ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: I-415/12
DATE: 20140220

BETWEEN:

HER MAJESTY THE QUEEN

– and –

MICHELE FIORILLI

John Scutt, for the Crown

John Park, for the Defendant

HEARD: January 24, 2014

TROTTER J.

INTRODUCTION

[1] After a trial before me (sitting without a jury), Mr. Fiorilli was found guilty of four counts of fraud over $5,000. The charges relate to two real estate transactions in which the Royal Bank of Canada (RBC) and the Canada Mortgage Housing Corporation (CMHC) were defrauded of $267,082 in total.

[2] The Crown seeks a sentence of 18 months imprisonment, a restitution order, a fine in lieu of forfeiture and a DNA order. Counsel for Mr. Fiorilli submits that a conditional sentence is appropriate.

CIRCUMSTANCES OF THE OFFENCES

[3] I will not repeat the facts in detail. My findings are set out in my Reasons for Judgment following the trial: see R. v. Fiorilli, 2013 ONSC 5999. In short, Mr. Fiorilli was at the centre of two real estate transactions involving residential properties. Mr. Fiorilli, in conjunction with others, arranged for straw purchasers to acquire the properties. Fraudulent documentation was generated about the financial situation of the purchasers. Mortgage funds were advanced on the strength of these deceitful representations. The mortgages soon went into default. While others benefited, mortgages that were already on the property were discharged and Mr. Fiorilli (or his company) walked away with an additional $110,000.

[4] Mr. Fiorilli faced four counts altogether – two counts relating to each transaction, with RBC and CMHC noted as victims in separate counts. In the end, the insurer, CMHC, covered the loss. Accordingly, applying the principles in R. v. Kienapple (1975), 1974 14 (SCC), 15 C.C.C. (2d) 524 (S.C.C.), I enter conditional stays on the two RBC counts.

THE CIRCUMSTNCES OF MR. FIORILLI

[5] Mr. Fiorilli is almost 49 years old. He has no criminal record. The Pre-Sentence Report (PSR) prepared for this case is terribly inaccurate in that it attributes 11 convictions to Mr. Fiorilli. The convictions relate to someone else with the same name. This diminishes the value of the report.

[6] Mr. Fiorilli worked as a businessman for many years. Mr. Park submitted that he was very successful at a very young age, demonstrating an entrepreneurial spirit that resulted in amassing large amounts of money. He was the subject of several positive newspaper articles that spoke of his successes. In more recent years, Mr. Fiorilli dealt in real-estate, flipping and renting properties.

[7] Mr. Fiorilli was married twice and has four children, two from each marriage. While he is in contact with all of them, he provides no financial support. Mr. Fiorilli currently lives with his mother, who is 70 years old. Mr. Park submitted that his client takes care of his mother, however I was left unclear on the issue of whether his mother has any medical or special needs. Mr. Fiorilli’s sister also lives in the mother’s home.

[8] Mr. Fiorilli has some health issues. He advised the author of the PSR that he stopped working in 2006. He suffered a heart attack a few years earlier. A letter from his cardiologist confirms his medical history. It also states that Mr. Fiorilli suffers from diabetes. His cardiologist says that Mr. Fiorilli is presently stable, from a clinical perspective. He goes on to say, “I am not sure what the incarceration in jail is going to do for his underlying coronary artery disease.”

[9] Mr. Fiorilli is not presently working. He receives a pension from the Ontario Disability Support Program (ODSP) of roughly $1,100 per month.

[10] The PSR author provides a rather tepid endorsement of Mr. Fiorilli. He is referred to as a “repeat offender” who takes no responsibility for his actions. He expressed his disappointment with the criminal justice system in being singled out for his role in this fraud of RBC and CMHC.

[11] Lastly, Mr. Fiorilli relies on a letter from his Pastor, which speaks to Mr. Fiorilli’s good character and requests that he be treated with lenience, in part because of his underlying health issues.

ANALYSIS

[12] This is a case of large-scale fraud. The Court of Appeal of this province has been very clear that, with these types of frauds, the primary sentencing goals should be denunciation and general deterrence. This principle has generally been vindicated by the imposition of jail sentences, even for first offenders: see R. v. Bogart (2002), 2002 41073 (ON CA), 167 C.C.C. (3d) 390 (Ont. C.A.), R. v. Dobis (2002), 2002 32815 (ON CA), 163 C.C.C. (3d) 259 (Ont. C.A.), R. v. Siddiqui, 2008 ONCA 312 and R. v. Hameed, 2008 ONCA 51. Penitentiary sentences are regularly imposed for large-scale frauds. For example, in R. v. Dwyer (2013), 2013 ONCA 34, 296 C.C.C. (3d) 193 (Ont. C.A.), the Court upheld a 3 ½ year prison term for a fraud that resulted in a loss of just over $200,000 to RBC. There are also many examples of reformatory sentences being imposed: see R. v. Siddiqui, 2008 ONCA 312, R. v. Hameed, 2008 ONCA 51 and R. v. Garrick, 2013 ONSC 1798. In exceptional circumstances, conditional sentences have been imposed: see R. v. Dobis, supra, R. v. Bogart, supra and R. v. McCarthy, [2008] O.J. No. 5365 (S.C.J.).

