SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 1-600362
DATE: 20120224

RE: R. v. Saturday J. Oton

BEFORE: Justice E. P. Belobaba

COUNSEL:
S. Montefiore for the Crown
A. Baratz for Mr. Oton

HEARD: February 3, 2012

SENTENCING DECISION

[ 1 ] On December 12, 2011, after a ten-day trial, a jury convicted Saturday J. Oton on one count of fraud over $5000. The jury found that Mr. Oton, operating as Oton’s Consulting and Bookkeeping Service, defrauded the Government of Canada of more than $5000 by filing tax returns with false donation claims resulting in unlawful refunds for either himself or his clients.

[ 2 ] The charge arises out of some 26 instances of alleged income tax fraud for the tax years 2004, 2005 and 2006:

• 6 “identity theft” instances - where Mr. Oton created and filed a false return with false donations claims on behalf of taxpayers without their knowledge or permission and then converted the tax refunds to his own use, either by paying off his Visa account (on two occasions) or depositing the refund directly to his bank account (on three occasions); [1] and

• 20 client instances - where Mr. Oton prepared an actual return on behalf of the taxpayer/client but then created and added false donation claims, charging in many cases an enhanced fee of $300 or more because of the larger expected refund.

[ 3 ] The false donation claims related to donations allegedly made by the taxpayer to either the Siva Vishnu Temple or the Hindu Temple Society. No such donations were actually ever made. The total amount of fraud measured by the total refund amount paid out by the Government of Canada is $129,381.40. I have attached an Appendix breaking down this total refund amount by witness name and taxation year.

[ 4 ] The Crown asks for a six-month jail term and one year probation. Crown counsel submits that the sentencing objectives of denunciation and deterrence require a period of incarceration.

[ 5 ] Defence counsel seeks a conditional sentence consisting of a period of strict house arrest followed by a period of early curfew. Defence counsel also recommends the imposition of a community service obligation.

[ 6 ] Mr. Oton, please stand. Do you wish to say anything before sentence is imposed?

[ 7 ] For the reasons that follow, I agree with Crown counsel that a conditional sentence is not appropriate on the facts of this case. Given the scale of the overall fraud and even the smaller amount of money that you personally retained, a jail sentence in the order of nine to twelve months would not be unreasonable or unjust. However, as I will explain shortly, I am prepared to accept the Crown’s recommendation.

[ 8 ] Mr. Oton, I sentence you to six months in jail, minus two weeks credit for pre-trial custody. You will therefore be required to serve an additional 5 ½ months in jail followed by one year of probation. Crown counsel has not requested restitution so none will be ordered. Nor will you be prevented from resuming your work as an accountant and tax-preparer after you have been released from jail.

[ 9 ] I will now provide copies of my sentencing decision, one of which will be marked as an exhibit. However, to state the obvious, my sentencing decision is this entire decision and not just the portions that I will now highlight.

The offender

[ 10 ] Saturday Oton was born in Nigeria. He is 73 years old. After completing a four-year accounting degree at the University of Maine, he immigrated to Canada. For more than 30 years, until his arrest in 2008, he owned and operated Oton’s Consulting and Bookkeeping Services. He was divorced in 2004. He is estranged from his ex-wife and six adult children. Mr. Oton married a Nigerian woman in 2008 and is currently finalizing her sponsorship to join him in Canada. He lives alone and is in good health. Because of the inability since his arrest in 2008 to operate his bookkeeping and tax preparation business, Mr. Oton has very limited financial resources. He survives on his pension and with help from friends.

The offence

[ 11 ] The charge arises out of some 26 instances of alleged income tax fraud relating to the tax years 2004, 2005 and 2006:

• 6 “identity theft” instances - where allegedly Mr. Oton created and filed a false return with false donations claims on behalf of taxpayers without their knowledge or permission and then converted the tax refunds to his own use, either by paying off his Visa account (on two occasions) or depositing the refund directly to his bank account (on three occasions); [2] and

• 20 client instances - where Mr. Oton allegedly prepared an actual return on behalf of the taxpayer/client but then created and added false donation claims, charging in many cases an enhanced fee of $300 or more because of the larger expected refund.

