CITATION: R. v. Schoer, 2016 ONSC 1127
COURT FILE NO.: CR-12865/11
DATE: 20160212
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
HER MAJESTY THE QUEEN
– and –
Roger Schoer
Mitchell Flagg, for the Crown
P. Alexander, for the Defendant
HEARD: October 30, 2015 and February 12, 2016.
REASONS FOR JUDGMENT ON SENTENCING
GILMORE J.:
[1] Roger Schoer was convicted of one count of Fraud Over $5,000 on August 6, 2015. He was acquitted on the remaining two counts on the indictment, namely one count of Uttering a Forged Document and one count of Assault.
[2] This was a lengthy trial which took place over thirty-one days. There was significant documentary evidence filed, as well as numerous victims who testified with respect to their losses, corporate witnesses who had been involved with Mr. Schoer while he was still an investment advisor, and an expert witness who testified with respect to Ontario regulations and guidelines which apply to investment advisors.
[3] The sentencing submissions in this matter commenced on October 30, 2015. In order to allow the defence appropriate time to crystalize their position on the issue of any amount of a fine in lieu of forfeiture, brief written submissions were requested, such that they could be received and a final date for my judgment on sentencing was set.
[4] Those written reasons have now been received and my decision in relation to them incorporated into these reasons.
Factual Overview
[5] Over a period of approximately eight years, Mr. Schoer lured long-time friends and clients who trusted him into sham schemes, resulting in significant losses for many victims. While some of the transactions were legitimate, the majority of the transactions about which the victims testified, were not. Specifically, this court found that the transactions related to the Hyberlab debenture were fraudulent in their entirety. Given the amount of evidence that unfolded during the trial, it would be impossible to summarize each and every transaction, but using the Hyberlab transactions as an example, this court found that Mr. Schoer sold “placements” in a debenture, which he claimed he owned. I found that, in fact, Mr. Schoer did not own the debenture and the conditions under which he may have had some rights to it had long expired. He did not advise the victims of this, nor did he tell them when the premise on which the debenture had allegedly been granted to him had completely changed. Rather, Mr. Schoer continued to encourage the victims and tell them that their investments were doing well and, in some cases, had even doubled.
[6] The victims were aware that their investment in Hyberlab was somewhat speculative and even long term. However, they all testified that they expected to get something in return, even a piece of paper confirming their investment. What some of them received was a letter of undertaking from Greg Galbraith. In the trial judgment, I gave those undertakings no weight, as Mr. Galbraith was not called as a witness to verify their authenticity, and in any event, they were not signed by Mr. Schoer and were of no value with respect to confirming any of the victims’ alleged investments.
[7] Mr. Schoer’s evidence was that he was always attempting to obtain value for his clients and that, in the event that there was a reverse take-over, the debenture in Hyberlab would be revived and he could transfer shares to his clients. That has never come to pass, nor likely will it, since Hyberlab remains under a cease-trade order. While Mr. Schoer had the opportunity to return the funds he had taken from his victims for the Hyberlab debenture once it became clear that the debenture was valueless, he chose not to do so. He kept all of the funds for himself. This pattern is repeated with a number of other investments that Mr. Schoer presented to the victims. The victims were promised a quick return and a large increase on their investments and sometimes a short return. When victims became insistent on receiving something from Mr. Schoer, he often used money he received from other clients to satisfy their demands.
[8] This Ponzi type scheme continued for approximately eight years, until it crumbled as a result of a combination of a decline in market in 2008 and Mr. Schoer’s inability to keep up with the increasing demands of the victims for either a return of their original investment or some form of confirmation of their investment.
[9] The chart prepared by the Crown at Tab A of Exhibit 1 on sentence, sets out the various amounts in issue with respect to this fraud. The Crown’s position is that the total fraud was in the range of $1.8 million. The Crown concedes, however, that the actual amount retained by Mr. Schoer in his own bank account, as per the evidence at trial, was $413,500. These amounts are highlighted in yellow in Tab A, Exhibit 1.
[10] While the defence does not dispute the $413,500 as being amounts actually retained by Mr. Schoer, the defence position is that this is the upper threshold of the actual fraud. The defence opposes using this number for purposes of any restitution order, claiming that the only amount which can be proven with respect to what Mr. Schoer actually retained are the amounts that went into his account, which totalled approximately $103,000. Beyond this, the Crown is not able to prove that Mr. Schoer gained any benefit or retained any of the other amounts in question. While the defence concedes that some amount of restitution is in order, the amount is far lower than that suggested by the Crown. The defence opposes any fine.
[11] The Crown seeks restitution of the entire $413,500 and a fine in lieu of forfeiture in the same amount.
[12] It is of interest to note, by way of background, that Mr. Schoer was subject to a hearing in front of the Investment Industry Regulatory Organization of Canada (IIROC). A decision with respect to that hearing was released in May 2011, in which Mr. Schoer was ordered to pay a fine of $200,000 and costs of $100,000. Mr. Schoer has not paid any of these amounts to date.
Range of Sentence
[13] The defence takes the position that a sentence of four years’ incarceration is appropriate and meets the principles of sentencing in the within case. Further, the defence submits that the range of sentencing pursuant to current caselaw is between three to five years. The Crown disagrees. The Crown submits there is no three to five year range and that five years is an appropriate sentence, given the circumstances of the offence and this offender. The Crown points out that the maximum penalty for Fraud Over $5,000 for the relevant period based on these facts was ten years. The maximum penalty has since increased to fourteen years.
[14] Section 718 of the Criminal Code of Canada, RSC 1985, c C-46 (the Code), sets out the purpose and principles of sentencing, as follows:
The fundamental purpose of sentencing is to contribute, along with crime prevention initiatives, to respect for the law and the maintenance of a just, peaceful and safe society by imposing just sanctions that have one or more of the following objectives:
(a) to denounce unlawful conduct;
(b) to deter the offender and other persons from committing offences;
(c) to separate offenders from society, where necessary;
(d) to assist in rehabilitating 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 acknowledgment of the harm done to victims and to the community.
[15] In addition, s.718.1 of the Code sets out that a sentence must be proportionate to the gravity of the offence and the degree of responsibility of the offender. Aggravating and mitigating factors are categorized in s.718.2 of the Code, which mandates that the court take into consideration the principles in that section, and reduce or increase a sentence to account for relevant aggravating or mitigating circumstances. Two aggravating factors have specific application here:
718.2(a)(iii) evidence that the offender, in committing the offence, abused a position of trust or authority in relation to the victim;
718.2(a)(iii.1) evidence that the offence had a significant impact on the victim, considering their age and other personal circumstances, including their health and financial situation;
[16] In addition to all of the above, the Code requires that the court impose a sentence that is:
718.2(b) …similar to sentences imposed on similar offenders for similar offences committed in similar circumstances;
718.2(d) an offender should not be deprived of liberty, if less restrictive sanctions may be appropriate in the circumstances.
