CITATION: R. v. Eid, 2017 ONSC 898
COURT FILE NO.: 12-20041
DATE: 2017-02-07
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
HER MAJESTY THE QUEEN
– and –
ROLAND EID
Defendant
M. Welch, for the Crown
R. Adelman, for the Defendant
HEARD at OTTAWA: February 2, 2017.
REASONS FOR SENTENCE
RAY J.
1. Overview:
[1] I found the defendant guilty of ten counts of fraud and fraud related offences on May 2, 2016 after a trial that included 22 witnesses and almost 100 exhibits containing many thousands of pages during 36 days over 11 months. (R. v. Eid, 2016 ONSC 3221). The many exhibits included agreed statements of fact, volumes of financial and banking records, financial statements, emails, and other documentation. The defendant did not call evidence.
[2] The delay in sentencing arose from the delay in receiving mental health assessments requested by the defendant and a pre-sentence report.
2. The Facts:
(a) Circumstances of the offence
[3] The circumstances of the offences were complex and took place over many months from 2007 through to early 2008 while the defendant used the company, ICI, as the vehicle and cover for his fraudulent conduct during which he committed fraud in the many millions of dollars. He was the sole organizer and the sole beneficiary of the fraud. The Crown contends this was the biggest commercial fraud ever to have occurred in the Ottawa area. The trial evidence is summarized in detail and considered in the context of each of the offences in R. v. Eid 2016 ONSC 3221.
(b) Circumstances of the offender
[4] The PSR describes the mental health issues the defendant is coping with. None are related to the offences, but may be relevant to fashioning a proper sentence. He is receiving treatment in the form of medication. The report obtained at the request of the defendant, after the assessment by Dr. Kunjukrishnan, describes much of these medical issues, many are related to anxiety issues arising from this proceeding. Dr. Kunjukrishnan references a mental health facility associated with the Royal Ottawa Hospital that would be available if the defendant were to receive a provincial sentence. I do not take his report as recommending the defendant be sentenced to a provincial institution so that he can receive treatment.
(c) Impact on the Victim and/or Community
[5] The huge losses caused to subcontractors and creditors, which I found from the evidence before me at trial of approximately $3.8 million, included small subcontractors who could ill afford the losses, and financial institutions whose investors suffered the losses. I heard further evidence during this hearing concerning the harm done and losses sustained by three of the major creditors: Trisura, Acorn Partners, and the Caisse Populaire. The size and nature of the fraud had massive consequences to creditors and subcontractors alike; and indeed to the construction industry in the Ottawa area.
[6] This fraud case was not just about the millions of dollars that disappeared, it also had consequences to the personal lives of the people who worked closely with the defendant. These people, mostly former employees, looked up to the defendant with respect and trust. They said they felt it was a family. He lied to them over and over again. It was a gigantic ‘con.’ The anger and disappointment on the part of each of them was manifest as they gave their evidence. It was their blind trust in him, that he encouraged and developed, that permitted him to use them at each of the many stages of his scheme to execute this massive fraud. Then, when he was found out, he tried to put the blame on these same people who had so loyally trusted him. It was not just a breach of trust in the legal sense; but a breach of their friendship and their belief in their trust of another human being which will likely affect their future relationships for all time.
[7] Victim impact statements from 11 individuals were filed. Many of them, including former employees, described the personal toll to health and family from the defendant’s actions. They are quite moving. The losses from the victim impact statements total $488,057.48. I accept this amount as follows:
- Abou-Kheir, Kamil $70,000.00
- Acorn Partners/Peter Kemble (he has a judgement)
- Arango, Carmen $4,863.52
- B.R. Pretty Services Ltd. $16,400.00
- Business Development Bank of Canada $255,370.46
- HVAC Maximum Heating & Cooling, Alex Ram -
- Foote, Lionel $6,000.00
- Rajab Contracting Canada Inc. $100,000.00
- R. Pomerleau Limited & Pomerleau Sand & & Gravel Inc. $35,423.50.
3. Legal Parameters:
[8] For each of the counts, the following is the maximum penalty:
Count #1- s. 380(1)(a) CCC : 14 years
Count #2- s. 362(3) CCC: 10 years
Count #3- s. 363 (1)(a) CCC: 10 years
Count #4- s. 198(1)(a) Bankruptcy and Insolvency Act: 3 years
Count #5- s. 198 (1)(e) Bankruptcy and Insolvency Act: 3 years
Count #6- s. 198 (1)(f) Bankruptcy and Insolvency Act: 3 years
Count #7- s. 462.31 (1)(a) CCC: 10 years
Count #8- s. 380 (1)(a) CCC: 14 years
Count #9- s. 367 CCC: 10 years
Count #10- s. 368 (1)(c) CCC: 10 years
4. Positions of Crown and Defence:
[9] Kienapple was raised by the Court. It was the Crown’s position that each of the counts had different purposes, and therefore, all of the counts should stand. The defendant made no submissions on that issue.