[ 12 ] The twenty-six instances of alleged income tax fraud related to the tax years 2004, 2005 and 2006. The Crown says that the total amount of the fraud was $129,381.40. I have attached a chart showing the victims, the tax years and the amounts. I use the word “victims” loosely because in some of the cases, perhaps a majority of them, the so-called victims were willing beneficiaries of the abnormally large and clearly improper tax refunds.

Aggravating and mitigating factors

[ 13 ] There are several aggravating factors: this was a relatively sophisticated fraud that involved the creation of false charitable contribution receipts to garner unlawful tax refunds; this was not a one-time offence; the offender submitted some 26 falsified tax returns over three tax years; six of these cases involved the misappropriation and misuse of another person’s identity; and all of them involved a breach of trust either to the putative tax payer or to the defrauded tax authority.

[ 14 ] The mitigating factors are these: this is a first-time offender; his friends say that these actions were completely out of character for Mr. Oton; his counsel suggests that his client may have succumbed to the financial pressures of an unexpected divorce proceeding and child support obligations; Mr. Oton has been prevented from carrying on his bookkeeping business since his arrest in 2008 and has thus endured almost three years with no employment income; he is 73 years old, but fortunately has no health problems.

Principles of sentencing

[ 15 ] The fundamental purpose of sentencing, as set out in s.718 of the Criminal Code , is to contribute to respect for the law and the maintenance of a just, peaceful and safe society. All trial judges in Canada are required by law to impose a just sanction that has one or more of the following six objectives:

a. To denounce unlawful conduct;

b. To deter the offender and others from committing offences;

c. To separate offenders from society where necessary;

d. To assist in the rehabilitation of offenders;

e. To provide reparations for harm done to victims or to the community; and

f. To promote a sense of responsibility in offenders, and acknowledge the harm done to victims and to the community.

[ 16 ] It is a fundamental principle of sentencing that the sentence imposed be proportionate to the gravity of the offence and the degree of responsibility of the offender. The paramount question in sentencing is “what should this offender receive for this offence, committed in the circumstances in which it was committed?”

Conditional sentences

[ 17 ] The federal sentencing reforms of 1996 introduced the “conditional sentence” which is a sentence of imprisonment that is served in the community. [3] A conditional sentence is appropriate in cases where both punitive and restorative objectives can be achieved. Even where restorative objects cannot be readily satisfied, a conditional sentence will still be preferable to incarceration in cases where it can achieve the objectsof denunciation and deterrence as effectively as incarceration.

[ 18 ] The four statutory pre-conditions that must be satisfied before a conditional sentence can be imposed are set out in section 742.1 of the Criminal Code :

• The offence for which the accused has been convicted must not have a minimum term of imprisonment;

• The appropriate sentence must be imprisonment for less than two years;

• Serving a sentence of imprisonment in the community would not endanger the safety of the community; and

• Serving a sentence of imprisonment in the community would be consistent with the fundamental purpose and principles of sentencing set out in ss.718 to 718.2 of the Criminal Code .

[ 19 ] Therefore, if as here, there is no minimum sentence, probation and penitentiary terms are inappropriate and the judge is satisfied that the offender would not endanger the safety of the community, then the judge must consider whether the principles of sentencing dictate that a conditional sentence is appropriate. Indeed, it is an error in principle not to consider the conditional sentence where the first three statutory requirements have been satisfied.

Analysis

[ 20 ] The first three requirements for a conditional sentence as set out in s. 742.1 are satisfied on the facts herein. The only issue in dispute is the fourth prerequisite set out in s. 742.1 - whether a conditional sentence in this case would be consistent with the fundamental principles of sentencing set out in ss. 718 to 718.2.