Victim Impact Statements
[17] Six victim impact statements were filed in this matter. Mr. Dollekamp and Ms. Harley read out their victim impact statements in court on October 30, 2015. The victim impact statements are contained in the Crown sentencing materials marked as Exhibit 1.
[18] In their victim impact statements, Ron Dollekamp and Cynthia Bass recounted that they had known Mr. Schoer and his wife for almost thirty years. They had never invested outside of an RRSP, but they trusted their friend, Mr. Schoer, and gave him $121,400 of their life savings. Mr. Dollekamp, in his victim impact statement, sets out as follows:
Weeks passed. We reminded Roger constantly that he hadn’t finalized our first deal. He gave all sorts of reasons for this: People were on vacation. Certain lawyers were not available. There were small mistakes that had to be corrected. The few certificates and documents he did give us were later proven defunct. Then, the stock market crashed, and an even better excuse was born.
[19] Mr. Dollekamp and Ms. Bass recalled in their victim impact statement one particular evening when Mr. Schoer said he would be by in an hour to give them a certified cheque for part of the proceeds of their investments. He told them “I have the cheque in my hand – get ready to do the happy dance.” Mr. Dollekamp and Ms. Bass waited and waited. Mr. Schoer never showed up. Mr. Dollekamp set out that this type of cruel taunting went on for four months, until the police put an end to it. It should be noted that Mr. Dollekamp and Ms. Bass sued Mr. Schoer civilly and were able to recover $72,000 from Mr. Schoer when he remortgaged his home.
[20] Mr. Peter Edwards filed a victim impact statement. Mr. Edwards sets out that he invested $17,000 in the “scam” with Mr. Schoer. He estimates that the loss in interest this amount would have earned would have been close to $30,000. He notes that Mr. Schoer told him that the investment was worth over $200,000. Mr. Edwards wrote that his loss will mean he has to work an extra five years because he did not have the possibility of putting his money into an RRSP or a TFSA. The loss has affected him emotionally, in that he no longer trusts people, even his closest friends and family.
[21] Mr. George Foster filed a victim impact statement. Mr. Foster’s victim impact statement sets out that he lost between $40,000 and $50,000 from his investments with Mr. Schoer. He sued Mr. Schoer civilly for $25,000 and received a partial settlement of some share certificates that were worth about $10,000 at the time. Looking back, Mr. Foster feels angry about the confidence he put in Mr. Schoer. The constant delays and follow-ups required with Mr. Schoer caused significant tension between Mr. Foster and his wife at the time.
[22] Ms. Anita Harley was very emotional in delivering her victim impact statement. Mr. Schoer gained Ms. Harley’s trust as she was his neighbour, and continues to be. Ms. Harley dreads seeing Mr. Schoer, but cannot avoid it when she hangs her laundry, when he uses his pool or when he cuts his grass. She wrote that she rarely barbecues anymore because her deck is less than thirty feet from Mr. Schoer’s pool. The tenor of her victim impact statement was that she continues to be reminded on a daily basis of the losses caused by Mr. Schoer because of their proximity as neighbours. She feels that Mr. Schoer should move and she should not have to. Ms. Harley’s victim impact statement sets out that she lost about $39,000 through investments with Mr. Schoer.
[23] Ms. Diana McComb filed a victim impact statement. Ms. McComb did not claim a particular loss from Mr. Schoer. She commenced and settled a civil suit with Mr. Schoer, the terms of which she is unable to disclose. Ms. McComb describes that she and her husband, Lyle, thought of Mr. Schoer as a trustworthy, ambitious young man, who worked very hard. They had faith in his judgment and financial expertise, and never doubted his sincerity or honesty.
[24] When Ms. McComb’s husband passed away in August 2000, she felt she could trust Mr. Schoer to handle her investments; however, she feels he took advantage of her vulnerability, both as a result of the loss of her husband, and the requirement to care for her ninety-three year old mother and her brain injured daughter. She feels angry that she relied on someone she thought she could trust. She has chosen not to pursue the balance of her loss (ie: that amount which was not repaid to her through her settlement) because she cannot endure any further stress or anxiety.
[25] Mr. Franz Wieser filed a victim impact statement, indicating that he and his wife had known the Schoer family for over forty years. When Roger Schoer became a financial advisor, it seemed natural for Mr. Wieser to invest with him. He noted that he became increasingly concerned with Mr. Schoer’s approach and his inability to provide documentation to support the funds he had invested with him. He discussed in his victim impact statement, the countless false promises, lies and deception. He outlined losses that resulted in his having to take out a $175,000 mortgage on his cottage, which costs him $940 per month to carry. He is concerned about the affect these losses will have on his health and his ability to care for himself and his wife being 80 and 85 years old respectively. He is also regretful about the possibility of having to pass on a financial burden to his children.
Other Materials
[26] Mr. Schoer’s counsel filed letters from various individuals with respect to his personality and background. His father, Karl Schoer, outlines that his son has always been a hard worker and did well in school. His son was very helpful to him and his wife, especially when his wife was dying of cancer. Her death in 2000 was hard on the entire family. Karl Schoer relies on his son, Roger, who provides significant day to day care for him.
[27] A letter was also filed by Mr. Schoer’s wife, Karin. Ms. Schoer asks for leniency in this court’s sentencing decision. Since 2009, when her husband was arrested, she has had to support the family, both emotionally and financially on her own. She outlined how it has been extremely difficult to raise three teenagers, maintain a stable household and continue a full-time career. She describes her husband as a person of good character, who has a close relationship with their children, and who is committed to their marriage.
[28] The children of Mr. Schoer, Kyle, Nicole and Christina, have written a letter of support with respect to their father. They describe him as having been actively involved in their lives and their earliest memories include playing on sports teams where their father was coach, and many family dinners. During the period of time when their father was under house arrest and precluded from living at home, they felt the loss of guidance from their father and the care and attention he had previously given them. The Schoer children ask this court to impose a sentence that still allows their father to have active participation in their lives.
[29] A letter of support was filed by James MacGregor, who has known Mr. Schoer for thirty years. Although he has never done business with Mr. Schoer, he has seen the toll that the case has taken on his family, marriage and his father’s health issues. He views Roger as a devoted father and husband.
[30] A letter of support was filed by George Ttofas, who has known Mr. Schoer for twenty years. Mr. Ttofas is a neighbour of Mr. Schoer’s and describes that he helped his father with maintenance and had a strong commitment to his family. Mr. Toftas describes Mr. Schoer as a person of good character.
[31] A final letter of support was filed by Richard D. Williams, who has known Mr. Schoer professionally for more than twenty-five years. During Mr. Williams’ dealings with Mr. Schoer, he always conducted himself with integrity and viewed Mr. Schoer as acting responsibly and professionally in all of their dealings.
