COURT FILE NO.: CR-15-10000211 DATE: 20170330 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

HER MAJESTY THE QUEEN – and – MARVIN CLARKE and MONIQUE CLARKE Accused

Counsel: Christopher Ponesse, for the Crown Enzo Battigaglia, for the Accused

Heard: December 6, 2016

Before: B.A. ALLEN J.

REASONS FOR DECISION ON SENTENCING

THE CHARGES

[1] Marvin Clarke and Monique Clarke were charged with fraud over $5,000 and possession of proceeds obtained from crime in relation to defrauding Ms. Clarke’s employer, Acxsys Corporation/Interac Association. Crown counsel withdrew the proceeds of crime charge against Mr. Clarke before the commencement of the trial proper.

[2] Before closing arguments at the trial the Crown withdrew the two charges against Ms. Clarke in relation to Interac Association with the view that Interac Association and Acxsys Corporation operate their business together and separate charges are not necessary. The charges related to Acxsys Corporation (“Acxsys”) remained.

[3] During the trial, the charges before the court were the fraud and possession of proceeds of crime against Ms. Clarke in relation to Acxsys Corporation. Following closing arguments, Crown counsel withdrew the possession of proceeds charge against Ms. Clarke.

[4] I convicted Monique Clarke on July 8, 2016 of fraud over $5,000 in relation to defrauding Acxsys Corporation.

FACTUAL BACKGROUND TO THE CHARGES

[5] Ms. Clarke was employed as a payroll administrator in the payroll department of Acxsys when the allegations of fraud arose. She had started that position on a full-time basis in around July 2013. Acxsys used the services of ADP, a corporate payroll service provider, to administer direct deposits of its employees’ pay into their personal bank accounts. Her position in payroll required Ms. Clarke to use a desktop computer to interface with ADP’s payroll system to administer Acxsys’s payroll.

[6] Ms. Clarke devised a scheme where she changed the status of “terminated” employees to “active”, changed some ex-employees’ direct deposit bank account numbers, and changed earnings amounts. These amounts were deposited into seven different accounts at the four banks, into accounts in the names of unknown persons. One of the accounts was an account held jointly by Mr. Clarke with another person.

[7] Ms. Clarke also used her position as the payroll administrator to grant herself remuneration to which she was not entitled. No evidence of bank records of Ms. Clarke’s personal bank account where ADP directly deposited her pay was filed at trial.

[8] The scheme was discovered in February 2014 when the Bank of Montreal (“BMO”) informed Acxsys that the payee name for a deposit into a BMO account did not correspond with the account holder. This is the joint account I referred to earlier.

[9] Through the ADP payroll system an amount of $39,984.78 from Acxsys was deposited into that joint account which was held by Mr. Clarke and Carmelita Williams. It was that deposit which drew the attention of BMO and caused the bank to alert Acxsys. Ms. Clarke was suspended from Acxsys in February 2014.

[10] Acxsys retained Deloitte Forensics Inc. to conduct a forensic accounting investigation. Following the Deloitte findings, Acxsys called the police who obtained the bank records for the accounts into which the impugned amounts were deposited. The quantum of the fraud in relation to the ex-employees totalled $309,663.00 and in relation to excess payments to Ms. Clarke was $12,282.78. Ms. Clarke and Mr. Clarke were subsequently arrested.

[11] In arriving at a conviction of Ms. Clarke I found:

The evidence shows the fraudulent scheme was well thought out and seamlessly executed such that it even passed the notice of Ms. Clarke’s managers. Ms. Khayat testified she never knew Ms. Clarke had done anything wrong until she saw her being walked out of the Acxsys premises on the day she was suspended. Ms. Knapp and Mr. Lyras did not pick up on irregularities in the payroll records because Ms. Clarke stealthily made the changes after approval. Ms. Clarke’s scheme required intimate knowledge of the ADP payroll system and its interface with both the Acxsys payroll system and the bank account system.

The fraud was not a one-off singular event. This was not simple negligence, mistake or carelessness. It was rather a protracted and deliberate scheme by Ms. Clarke involving four banks, seven bank accounts and account holders, nine terminated employees, 58 unauthorized transactions involving bank accounts and 12 unauthorized excess payments to herself amounting to a fraud of over $300,000 executed over a five-month period.

R. v. Clarke, 2016 ONSC 3564, at paras. 171 and 172, (Ont. S.C.J.)

THE PRE-SENTENCE REPORT

[12] A Pre-Sentence Report was prepared for sentencing. Ms. Clarke is 35 years of age. She had a good childhood and came from a close-knit family. She continues to have a positive relationship with both of her parents although the parents have been separated for a number of years.

