

h. Mr. Singh has suffered the collateral consequence of a loss of income and the loss of his home. Mr. Singh’s ability to work in finance is effectively lost to him because of his own fraudulent acts.

[32] I am mindful that generally the prior good character of a person convicted of a fraud related offence is of little weight since usually it is the offender’s good character that made the fraud possible. In my view, Mr. Singh’s situation is very different. Mr. Singh’s contribution to the community through donations and his time go above and beyond what is typically considered as overall prior good character. In my view, Mr. Singh’s historic generosity and extensive donations to various causes and people over the years and his awards for his actions is a meaningful mitigating factor in this case.

[33] With this factual back drop, I now turn to the range of sentence normally imposed for these offences. There is not a large body of case law on the range of sentence normally imposed for a conviction for fraud of this magnitude under the OSA. As a result, counsel for the OSC relied heavily on cases where offenders were sentenced for large scale, sophisticated frauds under the Criminal Code. The typical range of sentence for a large scale, sophisticated fraud that involves many victims is usually in the range of three to five years. When those frauds are a product of a breach of trust, it is not unusual to see sentences as high as eight to ten years. If I was to rely solely on the range of sentences for frauds prosecuted under the Criminal Code, a sentence of five years would be completely appropriate in this case. As I previously stated, however, it is my view that this is not the correct approach given the differences in the maximum sentences permitted under the Criminal Code and the OSA. Clearly lower sentences are contemplated for frauds prosecuted under the OSA. A sentence of five years less one day is the maximum penalty under the act. While Mr. Singh’s offence is likely one of the most egregious ones prosecuted under this act, the maximum penalty does not take into account the numerous mitigating factors that exist in this case.

[34] There are a few sentencing decisions on the OSA that are helpful in providing me with a sense of the range of sentences imposed for similar offences under the OSA. In R. v. Heward and Wallace, unreported December 16, 2016, for example, a four year sentence was imposed on an offender who committed a $6,700,000.00 fraud where there were over 100 victims. In imposing this sentence, no mitigating factors were identified. The offence in the case at bar is quite similar to the Heward and Wallace case in that it involved a fraudulent company where millions of dollars were lost by many victims. The offenders, however, are very different in that Justice McLeod did not identify a single mitigating factor whereas in the case at bar, there are numerous mitigating factors that are highly relevant in assessing the appropriate sentence.

[35] In R. v. Tsatskin, [2011] O.J. No. 6612 (OCJ), the sentencing judge imposed a three-year sentence for a 14 million dollar fraud. In deciding that a three-year sentence was appropriate, the court focused on the fact that the accused did not act alone, was not the lead actor in the fraud, was a first offender and assisted the prosecution in prosecuting his co-accused. Mr. Tsatskin did, however, personally receive two million dollars from this fraud. In my view, Mr. Singh is in a different position from Mr. Tsatskin. Firstly, Mr. Singh was the lead actor in his fraud and the directing mind in the fraud. Secondly, Mr. Singh did not plead guilty and has not taken responsibly for his actions (albeit he does express some remorse for the harm suffered by his victims). Having said that, there are a host of other mitigating factors in this case that do not exist in the Tsatskin case including Mr. Singh’s prior good character and his ongoing mental health struggles.

[36] I appreciate why counsel for the OSC is seeking a sentence in the four-to-five-year range. Mr. Singh committed a massive fraud over many years and cost many many people their life savings. Only a lengthy term of imprisonment can properly address the objectives of general deterrence and denunciation in this case. Having said that, Mr. Singh is almost seventy years old. He is struggling with anxiety and depression and has suffered significant informal consequences including the loss of standing in his community and his reputation in the business community. Moreover, in the years prior to these offences, Mr. Singh was a generous donor to many causes. When I consider all these factors it is my view that a sentence of 3 ½ years is appropriate. I will impose a sentence of nine months for the other two offences to run concurrently. I will also impose a free standing restitution order in the amount of $4,859,552.58 to be divided up between his victims in accordance with Ms. Toledano’s chart I am mindful that this is at the lowest end of the range, which in most circumstances would not be appropriate for this kind of fraud, but when I weigh all the factors I am satisfied a sentence of three and half years in prison coupled with a restitution order that is just shy of five million dollars will act as a deterrent to others and does denounce the conduct.

Released May 9, 2022