General Background
[32] Mr. Schoer is 51 years of age and the only child of Karl Schoer. He grew up in Scarborough and was very affected by the death of his mother from cancer, in the year 2000. He married his wife, Karin, in 1988 and they have three children, ranging in ages from 19 to 25 years. All three children still live at home. The Schoer family lived in Ajax until 2009 when Mr. Schoer’s bail conditions did not allow him to remain in the family home, as he was not to be within a certain distance of Ms. Anita Harley who lived beside them. In 2014, his bail was varied to allow him to return to his home.
[33] Mr. Schoer worked very hard to become a qualified investment advisor and worked for sixteen years in the industry without complaint before these charges arose.
[34] According to the defence, Mr. Schoer was subjected to very restrictive bail conditions and particularly between 2009 and 2011. There was a long delay to complete this trial and it was a complicated case, which necessitated many witnesses and much documentary evidence. It has been six and a half years from the date of his arrest to the date of the sentencing hearing. This has taken a toll on Mr. Schoer and his family. The defence mentioned that while this is not an 11(b) type delay, it is still worthy of consideration by this court. The Crown’s position is that at least one year of the delay in getting to trial was caused as a result of a defence request for an adjournment.
[35] Between the stock market crash of 2008, lawsuits, complaints and this matter, Mr. Schoer has been financially decimated. He has been unable to get a loan, nor does he have a bank account, debit card or credit card. The defence notes that there is no evidence that, notwithstanding what Mr. Schoer might have received in the course of the fraudulent activity, that he was and is living in anything but a modest manner.
[36] The defence submits that approximately $103,000 was actually deposited by Mr. Schoer in his bank account over nine years. The rest of the money went to third parties and there was no evidence that he was enriched by these funds. As a result of these charges, Mr. Schoer has not been able to work since 2009 and he will never be able to work in the investment industry again, as IIROC has imposed a lifetime ban on such work. His reputation, for work purposes, is in tatters. Since these charges arose, he has been caring for his father, helping around the house and raising his children. His bank accounts remain frozen and he relies on his father and his wife to support him. He has no car, no assets and rarely goes out.
[37] Mr. Schoer and his wife jointly owned their family home. In 2009, the home was transferred to his wife’s name. Exhibit 3 on sentence was a copy of a letter from Cohen Barristers and Solicitors, dated September 21, 2010. That letter shows that a new mortgage of $360,000 was taken out on the matrimonial home. A statement of payout shows that $226,878 was used to payout the original mortgage. As well, a credit card was paid out in the amount of $4,845; the amount of $72,000 was paid in satisfaction of a writ of execution (which was related to the judgment obtained by Cynthia Bass and Ronald Dollekamp), and the sum of $13,943 was used to pay out a line of credit owed to TD Canada Trust. If this line of credit had not been paid out, TD would have forced the sale of the matrimonial home. In addition, $20,000 was paid for a legal retainer for Mr. Schoer for his criminal defence; $500 for ILA; $3,487 for legal fees and disbursements; and the balance of the mortgage funds were paid to Ms. Schoer, in the amount of $18,344. While the Crown argued that this amount should have been used to make restitution to some of Mr. Schoer’s victims, the defence position was that this was a partial payment in relation to Ms. Schoer’s half interest in the home.
[38] The defence does not dispute that Mr. Schoer has not paid the $200,000 fine and $100,000 in legal costs imposed as a result of the IIROC hearing. As indicated earlier, Mr. Schoer has no assets and is financially destitute. He is unable to pay any amount of the IIROC fine or legal expenses, nor is he currently in a position to pay any fine or restitution order which may be imposed as a result of this sentencing.
[39] Mr. Schoer has no criminal record. He has attended court on every single occasion and has complied with the terms of his bail to the letter. Mr. Schoer’s conduct post-charge can be described as nothing but exemplary.
Range of Sentence – Crown’s Position
[40] The Crown seeks five years’ imprisonment. The Crown relies on aggravating factors, such as the scale of the fraud and the breach of trust. Further, the fraud took place over a period of eight years and had a devastating effect on its victims. The Crown’s position is that the fraud was a tangled web of transactions involving one victim feeding another in a pyramid type scheme. Many of the important links to this chain, including Mr. Contos, the Burkes and Mr. Galbraith never testified. The Crown submits it was an intentional arrangement of conduct from beginning to end.
[41] The Crown relies on R. v. Khatchatourov[^1]. Mr. Khatchatourov and his paralegal, Ms. Reznik, were charged jointly with ten counts of fraud. Both Ms. Reznik and Mr. Khatchatourov were found guilty on all counts. The trial judge imposed a custodial sentence of four years imprisonment on both offenders. The sentence was appealed on the grounds that it was harsh and excessive and outside the range for similar offences. The appellants contended that the trial judge erred by concluding that the appropriate range of sentence was three to five years. The Ontario Court of Appeal upheld the trial judge’s custodial sentence and held as follows, at paragraph 39:
The four-year custodial sentences imposed are within the appropriate range for this large-scale, sophisticated fraud, even though the appellants were not in a position of trust with the financial institutions or, in a legal sense, with all the personal victims, and the consequences for the primary victim – the public purse – were not “devastating”.
[42] The Crown argues that the Khatchtourov fraud was commercial in nature with no breach of trust. Notwithstanding that, the court imposed a sentence of four years in a case where there were losses of over $1 million.
[43] In R. v. Kaminsky[^2], the accused, Ms. Kaminsky pleaded guilty to Fraud over $5,000. The fraud took place over a period of approximately six-and-a-half years, and involved ten people who were defrauded of a total of $639,700. Ms. Kaminsky used her position as a contract worker for a financial management corporation to earn the trust and friendship of her victims.
[44] The court emphasised that denunciation and deterrence were the key objectives in sentencing for fraud related offences and that fraud by persons in positions of trust generally attract sentences involving substantial periods of incarceration[^3]. The Crown sought a range of sentence between three to five years and asked the court to consider a four year sentence with restitution orders. The defence requested eighteen months in a provincial correctional centre. The court imposed a sentence of four years, given the dollar amount at stake and the length of time over which the offence occurred. The Crown notes that the amount of loss in Kaminsky ($640,000) was more than the case at bar, but the court imposed a four year sentence on an offender who had no record, and most importantly, had pleaded guilty.
[45] In R. v. Knight[^4], the offender, Yolande Knight, was responsible for the distribution of certain payments as the Director of Finance in a communications company. She was responsible for payroll, operational expenses and the payment of credit cards issued to the company’s employees. The trial court found that Ms. Knight used her corporate credit card to make non-business related expenses and hid her fraudulent conduct by manipulating general ledgers. Ms. Knight did not dispute the Crown’s allegations that she had charged $900,000 on her corporate credit card for personal use. Ms. Knight pleaded guilty based on those facts.
[46] The fraud involved thousands of credit card transactions over a period of eight years. The Crown sought a term of imprisonment of five years and the defence sought three. Quoting R. v. Williams[^5], the court set out a list of aggravating factors in breach of trust cases including, but not limited to:
(a) the nature and extent of the loss;
(b) the dishonest attainment of public monies even though the institution, on its face, seems able to bear the loss;
(c) whether the sole motivation is greed;
(d) a lengthy period of dishonesty;
(e) the number of dishonest transactions undertaken in the commission of the offence;
(f) little hope of restitution;
(g) where the offender was caught as opposed to voluntary termination of the criminality;
(h) running the risk that others would fall under suspicion;
(i) the impact on victims of the fraud including members of the public, the employer and fellow employees; and,
(j) the quality and degree of trust reposed in the offender.
