Superior Court of Justice

HER MAJESTY THE QUEEN

v.

JACQUES SCRIBNOCK

Reasons for Sentence

DELIVERED BY THE HONOURABLE JUSTICE R. MARANGER on March 2, 2017, at OTTAWA, Ontario

APPEARANCES: T. Wightman, Counsel for the Crown J. Harbic, Counsel for Jacques Scribnock

THURSDAY, MARCH 2ND, 2017

Reasons for Sentence

MARANGER J. (Orally):

Overview/Introduction

[1] The accused pled guilty to 19 counts of fraud. The total amount of money involved was in excess of $2.8 million. The accused held the position of financial advisor for approximately 25 years in the Ottawa area. He was a highly regarded and trusted financial advisor. Many of the people he defrauded considered him a trusted friend. Some of the victims were acquaintances of Jacques Scribnock for over 20 years. In many instances, they referred their friends to him.

[2] Between November 8, 2008 and November 2012 he collected funds from his clients by directing them to issue cheques and bank drafts in the name of Shell companies he created, one named Magna Securities and the other Stone Securities Corporation. He misled his clients into believing that they were investing substantial amounts of money into valid companies. The clients did not question him because they trusted him implicitly. Many of the clients were senior citizens who were counting on these investments for their retirement years.

[3] Jacques Scribnock used these funds to purchase and upgrade a luxury condominium in Mississauga, Ontario.

[4] The victim impact statements read during the sentencing hearing were compelling and left no doubt as to the depth of the feeling of betrayal and the magnitude of the breach of trust caused by the selfish greed of Jacques Scribnock.

[5] The victims in this case and the amounts for which they were defrauded were as follows:

1. Gail Worgan: $1,042,696, $159,400.64 of which was joint funds with Robert Grant.
2. Larry and Anna Brownrigg: $431,750
3. Beth Gordon and Neil Reid: $273,194.77
4. Robert Grant $239,800.54 ($159,400.54 was joint with Gail Worgan; $80,400 was in his name alone)
5. Audrey Coulshaw: $161,643.60
6. Alice Sherriff-Scott: $144,000
7. Rosemary O'Rourke: $110,000
8. François Rochon: $100,000
9. Jean Laroda: $100,000
10. Jim Quick and Diane McMartin: $50,000
11. Nicole Bureau $30,000
12. Pixie Vradenburg: $25,000
13. David Fletcher: $20,0000
14. Michelle and Scott Bradley: $14,848.48
15. Richard Meehan: $4,000

Position of the parties as to the appropriate sentence

[6] The Crown in this case is seeking a period of incarceration of 8 years, a restitution order, a fine in lieu order pursuant to s. 462.37(4) of the Criminal Code and a prohibition order pursuant to s. 380.2(1) of the Criminal Code.

[7] Defence counsel has submitted that a period of incarceration of 4 years is appropriate in all circumstances of this case. He does not oppose the various ancillary orders sought by the Crown.

Principles of sentencing

[8] Parliament has codified certain sentencing principles that are specifically applicable to major fraud cases. Section 380(1.1) and s. 380.1(1) and (2) of the Criminal Code state:

380.1 (1) Without limiting the generality of section 718.2, where a court imposes a sentence for an offence referred to in section 380, 382, 382.1 or 400, it shall consider the following as aggravating circumstances:

(a) the magnitude, complexity, duration or degree of planning of the fraud committed was significant;

(b) the offence adversely affected, or had the potential to adversely affect, the stability of the Canadian economy or financial system or any financial market in Canada or investor confidence in such a financial market;

(c) the offence involved a large number of victims;

(c.1) the offence had a significant impact on the victims given their personal circumstances including their age, health and financial situation;

(d) in committing the offence, the offender took advantage of the high regard in which the offender was held in the community;

(e) the offender did not comply with a licensing requirement, or professional standard, that is normally applicable to the activity or conduct that forms the subject-matter of the offence; and

(f) the offender concealed or destroyed records related to the fraud or to the disbursement of the proceeds of the fraud.

