Court File and Parties

COURT FILE NO.: CRIM 1348/15 DATE: 2018 10 23

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

HER MAJESTY THE QUEEN – and – APRIL VUONG and HAO QUACH Defendants

Michael Morris, for the Crown Self-Represented, for the Defendants

HEARD: September 11, 24 and 25, 2018

REASONS FOR SENTENCING

Shaw J.

Overview

1Following a four-week trial, a jury found Ms. Vuong and Mr. Quach, who are husband and wife, guilty of one count of defrauding the public of an amount exceeding $5,000. Ms. Vuong and Mr. Quach represented themselves at trial. Mr. Quach called evidence, but Ms. Vuong did not.

2The Crown called a number of witnesses, including twelve victims who lost money. Two victims were husband and wife. The indictment covered a period from October 1, 2007 to October 30, 2012. The sentencing hearing was conducted over a three-day period ending on September 25, 2018. The focus of the hearing was determining the fit and appropriate sentence for each offender.

3The Crown seeks a penitentiary sentence of nine years for both Ms. Vuong and Mr. Quach. The Crown also seeks an order for restitution in the sum of $3,567,992, jointly and severally, and a fine in lieu of forfeiture against both offenders in the same amount. Each offender agrees with the order for restitution and the amount of restitution. They both argue for a conditional sentence.

4Throughout these reasons, my comments apply to both offenders equally. Where there are different considerations for either, I expressly state so. I also use the terms “investor” and “victim” interchangeably.

Circumstances of the Offence

5Section 724(2) of the Criminal Code sets out two important principles that must guide the sentencing judge in determining the relevant facts following a conviction by jury. According to s. 724(2)(a), the sentencing judge “shall accept as proven all facts, express or implied, that are essential to the jury’s verdict of guilty”. Section 724(2)(b) states that the judge “may find any other relevant fact that was disclosed by evidence at the trial to be proven, or hear evidence presented by either party with respect to that fact”. As per s. 724(3)(e), should any such facts be an aggravating factor, it is the Crown’s burden to prove those facts beyond a reasonable doubt.

6In R. v. Ferguson, 2008 SCC 6, [2008] 1 S.C.R. 96, the Supreme Court of Canada set out the two principles which govern the sentencing judge in this endeavour. At paras. 16-18, McLachlin C.J., writing for the unanimous Court, found:

16This poses a difficulty in a case such as this, since, unlike a judge sitting alone, who has a duty to give reasons, the jury gives only its ultimate verdict. The sentencing judge therefore must do his or her best to determine the facts necessary for sentencing from the issues before the jury and from the jury’s verdict. This may not require the sentencing judge to arrive at a complete theory of the facts; the sentencing judge is required to make only those factual determinations necessary for deciding the appropriate sentence in the case at hand.

17Two principles govern the sentencing judge in this endeavour. First, the sentencing judge “is bound by the express and implied factual implications of the jury’s verdict”: R. v. Brown, [1991] 2 S.C.R. 518, p. 523. The sentencing judge “shall accept as proven all facts, express or implied, that are essential to the jury’s verdict of guilty” (Criminal Code, s. 724(2)(a)), and must not accept as fact any evidence consistent only with a verdict rejected by the jury: Brown; R. v. Braun (1995), 95 C.C.C. (3d) 443 (Man. C.A.).

18Second, when the factual implications of the jury’s verdict are ambiguous, the sentencing judge should not attempt to follow the logical process of the jury, but should come to his or her own independent determination of the relevant facts: Brown; R. v. Fiqia (1994), 162 A.R. 117 (C.A.). In so doing, the sentencing judge “may find any other relevant fact that was disclosed by evidence at the trial to be proven” (s. 724(2)(b)). To rely upon an aggravating fact or previous conviction, the sentencing judge must be convinced of the existence of that fact or conviction beyond a reasonable doubt; to rely upon any other relevant fact, the sentencing judge must be persuaded on a balance of probabilities: ss. 724(3)(d) and 724(3)(e); see also R. v. Gardiner, [1982] 2 S.C.R. 368; R. v. Lawrence (1987), 58 C.R. (3d) 71 (Ont. H.C.). It follows from the purpose of the exercise that the sentencing judge should find only those facts necessary to permit the proper sentence to be imposed in the case at hand. The judge should first ask what the issues on sentencing are, and then find such facts as are necessary to deal with those issues.

7Applying these principles, the following are the essential facts to the jury’s verdict in this matter.

8This was a large scale and sophisticated fraud that took place over a period of five years. The fraud involved a substantial amount of money being deposited into multiple bank accounts held in the name of Ms. Vuong and Mr. Quach jointly, as well as accounts held in their own names individually. Money was also deposited into various accounts held in the name of Systematech. Ms. Vuong and Mr. Quach incorporated Systematech in June 1999, initially as a software consulting company. By 2007, Ms. Vuong and Mr. Quach were using the company to offer investment opportunities to various investors. Ms. Vuong and Mr. Quach were the sole directors and employees of Systematech.

9Between October 2007 and October 2012, the offenders defrauded numerous people of $5,175,000 in an elaborate investment scam in the nature of a “Ponzi scheme”. The offenders solicited the victims to invest money with them to trade in the stock market using various trading instruments. Neither Ms. Vuong nor Mr. Quach were registered with the Ontario Securities Commission as dealers authorized to trade in securities.

10The offenders guaranteed payment of high annual rates of interest between 12 and 15 per cent. They offered some investors guaranteed rates as high as 20 per cent. They also promised that the principal and any unpaid interest would be returned to investors, upon written request, within a fixed number of days. Most of the victims signed promissory notes setting out these guarantees.

11Some investors were more knowledgeable than others. Some were professionals such as a doctor, architect, engineer, lawyer and small business owners. Some were encouraged to invest using the equity in their home secured by way of a line of credit. One used an advance on his credit card to invest. Some invested their parents’ retirement savings. Some of the victims had known either Ms. Vuong or Mr. Quach since childhood. A number were more recent friends and had personal relationships with them. Others were family members of investors. Still others had met Ms. Vuong more recently. Some were provided with written promotional information prepared by Ms. Vuong and Mr. Quach describing themselves, their investment strategy and their alleged successful investment record.

12Ms. Vuong and Mr. Quach promised to invest the victims’ money. They misrepresented that the victims’ money would be protected and that the investment scheme was safe. The offenders did invest some money, primarily in the trading of options and currency trading. Option trading is trading with the derivative of a share. What was being traded was whether the share price would go up or down and not the actual share itself.

13The offenders used some of the money from individual investors to pay other investors’ interest payments or principal in the way of a “Ponzi scheme”. The offenders used some of the money personally, including for the purchase of Porsche for $50,000 in October 2010.

14A number of the victims were to receive fixed monthly interest payments. A general pattern emerged. The offenders would make interest payments for a period of time until cheques could not be processed due to insufficient funds. Some of these interest payments came from other victims’ principal investment rather than interest earned on actual investments. Some investors received payment of some of their principal also funded by another victims’ principal investment.

15The offenders assured all of the investors their investments would be safe.

