ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CR-11-1292-00
DATE: 2014-06-19
BETWEEN:
HER MAJESTY THE QUEEN
– and –
Colin Henderson, for the Crown
PAUL VINCENT THORNTON
Paul Vincent Thornton, In Person
Self-Represented
HEARD: May 20-23, 26-28, 2014
REASONS FOR JUDGMENT
André J.
[1] The Crown alleges that Mr. Thornton defrauded his employer between 2004 and 2009 by causing three companies to write cheques totalling $3,948,301.01 to his own company rather than to his employer. Mr. Thornton has not disputed that he deposited the money into his own account. Rather, he maintains that based on a confidential agreement he had with a Vice President of his employer, he had the right to do so. I must therefore decide whether or not the Crown has proven beyond a reasonable doubt that Mr. Thornton fraudulently and intentionally deprived his company of the sum of money in question.
OVERVIEW
[2] Mr. Thornton worked as a manager at Loblaws from 2001 to February 2009 when he was fired. He was the Packing Manager of the Product Development of Packaging Department and he oversaw the company’s Preferred Printers and Rebate Program.
[3] The latter Program was based on services provided by 26 companies. These companies produced either cardboard boxes or labels for other companies called “co-packers”, which supplied certain brand name products to Loblaws for sale to the public.
[4] As a cost of doing business with Loblaws, the 26 companies agreed to be involved in a Rebate/Rebill Program with Loblaws. They issued rebate cheques to Loblaws based on a percentage of their volume of sales to the co-packers. They typically wrote cheques to “LBL” which is a shortened version for Loblaws Brands Limited. The co-packers were unaware of the rebate program. The propriety of this rebate program may raise some questions. However, executives of three of the printing companies all testified that other major retail companies have a similar rebate program.
[5] Loblaws also had a Rebill program with its printers. The latter were required to advise Loblaws of its cost of printing labels or boxes for its suppliers. Loblaws then advised the printers to charge the suppliers a higher cost for their products. The printers then sent Loblaws cheques at fixed intervals representing the difference between the company’s price for the product and that recommended by Loblaws, multiplied by the volume of product the printers sold to the co-packers.
[6] The evidence called by the Crown indicates that initially, three suppliers of Loblaws, Kwality Labels Inc., CENVEO and Boehmer Box, wrote out rebate cheques to “LBL” and either couriered the cheques to Loblaws or sent them by mail.
[7] A representative of Kwality Labels Inc. testified that in 2003, Mr. Thornton directed her to make out the rebate cheques to “IBL”, a company which unbeknownst to her, was owned by Mr. Thornton. Representatives of CENVEO and Boehmer Box also testified that Mr. Thornton instructed them to do the same. Representatives from all three companies testified that they never knew that IBL was Mr. Thornton’s company; neither did they know that Mr. Thornton was depositing the rebate cheques into his own bank account.
[8] Mr. Thornton testified that at the time of his hiring in 2001, a Vice President of Loblaws told him in confidence that he could keep all the rebate cheques once they had exceeded a certain amount. Mr. Thornton never advised anyone at Loblaws about this secret agreement ever after the Vice President left the company.
[9] Three Loblaws executives testified that none of the companies’ executives worked on a commission basis and that the incentive and merit bonuses to which Loblaws’ employees were entitled never exceeded 10 per cent of their annual wages. Mr. Thornton earned $93,000 annually in 2008 before the company released him. The money he received from the Rebate program, on the other hand, amounted to an additional annual income of approximately $800,000.
CHARTER APPLICATIONS
[10] Mr. Thornton brought two pre-trial Charter applications, both of which were unsuccessful. In the first, he alleged that the two arresting officers violated his s. 8 Charter rights by forcefully entering his home in order to arrest him. After hearing evidence called by Mr. Thornton and the Crown, I ruled that the two officers entered Mr. Thornton’s residence after receiving permission from his girlfriend’s brother to do so and therefore did not violate Mr. Thornton’s s. 8 Charter rights.