(1.1) Without limiting the generality of section 718.2, when a court imposes a sentence for an offence referred to in section 382, 382.1 or 400, it shall also consider as an aggravating circumstance the fact that the value of the fraud committed exceeded one million dollars.

(2) When a court imposes a sentence for an offence referred to in section 380, 382, 382.1 or 400, it shall not consider as mitigating circumstances the offender’s employment, employment skills or status or reputation in the community if those circumstances were relevant to, contributed to, or were used in the commission of the offence.

[9] Counsel have provided casebooks in an effort to support their respective positions. The jurisprudence uniformly supports the proposition that general deterrence and denunciation are the primary sentencing principles when dealing with large-scale frauds.

[10] In the case of R. v. Bogart, 2002 ONCA 41073, 167 C.C.C. (3d) 390, the Ontario Court of Appeal made it clear that this is the case. At paras. 29 to 31 the Court indicated:

[29] Two aspects of the need to give effect to general deterrence come into play in this case. First, general deterrence is the most important sentencing principle in major frauds. Second, when general deterrence is "particularly pressing", as it is here, the preferable sanction is incarceration.

[30] This court has affirmed that in cases of large-scale fraud committed by a person in a position of trust, the most important sentencing principle is general deterrence. Mitigating factors and even rehabilitation become secondary. In R. v. Bertram and Wood (1990), 40 O.A.C. 317, this court observed that most major frauds are committed -- as this one was -- by well-educated persons of previous good character. Thus the court held at p. 319 O.A.C.,

The sentences in such cases are not really concerned with rehabilitation. Instead, they are concerned with general deterrence and with warning such persons that substantial penitentiary sentences will follow this type of crime, to say nothing of the serious disgrace to them and everyone connected with them and their probable financial ruin.

(Emphasis added)

[31] In R. v. Gray (L.V.) (1995), 76 O.A.C. 387 at pp. 398-99, our court again stressed the need for general deterrence in fraud cases:

[T]here are few crimes where the aspect of deterrence is more significant. It is not a crime of impulse and is of a type that is normally committed by a person who is knowledgeable and should be aware of the consequences. That awareness comes from sentences given to others.

Personal circumstances of the accused/Aggravating and mitigating factors

[11] Mitigating factors: Jacques Scribnock entered pleas of guilty. That is a mitigating factor. He is a 59-year-old family man, who by all accounts is a very good husband, father and brother. Counsel representing him filed a series of reference letters, most of which come from his family members; clearly his children love him very much as does his wife of 32 years. He is very fortunate to have the family he has. It seems that he has had an otherwise good life except for the crimes for which he has been convicted and is about to be sentenced. His expressed desire to repay the money is a mitigating factor. Not opposing the fine in lieu order supports the proposition he intends on making the effort.

[12] Frankly there is not much more that can be said in mitigation. Mr. Harbic submitted that the luxury condo purchased by Jacques Scribnock was in essence a failed investment and an attempt to recoup losses and not simply the acquisition of a purely luxury item. That may be the case here. Nonetheless, he continued to live his opulent lifestyle on the backs of the people from whom he stole money. His last ditch effort at an apology, through the vehicle of what appears to me to be a form letter, seems on the face of it to be disingenuous. He put himself and his family's luxurious lifestyle first above all things including any semblance of integrity or honesty.

[13] I consider the following to be the aggravating factors in this case:

• The fraud totals over $2.8 million spread out a four-year period.
• There were 19 individual victims.
• The level of the breach of trust, for cases of this type, is at the very high end of the spectrum; the victims trusted him as a friend even referring friends to him who also ultimately were defrauded. He went so far as to defraud his own cousin.
• The impact on the victims was severe. The presentation of the victim impact statements and the raw anger on account of the feeling of extreme betrayal was palpable. By way of example: a) Gail Worgan said the following:

  This loss has been devastating and so heartbreaking to put into words...it has changed my life forever. Just trying to put this into words, having to rethink the long emotional pain, heartbreak and enormous stress, grief, loss and depression has been unbelievable and unbearable.