16Mr. Anthony Long, a forensic accountant with the enforcement branch of the Ontario Securities Commission, gave evidence as a fact witness regarding the sources and use of funds that flowed through the myriad personal and corporate bank and trading accounts held by the offenders and Systematech between February 2010 and March 2012. That period of time was used for his analysis as the opening and closing account balances for all the bank accounts into which money was deposited was overdrawn, which enabled Mr. Long to trace the source and use of funds moving into and out of those bank accounts for this time period.

17During that time period, the victims who gave evidence deposited $3,627,670 into the various bank accounts. During the same time, other deposits into those same bank accounts from other sources totaled $3,267,924. Thus, from February 2010 to March 2012 a total of $6,895,594 was deposited into bank accounts held by the offenders or their company, Systematech.

18In that same time period, the offenders transferred $2,241,382 into brokerage accounts for trading purposes. The offenders lost $1,711,205 in trading. As a result, only $530,177 was transferred back from the trading accounts to the bank accounts.

19From those bank accounts and during that time period, $1,249,999 was paid to the victims who gave evidence at trial and $3,426,261 was paid to the other sources of funds. Although they lost $1,711,205 in trading, Ms. Vuong and Mr. Quach took $468,487 out of the bank accounts for their personal use as cash withdrawals, for retail and miscellaneous purchases and credit card payments. This included the $50,000 payment for their Porsche in October 2010, funded partially from an investment made by one of the victims.

20Mr. Quach testified that in mid-2005, he started to develop a concept for an online poker site called Blueline Poker. Between 2007 and 2010 he formed a team of individuals to work on the project. None of the 12 victims who testified were ever told of the existence of Blueline Poker, nor were their investment funds used in the project.

21The evidence supports the conclusion that Ms. Vuong was the person who dealt directly with each of the victims. The trial evidence included numerous emails between herself and the victims soliciting funds from them. The emails were very personal as Ms. Vuong focused on developing connections with each one of the victims. Each victim was made to feel that they had a close relationship with Ms. Vuong. While the Crown’s position is that there was no breach of trust as contemplated in s. 718.2(a)(iii) of the Criminal Code, the victims’ did trust Ms. Vuong and believed her when she told them that their money was safe. She cultivated their trust, going so far as to encourage more than one victim to borrow against their home to invest with her and Mr. Quach. These victims trusted her so much that they put their homes at risk.

22Ms. Vuong told the victims that the returns were guaranteed. The promissory notes signed by most of the victims and Ms. Vuong and Mr. Quach confirm this guaranteed return. Ms. Vuong also told the investors that their principal was protected. They believed her. She told one of the victims that their money was used to buy “equivalent to a foreign currency position, very much like a money market bond which is held in our books. The additional money which comes in just gives us added purchasing power or more leverage on our books.” She told another victim that “the principal is protected as we take out a cash equivalent position by buying USD for our clients. How we make our money is we use our own personal money to trade the above instruments, it just allows us more buying power but the clients’ position is protected as we do not sell out their USD until they cash out with us.”

23The evidence supports the finding that none of the victims’ money was ever used in these ways. The offenders did not use the money to purchase foreign currency positions or hold it in US dollar accounts only as purchasing power or leverage for their own personal money to trade. The victims’ money was deposited into various bank accounts, transferred to other accounts, paid out to other investors, and used by the offenders personally. Only some of the money was invested.

24Ms. Vuong also gave two of the victims false documents purported to be statements from Systematech’s trading account with TD Waterhouse. Those documents falsely stated that the trading account had a significant balance at a time when it did not. These records were clearly given to lure investors through a deliberate falsehood. Ms. Vuong represented the balance in that trading account was just over $6 million at times when the balance was actually approximately $5,000 or in an overdraft position. These documents were used to convince the victims that their investments would be safe when, in fact, they were not.

25After each of the victims requested a return of their principal, the offenders offered numerous excuses and lies about why payment was not forthcoming. Some victims received cheques that, when presented to the bank, could not be cashed as a result of insufficient funds. Still others did not even attempt to cash the cheques they received. Mr Long’s evidence was that some of those cheques would not have been honoured as the accounts had insufficient funds. The victims became increasingly frustrated and upset with the offenders’ repeated excuses and lies about why their money could not be returned. The reality was that their money was gone.

26Although Mr. Quach did not communicate directly with all the victims, he is equally culpable as Ms. Vuong. He and Ms. Vuong shared the trading. He was aware of the significant trading losses that occurred between February 2010 and March 2012. He knew that the investors could not be paid the guaranteed returns as promised in the promissory notes. He was further aware of the money being deposited into various bank accounts as many were jointly held with Ms. Vuong. Some money was deposited into bank accounts held in Mr. Quach’s name only. He signed most, but not all, of the promissory notes and was aware of the guarantees being made regarding the interest payments and the guaranteed return of the principal on notice. While Ms. Vuong may have interacted with the victims to lure them into investing, she and Mr. Quach operated as a team. They used the victims’ funds as their personal piggy-bank and, when things got messy, to pay other investors in the “Ponzi scheme”.

27Although payments made to the victims were by way of cheques signed by Ms. Vuong, they were from bank accounts held by Systematech, a company owned and operated by Mr. Quach and Ms. Vuong. While Mr. Quach played a different role than Ms. Vuong, he was an active participant in the fraudulent scheme to lure more victims to invest money so that their money could be used to pay other victims.

28During sentencing submissions, Mr. Quach’s position was that he was equally culpable as Ms. Vuong. Interestingly, when asked to address the court Ms. Vuong indicated that her position was that Mr. Quach was less culpable as she held him to a higher moral standing. For the reasons set out above, I do not accept this but find that they both played a different but essential role in this fraudulent scheme.

The Impact on the Victims

29Ten victims filed victim impact statements. Each of those statements, some of which were read in court by the victims, speak of the financial and emotional devastation caused by Ms. Vuong’s and Mr. Quach’s crime. The victims spoke of their loss of trust in people, their financial struggle and their inability to recover. Others suffered devastating affects on their personal relationships or lost the ability to retire. The fraud led several victims to feel embarrassed and negatively impacted their health.

30Kare Anderson resides in California. She met Ms. Vuong while visiting friends in Toronto. She invested $839,000 and has lost $608,584. Ms. Anderson had to take on a part-time second job for four years as a result of this loss. She could not afford to visit her brother and sister in Oregon when they were severely ill. She feels embarrassed and she has problems sleeping. She saw a therapist for a year. She is unable to afford vacations. She had to defer two medical procedures. She has had to continue to work beyond her original plan to retire at age 65.

31Anita Andreychuk resides in British Columbia. She and her husband took out a line of credit of $650,000, secured against their home, to invest with Ms. Vuong and Mr. Quach. Nothing has been repaid. Her brother, Ken Lee, was a friend of Ms. Vuong and he persuaded Ms. Andreychuk to invest. After learning that all the money was lost, she feared that her brother would take his life.

32Ms. Andreychuk and her family lost their savings and went into debt. She described this time as the darkest of her life. Her son has been diagnosed with autism and she had wanted to work part-time to spend more time with him. She now has to work full-time and take on other jobs to supplement her income to pay the debt. She feels ashamed and embarrassed and has never been able to tell anyone what has happened. She has had to go to counselling and her marriage has suffered. Her mother and brother live with her as none can afford to live separately.