[11] In his second pre-trial Charter application, Mr. Thornton alleged that the officers who interviewed him violated his s. 10(b) rights by denying his constitutional right to have a lawyer present when the officers interviewed him. I dismissed the motion on the ground that Mr. Thornton did not have a constitutional right to have a lawyer present while he was interviewed by the police.
BLENDED TRIAL
[12] The court dealt with four other Charter applications brought by Mr. Thornton which were dealt with during the course of the trial.
[13] The first involved the alleged violation of Mr. Thornton’s constitutional right because of the arresting officer’ failure to interview him prior to his arrest. The court dismissed this application given that the officers did not have any legal obligation to interview him prior to his arrest.
[14] The second alleged Charter violation related to Cst. Gregoriou telling Mr. Thornton during the course of an interview that he believed that Mr. Thornton was guilty of the offence for which he was being charged. The court dismissed this application on the ground that the officer did not violate Mr. Thornton’s s.11(d) Charter rights by expressing an opinion about Mr. Thornton’s guilt.
[15] The third alleged Charter violation relates to the decision by the Ontario Legal Aid Plan to deny Mr. Thornton a legal aid certificate and the court’s dismissal of his Rowbotham application.
[16] The Ontario Legal Aid has the unfettered right to apply its criteria to either grant an applicant a legal aid certificate or to deny a request for a certificate. A person charged with a criminal offence does not have an unfettered right to receive a legal aid certificate from the Ontario Legal Aid Plan, upon request. An applicant is only eligible to receive such a certificate if he or she meets the criteria for eligibility under the Plan’s governing statute. If the criteria for eligibility is not met, the applicant is not entitled to receive a certificate and has no constitutionally protected right to receive one.
[17] Sproat J. dismissed a Rowbotham application brought by Mr. Thornton prior to the commencement of this trial. I have no jurisdiction to review this decision, neither do I have the jurisdiction to declare that the denial of Mr. Thornton’s Rowbotham application constituted a violation of his constitutional rights.
[18] The fourth Charter argument made by Mr. Thornton is that the decision by Loblaws to obtain his banking records and then hand them over to the Peel Regional Police violated his s. 7 Charter rights.
[19] During the trial, Mr. Thornton tendered an affidavit of Mr. Austin Gillies, a senior executive of Loblaws, which was made part of his company’s application during the course of civil proceedings, to obtain his bank records. These records were therefore received by Loblaws pursuant to a court order.
[20] The Peel Regional Police played no part in Loblaws’ decision to obtain Mr. Thornton’s banking records. They did not conscript Loblaws to obtain this information on their behalf. Loblaws apparently obtained this information while pursuing a civil action against Mr. Thornton.
[21] Did the company violate Mr. Thornton’s s. 7 rights when they handed those records to the Peel Regional Police in support of their criminal complaint against Mr. Thornton? In my view they did not. The company has the right to protect its interests and to lodge a criminal complaint against an individual who they believed may have defrauded them.
[22] Was the Peel Regional Police estopped from reviewing these records or initiating a criminal investigation against Mr. Thornton? The police have a statutory duty to investigate allegations of criminal wrongdoing. If the investigators form the requisite legal and probable grounds they can lawfully arrest and then charge the subject of their investigation.
[23] Cst. Gregoriou, the investigating officer, testified that after being assigned to investigate the complaint against Mr. Thornton, he interviewed a number of persons including representatives of three companies, Kwality Labels Inc., CENVEO and Boehmer Box. He then formed the legal and probable grounds to arrest Mr. Thornton and proceeded to do so on April 9, 2009.
[24] In my view, Cst. Gregoriou did not violate Mr. Thornton’s s.7 Charter rights in receiving and reviewing the banking records which Loblaws provided to the Peel Regional Police and initiating an investigation of his own into Mr. Thornton’s alleged criminal wrongdoing. He decided to arrest Mr. Thornton only after formulating the requisite legal and probable grounds to do so. To that extent, Cst. Gregoriou did not violate Mr. Thornton’s s. 7 rights by relying on the information provided by Loblaws in launching an investigation into Mr Thornton’s alleged wrongdoing.
