COURT FILE NO.: 30000416/10

DATE: 20121129

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

HER MAJESTY THE QUEEN

• and -

KOCHI TAKESHITA

Peter Fraser, for the Crown

Appearing in Person

HEARD: October 9-12, and 15, 2012

SPIES J.

REASONS FOR DECISION

Introduction

[1] Kochi Takeshita is charged that between January 29, 2002 and June 2, 2006, he did by deceit, falsehood, or other fraudulent means, defraud the Wesley Chapel Japanese Church (the “Church”), of an amount of money greater than $5,000, contrary to s. 380(1)(a) of the Criminal Code, R.S.C., 1985, c. C-46.

[2] Mr. Takeshita reelected trial by judge alone and pleaded not guilty to this charge.

The Evidence

[3] Mr. Takeshita and his wife, Mineko Takeshita, were long time members of the congregation of the Church. Mr. Takeshita became the Treasurer of the Church on April 30, 2001, and continued in this position until 2006. Mr. Takeshita resigned as Treasurer in April 2006, but continued on until July 2006, as his successor had health issues. Mr. Takeshita’s position as Treasurer was a volunteer position; he was elected to this position by members of the congregation. He was a trusted member of the congregation and was to receive no remuneration for his work as Treasurer. While Mr. Takeshita was Treasurer he was also a member of the Church Board. He had been on the Board as an observer for two years prior to his appointment as Treasurer.

[4] As Treasurer, Mr. Takeshita and the Church pastor, Reverend Edward Yoshida (the “Pastor”), had co-signing authority for the Church’s cheques in that both had to sign each cheque. The Church banked with TD Canada Trust - Fairview Branch during the material time.

[5] During the material time, Reverend Yoshida was an ex officio member of the Board.

The Alleged Fraudulent Cheques

[6] Reverend Yoshida identified 95 cheques written on the Church’s TD Canada Trust account between January 29, 2002 and June 2, 2006, which he said were not authorized. Reverend Yoshida testified that for all of these cheques, when he signed them, the “payee” was not named and that space was blank. Reverend Yoshida testified that in some cases, at the time Mr. Takeshita presented the cheques to him, the “Re” line was filled out and referred to a legitimate Mission to which the Church donated money. In those cases, Reverend Yoshida assumed when he signed the cheque that the cheque would be made payable to that Mission. In other cases, where the “Re” line referred to reimbursements of various sorts, such as a repayment of temporary loans, it is the position of Reverend Yoshida that he did not see anything in the “Re” line of those cheques at the time he signed them. According to Reverend Yoshida, he was asked to sign all of these cheques by Mr. Takeshita and they were usually signed in a rush after the Sunday Church service. He testified that Mr. Takeshita would tell him that the money was going to a legitimate place, such as a Mission the Church supported. He trusted Mr. Takeshita and as such, signed the cheques. He assumed the money was being used for Church purposes.

[7] Reverend Yoshida explained how it was that he would sign cheques where the payee and, in some cases, the “Re” line was blank. He stated that yearly he went to a church conference out West in late April through early May for three weeks. On those occasions, he would sign a few cheques, leaving them blank, with the expectation that Mr. Takeshita would use them for emergency payments while he was away.

[8] The cheques alleged to be unauthorized fall into a number of categories, as follows:

(a) A significant number of the cheques were made payable to “Tenex Canada Inc.” (“Tenex”), a company owned by Mr. Takeshita. Apart from two of those cheques, all of the cheques were signed by both Reverend Yoshida and Mr. Takeshita. Reverend Yoshida was adamant that if he had known the cheques were payable to Mr. Takeshita’s company, he would not have signed them; there was no reason to make payments to Tenex. In some cases, there was a notation in the “Re” line of the cheque. Reverend Yoshida testified that if he had seen a reference in the “Re” line to reimbursement or a loan payment or some other item that he did not recognize, he would have questioned Mr. Takeshita.

(b) A number of cheques were made payable to Mr. Takeshita personally. Some have no reference to anything in the “Re” line and others refer to various reimbursements; for example, a building fund, loan repayments, or other repayments. In each case, Reverend Yoshida testified that the payee was not written in on the cheque when he signed it, and where information was set out in the “Re” line, that too was blank when he signed the cheque. Again, he said that there was no reason to make any payments to Mr. Takeshita and he would not have signed any cheques had he known they were payable to Mr. Takeshita.

(c) A small number of cheques were made payable to “Opulence Boutique Corp.” (“Opulence”), a company owned by Mrs. Takeshita. With respect to those cheques, the “Re” lines were always blank. Reverend Yoshida stated that he never signed any cheque payable to Opulence. He would not have signed such a cheque as there was never any money owing by the Church to Mrs. Takeshita’s company.

(d) A number of cheques were made payable to “cash”. With respect to each of those cheques, save for one, there is a note in the “Re” line. Reverend Yoshida reviewed each of those cheques and again testified that he would not have signed these cheques had the “Re” lines been completed at the time. Reverend Yoshida explained that he signed cheques payable to “cash” rarely and only if the Church required U.S. funds to pay an honorarium for a guest speaker. In those cases, the honorarium ranged from $150 to $200.

(e) Two cheques were made payable to “Royal Bank Visa”. Reverend Yoshida said that these cheques were not authorized and he would not have signed them had this payee been set out at the time. The Church had no dealings with the Royal Bank and did not even have a credit card.

[9] In cross-examination Mr. Takeshita admitted that with the exception of five cheques that he claimed were NSF (#248 dated August 27, 2003; #253 dated August 27, 2003; #432 dated February 7, 2005; #562 dated March 3, 2006; #578 dated March 17, 2006), that the alleged unauthorized cheques were cashed and the money went into one of his various accounts or was received as cash. I will come to his explanation for why he did this.