[13] Each case must be determined on its unique set of facts and circumstances, with particular regard to the applicable aggravating and mitigating factors. In terms of the aggravating factors for this large-scale fraud, both transactions were well-planned and involved enlisting the assistance of a number of people to ensure success. Mr. Fiorilli was the principal person behind the frauds. Moreover, Mr. Fiorilli took advantage of the straw purchasers who were left to deal with the aftermath of these offences many years later. Lastly, Mr. Fiorilli was the primary beneficiary of the fraud, with just over $110,000 finding its way into his hands. This reinforces the characterization of his role as the principal person behind the scheme.

[14] In terms of mitigating factors, Mr. Fiorilli is a first offender, having no previous criminal record. He has been a hard working member of the community for many years. He is supportive of his mother. However, I was not provided with sufficient details about Mr. Fiorilli’s mother to make an assessment of the extent to which she is dependent on Mr. Fiorilli. She is 70 years old. No particular health issues or special needs were identified. It was submitted that Mr. Fiorilli’s mother will suffer if he goes to jail. Given the paucity of information, I have no way of gauging this potential impact.

[15] I mention a couple of factors that do not fit into the aggravation/mitigation matrix. First, Mr. Fiorilli has not repaid any of the money that was taken from RBC/CMHC. This is not an aggravating factor: see R. v. Dwyer, supra, at para. 11. It was submitted that Mr. Fiorilli does not presently have the means to repay any of the money. However, it does represent the absence of a mitigating factor, as does Mr. Fiorilli’s lack of remorse. An attempt to make restitution is a concrete indication of remorse, something that has the potential to blunt a sentence focused on denunciation and general deterrence. Unfortunately, it is absent in this case.

[16] As mentioned already, these offences were committed almost a decade ago. In the meantime, Mr. Fiorilli no longer works and his health seems to have deteriorated somewhat. I was not given a satisfactory explanation for this lengthy delay. I do not place blame at the feet of Mr. Scutt, who presented this case with his usual fairness and efficiency. Similarly, there is no suggestion that the defence is responsible for the delay. I suspect that the delay was the result of the police investigation.

[17] Ideally, in order to effectively serve the principles of denunciation and general deterrence, punishment ought to be imposed swiftly. When significant delay occurs between offending and sentencing, the effect of these sentencing goals is diluted. Moreover, the delay may well have undermined Mr. Fiorilli’s ability to make any sort of restitution. This delay is a factor that I take into account in arriving at the proper sentence in this case.

[18] I am not persuaded that this is one of those exceptional cases in which a conditional sentence is appropriate. As I have already noted, this was a large-scale fraud. The loss was significant. The transactions were motivated by pure greed on Mr. Fiorilli’s part. He was content to use others to achieve his purposes. This type of offending must be met with a sentence that emphasizes general deterrence and denunciation. While a conditional sentence is sometimes capable of achieving these ends (see R. v. Proulx (2000), 2000 SCC 5, 140 C.C.C. (3d) 449 (S.C.C.)), it would not effectively address the pressing need for general deterrence in this case. As Mr. Scutt submitted, a conditional sentence would not change Mr. Fiorilli’s life to any significant degree. He would be ordered to remain in a home in which he habitually stays. He does not work. Moreover, the PSR indicates that Mr. Firoilli does not socialize very often. As in R. v. Bogart, supra, at p. 401, a conditional sentence in this case would essentially amount to a probation order and would be ineffective in addressing the applicable sentencing principles.

[19] Similarly, Mr. Fiorilli’s health does not push this case across the line towards a conditional sentence. Without minimizing its importance or seriousness, Mr. Fiorilli suffered a heart attack roughly 10 years ago. The letter provided from his cardiologist indicates that Mr. Fiorilli is clinically stable. The letter is completely speculative about the impact of jail on his condition. It does not raise serious concerns.