ANALYSIS
[25] As already indicated, Mr. Thornton does not dispute the fact that he directed the three companies, Kwality Labels Inc., CENVEO and Boehmer Box, to make their rebate cheques payable to his company, “IBL”. Neither does he dispute the evidence that he never told representatives of those companies that he owned IBL and that the cheques were being deposited into his account. Additionally, he does not dispute that he received in excess of $3.9 million from his employer’s rebate program.
[26] Rather, Mr. Thornton maintains that he was entitled to the money on account of a confidential agreement he had with Mr. Terry Cuttie, a Vice President of Loblaws who initially interviewed him for the position of Packaging Manager at Loblaws. Mr. Thornton relies on a spreadsheet, marked as Exhibit 18, which specifically refers to a commission, as proof that he was being paid on a commission basis while being employed at Loblaws. He denied that he deliberately changed the name “IBL” on some of the rebate cheques to “LBL” in order to avoid suspicion or detection about what he had been doing. He also stated that contrary to the testimony of a Crown witness, she never saw him make any mark on any of the rebate cheques in question.
[27] The outcome of this trial is based, to a significant degree, on my assessment of the credibility of the witnesses including Mr. Thornton. In analyzing the witnesses’ testimony, I am guided by the following principles enunciated by the Supreme Court of Canada in the case of R. v. W(D), 1991 93 (SCC), [1991] 1 S.C.R. 742:
a. If I believe Mr. Thornton’s testimony, I should acquit him.
b. If I disbelieve Mr Thornton’s testimony, but nevertheless find that his evidence is capable of raising a reasonable doubt about the Crown’s case, I should acquit him.
c. Even if I disbelieve Mr. Thornton or find that his evidence is incapable of raising a reasonable doubt, I must be satisfied of his guilt beyond a reasonable doubt, based on the totality of the evidence that I accept.
[28] In applying this analytical tool, I am mindful that the assessment of credibility requires more than a simple comparison of the testimony of any two witnesses and preferring that one of witness over the other. Neither should I be influenced by the fact that the Crown called more witnesses than Mr. Thornton, or apply a stricter level of scrutiny to Mr. Thornton’s evidence than I apply to the Crown’s witnesses.
[29] That said, I have great difficulty accepting Mr. Thornton’s testimony for the following reasons:
a. First, Mr. Thornton testified that he made a confidential agreement with Mr. Cuttie that he would be able to retain all money received in the Rebate Program after it exceeded a certain level.
However, there does not appear to have been an apparent reason for the secrecy. Loblaws is a major retail company. It employs, according to Mr. Thornton, over 180,000 employees. Why then, would there have been a need for Mr. Cuttie, who was not called as a witness, to have had a confidential agreement with Mr. Thornton authorizing him to divert all the rebate cheques over a certain threshold into his bank account?
b. Second, one would have thought that had there been such an agreement, Mr. Thornton would have been anxious to protect this money, particularly after Mr. Cuttie left the company. And yet incredibly, Mr. Thornton chose to keep this lucrative agreement a secret. He did not disclose it to anyone.
c. Third, not only did Mr. Thornton keep this arrangement a closely guarded secret, he misled others who raised questions about the name, IBL, being placed on the cheques. For example, Mr. John Wright, a sales manager at CENVEO, testified that his company cheques were initially made out to “LBL”. Mr. Thornton, at one point, instructed him to make the cheques payable to IBL. Mr. Wright found the request to be strange. Mr. Thornton then advised him that IBL was a new holding company incorporated by Loblaws for the rebate cheques.
I accept Mr. Wright’s testimony for the following reasons:
He was not shaken in cross-examination by Mr. Thornton.
He had no reason to fabricate this evidence.
He was the person at CENVEO who dealt with Mr. Thornton on matters relating to the Loblaws Rebate Program.
d. Fourth, Mr. Thornton testified that he made this confidential agreement with Mr. Cuttie before accepting a formal offer of employment from Loblaws. One would have thought that Mr. Thornton would have, at the very minimum, ensured that this potentially lucrative agreement was reduced to writing in the event that someone questioned it in the future.