[10] The Crown’s position is for an 8 year global sentence; a restitution order for the victims of the fraud; a fine in lieu of forfeiture of $1.6 million with 5 years to pay, and 5 years in the event of a default; and a DNA order.
[11] The defendant’s position is 2 years less a day and that his life has been destroyed. He argues that restraint should be shown primarily on the basis of the PSR and the mental health assessments.
5. Case Law:
[12] I was provided with a case book with 20 authorities; and a ‘Major Commercial Fraud’ chart, showing the sentence range that was imposed in each case along with the amount of the fraud, and whether the defendant had pleaded or was found guilty at the end of a trial. The chart is attached to these reasons as Appendix A. The principle cases referred to in submissions were R. v. Bertram, 1990 CarswellOnt 872 (ONCA); and R. v. Drabinsky, 2011 ONCA 582 (ONCA).
6. Mitigating and Aggravating Factors:
[13] Mitigating factors are to be determined on the balance of probabilities standard, whilst aggravating factors are determined on the reasonable doubt standard.
[14] It is a mitigating factor that the defendant has no criminal record. I do not accept the defendant’s argument that the defendant’s mental health issues should be treated as mitigating factors. There is no evidence that his mental health issues had anything to do with his conduct in this case.[^1] I do not accept that the gap in time from the date of the offences to his arrest should be treated as a mitigating factor. He absconded to Lebanon in 2007 with many millions of dollars of other people’s money where there is no extradition treaty, with no intention of returning to Canada. I assume that he returned to Canada in June 2012 after life in Lebanon-Syria had become intolerable. He knew what he was facing when he returned. Any delay was his doing. The delay benefitted no one, least of all the victims who were unable to put closure on this sad chapter of their lives.
[15] I accept that the defendant’s reputation prior to these offences was a good one. He was seen as generous and hard working. This is a mitigating factor. On the other hand, it was his stellar reputation and trust that enabled him to plan and execute this massive fraud. Without his reputation in the construction industry, he would not have been able to pull off this scam.
[16] While remorse and acceptance of responsibility may be a mitigating factor, the absence of remorse cannot be an aggravating factor. The defendant is noted in the PSR as expressing remorse for the subcontractors who experienced financial losses; but denied responsibility and “blames others for his involvement with the criminal justice system.”
[17] It is an aggravating factor that there was very significant planning and deliberation by the defendant to perpetrate this fraud. It was not an impulsive act, but carefully thought through, accompanied by continual lying and double dealing.
[18] The level of sophistication is an aggravating factor. He dealt with the bonding companies, banks, and Acorn Partners with falsified accounts. When he was required to have the books audited, he managed to mislead the accounting firm with false accounts and lies. The whole scheme required a series of complicated transactions, false and forged documents, bad cheques, and lies over a long period of time from early 2007 through until the beginning of 2008. He structured the company around his wife so that he showed no ownership interest, and as a consequence, his two previous bankruptcies would not have come to the attention of any lenders or bonding companies. It was acknowledged that his prior bankruptcies would have affected his borrowings and bonds without which he could not have operated a construction company.
[19] Motive may be an aggravating factor. The Crown had sought to file evidence during the hearing concerning bank records obtained from Lebanon to show what had happened to the money in Lebanon after the defendant had absconded. The defendant took objection to the admissibility of this evidence on the ground that it should have been part of the trial evidence. I ruled in favour of the defendant and declined to consider it. However, in submissions, the defendant then argued that the fraudulent scheme was not that sophisticated because the defendant had at the time a legitimate business purpose in Lebanon, leaving the inference that the intended business enterprise in Lebanon just went wrong. I reject that contention for two reasons. First, while there was evidence from the defendant through letters and his employees that he needed the huge sum of money for a business in Lebanon-Syria, I found that that was part of his phony scheme. He made it appear that there was a legitimate purpose for the money to be sent to Lebanon-Syria, when in fact, it was all part of the sophisticated and complicated scam. Secondly, I infer that the Lebanese banking evidence the defendant successfully argued for exclusion would not have corroborated his contention of their having been a legitimate business purpose for the absconded funds. There was no legitimate business purpose in Lebanon. The defendant’s motive was solely for money. There was no generosity or altruism in the scheme. He was described by one witness as having used the company as his personal ATM machine; and drove it into the ground. Greed was what drove the entire scheme. There is no chance of recovery. Had there been, that might have been a mitigating factor. He had no intention of returning to Canada to deal with the problems he had created.