[20] This does not mean that Mr. Fiorilli’s health is irrelevant. In all of the circumstances, these mild health concerns and the unexplained passage of a decade since the offences were committed, a penitentiary sentence is not appropriate in this case. Absent these factors, it may well have been. General deterrence and denunciation can be vindicated with a shorter sentence, but one that sends a clear message that Mr. Fiorilli’s greed-driven conduct will be met with significant consequences. This type of sentence is necessary to deter others who might be tempted to steal from the banks in the future. Mr. Fiorilli, who has taken no responsibility for his actions, also needs to receive the message that his conduct is unacceptable and worthy of punishment. The fact that others involved in this scheme were not charged is irrelevant to his high level of moral blameworthiness.

[21] Accordingly, on the specific facts of this case, I impose a sentence of 12 months’ imprisonment on Counts #1 and 3, to be served concurrently.

[22] In addition to imprisonment, Mr. Scutt requests that I impose a free standing compensation order under s. 738 of the Criminal Code. He submits that the amount of the order should be $213,084.61. This amount is less than the overall loss which includes legal fees and interest.

[23] On behalf of Mr. Fiorilli, Mr. Park did not seriously resist the restitution order. He pointed out that Mr. Fiorilli is unemployed and has no ability to pay. He submitted that his client has already spent the money. I have no doubt about Mr. Park’s candour and integrity. However, his submissions on these issues were unsubstantiated by documentation from his client. I am left uncertain about Mr. Fiorilli’s assets and his present or future ability to pay.

[24] Moreover, as the Alberta Court of Appeal held in R. v. Johnson (2010), 2010 ABCA 392, 265 C.C.C. (3d) 443 (Alta. C.A.), at p. 453, an offender’s means have limited import in cases of fraud. I would add that the claim has far less credence when, without any support, an offender simply says: “I can’t pay because I spent what I stole.” In the context of fines in lieu of forfeiture, Deschamps J. in R. v. Lavigne (2006), 2006 SCC 10, 206 C.C.C. (3d) 449 (S.C.C.), at p. 460, made the following remarks that are also applicable to compensation orders:

If the offender no longer has the money, it will often be because he has spent it. If the fact that the money has been spent is a good ground for being exempted from the order, would this not incite offenders to quickly squander the proceeds of crime?

Accordingly, there will be a restitution order in the amount requested by the Crown.

[25] The Crown also requests that I impose a fine in lieu of forfeiture under s. 462.37 of the Criminal Code. The Supreme Court discussed the general principles that guide the application of this provision in R. v. Lavigne, supra. The Court held that there is a limited discretion in a sentencing judge not to make such an order. However, concerns about double punishment or the inability of the offender to pay are not legitimate reasons for refusing to make the order: see also R. v. Dwyer, supra.

[26] Mr. Scutt does not suggest that I make the order for the full amount. Instead, he quite fairly submits that a fine in the amount of $110,000 (the amount Mr. Fiorilli took away from the transactions) should be imposed. Pursuant to s. 462.37(4)(a)(v), I am required to set the time to be served in jail in the event that the fine is not paid. In the circumstances of this case, where the fine is between $100,000 and $150,000, the period that must be imposed is between 2 to 3 years’ imprisonment. In light of the mitigating factors discussed above in relation to the imposition of the custodial portion of the sentence, I see no reason to impose anything above the minimum in this context. Accordingly, imprisonment in default will be set at two years.

[27] Returning to the issue of the passage of time since the offences were committed, I consider this to be a relevant factor, not in relation to the amount of the fine, but in relation to the time that Mr. Fiorilli should be given to repay this amount. He is now unemployed and does not enjoy the best of health. However, he is only 49 years old. In time, he may well be able to discharge this fine, or make a significant dent in this obligation. I will permit Mr. Fiorilli to have 6 years to pay this fine. I arrive at this number in view of the fact that Mr. Fiorilli is being sentenced to a year in jail. While it is unlikely that he will serve all of this time, this number will allow him to get back on his feet once released and have 5 full years to discharge this fine.

[28] Given that I am making orders under both ss. 738 and 462.37 of the Criminal Code, I order that, in terms of the fine in lieu of forfeiture, the Attorney General shall transfer all payments received with respect to the fine payable to the satisfaction of the restitution order: Criminal Code, s. 740 and R. v. Katchatourov, 2012 ONSC 3511, at para. 138.

[29] Lastly, the Crown requests that I impose a DNA order. These offences are secondary designated offences. I am not persuaded that it is in the best interests of the administration of justice to make such an order in this case.

CONCLUSION

[30] For the reasons already given, Mr. Fiorilli is sentenced to one year imprisonment, in addition to the orders made under ss. 738 and 462.37 of the Criminal Code.

TROTTER J.

Released: February 20, 2014

COURT FILE NO.: I-415/12
DATE: 20140220

ONTARIO
SUPERIOR COURT OF JUSTICE

HER MAJESTY THE QUEEN

– and –

MICHELE FIORILLI

REASONS FOR SENTENCING

TROTTER J.

Released: February 20, 2014