Court File and Parties

Court File No.: 15-5174 Date: 2018/06/27 Ontario Superior Court of Justice

Between: Her Majesty the Queen And: Scott Reeves, Accused

Counsel: J. Vincelli, for the Crown J. Erickson, for the Defendant

Heard: April 27 and June 12, 2018

Reasons for Sentence

A.J. Goodman J.

[1] On October 18, 2017, Scott Reeves (“Reeves”) plead guilty to one count of fraud over $5000.00 pursuant to section 380(1) of the Criminal Code. The count alleged that between January 1, 2002 and June 30, 2014, at the City of Hamilton, he unlawfully defrauded Donna Aiken, Rachel Reeves, Gayle Meehan and Peter Vignjevic of money exceeding $5000.00 contrary to s. 380(1) of the Criminal Code.

[2] For a variety of reasons, including a change of defence counsel post-plea along with the defence request for a lengthy adjournment in order to complete medical reports and/or a psychiatric assessment, submissions from counsel on sentencing were not completed until June 12, 2018.

Background

[3] The circumstances of the offence have been laid out in the agreed statement of fact and the forensic accounting report filed as Exhibits 1 and 2 in this proceeding:

Reeves has been a long time resident of Hamilton. For the last 25 years he has provided a broad range of financial services to clients in Hamilton and surrounding communities.

Peter Vignjevic (“Vignjevic”) and Reeves have known each other for over 25 years and the two were friends. In 2006, Reeves advised Vignjevic that he should invest money with Guaranteed Investment Certificates (“GIC”s) and stocks that would yield higher rates of return. Reeves told Vignjevic that the investments were with CIBC Global Asset Management Inc., and that he should write the cheques to CIBC. Over the next 8 years, Vignjevic wrote a number of cheques to CIBC.

In 2008, Reeves advised Vignjevic that he should request redemptions from his mutual fund investments, and then re-invest the money into GICs and stocks that would yield a higher rate of return. Scott told Peter that he would facilitate the redemptions through Reeves Financial Services Inc. He then asked Peter to sign a document that would allow Reeves Financial Services to obtain the requested redemptions from FundEX, the primary mutual fund dealer. He also requested the redemptions to be electronically transferred directly into the account specified by Vignjevic. FundEX processed the redemption requests. A void cheque that accompanied the redemption requests were not from Vignjevic’s corporate or personal accounts with Scotiabank, but rather from an HSBC account. Vignjevic’s corporate letterhead had been printed on the cheque; however the account did not belong to him. Vignjevic continued to provide cheques to Reeves for what he believed were investments.

When Vignjevic heard that Reeves Financial Inc. was declaring bankruptcy, he began to worry about the safety of his investments. He started emailing Reeves and calling him to check on the status of his investments. Reeves would respond late with emails stating everything was ok with his investments but he would never return any of Peter’s phone calls. Vignjevic then contacted the CIBC where he believed a bulk of his investments were with as he had received portfolio summaries from CIBC. CIBC advised Vignjevic that he was never a client nor did he have any investments with them. He then contacted the Canada Western Bank who advised him that the Adroit documents that were in his possession were fraudulent and he was not a client.

During the investigation, Vignjevic told the detective that he has never banked with HSBC. Vignjevic believed his money was being properly invested for future financial security. Instead, Reeves took advantage of his friend by taking his money and using it to pay for business and personal expenses. The loss to Vignjevic exceeded $2 Million.

Rachel Reeves (“Rachel”) is the niece of the accused. In 2009, Rachel received an inheritance from the death of her mother as well as an inheritance from her grandmother. At that time Rachel was 18 years old. Rachel, through her uncle invested the inheritance money with segregated funds through Standard Life. In 2013, Reeves advised his niece that she should redeem her investments with Standard Life and place them into GIC’s as they would have a higher return rate. Rachel agreed and her money was redeemed through electronic transfer of funds directly into her CIBC chequing account. Rachel then began writing a series of cheques to Reeves Financial Advisors and Reeves Portfolio Management. Reeves received all these cheques.

In April 2014, Rachel asked her uncle for a transfer of money from her GIC investments. He usually responded quickly with a response; however she did not receive any response from him for well over a week. Reeves finally responded on May 12, 2014 asking Rachel for her bank account information so that the redemption could be electronically transferred. Rachel became suspicious of Reeves activities and decided to investigate where her money was. She had never received any portfolio summary and had no idea what her uncle had done with her money. Rachel later learned that her uncle had been arrested for fraud. Rachel trusted her uncle would invest her inheritance money in low risk investments for her future. Reeves took the money from his niece without any intent to purchase investments for her leaving her with nothing for her future. Her loss was $180,500.00.

Donna Aiken (“Aiken”) met Reeves in 2003 when he brought his dog to Aiken for professional dog grooming. Reeves began to regularly bring his dog to Aiken and in 2007 Aiken began investing with Reeves. Aiken had received a series of inheritances. In 2007, Aiken began a series of investments with Reeves in low risk investments. Reeves began investing Aiken’s money with segregated funds and mutual funds. In 2011, Reeves advised Aiken that she should redeem her initial investments and place them into GIC’s. She agreed and began redeeming her investments and she wrote a series of cheques to Reeves Financial Services and Infinita Capital Management, both of which are Reeves’ corporations.

In April 2014, Aiken became suspicious with where her money was invested as she had requested a redemption of $3,000.00. Reeves delayed answering her with numerous excuses. Aiken’s suspicions increased as she then requested Reeves move her money to Nesbitt Burns and he again delayed answering her with numerous excuses. When Aiken requested a portfolio summary of her investments, Reeves provided a document which listed certain credit unions or entitles and the document purported to show as of March 31, 2014, a total value of her investments as $321,661.45.