33Patricia Baeucker and her husband Ken Griffin own their own business. They invested $250,000 and lost $226,900. They used a line-of-credit against their home for part of the investment. They filed a joint victim impact statement stating that they are too ashamed to talk about this to their family and friends. They used to trust and rely on specialized professionals to deal with the needs of their small business but now they take on more of the work themselves because their trust in others has been eroded. The offence has affected their lifestyle and work-life balance as they have to work more hours to try to recover from the financial impact. This has increased their levels of stress and anxiety. Ms. Baeucker believes that the high stress level has contributed to her developing hypertension. They have delayed their retirement.

34Their company’s credibility and reputation with the bank has suffered as a result of the NSF cheques made payable to it by the offenders.

35Gwen Edwards lives in California. She invested $250,000 and lost $229,315. She financed part of the investment through a home equity line of credit. She describes feeling violated, depleted and stunned. She described the harm resulting from the loss as both psychological and physical. She is now 68 and her husband is 77 and she is still working. Her plan had been to stop working three years ago when she was entitled to Medicare.

36Dr. Kolbasnik invested and lost $100,000. His daughter has an inoperable brain tumor for which she has received a number of years of chemotherapy, surgeries and other medical interventions. The purpose of investing the money was to help build a trust fund for her as she is disabled due to her medical condition and will likely need life-long personal and medical assistance. Ms. Vuong and Mr. Quach were aware of his daughter’s condition and the importance to Dr. Kolbasnik that the principal he invested be safe for his daughter.

37The loss of their investment has made it much harder to create a financially secure future for his daughter. He and his wife had plans to hire some nighttime support but they have abandoned this idea to save money. Dr. Kolbasnik described feeling tired, sad and angry. He thinks of what has happened daily.

38Ken Lee invested and lost $1,028,000. He has not received any payment. Some of this money was from his mothers’ retirement fund. He also encouraged his sister, Anita Andreychuk, to borrow money to invest. He describes the extent of the impact on his life as “everything”. He thinks of the huge burden of debt that he and his family face on a daily basis. He describes feeling betrayed and taken advantage of by Ms. Vuong and Mr. Quach. He said Ms. Vuong was a friend for ten years. It is now hard for him to get close to people. He feels that the loss was his fault even though he was a victim. His personal confidence in himself and in his decision-making is gone. He also has a fear of discussing anything to do with finances. He experiences trepidation and anxiety when entering banks or even hearing financial updates in the news. This financial loss has created tension in the family and he feels responsible. He had some teeth removed and replaced with implants due to cracking caused by stress-induced jaw clenching. He has been diagnosed with a stomach ulcer.

39When Mr. Quang Luong gave his money to Ms. Vuong, he was about to purchase a new home. Ms. Vuong instead convinced him to invest the money with her. He and his wife invested $288,000 and lost $170,460.

40Joe Pellegrino invested $550,000 and lost $417,475. His ability to trust anyone has been diminished. His anxiety and depression have become unmanageable without medication. Instead of retiring he has had to return to work. He has not been able to help his children with their education. When he met Ms. Vuong, he was engaged to be married and was financially secure and looking forward to starting a new life. After losing the money, he was unable to retire and his fiancé broke up with him. It took him two years to talk about this with his family. He has lost his ability to concentrate and his business partners no longer trust his judgment. He has gained weight due to anti-depression medication and he has stopped being physically active.

41Mr. Pellegrino had no pension plan as he was self-employed. The financial impact has put him back 20 years and has destroyed him emotionally, mentally and financially. At 61 years of age he will have to keep working the rest of his life and he will not have anything to pass down to his children. He will have to sell his apartment soon in order to stay financially afloat.

42Daniel Tsai invested $700,000 and lost $62,465. He described feeling stress, anxiety and developing high blood pressure.

43Drew Hauser invested $470,000 and lost $48,000. His family helped the Vuong family when they first arrived in Canada by finding them housing and jobs. Their families were friends. The loss created significant emotional and financial strains on his home and work life. The multiple NSF cheques negatively impacted his professional relationships with banking and development partners.

Circumstances of the Offenders

April Vuong

44Ms. Vuong is 45 years of age. She was born in Vietnam and lived there until she was three years of age. She and her family initially moved to Singapore and then eventually to Canada. She attended university, working three jobs and relying on student loans. She married her husband, Mr. Quach, in 1999. They do not have any children.

45Ms. Vuong has a Bachelor of Arts in Law and Justice and a Bachelor of Commerce in Entrepreneurial Management and Finance. She also told the author of her pre-sentence report (PSR) that she completed the Canadian Securities Course. She has begun working on a Master of Business Administration degree. She has an interest in studying social work.

46Ms. Vuong was diagnosed with breast cancer at age 32. She underwent a lumpectomy and radiation followed by five years of drug therapy. While she is in remission she has pain on a daily basis. She also suffers from chronic pancreatitis.

47Her mother was diagnosed with lung cancer in 2009. She and her husband were very involved in caring for her mother. As a result of her mother’s failing health, Ms. Vuong became the primary caregiver for her grandmother for approximately one year until her death in 2012. She was very close with her grandmother and this was a difficult time.

48As a result of her mother’s declining health Ms. Vuong cared for her full-time in 2016, the last year of her life.

49Ms. Vuong and Mr. Quach currently live with Mr. Quach’s mother. Ms. Vuong’s father and Mr. Quach’s mother have been supporting the offenders financially.

50Ms. Vuong has not worked for the past five years, since being charged with this offence. As a result of an agreement reached with the Ontario Securities Commission in November 2013, Ms. Vuong is restricted regarding the type of work she can do in the financial and securities industry for 15 years.

51Before these criminal charges, Ms. Vuong told the author of the PSR that she was self-employed, working to invest investor money in the stock market as well as in a software company she jointly ran with Mr. Quach. She told the author of the report that the company’s main project was to create and the sell an online gaming solution geared towards the overseas market.

52Her prior work experience involved freelance consulting for various banks and financial institutions. She told the author of the PSR that her in-depth knowledge of the financial world, as well as her clear understanding of information technology made her a highly sought-after individual. She earned a substantial amount of money as a consultant.

53She told the author of the PSR that she and her husband received an offer to purchase their online gaming system in October 2013. They travelled to Hong Kong and China to make arrangements for the sale but were arrested upon their return to Canada. As a result, the company rescinded the offer. According to Ms. Vuong, this would have been a multi-million dollar transaction. Another offer was made in 2015 to buy the system but she and Mr. Quach could not travel as the Crown would not consent to vary the bail restrictions and therefore again the transaction did not proceed. Ms. Vuong was frustrated as the money would have allowed them to repay all of their investors.

54Ms. Vuong stated that her intention is to repay the money owing to the victims. She is remorseful that the victims lost money but says it was as a result of bad investing.

55Mr. Gabor Marton spoke to the author of the PSR and also was questioned at the sentencing hearing with respect to those discussions. He also gave evidence at trial and spoke about Ms. Vuong’s good character. He described her as ambitious, goal-orientated, dedicated, social, caring, dependable and having integrity. Another friend, Ms. Lily Huynh, described Ms. Vuong as sweet and truthful.