  My husband, Bob Grant, and I met the accused in late 1992. He gained our trust over time and he invested all our unregistered funds on our behalf and eventually on behalf of my parents when they moved to Kanata in 2005. At the time charges were laid against the accused this amount totals over $1 million.

  I worked with the accused at his office, part time and the accused had provided me with emotional support throughout my legal separation and attended lawyers meetings and I considered him to be a trusted friend of mine. He took advantage of me through this vulnerable and very stressful time and ultimately ended up with proceeds of the sale of my matrimonial home from both myself and my husband. Proceeds which he never invested and merely took for his own personal use. He was also instrumental in persuading me not to get back together with my husband.

  [...] I am 68 years old and all of the money, both my own and the inheritance I was expected to receive upon the death of my last remaining parent, I was going to live on in my retirement years has been taken by the accused. I find myself having to sell the home I live in because I cannot afford it and require the sale proceeds to support myself. b) Lawrence Brownrigg said that he met Mr. Scribnock in 1990 and that: During our association we developed a very friendly accord with him, wherein he attended family functions such as birthdays and anniversaries. During such occasions he was introduced to others which may be interested in his investing services. Family members and their friends became his clients. After all, he was our trusted friend, advised financial and investor. One of those clients you may hear from during this session.

  And later on in the same victim impact statement:

  As mentioned above various triggers continually set off a feeling of remorse, depression and self-worth. To this day it is common for both Anna and I to awake around 4 AM with thought of Scribnock going through our minds. Many of those thoughts are self-defeating as well as vengefully. c) Finally, Beth Gordon's victim impact statement: Our association with Mr. Scribnock began in 1999. He came highly recommended by a friend, as a competent and trustworthy investment counsellor; and for 12 years, we believed that to be the case. In his hands, our investments weathered the many ups and downs of the mutual fund market and our savings seemed to grow steadily. We trusted him with our life's savings, let him into our home, laughed with him, and shared personal stories with him. When my husband, Neal, and I discovered that he had defrauded us of three fifths of our life's savings, I felt as if I'd been hit in the gut with a betrayal more profound than I ever could have imagined.

Those are just some examples of the level of betrayal felt by the victims in this case.

Sentencing jurisprudence in million-dollar fraud cases

[14] The Crown and defence, as indicated, both filed casebooks.

[15] By way of example, Mr. Wightman for the Crown summarized and relied upon the following decisions:

• R. v. Shah, 2013 ONCJ 370, [2013] O.J. No. 370: a decision of Madam Justice Dorval of the Ontario Court of Justice who, in dealing with a 33-year-old first-time offender involving a $2.2 million fraud spread out over a two-year period of time, gave a sentence of 5½ years.
• R. v. Jones, 2010 QCCQ 956, [2010] Q.J No 956: a decision from the Court of Quebec where on a massive fraud of $50 million extended over 16 years involving a joint submission of 11 years' imprisonment was considered appropriate.
• R. v. Di Giuseppe, 2010 ONCA 91, [2010] O.J. No 426: a decision of the Ontario Court of Appeal where for a conviction for a $3,492,000 tax fraud, a sentence of 6 years' imprisonment was upheld.
• R. v. Johnson, 2010 ABCA 392: a decision of the Alberta Court of Appeal reducing a 13-year sentence to 10 years' imprisonment, in a case of a $2,400,000 fraud involving some 50 individuals.