[13] Ms. Clarke has been married to her husband, Marvin Clarke, since 2005. They have no children together, although Mr. Clarke has four children from previous relationships. He reports that Ms. Clarke is an excellent step-mother to his children. Mr. Clarke and his wife and children enjoy activities as a family. They enjoy a loving relationship. Mr. Clarke speaks fondly of his wife and about how important she has been in his life.

[14] Ms. Clarke attained a Bachelor’s Degree in Business in 2008. She was a good student who had a good relationship with her teachers. She has been in receipt of unemployment benefits since June 2015 due to a medical condition. She plans to return to school to qualify as a personal support worker.

[15] The persons interviewed for the Pre-sentence Report were her husband, her mother, a close friend and a pastor. Her friend described her as caring and loving. All described her as hard-working, well-mannered and reliable. This is in fact is how her co-workers who testified against her at her trial described her in spite of the fact she had defrauded their employer of a substantial quantity of money. The pastor said she was active in the church and church activities and found the current offences to be out of character. Her mother expressed disappointment because she raised Ms. Clarke to know right from wrong.

[16] Mr. Clarke expressed concern for Ms. Clarke’s sleep apnea. He indicated that he had to be watchful of her overnight because she would stop breathing throughout the night. She uses a breathing apparatus to assist her with breathing.

[17] Ms. Clarke maintains her innocence as she is allowed to do. She has denied any involvement in the current offences. She has a prior criminal record from about ten years ago for a crime of breach of trust in relation to $1,500 involving taking money for receipts of non-existent clients.

SENTENCING PRINCIPLES

Basic Objectives of Sentencing

[18] Section 718 of the Criminal Code sets out the principles that underpin the objectives for sentencing: denunciation, deterrence and the separation of the offender from society.

[19] 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 potential future offenders from committing offences; and (c) to separate offenders from society.

[20] Proportionality is also a guiding principle for sentencing. A sentence must be proportionate to the gravity of the offence, determined on the particular facts of the case. The narrow focus of the sentencing process is directed to imposing a sentence that reflects the circumstances of the specific offence and the attributes of the specific offender: [Criminal Code](https://laws-lois.justice.gc.ca/eng/acts/C-46/), s. 718.1 and R. v. Hamilton (2004), 2004 ONCA 5549, 186 C.C.C. (3d) 129, 72 O.R. (3d) 1 (Ont. C.A.).

[21] The parity principle requires a sentence be similar to sentences imposed on similar offenders for similar offences committed under similar circumstances. Sentencing is however an individualized process which necessarily means that sentences imposed for similar offences may not be identical: [R. v. Cox, 2011 ONCA 58 and R. v. L.M, [2008] 2 S.C.R. 163, 2008 SCC 31].

[22] Section 718.2 of the Criminal Code deals with the totality principle which provides that when consecutive sentences are imposed, the combined sentence should not be unduly long or harsh. This is to avoid sentences that cumulatively are out of proportion to the gravity of the offences. This requires the crafting of a global sentence of all offences that is not excessive.

Sentencing Objectives for Crimes by Person in Positions of Trust

[23] The prime objective for sentencing a person who commits crimes from a position of trust is general deterrence. The objective of denunciation must also be satisfied. Rehabilitation is not a prime concern with offenders in a position of trust who commit crimes like fraud. Crimes of this sort are not crimes of impulse. They are generally well thought out and committed by “a person who is knowledgeable and should be aware of the consequences. That awareness comes from sentences given to others”: [R. v. Dobis, 2002 ONCA 32815, [2002] O.J. No. 646, at paras. 43 – 45, (Ont. C.A.) as cited from R. v. McEachern (1978) C.C.C. (2d) 189 (Ont. C.A.)].

[24] That sentiment is also expressed in R. v. Wismayer, as cited in R. v. Dobis, at para. 53: “General deterrence should be reserved for those offences that are to be affected by a general deterrence effect. Large scale well-planned frauds by persons in positions of trust would seem to be one of those offences”: as cited from R. v. Wismayer (1997), 1997 ONCA 3294, 115 C.C.C. (3d) 18 (Ont. C.A.).

R. v. Dobis at para. 53 also cited in R. v. Pierce:

I would … refuse the application to permit the appellant to serve the sentence in the community. The abuse of a position of trust or authority in relation to a victim is an express aggravating circumstance set out in the sentencing guidelines under s. 718.2. This factor has traditionally drawn a severe custodial term even with first offenders.