[10] For the purpose of the accounting, I find that the evidence of the bank representatives called by the Crown proves that cheque #562 and cheque #578 were reversed. In particular Ms. O’Quinn from the TD Bank testified that cheque #562 in the amount of $810 was subject to a stop payment or NSF and was therefore reversed in the Church’s bank account. Ms. Gonsalves from the Bank of Nova Scotia testified that cheque #578, in the amount of $720, was reversed for some reason.

[11] The other cheques Mr. Takehsita challenged were in fact cashed by him as confirmed by Ms. O’Quinn or Ms. Gonsalves. I note that the summary Mr. Fraser prepared for his closing submissions states that the cheque that was reversed is cheque #541 in the amount of $520 and that it was not proven that cheques #562 and #578 were NSF. That is an error based on my notes of the evidence. However, this error does not appear to impact the Crown’s calculations, as the $810 and $720 amounts for the two NSF cheques are not included in the fraudulent payments column of the Crown’s summary.

[12] Mr. Takeshita testified that when he filled out the alleged unauthorized cheques, he had blank cheques that Reverend Yoshida had signed. He had tried to accumulate as many blank cheques as possible as he did not want the Pastor to become suspicious about what was going on. In other words Mr. Takeshita testified that all cheques were totally blank, when he got the Pastor’s signature. This means that he filled in the payee in all cases after he had Reverend Yoshida’s signature, and in those cases where there is a note in the “Re” line, he must have filled it in after the Pastor signed the cheque.

[13] Accordingly, apart from this issue of the NSF or reversed cheques, it is admitted by Mr. Takeshita that he used blank cheques drawn on the Church’s account to pay money to himself directly and indirectly.

Bank Statements for the Church

[14] A small number of photocopies of bank statements that Mr. Takeshita provided to the Church Board were introduced through Reverend Yoshida. Reverend Yoshida testified that, after Mr. Takeshita’s resignation, he got those records from the bank and compared these statements against the Church’s bank records. In all cases, the typed amounts in the statements showing the closing balance in the Church’s account was considerably larger than what the banking records actually showed. The typed amounts in the Church bank statements Mr. Takeshita gave to Reverend Yoshida showed the balance in the account was in the range of $10,000 or more. In fact, the balance in the account ranged as low as $53.83.

[15] The only explanation for this discrepancy is that the bank statements presented by Mr. Takeshita to the Board were altered by him so that Board members would not become alarmed at the lack of funds in the Church’s bank account. As I will come to, this was admitted by Mr. Takeshita when he testified.

Evidence of Mr. Takeshita

[16] Mr. Takeshita’s main defence is that he had paid a significant amount of money to the Church and that when he wrote various cheques to himself he was simply trying to pay himself back. In summary, Mr. Takeshita testified that he had no intention of depriving the Church of funds, that the Church had no money to steal, and that his only intention was to support the Church. He said he was well to do and had no reason to defraud the Church for small amounts of money. Mr. Takeshita testified that he ran out of his own money after he had spent about $20,000 on behalf of the Church. He then decided he had to get as much money back as possible. Mr. Takeshita admitted that in his head he justified this on the basis that he had some sort of right to get the money back when he needed it. He said that he wasn’t able to because the Church didn’t have much money. Mr. Takeshita said he did not have a sense of stealing the money and knew the congregation might not be happy but that they would understand. With the payments back to the Church that Mr. Takeshita alleges that he made, he testified that he did not know that he still owed the Church money.

[17] As I will come to, in my view Mr. Takehsita’s position is not a defence to the charge of fraud.

(i) Payments Mr. Takeshita alleges he paid to or on behalf of the Church before and after he became Treasurer – Schedule 1

[18] Mr. Takeshita prepared a schedule setting out payments that he alleges were made by him, his company Tenex, or his wife’s company Opulence, to or on behalf of the Church, which was introduced into evidence (Schedule 1). Some backup documentation was also provided. Schedule 1 states that $81,880.86 had been paid to the Church between October 18, 2001 and August 15, 2006.

[19] Mr. Fraser accepted that many of the payments Mr. Takeshita claims he made to the Church were in fact made by him or on his behalf between 2002 and 2006, but a number of alleged payments were challenged. The challenged payments are highlighted on Schedule 1. The principal issue is that there was either no or insufficient backup documentation to prove these payments. The Crown admits that payments back to the Church by Mr. Takeshita total $57,113.64.

[20] Reverend Yoshida testified that he was unaware of any payments made by Mr. Takeshita to the Church other than cheques he wrote as Church offerings. It was his evidence that on no occasion did Mr. Takeshita say that the Church was short of money or that he had advanced money to the Church. Mr. Takeshita did not suggest otherwise, with one exception which I will come to.

[21] The first seven contested payments on Schedule 1 totalling $3,292.34 were all allegedly made by Mr. Takeshita on October 18, 2001. According to Mr. Takeshita it was sometime after he became Treasurer that it was decided there would be two signatures on the cheques drawn from the Church’s account. He said after that, for a few months, he would go to the bank forgetting that he needed the Pastor’s signature. He testified that this occurred on October 18, 2001 when he was to make several payments to various Missions. Mr. Takeshita claims that rather than wait to get the Pastor’s signature he made these payments from his own funds. Bank receipts are available for those payments, but they do not show where the money came from. There is therefore no other documentation to prove how these payments were made and where the money came from.

[22] In any event, Mr. Takeshita admitted in cross-examination that he called the Pastor when he was at the bank and that he explained the situation to the Board later and got approval to be reimbursed. He believed he was reimbursed soon after he made the payments; within a week. He assumes he received the money back the following Sunday. He admitted that these payments were therefore a wash. On Monday, October 15, 2012, when Mr. Fraser for the Crown revisited these seven payments, Mr. Takeshita said that he didn’t know if he was reimbursed for these payments. When pressed, he eventually admitted that it would be fair to assume that he was. I have therefore not considered these payments in the accounting.