[47] Hill J. in Williams also recited mitigating factors in fraud related cases, including:
(a) Substantial recovery of the proceeds of the dishonest conduct;
(b) The presentence making of restitution;
(c) Where the dishonesty resulted in a personal benefit to the accused, there was a motive mitigating the breach of trust, such as a medical condition, or for addiction or other motivating cause other than greed or financial gain.
[48] The Crown compared the facts found in the case at bar with the factors set out in Williams as follows:
(a) the number of transactions in this case is staggering; numbering in the hundreds;
(b) there is little hope of restitution;
(c) Mr. Schoer was caught as opposed to any voluntary termination of his conduct;
(d) Mr. Schoer affected the corporate reputations of the companies he was raising money for;
(e) Mr. Schoer did not defend any of the civil lawsuits brought against him;
(f) the impact on his victims was devastating;
(g) a substantial amount of trust was reposed in Mr. Schoer by his victims, as they had all grown up knowing him through a family connection or as a friend, or they were a client he had lured because of a previous professional relationship.
[49] The Crown further submits that none of the considerations with respect to any reduction of Mr. Schoer’s sentence as set out in Williams should apply because there has been no substantial recovery of any losses here. Although some victims took steps at their own expense, many are left with unenforceable paper judgments.
[50] In addition, there is no pre-sentence restitution and the Crown uses the IIROC fine and legal fees as an example of Mr. Schoer not making any attempts to pay. Further, in 2009, Mr. Schoer transferred his house to his wife, which the Crown submits was an obvious attempt to place assets beyond the reach of his creditors and victims.
[51] In R. v. Lewis[^6], the offender was found guilty of one count of Fraud Over $5,000 after a thirty-nine day trial. Over a seven year period, Mr. Lewis was found to have defrauded numerous people of over $7 million, in an elaborate mortgage investment scam in the nature of a Ponzi scheme. Some thirty-three victims testified at trial, many of whom were retired or near retirement and had invested their money with Mr. Lewis to finance their retirement. Ten of the victims were more than 70 years old at the time of trial, and six were more than 80 years old.
[52] The Crown sought eight years imprisonment, as well as restitution and a fine in lieu of forfeiture. The defence sought two years of prison, with credit for four years of pretrial custody on the basis of 1.5 days of presentence custody. The Court imposed a sentence of seven years in prison on the basis that the fraud was a large scale, sophisticated one in which Mr. Lewis had breached the trust of many seniors who had entrusted their money to him. Further, the impact of the victims had been devastating and the crime was driven by pure greed. The court noted that Mr. Lewis did not appear to understand or acknowledge that taking people’s money to invest in mortgages is fraud if the money was not actually invested in mortgages. The Crown likens this to the case at bar, in which Mr. Schoer blamed his victims, claimed they misunderstood the documentation he gave them and never assumed any of the blame.
[53] In R. v. Banks[^7], the accused pleaded guilty to twelve counts of Fraud Over $5,000. The accused was a wealth management advisor, who operated a financial planning company and took $1.4 million from eighteen of his client’s investments to fund personal business enterprises, which all failed. The Ponzi scheme defrauded some of the victims of their entire life savings.
[54] Mr. Banks was sentenced to four years in prison, as he was in a position of trust which was held to be an aggravating factor, as was the large number of victims and the lengthy period of time during which the fraud occurred, namely seven years. The age and vulnerability of the victims was also a factor. The court found that Mr. Banks took advantage of the high regard in which he was held in the community. Mr. Banks’ guilty plea was a mitigating factor.
[55] The Crown submitted that Banks is factually similar to the case at bar in that Mr. Banks used funds which were given to him by victims of the fraud to repay other client’s monies that he owed because he had improperly used their monies previously. Although those clients were not victims because their monies were repaid before Mr. Banks was charged, the court held that this fact increased the number of occasions when Mr. Banks engaged in fraudulent conduct, and that a full forensic accounting was not done, or necessary, to determine fraudulent activity.
[56] Based on all of the above, the Crown submits that a sentence of five years is appropriate, given the following:
(a) The amount of the loss, which the Crown submits is over $1.8 million;
(b) The number of victims involved. Fourteen victims testified at trial;
(c) The length of time during which the fraud was perpetrated. Approximately eight years, during which time the Crown submits that Mr. Schoer engaged in a deliberate and intentional course of dishonest conduct;
(d) The case involves a serious breach of trust by a financial advisor. Referring specifically to s.718.2(a)(iii) of the Code, Mr. Schoer abused his power as the victims’ financial advisor, friend and colleague;
(e) Many of the victims were elderly and vulnerable with respect to their financial circumstances;
(f) The financial consequences for the victims were devastating and continue to be so;
(g) Mr. Schoer was aware of the financial circumstances of the victims and how his behaviour would cause them financial difficulties; and,
(h) No restitution has been made to date, and will likely not be made in the foreseeable future.
Range of Sentence – Defence Position
[57] The defence position is that the range of sentencing for offences such as this, with similar facts would be between three to five years. The defence submits that this is not a case which would justify a sentence at the top of the range, but the more appropriate range, given these facts, is three to four years.
[58] The defence urges the court to first examine the dollar amount of the loss. The defence submits that this is not a fraud in excess of $1 million because the Crown has not proven that beyond a reasonable doubt. The defence does not disagree that the fraud that can be proven by the Crown is no more than $413,500, as per Tab A of Exhibit 1 on sentencing.
[59] The defence submitted a number of cases in support of their position, starting with R. v. Kelly[^8]. Mr. Kelly was convicted of Fraud Over $5,000 and uttering forged documents. During a three year period, Mr. Kelly forged signatures of other shareholders in the company he managed and made $643,000 worth of cheques payable to him or his own company. The court was satisfied beyond a reasonable doubt that Mr. Kelly had defrauded the company of $453,380. In addition, the court found beyond a reasonable doubt that Mr. Kelly charged personal expenses to a corporate credit card in the amount of $250,105, bringing the total fraud to $703,485.
[60] Mr. Kelly had no record and was 65 years old. A review of the aggravating factors, included the total loss, a sole motivation of greed, Mr. Kelly’s conduct of putting the financial wellbeing of the company, and its employees and shareholders at risk, and the fact that Mr. Kelly did not voluntarily terminate his criminal activity. The court found that some restitution was possible and sentenced Mr. Kelly to three years in prison, as well as a restitution order of $703,485 in favour of the company.