56Mr. Papoula was a witness at the trial and filed a letter in support of Ms. Vuong and Mr. Quach. He described Ms. Vuong as a close friend of 16 years whom he met working at Mackenzie Investments. He described her as being well-respected by management and employees. He invested $36,000 and has not been repaid but has faith that Ms. Vuong will make restitution. He described Ms. Vuong and Mr. Quach as intelligent. He described Mr. Quach as kind and caring. He does not believe that they knowingly set out to deceive or swindle investors.

Hao Quach

57Mr. Quach is 44 years of age. He was born in South Vietnam. His family fled to Cambodia in 1975 with few possessions. He is an only child. His father died in a drowning accident when they arrived in Cambodia. Mr. Quach and his mother were accepted as refugees in Canada in 1979 and were sponsored by a family in Ontario. His mother worked for many years as a seamstress in factories in the Kitchener-Waterloo area. At the age of 64 she continues to work for a local clothing manufacturer.

58Mr. Quach recalls that his mother worked 14 hours a day to support him and other family members. They relocated to Mississauga when he was in grade seven. He met Ms. Vuong when they were in elementary school but did not have contact with her again until 1995, when Ms. Vuong was attending a local university. They stayed in touch after she left to attend other post-secondary schools and eventually married in 1999.

59Mr. Quach and Ms. Vuong have experienced a number of health-related problems within their family, including Ms. Vuong’s cancer, Mr. Quach’s mother’s high blood pressure, Ms. Vuong’s mother’s cancer and death, and her father’s heart problems. They have also experienced financial pressures but he said he and Ms. Vuong have been able to maintain a stable and mutually supportive relationship throughout this time.

60Mr. Quach was a top student in elementary school and was in an enrichment class. He fell in love with computers at a young age. Mr. Quach was accepted into the mathematics and computer science program at the University of Waterloo, but left after two years to earn an income. He and a friend decided to start their own software programming business. Mr. Quach’s CV was filed as evidence and it is quite extensive, showing a number of employers and consulting clients, including some major financial institutions.

61He and Ms. Vuong started Systematech, which he says was profitable for many years. He told the PSR author about the same potentially lucrative deal in Hong Kong that Ms. Vuong mentioned.

62Mr. Quach told the author of the PSR that as a result of the charges he and Ms. Vuong had to sell their possessions and are supported by his mother and Ms. Vuong’s father. He has had no income for five years.

63He told the PSR author that it was never his intention to defraud the victims. He has always intended to and plans to repay the victims as soon as he is able to do so. He plans to do this by developing new software programs that he can sell to repay the victims.

64Mr. Gabor Marton has known Mr. Quach for 30 years. He described him as goal orientated, determined, focused and ambitious but also very honest, loyal and intelligent. He told the PSR author that Mr. Quach made poor decisions surrounding investments and that he is remorseful for the loss experienced by the victims.

Position of the Parties

65The Crown submits that nine years in prison is the appropriate sentence for a fraud of this scale. The Crown also submits that Ms. Vuong and Mr. Quach should receive credit at the rate of 1.5:1 days for each of the 7 days they spent in pre-trial custody for a credit of 11 days. The Crown also seeks a joint and several restitution order of $3,567,992 to compensate the victims, a fine in lieu of forfeiture in the same amount, an order for a DNA sample, and a lifetime prohibition order under s. 380.2.

66Ms. Vuong and Mr. Quach agree that the priority should be on compensating the victims. They both submit that they intend to make restitution and to accomplish that they must be in the position to begin earning money as soon as possible. They both took the position that a conditional sentence would be a fit and appropriate sentence as it would permit them to begin earning an income to compensate the victims. They agreed with the amount of restitution owing to each victim.

Principles of Sentencing

67The principles of sentencing are set out in ss. 718, 718.1 and 718.2 of the Criminal Code. According to s. 718.1, the fundamental principle of sentencing is that a sentence must be proportionate to the gravity of the offence and the degree of responsibility of the offender.

68According to s. 718 of the Criminal Code, the fundamental purpose of sentencing is to protect society, to contribute to respect for the law and to maintain a just, peaceful and safe society by imposing just sanctions that have one or more of the following objectives:

a) Denouncing unlawful conduct; b) Deterring this offender and others from committing offences; c) Imprisoning offenders where necessary to separate them from society; d) Assisting in rehabilitating offenders and in appropriate circumstances encouraging their treatment; e) Providing reparation for harm done to victims or the community; f) Promoting in offenders a sense of responsibility for and acknowledgement of the harm they have done to victims or to the community.

69Section 718.2 of the Criminal Code sets out other sentencing principles. Those applicable to this case are as follows:

a) That a sentence may be increased or decreased depending upon the presence of any relevant aggravating or mitigating circumstances relating to the offence or to the offender; b) That a sentence should be similar to those imposed on similar offenders for similar offences committed in similar circumstances; c) An offender should not be deprived of liberty, if less restrictive sanctions may be appropriate in the circumstances; and, d) All available sanctions, other than imprisonment, that are reasonable in the circumstances and consistent with the harm done to victims or to the community should be considered for all offenders, with particular attention to the circumstances of Aboriginal offenders.

70In R v. Drabinsky, 2011 ONCA 582, 107 O.R. (3d) 595, the Court of Appeal for Ontario held at para. 160 that denunciation and general deterrence must dominate sentencing for large-scale commercial frauds and that these principles are most often expressed in the length of the jail term imposed. The Court noted that amendments made to the Criminal Code in September 2004 both raised the maximum sentence from ten to fourteen years and specifically identified certain factors found in sophisticated frauds to be aggravating factors. At para. 164 the court noted that the trial judge was correct in determining that crimes like those committed by the appellants in Drabinsky would normally attract significant penitentiary terms well beyond the two-year limit applicable to conditional sentences. At para. 173 the court held:

We agree that cases properly characterized as “scams” will normally call for significantly longer sentences than frauds committed in the course of the operation of legitimate business. Whether the absence of “pure greed” is viewed as a mitigating factor or simply as the absence of an aggravating factor would seem to make little difference in the ultimate calculation.

71The object of denunciation is a sentence that communicates society’s condemnation of the offender’s conduct. When determining the fit and appropriate sentence in this case, the court must impose a sentence that denounces criminal conduct that targets investors, some of whom were more vulnerable than others, and that defrauded victims not only of their savings but also resulted in many incurring significant debt.

72The objective of general deterrence is to impose a sanction that will discourage others from engaging in criminal conduct. In Drabinsky, the Court found at para. 159 that if the prospect of a long jail sentence will deter anyone from planning and committing a crime, it would deter people “who are intelligent individuals, well aware of potential consequences, and accustomed to weighing potential future risks against potential benefits”.

73In this case, Ms. Vuong and Mr. Quach are both highly intelligent and capable individuals. This was not a spontaneous crime. It involved careful and detailed planning to not only lure the victims but then to transfer money between many bank accounts and amongst a number of investors.

Case Law

74While sentencing is an individualized process driven by the unique facts of every case and the characteristics of the offender, the general sentencing provisions of the Criminal Code must be applied to those unique circumstances. The following review of the case law indicates that cases of large-scale and long-term frauds that have devastating consequences for a large number of victims will typically attract a substantial penitentiary term.

