R. v. Saucier, 2018 ONSC 7266

L]\CITATION: R. v. Saucier, 2018 ONSC 7266

COURT FILE NO.: 14-39

DATE: 20181219

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

HER MAJESTY THE QUEEN

– and –

Gilles Saucier

Defendant

Michael Purcell, counsel for the Crown

Lawrence Greenspon and Ninetta Caparelli, counsel for the Defendant

HEARD: May 11-12, 15-19, 2017 July 4-6, 2017 August 10-11, 30-31, 2017 December 19- 20, 2017 May 23, 30-31, 2018 July 3 and 6, 2018 August 27-28, 2018

REASONS FOR JUDGMENT

lacelle, j.

I. Introduction

[1] The accused is a financial advisor who for a number of years operated a business called Gilden Financial in the City of Cornwall. He had a contract with London Life which permitted him to sell their products. In addition, he was able to offer his clients products and services from other companies.

[2] Over a period of 3 years between 2009 and 2012, the accused is alleged to have defrauded and otherwise misused the funds of 10 of his clients. In doing so, it is alleged that he forged and used forged documents.

[3] With each of these clients, the allegation is that the accused received funds from his client for the purpose of directing them to life insurance policies or other investments. In a number of instances, the client testified that they understood that the funds they provided to the accused would be forwarded by him to London Life to pay the life insurance premiums on their policy.

[4] After having received the client’s funds the accused is alleged to have deposited them into one of two bank accounts controlled by him and then to have retained the funds for periods of time ranging from weeks to years without the client’s knowledge or consent. Invariably, the clients asked for the return of their funds. In each instance, the accused returned the funds as requested. In most cases, he returned the funds with interest.

[5] The credibility and reliability of the accounts given by the complainants and the accused are central issues in this case. This case also raises the issue of whether the offence of fraud may be made out in circumstances like these where there has been no actual loss to the complainants. The defence says there was no risk of loss sufficient to make out this essential element of the offence of fraud while the Crown says there was.

[6] At the invitation of the Crown, the accused has been acquitted of certain counts (counts 4, 5, and 9) for lack of evidence. The question before me now is whether the Crown has met its onus and proved the remaining 34 counts beyond a reasonable doubt.

The positions of the parties

[7] While their positions on specific issues will be described further in my reasons, very generally, the positions taken by the parties may be summarized as follows.

The Crown

[8] The Crown says that the accused knowingly engaged in a scheme where having baited his clients with a legitimate investment, he kept their money and uttered misleading documentation to maintain the fiction that the funds were invested with a third party when in fact they were not. He retained his clients’ funds in the same accounts out of which he reimbursed other clients’ funds and paid them what he referred to as “interest”. The Crown says the documentary evidence, the improbability of coincidence of such similar allegations from 10 clients, and the accused’s own testimony, prove its case.

[9] The Crown emphasizes that it was only when the client asked for the return of their money that the funds were returned. Even in that process, the Crown says the accused was trying to cover his tracks. This included paying his clients “interest” which had not been earned through an investment product but was paid out of his own account. The Crown says this conduct is directly relevant to and assists in proving the mens rea of the offences. In support of this submission the Crown points to the accused’s testimony to the effect that the payment of interest was a mechanism for him to solve the situation. The Crown argues that the accused’s repeated efforts to mislead and obfuscate about the status of his clients’ funds shows his conduct was fraudulent.

[10] Insofar as the evidence of the accused is concerned, the Crown says it should be disbelieved for a number of reasons. These include the accused’s refusal to acknowledge even admitted facts, his omission of material facts, his unreasonable attempts throughout his evidence to control the narrative, and his numerous prior inconsistent statements.

[11] As for the proof of loss in this case, the Crown says that the risk of loss or deprivation and actual loss flows from the fact that each client provided him with money to invest in a particular product. When that did not occur, they were deprived of the thing they had bargained for. With respect to the evidence of any direction given for the funds by the client, the Crown says that in all cases, there was at least the basic direction that the money was to be invested, even if the specifics of how it was to be invested were not discussed. That basic direction was not followed when the accused retained the client’s funds.