[23] With respect to other payments Mr. Takeshita alleges that he made to or on behalf of the Church, his explanation for why he did so, generally speaking, is that the Church always had a cash flow problem. Mr. Takeshita claimed that he was not aware of this when he took over as Treasurer, and in fact that he did not come to know this until July 2001, when the former Treasurer finally gave him the Church’s bank records. Mr. Takeshita also said, however, that everyone knew that the Church had a cash flow problem. Given his observer status on the Church Board, Mr. Takeshita did not explain, nor was he asked, how he could be unaware of this issue when he claimed everyone else knew. He also could not reasonably explain why he would not have seen the bank account balances when he was doing transactions at the bank after his appointment. As I will come to, the theory of the Crown is that the Church in fact did not have such a problem.

[24] Mr. Takeshita testified that once he became Treasurer, he learned that there were Notices of Assessment payable to the Canadian Revenue Agency (“CRA”) that the former Treasurer had not paid. By this time, the CRA was not prepared to give the Church any more time to make the payments, so according to Mr. Takeshita, he paid about $7,000 from his own pocket. He did not show this amount on his Schedule 1 and there are no documents in support of this alleged payment. Mr. Takeshita said he was “comfortable” paying this amount and that he never told anyone that he had done so, although he thought the Pastor knew. He did not cross-examine Reverend Yoshida about this when he had the chance to do so. In his mind, it was “financial help” for the Church; he was only trying to help the Church. He was hoping the amount of the weekly offerings would increase and there would be no more cash crunch for the Church.

[25] Mr. Takeshita testified that when these payments were made “we (a reference to him and presumably his wife) were OK” and that initially he was happy to be able to help the Church. In cross-examination, Mr. Takeshita admitted that in the fall of 2001, as a household they were wealthy. He also said however that he wasn’t rich, but there were things that he could do for the Church. Mr. Takeshita testified that after he had spent about $20,000 for the Church, he could not do this anymore as he had run out of his own money.

[26] Mr. Takeshita was very clear in his evidence on more than one occasion that when he made the payments he alleges, to or on behalf of the Church, he had no expectation at the time of making the payments of getting the money back. He said if he did, he would have said so. He agreed that at the time he made these payments they were donations, not loans. He was genuinely trying to help the Church. He did not make a record of any of these payments.

[27] Mr. Takeshita initially explained his process for preparing Schedule 1 as follows. He said that in cases where he didn’t have a cancelled cheque to support his alleged payment to the Church, he entered an amount on Schedule 1 if, based on the Church’s TD bank records, an NSF situation was imminent. He testified that in those cases no one else was going to deposit money to keep the account from overdraft and so he would write a cheque to do so.

[28] In cross-examination, Mr. Fraser reviewed the contested payments by Mr. Takeshita. In some cases Mr. Takeshita acknowledged that he had made an error in making a claim to the payment because, for example, the amount was a duplicate amount and had already been claimed, or the timing was off, that is, the deposit to the Church was ten days before the withdrawal from his account. Mr. Takeshita agreed that his major method of putting the schedule together was to “piece the puzzle together” from the bank records. It would appear that what he was looking for were times when dates and amounts of debits from one of his accounts lined up with a credit to the Church account. He admitted that he had no specific recollection of making any of the specific payments listed on Schedule 1.

[29] Over the course of Mr. Takeshita’s evidence, it became apparent that save where there were backup documents, he had prepared Schedule 1 to a large extent based on speculation. In fact, Mr. Takeshita agreed that he was speculating. His evidence was that he claimed that a particular Church deposit “must have come from me” because there was “no other source”.

[30] However, in cross-examination Mr. Takeshita admitted that there were other sources to make up potential NSF issues for the Church. There were the weekly donations, one time offerings to the Church (this would include, based on the evidence of Reverend Yoshida, money from funerals and weddings), and also an inter-church council that he was also Treasurer of called Renrakukai. Mr. Takeshita admitted that he sometimes took money from them to keep the Church afloat. Mr. Takeshita also admitted setting aside portions of weekly offerings for his own purposes and to keep the Church afloat. Mr. Takeshita admitted that as a result, there was in fact no way to know where the funds came from if deposits were made to avert an NSF situation.

[31] Mr. Takeshita was responsible as Treasurer for issuing receipts for people who made donations to the Church. He never claimed any of the payments he alleges he made to the Church as donations and admitted that no receipts were issued with respect to any of the $20,000 that he alleges he contributed before the end of 2001. He admitted that if he wanted a tax deduction, he would have claimed the contribution. When it was put to him that there were no receipts because he hadn’t in fact paid this money, he queried who then had paid the tax arrears and the cost of publishing the album, and added that people knew he was paying for journals and everything else including a two-way pager.

(ii) The two $8,000 payments

[32] Two payments to the Church were made by money orders each in the amount of $8,000, one on July 26, 2001, and the other on August 15, 2006. Mr. Takeshita testified that the money orders were in the name of his daughter but that the payments were made on his behalf. These amounts were paid after Reverend Yoshida had challenged Mr. Takeshita on the irregularities in his accounting. There is no dispute about this.

[33] With respect to the $16,000 payment, Mr. Takeshita testified that it was not intended as restitution. He said that he paid $12,000 of that amount because he had been telling the board that $12,000 was in a building fund when that was in fact not true. The additional $4,000 was because he had altered the bank statements suggesting to the Board there was more money in the account than there was. He said more than once that he couldn’t understand why he had to pay the $16,000, but he did so and decided to “just pay it and leave”. With respect to the $16,000 payment, Mr. Takeshita later said that he paid this because of his sloppy and altered bank statements which might suggest that $16,000 was in the Church’s account when it was not. He said that in fact the Church’s bank balance was always marginal and so this payment was a penalty for what he did.