[16] Mr. Harbic, on behalf of the Mr. Scribnock, by way of example relied upon the following cases:

• R. v. Wa, 2015 ONCA 117: Was a case where the accused defrauded the Salvation Army of $2.3 million over two years. The sentence imposed based upon a joint submission was 2 years' imprisonment.
• R. v. Rao, 2013 ONCJ 807: Was a substantial fraud case where a bank advisor stole from clients in the amount of almost $9 million where the sentence imposed was 4 years of imprisonment.
• R. v. Dieckmann, 2014 ONSC 717: Was another case of a large-scale fraud involving $5.7 million where the sentence was 4 years' imprisonment. It was a case where it was a fraud from a payroll service company over the course of four years where thousands of transactions were involved.
• R. v. Bertram, 1990 ONCA 317, 40 O.A.C. 317: Was a $4.5 million fraud where the accused was sentenced to 6 years' imprisonment. The fraud was against the Canada Trust Company. The sentence was reduced to 4.3 years' imprisonment. My reading of the decision is that this was done because the accused has already served 17 months of pre-trial custody, and it was conceded that the sentence of 6 years was appropriate in that case.

[17] The jurisprudence in major multimillion-dollar fraud cases seems to establish a very wide range of penalty, anywhere from 2 to 10 years seems to be indicated. Some of the key factors that would bring a period of incarceration into the higher range would include: the depth of the breach of trust, the number of victims, the impact on the victims, and the amount of money involved.

[18] When all is said and done, I conclude that the fit and just sentence on the facts of this case is a period of incarceration of 7 years. This was an egregious fraud where friendships of many years were taken advantage of, where a position of high trust was abused to the financial devastation of several honest hard-working citizens who earned the right to a comfortable decent retirement.

[19] Therefore, the penalty will be as follows: the warrant of committal will reflect that the sentence prior to giving credit for any pre-trial custody is 7 years' imprisonment. It was agreed that the credit for pre-trial custody in this matter was to be calculated at 15 months, leaving 5 years and 9 months to be served on the warrant of committal.

[20] There will be a restitution order pursuant to s. 738 of the Criminal Code in the following amounts:

1. Gail Worgan individually in the amount of $883,568.40; and a further $159,400.64 jointly with Robert Grant.
2. Larry and Anna Brownrigg jointly: $431,750
3. Beth Gordon and Neil Reid jointly: $273,194.77
4. Audrey Coulshaw: $161,643.60
5. Alice Sherriff-Scott: $144,000
6. Rosemary O'Rourke: $110,000
7. François Rochon: $100,000
8. Jean Laroda: $100,000
9. Robert Grant $80,400.
10. Jim Quick and Diane McMartin jointly: $50,000
11. Nicole Bureau $30,000
12. Pixie Vradenburg $25,000
13. David Fletcher $20,0000
14. Michelle and Scott Bradley jointly: $14,848.48
15. Richard Meehan: $4,000

[21] There also will be a fine in lieu of a forfeiture order in the amount of the amount of $2,871,963.30, pursuant to s. 462.37(3) of the Criminal Code. Jacques Scribnock will have 10 years to pay the fine, failing which he will be incarcerated for a further 5 years.

[22] The restitution order shall take priority over the payment of the fine in lieu of forfeiture ordered herein, and the fine in lieu of forfeiture shall be reduced by any amount paid pursuant to the restitution order.

[23] There will be an order pursuant to s. 380.2(1) of the Criminal Code prohibiting the accused from having authority over the real property, money or valuable security of another person.

[24] Were there any other orders requested by the Crown?

MR. WIGHTMAN: I don't believe.

THE COURT: Thank you.

[25] There are 19 counts, it is a 19-count Indictment, and the 5 years 9 months will be on count 3, and each count that has been pled to to be served concurrently.

Certificate of Transcript

EVIDENCE ACT, subsection 5(2)

I, Lynn Carrière, Authorized Court Transcriptionist, ACT ID 2366775200, certify that this document is a true and accurate transcription of the recording of R. v. Jacques Scribnock in the Superior Court of Justice held at 161 Elgin Street, Ottawa, Ontario, taken from Recording No. 0411_CR37_20170302_10_MARANGER, which has been certified in Form 1.

March 6, 2017 Date Lynn Carrière

* This certification does not apply to the Reasons for Sentence which were judicially edited.

Transcript Ordered: March 6, 2017

Transcript Completed: March 6, 2017

Approved by Maranger J.: March 15, 2017

Ordering Party Notified: March 15, 2017