And yet surprisingly, Mr. Thornton did nothing of the kind. He accepted Loblaw’s offer of employment, marked as Exhibit 16 in the trial, which merely indicated that:
Your annual salary will be at $76,000 (pay bond 8). You will also be eligible to participate in the company incentive program for 2001 on a pro-rated basis (potential payout in February, year 2002) and beyond.
e. Fifth, Mr. Silvio Delmonte, then the Senior Manager of Human Resources who made the offer of employment to Mr. Thornton, testified that Mr. Thornton was eligible to receive a percentage of his salary if Loblaws realized a profit in any year. He testified that Mr. Thornton would have been eligible to receive an annual merit increase between two and a half per cent to four per cent of his annual salary and that employees who exceeded expectations only received a three to four per cent increase. Mr. Thornton was also eligible to benefit from the company’s Incentive Program which is based on a department achieving its targets of performance. This incentive ranged from three to four per cent of annual income to eight to ten per cent for senior management.
f. Mr. Delmonte’s testimony that he was unaware of anyone at Loblaws who was entitled to a commission was corroborated by Mr. Austin Gillies, the Senior Director of Control Brand Packaging at Loblaws and Ms. Elizabeth Buderick, the Packaging Manager who replaced Mr. Thornton after Loblaws terminated him in 2009. I therefore find as a fact that as a policy, Loblaws’ employees did not earn commissions during the course of their employment with the company.
g. Sixth, I have great difficulty with Mr. Thornton’s testimony given the evidence of two witnesses that he went to great lengths to conceal the fact that rebate cheques were being paid to his company.
For example, Ms. Buderick testified that she attended a meeting with employees of Boehmer Box on February 12, 2009. Mr. Thornton and herself represented Loblaws. The representative of Boehmer Box presented each of them with a sales report of the Preferred Printer Program which showed the rebate cheques the company ostensibly paid to Loblaws. Mr. Thornton, for an unknown reason, took away her copy and advised her that it would be best to keep them together.
Furthermore, Mr. Gillies testified that between 2007 and 2009, Mr. Thornton was responsible for documentation regarding sales and revenue generated from the control brand products. Mr. Gillies testified that he repeatedly requested the documentation from Mr. Thornton but never received it since Mr. Thornton always had a reason why he could not provide it.
There is no suggestion that Ms. Broderick and Mr. Gillies colluded before testifying in this trial. Neither was shaken during cross-examination on this part of their testimony.
For those reasons, I accept their testimony about Mr. Thornton’s actions regarding disclosure of documentation related to Loblaws’ Preferred Printers Program.
[30] Ms. Buderick also testified that in December 2008 she saw Mr. Thornton making a mark on a cheque issued by Boehmer Box. He had then joked to her that the cheque had not been made out to the right company and that there was no need to ask the company to make the cheque out to Loblaws.
[31] Mr. Thornton vigorously denied that this incident took place and testified that there were no cheques from Boehmer Box dated December 2008, which had been altered.
[32] However, the copies of the cheques remitted by Boehmer Box to IBL, which were marked as Exhibit 11A in the trial, support Ms. Buderick’s testimony that she witnessed Mr. Thornton make a mark on a cheque. On five of the cheques, copies of which appear at Tabs 25, 51, 53, 57 and 58, the letter “I” in the name IBL had been changed to “L”. The copies of the cheques at Tabs 51, 53, 57 and 58 had all been issued in 2008 with the latter two having been issued in September 2008. The fact that Michael Hobbs, Boehmer Box’s Director of Finance, testified that all the cheques were sent to Mr. Thornton confirms that he was the person who altered the cheques.
[33] Mr. Thornton presented a spreadsheet, marked as Exhibit 18, as proof that Loblaws agreed to pay him commission as part of his wages. The spreadsheet is entitled, “CSP vs. Loblaws Benefit Package, Years 2001-2005”. The document provides a comparison between the wages and benefits Mr. Thornton received at CSP and that he would receive at Loblaws. At the bottom left of the document, in small print, are the words: “Loblaws Mgmt to set pkg revenue target / commissions earned over target set by Mgmt.”
