Court File and Parties

COURT FILE NO.: CR-15-70000276-0000 DATE: 20180822

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

HER MAJESTY THE QUEEN

– and –

CARLOS ALBERTO PAVAO Defendant

COUNSEL: B. McCallum, for the Crown S. Hassan, for the Defendant

HEARD: June 11, 2018 and in writing

REASONS FOR SENTENCE

MOLLOY J.

A. INTRODUCTION

[1] For reasons dated April 30, 2018, I found Carlos Pavao guilty of ten counts of fraud against named individuals and one count of defrauding the public.[^1] It is now my task to impose a fit sentence for these crimes.

[2] The frauds involved the sale of shares in gold mining companies. The gold mining companies actually existed, but Mr. Pavao never had access to the shares he purported to sell. Ten unsophisticated investors, many of them pensioners or people about to retire, paid hundreds of thousands of dollars to Mr. Pavao’s numbered company for these fictitious shares. Their cheques were deposited into the numbered company’s bank account, exclusively controlled by Mr. Pavao. The innocent investors received precisely nothing for the money they paid. The total amount of the fraud with respect to these ten victims was over $1.1 million.

[3] In addition, Mr. Pavao encouraged individuals who invested in these shares to bring in their friends and relatives, which many of them did. That is the subject matter of the conviction for defrauding the public.

[4] The Crown submits that the range for offences of this nature is from three to eight years and that the appropriate global sentence for Mr. Pavao is five years. The Crown also seeks restitution orders in the full amount of the monies taken from the complainants, as well as a fine in lieu of forfeiture.

[5] The defence submits that the range is three to five years and that the appropriate sentence for Mr. Pavao is slightly below that – a sentence of two to three years. Defence counsel further requests that the global sentence be allocated in such a way that the sentence for each individual count is no more than six months in order to avoid immigration consequences for Mr. Pavao, who is not a Canadian citizen. She further submits that Mr. Pavao wishes to make restitution if he remains in Canada, but that such an order should be made with caution as he is without assets and has civil judgments against him. If a fine is ordered, she requests that he be given six years to pay it.

[6] In my view, the principles of deterrence and denunciation require a significant sentence in this case. I agree with the submission of the Crown that the appropriate sentence is five years. Six months is not within the range for any of the individual counts on the indictment. It is not appropriate to artificially reduce a sentence in order to thwart the intent of immigration legislation.

[7] I agree with the Crown that the victims are entitled to full restitution, in priority to any fine I impose. I am therefore ordering Mr. Pavao to pay restitution in the amount of $1,100,799.00, as well as a fine in lieu of forfeiture in the same amount.

[8] My detailed reasons are set out below.

B. GENERAL PRINCIPLES

[9] A sentencing judge has considerable discretion in fashioning a fit sentence for a crime, but that discretion must be exercised within the parameters prescribed by the Criminal Code[^2] and judicial precedent. An overarching principle in sentencing, one that applies in every case, is the requirement of proportionality – the sentence imposed must be proportionate to the gravity of the offence and the degree of responsibility of the offender.[^3]

[10] The Criminal Code provides that the fundamental purpose of sentencing is to contribute to “respect for the law and the maintenance of a just, peaceful and safe society.”[^4] This is to be achieved by imposing just sanctions that have one or more of the following statutorily imposed objectives:

(a) denunciation of the unlawful conduct and the harm caused to victims and the community;

(b) specific deterrence of the offender and general deterrence of others in the community who might be tempted to commit similar offences;

(c) separation of offenders from society, where necessary;

(d) rehabilitation of the offender;

(e) reparation for harm done to victims or the community; and,

(f) promoting a sense of responsibility in offenders and acknowledgment of the harm done.^5

[11] Any sentence imposed is adjusted up or down based on what are found to be mitigating or aggravating factors.[^6] To a large extent these factors depend on the particular circumstances of the case and judicial precedent. However, the Criminal Code specifies some circumstances that are deemed to be aggravating. The deemed aggravating factors with potential application to this case in the general sentencing provisions of the Criminal Code are:

(a) evidence that the offender in committing the offence abused a position of trust or authority in relation to the victim;[^7] and,

(b) evidence that the offence had a significant impact on the victim, considering their age and other circumstances, including their health and financial situation.[^8]

[12] In addition, there are a number of provisions applying particularly to convictions for fraud, including:

(a) the amount of the fraud exceeded $1 million;[^9]

(b) the magnitude, complexity, duration or degree of planning of the fraud committed was significant;[^10]

(c) 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;[^11]

(d) the offence involved a large number of victims;[^12]

(e) the offence had a significant impact on the victims given their personal circumstances including their age, health and financial situation;[^13]

(f) in committing the offence, the offender took advantage of the high regard in which the offender was held in the community;[^14]

(g) the offender did not comply with a licensing requirement, or professional standard, that is normally applicable to the activity or conduct that forms the subject-matter of the offence;[^15] and

(h) the offender concealed or destroyed records related to the fraud or to the disbursement of the proceeds of the fraud.[^16]

[13] Sentencing judges are required to exercise restraint. An offender should not be deprived of liberty if less restrictive sanctions are appropriate and would properly reflect the other principles of sentencing.[^17] The sentencing judge must also strive to ensure that there is some consistency (or parity) in sentencing, so that individual sentences are not seen to be arbitrary. The guiding principle is that similar sentences should be imposed on “similar offenders for similar offences committed in similar circumstances.”[^18]

[14] In applying these principles I will first address the principle of proportionality, considering the circumstances of the offences and the degree of responsibility Mr. Pavao bears for these crimes. Next, I will review the applicable aggravating and mitigating circumstances. I will then review the principles of deterrence, denunciation and rehabilitation. Finally, I will undertake a review of similar cases with a view to achieving parity of sentencing as between Mr. Pavao’s circumstances and the circumstances of other offenders who have committed similar crimes and the sentences they received.

C. PROPORTIONALITY

[15] The proportionality principle is concerned with the gravity of the offence and the degree of responsibility of the offender.

[16] I convicted Mr. Pavao of ten counts of fraud under s. 380(1)(a) of the Criminal Code. Each count relates to Mr. Pavao’s dealings with an individual who was persuaded to invest substantial sums of money in order to purchase shares of a gold mining company. The investors were told that this was a private placement at a very advantageous price they could not obtain on the stock market. They each invested thousands of dollars, with the total of their investments exceeding $1 million. The stocks Mr. Pavao purported to be selling to these complainants did not exist, and Mr. Pavao had no ability to obtain them. Instead, he gambled with the money he took from these individuals, investing in high risk stocks in margin trading accounts based on the “skills” of his associate Sam Lawrence. He lost all of the money.

[17] In addition, Mr. Pavao persuaded some of the complainants to spread the word about this investment opportunity and to bring in their friends and families. This was the subject of Mr. Pavao’s conviction for defrauding the public.

[18] The maximum sentence for these offences is 14 years, having been increased from the previous maximum of 10 years by amendments to s. 380 of the Criminal Code that came into force on September 15, 2004. Both the 14-year maximum sentence and the fact that Parliament saw fit to increase the maximum sentence are indications that Parliament considers crimes of this nature to be very serious.

[19] As I will develop in more detail with respect to the aggravating factors for these offences, this was a serious fraud and one which extended over a period of years. Mr. Pavao was aware that these investors were ordinary working people who were investing their hard-earned money, often funds that were intended for their retirement or for their children’s education.

[20] Mr. Pavao has persistently attempted to avoid personal responsibility for these offences, seeking to deflect responsibility to Sam Lawrence. He told many of the investors, and likely others, that he was himself a victim of fraud and had been completely deceived by Sam Lawrence. I rejected that defence at trial. Mr. Pavao was fully aware that there were no shares available in the private offerings he was “selling” to these investors.

[21] All of the money taken from the complainants went into a bank account over which Mr. Pavao had sole control. Although Mr. Pavao had personal shares in these same mining companies, including shares in his own name from a lucrative private offering in Rubicon Minerals Corporation (“Rubicon”), he kept all of those shares for himself in a separate, personal account. He was motivated throughout by greed, seeking to sustain his own lavish lifestyle by defrauding people of their life savings.

