ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Her Majesty the Queen
F. McCracken, for the Provincial Crown
- and -
Daniel Reeve
M. Cremer and H. Gladstone for Daniel Reeve
HEARD: June 11-13, 2018
REASONS FOR SENTENCE
OVERVIEW
Overview
1Daniel Reeve was a successful financial planner who owned and operated a number of investment offices in Kitchener and surrounding areas. Mr. Reeve and his firms developed an enviable reputation for integrity and success in the financial investment business.
2After a trial that lasted many months spanning a period of almost two years, Mr. Reeve was found guilty of defrauding at least 41 victims of approximately $10 million over the indictment period of January 2007 to September of 2009.
ISSUES
Issues
3What is the proper incarceration period for an approximate $10-12 million fraud involving 41 victims? What is the appropriate pretrial credit to be deducted?
4Should a restitution order include, solely, repayment of the principal invested or repayment of principal and payment of interest payments due but not paid?
5Should there be a fine in lieu of forfeiture?
6Should there be a common law peace bond?
7The Crown seeks a DNA order and a s. 743.21 in custody non-communication order. The defence does not strongly oppose these orders.
ISSUE #1A – INCARCERATION PERIOD TO BE IMPOSED ON FRAUD OF APPROXIMATELY $10-12 MILLION INVOLVING 41 VICTIMS
FACTS
CIRCUMSTANCES OF OFFENCE AND OFFENDER
Issue #1A – Incarceration Period
8The evidence at trial is summarized in a lengthy judgment, R. v. Reeve, 2017 ONSC 5376.
9The judgment is summarized in an executive summary which appears at pages 812-832 of the trial judgment. The evidence is further summarized in chart form – Schedules A-J – which appear at page 833 in the trial judgment and onwards.
10Prior to 2007, Daniel Reeve had established a very successful financial investment business – DPR Financial and affiliated other businesses. Daniel had become very famous as a successful investor in the Kitchener area. He wrote several investment books and made appearances in the media extolling his uniquely successful approach to investing.
11However, it all started to unravel in or around 2007. In early 2007, Mr. Reeve lost his licence entitling him to give financial advice (Mr. Reeve testified to having insurance and mutual fund licences in the past – this is what I meant by “financial advisor” licence in para. 2696 of the trial judgment). By 2007-2009, as detailed in paragraph 2696 of the trial judgment, Daniel had become accustomed to a large lifestyle. Complicating matters still further, Mr. Reeve separated from his wife and on November 26-29, 2007, Daniel agreed to pay his wife $3 million in equalization and support payments to be paid in $500,000 installments from November 30, 2007 to August 1, 2008. Further complicating matters was the fact that Mr. Reeve’s businesses were failing over the 2007-2009 indictment period.
12In order to fund Mr. Reeve’s lifestyle, failing businesses and pay spousal support/equalization, Mr. Reeve entered into a variety of Ponzi schemes to attract investments into so-called low risk “bricks and mortar” real estate/commercial ventures.
13Both the Crown and the defence called expert forensic accounting evidence. At page 826, para. 2683 of the trial judgment, I concluded:
[2683] As indicated in my analysis of the accounting evidence in the judgment (see paragraphs 2305 to 2354), the overall conclusion from the expert accounting evidence is as follows:
As confirmed by the GT Report and my schedules, the Reeve companies used the alleged 41 victims’ investment monies not as intended toward low- or no-risk real estate and commercial investments but diverted that money for three main purposes:
- Shareholder loans to Daniel and shareholder loans mainly to Cheryl and Daniel Reeve, for the purposes of satisfying Daniel’s spousal support and equalization obligations;
- Expenses incurred by the various Reeve companies; and
- Repayments to the alleged victims and other individual investors.
14As indicated in the executive summary of the trial judgment, Mr. Reeve, by way of criminal fraud, from 2007-2009, put almost $12 million of the core 41 victims’ investments at risk, resulting in a loss of approximately $10 million. Mr. Reeve’s businesses shut down in the spring of 2009 and there is no chance of any financial recovery by these 41 victims.
15I concluded at para. 2697 of the trial judgment that, “this trial established an overwhelming case of fraud and theft perpetrated by a devious, clever, calculating, cold-hearted man who has absolutely no remorse for the many lives that he ruined.”
16Mr. Reeve, now 58 years old, was arrested on July 26, 2012 and has been in custody ever since – a period of almost 6 years.
IMPACT ON VICTIMS AND/OR COMMUNITY
Impact on Victims and/or Community
17The Crown filed, as Exhibit 2, 41 victim impact statements. Several common themes appear in these victim impact statements. A number of these themes overlap and are repeated in each individual victim statement. These themes can be summarized as follows:
- LOSS OF TRUST IN PEOPLE/INSTITUTIONS
18Virtually every one of the 41 victims expressed a loss of the ability to trust people and/or financial institutions again.
19Some examples are as follows:
20Eva Bernachi’s trust in people was shattered.
21Warren Boldt trusts no one. Mr. Boldt is disabled due to a car collision and with the loss of his funds, he cannot afford to go to a movie and basically does nothing but watch the world go by.
22Glen Brubacher has great difficulty trusting any professional, especially in the financial field.
23Lynette Caiger testified that Daniel’s theft of her money destroyed everything she had spent building but also destroyed her faith and judgment in herself.
24Lorna Eadie trusted Daniel Reeve as she felt that trust is the foundation of all relationships. She now knows that Daniel preyed on her, her husband and many innocent people.
25Andrew Eplen has lost all respect for those in banking/financial institutions.
26Craig Mason cannot trust any person or organization. After the fraud, Mr. Mason stopped vacations with his children, movies, dinners and outings.
27Peter Steenbergen has lost trust in the financial profession.
28Isaac Thiessen asks: how he can trust the financial system? He feels embarrassed and discomfort about his loss and quit evening school and stopped thinking about becoming a financial advisor.
29Patricia Westerhout lost over $600,000. She no longer trusts people and is suspicious and doubting. She feels betrayed, shocked and upset; she feels shame and humiliation. Going to court was a nightmare. She is devastated.
- NO OR LIMITED ABILITY TO RECOVER FUNDS AND RESULTANT FINANCIAL STRUGGLES
30Brad Ashman indicated “we will never get his mortgage paid off” and will have to sell their home when they retire.
31Eva Bernachi testified that Mr. Reeve systematically stole everything they had – they went from being financially secure to losing all their RRSPs and 80% of the equity in their home which had been mortgage free. She stated: “I was blown away by the fact that he knew exactly the amount of money we had and he stole every last cent.” The Bernachis were in their late 40s and “did not have the benefit of starting again.”
32Rene and Gabrielle Brossard carry a debt of roughly $840,000. Daniel has destroyed their retirement plans and he and his wife, in her mid-50s, both returned to work despite Gabrielle suffering from diabetes. The Brossards now live in Daniel’s “financial prison.”
33Annegret Colquhoun is a retired widow. Daniel’s fraud created a large tax bill for Ms. Colquhoun which in turn caused her great stress. Ms. Colquhoun was forced to sell family assets when she was in her 60s and she now can only afford bare essentials. She has little financial reserves to see her through the rest of her life and has a general feeling of insecurity.
34Mark McGuire, now 68, and his wife Inger Aas, now 64, are unable to retire any time soon due to their loss. In addition to their investment loss, they had to pay CRA extra monies for cashing in their RRSPs and paid money for lawyers in an attempt to get their money back.
35Cherrin Meleg indicated her retired husband had to go back to work full time 7 days a week working 12 hour days to make up for their losses. Cherrin herself is working full time plus two part time jobs in order to put money back into their retirement funds. Their dreams for an early retirement are gone.
36Paul Meleg and his wife planned to retire earlier but are now working much later than expected. In the past they travelled, but this is no longer the case.
- LOSS OF MARRIAGE/RELATIONSHIPS
37Lynette Caiger testified that her husband pressured her to invest with Daniel and this resulted in an overwhelming loss and complete financial blow that decimated her spousal relationship at a time when they both lost their jobs due to a plant closure. This fraud destroyed everything she had, emotionally and physically, including the loss of her marriage and her home. Lynette is loath to trust another man and may never again have another significant other due to this catastrophic event.