[34] Since the Crown has considered this $16,000 payment as money paid back to the Church by Mr. Takeshita, he is getting the benefit of the full amount. Mr. Takeshita said that the $16,000 payment was not intended as restitution but clearly some of it was. In any event, it is not necessary for me to rely on this payment as evidence of guilt given all of the objective facts and the other admissions made by Mr. Takeshita.

(iii) Payments Mr. Takeshita alleges he paid for the Church that are not on Schedule 1

[35] Mr. Takeshita testified that he paid an estimated $20,000 more than the amount shown in Schedule 1 for the Church, but that he did not include these monies as he had no proof. He said he had been supporting the Church financially as far back as 1990. Mr. Takeshita then revised this number to $26,400 after refreshing his memory from one of the detailed affidavits he had prepared and provided to the Crown in advance of the trial.

[36] As I understand his evidence, this amount is comprised of the following: $7,000 for the production of a 20th anniversary album in 1999; $7,000 paid to the CRA to cover tax arrears, which I have already referred to; $10,000 paid to cover NSF payroll cheques to Reverend Yoshida; and $2,400 paid for the monthly journal which he published for the Church. Mr. Takeshita said that apart from the album, the other amounts, which total $19,400, were paid while he was Treasurer.

[37] There was some confusion in Mr. Takeshita’s evidence as to the time period over which he said $19,400 was paid. At one point in cross-examination Mr. Takeshita did suggest this amount was paid in the period April to December 2001, after he became Treasurer. When Mr. Fraser returned to the $19,400 amount, Mr. Takeshita claimed the $19,400 was given over some years. Although Mr. Fraser made much of this inconsistency, having reviewed the evidence again, I do not find this inconsistency to be significant. I accept Mr. Takeshita’s evidence that if he said the $19,400 was paid in 2001, he was mistaken.

[38] Mr. Takeshita claimed the amount of $19,400 was not in Schedule 1 because he didn’t have the complete TD Bank statements until a few days before trial. He agreed there was no documentation in support of this claim. He went on to say that he made payments out of his account to third parties and that he did not know which account he used for that, but that he had one at ING Direct and another one at the Credit Union, which was supposedly his main account at the time. No evidence had been given about either of these two accounts before, nor were there any statements with respect to such accounts. Mr. Takeshita would have had access to statements concerning these accounts if they exist. He testified that he started to collect statements for this case in 2008. I therefore do not accept his bald statement that he ever had accounts at these other banks.

[39] If Mr. Takeshita paid as much as $7,000 for the Church album in 1999, as Mr. Takeshita admitted, that was a donation to the Church. In my view such a payment, if made, is irrelevant to the charge before the court. I reach the same conclusion with respect to the claim that $2,400 was paid for a journal Mr. Takeshita published for the Church. He never suggested that he would get reimbursed for either of these payments.

[40] As for the other two alleged payments to the CRA and for NSF payroll, I do not accept Mr. Takeshita’s evidence that he made these payments. It makes absolutely no sense that he would pay $7,000 to the CRA out of his own pocket and not seek immediate reimbursent. If the previous Treasurer had misrepresented the amount of money in the Church bank account, and Mr. Takeshita informed the Board of this, it was the Church’s problem to find the money. In any event, even if Mr. Takeshita made the payment, at that time his admitted intention was to financially support the Church, and he did not intend to get repaid. He agreed that at the time the payments were made, they were donations. He cannot change his mind about that if he later runs out of money. A gift is a gift and taking it back without consent of the Church is theft, or in this case, fraud.

[41] On Monday, October 15th, during his own re-examination, Mr. Takeshita introduced a new summary of alleged additional payments made by him to cover the Pastor’s NSF payroll and some additional deposits (“Schedule 2”). Mr. Fraser understandably objected to this as it was not proper evidence in re-examination. I had made it crystal clear to Mr. Takeshita that he needed to present all of his evidence if he chose to testify. He said he prepared Schedule 2 over the weekend. As he was self-represented, I let Mr. Takeshita explain Schedule 2 with the understanding that the Crown would be entitled to further cross-examination.

[42] Mr. Takeshita’s Schedule 2 is headed “Payroll that did not go through (& additional list of what appears to be my deposits)” (emphasis mine). The alleged payments total $19,134.36. It shows seven payments in the amount of $1,503.14, totalling $10,521.98, which I understand were allegedly for Reverend Yoshida’s salary. They are marked “did not go through”. These alleged payments for payroll were made between May 2004 and November 30, 2005, and are presumably part of the $19,400 that Mr. Takeshita had already referred to in evidence. The remainder, however, of $8,612.38 appears to be totally new.

[43] In further cross-examination Mr. Takeshita admitted that he has no backup documentation for any of the alleged payments in Schedule 2 and no specific recall of making any of the payments listed. The alleged payments were made between January 1, 2003 and November 30, 2005. There is no reason why bank records would not have been available in this time frame and no explanation as to why there are none. Mr. Takeshita also had no explanation for why he had never referred to these further alleged payments in the detailed affidavits he had provided to the Crown as late as September of this year.