[22] Mr. Pavao was seen by the investors as the man in charge and he played that role when he met with them. It is not possible to say whether Mr. Pavao was the mastermind – the person who hatched the whole scheme – but he was clearly a principal in the fraud. While he may not have acted alone, he acted independently and knowingly in committing these frauds. His degree of responsibility is high.

D. DETERRENCE, DENUNCIATION and REHABILITATION

[23] The Criminal Code requires that the principles of denunciation, deterrence and rehabilitation be considered in sentencing. There is considerable legitimate debate as to whether significant sentences imposed on offenders truly have a deterrent effect, either for the individual offender or for others who might be tempted to commit similar crimes. However, it is well recognized that if deterrence is relevant at all, it is particularly so for crimes of this nature, involving individuals who are intelligent and who deliberately set out to plan and execute sophisticated frauds. It is important that such individuals be aware that the significant risk of a long jail term outweighs any benefit or financial reward they may obtain from the fraud. This is relevant to the individual offender, and also to others in the community who are tempted towards such crimes.[^19]

[24] In this regard, I agree entirely with the views expressed by Ducharme J. in R. v. Dhanaswar,[^20] as follows (at paras. 18-19):

As for general deterrence, I recognize the theory behind general deterrence has been questioned in some contexts. Critics of general deterrence question its validity on the basis that: 1. Many crimes are relatively spontaneous and the offender does not stop beforehand to consider the possibility of being punished; 2. Offenders are not aware of the sentences imposed for particular crimes so the quantum of the sentence will not have a deterrent effect; and 3. Even if an offender was aware of the range of sentences imposed for a particular crime, they would discount that range by the risk of discovery, apprehension, and actual prosecution.

Despite these criticisms, general deterrence remains one of the objectives of sentencing that parliament has prescribed in section 718 of the Criminal Code. In fact, in my view, general deterrence is one of the principal sentencing objectives in a case like this. Moreover, the above criticisms have little or no applicability to cases of this nature: (1) Financial frauds of this nature are rarely, if ever, spontaneous crimes; (2) The persons committing these crimes usually do so after careful and detailed advanced planning. This will often involve a cost benefit analysis on the part of the fraudster. Thus, the imposition of significant sentences for such crimes by increasing the cost of punishment can alter that calculus and deter the fraud; and (3) eventually almost all frauds of this nature will be discovered as the money required to maintain the illusion of a successful investment program will run out. When this happens, even financially unsophisticated victims are likely to realize they've been swindled, and given the stakes involved they are likely to go to the authorities. If the fraudster is apprehended the chances of a successful prosecution are high given the paper trails that will have been left behind.

[25] Prior to September 15, 2004, the maximum sentence for a fraud involving more than $5000 was 10 years in prison. As part of a number of amendments that came into effect on September 15, 2004, Parliament increased the maximum sentence to 14 years and provided detailed guidance as to the aggravating factors to be taken into account in sentencing for large scale fraud cases. In doing so, Parliament was signalling that these types of frauds should be treated very seriously by the courts. Indeed, courts at all levels have repeatedly emphasized the importance of denunciation and deterrence for crimes of this nature. As stated by the Court of Appeal in Drabinsky, at paras. 160 and 162:

In any event, this court and all other provincial appellate courts have repeatedly held that denunciation and general deterrence must dominate sentencing for large-scale commercial frauds. Denunciation and general deterrence most often find expression in the length of the jail term imposed. [page 635]

The appellants' argument that longer sentences do not enhance general deterrence ignores that the proper sentence quantification in cases like this is also driven by the need to publicly denounce the appellants' criminal conduct. The length of the sentence imposed is reflective of the appropriate level of denunciation.

[26] In my view, this case falls squarely within these principles. The fraud was carried out with considerable planning and deliberation over a period of years, motivated entirely by greed. The impact on many of the complainants in this case was devastating. His conduct must be denounced and only a significant jail term would likely deter others from undertaking similar offences.

[27] I do not see rehabilitation as a significant factor in this case. Mr. Pavao is 58 years old now and will be close to retirement age when his sentence is completed. The length of his sentence will have little impact on either assisting or interfering with his rehabilitation. He does not need to learn any new skills. He is adept at finding employment and managing a business in a legitimate way. He already has the ability to earn a good living legitimately, and hopefully he will be motivated to do so when his sentence is complete.

E. AGGRAVATING FACTORS

Statutory Provisions

[28] Some conditions that are considered to be aggravating on sentencing arise by operation of the common law and through legal precedent, others are deemed to be aggravating by statute, and some arise both ways.

[29] In this case, Crown counsel relied upon the aggravating factors set out in ss. 380.1(1)(a) to (f) and (1.1) of the Criminal Code. Defence counsel did not object to these being aggravating factors that are relevant for purposes of sentencing, although she did not necessarily accept that all of them applied to the circumstances of this case. However, when I was in the course of writing these reasons, I noticed some of the provisions relied upon by the Crown did not come into force until 2011, which is after all of these offences were committed. I was concerned that applying this section could offend the principle against retroactivity and therefore gave both counsel the opportunity to provide written submissions on the point. I subsequently received written submissions from both counsel.

[30] Both counsel agree that four of the provisions relied upon by the Crown as aggravating factors did not come into force until November 23, 2011, specifically:

• the magnitude, complexity, duration or degree of planning of the fraud committed was significant;
• the offence had a significant impact on the victims, given their personal circumstances, including their age, health and financial situation;
• the offender did not comply with a licensing requirement, or professional standard, that is normally applicable to the activity or conduct that forms the subject-matter of the offence;
• the offender concealed or destroyed records related to the fraud or to the disbursement of the proceeds of the fraud.

[31] The Crown argued that the 2011 amendments, adding these aggravating factors, were merely a codification of the common law as these factors would already have been considered aggravating in determining a fit sentence.

[32] Defence counsel submitted that aggravating factors have the potential to increase the length of an offender’s sentence and that applying these 2011 provisions in sentencing Mr. Pavao would offend the rule against retrospective effect.

[33] As a general principle, legislation is presumed to speak as of the day of its enactment and is presumed not to have retroactive or retrospective effect in the absence of specific language expressing that intention or where the context demonstrates Parliament’s intention to create that effect.[^21] The presumption against retroactive application is particularly strong where the new legislation seeks to attach harsher penal sanctions to actions that occurred before its enactment.[^22] In my view, there is nothing in the 2011 amendments to rebut the presumption against retroactivity.

[34] In R. v. Stone,[^23] the Supreme Court of Canada considered whether retroactive effect could be given to a provision which deemed it to be aggravating if the offender, in committing the offence, abused a spouse or common law partner. The Court held, at para. 241:

Turning to the present case, I would note that s. 718.2(a)(ii) of the Code did not come into force until September 3, 1996, approximately nine months after sentencing occurred in this case. Given that the Code cannot be retroactively applied to the disadvantage of an accused, the sentencing judge’s treatment of the spousal nature of the killing must be assessed in light of the common law treatment of this factor prior to the implementation of s. 718.2(a)(ii). In my opinion, there is ample authority for the proposition that courts considered a spousal connection between offender and victim to be an aggravating factor in sentencing at common law. . .

In the result, the Supreme Court held that the trial judge had properly taken into account the fact that the manslaughter was committed in a domestic relationship setting and treated this as an aggravating factor.

[35] Similarly, the British Columbia Court of Appeal considered in R. v. G.(D.)[^24] whether s. 718.01 of the Criminal Code could be applied retroactively. That section required a sentencing judge to give primary consideration to the objectives of denunciation and deterrence for an offence that involved the abuse of a person under the age of eighteen. Because this section did not come into force until after the offence in question, the British Columbia Court of Appeal held that the trial judge erred in applying it, but noted, at para. 17:

Having said that, it is clear that offending against a child has always been an aggravating factor in a sentencing proceeding, often calling for a denunciatory and deterrent sentence. However, in this case, the sentencing judge only applied the principles of denunciation and general deterrence.