38Kevin Hillman is an honest truck driver who lost everything and was left with debt and depression. As a result of his depression, he went through a divorce. He has since remarried but any plans to retire at a normal age are long gone. He just wants to give up.
39Gary Raycroft suffered from anxiety and mood swings. This led to severe depression and hospitalization for approximately six weeks. This in turn led to his separation from his wife in April 2014 and led to his divorce in December 2018. Mr. Raycroft lost $450,000 and was mentally unable to take on a promotion at work.
40Paul Schnarr felt ashamed and stupid. His wife blamed him for allowing the fraud to happen. They divorced and this was a huge blow to him. He is not able to help out his children financially.
41Carin Smith’s life was turned upside down and she suffered financially and emotionally, and this led to the end of her marriage. She is an immigrant and has no support network. She lives from paycheque to paycheque. She will not be mortgage free until 2038 and may never be able to retire.
42Daniel Smith lost the equity in his home, and this added stress to his already unstable marriage. Daniel Smith separated and divorced, and Mr. Reeve’s fraud complicated the divorce proceedings.
- LOSS OF ABILITY TO RETIRE/ACQUIRE EASIER LIFE
43Glen Brubacher, in his mid-40s, wanted to slow down but instead, after the fraud, worked even harder (60-90 hour weeks). Mr. Brubacher was forced into a consumer proposal to avoid bankruptcy and ten years later, still works a 60-80 hour work week.
44When Linda Chaffe met Daniel Reeve, she was facing an uncertain future as her husband had left her with three children and a mortgage renewal. Instead of having the mortgage paid off in ten years as promised, the mortgage is now larger than when she met Daniel Reeve and her retirement is pushed back further than ever.
45Barry Cunningham and Sharon Hepburn were devastated and continue to lose sleep as they lost their money saved for retirement. Now nine years later, they continue to work and cannot retire for a long time yet. In 2011, they sold their dream home to reduce their debt.
46Josephine DeSalvo lost $200,000 which represented almost 40 years of “all her sweat.” She no longer can afford to go on vacations, and at 65 can no longer work due to numerous back surgeries. She has lost her retirement savings and her ability to purchase and sell houses, which was her plan. Her children help her instead of the other way around as she had planned.
47Andrew Eplen planned to retire when he was 60 in 2009 but worked until he was past 66 despite serious operations for knee and shoulder replacements. Due to further physical limitations, Mr. Eplen can no longer work. He has gone from enjoying a reasonably comfortable early retirement to being a recluse who worries about every dollar.
48Pilita Masilang (Galano) lost her life savings. She barely sleeps as she works at night to earn extra money and cares for her children during the day. She and her husband nearly divorced but stay together for the kids.
49Chin Tan was emotionally distressed for 11.5 years. He planned to retire in 2010 to spend time with his grandchildren, but had to work 7-8 years longer in order to pay off his debt.
50Claudette and David Taylor are farmers who work seven days a week from sun up to sun down. Daniel Reeve’s fraud robbed them of financial security – they were unable to maintain their line of credit as before and had to pay higher interest on borrowed monies. They were no longer able to help their children. They had planned to take some weekends off and go on vacation but the fraud changed all that.
- FEELINGS OF SHAME/EMBARRASSMENT
51Eva Bernachi testified that she was burdened by shame and guilt for what she had “done” to her family. She would shake with fear uncontrollably and had feelings of wanting to die. Ms. Bernachi experienced emotional torture and devastating spirals of despair.
52Lorna Eadie and her husband made a pact not to tell anyone that they had lost their life savings as their family might think they were fools for trusting Daniel Reeve. Her embarrassment and humiliation turned to anger with a feeling of sadness, regret and violation.
53Andrew Eplen spent 50 years striving to build a sterling reputation – he still has the highest mark ever in a Steamfitter’s Certification exam. Mr. Eplen’s personal shame, embarrassment and loss of self-worth has destroyed his 50 years of striving to prove his excellence to his family and community. Now he is too ashamed to be seen in public and as a result, relocated away from Kitchener in 2015.
54Ms. Terry Kaup indicated the ultimate punishment was to have her confidence in herself undermined. She felt helpless and disillusioned.
55Steven Manuel indicated that due to media coverage and his name being published, he has become a conversation topic at work. This has made him an introvert and he avoids conversations with co-workers. He will have to work 4-5 years longer due to his loss.
56Peter Steenbergen has been under emotional stress due to his losses and public embarrassment. He and his wife feel that their embarrassment was greatly enhanced by the publication of their names in the newspaper.
- LOSSES CREATED STRESS/STRESS RELATED DISEASES
57Dr. Ira Bernstein was 43 at the time he was defrauded. He had time to rebuild. However in 2011, “exacerbated by the stress I was enduring because of civil action regarding these matters, I developed Ménière's disease.” This resulted in disabling vertigo and dizziness, sleepless nights that took several years to overcome by a change in lifestyle and nutrition.
58Lynette Caiger testified that the loss of her money, marriage, home, job, and return to school at age 48 put a great deal of stress on her and she was later diagnosed with a hyperthyroid condition.
59Sharon Hepburn has suffered from stress and this has caused a form of psoriasis on her hands and feet which makes it difficult to walk. The medication required is expensive and costs $300 per month even with a drug plan.
60Jeanette Harrop is an elderly widowed woman who had to take a part time job at a funeral home. Ms. Harrop had to sell her house before the bank took it over. Ms. Harrop indicated that she nearly died from internal bleeding and stomach reconstruction due to stress caused by Daniel Reeve stealing from her. Her trust level is now gone at a late stage of life.
61Terry Kaup suffers from depression and sleepless nights. She has also been diagnosed with fibromyalgia which may or may not be related to stress. Her self-doubt contributes to her physical suffering.
62Amos Lichty has spent a lot of time in hospital with symptoms of panic attacks, breathing problems and chest pains which he believes were caused because “we lost our savings.” He is afraid for his future because he and his wife are in their late 80s and he is not sure how they will afford extra care for him and his wife.
63Sherrill Martin Stevenson referred to Daniel Reeve as a monster who went behind his brother David Reeve’s back and stole their money in November 2008. This put a lot of mental and financial stress on Ms. Stevenson, and in July 2009 she was diagnosed with breast cancer.
64Marina Ognjanovski, due to her stress, was diagnosed with AFib (atrial fibulation) or rapid heartbeat.
65Paul Schnarr has developed high blood pressure and will be on medication for the rest of his life. This is a result of the stress of having to pay bills with no cash flow and wondering if he will be able to cover expenses. He is angry due to being forced to work in his later years due to his loss of money.
66Pat Westerhout indicates that this fraud has been a horrific emotional experience. Her nerves were bad causing an outbreak of eczema.
- IMPACT ON HEALTH GENERALLY – PHYSICAL AND PSYCHOLOGICAL
67Warren Boldt is angry all the time. He has not been to a dentist in years – he cannot afford it.
68Brian Crozier, aged 63, did not retire and still works but cannot afford vacations. He has felt depressed, loses sleep and his decision-making process is not what it used to be.
69Ron DeKoning was a passionate outgoing family man who was mentally and emotionally destroyed. His marriage suffered due to frequent arguments about lack of money. He loses sleep, has lost weight and has diabetes. He has become fatigued and is mentally and emotionally unstable with frequent bouts of anger. Mr. DeKoning lost 30 years of savings and does not have another 30 years left to save again.
70When Laura Kerr was “financially raped” her emotional world crumbled and her doctor prescribed anti-depressants and counselling. She thought about suicide as her life insurance would then help her son and daughter. Ten years later, she has lost many years of her life to a negative emotional state which still threatens to take her under. Her financial state remains dire.
- FUTURE GENERATIONS IMPACTED
71Many of the victims indicated that their losses were so devastating that they were unable to adequately pay for their children’s education, university, weddings and/or other planned financial assistance for their children and/or parents/family.
72The Bernachis lost everything at a time when their older daughter was starting university with a younger one not far behind.
73Warren Boldt has three sons and has been forced to say no to all three of them when they asked for financial help.
74Linda Chaffe was promised a paid off mortgage and a pot of money for her children’s education. Instead Ms. Chaffe, ten years later, has a larger mortgage and her children have large student debts.
75Lisa Schnarr’s loss of $75,000 added years to her mortgage and made saving for her daughters’ education more difficult.