As cited from R. v. Pierce (1997), 114 C.C.C. (3d) 2 (Ont. C.A.)[Emphasis added]

[25] As of November 2012 conditional sentences were no longer available for offences where the law prescribes a maximum sentence of 14 years or life imprisonment. This includes fraud over $5,000.

Aggravating and Mitigating Factors

[26] Section 718.2 (a) of the Criminal Code provides that “a sentence should be increased or reduced to account for any relevant aggravating or mitigating circumstances relating to the offence or the offender”.

[27] Section 718.2 (a)(iii) specifically cites, as a statutory aggravating factor, circumstances where “the offender, in committing the offence, abused a position of trust or authority in relation to the victim.”

[28] Section 380.1 of the Criminal Code provides that where a court imposes a sentence for crimes such as fraud it shall consider whether “the magnitude, complexity, duration or degree of planning of the fraud committed was significant.”

[29] Other aggravating factors and the mitigating factors I considered are drawn from the Pre-Sentence Report and the facts of the case. The aggravating factors are as follows:

• Ms. Clarke defrauded her employer of a major amount of money totalling about $321,946.
• Ms. Clarke was in a significant position of trust in relation to her employer as the payroll administrator responsible for each pay period to move large amounts of money through her employer’s payroll system to the payroll service provider, which monies were then directly deposited into the many bank accounts of employees.
• Ms. Clarke managed to commit this fraud involving a relatively large amount of money over a period of only five months.
• The fraud required some ingenuity and planning. It was a well-thought out scheme involving 58 unauthorized transactions, unauthorized deposits into seven bank accounts held by unknown persons and 12 unauthorized excess payments to herself The scheme required intimate knowledge of key functions of her employer - its payroll system and how it interfaces with the system of the payroll service provider and the banks, and detailed knowledge of her employer’s human resources data.
• The fraud is in the low to medium range in magnitude.
• No restitution has been made.
• Ms. Clarke did not stop her activities of her own accord. She was caught by the discovery by a bank of a questionable, large transaction and ultimately fired by her employer.
• Ms. Clarke has a prior conviction for a crime of dishonesty, albeit, involving a much smaller amount of $1,500 and occurring ten years ago.

[30] Ms. Clarke did not plead guilty or show any remorse for her crime. She is entitled to maintain her innocence and the absence of a plea cannot be considered an aggravating factor. She will not however have the benefit as a mitigating factor that a guilty plea and show of remorse might bring.

[31] The mitigating factors are:

• Ms. Clarke has lived a pro-social life apart from the offences before the court and her prior dated conviction.
• Ms. Clarke has a post-secondary school degree and has maintained steady employment until her current medical condition required her to seek unemployment insurance. She has plans to return to school to obtain qualifications as a personal support worker.
• Ms. Clarke has the loving support of her husband of over ten years and support from her mother, a friend and her pastor.
• Ms. Clarke’s family, friend and pastor describe her in positive terms as active in the church, friendly, loving, caring and reliable. At trial her co-workers described her similarly. She is an excellent step-mother to her four stepchildren.
• Ms. Clarke has one prior conviction from ten years ago for an offence involving a much smaller amount of money than that involved in the offence before the court.
• Ms. Clarke suffers from sleep apnea that is assisted by the use of an apparatus to help her breathe when sleeping.

SENTENCING

The Parties’ Positions

[32] Crown counsel seeks a federal prison sentence of 30 to 36 months.

[33] Crown counsel further seeks the following orders: an order under s. 380.2 of the Criminal Code prohibiting Ms. Clarke from seeking, obtaining or continuing any employment, or becoming or being a volunteer in any capacity that involves having authority over the real property, money or valuable security of another person (discretionary); an order under s. 487.04 of the Criminal Code for obtaining bodily fluids for DNA analysis (discretionary); and a restitution order under s. 738 of the Criminal Code for the amount of $254,798.00 (discretionary).

[34] The Crown also seeks a fine in lieu of forfeiture in the amount of $67,147.78 pursuant to s. 734 of the Criminal Code. This amount is constituted of the amount of the overpayment of earnings to Ms. Clarke and the total of amounts deposited into the joint account held with Mr. Clarke.

[35] The defence seeks a suspended sentence and three years’ probation. The defence opposes the DNA order, the restitution order and the order of a fine in lieu of forfeiture.

