His Majesty The King v. Arif Ali Versi, 2023 ONCJ 442

Court File and Parties

ONTARIO COURT OF JUSTICE

DATE: 2023 10 03 COURT FILE No.: Toronto 17-55001002

BETWEEN:

HIS MAJESTY THE KING

— AND —

ARIF ALI VERSI

Before: Justice Peter N. Fraser

Heard on: September 15, 2023 Reasons for Judgment released on: October 3, 2023

Counsel: K. Rogozinski, counsel for the Crown D. Mideo, counsel for the accused Arif Ali Versi

Fraser J.:

Endorsement

[1] After a trial, I found Arif Ali Versi guilty of five counts of fraud over $5000 in connection with a series of real estate frauds that resulted in a total of $338,400 in losses to five victims.

[2] I found that Mr. Versi posed as a real estate or mortgage broker with special connections, who could secure houses for people below their open market value. The five victims in this case paid money to Mr. Versi in connection with various real estate purchases. However, they never obtained the houses, most of which were never for sale in the first first place, and each of them suffered financial losses.

[3] The Crown seeks a penitentiary sentence of 3.5 to 4 years and certain ancillary orders including a fine in lieu of forfeiture. The defence seeks a conditional sentence and probation.

Circumstances of the Accused

[4] Mr. Versi is 41 years old. He was born in Tanzania to parents he described as wealthy business owners and was raised in part by his uncle. He came to Canada in 2001 when he was 20 years old. He appears to be dealing with lingering trauma from experiences that occurred early in his life and has previously battled substance abuse issues.

[5] Mr. Versi has a degree in economics by his own account, has some history of employment, and enjoys the continued support of his family. He has a criminal record with two prior fraud convictions.

Principles of Sentencing

[6] Sentencing is a highly individualized process: R. v. Lacasse, 2015 SCC 64 at para. 58. The judge must give effect to a number of different and often competing sentencing objectives. Section 718 of the Criminal Code directs that the purpose of sentencing is to protect society and, more specifically, to contribute to respect for the law and the maintenance of a just, peaceful and safe society. According to s. 718.1, the fundamental principle of sentencing is proportionality. The sentence must be proportionate to the gravity of the offence and the degree of responsibility of the offender.

[7] Other principles of sentencing with particular application to this case include the following:

• Denunciation: the sentence must denounce the unlawful conduct and the harm done to victims and the community.
• Deterrence: the sentence must deter Mr. Versi and other people in the community from committing similar offences in the future.
• Separation of the offender from society: where necessary a sentence must protect the public from further offending by way of a custodial term.
• Rehabilitation: the sentence must allow for the offender to become a law-abiding citizen in time, which is in the long-term interests of our society.

Aggravating Factors

[8] The first aggravating factor concerns the nature of the fraudulent activity. According to s. 380.1(1)(a) of the Code, I must consider the magnitude, complexity, duration or degree of planning of the fraud committed. In this case, the offence was deliberate, relatively sophisticated in nature, involving forged documents and a great many misrepresentations and lies, and it was executed over a prolonged period of time. There were significant losses totalling $338,400. In the reasons for judgment, I found that Mr. Versi had caused the following deprivations:

• Elmer Barrientos-Santos – $31,000
• Samuel Umana Figueroa – $25,000
• Blanca Ramirez – $37,400
• Farid Uddin Ahmed – $84,500
• Muhammad Anwar Masood - $160,500

[9] The second aggravating factor is Mr. Versi’s criminal record, which contains the following entries:

• In February 2010, he was convicted of fraud over $5000. He received a conditional sentence of 2 years, less 1 day followed by 2 years probation.
• In June 2010, Mr. Versi was convicted of uttering threats, failing to comply with a recognizance and possession of a credit card forgery device. He was sentenced to 50 days in jail, (in addition to 18 days pre-sentence custody), followed by 1 year probation.
• In August 2010, he was convicted of fraud over $5000 and sentenced to 60 days jail, to be served intermittently, and 2 years probation.
• In October 2010 he was convicted of assault. He received a suspended sentence and probation.

[10] The two prior fraud convictions are of particular concern. While on their face, they are somewhat dated, these convictions are much closer in time to the present offences than they appear. All of Mr. Versi’s prior convictions were registered in 2010. His conditional sentence for fraud Over $5000 ended in February of 2012. His probation for that offence ended in February of 2014. The fraudulent conduct for which Mr. Versi is now being sentenced began about one year later, in March of 2015. In addition, the Crown filed evidence demonstrating that the restitution orders in connection with the prior frauds were never paid. [1]

[11] The third aggravating feature is the fact that there were multiple victims. Five people suffered losses as a result of Mr. Versi’s fraudulent acts.