76Wayne Schroeder lost over $90,000 in RRSP savings which is money that would have assisted his children as they raise their own families.
77Peter Steenbergen lost almost $550,000 and postponed his retirement and was restricted in being able to help his children.
78Pat Westerhout lost half of her financial investments. Her children’s inheritance has been reduced because two life insurance policies were decreased.
- EXPLOITATION AT TIME OF EXTREME VULNERABILITY OF VICTIM
79Eva Bernachi was grieving the death of her mother in 2007 and her mother-in-law in 2008 during the time Daniel Reeve defrauded her.
80Wilma Jordan’s husband died of a sudden heart attack on December 23, 2006. While Ms. Jordan was grieving, Daniel Reeve, a close, long-time “family friend” and their advisor for many years, told Ms. Jordan he would “help me through this horrible time.” Ms. Jordan’s daughter worked for DPR. Ms. Jordan cashed in her late husband’s RRSP and cashed in her savings and was defrauded of approximately $100,000. Ms. Jordan indicated she was grieving and thought Mr. Reeve was looking out for her interests. Since the loss of her money, she has had to continue to work.
81Terry Kaup’s husband died in 2005 and she was still grieving deeply at the time she was defrauded of $100,000 by Daniel Reeve. To have that vulnerability exploited left her feeling devastated. All she could think of was what her husband would say about losing the money he worked so hard for. Terry Kaup is now 67 and has emotional and financial deficits that have diminished her. She was ashamed for being so stupid. She lost her husband, brother and in-laws in the space of two years and then to be cheated by Daniel Reeve compounded the grief she was experiencing.
82In 2005, Michelle Keddie’s mother suffered a severe stroke and moved in with her. Her severely disabled mother had savings which were invested with Daniel Reeve for a 20% return with quarterly payments annually. Only three payments were made. A fourth payment was required to pay for a wheelchair but it was never received. Michelle and her husband borrowed the money to buy the wheelchair. The worst day of Michelle Keddie’s life was telling her disabled mother that her life savings were gone. Michelle also gave Daniel her life savings in RRSPs and it was lost. This forced Michelle to get a job and she was forced to place her mother in a nursing home. Her mother did not want to share a room but there was no money to pay for a private room. Tremendous guilt was placed on Michelle Keddie’s shoulders. Michelle’s marriage suffered and her husband at 59 years of age is looking at a much later retirement date. Ms. Keddie now has a permanent back injury from having gone back to work and received disability payments which were cut off in October 2016. Her chronic pain and injury make it impossible for her to work outside the home. She is dealing with her disability and shame for losing her money for the rest of her life.
83Marina Ognjanovski lost $400,000 to Daniel Reeve. Her deceased husband had left her insurance monies so that Marina and their children would be looked after. She was still mourning the death of her husband and Daniel Reeve took advantage of her vulnerability.
CONCLUSIONS REGARDING VICTIM IMPACT OF A $10 MILLION FRAUD
Conclusions Regarding Victim Impact
84In the animal kingdom, a predator seeks out the most vulnerable member of a herd and then ruthlessly hunts them down. This is a fair description of the predatory tactics employed by Mr. Reeve in this large and lengthy ongoing fraud.
85Mr. Reeve promised quarterly payments to Ms. Keddie. When a quarterly payment of $5,000 was required to pay for a wheelchair it was not paid. Mr. Reeve however had $10,000 to deposit on a purchase of a $1 million property in Bayfield.
86From January 1, 2007 to September 2009, Daniel Reeve took out approximately $1.3 million in shareholder loans – approximately half went to his ex-wife and $687,000 went to him to support his large lifestyle – a fleet of cars, a driver, and expensive renovations to his homes including $70,000 to $80,000 for the installation of marble into a bathroom.
87And what was happening to Michelle Keddie and her disabled mother during Mr. Reeve’s spending spree and subsequently? Michelle Keddie was forced to get a loan for her mother’s wheelchair. Michelle Keddie then had to get a job. She then had to tell her disabled mother that her life savings were gone. That in turn forced Michelle Keddie to place her disabled mother into a nursing home. Her mother didn’t want to share a room but there was no money for a private room. Eventually Michelle Keddie, due to working later in life, received a permanent back injury and is now disabled herself, in addition to being financially ruined.
88Mr. Reeve stated in his evidence at trial that all his boats were sailing. Mr. Reeve’s fraud of Ms. Keddie initiated a chain of events that sent Ms. Keddie’s family boat over a precipice into a lifetime of despair and misery.
89When long-time close family friend Wilma Jordan’s husband died, Mr. Reeve promised the grieving Ms. Jordan he would help her through a horrible time. Instead he swindled her out of all of her deceased husband’s RRSP and her own personal savings. Terry Kaup lost her husband, brother and in-laws over a space of two years. Mr. Reeve consoled this grieving widow by defrauding her of $100,000. Marina Ognjanovski was grieving the loss of her husband, who had arranged a life insurance policy to take care of his family. Daniel Reeve took away $400,000 of those proceeds.
90Warren Boldt was disabled in a car accident in 2003. In 2006, Mr. Boldt netted $315,000 from the resulting lawsuit. In 2008, Mr. Boldt invested $300,000 in the Breadalbane Inn. He received $35,000 in interest but lost the entire $300,000 principal.
91Ten years later, Mr. Boldt is a disabled man who cannot work and has no money. Mr. Boldt would like to go to the dentist to get his teeth fixed but has no money to do that.
92Laura Kerr was going through a difficult emotional period as she was separating from her husband. She had $100,000 to invest after entering into a separation agreement. She invested it all with Daniel in the Plaza Hotel in New York City. Daniel stated, “What could be safer than the Plaza Hotel?” The answer would eventually prove to be “pretty well anything else.” Ms. Kerr got $3,000 back but lost $97,000 and received zero of her 18% annual interest.
93Jeannette Harrop was a confused elderly widow with limited assets/income and she was defrauded. Isaac Thiessen was a recent immigrant who did not even have a high school education, and he was defrauded.
94Daniel’s frauds were not restricted to just the disabled, the elderly, the grieving, the vulnerable, and long-time trusted family friends and clients. You didn’t even have to be his client in order to be defrauded. Sherrill Martin Stevenson in November of 2008 was working with David Reeve (Daniel’s brother) who had or was about to leave DPR. Daniel attended her house on November 8 at 9:00 a.m. without David knowing and Daniel left later that morning after receiving a breakfast and a $75,000 cheque. Ms. Stevenson lost the $75,000. This was basically a theft when Daniel’s empire was crumbling all around him. David Reeve testified that he was shocked that this happened.
95More could be said but the picture is clear. The disabled, the elderly, the grieving spouse, the emotionally vulnerable, the close long-time friends, the loyal client, and complete strangers – they were all there for Daniel Reeve’s taking. No one was too vulnerable to escape Daniel’s claws – all were equal prey and fair game. It can be safely concluded that Daniel is a predator who has no conscience.
96What is both striking and troubling is the fact that these victim impact statements were written approximately ten years after the crimes were perpetrated on the victims. What emerges is that a decade later, the ruin created by those frauds – whether financial, psychological, emotional, mental, physical or any combination of these impacts – appears to be permanent.
97The wounds created by Mr. Reeve’s criminal conduct, ten years later, appear to be chronic and are not healing. In fact, the impact of these crimes in a number of instances have evolved like a cancer, to spread and damage numerous other parts of these victims’ lives – marriage breakdowns, physical and mental illnesses due to stress and worry, inability to assist family members, including aging parents and young children, and a general lack of trust in people and institutions.
98Over 40 years, I have seen many victim impact statements from victims subjected to extreme physical harm and violation. The set of victim impact statements from these 41 victims is comparable to the impacts upon people who have been subjected to the cruel physical and psychological harm that you see in actual crimes of violence.
99And what is truly sadly remarkable about this saga is the following comment, at page 9 of the presentence report, regarding Daniel Reeve:
The subject does not take responsibility for his offences and shows no remorse for any of his offences. Of concern the subject appears to have little or no empathy for the victims’ losses.
100As stated, Mr. Reeve testified that all his boats were sailing; I conclude that Mr. Reeve had no moral compass to guide them.