[36] In R. v. Dreger,[^25] the British Columbia Court of Appeal dealt specifically with the retrospective effect of s. 380(1)(c.1) of the Criminal Code, which is also at issue in the case now before me. That provision, added in 2011, states that it is an aggravating factor on sentencing if the offence had a “significant impact on the victims, given their personal circumstances, including their age, health and financial situation.” The trial judge relied on this provision and found the impact on the victims to have been aggravating. The Court of Appeal found there was no error, stating (at para. 35):

In terms of the recent codification of aggravating factors, it is clear that the effect of fraud on vulnerable victims would have been an aggravating factor that could have been taken into account by a sentencing judge regardless of the amendment. Thus, it was an appropriate factor for the sentencing judge to consider in this case.

[37] On its face, the decision of Moen J. of the Alberta Queen’s Bench appears to take a different approach to the retrospectivity issue in R. v. Iyer.[^26] In that case, Moen J. held, at para. 32:

Section 380.1(1) sets out certain factors which the Court must consider in imposing a sentence for fraud. Given that those factors have changed since the crimes were committed, I must consider the factors which constitute a lesser punishment, being those that were in place prior to the amendment in 2011. Those that may apply in this case are that the value of the fraud committed exceeded one million dollars, and the offence involved a large number of victims.

[38] However, in her analysis of the appropriate sentence for the offender, Moen J. also took into account the impact on the victims (at para. 260 of her decision), the fact that the fraud was “highly complex” with a significant degree of planning and deliberation (at para. 297) and the fact that the offender took numerous steps to conceal the fraud (also at para. 297). Thus, although not specifically articulating her approach in the same way, Moen J. essentially took the same approach as taken by the British Columbia Court of Appeal in the two cases I noted above.

[39] I was not directed to, and am not aware of, any Ontario decision that has grappled with this issue in any depth. In R. v. Takeshita,[^27] Spies J. of this Court sentenced an offender who, having been elected as treasurer of his church, proceeded to defraud the congregation of $77,000. At para. 49 of her Reasons, Spies J. stated that “I addition [sic], in this case, I must have regard to s. 380.1 of the Code although I note a number of amendments were made to that section that were not in force during the time this offence was committed.” Having said that, the sentencing judge proceeded in her analysis, at para. 53 of the Reasons, to list a number of aggravating factors, which included:

(d) The offence was premeditated. At trial I found that Mr. Takeshita acted in a systematic way over the years and that this was not a spur of the moment single payment back to him. There was nothing impulsive about the offence; it was deliberate and ongoing and involved 95 unauthorized cheques over a period of 4½ years.

(f) Although perhaps this was not a sophisticated fraud I do not accept Mr. Takeshita’s submission that his scheme was not well planned or that it was a mistake or that he was seeking an exit all the times. In my view it took a great deal of planning in that Mr. Takeshita got the Pastor to sign 95 blank cheques over the 4½ year period, not to mention the steps he took to avoid detection.

(g) Mr. Takeshita went to great lengths to conceal the fraud including falsifying statements presented to the Board and depositing his own funds into the Church’s bank account to ensure there were no NSF cheques that would uncover his fraud.

[40] These factors are in addition to the statutory aggravating factors relied upon and, at least arguably, fall within the 2011 amendments with respect to: the magnitude, complexity, duration or degree of planning of the fraud; the impact on the victims; and, the extent to which the offender concealed or destroyed records related to the fraud or to the disbursement of the proceeds of the fraud.

[41] Finally, I have considered the decision of Bielby J. in R. v. Ajise,[^28] in which the sentencing judge specifically stated he would take the same approach effectively taken in the other decisions to which I have referred (although without referring to those decisions). He held at para. 79:

During submissions on sentence no issue was made in regards to what version of section 380.1 is applicable given the period in which the offence occurred. Argument was made in accordance current version of the section, and for my considerations as to sentence I will rely on the current version. Having said that, I believe that the 2011 additions, with respect to what must be considered as aggravating circumstances, could be considered as such without the mandatory statutory requirement, especially in regards to the magnitude, complexity, duration or degree of planning of the fraud committed.

[42] In my view, this is the correct approach, consistent with that taken by the British Columbia Court of Appeal in G. (D.) and Dreger with the dicta of the Supreme Court of Canada in Stone. Strictly speaking, the statutory amendments enacted in 2011 would not be applied retrospectively to attach adverse consequences for the offender in respect of actions that have already occurred prior to the amendments. Typically, deeming a factor to be aggravating attaches an adverse consequence for an offender because it attracts a higher sentence. However, if the statutory provision does no more than codify the existing law as to what is an aggravating factor, there are no adverse consequences for the accused. Put another way, if these factors would be considered aggravating with or without the amendments, then there is no adverse consequence for the offender if the new provisions are applied.

[43] In this case, clearly the magnitude of the fraud, its complexity and duration are factors that would always have been considered to be aggravating, with or without the 2011 amendments. Likewise, a crime that has had a significant impact on victims, particularly where the victims are vulnerable, is considered an aggravating factor in all criminal offences, including financial offences such as fraud. In a financial offence, it is obvious that the financial circumstances of the victim would therefore be a factor. I would expect that a failure to comply with a licensing requirement or professional standard would typically attract a higher sentence. Likewise, efforts undertaken to conceal the fraud by destroying or hiding records would likely be seen as aggravating. However, in this particular case, I do not consider these latter two factors to play a significant role and have not put any weight on them.

The Nature and Duration of the Fraud

[44] The nature of the scam is aggravating. Mr. Pavao held this out as a legitimate investment in a legitimate gold mining company. Investors were able to follow the price of the stock on the Toronto stock market where it was publicly traded. Phony subscription agreements were provided and the money was funneled into what appeared to be a legitimate company, but was not. This was a deliberately thought-out scheme. Further, even after investors had put in substantial amounts, Mr. Pavao went back to them and persuaded them that there were new opportunities to take out other investors’ positions, which many of them did.

[45] The duration of the fraudulent conduct is also an aggravating factor. The transactions involved in these counts occurred between 2005 and 2008. However, even into 2009, Mr. Pavao was making excuses to investors to cover up his wrongdoing. The only reason the fraudulent conduct ended is because Mr. Pavao was unable to raise sufficient money by gambling on high-risk trading in the stock market, with the result that he was unable to pay out any of the investors. Ultimately, they saw that share prices for these stocks in the markets had increased greatly over the amounts they had paid to purchase them and began pressing Mr. Pavao to sell their interest and take their profits. That was when the house of cards came tumbling down and Mr. Pavao was forced to tell them that there were no shares to cash in. That was when he began telling investors that Sam Lawrence had taken all of their money.

[46] The total amount of the funds paid by the investors to Mr. Pavao’s company was approximately $1.1 million. As such, I consider it to fall within the case law that identifies a higher range of sentence for large scale sophisticated frauds. I note as well that the legislation deems the amount of the fraud to be an aggravating factor if it exceeds $1 million.

Number of Victims and Impact of the Fraud

[47] There are ten named complainants, all of whom were victims of Mr. Pavao’s fraud. It is also apparent from the evidence at trial that there were many other victims of the scam itself. Some of them were able to get their money out, sometimes by Mr. Pavao paying them out of his own funds and sometimes by arranging for one of the complainants to put in more money to take over the position purchased by others. It is therefore apparent that the scam went beyond these ten individual complainants, but for purposes of sentencing it can be said that there were at least ten victims of the fraud. The number of victims is an aggravating factor.

[48] These were not sophisticated investors with considerable wealth. They were ordinary, middle-class people who had accumulated some savings, which they had intended to use for their retirement or to send their kids to university. Some of them borrowed money against their homes in order to invest. They did not have independent advisers assisting them; they relied entirely on Mr. Pavao and Sam Lawrence.