[61] The defence points out that in Kelly, the amount of fraud proven by the Crown beyond a reasonable doubt was over $700,000, much higher than the case at bar. In addition, Mr. Kelly was able to work and, in fact, started a new company before he was imprisoned. He was therefore not financially ruined and there was a possibility of some restitution. The defence relies on this for their position that four years is appropriate, given that Mr. Kelly was not in a position of trust.
[62] In R v. Galna[^9], Mr. Galna received a four year penitentiary sentence with respect to a large scale, sophisticated investment fraud involving numerous victims and perpetrated over a long period of time. The court reiterated the necessity of denunciation and general deterrence and the fact that the case involved losses of $1.6 million over a period of fifteen months. The court also referred to the fact that Mr. Galna refused to acknowledge that he had done anything wrong and seemed to suggest in his evidence that no one really understood the situation, only him.
[63] The defence submits that the court was very critical of this offender, who did not have a positive presentence report and had no perception of the fact he had done anything wrong. Given that the amount involved in Galna was significantly more than in this case, the defence submits there is no reason to go beyond a four year sentence, especially since the only amount the Crown can prove in this case is $413,500.
Ruling on Range of Sentence
[64] Mr. Schoer comes before the court as an offender without any previous involvement in the criminal justice system. His conduct, post-arrest, has been without blemish. He has always shown up to court on time, showed respect to the court and dressed appropriately. He was well represented by defence counsel and had the support of his wife, children and father throughout.
[65] There is no doubt that this matter has gone on for a lengthy period of time. The sentencing hearing itself took an entire day. In order to accommodate counsel and the consideration of a medical procedure which Mr. Schoer had to undergo, a date for my sentencing judgment in this matter was put to today’s date, February 12, 2016. It has therefore been approximately seven years since Mr. Schoer was arrested. He was initially under a very strict bail, which was a form of house arrest, and included conditions that precluded him from living in his own home because of its proximity to one of the victims, Ms. Harley. His bail restrictions became increasingly less restrictive over time, but Mr. Schoer has not worked since he was arrested in 2009. This has obviously put an extreme burden on his wife who continues to support her children and Mr. Schoer, both financially and, apparently, emotionally.
[66] Mr. Schoer has been described in the various letters he has submitted as a hard-working family man devoted to his wife and children. There is no doubt in my mind that this arrest, the preliminary inquiry, the legal fees, the lengthy trial and now the sentencing process has been devastating to Mr. Schoer and his family.
[67] Mr. Schoer will never be able to work in the investment industry again. His lack of employment and the fact that his bank accounts have been frozen prevents him from, at this point, realistically repaying any of the fines or fees imposed on him by IIROC. However, the above mentioned factors are only marginally mitigating as there are aggravating factors to consider.
[68] Starting with the victim impact statements, all of the victims were taken in by Mr. Schoer because of either a professional or personal long standing relationship with him. They trusted him and his abilities. Mr. Schoer used that trust to lure his victims into more and more speculative investments. As I found in my judgment, not only were the investments speculative, but in the case of the Hyberlab debenture, non-existent. More aggravating is the fact that, as found in my trial judgment, Mr. Schoer chose to ignore the fact that the Hyberlab debenture was of no value and had been of no value for some considerable time. I found his protestations that he continued to rely on good faith negotiations, with respect to that debenture, to be hollow and unworthy of any weight.
[69] There can be no doubt that these victims suffered devastation from their financial losses. In particular, Mr. Weiser, who is now 85 years of age, has indicated in his victim impact statement that these losses will have an effect on his ability to support himself and his wife in their late retirement. He may have to sell his family cottage. He is concerned about the long term effect of these losses on future generations of his family.
[70] Ms. Harley was affected in a different way. Although she certainly suffered financial losses, the emotional impact on her was and continues to be very significant, as she is a neighbour of Mr. Schoer’s and feels constantly reminded of the fact that she trusted Mr. Schoer implicitly and continued to give him money based on that trust.
[71] Other victims, such as Ronald Dollekamp and Cynthia Bass, expressed outrage, anger, hopelessness and depression. They described themselves as emotionally crushed and betrayed. Not surprisingly, victims, such as George Foster, felt angry and ashamed for having fully trusted Mr. Schoer.
[72] With respect to the amount of the fraud, the Crown’s position is that the total fraud was $1.8 million. This is detailed in the Crown’s sentencing materials marked as Exhibit 1, at Tab A. While it is true that the Crown concedes that only $413,500 can be proven with respect to funds received by third parties or by Mr. Schoer, the Crown’s position is that that does not matter. The Crown is not required to engage in a detailed tracing exercise. The defence has had the chart at Tab A for many months and there is no reason not to consider the entire amount of the fraud for sentencing purposes.
[73] The defence disagrees and argues that the range of sentence should not be in the upper range, based on a fraud of over $1.8 million when the Crown is unable to prove more than $413,500 beyond a reasonable doubt. The defence position is that the actual dollar amount of the fraud is more realistically in the range of $103,500 and the defence concedes this amount. However, if the court accepts the amount able to be proven by the Crown at $413,500 it is still in the lower/middle end of dollar values for range of sentence.
[74] In summary and given all the circumstances set out above, I impose a term of imprisonment of four years, based on the following aggravating factors:
(a) The total loss for sentencing purposes was $413,500. Although, based on the review of cases, this is not the largest fraud this court has seen; it is also not insignificant especially to the victims;
(b) There were at least fourteen victims who were defrauded over approximately seven years, which involved hundreds of transactions. The Crown has painstakingly attempted to trace these transactions, which is laudable and helpful, but unfortunately, it is unlikely that this web of interrelated transactions could ever be unravelled. The Crown need not engage in a minute tracing exercise. The evidence as it unfolded was clear that the numerous transactions in this case were multi-layered, complex and interwoven;
(c) As per R. v. Banks, this was a deliberate and intentional course of dishonest conduct over a significant period of time;
(d) These frauds involved a serious breach of trust by a financial adviser. I specifically reference s.718.2(a)(iii) of the Code. As indicated above, Mr. Schoer was the friend, financial advisor and neighbour, in whom the victims placed their implicit trust. He abused that trust, while aware of his victims’ financial circumstances. For example, he knew that Ms. McComb’s husband had died and that she was financially vulnerable as a result. He knew Mr. Weiser’s financial circumstances, given that he had been a long-time friend of his father’s. Mr. Schoer knew Mr. Dollekamp and Ms. Bass’ financial circumstances as he had been friends of theirs for more than thirty years. Mr. Schoer took advantage of the inside personal and private information that he gained. He worked hard to gain the trust of his victims to the point where they would believe almost anything he told them. He then told them fanciful stories of beautiful shells with large returns in short periods of time and of course, they believed him;
(e) Mr. Schoer did not make any attempts to repay his clients even when it became very clear that, for example, the Hyberlab debenture would never have any value or that the Airesurf shares would never be delivered by Paul Sand. It did not occur to him nor did he make any overture to return his clients’ investments when it became clear that the premise of the investment no longer existed;
(f) The victims were vulnerable and in some cases, elderly. Victims such as Mr. Weiser and Mr. Edwards have serious and legitimate concerns about the effect of their losses on their retirement and their ability to support themselves on retirement. Mr. Schoer was aware that Mr. Dollekamp and Ms. Bass scrimped and saved for many years by living a simple and modest life and that the money they gave to him to invest on their behalf was almost all of their savings;
(g) Financial consequences for the victims were devastating and continue to be so. The victim impact statements make it clear that the devastation continues, not just financially, but emotionally. The impact is far reaching with respect to consequences for retirement, other family members, illness and strain on relationships;
(h) Mr. Schoer was caught and did not voluntarily terminate his criminal activity;
(i) The sole motivation of Mr. Schoer appears to have been personal gain and greed.