The defence

[12] The defence argues that in all instances, the accused was forthcoming about the fact that he not only represented London Life but that he operated his own business, Gilden Financial. The common thread in the evidence is that all his clients developed a trusting relationship with him. At all times, the accused handled his clients’ funds to maximize returns or minimize tax obligations and he was always governed by his client’s best interests. Sometimes this meant not investing their money with London Life, or remitting their premium payments to London Life incrementally. He appropriately tailored his financial advice to the needs of his clients.

[13] The defence says that the accused received direction from a manager at London Life that notwithstanding the London Life directive with respect to never receiving client funds it was acceptable for him to receive such funds and deposit them. At most, the defence says the accused may have breached the terms of his London Life contract and engaged in unwise business practices. This is not criminal conduct.

[14] Counsel argues that this case only developed into a criminal prosecution because the accused was targeted by the London Life investigator, Gary Schmidt who “had it in” for the accused. As a result of Mr. Schmidt’s influence, the complainants’ testimony is tainted and less reliable. The court should be wary of accepting their accounts given this influence by Mr. Schmidt.

[15] The defence position is that the evidence of the accused should be believed. Counsel emphasizes that the accused was assisted by his review of his contemporaneous notes throughout his testimony and argues that this is a basis to prefer the evidence of the accused over that of the complainants.

[16] Finally, the defence says that in every case, when clients asked for money back, they received it. There has been no loss. Nor was there a risk of loss since in all cases the accused immediately reimbursed the client. Further, in all cases, the accused followed the directions given by his clients to the extent any directions were given. In all instances he acted in his client’s best interests. Accordingly, the accused should be acquitted.

II. The Law

The fundamental principles of criminal law

[17] In our law, an accused person is presumed innocent until proven guilty. It is the Crown who bears the burden of proving any criminal offence charged beyond a reasonable doubt. That burden never shifts. An accused person is not required to prove his or her innocence. Our law requires that if a judge has a reasonable doubt about whether the accused committed a criminal offence the accused must be acquitted.

[18] In a case like this, where the accused has testified and presented evidence, the case of R. v. W.D., 1991 CanLII 93 (SCC), [1991] 1 S.C.R. 742 directs the court in its approach to the evidence. In summary, it tells me that if I believe the accused’s evidence, or it leaves me with a reasonable doubt after I have considered it in the context of all the evidence, he must be acquitted. In a case like this, my assessments of the credibility and reliability of a witness’s evidence are particularly important.

[19] It is important to note, however, that in deciding a case, a judge is not simply comparing each account and deciding which account to believe. It is also important to note that a judge can believe a witness but still be left with a reasonable doubt about what happened after considering all of the evidence.

[20] Further, even if a judge disbelieves the evidence given by an accused person, or is not left with a reasonable doubt based on the accused’s evidence, this does not mean that the Crown has proved its case. A judge must always determine whether the Crown has proved each element of every offence charged beyond a reasonable doubt. This will only happen when there is evidence that the judge accepts that supports each element the Crown is required to prove.

[21] As for what is meant by “reasonable doubt”, it is not an imaginary, far-fetched or frivolous doubt, and it must not be based upon sympathy or prejudice. It is based on reason and common sense. It is logically derived from the evidence or absence of evidence. Probable or likely guilt is not sufficient to meet the standard in a criminal trial. But the burden of proof is also not impossibly high. The Crown is not required to prove its case to an absolute certainty.

[22] If at the end of the case a judge concludes only that the accused is likely or probably guilty, the accused must be acquitted. Before an accused may be found guilty, and face the consequences of a conviction, a judge must be sure that he or she committed the offence charged (see D. Watt, Watt’s Manual of Jury Instructions, 2nd Ed., Thomson Reuters Canada Ltd., 2015, Final 13, “Reasonable Doubt”; and R. v. Lifchus, 1997 CanLII 319 (SCC), [1997] 3 S.C.R. 320 at paras. 36-40).