[49] Many of the victims were devastated as a result of this fraud. Some were particularly upset that they had been persuaded to bring their friends and family into the deal and felt responsible that those people lost their money as well. For example, Jeff Fallon brought in his friends Ray Lefaive (Count 10) and Marc Belanger (Count 7) and his cousin Gerald Fallon (Count 5), all of whom lost the money they had invested. Neil Doherty (Count 3) brought in two of his friends (Patrick Quinn and Trevor Appleby). Dan Meghory (Count 6) brought in five friends and his father-in-law. When Mr. Pavao complained to him that the people he had brought in were giving him grief about not getting their shares and wanting their money back, Mr. Meghory stepped in and bought out their positions, resulting in an additional loss to him of over $100,000. Mr. Meghory also brought in his niece’s husband, Jason Michaels (Count 9) who lost his entire investment.

[50] Four written Victim Impact Statements were filed at the sentencing hearing: Dan Meghory (Count 6); Allan Sadowy (Count 8); Jason Michaels (Count 9); and, Raymond Lefaive (Count 10). Raymond Lefaive and Dan Meghory also spoke at the hearing, as did Neil Doherty (Count 3).

[51] Dan Meghory owns a business that leases cars to corporations and individuals, which is how he first met Mr. Pavao. He said that the emotional impact of the fraud on him and his family has been “disastrous.” For close to ten years he has had trouble sleeping and continues to think obsessively about what he has lost and where he would be now but for that loss. His relationships with his wife and children have been affected. Because of his financial losses, he has been unable to retire and continues to work full-time past his retirement age. He is particularly angered by the fact that Mr. Pavao continues to live in his lovely home with a lavish lifestyle because he has put all of his assets in his wife’s name and has made himself immune to judgments against him.

[52] Neil Doherty was originally a teacher for seven years and then a negotiator to the Teachers’ Association for 25 years. He has been retired for the last 17 years. He made similar comments about resenting Mr. Pavao’s ability to continue living the same lifestyle although his victims cannot. Mr. Doherty is now 77 years old. Because of these losses he had to put a $70,000 line of credit on his condominium, which is still owing.

[53] Raymond Lefaive is a retired former teacher and Roman Catholic school board administrator. He and his wife were impressed by what Mr. Pavao told him about his commitment to fundraising for the private Catholic school that his daughters attended. Mr. Lefaive described himself as being generally an optimistic person and said that when he first heard the rumours about the fraud, he refused to believe it. He was angry with himself for having been so naïve as to be taken in by Mr. Pavao. He said this put a strain on his marriage. He explained that he got into the teaching profession later in life (at the age of 44) and as a result had a reduced pension. He also had three children, each one year apart, all of whom would be in university between 2007 and 2012. He had intended to use the profit from this investment to send his kids to university and make up some of the shortfall from his reduced retirement pension. He borrowed some of the money he invested. He said he has been devastated by the loss, and by not being able to help his children with their university expenses. His children took out student loans, which they continue to be paying off to this day.

[54] Allan Sadowy owns a small business delivering janitorial and maintenance products. He invested $48,000 and lost all of it. He said this has caused great financial difficulty for him, his wife, and their children. After investing the money with Mr. Pavao, he asked to cash out his shares because his delivery van broke down and he needed the money to buy another one. He was unable to get his money back and ended up paying for the van out of money he would have spent on household expenses and his children’s sports activities. He could not afford to lose this money and this matter has put “undue stress’ on his marriage. He also explained that he is now “very distrustful of investment advisors” and “hesitant to ever put money away for [his] family’s future.”

[55] Jason Michael described feeling “duped” and “stupid.” He also expressed anger that it took ten years for the justice system to conclude these proceedings while Mr. Pavao was able to “live a normal life with all our money while we all sat around waiting.” He also described having a strained relationship with his family and in particular with his wife’s uncle Dan Meghory. As he put it, “[n]othing has been the same since.”

[56] The extent to which the investors relied on Mr. Pavao for expert guidance is an aggravating factor. The fact that they were unsophisticated investors is also aggravating. Finally, they were people who could not afford to simply absorb these financial losses, and they also suffered emotionally to a significant degree. All of these are aggravating factors.

Breach of Trust

[57] There was no trust relationship in the traditional sense between Mr. Pavao and the victims of his fraud. He was not their lawyer or financial adviser, nor was he a registered stock broker. It is true that the victims trusted Mr. Pavao and relied upon his advice, but this is true for virtually every instance of fraud. I do not consider this to be an aggravating factor.

Motivation

[58] The frauds were carried out with the sole motivation of financial gain.

[59] All of the frauds in this case involved the purported sale of shares in a gold mining company through an alleged “private offering.” There were two companies: Africo Resources Ltd. (“Africo”) and Rubicon, mentioned earlier at para. 21. In both instances, 6048382 Canada Inc. (“604”) did participate in purchasing shares through a private offering, rather than on the stock market. However, those shares were never available to any of the victims of the fraud. The investors would make their cheques for share purchases payable to 604. However, they never received any shares. In fact, the shares did not exist. Mr. Pavao had exclusive control over 604’s bank account.

[60] Further, Mr. Pavao had personal investments in both companies, which he kept completely separate from those of the investors he defrauded.

[61] With respect to Africo, 604 participated in a private offering by purchasing 614,401 common shares for $500,000 in 2004. However, the two complainants who believed they invested in an Africo private offering were not part of this offering. Mr. Kirkwood invested a total of $140,000 in three separate transactions in 2006, believing he would be acquiring Africo shares. Mr. Vella, also believing he would get Africo shares, invested a total of $275,000 on three occasions between September 2005 and October 2006. At the time they made their payments, 604 had no shares to give to them. Although they sought to get share certificates and also sought to cash out, they were put off by Mr. Pavao for various different excuses.

[62] Meanwhile, Africo went public in December 2006, at which point the 614,401 shares 604 held in Africo were transferred out of 604 and into personal trading accounts held by Mr. Pavao and Mr. Lawrence, with Mr. Lawrence receiving 364,401 shares and Mr. Pavao receiving 250,000 shares. They made a profit on this transaction. Mr. Kirkwood and Mr. Vella received nothing – no shares, no profit, not even a return of their purchase price.

[63] 604 also had the opportunity to participate in a legitimate private offering in Rubicon shares. However, the participation was limited to $100,000. This time, instead of any shares going into 604, Mr. Pavao took all of the shares in his own personal name and had them deposited into his personal account. It was only after securing his own shares that he purported to sell about $1 million shares to other investors, even though 604 in fact had no access to such shares. Further, in May 2009, when everything was starting to become unglued, Mr. Pavao had an opportunity to exercise a further right to purchase shares on warrants issued with the first block of shares. He did so, again in his own name, paying $107,142 for the additional shares, which were deposited into his personal trading account. This was at the very time when some of the complainants were already complaining about wanting to cash out their investments in Rubicon.

[64] Although Mr. Pavao testified at trial that he believed Sam Lawrence had purchased $1.5 million worth of shares in Rubicon as part of this same private offering, I rejected his evidence as not credible. It is worth noting that at the same time Mr. Lawrence was urging the complainants to purchase more and more shares, and to bring in their friends and family to participate in this great opportunity, he put none of his own money into that 604 pot, nor did he suggest that any of his family do so.

[65] Just as happened in Africo, Mr. Pavao kept his personal shares separate and collected his profit, while his victims lost everything.

[66] Although a person who already had a substantial net worth and an extremely comfortable lifestyle, Mr. Pavao sought to increase his own wealth by gambling with other people’s money. He did so knowing the circumstances of those individuals and that they could ill afford to lose this money. This is an aggravating factor.

Broader Adverse Impact, Licensing Requirement, and Concealing or Destroying Evidence

[67] The Criminal Code directs that it is an aggravating factor if the offence adversely affected, or had the potential to adversely affect, the stability of the Canadian economy or financial system, any financial market in Canada, or investor confidence in such a financial market. This was not a fraud on the financial system itself, nor was it so extensive that it could undermine the stability of Canadian markets. However, it did undermine the confidence of the investors who participated in this scheme. Some said they will always be afraid to invest in the stock market again. That sort of attitude has a ripple effect on the friends and associates of those who were taken in and others who merely heard about the fraud. It also tends to undermine investor confidence in gold mining companies generally. However, these effects were minor in their nature and extent. It is to some extent aggravating, but not to a large degree.