(j) Obviously, Mr. Schoer cannot be penalized for insisting on his right to a trial, but he does not get the benefit of a reduced sentence because of a guilty plea;
(k) Mr. Schoer accepts no responsibility for his actions and sets himself up to be a victim. The lack of remorse, however, is a neutral factor, as is the fact that Mr. Schoer has not made any restitution to date;
(l) In terms of mitigation, Mr. Schoer has had the benefit of the support of his wife and family throughout. I accept that he has been a good father to his children and that they have stood by him;
(m) His bail conditions were initially restrictive to the point where he was unable to live in his home with his family;
(n) He repaid the Dollecamps $72,000 and Ms. McComb an undisclosed amount of money. It must be mentioned however, that these amounts were only repaid when those victims pursued Mr. Schoer by way of a civil action;
(o) Mr. Schoer has been devastated financially and will never be able to work again in his chosen field. In addition to the incarceration and other penalties imposed by this court his life will be forever changed in terms of career and no doubt his own plans for retirement;
(p) Mr. Schoer is still subject to the unpaid fine and fees imposed by IIROC. This remains as an additional penalty to Mr. Schoer should he ever be able to accumulate assets in the future;
(q) I agree with the defence that it is unlikely that Mr. Schoer will ever re-offend. He has no bank account, credit card or debit card. He cannot work in any position of trust again. His financial circumstances have not improved as he has not worked since his arrest. His arrest and the trial process appear to have completely immobilized Mr. Schoer.
[75] In imposing a sentence of four years, I take into account, in particular, s.718.2(3) with respect to my finding that Mr. Schoer has, in committing the offence, abused a position of trust or authority in relation to his victims. With respect to the other purposes and principles of sentencing, I find that a sentence of four years will meet the objectives in s.718, in that it is:
(a) a sufficiently lengthy term of imprisonment to denounce the unlawful conduct;
(b) it will serve to deter Mr. Schoer and others from committing such offences;
(c) it will separate Mr. Schoer from society;
(d) it will promote an acknowledgment of the harm done to the individual victims and to the community.
[76] Finally, Mr. Schoer seeks credit for one month of pre-trial custody as the Truth in Sentencing Act was not yet in force at the time of pre-trial custody. The Crown submits this is discretionary and that 3 weeks pre-trial credit should be given based on a 1.5 to 1 basis. By way of background, one week of the pre-trial custody followed Mr. Schoer’s arrest in 2009 and the other week related to a charge of fail to comply in 2009 on which Mr. Schoer was ultimately acquitted.
[77] In the circumstances I do not see that this is a case which would attract any less than two for one credit given the legislative regime in place at the time and the circumstances of the pre-trial custody. As such, Mr. Schoer will be given credit for one month of pre-trial custody.
Restitution
[78] The Crown has made an application for restitution. Pursuant to s.738(1) of the Code, a court may on application of the Attorney General and in addition to any other measure imposed on the offender, order that the offender make restitution to another person as follows:
(a) In the case of damage to, or the loss or destruction of, the property of any person as a result of the commission of the offence or the arrest or attempted arrest of the offender, by paying to the person an amount not exceeding the replacement value of the property as of the date the order is imposed, less the value of any part of the property that is returned to that person as of the date it is returned, where the amount is ascertainable.
[79] In R. v. Castro^10 the court commented that a restitution order provides a convenient, rapid and inexpensive means of recovery for the victims, especially vulnerable victims, and is one of the considerations in favour of ordering payment of restitution. It should be noted, however, that an order of restitution is not meant to circumvent civil process respecting any disputed amounts[^11].
[80] The defence submits that while some restitution is appropriate, given the findings of fact in my judgment, it cannot be done in a loose way. The defence points to R. v. Devgan[^12]. In that case, the Ontario Court of Appeal considered whether the making of compensation orders involved a proper exercise of discretion. The court referred to R. v. Zelensky[^13], which emphasised that a court’s power to make a compensation order as part of the sentencing process is discretionary. In exercising that discretion, the court must consider certain objectives and factors related to the relevant section. At paragraph 26 of Devgan, the court sets out that those considerations are as follows:
An order for compensation should be made with restraint and caution;
The concept of compensation is essential to the sentencing process;
(i) it emphasises the sanction imposed upon the offender;
(ii) it makes the accused responsible for making restitution to the victim;
(iii) it prevents the accused from profiting from crime; and
(iv) it provides a convenient, rapid and inexpensive means of recovery for the victim.
- A sentencing judge should consider;
(i) The purpose of the aggrieved person in invoking s.725(1);
(ii) Whether civil proceedings have been initiated and are being pursued; and
(iii) The means of the offender.
A compensation order should not be used as a substitute for civil proceedings. Parliament did not intend that compensation orders would displace the civil remedies necessary to ensure full compensation to victims.
A compensation order is not the appropriate mechanism to unravel involved commercial transactions.
A compensation order should not be granted when it would require the criminal court to interpret written documents to determine the amount of money sought through the order. The loss should be capable of ready calculation.
A compensation order should not be granted if the effect of provincial legislation would have to be considered in order to determine what order should be made;
Any serious contest on legal or factual issues should signal a denial of recourse to an order;
Double recovery can be prevented by the jurisdiction of the civil courts to require proper accounting of all sums recovered; and
A compensation order may be appropriate where a related civil judgment has been rendered unenforceable as a result of bankruptcy.
[81] It is clear, as well, from this case that legal fees, disbursements and prejudgment interest cannot form part of any compensation order.
[82] The defence submits that pursuant to points 5 and 6 in the list of factors in the Devgan case, the amount of loss should be capable of ready calculation and subject to deductions, such as the amount already recovered by Mr. Dollekamp and Ms. Bass. Further, where there is a serious factual contest, there should be no order for restitution.
[83] With respect to ability to pay, the defence submits that this is a factor and that the amount of restitution must be lowered on that basis. Further, the courts ought to err on the side of caution and award a low amount, keeping in mind Mr. Schoer’s ability to pay and any previous reimbursement received by the victims.
[84] The Crown submits that the amounts sought by the victims seeking restitution are readily ascertainable and fair. All of the amounts claimed should be paid. Regarding ability to pay, the Crown submits that as per Castro, the primary consideration of the court with respect to restitution is the claims of the victims. Ability to pay by the offender should not factor into this consideration.