101One of the victims in her victim impact statement referred to Mr. Reeve as a monster. This comment is not unfair in these circumstances.
COMMUNITY IMPACT STATEMENTS
Community Impact Statements
102The Mutual Fund Dealers Association (MFDA) indicates the obvious at page 2 of 5 of their community impact statement: “Fraud on the part of a financial advisor violates investor trust and undermines confidence in the entire financial services industry.”
103The Financial Services Commission of Ontario (FSCO) indicates that the raising of funds by way of syndicated mortgages to support real estate development projects must be performed by a licenced mortgage broker or agent supervised by FSCO. Mr. Reeve was not a licenced mortgage broker or agent with FSCO. High risk and suspected mortgage activity has increased by 52% in Canada since 2013, with Ontario seeing the majority of the increase. FSCO expends considerable human capital, time and resources to address mortgage frauds such as those perpetrated by Mr. Reeve and those costs are borne by compliant licensees in the mortgage brokerage sector. Those licensees also pay higher insurance costs. Further public confidence in the mortgage sector is lost causing a chilling effect as consumers are less inclined to invest and promote a healthy and competitive market. This in turn forces legitimate developers to pay higher interest rates to compensate lenders for the additional risks associated with potential fraud in the sector.
104The Investment Industry Regulatory Organization of Canada (IIROC) indicated in its community statement, at page 3:
When advisors engage in fraud, they not only fail in their gatekeeper role, but also directly contribute to undermining investor confidence. This, in turn, threatens the strength of capital markets.
Holding advisor wrongdoers accountable, especially those who betray the trust of investors, is essential to maintaining market integrity. Firms and other advisors typically support eliminating “bad apples” because of the threat they pose to their industry. Advisor misconduct undermines the honest, legitimate and diligent work of trustworthy and compliant advisors.
Any punishment must send a strong deterrent message to those who might cause harm to investors and re-establish public confidence in capital markets by demonstrating misconduct will be identified and wrongdoers will be punished.
MITIGATING AND AGGRAVATING CIRCUMSTANCES
Mitigating and Aggravating Circumstances
105S. 718.2 of the Criminal Code requires a sentencing court to increase or decrease a sentence after taking into account mitigating and aggravating circumstances. Evidence that an accused abused a position of trust in relation to the victim is deemed to be an aggravating circumstance.
106The former s. 380.1 of the Criminal Code which was in force at the time of these offences (2007 to 2009) stated as follows:
380.1 (1) Sentencing — aggravating circumstances — Without limiting the generality of section 718.2, where a court imposes a sentence for an offence referred to in sections 380, 382, 382.1 and 400, it shall consider the following as aggravating circumstances:
(a) the value of the fraud committed exceeded one million dollars;
(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; and
(d) in committing the offence, the offender took advantage of the high regard in which the offender was held in the community.
(2) Non-mitigating factors — The court 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.
107The current version of S. 380.1 adds additional aggravating factors, most of which are present in this case.
MITIGATING FACTORS
Mitigating Factors
108The accused has no criminal record and was formerly a highly respected and well known owner of DPR Financial – an investment company prominent in South-West Ontario. However, Mr. Reeve’s skills, status and reputation in the community were used by Mr. Reeve in the commission of these frauds and those skills and reputation were relevant and contributed to the trust the victims had in Mr. Reeve, which in turn Mr. Reeve exploited to perpetrate these frauds.
109Accordingly, pursuant to s. 380.1 (2), Mr. Reeve’s previous impeccable background, skills, status and reputation cannot be considered as mitigating circumstances.
110The Crown submitted that there were no mitigating circumstances, a submission in which I completely agree.
AGGRAVATING CIRCUMSTANCES
Aggravating Circumstances
111All of the aggravating circumstances listed in the former s. 380.1 are present here:
(a) The value of the fraud exceeded 1 million dollars (the fraud was at least approximately 10 million dollars).
(b) This fraud was well publicized in South-West Ontario and has the potential to affect investor confidence in investment firms and ultimately the Canadian financial system. The community impact statements confirm the potential harm the frauds perpetrated by investment professionals such as Mr. Reeve can cause.
(c) The offence involved a large number of victims – 41 victims in approximately 70 transactions.
(d) In committing the offence, the offender took advantage of the high regard he had in the investment and general community.
112Mr. Reeve has absolutely no remorse or empathy for the victims. He did apologize to the victims in a closing statement at the end of the sentencing hearing. However, I find his words hollow. During his trial evidence, Mr. Reeve insisted he had done nothing wrong despite the absolutely overwhelming evidence of fraudulent intent and fraudulent conduct deliberately perpetrated by Mr. Reeve over the indictment period from 2007-2009.
113The evidence at this trial and subsequent sentencing confirm the following comments found at page 9 of the presentence report:
The subject does not take responsibility for his offences, and shows no remorse for any of his offences. Of concern the subject appears to have little to no empathy for the victims’ losses. He denies any intent to defraud investors in any of his companies. He claims “I fully expect to pay” in full anyone he owes money to or who lost money. The writer questions how this would be possible given the loss of his financial licenses. Outside of his mother, it does not appear he has the support of anyone in his family.
114The accused was well aware that he was in a position of trust vis-à-vis the 41 victims, and that the victims in fact trusted and relied upon his advice. Mr. Reeve flagrantly abused that trust.
115Of the approximately $10.8 million invested with Mr. Reeve, following the collapse of the Reeve companies, there has been no restitution of any kind. In my opinion, the chances of any restitution being made are slim or none.
116As my review of the victim impact statements makes graphically clear, these frauds devastated the 41 victims, many of whom are/were elderly and who lost their retirement funds and they can never adequately recover. Further, many of the victims suffered extreme psychological, mental and ultimately physical harm and anguish due to the stress that these frauds inflicted on them.
117Mr. Reeve lost his licence in early 2007 and was not licenced to give financial/mortgage advice but did so anyway to the extreme detriment of the victims.
118The fraud was committed for an approximate 2.5 year period and involved a Ponzi scheme of considerable complexity and creative planning.
119Mr. Reeve, once it was apparent that investors could never be repaid, nonetheless lied repeatedly to the victims about repayment and entered into numerous repayment agreements that could not and were not complied with, thereby further tormenting and stressing the victims.
120The motive behind the frauds was to bolster Mr. Reeve’s ego and fuel Mr. Reeve’s lavish and extravagant lifestyle.
121Mr. Reeve repeatedly told investors in the fall of 2008/spring of 2009 that money was coming in on Friday. When Friday came, the DPR doors were locked and frustrated investors banged on doors demanding entry. These Friday disappointments caused anxiety in both the investors and DPR employees and Fridays were eventually labelled by DPR employees as “Freaky Fridays.”
122Mr. Reeve used his position as owner of DPR and related companies to obtain privileged and confidential financial information of DPR clients given to their financial advisors. These clients included those of his brother David Reeve – see for example, the victim impact statement of Sherrill Martin Stevenson.
123Mr. Reeve exploited the general fear and panic created by the 2008-2009 worldwide financial crisis. He did this by convincing clients/victims, who trusted him, to cash in their losing portfolios and convert the monies into “safer” investments that would not go down – see for example, Isaac Thiessen at paras. 882-884 of the trial judgment.
124In order to stave off a police complaint from Andrea Morgan in October of 2008, Daniel approached two unsophisticated investors – Ms. Jeanette Harrop, an elderly confused widow with limited income, and Mr. Isaac Thiessen, a hard-working recent immigrant who had not completed high school. Mr. Reeve basically manipulated them to cash in their investments which he used to pay off Ms. Morgan. Ms. Harrop and Mr. Thiessen received no copies of any corporate bonds until months later.
125The fear and anxiety of many of the victims, besides not getting paid, was exacerbated by either not ever receiving a copy of their corporate bonds/agreements or not receiving them until many months later – see Schedule H of the trial judgment.
126The evidence at trial revealed that, embedded within the fraud, were countless lies, deceptions and/or financial losses inflicted not only on the 41 victims but also upon many others including creditors, employees, other investors and even family members, such as David Reeve.
CROWN POSITION ON INCARCERATION
Crown Position on Incarceration
127The Crown submits that the 14 year maximum period of incarceration, less pre-trial custody, is appropriate. The Crown opposes any enhanced credit, beyond the standard 1.5:1 credit, as sought by the defence.