Crown Cases

75In R. v. Dhanaswar, 2016 ONCA 172, the offenders were a husband and wife. Ms. Dhanaswar was convicted of two counts of fraud over $5,000 following a trial by a judge sitting with a jury. She was sentenced to six years imprisonment on each charge concurrent and was ordered to pay restitution in the amount of $2,372,702. The trial judge imposed a fine in lieu of forfeiture in the same amount, payable in six years following her release. The sentence included a further five years imprisonment in the event of non-payment of the fine.

76The Court of Appeal found that the evidence was unequivocal that the appellant was an active participant in the fraudulent scheme with her husband. She held executive positions in the companies and participated in the marketing of the various fraudulent transactions and made statements in support of her husband’s credibility to prospective investors. She also assisted with promotional materials that she knew were deceptive. The Court of Appeal upheld both the conviction and sentence.

77In R. v. Khatchatourov, 2014 ONCA 464, the Court of Appeal upheld a four-year custodial sentence. The Court found at para. 39 that the sentence was in the “appropriate range for a large-scale, sophisticated fraud, even though the appellants were not in a position of trust with the financial institutions or, in a legal sense, with all of the personal victims.” The Court upheld the trial judge’s order for restitution of $495,535.04. The financial institutions involved lost $1,167,869.95, which was reimbursed by the Canada Mortgage and Housing Corporation.

78The Court found at para. 55 that the objective of forfeiture under s. 462.37(3) of the Criminal Code “is not punishment, but to deprive the offender of the proceeds of crime and to deter him or her from committing crimes in the future.” If the offender fails to pay the fine without a reasonable excuse, they serve a mandated period of imprisonment. This is not an additional punishment, but a substitute for the fine and an enforcement mechanism meant to encourage payment.

79In R. v. Dieckmann, 2017 ONCA 575, leave to appeal to the Supreme Court of Canada refused March 15, 2018, No. 37788, the Court of Appeal upheld the four-year custodial sentence imposed by the trial judge. In that case the judge found that the fraud was a large-scale fraud driven by greed and was complex and prolonged. The appellant was convicted of seven counts of fraud in relation to $5.7 million, which the offenders diverted from the Canadian Revenue Agency. The Court referred to R. v. Lavigne, 2006 SCC 10, [2006] 1 S.C.R. 392, which dealt with an offender’s ability to pay a fine imposed in lieu of forfeiture and held that ability to pay is not taken into consideration either in the decision to impose the fine or in the determination of the amount of the fine.

80At para. 100 in Dieckmann the Court also found that when considering a fine in lieu of forfeiture, there is no onus on the Crown to establish that an offender has received a benefit.

81In R. v. Reeves, 2018 ONSC 3939, the offender pleaded guilty to one count of fraud over $5,000 pursuant to s. 380(1) of the Criminal Code. The offender was in the financial services business and committed fraud through the course of that business. He did not seek a pre-sentence report and did not testify during the sentencing hearing. The judge’s only source of additional information for the purpose of sentencing came from a forensic psychiatrist who discussed issues relating to the offender’s mental health.

82After reviewing a number of cases, Goodman J. found that the range of sentence varies considerably. He found that this was a large-scale fraud with losses totaling $3,124,453, which was an aggravating factor. Another aggravating factor was the offender’s proximity to the victims, who were either friends, common acquaintances, relatives or otherwise connected to the accused.

83A significant mitigating factor was that the accused pleaded guilty, though not until the second week of trial. As a result, Goodman J. sentenced the offender to four years’ incarceration and made an order for restitution to the individual victims. He also imposed a fine in lieu of forfeiture of $3,125,453, with five years following the expiration of any term of imprisonment to pay the fine, and a further five years on non-payment, consecutive to any other term of incarceration being served. Lastly, Goodman J. ordered that the restitution take priority over the payment of the fine in lieu of forfeiture and the fine in lieu of forfeiture be reduced by the amount of restitution paid to the victims.

84In R. v. Reeve, 2018 ONSC 3744, the offender was a financial planner who owned and operated a number of investment offices. After a lengthy trial he was found guilty of defrauding at least 41 victims of approximately $10 million over the indictment period of January 2007 to September 2009. Skarica J. reviewed in detail the victim impact statements, which spoke of the loss of trust in people, financial struggles, loss of relationships, loss of an ability to retire, feelings of shame and embarrassment, stress-related diseases and impacts on general health.

85The court found the offender’s lack of a criminal to be a mitigating factor, along with his previous position as a highly-respected and well-known owner of an investment company. With respect to aggravating factors Skarica J. found that the total value of the fraud exceeded $1 million, there were a large number of victims and that in committing the offences the offender took advantage of his high regard in the community. The court found that denunciation and general deterrence must dominate sentencing for large-scale commercial frauds and sentenced the offender to 14 years with credit for pre-trial custody. Skarica J. also imposed a restitution order for $10,887,000.87 and a fine in lieu of forfeiture for the same amount, with a further ten years to be served in default of payment of the fine.

86In R v. Dobis, [2002] 58 O.R. (3d) 536 (C.A.), [2002] O.J. No. 646 (C.A.), the offender pleaded guilty to fraud over $5,000 and theft over $5,000 relating to money he misappropriated from a company. The trial judge found that the fraud and theft took place over a period of three years and totaled more than $2 million. The trial judge imposed a conditional sentence of two years less a day, to be served in the community.

87The Court of Appeal overturned the sentence and increased the sentence to three years. The Court held that the serious nature and consequences of the offence required the imposition of a penitentiary sentence. The Court emphasized a real need to denounce and generally deter in the realm of large-scale frauds committed by persons in positions of trust that result in devastating consequences for the victims.

88In R. v. Drakes, 2009 ONCA 560, leave to appeal to the Supreme Court of Canada refused January 28, 2010, No. 33276, two offenders were found guilty of several counts of fraud over $5,000, involving a large-scale, brazen and sophisticated fraud scheme. After trial one accused was sentenced to five years and the other to four years. The Court of Appeal upheld the sentences on the basis that they were in keeping with those found in large-scale fraud cases. At para. 26, the Court accepted the following from the trial judge’s reasons for sentence:

There is a real need to emphasize denunciation and general deterrence in the realm of large-scale frauds with devastating consequences for their victims. There is a real need to warn individuals currently involved in such scams, and those devising new ones, that substantial penitentiary sentences will follow this type of crime, to say nothing about the serious disgrace to them and everyone connected with them.

89At para. 14 of R. v. Rafilovich, 2017 ONCA 634, the Court of Appeal relied on Lavigne and held that the purpose of the Criminal Code’s forfeiture provisions is to deprive the offender of the proceeds of their crime and deter them from committing future crimes. At para. 15 the Court also held that where the property itself is no longer available for forfeiture, the court has a limited discretion to refuse to order a fine in lieu of forfeiture under s. 462.37(3) of the Criminal Code. At para. 17 the Court found that “[t]he amount of the fine is intended to be equal to the value of the proceeds of crime it replaces”. Thus, forfeiture orders are not part of the individualized general sentencing provisions aimed at sentencing for a particular offence.