[68] The Crown argued that Mr. Pavao knew he needed to be licensed to trade in securities and that this is an aggravating factor in sentencing. I am satisfied that Mr. Pavao was aware of the licensing structure and had a licensed broker who assisted him trading on the markets when he wished to do so. However, this is not a situation where Mr. Pavao was a trained professional who ignored licensing requirements, or who had been suspended and nevertheless continued to carry on trading without a license. While he might technically fall within s. 380.1(1)(e), that provision was added to the Criminal Code in 2011 and does not apply. Outside that statutory provision, I do not consider this factor to be aggravating.

[69] These offences had a devastating impact on the complainants and their families. To some extent there is a broader adverse impact, but I do not see this as having a seriously aggravating effect on sentencing.

[70] Similarly, I recognize that Mr. Pavao was effectively trading in shares without being properly licensed to do so and that a professional trader would have been required to comply with professional standards that were ignored by Mr. Pavao. However, I do not see this as contributing much beyond the very nature of the fraud itself. If Mr. Pavao had been a licensed professional and still perpetuated a fraud of this nature, or if he actively passed himself off as having professional credentials, I would consider that to be more aggravating.

[71] Finally, there were, of course, steps taken to cover up this fraud. That is the very nature of fraudulent conduct. However, I am not satisfied beyond a reasonable doubt that Mr. Pavao actively destroyed documents and I have not taken this factor into account as aggravating.

F. CIRCUMSTANCES OF THE OFFENDER and MITIGATING FACTORS

Prior Good Character

[72] Mr. Pavao has no prior criminal record, which is a mitigating factor. Since the date of these offences, he has separated from his wife, although they continue to live in the same house. He has three daughters (now aged 28, 26 and 24). He has been a devoted family man throughout his life with respect to his widowed mother and also his wife and children. His wife and daughters are highly supportive of him.

[73] I described Mr. Pavao’s background as follows in my earlier decision (at paras. 9 and 10):

Carlos Pavao was born in Portugal in 1960. His father died when he was six years old. When he was about eight or nine years old, he emigrated to Canada with his mother and brother. He dropped out of school part way through Grade 10 and started working, supporting himself and his mother through manual labour. He had a knack for electrical and mechanical work and obtained additional money doing repairs on industrial cleaning equipment. Eventually, he built this into his own business, CAP Maintenance. He also branched out into other businesses selling cleaning supplies and equipment. Along the way, he married and had two children.

As of approximately 2005, Mr. Pavao was a successful businessman. He owned a company named Goldmark Sanitation (which sold cleaning supplies and equipment), as well as CAP Maintenance (which did repairs), and a holding company named Starmix. He also owned three residential properties in the Toronto area. He had a net worth of several million dollars.

[74] I accept that Mr. Pavao has done good things in his past – donated to charities, helped out his neighbours, worked hard in his legitimate businesses, cared for his family, and loved all kinds of little animals. His prior good character is a mitigating factor.

[75] Apparently, Mr. Pavao was held in high regard by his friends and neighbours and within the Portuguese community in Toronto. Several friends and community members filed glowing letters of support for him, which were filed at the sentencing hearing. I also understand that Mr. Pavao has lost some friends and supporters as a result of these convictions. Neither is surprising to me. Frequently, fraudsters and conmen are able to accomplish their crimes because they are charming and well-liked.[^29] And frequently, friends and relatives who were not victims of the fraud refuse to believe that the fraudster is actually guilty of these crimes. In this case, Mr. Pavao continues to deny any responsibility for his crimes, which is of course his right. That is not an aggravating factor, but it does detract from the impact these character references can have. These references are about the individual these people thought they knew, without taking into account that Mr. Pavao spent four years engaged in a fraud that netted him over $1 million. The fact that Mr. Pavao continues to deny his crimes enables these individuals to continue to hold him in high regard. The fact that Mr. Pavao has lost some friends as a result of his crimes is not a mitigating factor; it is a natural result of his own conduct.

[76] I also note that under s. 380.1(2) of the Criminal Code in force at the time, I am prohibited from “considering 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.” Mr. Pavao traded on his good name, his reputation as a good businessman and his personal affluence. The complainants considered him to be impressive and knowledgeable, which persuaded them to trust him. In particular, Mr. Lefaive noted that he was influenced by the extent to which Mr. Pavao was involved with and supportive of the Catholic school his daughters attended.

Age and Health Status

[77] Mr. Pavao is now 58 years old. I do not see that age as particularly mitigating. Mr. Pavao also has some health issues, the most serious being a heart condition. Since the date of these offences, he has had several heart attacks and has had quintuple bypass surgery. He also suffers from colitis. He requires a number of medications, as well as a healthy diet and physical exercise. All of these can be easily handled in the penitentiary system. Although a proper psychiatric report was not filed, and although Mr. Pavao’s family doctor, Dr. Klinghofer, felt unqualified to offer an opinion about his mental health, I accept that Mr. Pavao also suffers from depression. Again, this is a condition that can be managed within the penitentiary system. I do not see any of these conditions as requiring a reduction from what would otherwise be a fit sentence. That said, I recognize that a prison sentence will be harder for Mr. Pavao to serve than it would be for a younger person without any health issues. To this extent only, I consider these personal circumstances of Mr. Pavao as a factor that may serve to reduce the length of sentence to which he might otherwise be subject.

Possible Immigration Consequences

[78] Mr. Pavao has been in Canada for 50 years and is a landed immigrant. He is a citizen of Portugal and has never applied to become a Canadian citizen. Because he is not a Canadian citizen, the provisions of the Immigration and Refugee Protection Act[^30] (IRPA) may result in his being deported after he has served his sentence. Mr. Pavao’s circumstances meet the IRPA definition of “serious criminality” both because the maximum available sentence is more than ten years and because the actual sentence imposed on any given count is more than six months. Therefore, it is open to the authorities to issue a report as to the conviction and sentence and a Removal Order may be made against Mr. Pavao, deporting him to Portugal. Because his sentence is longer than six months, he would have no right of appeal with respect to such a Removal Order.[^31]

[79] The Supreme Court of Canada held in R. v. Pham[^32] that collateral immigration consequences of a sentence are not properly considered as mitigating factors because they do not relate to either the gravity of the crime or the degree of responsibility of the offender. Collateral consequences such as deportation may be taken into account as part of the particular circumstances of an offender, such that the sentence is individualized to take into account the actual impact on the particular offender and, perhaps, to distinguish it from other cases when applying the parity principle. However, these collateral immigration consequences cannot be permitted to “dominate the exercise or skew the process.”[^33] The sentence ultimately imposed must be one that it is fit and proportional, regardless of the immigration consequences. Further, it would be improper to artificially adjust a sentence for the sole purpose of avoiding the intended consequences of the legislation. Wagner J. (as he then was), writing for the unanimous Court, held, at paras. 14-16:

The general rule continues to be that a sentence must be fit having regard to the particular crime and the particular offender. In other words, a sentencing judge may exercise his or her discretion to take collateral immigration consequences into account, provided that the sentence that is ultimately imposed is proportionate to the gravity of the offence and the degree of responsibility of the offender.

The flexibility of our sentencing process should not be misused by imposing inappropriate and artificial sentences in order to avoid collateral consequences which may flow from a statutory scheme or from other legislation, thus circumventing Parliament’s will.

These consequences must not be allowed to dominate the exercise or skew the process either in favour of or against deportation. Moreover, it must not lead to a separate sentencing scheme with a de facto if not a de jure special range of sentencing options where deportation is a risk.

[80] Defence counsel in this case suggested that instead of imposing a global sentence, I should allocate the total sentence amongst the various counts such that the sentence for each separate offence was six months or less, thereby preserving Mr. Pavao’s right of appeal from any Removal Order that might be made. In my view, that would be improper. First, the fit sentence for each count considered independently would be more than six months. The Supreme Court in Pham cautioned against imposing a sentence that does not properly reflect the gravity of the offence and the degree of responsibility of the offender in order to take into account the impact of immigration consequences on the offender. Second, it would also contravene the principles stated in Pham to artificially adjust a sentence in order to circumvent the intention of Parliament as expressed in IRPA. A series of 11 sentences of six months each, all to be served consecutively, would not be the usual manner of sentencing in this case as it would fail to take into account the fact that all of these offences were part of an overall, almost cookie-cutter fraud.