[34] This document cannot be regarded as proof that Loblaws agreed to allow Mr. Thornton to keep any revenue from its Rebate Program when sales exceeded a certain limit for the following reasons:
a. There is no evidence that it formed part of any offer of employment made to Mr. Thornton.
b. Mr. Delmonte testified that he never saw the document.
c. The document does not specifically state that Loblaws would pay Mr. Thornton commissions.
d. If this undertaking to pay commissions to Mr. Thornton was part of the reason why he accepted Loblaws’ offer of employment, it strains the bounds of credulity that Mr. Thornton made absolutely no reference to it in his acceptance of the offer of employment.
[35] Mr. Thornton maintains that any similarity between the names “LBL” and “IBL” is merely coincidental and that his company predated his employment with Loblaws.
[36] In my view, however, this explanation defies belief. Mr. Thornton opened a bank account with the TD Bank under the name IBL on October 28, 2002, after he commenced employment with Loblaws. The only cheques deposited into this account were the rebate cheques from Kwality Labels Inc., CENVEO and Boehmer Box. This evidence therefore raises a reasonable inference that Mr. Thornton opened the account for the specific purpose of depositing the rebate cheques into the account and that the name “IBL” was deliberately chosen to avoid suspicion that the cheques payable to Loblaws were being paid to an entirely different company.
[37] For the above reasons, I disbelieve Mr. Thornton’s testimony that he had a confidential agreement with Mr. Cuttie authorizing him to appropriate some of the rebate cheques from Kwality Labels Inc., CENVEO and Boehmer Box. Furthermore, I find that his evidence is incapable of raising a reasonable doubt in the Crown’s case.
[38] Has the Crown proved its case beyond a reasonable doubt, based on the totality of evidence that I accept?
[39] There is no dispute that Mr. Thornton caused Kwality Labels Inc., CENVEO and Boehmer Box to write the cheques in his company’s name and that he then deposited them into his account. I accept the testimony of Elizabeth Buderick, Austin Gillies and John Wright that Loblaws did not pay commissions to its employees and that Mr. Thornton had no permission to divert this money into this own account. I also accept Ms. Buderick’s testimony that Mr. Thornton’s actions were discovered only after an audit of the Boehmer Box, sales report revealed a discrepancy between what Boehmer Box claimed it had paid out to Loblaws and the latter’s records indicating what it had received from Boehmer Box.
[40] I find that Mr. Thornton defrauded Loblaws from 2004 to 2009, when he instructed three printing companies to pay out rebate cheques to his own company, IBL, which he deposited into his account.
MOTIVE
[41] The Crown is not required to provide a motive for Mr. Thornton’s actions. Crown counsel suggests that Mr. Thornton was clearly motivated by greed when he decided to defraud his employer.
[42] There is evidence to support this. As part of its case, the Crown tendered the bank records of the credit cards used by Mr. Thornton and his girlfriend, Ms. Pronovich. They indicate that the two enjoyed a lavish lifestyle with Ms. Pronovich making frequent shopping excursions to expensive retail establishments such as Gucci, Louis Vuitton, Sassafraz and Holt Renfrew. She dined regularly at expensive restaurants and in one visit to a jewellery store in Toronto, spent $10,628. She also travelled to a number of destinations such as Russia, Poland, Turkey, Ukraine, Cuba, Mexico, all which were paid for by Mr. Thornton. Mr. Thornton also issued a cheque in the amount of $260,000 to his son for the purchase of a cottage and spent large sums of money on expensive clothing.
CONCLUSION
[43] Based on the above, the Crown has proven its case against Mr. Thornton beyond a reasonable doubt. Accordingly, I find him guilty.
André J.
Released: June 19, 2014
COURT FILE NO.: CR-11-1292-00
DATE: 2014-06-19
ONTARIO
SUPERIOR COURT OF JUSTICE
HER MAJESTY THE QUEEN
– and –
PAUL VINCENT THORNTON
REASONS FOR JUDGMENT
André J.
Released: June 19, 2014