90In R. v. Lewis, 2014 ONSC 4188, a jury found the offender guilty of one count of defrauding the public of an amount exceeding $5,000. He represented himself at trial.

91Corrick J. found that between January 2004 and October 2011, the offender defrauded numerous people of $7,527,630 in a mortgage investment scam in the nature of a Ponzi scheme. The offender lured members of the public to invest in private mortgages through various companies he controlled by offering attractive interest rates and the backing of promissory notes promising the return of principal.

92Though the offender did invest a small portion of the money he received, the investments were not as safe and secure as advertised. Corrick J. found that Mr. Lewis deposited the bulk of the money into various bank accounts held by the offender and his wife. Bank records indicated that most of the investors’ money actually went toward “interest” payments to other investors, to pay company and personal expenses, and to point of sale purchases and cash withdrawals.

93The court found that aggravating factors were the scale of the fraud, the offender’s breach of his clients’ trust, the devastating impact on the victims, the driving motivation of greed in committing the crime and that the offender did not acknowledge that what he did was criminal.

94Corrick J. found that protection of the public, denunciation, and deterrence (both general and specific) were of paramount importance, and sentenced the offender to seven years in prison. The court made an order for restitution and a fine in the lieu in the amount of $7,527,630, payable within ten years of his release, with a further five years in prison on default.

95In R. v. Scribnock, 2017 ONSC 1716, [2017] O.J. No. 1365, the accused pleaded guilty to 19 counts of fraud. The total amount involved was in excess of $2.8 million. The accused was a financial adviser for approximately 25 years, and many of the victims had considered him a trusted friend. The fraud took place between November 2008 and November 2012.

96Maranger J. found that the jurisprudence in major multi-million dollar fraud cases establishes a very wide of range of penalty, anywhere from two to ten years’ imprisonment. Key factors pushing incarceration into the higher range include “the depth of the breach of trust, the number of victims, the impact on the victims, and the amount of money involved”. Maranger J. sentenced the offender to a period of incarceration of seven years. The court found that the offender’s fraud was egregious, took advantage of long friendships, and abused a position of high trust to the financial devastation of several honest and hard-working citizens who were deprived of their right to a comfortable and decent retirement. The court ordered restitution and a fine in lieu of forfeiture in the same amount with ten years to pay, with a further five years in prison on default.

97In R. v. Eid, 2017 ONSC 898, Ray J. found the offender guilty of ten counts of fraud after a trial that had heard from 22 witnesses and involved complex offences over many months. The total amount of the fraud was approximately $3.8 million. The court found that a mitigating factor was that the offender had no criminal record. The court did not accept the argument that the offender’s mental health issues should be treated as a mitigating factor. The court accepted that the offender’s reputation was a good one and he was seen as generous and hard-working, which was a mitigating factor. Ray J. did, however, find that this reputation is what enabled the offender to execute the fraud.

98While remorse and acceptance of responsibility may be a mitigating factor, Ray J. noted that the absence of remorse cannot be an aggravating factor. The PSR noted that the offender expressed remorse for the subcontractors who experienced financial losses but denied responsibility and blamed others for his involvement with the criminal justice system. The court found the offender’s significant planning and deliberation in order to perpetrate the fraud to be aggravating factors. The fraud was not an impulsive act, it involved a high level of sophistication and many victims. The losses ranged between $6.9 to $8.4 million.

99The Crown filed a forensic accounting report at the sentencing hearing in Eid. The judge accepted the report into evidence but relied on it only to the extent that it was based on evidence already admitted as part of the financial records and documentation at trial. The court found that it was entitled to rely on credible and relevant evidence in the sentencing hearing that speaks to the losses of various creditors, employees and other victims. The court accepted the losses summarized by the forensic accountant based on her expert opinion and imposed as fit and proper a penitentiary sentence of seven years.

The Offenders’ Cases

100Ms. Vuong and Mr. Quach asked me to consider three fraud decisions in which the court ordered a conditional sentence. In R. v. Bogart, [2002] 61 O.R. (3d) 75 (C.A.), [2002] O.J. No. 3039 (C.A.) the accused, who was a physician, submitted false billings to OHIP. He pled guilty to fraud over $5,000 and was sentenced to a conditional sentence of two years less a day and three years’ probation. In that case the Court of Appeal allowed the Crown’s appeal against sentence and imposed a jail sentence of 18 months. In that case the offender had fraudulently billed OHIP for medical services in the total sum of $923,780.53. At the time of the hearing of the appeal, he had repaid OHIP over $200,000.

101The Court of Appeal noted that there were a number of mitigating circumstances. It noted that the offender had overcome cancer to become a doctor and served persons diagnosed with HIV or AIDS. He eventually pleaded guilty at the sentencing hearing and expressed great remorse.

102The Court found that given the seriousness of the offence, the respondent’s moral blameworthiness, the need for general deterrence, and the sentences in previous cases of large-scale fraud, a jail term was warranted.

103Ms. Vuong and Mr. Quach also relied on R v. Kirk, [2004] 189 O.A.C. 314 (C.A.), [2004] O.J. No. 3442 (C.A.). In that case the offender was convicted of six counts of fraud in relation to construction contracts he entered with homeowners over four months in 1999. He was sentenced to nine months and to pay restitution in the sum of $42,082.

104At para. 23 the Court found that the trial judge erred in overemphasizing the need for general deterrence and denunciation on the basis that there had been a breach of trust. The Court held that the offender was not in a position of trust as the relationship between the offender and his victims was strictly commercial. In the circumstances of that case the court found that a conditional sentence was warranted.

105In R v. Gibb, 2014 ONSC 5316, the offenders were convicted of defrauding two individuals of $100,000. In that case Daley J. found that a conditional sentence was the fit and appropriate sentence, but noted that the offence was not a large-scale fraud.

Aggravating and Mitigating factors

106Section 718.2(a) of the Criminal Code mandates a consideration of any relevant aggravating or mitigating circumstances related to the offence or the offender.

Aggravating Factors

107The Criminal Code was amended in 2004 to include s. 380.1(1), which listed aggravating circumstances in cases of financial fraud. The relevant factors to this case are whether the value of the fraud committed exceeded $1 million dollars and whether the offence involved a large number of victims. Further changes were made to this section in 2011 to expand the list of aggravating factors to include, among others, the magnitude, complexity, duration, or degree of planning involved in the fraud, and the impact on the victims given their personal circumstances, including their age, health, and financial situation. While there is a presumption that statutes do not apply retroactively, in this case the indictment period spanned the amendments to the Criminal Code.

108The presumption against retroactivity does not apply in continuing fact situations. Furthermore, the aggravating nature of a fraud in excess of $1 million was consistent throughout the indictment period. Thus, I am able to consider as aggravating the scope of the fraud and its impact on the victims insofar as those characteristics of the fraud that began before the 2011 amendment continued after it. I do not need to separate my analysis into pre- and post-amendment periods. For a general discussion of statutory retroactivity, see Regina Police Superannuation & Benefit Plan v. Wyatt Co., [1996] 146 Sask. R. 81 (Q.B.), Imperial Oil Ltd. V. Alberta, 2003 ABQB 388; R. v. Dineley, 2012 SCC 58, [2012] 3 S.C.R. 272.