Restitution Orders

[36] Section 738 extends the sentencing judge the discretion to order the offender to make restitution by paying the victim an amount not exceeding the replacement value of the property as of the date the order is imposed, less the value of any property returned where the amount is readily ascertainable. A restitution order is part of the overall sentence.

[37] A restitution order is not to be simply tacked onto a sentence of imprisonment which is itself a suitable sentence. This would offend the totality principle in that this could result in an excessive sentence: [R. v. Castro, 2010 ONCA 718, [2010] O.J. No. 4573), at para. 23, (Ont. C.A.)]. Among the factors to consider when imposing a restitution order, as set out in R. v. Castro at para. 24 citing R. v. Devgan, 1999 ONCA 2412, [1999] 136 C.C.C. (3d) 238 (Ont. C.A.), are that a restitution order:

• emphasizes the sanction imposed on the offender;
• makes the offender responsible for making restitution to the victim;
• prevents the offender from profiting from crime; and
• provides a convenient, rapid and inexpensive means of recovery for the victim.

[38] The sentencing court can also take the means of the offender into account. A serious dispute over legal or factual issues does not support ordering restitution. The loss should be capable of ready calculation. Also for consideration is the nature of the offence, when the money was taken and what has happened to the money. Whether a breach of trust is involved is important to take into consideration: [R. v. Castro, at paras. 24 and 27].

[39] R. v. Castro summarizes the principles that govern the use of restitution orders:

To summarize, a restitution order is simply part of the determination of an overall fit sentence, and general sentencing principles apply. While consideration of the offender’s ability to pay and the impact of a restitution order on an offender’s rehabilitation are factors to be considered, the weigh to be given to these factors will vary depending on the nature of the offence and the circumstances of the offender. When the offence involves a breach of trust, a primary consideration is the effect on the victim; rehabilitation is a secondary consideration. Furthermore, consideration of the ability to pay includes the ability to make payments from the money taken as a source of restitution.

[R. v. Castro, at para. 35]

Forfeiture Order and Fine in Lieu of Forfeiture

[40] Section 462.3(1), and following, of the Criminal Code govern crimes involving proceeds of crime. Those provisions are under the Criminal Code at Part XII.2 entitled “Proceeds of Crime”. “Proceeds of crime” means any property, benefit or advantage obtained or derived directly or indirectly as a result of the commission of an offence. That Part contains provisions which allow on conviction an order of forfeiture or a fine in lieu of forfeiture in respect of the proceeds of crime.

[41] The objective of Part XII.2 is to deal with proceeds of crime separately from, and in addition to, the punishment for committing the crime”: [R. v. Lavigne, 2006 SCC 10, [2006] 1 S.C.R. 392, at para. 26, (S.C.C.)]. Hence, a forfeiture order or fine in lieu is separate and distinct from a restitution order. Restitution orders are part of a fit sentence to be determined in accordance with general sentencing principles. Forfeiture orders and fines in lieu are not to be treated as part of the general sentencing regime.

[42] Crown counsel withdrew the proceeds of crime charge against Ms. Clarke. Hence, forfeiture or a fine in lieu are not available to the Crown.

Case Authorities on Length of Sentence

• R. v. Takeshita, [2013] O.J. No. 112 (Ont. S.C.J.) – offender defrauded church of $80,154.00 by making out false cheques to himself; age 68; no prior record; position of trust; sentence 16 months’ imprisonment.
• R. v. Trotter, [2012] O.J. No. 6436 (Ont. S.C.J.) – offender bookkeeper defrauded private company of $653,355.40; used funds to finance three private residential home purchases; breach of trust, sophisticated scheme; no prior criminal record; plea of guilty; history of employment; medical condition; community support; two years’ federal penitentiary sentence; free-standing restitution order of $597,860.33.
• R. v. Lall, [2007] O.J. No. 5213 (Ont. S.C.J.) – offender filed fraudulent tax returns with CRA in the amount of $143,000, offender age 45; alcohol and gambling problems; breach of trust; sophisticated scheme no criminal record; guilty plea; family support and care obligations; remorse and positive steps towards rehabilitation; sentence 18 months’ imprisonment.
• R. v. Atwal, 2016 ONSC 3668, [2016] O.J. No. 3109 (Ont. S.C. J.) – offender, age 54, no prior convictions, bookkeeper accountant; intended beneficiary of $1,015,731 from forged cheques misappropriated from employer; planned deliberate crime; breach of trust; sentence three years’ imprisonment for fraud; $35,000 restitution order.
• R. v. Kelly, [2008] O.J. No 115 (Ont. S.C.J.) – offender, age 65, president, shareholder of a company; forged cheques in amount of $643,000 and improperly charged personal expenses in the amount of $250,105.00; position of trust; sentence three years’ imprisonment; $703,465.00 restitution ordered.
• R. v. Alves, [2015] O.J. No. 770 (Ont. S.C.J.) – offender, customer service representative at bank; conducted ten fraudulent transactions withdrawing $536,000.00 from eight customer accounts; position of trust; $347,000.00 was recovered; bank reimbursed and suffered $188,085.00 loss; forfeiture order for $188,080.00, two years’ imprisonment.
• R. v. Castro, 2010 ONCA 718, [2010] O.J. No. 4573 (Ont. C.A.) – offender operated a paralegal firm and stole from his clients; many vulnerable new immigrants and disabled were his victims; breach of trust; order of restitution order of $141,252; sentence of 23 months imprisonment, two years’ probation; sentence upheld on appeal.
• R. v. Collalti, [2003] O.J. No. 5353 (Ont. S.C.J.) – offender, no criminal record; bookkeeper, defrauded employer of $120,000 through 30 transactions; sentence 14 months’ imprisonment; restitution order of $120,000.00.