The offences charged and their essential elements

[23] The accused is charged with various offences. The constituent elements of each of those offences, as well as the interpretation of those elements in the case law, are outlined below. For the most part, I adopt the framing of the elements for each offence as set out in Watt’s Manual of Criminal Jury Instructions. While this summary of the law was largely contained in the ruling on the defence application for a directed verdict, I reproduce it here for ease of reference.

Fraud

[24] Section 380 (1) of the Criminal Code prohibits the offence of fraud over $5,000 as follows:

Every one who, by deceit, falsehood or other fraudulent means, whether or not it is a false pretence within the meaning of this Act, defrauds the public or any person, whether ascertained or not, of any property, money or valuable security or any service

(a) Is guilty of an indictable offence and liable to a term of imprisonment not exceeding fourteen years, where the subject-matter of the offence is a testamentary instrument or the value of the subject-matter of the offence exceeds five thousand dollars

[25] To prove the offence, the Crown must prove the following essential elements beyond a reasonable doubt (see Watt’s Manual of Criminal Jury Instructions at pp. 1000-1003):

i. That the accused deprived each named complainant of something of value;

ii. That the accused’s deceit, falsehood or other fraudulent means caused the deprivation;

iii. That the accused intended to defraud the named complainant; and

iv. That the value of the property exceeded $5,000.

The actus reus

[26] R. v. Zlatic, 1993 CanLII 135 (SCC), [1993] S.C.J. No. 43 (S.C.C.) and its companion case R. v. Theroux, (1993), 1993 CanLII 134 (SCC), 19 C.R. (4th) 194 (S.C.C.) confirm that the actus reus of fraud will be established by proof of:

1. the prohibited act, be it an act of deceit, a falsehood or some other fraudulent means; and

2. deprivation caused by the prohibited act, which may consist in actual loss or the placing of the victim’s pecuniary interests at risk (see Zlatic at para. 13, Theroux at para. 16).

The prohibited act

[27] The prohibited act may involve a wide variety of conduct. The Crown must establish that the accused “practiced deceit, lied, or committed some other fraudulent act”: Theroux at para. 39.

[28] In R. v. Currie (1984), 5 O.A.C. 280, the court held that the use of funds by the accused (who “were in a business of investing funds in a certain company”) in a manner which was not authorized was sufficient to ground a finding that the accused acted dishonestly.

[29] The term “other fraudulent means” includes means that are properly regarded as dishonest according to the standards of reasonable people: Theroux at para. 39. Those situations have included the use of corporate funds for personal purposes, non-disclosure of important facts, exploiting the weakness of another, unauthorized diversion of funds, and unauthorized arrogations of funds or property. Negligence will not suffice to make out the prohibited act, nor “taking advantage of an opportunity to someone else’s detriment, where that taking has not been occasioned by unscrupulous conduct, regardless of whether such conduct was wilful or reckless”: Zlatic at para. 32.

[30] Unwise business practices are not fraudulent: Zlatic at para. 37. “Improvident business conduct” and sharp business practice are also excluded: see Zlatic at paras. 18-20; see also Theroux at paras. 17 and 39. Consequently, as noted by the Court of Appeal in R. v. Milec, [1996] O.J. No. 3437 at para. 16, “[t]he reality of commercial life mandates that the line between acts directed to the preservation of [a] business, even if desperate, and acts which are fraudulent, be meticulously drawn”. Similarly in R. v. Doren, [1982] O.J. No. 3196 (C.A.) at paras. 14-15, the court noted that business practices that fall short of “straightforward or honourable dealings” may not make out a case of fraud.

Deprivation caused by the prohibited act

[31] “Deprivation” does not require evidence that the complainant suffered an actual economic loss. The complainant’s economic or financial interests must be proved to have been at risk, however: Zlatic at para. 25, Theroux at para. 17, R. v. Olan, 1978 CanLII 9 (SCC), [1978] 2 S.C.R. 1175.