(iv) General admissions of wrongdoing by Mr. Takeshita

[44] Throughout his evidence, Mr. Takeshita made a number of statements that suggest that he realized then and now that his decision to start writing cheques to himself on the Church bank account was wrong. Some of these admissions are as follows:

a) Mr. Takeshita said the moment he wrote the first cheque to himself he felt very guilty because it was “God’s money” and people trusted and respected him. He claimed it was a “big error in my judgment” and that he should have gone to the Pastor right away but did not have the courage to do so. One of the factors that prolonged the resolution of this issue from Mr. Takeshita’s perspective was that he was really afraid of the Pastor’s reaction. He said that once he got into this, he could not disclose anything and he could not get out.

b) Mr. Takeshita admitted that he concealed the payments to himself and falsified the bank statements that he showed to the Board. He admitted he was making sure the Church’s account did not go into overdraft because he knew that if the Church’s cheques bounced, everyone would find out what he was doing. He felt he “had to” prepare altered bank statements which he did when he was pressed to provide them and the Board wanted something beyond an oral report.

c) Mr. Takeshita said that he was “so disgusted with myself that I started doing that – didn’t want to look at bank records”.

d) Mr. Takeshita described the situation as a “real shameful mess that I created”.

e) He said it was a “lapse in his judgment” when he ran out of money.

f) He couldn’t explain when it started or under what situation he wrote the first cheque but then it was a continuation of a “bad cycle”.

g) As time went on, it was a burden and he felt guilty and felt he had to get out.

h) He admitted that what he was doing was wrong and that he wanted to remedy it as soon as possible.

i) He said that this went “terribly wrong” and he made a mistake.

Lack of bank records for 2001 and earlier

[45] Mr. Takeshita complained that the Church did not obtain all of the relevant bank records. It was his position that if the Church had asked for the records in 2006 they could have obtained records back to 1999. That begs the question, however, as to why Mr. Takeshita did not obtain his own missing records. He explained that he never thought to get records because he was not aware of the seven year retention period, namely that the banks only keep records for seven years, He assumed the records would continue to be available.

[46] Although there was some suggestion by Mr. Takeshita that Reverend Yoshida was deliberately not disclosing bank records, there is no evidence of that and the question was not even put to the Pastor. Furthermore, the fact that Church bank records are not available for the year 2001 is the fault of Mr. Takeshita. Mr. Takeshita was in possession of the bank statements for the Church, which were mailed to his home, and he had possession of the cheque book stubs and cancelled cheques, which were sent to him as well. He stated that if he believed records were retrievable such as cancelled cheques, he discarded the records as he did not want anyone to know what he was doing. This included both the Church’s records and his bank records.

[47] In any event, I do not accept the suggestion that the fact Mr. Takeshita believes that there is some missing documentation because the Church failed to ask for the records earlier is somehow relevant to the Crown’s case. He is the one who made these payments to himself and he did so in secret. He is the one who as Treasurer had possession of the Church’s financial records. He is the one who chose not to keep a record of what he was doing. That said, the fact remains that the onus is on the Crown to prove its case beyond a reasonable doubt. If the lack of records results in an inability of the Crown to do so, then obviously that will be an issue for the Crown.

analysis

[48] I now turn to my analysis. Since Mr. Takeshita testified, the principles set out in the decision of the Supreme Court of Canada in R. v. W.(D.)[^1] apply. I must acquit Mr. Takeshita if I believe his evidence and it raises a defence or, even if I do not believe his evidence, I am left in a reasonable doubt by it. If I am not left in doubt by his evidence, then I must ask myself whether, on the basis of the evidence which I do accept, I am convinced beyond a reasonable doubt by that evidence of his guilt. In my analysis, I am not bound by the strict formulaic structure set out in W.(D.), but rather must adhere to the basic principle underlying the W.(D.) instruction, that the burden never shifts from the Crown to prove its case beyond a reasonable doubt.[^2] Further, in assessing the evidence of Mr. Takeshita, I am entitled to consider it in the context of all of the other evidence.[^3]

Credibility of Rev. Yoshida

[49] Mr. Fraser submitted that the credibility of the Pastor is not an issue that I need to decide. I agree with that submission. The Pastor’s evidence with respect to the fraudulent and unauthorized cheques was essentially admitted by Mr. Takeshita. The only area where their evidence differed was how the cheques in issue were signed. On that issue, as I will come to, I have for the purpose of my analysis accepted Mr. Takeshita’s evidence as it not necessary to resolve this factual issue. There is no other aspect of the Pastor’s evidence that was not admitted by Mr. Takeshita that I need to consider in order to determine if Mr. Takeshita is guilty of fraud

Credibility of Mr. Takeshita

[50] Although for the most part I accept Mr. Takeshita’s evidence, I do have some serious concerns about his credibility.

[51] When the trial resumed on Monday, October 15, before his cross-examination continued, Mr. Takeshita advised the court that he wanted to make some corrections to evidence he had given earlier. He claimed a language issue for the first time. I do not accept that was true and in all of the circumstances have concluded it was part of an effort to resile from some of the evidence he had given the previous week. Although I accept English may be Mr. Takeshita’s second language, he agreed with Mr. Fraser that he is reasonably fluent in English. Judging from his conduct in court, I would say he is an intelligent man and quite fluent in English. He admitted that he normally doesn’t have a problem with the English language and acknowledged that he had not requested an interpreter before and he was not asking for one now. Furthermore, he admitted that he had prepared three very lengthy affidavits, ranging from 30-50 pages in length each, all in English, and that they had been written by himself. I have therefore discounted his late claim to a language problem in assessing his evidence. In any event, it would clearly have no impact on the critical admissions that he made.

[52] There are other areas of evidence given by Mr. Takeshita which are really collateral and do not impact on my determination of whether or not the Crown has proven his guilt beyond a reasonable doubt, where I have concerns about the veracity of Mr. Takeshita’s evidence. They are as follows.

[53] On October 15th, one of the corrections Mr. Takeshita advised the court that he wanted to make was as a result of speaking to his daughter and telling her that he had said that they were “well to do”. His daughter suggested that in fact they were just “getting by OK”. He denied ever saying that they were wealthy or rich and claimed that he did not understand the phrase “well to do”, even though he is the one that used it. This evidence was also at odds with the fact that he had described himself as wealthy in the fall of 2001, although he later said he was not rich. In my view, this was not a language problem but rather hedging to try to reconcile his financial situation as disclosed in the bank records and the fact he maintains he made substantial donations to the Church.