[81] A very similar issue arose in R. v. Mohammed.[^34] At trial, Allan Mohammed was convicted of seven counts of defrauding various financial institutions by obtaining funds on mortgages and lines of credit obtained through fraudulent documents of income. The financial institutions were defrauded of approximately 1.2 million. Nightingale J. of this Court imposed a global sentence of 42 months (3½ years), with each count receiving the same sentence, all to be conserved concurrently. The immigration consequences do not appear to have been argued.

[82] Mr. Mohammed appealed his sentence on the basis that 42 months was excessive and had uncontemplated immigration consequences.[^35] The Court of Appeal dismissed the appeal, holding, at para. 2, that 42 months was not excessive because “some of the offences taken alone and all of the offences taken together constitute a major and serious fraud worthy of a penitentiary sentence.” Further, the Court of Appeal rejected Mr. Mohammed’s submission that the sentence should be varied to make it seven sentences of six months each, precisely what the defence is asking me to do in this case. On this point, the Court of Appeal held, at para. 3:

We are not prepared to do this. It would be an artificial way of avoiding Parliament’s intent with respect to serious crimes committed by persons who immigrated to Canada: see R. v. Pham, 2013 SCC 15.

[83] The decision of the Court of Appeal in Mohammed is directly on point and binding on me. Six months is not a fit sentence for any of the individual fraud counts on which I convicted Mr. Pavao. Given the nature and extent of his fraudulent acts and the aggravating factors that I have indicated above, at least some of the offences and certainly all of the sentences when taken together are, to use the language of the Court of Appeal, “worthy of a penitentiary sentence.” Accordingly, it is not proper for me to sentence Mr. Pavao to a number of six month terms and make them consecutive solely for the purpose of avoiding the intended application of the IRPA.

[84] Since the immigration consequences are not automatic and some discretion may be exercised by immigration authorities, I will not adjust Mr. Pavao’s sentence based on the immigration issues. I do not know what will happen after he has finished serving his sentence, and do not propose to speculate.

Absence of Important Mitigating Factors

[85] The Crown submitted, and I agree, that there are four significant factors that most commonly have a mitigating impact on sentencing for large scale frauds: (1) guilty plea; (2) substantial recovery; (3) cooperation in recovery; and (4) motivation other than greed or financial gain.[^36] None of these factors exist here. The absence of these factors (particularly the absence of a guilty plea), is not aggravating but serves to distinguish this case from other situations in which the offender had the benefit of important mitigating factors to support a lesser sentence. In particular, I note the absence of any recovery by the complainants. Mr. Pavao, however, has been working and continues to live in a large, expensive home. He has placed that home in his wife’s name, putting his most significant asset theoretically beyond the reach of his creditors. His counsel indicated on sentencing that Mr. Pavao wishes to make restitution if he remains in Canada. I do not see that as any indication at all that he recognizes the losses of those he defrauded. These frauds took place between 2005 and 2009, and Mr. Pavao has consistently put his own interests ahead of those of his victims for these past nine years. Making restitution conditional on his remaining in Canada is yet another example of that self-interest.

G. PARITY IN SENTENCING

Range

[86] Both counsel agree that the bottom end of the range for a crime of this nature is three years. They differ as to the top of the range: Ms. Hassan, for the defence, submits that the upper limit is five years, whereas Ms. McCallum, for the Crown, submits that the top of the range has moved in recent jurisprudence to eight years. In my view, the Crown is correct that the range has moved up somewhat in recent years, but it is difficult to define where that upper limit now rests.

[87] There is clearly case law supporting the three to five year range. Those cases tend to rely on Court of Appeal decisions in the 1990s and early 2000s.[^37] In R. v. Dieckmann, the trial judge relied on those earlier cases as establishing a range of three to five years for a large-scale $5.1 million fraud against the Canada Revenue Agency and sentenced one offender to four years and a second offender (who had a minor role) to two years less a day.[^38] Those sentences were upheld on appeal, with the Court of Appeal holding:

We would not interfere with the four-year sentence imposed by the trial judge on Ms. Dieckmann. She played a central role in a large-scale, long-term fraud on the public purse. Greed was her motivator. The case law is clear that individuals like Ms. Dieckmann who choose to do what she did can expect significant penitentiary sentences, even in the face of strong mitigating factors. Four years was an appropriate sentence.[^39]

The Court of Appeal made no comment on whether the stated range was correct.

[88] The trial judge in R. v. Khatchatourov also relied on case law from the 1990s and early 2000s and found that the range of sentence was three to five years.[^40] The amount of the fraud was slightly over $1 million and the offenders were sentenced to four years in prison. The accused appealed their convictions and sentence. In particular, with respect to sentencing, the defence challenged the trial judge’s finding that the range of sentence was three to five years and argued that the range should have been lower because the offenders were not in a position of trust and the consequences for the victims had not been devastating. The Court of Appeal dismissed the appeal, found that the four-year sentences were fit and that the trial judge “did not err by finding that the range for fraud offences like the ones committed by the appellants was three to five years.”[^41] It does not appear that there was any argument addressed as to whether the upper end of the range could be higher than five years, nor does the increase in the maximum sentence to 14 years appear to have been raised.

[89] In R. v. Drabinsky, the trial judge (Benotto J. as she then was) held that the range for a sophisticated fraud involving a public corporation, lasting a duration of three years and with losses slightly in excess of $8 million was from five to eight years.[^42] Justice Benotto noted that there were examples of offenders being sentenced to substantially more than that in more serious fraud cases. She sentenced Mr. Drabinsky to a total of seven years and the co-accused (Mr. Gotlieb) to a total of six years. On appeal, the Court of Appeal referred to this five to eight year range and stated, “While one might quibble about both ends of that spectrum, the trial judge was correct in determining that crimes like those committed by the appellants must normally attract significant penitentiary terms… .”[^43] The Court of Appeal adjusted the sentences to five years for Mr. Drabinsky and four years for Mr. Gotlieb. The reductions were largely based on the extent to which the financial losses and other consequences had been shown to have flowed from the fraud itself, rather than the degree of responsibility and range of appropriate sentences for the two offenders for a large scale sophisticated fraud. With respect to the range and the actual sentences imposed, it must be noted that the decision in Drabinsky preceded the 2004 amendments increasing the maximum sentence to 14 years. There were also significant mitigating factors that reduced the sentences that these two offenders would otherwise have received.

[90] R. v. Dhanaswar[^44] involved a fraud perpetrated by a husband and wife in which 31 investors were duped out of $2.3 million over the course of several years. Ducharme J. sentenced Mr. Saheed to seven years and Ms. Dhanaswar to six years (on the basis that although she was a knowing and active participant in the frauds, she was less involved than her husband). In reaching that conclusion, the trial judge considered the range of sentences for offences of this nature, noted that Drabinsky had been decided prior to the penalty for fraud being increased, and held that the range for a large scale fraud of the nature before him was three to eight years in prison. He held, at para. 23:

While it is difficult to define a clear range for offences such as these frauds, my review of the case law suggests the appropriate range of sentence for a large scale fraud of this nature is between three and eight years in prison. However, it is important to note that many of these cases pre-date the amendments to the Criminal Code increasing the punishment for fraud. It is also important to recognize the cases in which sentence imposed was less than five years for frauds involving a breach of trust have significant differences that distinguish them from this case. Nonetheless, the case law makes it clear 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.

[91] Ms. Dhanaswar appealed both her conviction and sentence.[^45] The Court of Appeal dismissed her appeal with a brief endorsement. On the issue of sentencing, the Court of Appeal emphasized the importance of denunciation and deterrence for a large scale fraud such as the one before it where multiple, vulnerable victims had been duped. The Court held, at para. 11, that the “sentence was fit and within the acceptable range.”

[92] I consider the Court of Appeal in Dhanaswar to have accepted the appropriateness of the range applied by Ducharme J. as between three and eight years. At a minimum, sentences of six and seven years were considered to be within the range. I agree with the Crown’s submissions that the upper end of the three to five year range previously applied has moved to seven or eight years.