Aiken contacted Meridian Credit Union and they advised her she was not a client and did not hold any investments. Investigators sent the portfolio summary to each of the Credit Unions listed for verification. Investigators were able to determine the cheques had been deposited into a business account with HSBC Bank Canada and the CIBC accounts belonging to Reeves. An examination by investigators reveal the money given by Aiken to Reeves was not used to purchase any GIC investments but rather used by him for personal use or as business expenses. Aiken gave Reeves her life savings and trusted him to invest her money in extremely low risk investments so that she would have money in her retirement. Aiken has not received any of her money back from Reeves and her losses total $378,000.00.

Gayle Meehan (“Meehan”) is a long-time family friend of Reeves. For the past 20 years Meehan has trusted Reeves to be her financial advisor. Meehan asked Reeves to invest most of her money in low risk mutual funds. In the 2008 financial crisis, Meehan’s investments lost a significant portion of their value. In March 2009 Meehan decided to move her investments from mutual funds to low risk GIC’s. Reeves said that his DBS could purchase GIC’S for Meehan and get a better interest rate than if she purchased them herself directly from the Credit Unions.

Between March 2009 and July 2011 Meehan redeemed her mutual funds and wrote 18 cheques to Reeves Financial Services. Each of the cheques were given to Reeves personally and in return for the cheques Reeves provided Meehan with signed receipts that indicated that the funds were for the purchase of GIC’S in various Credit Unions. Reeves did not purchase the GIC’S as indicated on each of the receipts. Instead he deposited all 18 cheques into the general HSBC account for Reeves Financial Services Incorporated. The money was used to pay for the company’s expenses and his personal expenses. As each of the GIC’S maturity date occurred Reeves told Meehan that she was still getting a great interest rate and said that she should roll them over for reinvestment. Meehan accepted Reeves’ advice and did not attempt to redeem her GIC’S.

In February 2014, Meehan began requesting tax documents from Reeves as she was preparing her 2013 taxes. On May 14th, 2014 Reeves provided Meehan with a Canadian Revenue Agency (CRA) RSP tax receipt for $12,000 from the Fort Erie Credit Union. Meehan believed the tax receipt was authentic and submitted it with her 2013 Tax Return. Towards the end of May 2014, she contacted Fort Erie Credit Union seeking redemption from her GIC investments to purchase a motor vehicle. She was advised by Fort Erie Credit Union that they have no record of her as a client holding any GIC investments. Meehan became suspicious and advised the credit union that she had received a tax receipt. Meehan forwarded a copy of the tax receipt to the attention of the Credit Union. Upon receipt of the document, Meehan was advised that the document was fraudulent and the signature was forged. All indicated Meehan was not a client with GICs. All cheques written by Meehan to Reeves Financial Services were deposited into the HSBC account. An examination of this account by investigators reveal the money given by Meehan to Reeves was not used to purchase any GIC investments but rather used by Reeves for personal use or as business expenses for Reeves Financial Services.

Meehan gave Reeves her life savings and trusted him to invest her money in extremely low risk investments so that she would have money in her retirement. Reeves took her money and left Meehan destitute in retirement. Her losses totals $299,000.00

On June 9, 2014 Reeves Financial Services Inc. was deemed to be Bankrupt. There is an outstanding civil action against Reeves.

Positions of the Parties

[4] Mr. Vincelli, on behalf of the Crown, submits that the circumstances of this case warrant a significant period of incarceration. The Crown describes the defendant as an incorrigible fraud artist with little prospects of rehabilitation. General deterrence and denunciation are paramount in this case.

[5] Crown counsel seeks a sentence of five years based on the factors as outlined in the Criminal Code including the numerous aggravating factors that arise from the defendant’s conduct during the course of this large scale fraud. The Crown also seeks various ancillary relief including an order pursuant to s. 462.37 of the Code.

[6] Mr. Erickson for the defence, seeks a sentence of two years less a day to be served conditionally in the community plus a period of lengthy probation. Mr. Erickson submits that the proposed sentence would satisfy the interests of justice and provide an opportunity for Reeves to work on repaying back the losses suffered by his victims and will assist his client in being able to deal with his underlying mental health issues and familial obligations. In the alternative, counsel proposes a sentence of 18 months jail with probation should a conditional sentence not be deemed appropriate. Mr. Erickson did not voice any opposition to any ancillary relief sought by the prosecution. [1]

Victim Impact Statements

[7] All of the victims in this case presented Victim Impact Statements (“VIS”). Briefly, I have captured some of the essence of their respective statements in these Reasons as noted hereunder.

Gayle Meehan states that “...I wake up to realize that everything I worked for is gone. I was planning my retirement when I discovered that Scott Reeves had stolen my money and no matter how hard I work there is not enough time to earn it back. Three years later I am still working despite constant pain in my hips and shoulders from standing on concrete and repetitive lifting. I have Meniere’s Disease and the stress is causing damage to my hearing. Should my health get worse, I have no life partner to support me and my children do not live close and must work themselves. …I can longer afford a retirement home and will have to wait for a place in subsidized care. I have known Scott for close to thirty years first as a friend of my daughter and I believed a friend of the family, always welcome in my home. Scott has not only robbed me of my money and health but has also stolen what little future I have left… Any dreams of a better future are gone and the possibility of retirement nothing more than a fantasy. For the first time in my life I cannot afford to have a pet. Some days I wonder why I should even bother to get out of bed”.

Aiken says that “I am 66 years old. I own and operate (on my own) a dog grooming business.... I met Scott Reeves when he began bringing his dog to me for grooming. He was a client of mine for many years up until I realized he had defrauded me of my savings. When I received gift and inheritance money from my family. I invested the funds with Scott. He had the qualifications and all my investments were to be in low risk – safe funds based on my stated lack of knowledge and experience in investment alternatives. Shortly after my husband passed, Scott told me my investments were not doing well and he convinced me to move all of them… My lack of investment experience, the trust I placed in Scott's guidance, and the belief my investments were secured by Fundex made me a target for Scott to get the funds he needed to cover business and personal expenses… The fact Scott defrauded me of my savings within six months of my husband's death showed a lack of empathy for what I had gone through and an obvious lack of concern for how his actions of greed and entitlement would affect my future... In summary, my physical and mental health has been impacted to the degree I can no longer enjoy life in the manner I had planned for and hoped for”.