[20] It is an aggravating factor that he tried to divert suspicion away from himself immediately after he absconded by saying that Mr. Dagenais was responsible as the owner of the company, on the basis of a phony sale document - not him. The theory of his defence included an attempt to blame Mr. Dagenais, who as I found, was a young man who had idolized the defendant; but then he too found himself victimized by the fraud. Similarly, all of the rest of the employees were victimized by the defendant through the fraud, and then were attacked during their cross-examination. The defendant breached their trust and then played them for fools.
[21] It is an aggravating factor that so many different people found themselves recruited unwittingly into the scheme. The defendant’s involvement with BDC in getting a letter, and then using it for a different purpose was a classic example. All of these people probably wish they had never met the defendant. The defendant complains that he feels like a pariah.
[22] It is an aggravating factor that there are so many victims. The list of those who had been fleeced was evidence of that. The reputation of the construction industry in the Ottawa area was affected.
[23] The size and scope of the losses is an aggravating factor. I accept that the losses to creditors alone totalled in the range of $6.9 to $8.4 million, a massive loss to the Ottawa economy. The Crown filed a forensic accounting report at the hearing. In spite of the defendant’s objection, I accepted the report into evidence but am relying on it only to the extent that it was based on evidence that had been admitted or part of the financial records and documentation at the trial. I am entitled to rely on credible and relevant evidence on this sentencing hearing that is relevant to the losses documented by the various creditors, employees, and other victims.[^2] The qualifications of the forensic accountant permit me to rely on her opinion. The report assesses the losses at the low end of a range where there are approximations. In particular the report chooses $6.9 million as the losses to creditors on a conservative basis using accepted accounting principles. Additional losses of $1.13 to $1.88 million bring the total to approximately $8 million using the low end of the range.
[24] I accept the losses reported and summarized by the forensic accountant in Exhibit 3. Of the $6,924,600.00 total losses (at the low end of the range), Trisura Guarantee Insurance Company, Acorn Partners, and Canada Revenue Agency lost $5,071,600. These amounts were also calculated at the low end of the ranges. Trisura has an outstanding unpaid judgement against the defendant for approximately $2.1 million; and Acorn has an outstanding unpaid judgement against the defendant for approximately $2.8 million. CRA is owed approximately $1.7 million for unpaid source deductions, unpaid GST/HST, interest and penalties. Other creditors include Dr. Abou-Kheir at approximately $70,000, but that could be as high as $1.1 million. Contractors on the Abou-Kheir property lost approximately $151,500.00. The OCAPDD lost approximately $55,100.00 in having to complete their Silver Springs Farm, after it had been abandoned by the defendant. Additional costs incurred by the various creditors for legal and accounting fees, and interest total between $1.132 and $1.88 million. Any asset seizures, which were quite modest, were taken to pay the Trustee in Bankruptcy. I accept that the total losses arising from the defendant’s fraud totalled approximately $8,000,000.00.
7. Principles of Sentencing:
[25] The law establishes a number of principles for the imposition of sentences:
- The sentence must be proportionate to the gravity of the offence and the degree of responsibility of the offender.
- Sentences should be similar to sentences imposed on similar offenders for similar offenses committed in similar circumstances.
- 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 justice sanctions that have one or more of the following objectives: i. to denounce unlawful conduct; ii. to deter the offender and other persons from committing offences: iii. separate offenders from society, where necessary; iv. to assist in rehabilitating offenders; v. to provide reparations for harm done to victims or community; and vi. to promote a sense of responsibility in offenders and acknowledgement of the harm done to victims and the community.
[26] Denunciation and general deterrence must dominate sentencing for large scale commercial frauds. These principles most often find expression in the length of the jail term imposed.[^3]
[27] The process of analysis requires that the offence first be placed in a category. Secondly, the range of sentences is identified for that category to referenced texts and judicial decisions. Lastly, the sentence is placed at the appropriate point according to all of the circumstances, including those of the offender.
8. Reasons:
[28] I accept the submission that this case checks all the boxes for size, scope and heartlessness; and that the defendant is the sole person responsible. I have enumerated the aggravating factors, and mitigating factors, and quantify this fraud at approximately $8 million, the largest commercial fraud in Ottawa’s history.