Similar Cases

[93] I have reviewed the extensive case law relied upon by both parties. I do not propose to refer to all of them. I will, however, set out those cases I found to be most similar to the offence and offender now before me.

[94] The offender in Dieckmann[^46] participated with four others in a scheme to defraud the Canada Revenue Agency out of millions of dollars. Ms. Dieckmann was not the mastermind, but played a central role in respect of frauds totalling approximately $1.3 million. She was 48 years old, with three children and no criminal record. She was sentenced to four years. The two main perpetrators died before trial. Mr. Pavao’s personal circumstances are similar. However, there were more victims and the effects on them were more devastating. Also, his degree of culpability was higher than that of Ms. Dieckmann.

[95] The circumstances of the victims in Dhanaswar[^47] were similar to those of Mr. Pavao. However, there were 31 of them (as opposed to 10) and the total amount of the fraud was higher ($2.3 million as opposed to $1.2 million). The circumstances of the accused were similar to those of Mr. Pavao – Mr. Saheed was 47 years old and his wife was 53. They had one child in university and had considerable community support and no prior criminal record. Mr. Saheed was sentenced to six years and Ms. Dhanaswar to four years. The extent of Mr. Pavao’s fraud is less, but his degree of culpability is higher than that of Ms. Dhanaswar, more akin to that of Mr. Saheed.

[96] In R. v. McGill,[^48] the accused was a mortgage broker who assisted in a Ponzi scheme totalling about $3.5 million. There were 22 victims, many of whom suffered devastating financial consequences. Mr. McGill was sentenced to four years. The mastermind of the scheme was sentenced to six years. Mr. Pavao’s degree of culpability is greater than that of Mr. McGill, but the extent of his fraud was less.

[97] The two offenders in Khatchatourov[^49] were similar to Mr. Pavao in that they had extensive support from their families and communities and no criminal records. Each was sentenced to four years. The amount of their fraud was less than that of Mr. Pavao.

[98] In R. v. Boghossian,[^50] one offender (a lawyer) was sentenced to 3½ years in prison and two other offenders were each sentenced to three years after being convicted of defrauding a bank of approximately $1.9 million. Using the money obtained from the bank, the offenders had purchased gold bars, which were never recovered. The personal circumstances of Mr. Boghossian were not dissimilar from Mr. Pavao, except that Mr. Boghossian was a lawyer, which was found to be an aggravating factor. Although the other two offenders played lesser roles in the overall fraud, it was a coordinated effort and they were involved in the planning. Therefore, the trial judge rejected submissions that their sentences should be substantially less than that of Mr. Boghossian. One of those accused had a number of serious health issues, including high blood pressure, diabetes, obesity and dementia (believed to be Alzheimer’s disease) with sufficient cognitive impairment that he was unable to work, drive, or live by himself. The trial judge held that he considered these medical conditions in moderating the length of the sentence within the appropriate range, but nevertheless held that they could be managed in prison.

[99] In R. v. Schoer,[^51] an investment adviser was sentenced to four years for defrauding 14 victims of a total of $413,500, over a period of eight years. Many of the victims were elderly and could not afford the losses they sustained. Mr. Schoer was in a position of trust. He was 51 years old, married with three children and had no criminal record. He had good character references and had already repaid one victim $72,000. Mr. Pavao has repaid nothing and the extent of his fraud is considerably more.

[100] R. v. Piccinini[^52] involved an extensive fraudulent scheme in which phone calls were placed to elderly Americans who were deceived into forwarding funds to assist grandchildren they were told had been arrested. The scheme netted $900,000. Mr. Piccinini was the leader of the group carrying out the scam. He was sentenced to six years imprisonment. He had strong family support, had expressed remorse and had entered a guilty plea. Mr. Pavao’s fraud was larger and he does not have the mitigating effect of a guilty plea.

[101] The offender in R. v. Banks[^53] was an investment adviser who defrauded his victims of approximately $1.4 million. The majority of the victims were elderly retirees who relied upon the interest from their investments to supplement their retirement income. Some of them lost their entire life savings. Mr. Banks was 51 years old, had numerous character references, and no prior criminal record. He pleaded guilty. Mr. Banks was sentenced to four years imprisonment. Mr. Pavao’s personal circumstances are similar, as are his crimes, but he does not have the advantage of the mitigating impact of a guilty plea.

[102] In R. v. Shah,[^54] the offender defrauded 20 victims of a total of $2.2 million. He was sentenced to 66 months in prison. The circumstances of the victims and the consequences they suffered as a result of the fraud bear many similarities to Mr. Pavao’s victims. However, there were more of them and the total amount of the fraud was also greater. Some of the circumstances of Mr. Shah’s fraud were more aggravating. For example, some of these frauds were perpetrated after he had been arrested and charged with another fraud and for some of the frauds he misrepresented himself as a lawyer. In that sense, his crimes were deserving of a harsher sentence than would be appropriate for Mr. Pavao. However, Mr. Shah pleaded guilty, which was mitigating.

H. APPROPRIATE SENTENCE IN THIS CASE

[103] I cannot agree with the submissions of defence counsel that Mr. Pavao should be sentenced at the lower end of the appropriate range. The aggravating factors bring this case well above the bottom of the range, in particular: the extent and duration of the fraud; the nature and vulnerability of the victims; the devastating impact on many of those victims; the motivating force of greed; and, the fact that Mr. Pavao was knowingly selling non-existent shares in real mining companies to the victims of his fraud, while at the same time taking profits for himself from his own acquisition of actual shares in the same mining companies.

[104] The extent of Mr. Pavao’s fraud does not put him at the top of the range, and I also must take into account the mitigating factors. Mr. Pavao is a first-time offender of prior good character and I recognize that his various medical conditions will make serving a prison sentence more difficult than would be the case if he was in good health.

[105] In my view, the appropriate sentence is five years, taking into account the importance of denunciation, deterrence and the other factors I have reviewed above. I also find that such a sentence is fit in light of similar sentences imposed on others for similar crimes.

I. RESTITUTION and FINE

[106] The Crown seeks a restitution order for the full amount invested by each of the complainants, for a total of $1,100,799.00. It is appropriate, and in accordance with the principles of sentencing, that the victims of these crimes receive compensation and that Mr. Pavao be prevented from profiting from his crimes. Mr. Pavao is by no means destitute. He has been working and is likely to be able to work in the future, upon completion of his sentence. There is also some reason to believe that he may have an interest in his matrimonial home, notwithstanding that he placed it in his wife’s name. The individual complainants are not wealthy, could ill-afford to lose the money they invested, and do not have access to any insurance to compensate them for their losses. Many of them are retirees who will not be able to recoup their losses through employment. In my view, a restitution order is a just disposition in these circumstances.[^55]

[107] The Crown also seeks a fine in lieu of forfeiture of the proceeds of the fraud, relying upon s. 462.37(3) of the Criminal Code. I agree with the submissions of the Crown that all of the requirements for a fine in lieu of forfeiture have been met. Fraud is a designated offence under the section and the monies paid by each investor are quantifiable and clearly the proceeds of the fraud. All of the monies received were placed in the 604 bank account, an account under the sole control of Mr. Pavao. If the monies were traceable, they would be clearly subject to forfeiture. However, regardless of whether it can be shown that Mr. Pavao profited personally in the same amount of the monies fraudulently taken, all of the monies are now gone, making a forfeiture order impracticable. In these circumstances, a fine in lieu of forfeiture is an appropriate order.[^56] My only hesitation in ordering both a fine and restitution is that in some respects this is double counting. Also, the fine goes to the government, whereas restitution benefits the individual complainants. In my opinion, justice requires that any funds recovered be paid first to the complainants. The Crown submitted that this problem could be addressed by an order that the restitution order would take priority to the fine and the fine would be reduced as restitution was paid. I agree that this would address my concerns. So ordered.

[108] I have a discretion with respect to the time Mr. Pavao should be given to pay the fine. His counsel submitted that an appropriate time would be six years, based on her submission that his sentence should be two to three years. I agree that three years following the completion of the sentence is a reasonable period of time. Accordingly, I will give Mr. Pavao eight years to pay the fine.