109Furthermore, that amendments to s. 380.1 codified certain aggravating factors on sentencing does not mean that prior to the amendments I would have been unable to consider those factors. The size and scope of the fraud and its impact on the victims are among the key factors when analyzing the fit and appropriate sentence for fraud.

110The aggravating factors in this case are many:

a) This Was a Large-Scale Fraud

111This was a large-scale fraud that involved many victims. Section 380.1(1.1) makes fraud in excess of $1 million a statutorily aggravating factor. In this case the fraud was over five times that amount. The total amount invested by the victims was $5,175,000 between October 1, 2007 and October 30, 2012. Some of them received interest payments and some principal payments, some of which was paid from other investors, in the way of a “Ponzi scheme”.

b) The Fraud was Complex and Prolonged

112This was also a sophisticated fraud perpetuated over several years. It was planned and detailed. It was not spontaneous. Ms. Vuong and Mr. Quach created promotional material about the company and themselves that was distributed to some investors. Ms. Vuong lured her victims in by taking advantage of existing personal relationships and pursuing new relationships with others. They trusted her. In her emails soliciting money she was empathetic and caring about their own particular circumstance. She and Mr. Quach knew some were going through difficult times such as a very ill child or loss of employment. She took a different approach to each victim. She made each victim feel that they had a personal connection with her and that she was doing them a favour by offering them to take part in her and Mr. Quach’s investment strategy.

113The offenders also fabricated documents to show some investors that Systematech had a significant balance in its trading account when this was simply false. Such misrepresentations require time and planning to create official-looking fraudulent documents from a TD brokerage account. The offenders presented these documents to two victims to create the false appearance that they were operating a financially solid investment scheme when they were in fact losing money.

114Even as the house of cards was collapsing Ms. Vuong and Mr. Quach continued to lure victims into investing significant amounts of money until an investigation and charges by the Ontario Securities Commission prevented them from engaging in any further trading. The bulk of the money received from the last investor, Ms. Andreychuk, who invested $640,000 in September 2011, was used to fund payments to a number of other investors. That money was even used to pay Ms. Andreychuk her own first interest payment.

c) Impact on the Victims

115The impact on the victims has been devastating. The victim impact statements describe not only financial loses but also the physical and psychological effects of these offences. A number of the victims have not been able to retire as planned. Some victims have been left with significant debt as they funded the investments through home equity lines of credit or credit card advances. The losses have affected not only the victims but their extended families. Some have experienced physical illnesses and mental health issues such as depression, and anxiety. Many of these victims were people who could not afford to invest and borrowed money to do so. Many suffered a loss in their self-confidence and an inability to trust others after having close friends, like Ms. Vuong and Mr. Quach, take advantage of them.

116What is most troubling is that Ms. Vuong and Mr. Quach were aware of and took advantage of the vulnerability of some of these victims. They were also were that some had modest financial means. Nonetheless, the offenders deliberately urged them to invest money that they could not afford under the fraudulent pretense of guaranteed investment returns and a fully protected principal. While this case is not one that involves a breach of trust per se, a fact the Crown conceded, the offenders did cultivate and abuse the victims’ trust. Nonetheless, I have not found that this was a breach of trust for the purpose of aggravating sentencing factors.

Mitigating Factors

117A mitigating circumstance in this case is that Ms. Vuong and Mr. Quach do not have criminal records. They are also caring for elderly parents. There are few other mitigating factors. They have expressed remorse, though not for defrauding the public but for losing investors’ money through poor decision-making in trading transactions. While lack of remorse is not an aggravating factor, in this case, the offenders’ remorse is not a mitigating factor. There has also been no recovery of the balance of monies owing to the victims nor any effort of restitution. Failure to make restitution is not an aggravating factor, but the offenders do not have the advantage of having made restitution as a mitigating factor: R. v. Dwyer, 2013 ONCA 34 at para. 11.

118The offenders submit that it is a mitigating factor that they were not motivated by greed, but were engaged in trading activity that unfortunately failed. There was evidence that they were, at one point, engaged in a high-volume of trading. When the trading activity was failing and resulting in losses, Ms. Vuong and Mr. Quach continued to lure new investors and guarantee high rates of return. They assured these new investors that their principal was safe when, in fact, money was being diverted to pay other investors. At para. 174 of Drabinsky, the Court of Appeal underlined the fact that an offender’s motivation for fraud may stem from a desire to operate a legitimate business, but that does not make their motives altruistic.

119This is a case of a deliberate and fraudulent scheme to cover losses and to use one investors’ money to pay others. During this time Ms. Vuong and Mr. Quach continued to personally benefit from the scheme through cash withdrawals, credit card debt payments, and retail transactions, including the purchase of a Porsche. They diverted money to themselves while the promise to pay victims interest and return their principal went unfulfilled. Their excuses and lies continued after investors demanded their money back. This was a situation motivated by greed and not simply the result of failed investments.

A Note on Certain Criminal Code Amendments

120As I noted above in paragraphs 107-108, while the principle against retroactivity applies to legislative amendments, I can properly consider as aggravating behaviour that continued after Criminal Code amendments came into force. As I explain below, where statutory amendments would require me to make quantitative findings from the amendment date onward, such calculations are not necessary to my sentencing decision.

121On March 23, 2011, s. 380(1.1) was added to the Criminal Code, instituting a mandatory minimum of two years’ imprisonment where a fraud exceeds $1 million. While parts of the fraudulent activity in this case occurred before March 23, 2011, I do not need to consider whether the mandatory minimum should apply because I am satisfied that on the whole the principles and goals of sentencing require a term of imprisonment greater than two years.

122Finally, on November 20, 2012, after the indictment period for this case, Parliament amended s. 742.1 of the Criminal Code to make conditional sentences unavailable for offences that carry a minimum sentence. I have determined a conditional sentence is inappropriate in this case through a review of the facts and case law, without relying on this provision of the Criminal Code. Thus, while a conditional sentence was available to the offenders, on the facts of the case it is not a fit and appropriate sentence.

Sentence

123Neither Ms. Vuong nor Mr. Quach have acknowledged that what they did was criminal. They are remorseful for the money their victims lost but simply attribute the losses to a failed business. They also submit that they had no intention to lose the money and they did not use the money to fund a lavish lifestyle. They argued that any money they received personally was to cover their expenses and pay for their services. They assert that their goal at all time was to make money for the investors and they all would have been paid had they completed the transaction to sell their online gaming concept.

124Ms. Vuong and Mr. Quach do not accept or acknowledge that taking money on the representation that it would be invested is fraud if the money is not invested as promised. They fail to accept that this is true even if they had no intention to lose the money. The rationale that the investors’ money was pooled and could therefore be used for purposes within Systematech’s business operations fails to recognize that it is a crime to use money for a purpose other than represented to investors. Ms. Vuong and Mr. Quach do not recognize that it is fraud to take one investor’s money and use it to pay other investors or pay for their own personal expenses.