[32] As more recently stated by Benotto J. (as she then was) in R. v. Drabinsky, 2009 CanLII 12802 (ON SC), [2009] O.J. No. 1227 at para. 489, “[t]he imperiling of an economic interest of another is sufficient even if there was no loss in fact. Since actual detriment does not need to be proved, the question is: was there proof of potential detriment or risk of pecuniary loss? ”. In Drabinsky, the accused had made false statements in an IPO which were found to be a lie to induce investors. This conduct was found to have put the pecuniary interests of the public at risk. The trial judge held that members of the public were entitled to rely on statements in an IPO before risking their funds and therefore there was a potential risk to the public. This was so notwithstanding there was no evidence that the accused had profited or that the public had in fact suffered any loss. The trial judge’s conclusion was upheld on appeal: R. v. Drabinsky, 2011 ONCA 582 at paras. 80-82.

The causal connection between the prohibited act and deprivation

[33] In R. v. Riesberry, 2015 SCC 65, the accused, who was a licensed horse trainer, had been acquitted of defrauding the public after the trial judge found that he had injected a horse with performance enhancing substances prior to a race. On review, the accused argued that there was no evidence that his fraudulent conduct caused any risk of deprivation because the Crown did not establish that anyone betting on the race “had been induced to bet by, or would not have bet for, his fraudulent conduct”. The Court of Appeal substituted a conviction because the accused’s conduct could properly be stigmatized as dishonest and it was causally connected to a risk of deprivation to the betting public. The court held that the trial judge had erred in not considering the regulatory scheme for horse racing in considering the deprivation issue.

[34] In upholding the result in the Court of Appeal, the Supreme Court offered a succinct summary of the offence of fraud at para. 17: “[f]raud consists of dishonest conduct that results in at least a risk of deprivation to the victim”. It held at para. 22 that

proof of fraud does not always depend on showing that the alleged victim relied on the fraudulent conduct or was induced by it to act to his or her detriment. What is required in all cases is proof that there is a sufficient causal connection between the fraudulent act and the victim’s risk of deprivation. In some cases, this causal link may be established by showing that the victim of the fraud acted to his or her detriment as a result of relying on or being induced to act by the accused’s fraudulent conduct. But this is not the only way the causal link may be established.

[35] Later, at para. 26, the court summarized its position:

Simply put, a rigged race creates a risk of prejudice to the economic interests of bettors. Provided that a causal link exists, the absence of inducement or reliance is irrelevant. I agree with the Court of Appeal that Mr. Riesberry’s reliance on R. c. Coté, 1986 CanLII 93 (SCC), [1986] 1 S.C.R. 2 (S.C.C.), is misplaced. That case made it clear that

[f]raud consists of being dishonest for the purpose of obtaining an advantage and which results in prejudice or a risk of prejudice to someone’s ‘property, money or valuable security’. There is no need to target a victim … and the victim may not be ascertained.

[36] A similar conclusion had been reached in R. v. Renard, [1974] O.J. No. 361 (C.A.), where the court held at para. 9:

A person may be defrauded by being deprived of something and he may be deprived of something either by being fraudulently induced to part with it or by having that to which he is entitled fraudulently diverted or withheld from him.

The mens rea

[37] The mens rea is established by proof of:

1. Subjective knowledge of the prohibited act; and

2. Subjective knowledge that the prohibited act could have as a consequence the deprivation of another (e.g. subjective appreciation that the consequences of this conduct could be deprivation, in the sense of causing another to lose his or her pecuniary interest in certain property or in placing that interest at risk). The accused need not actually intend the prohibited consequence (see Zlatic at paras. 13-14 and 27).

[38] The question to ask is “whether the accused intentionally committed the prohibited acts (deceit, falsehood, or other dishonest act) knowing or desiring the consequences proscribed by the offence (deprivation, including the risk of deprivation)”: Theroux at para. 24. The Crown need not prove precisely what thought was in the accused’s mind at the time of the criminal act. Subjective awareness of the consequences may be inferred from the act itself, or from the facts as the accused believed them to be. The accused may introduce evidence negating that inference. The fact that such an inference is made does not detract from the subjectivity of the test: see Theroux at paras. 23 and 29. Recklessness as to the consequences will also attract criminal responsibility: Theroux at paras. 26 and 28. The scope of the mens rea requirement ensures that negligent or careless misrepresentation, “improvident business conduct”, and sharp business practice are excluded: see Theroux at para. 40.