[12] And fourth, these offences had a significant impact on the victims. This is an important consideration that is set out in the Criminal Code in both s. 718.2 (a)(iii.1) and s. 380.1(1)(c.1).

Victim Impact Statements

[13] The victim impact statements reveal the extent of the damage Mr. Versi has caused. Mr. Figueroa, Mr. Ahmed and Mr. Masood wrote of the financial, emotional and psychological impacts of these offences. It is clear these crimes have affected their quality of life, their financial security, their prospects for work and retirement, their relationships with other people, and their mental health.

[14] It is clear from the victim impact statements, and from the evidence lead at trial, that the victims in this case were not investing discretionary funds. Much of the money taken in by Mr. Versi’s fraudulent real estate transactions was raised via loans from family members, lines of credit, and credit card debt. In short, these people could ill-afford to lose the money he stole from them.

Mitigating Factors

[15] I would first observe that Mr. Versi has the support of his family members, as evidenced by the letters of support filed by his counsel. This is a positive indicator with respect to rehabilitation.

[16] Second, he has taken some positive steps since his arrest, improving his relationships with family members, engaging in employment, and contributing to certain volunteer activities.

Other Contextual Factors

[17] Mr. Versi claims to have suffered extreme forms of physical and emotional abuse as a child at the hands of his father and eldest brother, which left him with lasting physical impairments and psychological trauma. Mr. Versi indicated alcohol and cocaine were an issue for him at various points in his past as well. There is no clear line between these features of Mr. Versi’s past and the offences before the court. In a more general sense, they help me to understand him as a person and contextualize the criminal conduct at issue here. But I do not find these features have been established as mitigating factors in law.

[18] I would also observe that Mr. Versi has demonstrated very little insight into the harm he has caused. As an example, he told the writer of the pre-sentence report that “he feels bad for what happened. However he continues to believe that he was also a victim.” I do not treat this as an aggravating factor, but it informs my assessment of Mr. Versi’s prospects for rehabilitation.

Other Cases

[19] As stated above, proportionality is central to the sentencing process. One way of ensuring proportionality is by imposing a sentence similar to those imposed on other persons in similar circumstances: R. v. Lacasse, supra, at para. 2. To that end, the Crown has provided me with a book of authorities containing several appellate-level decisions.

[20] In R. v. Scholz, 2021 ONCA 506, the Ontario Court of appeal allowed a Crown appeal against a sentence of 2 years, less a day for a fraud exceeding $1 million and imposed a sentence of 3 years imprisonment. The Court stressed the need to emphasize deterrence and denunciation in connection with large scale frauds, and further noted that an offender does not have to be in a position of trust in order to warrant a penitentiary term: see also R. v. Khatchatourov, 2014 ONCA 464, at para. 39.

[21] In Scholz, at paragraph 18, Justice Nordheimer addressed the range of sentence in the following terms:

[T]his court has an established range of three to five years as the sentence for major frauds: R. v. Bogart, [2002] O.J. No. 3039 (C.A.), at para. 36; R. v. Davatgar-Jafarpour, 2019 ONCA 353, at para. 34. It is a range of sentence that has been set for many years.

[22] What constitutes a “major fraud” for the purposes of this range is not precisely defined. In Bogart, supra, the losses were about $924,000. In Davatgar-Jafarpour, supra, the losses were between $2 and $2.5 million. And the fraud in Scholz itself was over $1 million. The Crown relies on the following passage from R. v. Atwal, 2016 ONSC 3668, affirmed, 2017 ONCA 228, at paragraph 42 (5):

The Dobis decision, at p. 273, includes at the lower end of "large-scale frauds", the McEachern case (1978), 42 C.C.C. (2d) 189 (Ont. C.A.) involving $87,000 and the fraud in Pierce (1997), 114 C.C.C. (3d) 23 (Ont. C.A.) (leave to appeal refused, [1997] S.C.C.A. No. 225)) in the amount of $270,000, while a $200,000 defalcation was described by Juriansz J. (as he then was) as a large-scale fraud in R. v. Robinson, [2003] O.J. No. 4722 (S.C.J.), at paras. 4, 11.