Rachel discusses the impact on her and the fact that Reeves was her uncle. It was a betrayal to her family and late mother and grandparent when Reeves squandered her entire inheritance.

Vignjevic says that “while Scott Reeves pled guilty to stealing $2.5 million from me, he in fact, stole much more. This theft occurred over more than a decade, month after month. … Ten years ago, I came to Scott when I was thinking of working less. I had worked extremely hard since the day I graduated - I didn't even take any time off after my residency, starting work the day after residency ended. .. He knew that he had depleted most of my personal and corporate savings by then. He sat across a table from me, looked me in the eye and told me to work less, when he knew that everything he was basing his recommendations on was a lie… He tricked me into borrowing almost one million dollars from my life insurance policy to fund my new office and equipment. That insurance policy was supposed to help me in my hour of need, and has now been decimated… Scott knew that I have always had issues with trust. This mistrust made me suspicious of big banks and stand-alone investment advisors. But Scott gained my trust. He pretended to be a decent, honest and upstanding businessperson in the Hamilton community… I trusted Scott and Fundex to give me honest and fair advice that would be in my best interests. ...Scott bought me a very generous present to congratulate me on my new office – two brand new big screen televisions for my office waiting room to entertain my patients – that I likely paid for myself. How premeditated and terrible to use your victims own money to gain even more of their trust? I had always respected Scott because I believed that he was an upstanding member of the community. I knew that he supported many local charities. Can you imagine my shock after reading the forensic accounting report to realize that it was my money that funded his philanthropic donations? ... After the major fraud was revealed I found it extremely difficult to trust anyone, including people who were trying to help me. I felt like I couldn't trust financial institutions either, as Fundex had let me down. .. Scott tried to take away my business, my career, my home and my life. He tried to leave me with nothing… Can you imagine thinking that you have lost everything, including your home and then going from neighborhood to neighborhood, looking at apartments, just wondering which apartment, if any, you could even afford… Scott, knew that I have always battled anxiety. I had always stressed to him my fear of dying alone, with no family there to help me, and that the only way that I could try to protect myself was to set aside a nest egg to be able to pay to have someone to take care of me, when I could no longer take care of myself… Scott has changed my life forever. Even if I were to get every penny back, Scott has scarred me. My anxiety has reached new levels that I never had before, and I don't know if it will ever get better… He has pled guilty to stealing $2.5 million from me, but, he in fact, stole much more… Scott never said that he was sorry, despite several opportunities to do so… Even as the walls were coming down crashing around him, he still persisted with his lies and denials, and never once was honest with me, or acted in a sympathetic fashion. I have been waiting over three years to hear a sympathetic word from Scott Reeves and Fundex… What may hurt more than anything else is the fact that Scott carefully selected us, his victims. We were rich and poor, men and women but what made it even worse was that we were all family members, or people that he had known for extended periods of time”.

Circumstances of the Offender

[8] The defendant did not seek a pre-sentence report. He did not testify during the sentencing hearing. The only source of information as to the defendant’s background and other relevant details was provided by Dr. J. Gojer, a forensic psychiatrist. During his testimony, Dr. Gojer provided a diagnosis related to Reeves’ mental health. Certain segments of Dr. Gojer’s evidence are reproduced below:

Mr. Reeves said that he first went to his family doctor in 2004, who prescribed him an antidepressant drug, Paxil in a dose of 40 mgs a day. He took this regularly and continued on it for about four years. His depression continued and the medication was changed to Effexor XR 225 mg and he took this for about a year.

In 2009 he started seeing a psychiatrist, Dr. Stanley Dzuirdzy. He noted that Dr. Dzuirdzy did not provide any psychotherapy and that he was simply interested in trying different medications and altering their doses. Mr. Reeves was tried on Cymbalta, Wellbutrin and Cipralex. He said that the medications would take care of his panic attacks, but they also made him feel “grandiose, more agitated, more compulsive, worsening insomnia, and a carefree attitude.” He said that he believed he could expand his business and he also believed that there was “no way” he could fail. He felt invincible.

The medication was changed to Cymbalta 90 mg sometime in 2009 and this was increased to 120 mg over time. From 2009 he said that he became very impulsive and irritable. He received three speeding tickets in a short amount of time, and he fired people at work impulsively. He was started on Wellbutrin XL 150 mg, in conjunction with the Cymbalta 90 mg by Dr. Dzuirdzy in January of 2010 and this was maintained for a year. His Wellbutrin was increased to 300 mg in conjunction to the Cymbalta 90 mg. Mr. Reeves said that he continued to feel “invincible” and also noted that he was having decreased sleep. He said, “the more invincible I felt, the more money I would take, and he noted that he became less cautious about how he went about investing the money because he believed he could not get caught. He said the medications “took away all my inhibitions.”

The Cymbalta was discontinued in May of 2011 as he felt it was not helping and Dr. Dzuirdzy continued to prescribe the Wellbutrin and his dose was increased from 150 mg to 600 mg in September of 2011 (this is an unusual dose that is not normally prescribed). This dose of Wellbutrin was maintained until September of 2014. Cipralex was added in October 2011 in a dose of 10 mg a day for one year, and then increased to 60 mg in October of 2012 until September of 2014 (this too is an unusually high dose not normally prescribed). Mr. Reeves said that throughout all these dose and medication adjustments, he continued to feel depressed yet “grandiose,” stating that the some of the medications “curbed my impulse control but then I would still feel depressed.”

He also started seeing Dr. Doupe at this time. He has been having individual therapy to address his emotions, memories and experiences at the time of his sexual abuse, his offending behavior and his depression. He feels he has benefitted from the therapy and is better in mood.