J. CONCLUSION

[109] I sentence Mr. Pavao to five years on each of Counts 1 through 11, all to be served concurrently.

[110] I further order Mr. Pavao to pay restitution to the complainants in the total amount of $1,100,799.00, allocated amongst the complainants in accordance with Schedule A attached to these Reasons.

[111] In addition, I am imposing a fine in lieu of forfeiture in the amount of $1,100,799.00, with eight years to pay. The restitution order takes priority over the fine. Any monies paid by way of restitution shall be deducted from the amount of the fine.

MOLLOY J.

Released: August 22, 2018

SCHEDULE A: R. v. PAVAO RESTITUTION SCHEDULE

INVESTOR	ADDRESS	CHEQUE AMOUNT	TOTAL INVESTMENT
Anthony Vella	46 Chauncey Ave. Toronto M9B 2Z4	$100,000	$370,000 ____________ -$5,000 (recovered)
		$75,000
		$100,000
		$100,000
Brian Kirkwood	76 Davis Brook Blvd Toronto M1T 2J2	$40,000	$140,000
		$30,000
		$70,000
John Venchiarutti & Andrea Venchiarutti	355 Briar Hill Ave. Toronto M4R 1J3	$140,000	$161,000
		$21,000
Gerald Fallon	101 Centerfield Dr. Courtice L1E 1L5	$23,100	$23,100
Marc Belanger	880 Cathcart Blvd Sarnia N7V 2N8	$20,000	$20,000
Jeff Fallon & Nicole Fallon	32 Megan Ave. Toronto M1E 4A7	$25,000	$45,000
		$5,000
		$10,000
		$5,000
Raymond Lefaive	9015 Leslie St. PH #3 Richmond Hill L4B 4J8	$5,000	$50,000
		$45,000
Dan Meghory	58 Roseborough Cres Vaughan L4J 4V1	$28,000	$198,699
		$42,000
		$23,000 $22,746 $21,284 $29,700 $7,500 $10,969 $13,500
Allan Sadowy	605 Royal Park Way Vaughan L4H 1K2	$30,000	$30,000
Neil Doherty	15 McMurrich # 1006 Toronto M5R 3M6	$28,000	$35,500
		$7,500
Jason Michaels	176 Dunbar Ave Toronto M5M 2S5	$27,500	$27,500
Total:			$1,100,799

[^1]: R. v. Pavao, 2018 ONSC 2506.

[^2]: Criminal Code, R.S.C. 1985, c. C-46 [Criminal Code].

[^3]: Ibid., s. 718.1.

[^4]: Ibid., s. 718.

[^6]: Ibid., s. 718.2.

[^7]: Ibid., s. 718.2 (a) (iii).

[^8]: Ibid., s. 718.2 (a) (iii.1).

[^9]: Ibid., 380.1 (1.1).

[^10]: Ibid., s. 380.1(1)(a).

[^11]: Ibid., s. 380.1(1)(b).

[^12]: Ibid., s. 380.1(1)(c).

[^13]: Ibid., s. 380.1(1)(c.1).

[^14]: Ibid., s. 380.1(1)(d).

[^15]: Ibid., s. 380.1(1)(e).

[^16]: Ibid., s. 380.1(1)(f).

[^17]: Ibid., s. 718.2 (c) and (d).

[^18]: Ibid., s. 718.2 (b).

[^19]: R. v. Drabinsky, 2011 ONCA 582, 107 O.R. (3d) 595, at para. 159; R. v. Gray (1995), 1995 CanLII 18 (ON CA), 76 O.A.C. 387, at pp. 398-99 (C.A.), leave to appeal to S.C.C. refused [1995] S.C.C.A. No. 116; R. v. Williams, 2007 CanLII 13949 (ON SC), [2007] O.J. No. 1604 (S.C.).

[^20]: R. v. Dhanaswar, [2014] O.J. No. 6388 (S.C.), aff’d 2016 ONCA 172.

[^21]: British Columbia v. Imperial Tobacco Company Ltd., 2005 SCC 49, [2005] 2 S.C.R. 473, at para. 69.

[^22]: R. v. Dineley, 2012 SCC 58, [2012] 3 S.C.R. 272, at para. 10. The SCC stated that “where legislative provisions affect either vested or substantive rights, retrospectivity has been found to be undesirable.”

[^23]: R. v. Stone, 1999 CanLII 688 (SCC), [1999] 2 S.C.R. 290, at para. 241.

[^24]: R. v. G. (D.), 2014 BCCA 84, 351 B.C.A.C. 146, at paras. 15-16.

[^25]: R. v. Dreger, 2014 BCCA 54, 351 B.C.A.C. 179.

[^26]: R. v. Iyer, 2016 ABQB 680.

[^27]: R. v. Takeshita, 2013 ONSC 1385.

[^28]: R. v. Ajise, 2014 CarswellOnt 19323 (S.C.), aff’d (on other grounds) 2018 ONCA 494, 361 C.C.C. (3d) 384.

[^29]: Drabinsky, supra note 19 at para. 167.

[^30]: Immigration and Refugee Protection Act, S.C. 2001, c. 27 [IRPA].

[^31]: Ibid., ss. 36(1)(a), 44, 45, 63(3), 64.

[^32]: R. v. Pham, 2013 SCC 15, [2013] 1 S.C.R. 739.

[^33]: Ibid. at para 16.

[^34]: R. v. Lal, Mohammed and Mohammed, [2014] O.J. No. 6550 (S.C.).

[^35]: R. v. Lal, Mohammed and Mohammed, 2016 ONCA 678.

[^36]: R. v. Williams, 2007 CanLII 13949 (ON SC), [2007] O.J. No. 1604, at para. 31 (S.C.); R. v. Khatchatourov SCJ, 2012 ONSC 3511, at para. 94.

[^37]: See e.g. R. v. Bogart (2002), 2002 CanLII 41073 (ON CA), 61 O.R. (3d) 75 (C.A.); R. v. Dobis (2002), 2002 CanLII 32815 (ON CA), 58 O.R. (3d) 536 (CA); R. v. Bertram and Wood (1990), 40 O.A.C. 317 (CA).

[^38]: R. v. Dieckmann, 2014 ONSC 717 at para. 34 [Dieckmann SCJ].

[^39]: R. v. Dieckmann, 2017 ONCA 575 at para. 75 [Dieckmann CA].

[^40]: Khatchatourov SCJ, supra note 36 at para. 93.

[^41]: R. v. Khatchatourov, 2014 ONCA 464, 323 O.A.C. 389, at para. 45.

[^42]: R. v. Drabinsky (2009), 2009 CanLII 41220 (ON SC), 246 C.C.C. (3d) 214, at para. 35 (Ont. S.C.).

[^43]: Drabinsky, supra note 19 at para. 164.

[^44]: R. v. Dhanaswar, [2014] O.J. No. 6388 [Dhanaswar SCJ].

[^45]: R. v. Dhanaswar, 2016 ONCA 172.

[^46]: Dieckmann SCJ, supra note 38.

[^47]: Dhanaswar SCJ, supra note 44.

[^48]: R. v. McGill, 2016 ONCA 139.

[^49]: Khatchatourov SCJ, supra note 36.

[^50]: R. v. Boghossian (29 March 2016), Toronto CR-15-70000087-0000 (Ont. S.C.).

[^51]: R. v Schoer, 2016 ONSC 1127.

[^52]: R. v. Piccinini, 2015 ONCA 446.

[^53]: R. v. Banks, 2010 ONCJ 339.

[^54]: R. v. Shah, [2013] O.J. No. 3370.

[^55]: Dhanaswar SCJ, supra note 44 at paras 40-46; R. v. Kazman, 2018 ONSC 2332 at paras. 250-259.

[^56]: Criminal Code, supra note 2, s. 462.37; Dieckmann CA, supra note 39 at paras. 80-85, 99-100; Piccinini, supra note 52 at paras. 10, 13, 18; Khatchatourov CA, supra note 41 at paras. 51-52.