[ 21 ] Here, the primary sentencing objectives are deterrence and denunciation. The question then is whether these objectives can be satisfied with the imposition of a conditional sentence. This is a determination that is based on a careful consideration of all of the relevant facts, including the total amount of the fraud.

[ 22 ] Crown counsel submits that the total amount of the fraud herein is just over $129,000 – see the attached appendix. Defence counsel says that there is no basis for coming to any such determination. We don’t really know, says defence counsel, what the jury decided on this point; that the most one can say is that the jury found fraud over $5000.

[ 23 ] Crown counsel, in turn, points to the following logic. One, it is clear that the jury must have found as a fact that Mr. Oton created fraudulent tax receipts that in total yielded unlawful tax refunds that amounted to more than $5000. Two, the jury must also have found that Oton created all, not just some, of these fraudulent receipts. There is simply no basis, says Crown counsel, for drawing any distinctions on the evidence presented. For example, if Mr. Oton created one of the Siva Vishnu Temple receipts found at his office, then he must have created all of the SVT receipts because they were all similarly, indeed identically, formatted and there was no evidence to the contrary. The same can be said about the Hindu Temple Society receipts. In short the total has to be $129,381.

[ 24 ] I agree with Crown counsel’s submission. There is no way on the evidence before me to differentiate one instance from another and to conclude that the amount in question could logically be less than the $129,381 amount itemized by the Crown and set out in the appendix.

[ 25 ] I pause here to note that Mr. Oton did not personally benefit in the amount of $129, 381. Most of the unlawful refunds received by his taxpayer clients were recovered in due course by the Canada Revenue Agency. My best estimate of the amount of money that was personally made and retained by Mr. Oton was about $30,000. My calculation is based on the following analysis:

• The tax refunds received and personally retained by Mr. Oton on the six “identity theft” cases – about $25,892;

• The larger than normal fees charged to taxpayer clients – about $5700. Mr. Oton normally charged a $35 to $40 tax return preparation fee. Thirteen clients admitted paying Mr. Oton between $300 and $500 for his services (say on average an extra $350 times 13 equals $4550). One client paid Mr. Oton a fee of $1200 (say an additional $1150). The total in higher fees is therefore about $5700

• Thus my best-estimate that Mr. Oton personally benefitted in the amount of $31,500.

[ 26 ] I do not mean to suggest that the total amount of the fraud is only $31,500. Because of Mr. Oton’s actions, more than $129,000 in fraudulent tax refunds was sent out to undeserving recipients. I simply note that the actual financial benefit to Mr. Oton was much smaller – only about $30,000. This latter observation, in my view, goes some way to support the Crown’s arguably lower-range sentence submission.

[ 27 ] I now turn to the case law. I have personally imposed conditional sentences in cases of fraud over $5000 only where there were strong mitigating factors and/or the amount of the fraud was relatively small, generally under $15,000. For example:

• Scott [4] - a petty cash cashier defrauded her employer of $9367 on one occasion – there were numerous mitigating factors - conditional sentence of 14 months (seven months of house arrest followed by seven months of curfew) together with community service, restitution and probation;

• Howard [5] - a caseworker with Toronto Social Services defrauded the city of $13,580 – she diverted monies to her personal bank account on eleven different occasions - 18 month conditional sentence (nine months of house arrest followed by nine months of curfew) together with community service, restitution and probation.

[ 28 ] However, where the amount of the fraud approaches the middle to large-scale range, jail sentences are almost always imposed in order to achieve the sentencing objectives of denunciation and deterrence. Here are some sample jail terms imposed for fraud amounts in the $40,000 to $140,000 range :

• Smith [6] : a bank employee stole $40,000 – 14 months jail;

• Murdock [7] : a nephew stole all of his aunt’s $110,000 – 12 months jail ;

• Collalti [8] : a bookkeeper stole $120,000 – 14 months jail;

• Morin [9] : theft of $120,000 from an armored truck – 12 months jail;

• Castro [10] : a paralegal acting for auto accident victims stole a total of $140,000 from the trust funds of his clients – 19 months in jail.