[23] In my view, there is some danger in using those cases as the threshold for “major frauds” which thereby engage the 3-5 year range of sentence. The three cases referred to in the passage above are very old, and the value of those losses would be equivalent to much higher figures now on account of inflation. The $87,000 loss described in McEachern was 45 years ago. An equivalent fraud now would have to be several times that amount. I would also observe that none of those cases applied the 3-5 range of sentence at the time. All three dispositions were in the reformatory range, and one was a conditional sentence.

[24] In my view, the present case lies somewhere near the lower boundary of what the Court of Appeal has termed a “major fraud”. As this discussion reveals, however, the application of sentencing ranges is not an exact science. Ranges are not hard and fast rules, they are summaries of sentences imposed in the past, which serve in any given case as guides for the application of all the relevant principles and objectives: R. v. Friesen, 2020 SCC 9 at para. 36-37. It is the just application of those sentencing principles that must remain the focus. And I reiterate here that sentencing is a highly individualized process: R. v. Lacasse, supra, at para. 58.

[25] Furthermore, the value of the loss is not the sole determinant of the sentence. For example, in R. v. Elliot, 2021 ONCA 909, the Court of Appeal upheld a three-year sentence for a fraud involving only $10,000. In that case, there was a breach of trust and the accused had a prior related criminal record containing three different conditional sentences of increasing duration. The Court rejected the submission that a 3 year sentence imposed in 2019 violated the step principle where a conditional sentence of 2 years, less a day had previously been imposed in 2012. That case bears some similarity with the present case, given that Mr. Versi received a conditional sentence of 2 years less a day in 2010 for the same offence of fraud over $5000.

[26] In the other direction, in R. v. Pun, 2018 ONCA 240, a 30 month sentence was upheld by the Court of Appeal for a fraud involving losses of $640,000. The accused in that case had no criminal record and had made significant charitable contributions within the community. I have also considered R. v. Maxwell, 2014 ONCA 316, wherein a sentence of 4 years was upheld. The amount of the fraud was $375,000, of which roughly $80,000 was recovered.

[27] Counsel for Mr. Versi relies on three trial level decisions in which conditional sentences were ordered for the offence of fraud over $5000. In my view, they are each distinguishable from the present case.

[28] In R. v. Gasparetto, [2008] O.J. No. 3840, a conditional sentence of 18 months was imposed for a fraud involving $190,500 in losses. That case is distinguishable on the basis that there were fewer victims and lesser financial losses. Furthermore, the accused had mental health issues, no criminal record, and plead guilty to the offence.

[29] In R. v. Gibb, [2014] O.J. No. 4760, conditional sentences were imposed on two co-accused for frauds totalling $100,000. Again, the quantum was less, the victims fewer, and neither accused had a criminal record.

[30] In R. v. Fontana, [2017] O.J. No. 2646, a conditional sentence was imposed for a $150,000 fraud. There was a single victim, and the loss was less than in the case before me. The accused had a related record that was 20 years old. The sentencing judge found the accused did not set out to commit a fraud, but rather misused a loan that was given for the purpose of starting a business venture.

[31] I have considered whether a conditional sentence would give effect to the relevant principles of sentencing in this case. I conclude that it would not. While a conditional sentence is available in law for this offence, the weight of appellate authority concerning frauds of this magnitude favours a penitentiary term. Lesser sentences that have been imposed in other cases have tended to include one or more of the following factors: lesser financial loss, a guilty plea, the repayment of moneys taken, an offender who played only a minor role in the fraud itself, or an offender who was at an advanced age or had serious health issues: see R. v. Scholz, supra, at para. 23. None of those factors are present in the case before me.

[32] In my view, a proper application of the principles of sentencing requires that I impose a penitentiary term. A conditional sentence would not be available based on that finding. After careful consideration of all the circumstances in this case, and having weighed the aggravating and mitigating factors, I find that a penitentiary sentence of 3 years is the appropriate sentence.

[33] Counsel for Mr. Versi submits that his client is not a Canadian citizen and that I should consider the potential immigration consequences of the sentence I impose. Specifically, he takes the position that a jail sentence will remove Mr. Versi’s right of appeal against a deportation order, whereas a conditional sentence will not. While potential immigration consequences are a proper consideration on sentence, they cannot override the proper application of fundamental sentencing principles and make what is otherwise an unfit sentence fit. The Supreme Court held as follows in R. v. Pham, 2013 SCC 15, at paragraph 16:

These consequences must not be allowed to dominate the exercise or skew the process either in favour of or against deportation. Moreover, it must not lead to a separate sentencing scheme with a de facto if not a de jure special range of sentencing options where deportation is a risk.