Ruling on Restitution
[85] Given all of the above, I find that restitution should be ordered in the following amounts:
(a) $39,000 to Ms. Harley. The regime does not permit the collection of restitution for yard work. As for the interest claimed, there is no case law on this point. Restitution is not subject to the same rules as civil judgments which would automatically accrue interest. I decline to allow any claim for interest.
(b) $31,400 to Ronald Dollecamp and Cynthia Bass jointly. I decline to include the $8,000 in legal fees sought by these victims as it is not clear the regime permits this and further no evidence was provided to verify this amount.
(c) $17,000 to Mr. Weiser. Mr. Weiser claimed restitution of $159,000. However, $130,000 of this amount apparently related to stocks. His evidence at trial was somewhat confusing as to what stocks he owned and what stocks he and Mr. Schoer discussed buying. In short, it was unclear what Mr. Weizer did and did not own by way of stocks and therefore I do not order any restitution for this amount. With respect to the $29,000 balance claimed, I accept the defence submission, and the evidence supports, that Mr. Weiser received a cheque for $2000 from Mr. Schoer and a $5000 cheque from Mr. and Mrs. Moorby. Finally, there was evidence to support that the $5000 cheque marked as Exhibit 7.20 was never cashed. Subtracting the total deductions of $12,000 from the $29,000 balance leaves $17,000.
(d) George Foster claims restitution of $35,750. I accept the defence submission that there was no evidence of any loss related to Straightforward Marketing. The sum of $11,000 should therefore be deducted from the claimed amount. As well, the evidence supports that Mr. Foster received a cheque for $3000 which should also be deducted from the claimed amount. The defence submits that a further $7000 should be deducted for the funds paid to Roy Wise for Airesurf shares. I do not agree. I accept Mr. Foster’s evidence that there was such a lengthy delay in him receiving those shares that they were of no value when he finally received them. This type of delay was typical of the way Mr. Schoer conducted business with his clients. Such delays were, according to Mr. Schoer, caused by something or someone else, never by him. As such, I decline to deduct this amount from the restitution claimed. Therefore, the total amount of restitution in relation to Mr. Foster based on the allowed deductions is $21,750.
(e) I order no restitution to Mr. Shute. As per my trial judgment, I found his evidence to be confused and unreliable. I also found him to be hostile towards Mr. Schoer and thus his evidence somewhat tainted in that regard.
[86] The total restitution ordered is therefore $109,150.
[87] As for the issue of ability to pay, I refer again to R. v. Castro[^14], in which the court said:
Ability to pay is not the predominant factor. Indeed, where the circumstances of the offence are particularly egregious, such as where a breach of trust is involved, a restitution order may be made even when there does not appear to be any likelihood of repayment[^15]
[88] I am in agreement with the findings in Castro on this basis. This case does involve an egregious breach of trust and what appears to be an inability to pay on the part of Mr. Schoer should not be the determining factor with respect to restitution. I am therefore not persuaded that the order of restitution should either be lowered or refused on that basis.
Fine in Lieu of Forfeiture
[89] Section 740 of the Code sets out as follows:
- Where the court finds it applicable and appropriate in the circumstances of a case to make, in relation to an offender, an order of restitution under section 738 or 739, and
(a) an order of forfeiture under this or any other Act of Parliament may be made in respect of property that is the same as property in respect of which the order of restitution may be made, or
(b) the court is considering ordering the offender to pay a fine and it appears to the court that the offender would not have the means or ability to comply with both the order of restitution and the order to pay the fine, the court shall first make the order of restitution and shall then consider whether and to what extent an order of forfeiture or an order to pay a fine is appropriate in the circumstances.
[90] The Crown relies on R. v. Lavigne[^16] with respect to its application for a fine in lieu of forfeiture. In that case, the court held that a sentencing judge, once determining the value of the proceeds of crime, and where the court is satisfied on a balance of probabilities that the offence was committed in relation to that property, the court may order that the property be forfeited. Any fine ordered in lieu of forfeiture is to be in the same amount as the sentencing judge determined the value of the property to be. Ability to pay is not a factor in determining the fine. However, the sentencing judge has discretion in deciding whether or not to impose a fine and in determining the value of the property. Ability to pay could be taken into account in determining the time limit for payment. In that case, where the sentencing judge determined the value of the proceeds of crime to be $150,000, he should have imposed a fine for that amount.
[91] The Crown also referred to paragraphs 13 and 18 of that case, with respect to defining property. The court referred to the definition of property in the Code and determined that:
There is thus a wide range of property that could be proceeds of crime. Such property may consist of real rights or personal rights, of corporeal or incorporeal property. Forfeiture may apply to the original property, or property acquired in exchange for or by conversion of the original property. It could also apply to a right in a portion of property. The link between the property or right and the designated offence need not be direct.
Forfeiture of the proceeds of crime is not always practicable, however. The proceeds of a crime may have been used, transferred or transformed, or may simply be impossible to find. To ensure that the proceeds of a crime do not indirectly benefit those who committed it, Parliament has provided that the court may impose a fine instead of forfeiture of the proceeds of crime.
[92] The Crown submits that in R. v. Lavigne, the relevant principles are stated and are similar to the case at bar, in that, the proceeds of crime in this case have been transformed or impossible to find. The Crown therefore submits that this is a case in which the court would not have any limited discretion to impose a fine in lieu of forfeiture.
[93] The Crown points out that Mr. Schoer transferred his house to his wife and picked and chose which creditors would receive payouts on the refinancing. The Crown need not point to an individual cheque or dollar amount. It is sufficient that the amount consist of cheques from victims to Mr. Schoer or third parties that he induced to write cheques.
[94] With respect to time to pay after imprisonment, the Crown submits that Mr. Schoer should have four years to pay. He is young, resourceful and after leaving prison, he should be in a position within four years to pay the fine.
[95] In summary, the Crown submits that the amount of proceeds of crime in this case is not speculative and does not rely on the drawing of inferences. This is money actually received by Mr. Schoer and a fine of $413,500 should issue in lieu of forfeiture.
[96] The defence submits that Mr. Schoer is unable to pay both restitution and a fine and that his court has the discretion to decline to order a fine. The defence argues that the Lavigne case stands for the proposition that the purpose of a fine is to punish with respect to the sentencing principle of deterrence and to ensure that offenders are deprived of the proceeds of their offences. However, in this case Mr. Schoer is already deprived of the proceeds by making restitution. If he is then required to pay a fine, this will be a double penalty.
[97] The defence warns that the court must ensure that the fine order must be related to the proceeds of crime in the possession of the offender and not on the amount that the complainants lost. In this case, much of the time monies were directed from Mr. Schoer to a third party. Therefore, the defence submits that the $413,500 number may not be used; rather, in reference to the spreadsheet relied upon by the Crown, it should be the sum of $103,650, which are amounts which can be traced to and received directly by Mr. Schoer.