In April of 2018, Dr. Doupe conducted GeneSight DNA testing and his psychotropic results indicated that most of the medications he had been tried on or taking fell under the “Use with Increased Caution and With More Frequent Monitoring” category. He said that he believes that his depression and the use of medications that did not help and caused side effects worsened an already bad situation.

Mr. Reeves father, Mr. William Reeves, lives in a long-term care facility and is 84 years old. He has advanced Alzheimer’s and was diagnosed about 7 years ago. Scott is the only child his father recognizes. He described his father as a hard worker and said that, growing up, he viewed him as a role model and father figure.

Mr. Reeves mother, Ms. Margerie Reeves, lives alone in Burlington. He said he has a good relationship with her and he takes her for all of her errands, as she does not drive. She is dependent on him for most things. She has congestive heart failure and a weak knee.

At the age of 10 years he was sexually abused by a male babysitter who was about 16 years old. He said that it happened on a few occasions (5) in a span of five months, until the babysitter moved away. He said that he did not understand what was happening at the time. There was no penetration and it did not escalate to more than rubbing and ejaculating. The babysitter told him that this was their secret and that Mr. Reeves would get into a lot of trouble if he told anyone. Had the boy not moved away, Mr. Reeves believes the abuse could have continued, though he added that he avoided the male “at all costs.” He did not tell anyone about this abuse until he started seeing Dr. Doupe in October of 2017. He said that at the time of the abuse, he was very upset, and was fearful of telling on the male. He recognized at that time that what was happening to him was not normal but he could not explain it to himself. It left him feeling confused and angry. He recalls being anxious every time the male came to the house.

He had a good high school experience and he was on the student council and debate team. He was an above average student, receiving grades in the 80s. He left high school one credit shy of graduating because he came out as gay to his best friend, Michael and was shunned by his friends. He said that he felt “shame and there was a lack of community.”

He dated casually throughout his early and mid-twenties and in 1999, at the age of 28 years, he met his partner, Glen Brunetti in an online chat room. Glen was 30 years old at the time. They started living together in 2003 and they have been together since.

Mr. Reeves said that he and Glen have a very good relationship and he described Glen as “positive and supportive. He is a great guy. He is my best friend.” Glen has been very supportive since the charges. He also said that Glen’s family has been a tremendous support both emotionally and financially.

He has high blood pressure and takes Coversyl 8/2.5mg. He also suffers from Acid Reflux and takes Pantoloc. He used to have cluster migraines and he was started on Elavil 20 mg in October of 2013 by Dr. Dzuirdzy. It was increased to 40 mg in December of 2013 and he has not had any migraines since. His current medication are: Elavil 40 mg daily, Zoloft (sertraline) 200 mg daily, Buspirone 90 mg daily, Clonazepam 1mg daily and Latuda 60 mg daily

He has lost consciousness on one occasion, during his suicide attempt in September of 2014. He was unconscious for two days. He has not had any other major injuries, accidents or surgeries.

After experiencing a panic attack in 2004, he went to his family doctor who prescribed the antidepressant, Paxil. He stopped using alcohol at this time. He took the Paxil regularly for four years. His family doctor then prescribed the antidepressant Effexor XR 225 mg.

He has seen a psychiatrist, Dr. Youseff Slataroff since 2015 and he continues to see him today. He said that Dr. Slataroff initially diagnosed him with a Bipolar disorder but has since changed his mind and has diagnosed him with a Major Depressive Disorder and an Anxiety Disorder. Dr. Slataroff monitors his medications and he has been seeing Dr. Doupe since October of 2017 for counselling.

Mr. Reeves presented on time for the scheduled assessment. He was anxious and somewhat depressed during the interview process. He maintained good eye contact. His speech was normal in rate and volume. There were no evident psychomotor abnormalities. His thought form was goal directed and there was no evidence of thought blocking or disorganization. There were no overt delusions. He was not responding to internal stimuli and did not report any hallucinations. His insight and judgment were fair.

Mr. Reeves gives a complicated history. He reports a history of being sexually abused in his childhood. Memories of this trauma were triggered when he saw a client of his having child pornography on his computer.

I see him as suffering from Complex Trauma associated with a Persistent Depressive Disorder. The triggered negative memories and attendant emotions and anger towards his perpetrator were redirected to the client and he assuaged his anger by deliberately defrauding the client. As time went by, he found that his defrauding behavior persisted and extended to other clients.

During this time, he was being treated for a Depressive illness with medications that were in doses significantly above the recommend therapeutic quantity and in non­recommended combinations. There is a strong possibility that these medications in their dosage and combinations caused side effects in the form of agitation and some manic like symptoms. Another complicating factor is the presence of a severe obstructive sleep apnea.

Mr. Reeves should continue to address his trauma in therapy. He should seek out a consultation from a specialized Mood Disorders Clinic at CAMH, the Toronto Western Hospital or at the McMaster Mood Disorders Program to optimize treatment of his depression.

Case Law

[9] I have been provided with cases from counsel on the issue of the appropriate sentence to be imposed although the law is clear that each case turns on its own specific facts.

[10] In R. v. Palantzas, [2009] O.J. No. 3862 (S.C.), Trafford J. did not accept the joint position for a reformatory range sentence and imposed a term of four years’ incarceration. The accused was a bank manager for TD Bank. He was in a trust position and pleaded guilty of defrauding the bank of $819,000.00 over the course of seven years. There was no chance of recovery of monies. The accused had no prior record and waived the preliminary inquiry.

[11] In R. v. Banks, 2010 ONCJ 339, [2010] O.J. No. 3550 (C.J.) the accused pleaded guilty to fraud where the amount involved was $1.4 million taken from 18 of his clients’ investments. The accused was sentenced to four years in prison.

[12] In R. v. Thiboutot, 2017 QCCQ 327, the accused was found guilty of 10 counts of fraud of an amount of $896,150.00. The court found that he abused his clients promising great returns on investments. The accused was sentenced to 42 months incarceration.