[34] Given my determination of a fit sentence absent consideration of the possible immigration consequences, those considerations do not weigh heavily enough to reduce this sentence into the reformatory range such that a conditional sentence could be considered: see R. v. McKenzie, 2017 ONCA 128 at paras. 24-32.

Restitution and Fine in Lieu of Forfeiture

[35] There will be a restitution order for $338,400, pursuant to s. 738(1) of the Code. This order is not contested by the defence.

[36] In addition, the Crown seeks a fine in lieu of forfeiture, pursuant to s. 462.37(1) of the Code, for the same amount. The objectives of the forfeiture provisions are to deprive offenders of the proceeds of crime, to deter others from committing designated offences and, more broadly, to ensure that crime does not pay: R. v. Shoer, supra, at para. 91; R. v. Vallieres, 2022 SCC 10 at para. 34.

[37] When used in conjunction with a forfeiture order, these provisions provide a powerful incentive for an offender to repay victims of the crime committed. The consequence of failure to pay a fine in lieu of forfeiture is incarceration. Section 462.37(4)(a) of the Code sets out the range of sentence in default, which is a function of the amount of the fine. In this case the range is 3-5 years. According to section 462.49, a restitution order shall take priority over payment of the fine in lieu of forfeiture. The fine in lieu can be reduced by any amount paid in restitution, and the sentence in default is adjusted according to the provisions of the Code. Practically speaking, this arrangement imposes carceral implications for non-payment of a restitution order in favour of the victims.

[38] I find that all the preconditions for a fine in lieu of forfeiture are met. Mr. Versi has been convicted of a designated offence. The money is offence related property and it was in his possession at some point prior to sentencing: R. v. Shoer, supra, at para. 87. The funds cannot currently be located for the purpose of forfeiture. Had the funds been available, an order of forfeiture would have been available – in fact, it would have been mandatory: R. v. Lavigne, 2006 SCC 10 at para. 14; R. v. Angelis, 2016 ONCA 675 at para. 35.

[39] The Code confers on me a limited discretion respecting the imposition of a fine in lieu of forfeiture: R. v. Lavigne, supra, at para. 29. That discretion is confined by the objectives of the legislative scheme as discussed above: R. v. Shoer, supra, at para. 90-93.

[40] A fine in lieu of forfeiture is not a punishment for the crime committed, nor part of the global sentence imposed on the offender: R. v. Saikaley, 2017 ONCA 374 at para. 181. The fine in lieu is not to be considered in the context of the principle of totality: R. v. Shoer, supra, at para. 93. While a term of imprisonment flows from a failure to pay without reasonable excuse, that term of imprisonment is a means by which to enforce the fine, not to punish the offender for the designated offence: R. v. Lavigne, supra, at paras. 25-26.

[41] The offender’s ability to pay is not a factor to be considered in determining whether to impose the fine in lieu of forfeiture or in affixing the amount: R. v. Lavigne, supra, at paras. 35-37; R. v. Rafilovich, 2019 SCC 51 at para. 32; R. v. Vallieres, supra, at para. 37. Moreover, once the decision has been made to impose a fine in lieu, the sentencing judge has no discretion to reduce the amount. The fine must correspond to the value of the property which would otherwise have been forfeited: R. v. Lavigne, supra, at paras. 35.

[42] Given the aggravating factors in this case, it is appropriate that I impose a fine in lieu of forfeiture of $338,400. It is significant that this is Mr. Versi’s third conviction for fraud over $5,000 and he never paid the restitution orders in connection with his prior convictions. He will be afforded 6 years following the expiration of the term of imprisonment to pay the fine (which is 9 years from now). The sentence in default will be set at three years.

[43] According to s. 462.49 of the Code, the restitution order shall take priority over payment of the fine in lieu of forfeiture. The fine in lieu will be reduced by any amount paid in restitution. The sentence in default will be similarly reduced according to the provisions of the Code. The sentence in default, if any, shall be served consecutive to any other term of imprisonment served by the accused.

Other Ancillary Orders

[44] There will be an order pursuant to s. 743.21 of the Code, directing Mr. Versi to have no contact with any of the victims while in custody, except through counsel for the purpose of any civil proceedings.

[45] There will be a DNA order for the fraud convictions, which are secondary designated offences.

Released: October 3, 2023 Signed: Justice Peter N. Fraser

[1] One restitution order was for $10,000, of which only one third was paid. The second restitution order was for $255,830 of which nothing was paid.