DEFENCE POSITION ON INCARCERATION
Defence Position on Incarceration
128The defence position is that an appropriate sentence is an imposition of a custodial sentence of 8-10 years less pre-trial custody on a 1.5-1 basis, plus an enhanced credit of 2 years due to harsh jail conditions imposed on Mr. Reeve.
SENTENCE RANGES FOR LARGE SCALE FRAUDS WITH NUMEROUS VICTIMS
Sentence Ranges for Large Scale Frauds
129“The worst offender, worst offence” sentencing principle no longer operates as a constraint on the imposition of a maximum sentence where a maximum sentence is otherwise appropriate, bearing in mind the principles of sentencing set out in Part XXIII of the Criminal Code – see R. v. Solowan, 2008 SCC 62, [2008] S.C.J. No. 55 at para. 3, R. v. McArthur, 2004 CanLII 8759 (ON CA), [2004] O.J. No. 721 (C.A.) at para. 39.
130The concept of “stark horror” adds nothing to the analysis and should be avoided. All relevant factors must be considered. A maximum sentence will be imposed rarely. A maximum sentence is only appropriate if the offence is of sufficient gravity and the offender displays sufficient blameworthiness. The sentencing inquiry must proceed on a case-by-case basis. The sentencing judge must consider all relevant factors – see R. v. Cheddesingh, 2004 SCC 16, [2004] 1 S.C.R. 433 at para. 1.
131In R. v. Mesgun (1997), 1997 CanLII 623 (ON CA), 121 C.C.C. 3d 439 (Ont. C.A.), the court upheld a life sentence on a first-time offender who attempted to murder his girlfriend in a particularly brutal and savage assault. The court held that sentencing is an inherently individualized process. This process is best served by an approach hallmarked by flexibility rather than rigidity – see Mesgun at para. 14.
132Both the Crown and defence provided me with a host of cases regarding the sentence range that I must consider. The cases involve convictions for a variety of significant fraudulent schemes and involve sentences ranging from 4-13 years. The lowest sentence submitted to me was R. v. Drabinsky, 2011 ONCA 582, where investments in a public company totalled $500 million. However, the exact amount of loss was unknown, and this justified a sentence that was somewhere lower than the trial judge’s suggested range of 5-8 years – see Drabinsky at paras. 164, 185-187. Mr. Drabinsky received five years and another accused, Mr. Gottlieb, received four years. The amendments in 2004, raising the maximum sentence for fraud from 10 to 14 years, were not applicable in Drabinsky – see Drabinsky at para. 161.
133The high end of the sentencing range of 13 years is found in R. v. Lacroix, 2009 QCCS 4519. That case involved a guilty plea. The accused embezzled money from 9,200 investors. The total amount of the fraud was approximately $95 million. The fraud had an impact on investors and the Canadian economy.
134The cases that have some factual similarities to Mr. Reeve’s case are R. v. Eid, 2017 ONSC 898, and R. v. Lewis, [2014] O.J. No. 3596 (S.C.).
135In Eid, fraud took place in 2007 to early 2008 at a time when Mr. Reeve was conducting his frauds. Mr. Eid was the sole owner and beneficiary of a construction company. The fraud totalled approximately $8 million. The judge held the range of sentence was five to ten years. Mr. Eid was sentenced to seven years.
136In Lewis, the accused operated a Ponzi scheme that defrauded 33 victims of $7.5 million. He was found guilty after a trial. However, he was subject to the maximum of 10 years and not the current 14 years – see Lewis at para. 14. Mr. Lewis was sentenced to seven years in prison.
137I do not find these cases very helpful due to the individual circumstances of each particular case. Instead, I propose to apply the principles of sentencing referred to in those cases.
138In Lewis, Justice Corrick at para. 24 outlines the parameters of the sentence to be imposed here:
Of course, sentencing is a profoundly individualized process driven by the unique facts of every offence and the unique characteristics of every offender. The sentencing principles set out in the Criminal Code must be applied to the unique circumstances of the case. However, a review of the jurisprudence reveals that convictions for large scale, long-term frauds involving a breach of trust that has devastating consequences for the victims will attract a substantial penitentiary term. It is also clear from the cases that denunciation and general deterrence are the paramount considerations in determining a fit sentence for this crime.
139Denunciation and general deterrence must dominate sentencing for large scale commercial frauds – see Drabinsky at paras. 160 and 163 and Lacroix at paras. 69-70.
140The impact the fraud has had upon the victims is a factor to be considered – see R. v. Sorenson and Brost, 2015 ABQB (unreported).
141The legislative reforms in 2004 were part of a package that raised the maximum penalty for fraud from 10 years to 14 years. The legislative reforms were part of a package designed to ensure that Canada was not a safe haven or secure refuge for those intent on perpetrating frauds. Parliament’s decision to increase the maximum penalty for fraud reflects the view that sentences for serious frauds will be reflected in sentences imposed – see R. v. Johnson, 2010 ABCA 392 at para. 36, 39.
142An assessment of the degree of responsibility is influenced in part by an offender’s awareness of the consequences of his criminal conduct – see Johnson at para. 33.
143Cases characterized as scams will normally call for significantly longer sentences than frauds committed in the course of a legitimate business – see Drabinsky at para. 172-174.
144In my opinion, the trial revealed that Reeve Hotels and Resorts and money raised for supposed real estate investments was a scam.
145Sufficient monies were raised to purchase a suite at the Plaza with the bulk of the purchase price and the Breadalbane, outright. While a deposit was made at the Plaza (in Mr. Reeve’s personal name but forfeited) Reeve Hotels and Resorts never owned or purchased any real estate. Investor money flowed into the Reeve Hotels’ bank account and other bank accounts. Usually, within 24-48 hours of those deposits, the investor money flowed out to the various other Reeve enterprises, and/or shareholder loans, and/or to his ex-wife, and/or to pay to other investors to prolong his Ponzi schemes – see paras. 2625, 2666, 2667, 2672, 2673, 2678 and Schedules F and G of my trial judgment.
146The comments of A. W. Germain J. in R. v. MacMullin, 2014 A.J. No. 1202 at paras. 26-28 are particularly germane to Mr. Reeve and this trial:
26It is important in Canadian criminal law that individuals charged with crime have their trial. However here, as the Crown fought for every single conviction, the downside to Mr. MacMullin is that the Crown laid a trail of economic deceitfulness that took me numerous pages in my final judgment to describe. Day after day Mr. MacMullin would sit in the dock looking at straw buyers describing their ruined lives and economic chaos, all caused by his callous indifference and insensitivity.
27During the trial Mr. MacMullin elected to give evidence. He concluded by describing in great detail what a religious man he was, and how he was doing all of this to help these victims.
28Sometimes a trial achieves more than proof beyond a reasonable doubt. It exposes the evil embedded in the individual on trial. It strips away any suggestion that the victims here were simply Canada’s financial institutions, and removes any Robin Hood mentality of a clever individual just trying to get ahead and put deserving people in houses they could not otherwise acquire. The trial exposed Mr. MacMullin for what he is: a pathologically dishonorable, deceitful individual who cared little about who he hurt as long as it was not him who got hurt. Sometime Canadian criminal law trials do more than just prove the crime beyond a reasonable doubt, sometime they give us a window into the soul of dishonesty.
147Finally, Wagner J.’s comments in R. v. Lacasse, 2015 SCC 64, [2015] 3 SCR 1089 at paras. 57-61, and 67, outline the importance of considering an accused’s sentence as a highly individualized exercise considering the unique circumstances of a unique individual with a unique profile:
57Tariffs differ from sentencing ranges in that tariff‑based sentencing is theoretically the opposite of sentence individualization, which the ranges allow: Thomas, at p. 8. On the other hand, the principle underlying the two approaches is the same: ensuring that offenders who have committed similar crimes in similar circumstances are given similar sentences. The same is true of the starting‑point approach, which is used mainly in Alberta but sometimes also in other Canadian provinces: R. v. McDonnell, 1997 CanLII 389 (SCC), [1997] 1 S.C.R. 948, at para. 69. Ultimately, whatever mechanism or terminology is used, the principle on which it is based remains the same. Where sentencing ranges are concerned, although they are used mainly to ensure the parity of sentences, they reflect all the principles and objectives of sentencing. Sentencing ranges are nothing more than summaries of the minimum and maximum sentences imposed in the past, which serve in any given case as guides for the application of all the relevant principles and objectives. However, they should not be considered “averages”, let alone straitjackets, but should instead be seen as historical portraits for the use of sentencing judges, who must still exercise their discretion in each case:
Even when an appellate court has established a range, it may be that a fact pattern will arise, which is sufficiently dissimilar to past decisions that the “range”, as it were, must be expanded. The fundamental point is that a “range” is not a straitjacket to the exercise of discretion of a sentencing judge.