[54] I do not accept Mr. Takeshita’s evidence that he could afford to make substantial payments to or on behalf of the Church in 2001 and 2002. Mr. Fraser submitted that Mr. Takeshita’s finances were in shambles and that was the motivation behind this fraud. He argued that Mr. Takeshita’s position as Treasurer afforded him an opportunity to eliminate some financial stress and he took advantage of this. Why Mr. Takeshita began to write cheques to himself, in my view, is not relevant to his culpability, save that it may assist me in determining whether or not he made payments to or on behalf of the Church as he alleges and that is relevant to the final amount of money he netted from the Church.

[55] I agree with Mr. Fraser that Mr. Takeshita’s evidence that he had sufficient funds to provide substantial donations or financial support to the Church in 2001 and 2002 is not credible. Mr. Takeshita denied the Crown’s suggestion that his financial situation was in trouble in the spring of 2002, but based on his bank records it appears that in early 2002 he was in debt and paying overdraft charges. He cashed in a RRSP in July 2003, and his explanation for doing so was weak and was offered only after the weekend, when his cross-examination resumed.

[56] Furthermore, Mr. Takeshita’s joint account with his wife at the Royal Bank of Canada was in overdraft in December 2002, based on the earliest statement that was introduced into evidence. This account remained in overdraft from time to time throughout until the last statement in evidence to October 30, 2003. In the period for October 2003, the joint VISA account with RBC shows almost the entire credit limit of $25,000 being exhausted by October 30th and only minimum payments being made.

[57] There was a considerable amount of evidence given about a raise given to the Pastor and when that raise occurred. This was an important part of how Mr. Takeshita justified his position that the Church was in a cash crunch and he therefore needed to make payments to and on behalf of the Church from his own funds. In his evidence in chief and the first half of his cross-examination, Mr. Takeshita was adamant that he suggested that the Pastor’s salary be increased from $30,000 to $35,000 per annum, soon after he became Treasurer and before he knew the true state of the church’s finances. He said it was not until July or August 2001, that he finally received the documents from the former Treasurer and determined the bank balance. He said that the raise was retroactive to January 1, 2001.

[58] On October 15th, when Mr. Takeshita’s evidence continued, he agreed that the Pastor’s salary had in fact increased almost a year later: April 2002, but again claimed there was a retroactive adjustment to January 1, 2001. The Church bank records make it clear that the change in salary for the Pastor was as of April 2002, and whether or not there was a retroactive adjustment, this admission by Mr. Takeshita totally undermined all of the earlier evidence he had given about how he was the one who suggested the salary increase and that he did so before he was aware of the true state of the Church’s finances.

[59] Mr. Takeshita also testified it was unthinkable to tell anyone about the payments he was making because others had opposed his idea of a salary increase for the Pastor on the basis that the Church could not afford it. He did not want to admit that they were right. He was embarrassed and did not want to be humiliated. However, given the admitted fact that the salary of the Pastor did not change until the spring of 2002, by then Mr. Takeshita had been Treasurer for some time and would have known about the Church’s finances. The earlier evidence he gave about proposing the increase at a time when he was unaware of the Church’s finances was clearly false.

[60] Mr. Takeshita in cross-examination said that everyone apparently knew that the Church had a chronic cash flow problem but he claimed that he didn’t know this until July 2001, when he got the Church’s bank records from the former Treasurer. He denied even knowing the balance in the Church’s bank account, even though he was making deposits for a period of four months from April to July 2001. He admitted that sounded strange, but he said it was true. He did not have an explanation for this. I do not accept this evidence which was presumably given to support his position that when he proposed an increase to the Pastor’s salary, he did not know the Church could not afford it. Furthermore, given Mr. Takeshita had been an observer on the Board, there is no explanation for why he would not know something about the Church’s financial situation that everyone else knew.

[61] During his cross-examination, Mr. Fraser suggested to Mr. Takeshita that if the Church’s cash flow problem was as bad as he was suggesting he would have gone to the Board after he became Treasurer. In response to this question, he agreed and stated that after he discovered how low the bank balance was, there was a big discussion at the Board as to how to pay the Notices of Assessment from CRA. He said that almost every Sunday they discussed how they were going to deal with them. This evidence is totally at odds with his evidence in chief and undermines his position that he simply paid the CRA $7,000 from his own pocket without telling anyone. Surely the other Board members would have been concerned enough to ensure that the CRA had been paid.

[62] Mr. Fraser submitted that over the weekend, Mr. Takeshita, as an intelligent man, realized that there was merit to the Crown’s position that some of his alleged payments totalling about $23,000 had not in fact been paid to the Church. I agree with Mr. Fraser that Mr. Takeshita is an intelligent man and that when he realized during his cross-examination on Friday, October 12th, that he had made some errors in Schedule 1and that he was going to be short on his position that the Church was not out any money, that he prepared Schedule 2 to cover the shortfall.

[63] For these reasons, I have concluded that some of the evidence Mr. Takeshita gave was not true. My conclusion in this regard is not relevant to whether or not he is guilty of fraud as the Crown’s case in that regard is based on his admissions. This concern does however factor into my finding that the contested payments were not made by Mr. Takeshita to the Church as he alleges.

Is Mr. Takeshita guilty of fraud as alleged?

(i) The Law

[64] Neither Mr. Fraser nor Mr. Takeshita provided any law in support of their submissions. The law, however, is settled. I have considered the following cases.