[13] In a prosecution quite similar to the fact pattern here, the case of R. v. Scribnock, 2017 ONSC 1716, was provided by the Crown attorney. The accused pled guilty to 19 fraud counts. The total amount of the loss as a result of the fraud was $2.8 million. The accused had no criminal record. The judge found that the fraud was egregious and the impact on the victims was severe. The accused was sentenced to seven years in jail along with a fine in lieu of forfeiture order. The range of sentence for cases furnished by the Crown for large scale frauds ranged from 5.5 years to 11 years, while cases proffered by defence counsel ranged from two to six years. I note Maranger J.’s reference to various relevant case law found at paras. 15 and 16 of his decision.

[14] I have also taken into consideration the review of the relevant jurisprudence considered by my colleague Gilmore J., in the case of R. v. Schoer, [2016] O.J. NO. 764. In Schoer, the accused did not have a prior record. The sentence was imposed after trial and both counsel were not far off in the proposed range of imprisonment although there was opposition to the s. 462.37 order. The accused was sentenced to four years imprisonment along with restitution and a fine in lieu of forfeiture order.

[15] A careful review of these and other cases to the extent I can find similarities to the case before me does assist me in determining the appropriate range for the sentence to be imposed.

[16] I appreciate that the range of sentence varies considerably. I can only conclude that the range of penalty is very broad. I must take into account the particular circumstances of each case and of the offender in order to discharge my function as a sentencing judge. Indeed, it is a highly individualized process.

[17] Before I turn to my consideration of the appropriate sentence to be imposed, a brief mention of the case of R. v. Angelis 2016 ONCA 675, [2016] O.J. No. 4735 (C.A) is warranted.

[18] Clearly, the statutory objectives underpinning the discretion of s. 462.37(3) are to deprive the offender of the proceeds of his crime; and to deter the offender from future crime by showing that “crime does not pay”. In Angelis, the Court of Appeal overturned the trial judge’s discretion not to order a fine in lieu of forfeiture. The court had occasion to consider the provisions found in the Part XII.2 of the Code in relation to various sentencing principles. Watt J.A. held at paras. 50-53:

First, the imposition of a fine in lieu of forfeiture is not punishment imposed upon an offender: R. v. Khatchatourov, 2014 ONCA 464, 313 C.C.C. (3d) 94, at paras. 55-56. Nor is it part of the global sentence imposed upon an offender despite its inclusion in the definition of "sentence" in s. 673 of the Criminal Code for appeal purposes: Dritsas, at para. 56. Subsequent imprisonment for failure to pay the fine in lieu of forfeiture is an enforcement mechanism to encourage payment by those with the resources to do so: R. v. Bourque (2005), 193 C.C.C. (3d) 485 (Ont. C.A.), at para. 20; Khatchatourov, at para. 56.

Second, since imposition of a fine in lieu of forfeiture is not part of the global sentence imposed on an offender, it is not to be consolidated with sentencing on a totality approach: R. v. Craig, 2009 SCC 23, [2009] 1 S.C.R. 762, at para. 34. Totality is a principle of sentence the purpose of which is to ensure that the total sentence imposed does not extinguish the rehabilitative potential of the offender.

Third, the sentencing provisions of the Criminal Code distinguish between sanctions that involve imprisonment and those that do not do so. Deprivation of an offender's liberty is qualitatively different from other sanctions. And so it is that forfeiture orders, or fines in lieu, must not be considered interdependently with general sentencing principles: Craig, at para. 37.

Fourth, the sufficiency of the carceral component of a sentence to satisfy the applicable sentencing objectives and principles cannot justify refusal to order payment of a fine in lieu of forfeiture where the conditions for its imposition have been established: Dwyer, at para. 18; Lavigne, at paras. 25-26.

[19] In considering the interplay between rehabilitation and the provisions in Part. XII.2 of the Code, at paras. 56-59, Watt J.A. explained:

First, assistance in rehabilitating an offender is an objective of sentencing under s. 718 (d) of the Criminal Code. Sentencing is punishment. Imposition of a fine in lieu of forfeiture is not regarded as punishment, thus the general statutory provisions of Part XXIII including the objectives in s. 718, have no say in exercising the limited discretion to refuse to impose a fine in lieu of forfeiture.

Second, at the risk of saying the same thing in a slightly different way, the general sentencing provisions have limited application to forfeiture proceedings under Part XII.2. Their application is co-extensive with their compatibility with the specific provisions of Part XII.2. Assistance in rehabilitation is not compatible with provisions which have as their objective depriving an offender of the proceeds of crime by making him or her pay their monetary equivalent.

Third, to consider assistance in rehabilitation as a factor in deciding whether to order a fine in lieu of forfeiture is to adopt the interdependent or totality approach to sentencing and forfeiture expressly rejected in Craig.

Fourth, the totality principle in sentencing seeks to ensure, in the case of terms of imprisonment to be served consecutively, that the total sentence does not extinguish any realistic rehabilitative prospects of an offender. This link to rehabilitation extinguishes the influence of this principle on the fine in lieu of forfeiture decision.

[20] In addressing the offender’s ability (or inability) to pay the amounts, Watt J.A. addressed this question at para. 81:

It is well-settled that ability to pay may not be considered either in deciding to impose a fine in lieu of forfeiture or in determining the amount of the fine: Lavigne, at paras. 1; 48; and 52. However, ability to pay is a factor to be considered in determining the time within which the fine is to be paid: Lavigne, at para. 52.84

Analysis

[21] This court, or any court, is guided by the principles of sentencing as set out in s. 718 to 718.2 of the Criminal Code. As directed by s. 718 of the Criminal Code, the fundamental purpose of sentencing is to contribute to respect for the law and the maintenance of a just, peaceful, and safe society by imposing sanctions that reflect enumerated objectives. The objectives relevant to this case are a denunciation of the unlawful conduct, deterrence of other potential offenders, specific deterrence and rehabilitation of Reeves.