(R. v. Keepness, 2010 SKCA 69, 359 Sask. R. 34, at para. 24)
58There will always be situations that call for a sentence outside a particular range: although ensuring parity in sentencing is in itself a desirable objective, the fact that each crime is committed in unique circumstances by an offender with a unique profile cannot be disregarded. The determination of a just and appropriate sentence is a highly individualized exercise that goes beyond a purely mathematical calculation. It involves a variety of factors that are difficult to define with precision. This is why it may happen that a sentence that, on its face, falls outside a particular range, and that may never have been imposed in the past for a similar crime, is not demonstrably unfit. Once again, everything depends on the gravity of the offence, the offender’s degree of responsibility and the specific circumstances of each case. LeBel J. commented as follows on this subject:
A judge can order a sentence outside that range as long as it is in accordance with the principles and objectives of sentencing. Thus, a sentence falling outside the regular range of appropriate sentences is not necessarily unfit. Regard must be had to all the circumstances of the offence and the offender, and to the needs of the community in which the offence occurred.
(Nasogaluak, at para. 44)
59In Brutus, the Quebec Court of Appeal described the limits of the process of ensuring the similarity of sentences as follows:
[translation] There is no doubt that the sentence imposed in this case differs from certain sentences imposed in other cases for the same offence. However, as our colleague Rochon J.A. stated in Ferland v. R, 2009 QCCA 1168, with respect to the principle of parity of sentences that is set out in section 718.2(b) Cr.C., it “has some limits because of the individualized nature of the sentencing process” and cannot provide a basis for departing from the principle of deference to the trial judge’s exercise of his or her sentencing discretion (R. v. L.M., supra, at para. 35). [para. 12]
60In other words, sentencing ranges are primarily guidelines, and not hard and fast rules: Nasogaluak, at para. 44. As a result, a deviation from a sentencing range is not synonymous with an error of law or an error in principle. Sopinka J. stated this clearly in McDonnell, although he was referring in that case to categories of assault:
. . . in my view it can never be an error in principle in itself to fail to place a particular offence within a judicially created category of assault for the purposes of sentencing. . . . If the categories are defined narrowly, and deviations from the categorization are generally reversed, the discretion that should be left in the hands of the trial and sentencing judges is shifted considerably to the appellate courts. [para. 32]
61Any other conclusion would have the effect of authorizing appellate courts to create categories of offences with no real justification and accordingly intervene without deference to substitute a sentence on appeal. But the power to create categories of offences lies with Parliament, not the courts: McDonnell, at para. 33.
67Like the range itself, the categories it comprises are tools whose purpose is in part to promote parity in sentencing. However, a deviation from such a range or category is not an error in principle and cannot in itself automatically justify appellate intervention unless the sentence that is imposed departs significantly and for no reason from the contemplated sentences. Absent an error in principle, an appellate court may not vary a sentence unless the sentence is demonstrably unfit.
CONCLUSION – APPROPRIATE SENTENCE OF INCARCERATION
Conclusion – Appropriate Sentence of Incarceration
148There are no mitigating circumstances. This case presents, as previously discussed, virtually every aggravating circumstance recognized by the Criminal Code and the case law.
149It might be argued that Mr. Reeve did not conceal or destroy records.
150The counter argument is that by the fall of 2008, Mr. Reeve on many occasions did not provide copies of documentation to numerous victims – see Schedule H of my judgment. The financial crunch was on and many of these transactions were really just out and out theft – hence no documentation was provided and none needed to be or could be destroyed.
151The books were a mess as it was obvious to the bookkeepers that the investors could never be repaid and many employees left DPR in the fall of 2008. In these circumstances, there is little merit to an argument that there was a lack of destroying records, as records that should have been created did not exist and others were in disarray.
152Ms. Cremer argues that the higher sentences of fraud should be restricted to publicly held companies that hurt numerous investors and cascades into impacting the general Canadian economy. For example, in Lacroix, the accused received a 13 year sentence including the maximum sentence of 10 years for fraud over. He pled guilty to an approximate $100 million fraud affecting 9,200 investors with an impact on financial markets and the Canadian economy.
153Should I accede to this argument, I would in effect create a category of sentencing not created by the Legislature. As Justice Wagner indicated in Lacasse at para. 61, the power to create categories of offences lies with Parliament, not the courts.
154Lacasse also indicates that the particular circumstances of each offence and offender is a highly individualized exercise that goes beyond mathematical calculation. For example, a $100 million fraud on multibillionaires such as Warren Buffet or Bill Gates would have the impact of a pin prick. A $63,000 fraud on elderly Jeanette Harrop, a widow who has limited income and assets, and who was forced, due to the fraud, to pay a large income tax bill and to initially lose her old age security pension, produces devastating and ruinous consequences.
155Accordingly, I reject the defence argument that the upper sentence range of frauds is restricted to large scale frauds on publicly held companies with many investors.
156Mr. Reeve’s fraud can be summarized as follows: For purposes of greed and ego, Mr. Reeve initiated a number of Ponzi schemes and scams that lasted over a period of two and a half years. Mr. Reeve was in a trust relationship with the vast majority of the investors and the 41 core victims. Most of the victims were long-time clients and/or friends. No person was too vulnerable to be victimized. Mr. Reeve was aware of the victims’ financial and personal circumstances. He was aware of their vulnerabilities whether financial, physical, emotional or psychological. Mr. Reeve was fully aware of the devastating impact that the loss of all or most of their life savings would have on the victims. The fraud was substantial – $10-12 million. Mr. Reeve was unlicensed. He took full advantage of the high regard he had in the community and the personal trust and faith the victims had in him. There has been not a nickel in restitution. In my opinion, despite Mr. Reeve’s assurances of eventual repayment, no restitution will ever be made. The victim impact statements reveal a grim picture of victimization that is both devastating and largely permanent. The profound pain produced by Mr. Reeve’s fraud ten years ago remains as alive and vivid as when first inflicted. The presentence report reveals a man who has no empathy for these destroyed people and has no remorse.
157The community impact reports reveal that there has been a significant increase in frauds of this type in Ontario in the recent past. Parliament has increased the maximum sentence for fraud to send a message to fraudsters that Canada will not be a safe haven for criminals like Mr. Reeve.
158Like the MacMullin case, the Reeve trial allowed us to look into the soul of Mr. Reeve. What was revealed beyond any reasonable doubt was a cold, calculating and clever man who was a master of deceit and manipulation who, despite the wreckage created by his greed and criminal acts, still maintains he did nothing wrong.
159The presentence report confirms that Mr. Reeve still denies any intent to defraud the victims.
160The bottom line, therefore, is that Mr. Reeve deliberately and deviously conducted a large scale fraud of many trusting, vulnerable victims that took years to complete.
161When the fraud was done and the money was gone, many, if not most, of the victims, were left with lives of complete devastation, absolute destitution and utter despair, which in many cases continues to this day. Mr. Reeve, like a true predator, walked away, until his arrest, with absolutely no empathy or remorse for the suffering and scarring left behind.
162If that scenario does not cry out for a maximum sentence, what does?
163In the particular circumstances of this most egregious crime of fraud over $5,000, Mr. Reeve will receive the maximum sentence of 14 years’ incarceration.
ISSUE #1B – PRETRIAL CREDIT AND ENHANCED CREDIT FOR HARSH JAIL CONDITIONS
Issue #1B – Pretrial Credit and Enhanced Credit
164Mr. Reeve has been in custody on these charges since his arrest on July 26, 2012. He has spent most of his pretrial custody at the Maplehurst Correctional Complex in Milton, Ontario.
165Accordingly, as of today, June 22, 2018, Mr. Reeve has spent 5 years and 11 months in pretrial custody for a total of 71 months.