[29] The range of sentence for a major commercial fraud of this scope and nature is in the range of 5 to 10 years. [^4] In R. v. Drabinsky the court reduced the sentence in similar circumstances to this case, from 7 years to 5 years. However the variation was based on the damages and whether the defendant had caused the bankruptcy of Livent. In this case, there is no doubt, as I have found, that the bankruptcy and all of the consequent losses was a direct result of the defendant’s fraudulent scheme.
[30] Having regard to the size, scope and damage caused by the defendant, I am satisfied that a penitentiary sentence of 7 years is fit and proper.
9. Ancillary Orders:
[31] In addition, there will an order for a fine in lieu of forfeiture in the amount of $1.7 million with 5 years to pay. In the event of default, the defendant is sentenced to 5 years to be served consecutively. [^5]
[32] I order restitution requiring the defendant to pay $488,057.48 towards the victims identified in paragraph 7.
10. Final Decision
[33] Count #1: the defendant is sentenced to 7 years.
[34] Counts #2 through #10: sentence is concurrent to Count #1.
[35] The ancillary orders as above.
Honourable Justice Timothy Ray
Released: February 7, 2017
APPENDIX A
| CASE | DATE | COURT | AMOUNT | PLEA/TRIAL | SENTENCE |
|---|---|---|---|---|---|
| R. v. Scherer | Oct 23, 1984 | ONCA | $2,173,164.21 | Plea | 7 years |
| R. v. Montemurro | Jan 11, 1984 | Ont. Sup. Crt. H.C.J. | $3.9 million | Plea | 6 years |
| R. v. Bertram | Oct 18, 1990 | ONCA | $4,536.384 | Plea | 6 years minus 19 months pre-trial custody |
| R. v. Nichols | Dec 12, 2000 | ONCA | $1,005,000 | Trial | 4 years |
| R. v. Dobis | Jan 31, 2002 | ONCA | $2 million | Plea | Conditional sentence at trial overturned to 2 yrs less a day in jail (9mths conditional had already been served) |
| R. v. Bjellebo | Oct 14, 2003 | ONCA | $22 million + $118 million in fraudulent tax losses | Trial | 10 years |
| R. v. Di Giuseppe | Feb 2, 2010 | ONCA | $3,492,415 | Trial | 6 years |
| R. v. Drabinsky | Sep 13, 2011 | ONCA | undetermined | Trial | 5 years |
| R. v. Waxman | Oct 20, 2011 | Ont. SCJ | $17 million | Trial | 8 years |
| R. v. Mazzucco | May 29, 2012 | OCJ | $9.7 million | Plea | 6 years |
| R. v. Solleveld | May 22, 2014 | ONCA | $7,637.041 | Trial | 6 years |
| R. v. Stevenson | Jan 20, 2014 | BCSC | $4.56 million | Plea | 5 years, 8 mths |
| R. v. Davis | Mar 31, 2014 | Alta. CA | $3 million | Plea | 4 years |
| R. v. Adams | Jan 9, 2015 | OCJ | $1,610,444 | Trial | 5 ½ years |
| R. v. Dhanaswar | Sep 19, 2014 | ONSC | $2,372,702 | Trial | 7 years |
| R. v. Pouchkina | Apr 11, 2016 | OCJ | $5,476,204 | Plea | 6 years |
| R. v. Thornton | Aug 21, 2014 | ON SC | $3,948,301 | Trial | 5 years |
| R. v. Samji | Sep 28, 2016 | BCPC | Undetermined | Plea | 6 years |
| R. v. Watts | Jun 6, 2016 | ON SC | $2,750,288 | Trial | 6 years |
| R. v. Iyer | Dec 2, 2016 | Alta. QB | $5 million | Trial | 7 years |
SENTENCING RANGE – MAJOR COMMERCIAL FRAUD
CITATION: R. v. Eid, 2017 ONSC 898
COURT FILE NO.: 12-20041
DATE: 2017-02-07
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
HER MAJESTY THE QUEEN
- and –
ROLAND EID
Defendant
REASONS FOR SENTENCE
RAY, J.
Released: February 7, 2017
[^1]: R. v. Haly, 2012 ONSC 2302 at para. 34
[^2]: S. 723(5) C.C.C
[^3]: R. v. Drabinsky, 2011 ONCA 582, 107 O.R. (3d) 595 at paras. 159 to 161 (ONCA)
[^4]: R. v. Bertram, 1990 CarswellOnt 872 (ONCA); R. v. Drabinsky, supra; Major Commercial Fraud Sentencing Chart attached as Appendix A.
[^5]: ss. 437 and 462.37 C.C.C.