[22] It is important to impose a sentence that promotes a sense of responsibility in offenders, and an acknowledgment of the harm done to victims and to the community. The sentence must be proportionate to the gravity of the offence and the degree of the responsibility of the offender. The circumstances of the offence and of the offender must be analyzed.

[23] Section 718.2 addresses the principles of totality, parity, and the principle of restraint among other factors. Section 718.2 also addresses specific aggravating and mitigating factors that shall be taken into consideration based on those enumerated principles. However, I have not neglected to consider all of the other principles listed in s. 718 and that part of the sentencing regime of the Criminal Code including rehabilitation.

[24] In particular, I must consider the principles found in s. 380.1, and 380.3 of the Code. In conjunction with this provision, Crown counsel submits that consideration be given to various factors including the nature of the offence, its magnitude, complexity and duration; the significant impact of the fraud on the victims given their personal circumstances, including their age, health and financial situations, and non-compliance with a licensing requirement that is normally applicable to the regulatory activity or conduct.

Aggravating Factors

[25] In addressing the s. 380.1 statutorily aggravating factors, the magnitude or value of the fraudulent activity here exceeded $1 million and invokes s. 380.1 (1.1). Indeed, this was large scale fraud, the loss totaling $3,124,453.00.

[26] In terms of complexity, while not the most sophisticated fraudulent scheme, its ease of accomplishment was exacerbated by the fact that the various victims were either friends, acquaintances, relatives, or otherwise connected to the accused apart from their original client investments, all of whom trusted the accused. They relied on him for advice and assurances that their money was secure. Reeves repeatedly having to convince those who trusted him that he was not stealing from them and that they still retained their money. False statements of investment assets and rates of return on those nonexistent assets were generated on a regular basis, yet relied upon as genuine. These false statements of clients’ holdings looked legitimate.

[27] Reeves altered the banking information on the void cheque(s) so that the redemption funds went to a different bank and into his direct account. When the clients ultimately demanded an explanation of status or location of their funds, Reeves sent out e-mails blaming redemption delays on problems ranging from the mutual fund processor’s new payment system to a computer virus to illness of both himself and his dog.

[28] The fraud against Vignjevic became more sophisticated when the victim was induced to have him part with his mutual fund investments held through FundEX. A two-step process was required to separate the victim from his money. FundEX would only pay redemptions directly to the client and so Reeves engaged in behaviour to gain control of the client’s funds. He had Vignjevic give him a void cheque ostensibly so FundEX would purportedly know where to place the redemption monies.

[29] In respect of duration, the fraud on Vignjevic can be documented from January 2007, a period of over seven years. Meehan’s deposits of $279,000 were siphoned off as they were made, a duration of five years. Rachel’s initial inheritance of $30,000.00 was placed with her uncle in May, 2010 and was also siphoned off as soon as it was made. Her subsequent inheritance of October 2013 in the amount of $100,000.00 was likewise immediately diverted. The fraud against his niece was over four years in duration. Aiken invested life insurance proceeds of $206,000.00 in March through June, 2013.

[30] Section 380.1(1)(c.1) provides that the Court shall consider as an aggravating circumstance whether the offence had a significant impact on the victims given their age, health and financial situation.

[31] Rachel at age 26 is the youngest victim. She trusted her uncle with the monies she inherited upon the death of her mother and grandparents. She is deeply troubled at having lost their money. Aiken is 66 years old, widowed, and has a son in the US stricken with terminal cancer. She cannot now afford to visit him because of Reeves. She is a dog groomer by trade, a pursuit for which her aging body is no longer suited. The loss of her $206,200.00 has been devastating to her health and her financial situation. Meehan is 69. She still cleans houses for a living, and had cleaned Reeves’ house for a time. At her age she would like to stop cleaning houses but now cannot afford to. Her mental and physical health has suffered greatly. She is financially ruined. She cannot make up the $279,000.00 taken from her.

[32] Last, but certainly not least, 50 year old dermatologist Dr. Vignjevic may be in the best position to replace some of his loses. However, his financial loss of over $ 2.5 million is by far the largest sustained by any of the victims and it will take many years to replace. The only way for Vignjevic to make up the loss is to continue working long past the date at which he planned to retire. Yet, the significant breach of the trust relationship between the accused and the victim, the direct and indirect impact of Reeves’ actions on this individual, as so amply and poignantly expressed in his VIS, will be felt for years to come, and goes well beyond any monetary or economic loss.

[33] Reeves was a member of and subject to the rules and discipline of the Mutual Fund Dealers Association of Canada (MFDA), a national self-regulatory organization for the distribution side of the mutual fund industry. I note that Reeves did not comply with a licensing requirement, or professional standards, that are normally applicable to the activity or conduct that forms the subject matter of this offence.

Mitigating Factors

[34] Turning to the mitigating factors, Reeves does not have any prior criminal record and he is a first time offender with no other deleterious antecedents.

[35] In his comments to me, Reeves expressed some remorse and apologized for his actions.

[36] Reeves pleaded guilty to the one count of fraud over $5000.00. Generally speaking, I treat a guilty plea as a significant mitigating factor in sentencing. It demonstrates remorse and acceptance of responsibility by the offender for the harm done to the victim(s) and the community.

[37] However, the guilty plea in this case is by no means an early plea. It was rendered in mid-trial, during week two of evidence after several victims had already testified for the second time, the first occasion arising at the preliminary inquiry. Here, a plea was offered at a very late stage when, clearly the inevitability of guilt was going to be the result of the prosecution’s case.

[38] Mr. Reeves cannot be penalized for insisting on his right to a trial, as he is fully entitled to his day in court. While it eventually resulted in a guilty plea before me, nevertheless, given its genesis in the course of mid-trial, it is my view that Reeves only receives a reduced benefit of the mitigation of a plea.

[39] Mr. Reeves has the support of family and his partner, Mr. Brunetti. He is responsible for his elderly parents and supports them both financially and otherwise.