125The offenders’ position is that the fit and appropriate sentence is a conditional sentence. I do not agree. Given the nature, complexity, and the magnitude of the crime, a penitentiary term is appropriate. A conditional sentence is therefore not available to the offenders: R. v. Proulx, 2000 SCC 5, [2000] 1 S.C.R. 61.

126Ms. Vuong and Mr. Quach seek some reduction in sentence because of the restrictive nature of their bail conditions which have been in place for five years. They rely on R. v. Downes, [2006] 79 O.R. (3d) 321 (C.A.), [2006] O.J. No. 555, in which the Court of Appeal found that time spent under stringent bail conditions, especially under house arrest, must be taken into account as a relevant mitigating circumstance.

127Ms. Vuong’s and Mr. Quach’s bail conditions included that they the live with Mr. Quach’s mother; remain in Ontario; report once per month to Peel Police; not to attend within one (1) kilometer of any border crossing; and remain in their residence daily between 9 p.m. and 6 a.m. except for medical emergencies, court related matters, counsel matters or while in the presence of their surety or an adult person approved in writing by their surety. While somewhat restrictive, this was not a situation of virtual house arrest like in R. v. Downes. However, the bail conditions have been in place for five years. The Crown acknowledged that there should be some credit, and submitted that two months is appropriate.

128Given the circumstances, I find that Ms. Vuong and Mr. Quach are entitled to three months credit for their bail conditions.

129After reviewing all these factors I conclude that the appropriate sentence for Ms. Vuong and Mr. Quach is a custodial sentence of six years less 11 days credit for pre-trial custody and three months credit for their lengthy bail conditions.

Fine in Lieu of Forfeiture

130The Crown seeks a fine in the amount of $3,567,992 pursuant to section 462.37(3) of the Criminal Code. According to that section:

Fine instead of forfeiture

(3) If a court is satisfied that an order of forfeiture under subsection (1) or (2.01) should be made in respect of any property of an offender but that the property or any part of or interest in the property cannot be made subject to an order, the court may, instead of ordering the property or any part of or interest in the property to be forfeited, order the offender to pay a fine in an amount equal to the value of the property or the part of or interest in the property. In particular, a court may order the offender to pay a fine if the property or any part of or interest in the property

(a) cannot, on the exercise of due diligence, be located; (b) has been transferred to a third party; (c) is located outside Canada; (d) has been substantially diminished in value or rendered worthless; or (e) has been commingled with other property that cannot be divided without difficulty.

131That section provides for the forfeiture of the proceeds of crime where an offender is convicted of a designated offence. Fraud over $5,000 is such a designated offence.

132The evidence shows that the victims were defrauded of $5,175,000. Some received payments for a total net loss of $3,567,992. At the sentencing hearing, a document prepared by Mr. Long calculating the total investments and payments made to each of the victims was filed as an exhibit. The offenders agreed with those calculations. The funds cannot be traced and therefore a forfeiture order cannot be made with respect to the funds. There is no dispute that Ms. Vuong and Mr. Quach and Systematech received the funds and that they were in possession and control of them. There is, therefore, a basis for making an order for a fine in lieu of forfeiture.

133Ms. Vuong and Mr. Quach will be fined in the amount of $3,567,992. They must be given a reasonable time to pay, which in my view is 10 years from the date of their release from prison.

134Section 462.37(4) also sets out minimum terms of imprisonment that must be imposed in default of payment of the fine which depends on the amount of the fine. Where the fine exceeds $1 million, the minimum term of imprisonment is five years. If they are in default of payment, Ms. Vuong and Mr. Quach will be each sentenced to an additional five years in prison consecutive to this sentence.

Restitution

135Ms. Vuong and Mr. Quach have indicated that they are committed to making restitution to their victims as soon as possible. Pursuant to s. 738 Ms. Vuong and Mr. Quach are jointly and severally responsible for paying restitution of $3,567,992 to the victims. Restitution is to be distributed on a proportionate basis to the amounts set out below:

Drew Hauser $ 48,000 Kare Anderson $ 608,584 Anita Andreychuk $ 626,793 Patricia Baeucker and Ken Griffin $ 226,900 Gwen Edwards $ 229,315 Alex Kolbasnik $ 100,000 Ken Lee $1,028,000 Quang Luong and Marci Luong $ 170,460 Elizabeth Marton $ 50,000 Joseph Pellegrino $ 417,475 Daniel Tsai $ 62,465 Total $3,567,992

136The restitution order shall take priority over payment of the fine in lieu of forfeiture and the fine in lieu of forfeiture shall be reduced by any amount paid pursuant to the restitution order.

137Section 380.2(1) allows for an order “prohibiting the offender from seeking, obtaining or continuing any employment, or becoming or being a volunteer in any capacity, that involves having authority over the real property, money, or valuable security of another person.” The Crown is seeking that order for life. However, in R. v. Hooyer, 2016 ONCA 44, 129 O.R. (3d) 81 at para. 49, the Court of Appeal held that section was not retroactive and does not apply to crimes committed before November 2011, when this section was enacted.

138In this case, the indictment period runs beyond November 2011. Section 380.2(1) does not require me to make any findings of fact that could be split into pre- and post-amendment periods. While Hooyer acknowledges that a s. 380.2(1) order significantly restricts an offender’s liberty and security of the person, in that case the fraudulent activity occurred before the amendment. Thus, the substantive impact of the section means it cannot be applied retroactively: see also R. v. Dineley, 2012 SCC 58, [2012] 3 S.C.R. 272. In this case, the offenders’ fraud occurred before and after the enactment of s. 380.2. As I am not applying the statute retroactively, I am satisfied that I am able to make this order. Under s. 380.2(2), I have the discretion to fix the length of the order. The offenders will be prohibited from engaging in the activities described in s. 380.2(1) for the period of fifteen years to begin upon their release from prison.

Final Order

139For their conviction of fraud over $5,000, Ms. Vuong and Mr. Quach are each sentenced to six years of imprisonment. They will each receive a credit of 11 days for pre-trial custody and three months for the five years of bail. Their net sentence will be five years, eight months, and 19 days.

140Ms. Vuong and Mr. Quach are to pay restitution to their victims jointly and severally in the amount of $3,567,992 in the proportion set out in paragraph 135.

141I order a fine in lieu of forfeiture, payable jointly and severally, in the amount of $3,567,992. Ms. Vuong and Mr. Quach will have ten years to pay after they are both released from prison. In default of payment of the fine in lieu of forfeiture, they shall each serve a further term of five years, which will be consecutive to any other term of imprisonment they are serving.

142The restitution order will take priority over payment of the fine in lieu of forfeiture and the fine in lieu of forfeiture will be reduced by any amount paid pursuant to the restitution order.

143Ms. Vuong and Mr. Quach will each provide a sample of their DNA pursuant to s. 487.05(1)(a) of the Criminal Code.

144Pursuant to s. 380.2 of the Criminal Code, Ms. Vuong and Mr. Quach are prohibited from seeking, obtaining or continuing any employment, or becoming or being a volunteer in any capacity that involves having authority over the real property, money, or valuable security of another person for a period of fifteen years upon their release from prison.

145Ms. Vuong and Mr. Quach shall not, while in custody, contact any of the persons listed in paragraph 135 pursuant to s. 743.21 of the Criminal Code.

L. Shaw J.