[ 29 ] One can see that a jail sentence of twelve months for the amount of fraud involved herein would easily fall within the range set out in the case law. Crown counsel says she would have asked for a jail sentence of nine to twelve months but in the end concluded, mainly because of Mr. Oton’s age (he is 73), that six months was more appropriate.

[ 30 ] For my part, I am prepared to accept the Crown’s recommendation, not only because of Mr. Oton’s age, but because of the amount of actual personal gain and also because of the three years of restricted bail that, in essence, prevented Mr. Oton from working as an accountant and earning an income as a self-employed professional. And, as a result, he has probably lost all or almost all of his clientele.

[ 31 ] I therefore have imposed a sentence of 6 months in jail, minus two weeks for pre-trial custody. Mr. Oton will therefore be required to serve an additional 5 ½ months in jail followed by one year of probation. Crown counsel has not requested restitution so none will be ordered.

[ 32 ] Mr. Oton, you have been found guilty of fraud over $5000. You must now serve time in jail. After you have been released, you can resume your work as an accountant and tax preparer. I don’t think that you will ever again file fraudulent tax returns. In any event, I expect that the CRA will be keeping a careful eye on your work as a tax preparer in the years ahead.

[ 33 ] Good luck to you.

Belobaba J.

Date: February 24, 2012

Appendix: Witnesses, tax years and fraudulent refunds

First name
Last name
2004
2005
2006

Bryan
Thomas
$2,581.46

Chandra
Rajkumar
$4,158.29

Christopher
Rajkumar
$6,601.97

Charmine
Gordon
$6,768.53

Damion
Murray
$4,560.24

David
Jadoonanan
$3,783.03

Hilda
Grant
$6,483.95

Immacula
Joachimpillai
$1,835.51

Jeremy
Shepherd
$2,324.13

Jihad
Fettah
$854.73

Kandiah
Yogeswary
$1,511.84

Kanthi
Perera
$2,598.04

Madge
Marsh
$1,629.60

Mostapha
Younesi
$9,631.82

Nariman
Hosein
$6,793.09

Natalee
Peck
$3,397.86
$6,530.86
$5,351.49

Oliver
Walters
$4,419.93

Pam
Reynolds
$6,675.63

Rajaratnasingham
Rajasingham
$3,648.72

Ratnasingham
Sinnathamby
$7,229.96

Raviyinkumar
Ponnuthurai
$6,271.93

Roger
Trilokie
$8,261.20

Sasivathany
Sivatkantharoopan
$4,279.27

Sunil
Ramkairsingh
$2,536.15

Timothy
Barran
$5,550.25

Upali
Perera
$3,111.92

Subtotals per year
$59,452.00
$6,530.86
$63,398.54

TOTAL
$129,381.40

[1] The refund for Jeremy Shepherd in the amount of $2324.17 was “cancelled.”

[2] The refund for Jeremy Shepherd in the amount of $2324.17 was “cancelled.”

[3] I note that the recent 2011 amendments to the Criminal Code will restrict the availability of the conditional or “house arrest” type of sentence. In particular, a conditional sentence will no longer be available for anyone convicted of fraud over $5000. The new amendments do not, of course, apply herein because the offence was committed in 2004 to 2006.

[4] R v. Scott , 2011 ONSC 5964

[5] R v. Howard, (S.C.J., released Jan 13, 2009).

[6] R v. Smith , 2004 (ON CA) , [2004] O.J. No. 4179 (Ont. C.A.)

[7] R v. Murdock, [2004] O.J. No. 1546 (S.C.J.)

[8] R v. Collalti, [2003] O.J. No. 5353 (S.C.J.)

[9] R v. Morin, [1997] O.J. No. 2413 (Ont. Ct. Gen. Div.)

[10] R v. Castro, [2008] O.J. No. 2110 (S.C.J.)