[40] Apart from what has been provided from Dr. Gojer in testimony, I do not have much direct evidence about Reeves. The medical information and Reeve’s mental health as presented and opined by Dr. Gojer is only as reliable as its foundational evidence. Here, I have no evidence from Reeves about what he advised Dr. Gojer in the assessment. That said, there does not appear to be any dispute with respect to the collateral resources relied upon by Dr. Gojer in formulating his opinion. However, as Mr. Vincelli points out, noticeably, there were no clinical notes from Dr. Dzuirdzy for Dr. Gojer to review when discussing the accused’s medication regime leading up to an increased dosage of Wellbutrin XL to 600 mg. per day.

[41] In a similar vein as to what was purportedly reported to Dr. Gojer, I categorically reject any and all evidence related to any suggestion of sexual misconduct by one of the victims as revealed by Reeves. Having permitted its introduction into evidence during the sentencing hearing for a limited purpose as to the defendant’s state of mind and to assist the expert in formulating an opinion, the foundation and nature of these statements are entirely self-serving and without merit. Not only do these statements lack any causal connection to the underlying offences, in my opinion, these assertions tend to unapologetically shoulder some fault/blame for his actions upon his victim.

[42] Whether it is true or not that Reeves had feelings of anger or alternatively, a grandiose or infallible persona by virtue of the medications, in respect of much of the second-hand information relied upon by Dr. Gojer, it seems to be at odds with some of the established facts. For example, despite a reference by Dr. Gojer about Reeves handling of funds received from his victims, there is no cogent evidence that Reeves actually invested any of his client’s money.

[43] Turning to the defence submissions on sentence, given the dates of the offence, a conditional sentence remains statutorily available. Mandatory minimums are also not applicable.

[44] With respect, the cases relied upon by counsel are distinguishable based on their facts, the particular circumstances of the offender or application of the relevant legal principles. For example, in R. v. Plange, [2018] O.J. No. 1502 (S.C.), the accused committed the offence by remitting fraudulent forms to the Canada Revenue Agency. While it was considered as a large scale fraud, albeit a lack of planning and sophistication, at the end of the day the total loss was $15,290.00, (para 8), which was fully reimbursed by the accused. The trial judge found that there was a strong prospect of rehabilitation. The judge categorically rejected the imposition of a conditional sentence, had it been available, and imposed a term of 13 months and 18 days in jail. I need not address the judge’s finding that s. 380(1.1) violated s. 12 of the Charter as that issue was not advanced before me and does not figure into my determination of sentence.

[45] In R. v. Campbell, [2005] O.J. No. 4696 (C.J.), the accused was a 65 year-old lawyer sentenced to a conditional sentence of two years less a day. Along with some medical information, the court found special circumstances. With the dearth of reasons in the decision, I am not persuaded by the analysis employed by the provincial court judge to sustain the disposition.

[46] In R. v. Umenwoke, 2013 ONSC 4496, [2013] O.J. NO. 3131 (S.C.), the sentencing judge referred to various authorities in support of a conditional sentence. The Crown submitted that there was some complexity but it was not a typical breach of trust case. The accused was not motivated for personal gain, but rather to fund his children’s education, a factor found by the judge to be somewhat relevant. In the case, the sentence was imposed after trial, albeit the loss was $US 75,650.60, an amount substantially less than in the case at bar.

[47] In R. v Hope, [2013] O.J. NO. 1078 (C.J.) the amount of the fraud was approximately $390,000.00, less than in the present case. The judge found several mitigating factors. While the Crown did not agree with a conditional sentence, it made submissions for a sentence in the 12 to 18 month range.

[48] In R. v. Kohuch, [2011] O.J. No. 5447 (C.J.), an 18 month conditional sentence was rendered. The total amount of the fraud was $62,765.00 stolen from a non-profit organization involving a breach of trust. The Crown only sought a sentence in the range of six months incarceration. The judge found that this was one of those rare cases to impose a conditional sentence.

[49] In R. v. Abedi, [2012] O.J. No. 4029 (C.J.) the accused was a small player implicated in a large scale conspiracy to commit fraud of $14 million. The accused’s conduct resulted in a loss of approximately $850,000.00 of which he had personally received $50,000.00 for his involvement. Referring in part, to R. v. Tulloch, [2002] O.J. No. 5446, the trial judge opined that a conditional sentence was appropriate given the accused’s qualitatively lesser role in the entire scheme. There was no breach of trust. Both Crown and defence agreed that a reformatory range sentence was appropriate in that case.

[50] In R. v. Massoudinia, [2002] O.J. No. 5504 (S.C.), Nordheimer J., as he then was, decided that notwithstanding the case was a fraud of considerable proportions, implicating many victims; imposed a conditional sentence of two years less a day. The judge found significant mitigating factors including demonstrated remorse, cooperation with the police in relation to other fraudulent activities, (not the instant case), a relatively early guilty plea and the valid offer of restitution by contribution of 85 percent of his net salary for a period of time. [2]

[51] I neither find unique circumstances in support of a conditional sentence nor a situation where this is one of those rare cases where a reformatory range - and thus a conditional sentence - can be fashioned to deter others and denounce the unlawful conduct. While, I accept that there is a minimal risk for re-offending, the motivation here appears to have been rooted in monetary gain and averess. Upon due consideration of the offence and of the offender, the term of incarceration proposed by Mr. Erickson is not within the appropriate range of sentence, as it does not adequately address the circumstances of this case in conjunction with the sentencing principles as found in ss. 718 to 718.2 and 380.1 of the Code.

[52] In my opinion, the authorities which I accept as relevant and instructive for this particular case provide that a range of sentence for an offence of this large scale and of this duration fall within the penitentiary range. To that end, I accept the cases proffered by the Crown attorney. I also refer to the appellate jurisprudence as found in R. v. Dobis, [2002] O.J. No. 646 (C.A.) at para. 36; [3] and R. v. Holden, [2000] O.J. No. 3481 (C.A.).