[65] In R. v. Théroux, 1993 134 (SCC), [1993] 2 S.C.R. 5, McLachlin J. for the court stated at paragraphs 16 and 17:

Speaking of the actus reus of this offence, Dickson J. (as he then was) set out the following principles in Olan, 1978 9 (SCC), [1978] 2 S.C.R. 1175 at page 150, paraphrase]:

(i) the offence has two elements: dishonest act and deprivation;

(ii) the dishonest act is established by proof of deceit, falsehood or “other fraudulent means”;

(iii) the element of deprivation is established by proof of detriment, prejudice, or risk of prejudice to the economic interests of the victim, caused by the dishonest act.

… “other fraudulent means” in the third category is determined objectively, by reference to what a reasonable person would consider to be a dishonest act.

[66] In R. v. Zlatic, 1993 135 (SCC), [1993] 2 S.C.R. 29, McLachlin J. held at paragraph 32 that:

The dishonesty of “other fraudulent means” has, at its heart, the wrongful use of something in which another person has an interest, in such a manner that this other’s interest is extinguished or put at risk. A use is “wrongful” in this context if it constitutes conduct which reasonable decent persons would consider dishonest and unscrupulous.

[67] In Théroux, McLachlin J. also stated at paragraph 24 that:

[T]he proper focus in determining the mens rea of fraud is to ask whether the accused intentionally committed the prohibited acts (deceit, falsehood, or other dishonest act) knowing or desiring the consequences proscribed by the offence (deprivation, including the risk of deprivation). The personal feeling of the accused about the morality or honesty of the act or its consequences is no more relevant to the analysis than is the accused’s awareness that the particular acts undertaken constitute a criminal offence.

[68] In order to establish Mr. Takeshita is guilty of the charge of fraud contrary to section 380(1)(a) of the Criminal Code, in applying this law and considering the elements of the offence as outlined in a standard jury charge, the Crown must prove beyond a reasonable doubt that:

(a) that Mr. Takeshita deprived the Church of something of value;

(b) that Mr. Takeshita’s deceit, falsehood or other fraudulent means caused the deprivation;

(c) that Mr. Takeshita intended to defraud the Church; and

(d) that the value of the property (or, specify) exceeded $5,000.

(ii) Did Mr. Takeshita deprive the Church of something of value;

[69] It is the position of the Crown that Mr. Takeshita deprived the Church of a total amount of $80,154.75 over the period 2002 to 2006. This takes into account the two cheques that were reversed.

[70] It is admitted by the Crown that Mr. Takeshita made payments back to the church totalling $57,113.64, which includes payments made after his conduct was discovered. This results in a total deprivation over this period of time to the Church of $23,041.11.

[71] Mr. Fraser presented the following chart as part of his closing. It includes the adjustments for the NSF/reversed cheques. It is his position that before the $16,000 payment, the payments from the Church to Mr. Takeshita exceeded his payments back to the church by $39,041.11. The breakdown is as follows:

YEAR

PAYMENTS TO THE

DEFENDANT

PAYMENTS BACK

TO THE CHURCH

TOTAL DEPRIVATION

2002

$8,655.00

$3,500.00

$5,155.00

2003

$46,272.18

$22,064.00

$24,208.15

2004

$11,337.36

$7,219.61

$4,117.75

2005

$3,460.00

$4,670.00

-$1,210.00

2006

$10,430.21

$19,660.03

-$9,229.82

TOTAL

$80,154.75

$57,113.64

$23,041.11

LARGEST DEFICIT - $39,041.11

[72] The theory of the Crown is that Church was owed $39,041.11 by Mr. Takeshita as of June 2, 2006, which is just before the final payment of $16,000 was made on behalf of Mr. Takeshita.

[73] I have considered Mr. Takeshita’s evidence that he made other payments to the Church that were not included in Schedule 1 and have considered his evidence with respect to Schedule 2. In addition to the comments I have already made with respect to this evidence, I do not accept that any of those payments were made for a number of reasons as follows:

(a) Mr. Takeshita was not as wealthy as he led the Court to believe and in fact was operating his accounts in overdraft. He really did not have the financial means to make substantial payments on behalf of the Church.

(b) Mr. Takeshita would have had no reason to pay debts such as the CRA debt out of his own pocket. He was not responsible for those tax arrears. In any event, he testified that this debt was discussed at the Board and so I do not accept his evidence that he paid it.

(c) Given Mr. Takeshita’s evidence that he desperately needed to get money back, given that he started making payments to himself in 2002, his allegation that he made payments to cover otherwise NSF cheques to the Pastor all in 2003-2005, makes absolutely no sense.

(d) Mr. Takeshita’s evidence as to payments made, that the Crown contests, is unsupported by any documents. As I have set out, it is admittedly based on speculation. Mr. Takeshita has also admitted that the deposits that prevented the Church’s account from going into overdraft could have come from other sources.

(e) As already stated, Mr. Takeshita acknowledged that many of the challenged payments were listed in error for one reason or another.

[74] On a year by year basis, Mr. Takeshita was in a deficit situation with respect to payments received and payments returned until 2005 when he started to pay more money back than he was taking from the Church. He was however always in a net deficit, particularly before the $16,000 payment.

[75] Mr. Fraser submitted that Mr. Takeshita paid money back to the Church, but only after he had taken money out and that he did so to prevent the account from going below zero which would have revealed his actions. I accept that submission. I have not done a running analysis, but the unauthorized cheques to Mr. Takeshita started in January 2002, and the payments back to the Church by Mr. Takeshita started in April 2002. On all of the evidence, it seems that Mr. Takeshita was using funds in the Church bank account for his own purposes and then from time to time paid money back in order to ensure the account did not go into overdraft and result in NSF cheques. All of this was done without a record, apart from what the bank records disclose, and was done in secret. Clearly this was not a situation, as suggested by Mr. Takeshita, where he had made a number of payments to the Church and then decided to take the money back. The payments to him and the payments back are virtually over the same period of time. The timing of many of the payments by Mr. Takeshita back to the Church was clearly because the Church’s bank account was about to go into overdraft. Mr. Takeshita was very clear that he needed to avoid that so that Reverend Yoshida and others would not come to know what he was doing.