166Both counsel are agreed that he should receive a credit of 1.5 to 1 for the time spent in custody – see s. 719(3.1) of the Criminal Code and R. v. Summers, 2014 SCC 26.
167Accordingly, Mr. Reeve is to receive a pretrial custody credit of 1.5 x 71 months = 106.5 months = 8.875 years, rounded off to 8.9 years.
168In R. v. Duncan, 2016 ONCA 754, the court held at para. 6:
6On our reading of the trial judge’s reasons, we agree with counsel. The trial judge effectively held that any credit or consideration in relation to presentence incarceration was capped at the 1.5 limit. We agree with counsel that in the appropriate circumstances, particularly harsh presentence incarceration conditions can provide mitigation apart from and beyond the 1.5 credit referred to in s. 719(3.1). In considering whether any enhanced credit should be given, the court will consider both the conditions of the presentence incarceration and the impact of those conditions on the accused. In this case, there was evidence that the appellant served a considerable part of his presentence incarceration in “lockdown” conditions due to staffing issues in the correctional institution. There was, however, no evidence of any adverse effect on the appellant flowing from the locked down conditions. Indeed, some of the material filed on sentencing indicates that the appellant made positive rehabilitative steps during his presentence incarceration.
169Pursuant to Duncan, Mr. Reeve filed an affidavit describing three main complaints:
Insufficient food and inappropriate diet times.
Triple bunking due to overcrowding.
Numerous lockdown days requiring Mr. Reeve to be locked up in his cell for lengthy periods of time.
170Mr. Reeve in his affidavit indicated these conditions negatively affected him physically and mentally.
171Regarding the insufficient food and appropriate diet times, the evidence revealed that Mr. Reeve had a special diet with substitutes. He had access to a canteen. His weight fluctuated around 185 pounds which is acceptable for a man with a height of 5’9”. His main complaint was that supper was served at 3:30-4:00 p.m. and breakfast was served at 8:00 a.m.
172I find no merit in the diet/food complaint.
173More problematic are the other two complaints. Mr. Reeve was initially placed in general population for 2 years, 1 month and 21 days. There is no triple bunking in general population. Mr. Reeve was placed in protective custody for 3 years, 8 months and 25 days due to safety concerns. Jail records indicate Mr. Reeve was triple bunked for 627 days. Pictures of Mr. Reeve’s cell show a cell similar in size to a typical walk-in closet in a suburban home. Cramming three people into a cell of this size would be extremely uncomfortable. Mr. Reeve says he slept on the floor near the toilet and this was an unsanitary experience.
174Regarding lockdowns, a full lockdown means an inmate will be confined to his cell for eight hours when he normally would be in the day room. A partial lockdown means an inmate is confined for some part of eight hours when he normally would be in the day room.
175Jail records show, often due to staff shortages, Mr. Reeve was subjected to 305 occurrences of full lockdown and 141 occurrences of partial lockdowns for a total of 506 occurrences.
176Mr. Reeve says there were more – 853. However, I agree with the Crown that Mr. Reeve in his affidavit focused on the negative aspects of his incarceration and only in cross-examination was it revealed there were positive aspects to his incarceration such as being allowed out of the cell 50% of the time when there were lockdowns due to Mr. Reeve’s status as a server/cleaner in April/May 2017 (a job he “loves”) going forward.
177There is no need to decide the number of exact lockdown days. The jail records confirm at a minimum there were many, many lockdown days, many of which occurred on numerous consecutive days.
178Confining men in tiny spaces for long periods of time and triple bunking them is an inhumane form of treatment, even if Mr. Reeve is a monster, as he was described by one of the victims.
179An inmate of a jail is at the mercy of the state and is vulnerable and helpless in the face of institutional neglect and mistreatment. A society is judged by how the state treats people who have no choice but to submit to its rules and power.
180Harsh and/or brutal treatment of any individual, even of hardened criminals, diminishes us all.
181Defence counsel provided me with a number of cases where accused persons were provided with enhanced credit due to harsh jail conditions such as lockdowns – see R. v. Johnson, 2017 ONSC 3512, R. v. Ward-Jackson, 2018 ONSC 178, R. v. Jama, 2018 ONSC 1252, and R. v. Tello, 2018 ONSC 2259.
182There is no mathematical formula that is available to conveniently calculate the appropriate enhanced credit that an accused can receive due to suffering from harsh jail conditions that have negatively impacted the accused. The specific nature of the appropriate credit is left to the discretion of the sentencing court – see Tello at para. 80, Ward-Jackson at para. 52, and Jama at para. 17.
183The defence seeks a further enhanced credit of two years. The Crown seeks zero credit. I feel that a fair enhanced credit due to harsh conditions suffered by Mr. Reeve would be 1.1 years.
184Adding the 1.1 year enhanced Duncan credit to the Summers credit of 8.9 years gives Mr. Reeve a total pretrial credit of 10 years.
ISSUE #2 - RESTITUTION
Issue #2 – Restitution
185Pursuant to s. 738(1)(a) of the Criminal Code, the Crown seeks a restitution order of $20,042,314. This amount includes principal and interest payments due to the victims pursuant to the signed agreements.
186The defence agrees that a restitution order should be made but submits it should be restricted to the principal amounts actually paid by the victims to Mr. Reeve – a total of $10,887,885.
187S. 738(1)(a) requires the restitution amount to be readily ascertainable.
188The overwhelming weight of authority is that compensation orders and/or restitution orders are not civil remedies and accordingly those orders should not include a claim for interest – see R. v. Brunner, 1995 ABCA 120, 1995 A.J. No. 215 (C.A.) at para. 7, and R. v. Devgan, 1999 CanLII 2412 (ON CA), [1999] O.J. No. 1825 (C.A.) at paras. 34 and 44.
189Restitution orders however may be made, particularly in egregious circumstances such as breach of trust, even where there appears to be no likelihood of repayment – see R. v. Castro, 2010 ONCA 718 at para. 28. Inability to pay is a factor to be considered but it is not determinative – see R. v. Waxman, 2014 ONCA 256 at para. 27.
190Accordingly, although I believe there is no likelihood of repayment, I will order that restitution in the amount of $10,887,885 be paid by Mr. Reeve to the victims. This order does not include any payments of interest and the Crown’s application for interest payments to be included in the restitution is denied.
191In the unlikely event that restitution monies are paid, it shall be distributed on a proportionate basis to the amounts set out in Schedule B to these sentencing reasons.
ISSUE #3 - FINE IN LIEU OF FORFEITURE
Issue #3 – Fine in Lieu of Forfeiture
192S. 462.37(3) permits a court to impose a fine where the forfeiture of proceeds of crime is not practicable.
193The objective of this section is to deprive offenders and criminal organizations of proceeds of crime and thereby deter future crimes: see R. v. Angelis, 2016 ONCA 675 at para. 32.
194The mere fact that the property has been used cannot justify exercising the discretion to reduce the fine, especially where the property consists of cash. The fact that the offender no longer has enough money must not serve as a way to avoid the fine: R. v. Lavigne, 2006 SCC 10 at para. 32.
195S. 462.37(1) indicates that where the accused is convicted of a designated offence (Fraud Over $5,000 would be a “designated offence” as defined in s. 462.3(1)) and where the court is satisfied, on a balance of probabilities, that the subject matter is proceeds of crime within s. 462.3(1) and the designated offence was committed in relation to that property that is proceeds, the court “shall” order the property be forfeited to the Crown.
196The offender must have had possession or control of the property in question at some point – see Angelis at para. 35.
197The trial established beyond a reasonable doubt that Mr. Reeve obtained $10,887,885, set out in the restitution order, from the victims by way of fraud. These monies were in his possession and control and are proceeds of crime, which would be subject to forfeiture by the Crown pursuant to s. 462.37.
198The trial also established that the victims’ monies were transferred to third parties (approximately $2 million to his now deceased ex-wife and the rest to a variety of third parties – creditors, employees, other investors, lavish lifestyle, etc.) and the money has all been spent.
199Accordingly, pursuant to s. 462.37(3), Mr. Reeve will be fined in the amount equal to the amount defrauded from the 41 victims. The fine imposed is $10,887,885, in lieu of forfeiture, which equals the amount of the restitution order. Mr. Reeve testified he can pay it in two years once he is released from custody. I do not see how that can be done legitimately. I will give him longer.