[53] Mr. Vincelli submits that Reeves had ample time to reflect on what he was doing and the economic circumstances of those he was hurting. I find that Reeves preyed upon a hard-working, trusting medical professional and others, who perhaps, all had a less than sophisticated financial acumen, and yet, he took advantage of him or her in order to sustain his lifestyle. Greed and avarice were at play here.

[54] While there is some mention of a stated intention for counselling, I am not persuaded that Reeves has a sincere interest in participating in such rehabilitative programs that would have him on the road to address his mental health issues; noting that some counselling having only commenced at the time of his entering a guilty plea in 2017.

[55] Reeves has also expressed a strong desire and willingness to repay the amounts he took from the victims. That has been stressed to me on several occasions by counsel and from Reeves himself. I tend to agree with Mr. Vincelli and have robust reservations whether Reeves has the willingness or ability to repay any amounts towards restitution. No such efforts have been made and reliance on bail conditions negativing specific employment in the financial field is a meagre excuse for any efforts of repayments to date.

[56] I remain unimpressed with Reeves’ apology to the Court and to the victims seated in gallery, who were all anticipating some demonstration of contrition.

[57] Frankly, it seems to me that Reeves is an individual who promises everything and delivers nothing. He takes advantage of others, those who had trusted him with their life savings. He has conned or duped individuals in his quest to benefit or maintain a lifestyle to which he is neither entitled nor merited by virtue of education, experience or hard and honest work.

[58] The unlawful act and the activity arising here in this case are wholly unacceptable. The victims were friends or relatives. There was a breach of trust. Clearly the impact of the fraud on the victims is severe and devastating.

[59] In my opinion, Crown counsel’s specific quantum with respect to the period of incarceration for this offender is entirely appropriate. I have no difficulty in concluding that in this case, a sentence in the mid-single digit penitentiary range is warranted for this offence and offender.

[60] That having been said, having regard to Dr. Gojer’s diagnosis related to Reeves’ mental health for many years commencing in 2004, I am persuaded that this mitigating factor must be given some weight. Dr. Gojer’s opined that Reeves had a complicated history and suffered from a diagnosis of a major depressive illness along with being subjected to high dosages of medications. Thus, I accept the expert’s testimony to the limited extent that it can be relied upon with respect to the adequacy of the medical records reviewed. There is a lingering question as to how much his depressive illness actually impacted upon his continued pattern of fraudulent conduct directed at the victims over the course of many years.

[61] In the course of his testimony, Dr. Gojer also offered an opinion related to what might have affected the defendant’s actions and judgment. While it offers only a partial insight to Reeves’ underlying behaviour at the relevant time, nonetheless, this does not excuse or justify the conduct. Clearly, I do not yield my responsibility and ultimate determination of the appropriate sentence to be imposed based on the proffered expert opinion evidence tending to explain Reeves’ intent or judgment in conducting his affairs at the time he defrauded his various clients. In this regard, the expert may have strayed into areas beyond the scope of his expertise.

[62] In any event, I have taken all of the circumstances into account and have not lost sight of the important sentencing principles of rehabilitation. The nature of this offence demands condemnation for the harms done to the victims and specific deterrence is required at a high level. As the appellate jurisprudence suggests, emphasis must be placed on denunciation and general deterrence for a large scale fraud as found in this case: R. v. Drake, 2009 ONCA 560, [2009] O.J. No. 2886 (C.A.); R. v. Dhanaswar, [2016] O.J. No. 1052 (C.A.) at para. 10; R. v. McGill, [2016] ONCA 139: Scribnock at para. 17; Dobis at para. 42.

Disposition

[63] As mentioned, there is no dispute in regards to the Crown’s request for various ancillary orders. I impose a s. 380.2 lifetime prohibition order prohibiting the defendant from gainful or voluntary employment that involves having authority over the real property, money or valuable security of another person, unless Mr. Reeves is, at all times, acting under the direct supervision of an individual duly licensed or regulated to engage in such employment.

[64] A non-communication order is imposed related to Donna Aiken, Gayle Meehan, Rachel Reeves and Peter Vignjevic pursuant to s. 743.21.

[65] In accordance with s. 737.1 of the Code, I grant a free standing restitution order in respect of the victims and in the following amounts: $206,200.00 in favour of Donna Aiken; $279,000.00 in favour of Gayle Meehan; $130,000.00 in relation to Rachel Reeves and $2,510,253.00 in favour of Peter Vignjevic.

[66] As a secondary designated offence, Mr. Reeves will provide a sample for the purposes of the DNA data bank.

[67] With respect to the one count of fraud over $5000.00, Mr. Reeves is sentenced to term of four (4) years’ incarceration in a federal penitentiary.

[68] In this case, the preconditions having been met by the Crown attorney, pursuant to s. 462.37(3) of the Code, I impose a fine of $3,125,453.00 in lieu of forfeiture. Mr. Reeves shall have five years following the expiration of any term of imprisonment to pay the fine. In default of payment on the fine in lieu of forfeiture, Mr. Reeves shall serve a further term of imprisonment of five (5) years consecutive to any other term of incarceration being served.

[69] The restitution order shall take priority over the payment of the fine in lieu of forfeiture. The fine in lieu of forfeiture shall be reduced by the amount of restitution paid to the victims.

[70] Given the dates of the offence, which predating the changes in the legislation, the victim surcharge is waived.

Justice A.J. Goodman

Released: June 27, 2018

Footnotes

[1] As there was no opposition to the relief being sought pursuant to s. 462.37, I need only briefly address the jurisprudence in relation to the application of the principles related to Part XII.2 of the Code.

[2] Based on my review, I am remain uncertain as to the exact amount of the loss related to this particular accused.

[3] Dobis is being referenced for its instructive tenets related to fraud and sentencing principles, rather than the factual basis found in the case.