[76] For these reasons I am persuaded that Mr. Takeshita did not make the payments to the Church which the Crown disputes. I find that the payments Mr. Takeshita made back to the Church total $57,113.64 and that they were made between March 28, 2002 and August 15, 2006. As a result, I am persuaded beyond a reasonable doubt that the net deprivation to the Church is $80,154.75 minus $57,113.64 or $23,041.11.

(b) Did Mr. Takeshita use deceit, falsehood or other fraudulent means to cause the deprivation?

[77] Mr. Takeshita testified that all of the unauthorized cheques were blank when Reverend Yoshida signed them. Although Reverend Yoshida did explain when and why he signed blank cheques, he testified that with respect to the unauthorized cheques, where there was a legitimate looking “Re” line, such as the name of a Mission, that it was filled in when he signed the cheque and in those cases he was relying on advice from Mr. Takeshita that the cheque would be made payable to the Mission or other legitimate payee.

[78] As I have already said, I have concluded that this is a factual issue that I do not have to resolve. Reverend Yoshida testified that he did sign blank cheques so that when he was away for an extended period of time Mr. Takeshita could make emergency payments. Based on the evidence of Mr. Takeshita which I am prepared to accept for this purpose, these are the cheques that he used for unauthorized payments to himself. This means that he did not lie to the Pastor or use deceit to get him to sign the cheques. However, even if there is no evidence of any deceit or falsehood with respect to the signing of the cheques, it is clear that Mr. Takeshita used other fraudulent means to obtain money from the Church. Clearly the cheques were signed in blank so that they could be used for legitimate Church expenses. Mr. Takeshita saved up the blank cheques and then made them payable to his own or his wife’s accounts. He then altered the Church’s bank statements and provided false information to the Board of Directors in order to hide what he was doing.

[79] To the extent Mr. Takeshita relies on moneys he says he spent on behalf of the Church, regardless of the amount that he did in fact advance, his evidence was clear that it was a donation or financial support and that at the time these payments were made, he never intended to get those amounts back. To the extent Mr. Takeshita justified cheques that he wrote to himself on this basis, he was taking money that he was not entitled to. It would be no different than a member of the congregation starting to take money out of the collection plate on the basis that he had put a comparable amount into the collection plate earlier in the year.

[80] Using the definition of “other fraudulent means” as set out by the court in Zlatic, I am persuaded beyond a reasonable doubt that Mr. Takeshita wrongly used the Church’s money for his own purposes and his conduct clearly constitutes conduct which reasonable decent persons would consider dishonest and unscrupulous. He also used deceit and falsehoods to hide his conduct by altering the Church’s bank statements that he provided when required to report to the Board.

(c) Did Mr. Takeshita intend to defraud the Church?

[81] Considering the focus in determining the mens rea of this offence as set out in Théroux that I have already referred to, the question is whether or not the Crown has proven beyond a reasonable doubt that Mr. Takeshita intended to do what he did when he made the Church’s cheques payable to himself directly or indirectly and that he knew the money was the Church’s money. It does not matter whether Mr. Takeshita thought that what he was doing was not dishonest, or he thought that the Church would not suffer harm in the end as a result because he was paying money back.

[82] I am satisfied beyond a reasonable doubt that Mr. Takeshita intended to defraud the Church. He acted in a systematic way over five years. This was not a spur of the moment single payment back to himself. Furthermore, although not a necessary finding, the evidence is clear that Mr. Takeshita knew at the time that what he was doing was wrong and that the Pastor and the Board would not tolerate this conduct.

(d) Did the amount of money defrauded from the Church exceed $5,000?

[83] Mr. Fraser submitted that Mr. Takeshita defrauded the Church of the amount of $80,154.75, which is the total amount he received in payments from the Church. He submitted that the Church was deprived of this amount and that Mr. Takeshita was always paying money back to the Church after he had taken money from the Church. He argued that the payments back are relevant only to sentencing. In the alternative, he argued that if those payments back are to be taken into account, year by year there was a net depravation until 2005.

[84] In Olan at page 1194, the court held that:

… an intention to repay has never been of avail in the past in negating fraud if the conduct of the accused is otherwise shown to involve dishonest deprivation for personal ends. An intention to repay might, at most, be relevant at sentencing.

[85] I accept Mr. Fraser’s submission that the payments back by Mr. Takeshita are only relevant to sentencing. Mr. Takeshita had no right to have any of the cheques comprising the sum of $80,154.75 made payable to himself or for his benefit. He put the Church at risk of the deprivation of this amount and essentially used the Church’s bank account as his own. For these reasons, I am persuaded beyond a reasonable doubt that Mr. Takeshita defrauded the Church in an amount that exceeded $5,000, namely the sum of $80,154.75. The substantial payments Mr. Takeshita made back to the Church before and after his wrongful conduct was known will be relevant to his sentence.

Disposition

[86] Mr. Takeshita would you please stand.

[87] For the reasons I have given, I find you guilty of fraud as alleged in Count #1.

Spies J.

Released: November 29, 2012

[^1]: 1991 93 (SCC), [1991] 1 S.C.R. 742. [^2]: See R. v. C.L.Y., 2008 SCC 2, at paras. 7, 9; R. v. J.H.S., 2008 SCC 30, at para. 13. [^3]: See R. v. C.L.Y., 2008 SCC 2, at para. 6; R. v. Mends, 2007 ONCA 669, at para. 18. R. v. Carriere (2001), 2001 8609 (ON CA), 159 C.C.C. (3d) 51, at para. 48 (Ont. C.A.).