[98] Further, given that $39,000 of this amount was from Diane McComb and that her claim has settled, this amount be deducted from the fine order. The defence submits that there should be even further reductions. The $4,500 paid by Mr. Arber was accounted for in the Airesurf shares he received. The $3,000 payment from Mr. Shute in July 2005 should also be deducted, because Mr. Shute was unable to substantiate his investments in detail. Further, the $103,650 number included a number of cheques from Mr. Weiser, including a draft for $2,000, which is in the un-highlighted portion of the schedule; therefore, that amount should also be deducted. Based on deductions of a further $29,000 owed to Mr. Shute, the amount owing would be either $55,150 or $57,150, depending on the payments deducted.
[99] The defence points out that if the fine is over $400,000, it would be impossible for Mr. Schoer to pay it, and he would be re-imprisoned. The reality is that Mr. Schoer would have to earn at least $100,000 per year and pay all of it towards restitution in order to ensure he was not jailed for an unpaid fine. If the $55,000 amount suggested by the defence is ordered, at least eight years of time to pay would be required because, even with that amount of time to pay, Mr. Schoer would be obligated to dedicate $1,000 per month of his income towards the payment of restitution and fines, which would be a significant amount of any person’s income and certainly a person who, by the time Mr. Schoer gets out of prison, would have been unemployed for possibly ten or more years.
Ruling on Fine in Lieu of Forfeiture
[100] The Court of Appeal of Ontario recently addressed the issue of a fine in lieu of forfeiture in R. v. Gibb[^17]. In that case, the appellant appealed his sentence and the Crown argued that the trial judge erred in not ordering a fine in lieu of forfeiture. Specifically, the Crown argued that the trial judge erred in finding that the Crown had adduced no evidence that the property could not be forfeited and that there was evidence led at trial explaining how the $200,000 had been dissipated by the respondent. In their review of the evidence, the court held that it was apparent that the funds were converted to cash and cannot be located or was paid out to third parties. The court held that the Crown met its burden under s.462(37)(3).
[101] In addressing the second alleged error, the court dealt with the issue of the trial judge’s concerns about double recovery and consideration of the respondent’s ability to pay. The court made reference to R. v. Lavigne^18 and held that ability to pay is not an issue at this stage, and the double recovery is not a concern in that it is addressed by inserting appropriate terms in the order. The Court of Appeal added to the respondent’s sentence, a $200,000 fine in lieu of forfeiture to be paid within three years following the expiration of the probation order and two years’ imprisonment in default of payment. A term was to be added to the effect that any payment made towards the fine in lieu of forfeiture would be applied to the restitution order.
[102] Gibb has made it clear that funds which cannot be located or have been paid out to third parties, may be considered as good evidence with respect to ordering a fine in lieu of forfeiture. In addition, ability to pay is not an issue, because double recovery can be addressed with respect to a term that payments on a fine in lieu of forfeiture will be applied. Given the findings in Gibb, it is clear that the issue of ability to pay and double recovery need not be considered by this court, as issues to prevent the ordering of a fine in lieu of forfeiture, as long as there is a term in the final order with respect to the reduction of the restitution order on account of any payment.
[103] However, the ordering of a fine in lieu of forfeiture must be considered in the context of the entire punishment. Mr. Schoer will be going to jail for four years. He has been ordered to pay restitution $109,150. I accept the defence submission that Mr. Schoer has minimal or no ability to pay but I also accept the Crown’s submission that ordering a fine under this section relates to punishment and not to ability to pay.
[104] While the defence argues strongly against any fine, the defence concedes that if any fine is ordered is should be subject to the deductions set out above. With respect, I do not agree. I view the Crown’s argument as more in line with current case law. That is, that no deductions should be taken because Mr. Schoer did not repay the victims with their own money. Rather, they were repaid from commingled property he received from these and other victims. A tracing exercise in this case is impossible for the very reasons the Crown states. Mr. Schoer never set his individual clients’ money aside. Instead, even the funds he received “in trust” went in and out of his personal bank account and were paid to third parties without his clients’ consent. While I do not disagree with the Crown that the Mr. Schoer’s “inducing” clients to write cheques is part of the fraud even if those amounts cannot be traced, in my view a fine must still be proportionate as it is a component of the punishment.
[105] In this case, Mr. Schoer is receiving a sentence in the mid-range. The fine should reflect that. As such he shall pay a fine equivalent to the amount of restitution or $109,150. He shall have six years from the date of his release from prison to make that payment. Payments made on the fine will reduce the amount of restitution dollar for dollar. I make the fine order for the following reasons:
(a) The case law supports that it is not inappropriate to order both restitution and a fine, particularly where a breach of trust is involved.
(b) I do not view the fine as a “double penalty” as characterized by the defence. The fine will be paid in full upon payment of the restitution. Therefore, it does not offend the principles in Gibb which preclude ordering a fine to artificially attach penal consequences to unpaid restitution.
(c) It is appropriate and just that he be fined this amount when those funds can obviously no longer be found or seized.
(d) Finally, as ability to pay should not be considered in the context of a fine, the six year term to pay will appropriately address the financial difficulties which Mr. Schoer faces currently and those he will face upon his release from prison.
[106] In addition to all of the above, there will be a DNA order as this is a designated secondary offence and a non-communication order pursuant to s.743.21(1) of the Code. The Crown is to provide a list to the Registrar of those with whom Mr. Schoer is not to communicate. Finally, there is to be two year term of imprisonment for failure to pay the fine in the required amount within the required time.
Madam Justice C.A. Gilmore
Read in Open Court: February 12, 2016
NOTE: As noted in court, on the record, this written ruling is to be considered the official version and takes precedent over the oral reasons read into the record. Any discrepancies between the oral and written versions, it is the official written ruling that is to be relied upon.
Released: February 12, 2016
CITATION: R. v. Schoer, 2016 ONSC 1127
COURT FILE NO.: CR-12865/11
ONTARIO
SUPERIOR COURT OF JUSTICE
HER MAJESTY THE QUEEN
– and –
Roger Schoer
REASONS FOR judgment on sentencing
Madam Justice C.A. Gilmore
Released: February 12, 2016
[^1]: 2014 ONCA 464.
[^2]: 120 W.C.B., (2d) 184.
[^3]: ibid, paragraph 18.
[^4]: 2014 ONSC 6601.
[^5]: 2007 13949.
[^6]: 2014 ONSC 4188.
[^7]: 2010 ONCJ 339.
[^8]: 2008 CarswellOnt 1616.
[^9]: 2005 CarswellOnt 3933.
[^11]: R. v. Castro, ibid, paras 43 and 44.
[^12]: 1999 CarswellOnt 1534.
[^13]: 1978 8 (SCC), [1978] 2 S.C.R. 940.
[^14]: Supra, para 28.
[^15]: R. v. Yates, (2002), 2002 BCCA 583, 169 C.C.C. (3d) 506 BCCA.
[^16]: (2006), 2006 SCC 10, 206, C.C.C., (3d) 449 (S.C.C.).
[^17]: 2014 OJ No. 3684.