CONCLUSION

[43] I have reviewed the facts of the case, the evidence provided on sentencing and the case authorities and arrive at the following conclusions:

[44] Ms. Clarke breached her position of trust as payroll administrator with her employer. She devised a well thought out and sophisticated scheme that she put into effect over a five-month period committing a fraud of over $300,000 through her employer’s payroll system. The fraud was low to medium in magnitude.

[45] Ms. Clarke has a prior criminal record for a crime of dishonesty from ten years ago. It seems that a prior conviction was not sufficient to dissuade her from criminal conduct, particularly crimes involving breach of trust and misappropriation of someone else’s money. She does not have the advantage she would garner from an expression of remorse. She absolutely denies involvement in the scheme in spite of the compelling evidence that points to her.

[46] I considered Ms. Clarke’s close family ties, her positive, reliable and caring personality as described by those interviewed, and, perhaps ironically, expressed by her ex co-workers at Acxsys. I also took into account her health concern with sleep apnea and considered she has the use of an assistive device.

[47] Balancing the aggravating and mitigation factors, I find a lower range prison sentence is required. A suspended sentence with probation is not a fit sentence. That type of sentence does not meet the crucial objectives of general deterrence and denunciation. I order a prison sentence in a federal penitentiary of three years (36 months).

[48] A fine in lieu of forfeiture is not available.

[49] The restitution order of $254,798.00 sought by the Crown is excessive in the circumstances. That amount includes money that went into the bank accounts of the unknown account holders. It includes the amount of $54,865.00 that went into the joint accounts of Mr. Clarke and Carmelita Williams. I considered the absence of evidence that Ms. Clarke had access to the accounts of the unknown persons and the lack of evidence of any benefit she received from the money that went into the husband’s joint account.

[50] I received two one-page documents that suggest Ms. Clarke has limited assets and savings. I can take ability to pay into account. I note that she is currently unemployed due to health reasons and has been so since June 2015. She has been in receipt of unemployment benefits.

[51] The amount directly attributable to Ms. Clarke that the ADP payroll records show was transferred to her bank account as excess earnings is $12,282.78. I find a reasonable inference can be drawn that Ms. Clarke received that money. With the totality principle in mind, I make a free standing or stand-alone order for restitution in the amount of $12,282.78.

[52] I make an order under s. 380.2 of the Criminal Code prohibiting Ms. Clarke for life from seeking, obtaining or continuing any employment, or becoming or being a volunteer in any capacity that involves having authority over the real property, money or valuable security of another person.

[53] I decline to make an order under s. 487.04 of the Criminal Code to obtain bodily fluids for a DNA analysis.

SENTENCE

[54] I will now pronounce sentence. Monique Clarke, will you please stand?

[55] You stand to be sentenced for fraud over $5,000 in relation to your employer, Acxsys Corporation.

[56] I sentence you to three years’ (36 months’) imprisonment in a federal penitentiary on that count.

[57] I make a free standing restitution in the amount of $12,282.78.

[58] I make an order under s. 380.2 of the Criminal Code prohibiting Ms. Clarke for life from seeking, obtaining or continuing any employment, or becoming or being a volunteer in any capacity that involves having authority over the real property, money or valuable security of another person.

B.A. ALLEN J. Released: March 30, 2017