200Pursuant to s. 462.37(4) the accused shall have ten years after the expiration of any term of imprisonment to pay the fine. In default of payment, Mr. Reeve will serve a term of imprisonment of ten years, which will be consecutive to any other term of imprisonment he is serving – see Angelis at para. 86 and Lavigne at para. 47.
201The restitution order shall take priority over 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: R. v. Waxman, 2014 ONCA 256 at para. 31.
ISSUE #4 - COMMON LAW PEACE BOND
Issue #4 – Common Law Peace Bond
202The Crown seeks a lifetime common law peace bond restricting the accused from having control over another person’s money.
203S. 380.2(1), enacted in 2011, allows for an order “prohibiting the offender from seeking, obtaining or continuing any employment or continuing any employment or being a volunteer in any capacity that involves having authority over real property, money or valuable security of another person.” The order can be for any period, including life.
204The Court of Appeal in R. v. Hooyer, (2016) 2016 ONCA 44, 332 C.C.C. 3d 97 (Ont. C.A.) at para. 49 held that this section is not retroactive and does not apply to crimes committed before November 2011 when the section was enacted.
205The Crown conceded that peace bonds involve an order for a “reasonably apprehended breach of peace” which is generally directed at actual physical violence.
206No authority was provided to me that involves a peace bond in situations such as the one under consideration.
207Accordingly, this Court is bound by Hooyer and the Crown’s application for a peace bond is denied.
ISSUE #5 - ANCILLARY ORDERS
Issue #5 – Ancillary Orders
208There will be an order that Mr. Reeve provide a sample of his DNA pursuant to s. 487.051.
209There will also be an order that Mr. Reeve be prevented, while in custody, from contacting any of the 41 victims as set out in Schedule A to these reasons, pursuant to s. 743.21.
FINAL ORDERS
Final Orders
210Mr. Reeve is sentenced to the maximum sentence of 14 years in the penitentiary for his conviction for Fraud Over $5,000. He will receive a total credit of 10 years for pretrial custody. Accordingly, Mr. Reeve is sentenced to a further four years in the federal penitentiary consecutive to any other sentences he may serve.
211There will be a restitution order in the amount of $10,887,885 as set out in Schedule B.
212There will be a fine in lieu of forfeiture in the amount of $10,887,885. Mr. Reeve will have 10 years to pay.
213In default of payment of the $10,887,885 fine in lieu of forfeiture, Mr. Reeve will serve a further term of 10 years, which will be consecutive to any other term of imprisonment he is serving.
214The restitution order shall take priority over 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. Any restitution monies paid shall be distributed on a proportionate basis to the amounts set out in Schedule B.
215Ancillary orders – Mr. Reeve will provide a sample of his DNA pursuant to s. 487.051 of the Criminal Code and shall not, while in custody, contact any of the persons listed in Schedule A, pursuant to s. 743.21 of the Criminal Code.
Skarica J.
Released: June 22, 2018
R. v. Daniel REEVE
SCHEDULE A (to an order under s. 743.21 of the Criminal Code)
Schedule A
Brad Ashman and Colleen Merrill
Eva and Jay Bernachi
Ira Bernstein
Warren Boldt
Rene and Gabriele Brossard
Glen and Sandra Brubacher
Lynette Caiger-Carnegie
Linda Chaffe
Anne Colquhoun
Brian and Diane Crozier
Barry Cunningham and Sharon Hepburn
Ron and Frieda DeKoning
Josephine DeSalvo
Lorna Eadie and Dave Hocking
Andy and Margaret Eplen
Jeanette Harrop
Kevin Hillman
Wilma Jordan
Terry Kaup
Laura Kerr
Michele and Mark Keddie
Amos and Dorothy Lichty
Steven Manuel
Sherrill Martin-Stevenson and Bob Stevenson
Pilita Masilang (Galano)
Craig Mason
Mark McGuire and Inger Aas
Cherrin Meleg
Paul and Elizabeth Meleg
Marina Ognjanoski
Gary and Deborah Raycroft
Paul and Lisa Schnarr
Doug Thiel
Wayne Schroeder
Carin and Dan Smith
Heather Gardner
Peter Steenbergen
Chin and Chun Tan
Claudette and Dave Taylor
Isaac Thiessen
Patricia Westerhout
R. v. Daniel REEVE
Schedule B
Victim Name
Investment
Principal Owing
Glen Brubacher
Plaza Hotel
$ 360,000
Rene Brossard
Emerald MET
$ 120,000
Rene Brossard
Plaza Hotel #1
$ 190,000
Rene Brossard
Plaza Hotel #2
$ 100,000
Rene Brossard
Plaza Hotel #3
$ 100,000
Wilma Jordan
Jakobstettel
$ 100,000
Pat Westerhout
MM
$ 200,000
Pat Westerhout
Breadalbane
$ 237,286
Pat Westerhout
Jakobstettel
$ 200,000
Barry Cunningham
Jakobstettel
$ 200,000
Barry Cunningham
Breadalbane
$ 450,000
Josephine DeSalvo
Jakobstettel
$ 200,000
Josephine DeSalvo
Breadalbane
Heather Gardner
Jakobstettel
$ 200,000
Heather Gardner
Plaza
$ 200,000
Heather Gardner
Breadalbane
$ 375,000
Amos Lichty
Plaza
$ 100,000
Anne Colquhoun
Jakobstettel
$ 60,000
Anne Colquhoun
Plaza
$ 200,000
Anne Colquhoun
Bayfield
$ 200,000
Laura Kerr
Plaza
$ 97,000
Chin Tan
Plaza
$ 200,000
Claudette Taylor
Jakobstettel
$ 300,000
Claudette Taylor
Plaza
$ 400,000
Brad Ashman
MM
$ 130,000
Eva Bernachi
Jakobstettel
$ 305,469
Eva Bernachi
$ 200,000
Ira Bernstein
Breadalbane
$ 507,126
Ira Bernstein
Breadalbane
$ 189,698
Warren Boldt
Breadalbane
$ 300,000
Robert and Lynette Caiger
MM
$ 100,000
Linda Chaffe
MM
$ 64,996
Brian Crozier
Breadalbane
$ 166,325
Ron DeKoning
Breadalbane
$ 237,961
Lorna Eadie/David Hocking
Breadalbane
$ 300,000
Andrew Eplen
MM
$ 111,978
Pilita Galano
MM
$ 74,000
Jeanette Harrop
MM
$ 62,714
Kevin Hillman
MM
$ 51,031
Terry Kaup
Jakobstettel
$ 100,000
Mark and Michelle Keddie
MM
$ 97,691
Mark and Michelle Keddie
Breadalbane
$ 150,000
Steve Manuel
MM
$ 50,000
Craig Mason
Jakobstettel
$ 143,378
Mark McGuire
Breadalbane
$ 169,590
Mark McGuire (Inger Aas)
Jakobstettel
$ 171,932
Mark McGuire
MM
$ 173,736
Cherrin Meleg
MM
$ 43,337
Paul Meleg
Breadalbane
$ 200,000
Paul (Elizabeth) Meleg
MM
$ 68,676
Marina Ognjanovski
Jakobstettel
$ 400,000
Gary and Deborah Raycroft
Jakobstettel
$ 100,000
Gary and Deborah Raycroft
Jakobstettel
$ 100,000
Gary and Deborah Raycroft
MM
$ 250,000
Lisa and Paul Schnarr
MM
$ 75,000
Wayne Schroeder
Jakobstettel
$ 59,524
Carin and Dan Smith
MM
$ 70,000
Peter Steenbergen
MM
$ 250,000
Peter Steenbergen
MM
$ 249,437
Peter Steenbergen
Jakobstettel
$ 50,000
Sherrill Martin-Stevenson
MM
$ 75,000
Doug Thiel
Breadalbane
$ 200,000
Isaac Thiessen
MM
$ 50,000
Total:
$10,887,885.00
COURT FILE NO.: CR-13-8029
DATE: 2018-06-22
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Her Majesty the Queen
- and -
Daniel Reeve
REASONS FOR SENTENCE
TS
Released: June 22, 2018