[39] This expansive interpretation of the offence “establishes fraud as an offence of general scope capable of encompassing a wide range of dishonest commercial dealings”: Theroux at para. 17.

[40] Additional guidance in interpreting the law is found in other cases. For instance, the accused in Currie was a professional investment counsellor who operated a financial consulting and professional management service through a company. He was found to have received funds specifically for investment in one company and to have diverted them, without notice to the investors, to a different company. The funds were eventually lost.

[41] The defence conceded at trial in Currie that the accused may have used his clients’ investment funds in a manner which was not expressly authorized but argued that the accused had an implied general discretionary power to invest the funds. The Court of Appeal noted at p. 3 that in a number of the counts, the clients had authorized the use of the funds in a specific manner, and that the funds “were not used in the specific manner authorized by the clients or in any other manner so authorized”. It approved of the trial judge’s direction to the jury that “where a representation is made to a person who, over time, parts with property as a result of that representation, failure to advise the individual of a change in circumstances which make the representation false will turn the representation into the offence of fraud”. The trial judge also instructed the jury that

an intention on the part of the accused to repay the victim is irrelevant and does not provide a defence if the conduct of the accused is otherwise shown to involve dishonest deprivation for personal ends. Similarly, if the victim is deliberately deprived by dishonest means, it matters not that the accused had an honest motive or genuine desire to avoid causing any loss or that he expected that that which he was doing might, at a later time, be validated or rectified or meet with the victim’s approval …. And so, as I stated, if the victim is deliberately deprived by dishonest means, it matters not that the accused had an honest motive or genuine desire to avoid causing any loss.

Theft

[42] The offence of theft is set out in section 322 (1) of the Criminal Code:

Every one commits theft who fraudulently and without colour of right takes, or fraudulently and without colour of right converts to his use or to the use of another person, anything whether animate or inanimate, with intent,

(a) To deprive, temporarily or absolutely, the owner of it, or a person who has a special property interest in it, of the thing or of his property or interest in it;

(b) To pledge it or deposit it as security;

(c) To part with it under a condition with respect to its return that the person who parts with it may be unable to perform; or

(d) To deal with it in such a manner that it cannot be restored in the condition in which it was at the time it was taken or converted.

[43] To prove this offence, the Crown must prove the following elements beyond a reasonable doubt (see Watt’s Manual of Criminal Jury Instructions at pp. 917-920):

i. That the accused converted the property of each named complainant to his own use;

ii. That the accused converted the property fraudulently and without colour of right;

iii. That when the accused converted the property he meant to deprive the complainant, at least temporarily, of the property or the complainant’s interest in it, and

iv. That what the accused converted was worth more than $5000.

[44] The meaning of “convert” is also explained in Watt’s Manual of Criminal Jury Instructions Second Edition, in this way, at p. 918:

To convert something means to (wrongfully) deal with it in a way that is inconsistent with the rights of the true owner of that thing. Even if one person is lawfully in possession of another person’s property, to do something with that property contrary to the terms on which the person got (had) it in the first place would be to convert that person’s property to the use of the person who converted it (or, to the use of somebody else). For example, A borrows a car with the owner B’s permission. A then sells the car to C. As has converted B’s care to the use of C.

[45] In R. v. Milne, 1992 CanLII 86 (SCC), [1992] 1 S.C.R. 697, the court held at para. 29 that

[w]here a transferor mistakenly transfers property to a recipient, and the recipient knows of the mistake, property does not pass for the purpose of the criminal law if the property creates a right of recovery no matter whether the original transfer is said to be void or voidable. The distinction between void and voidable transfers has no purpose in the context of the criminal law. In either case, where the law of property provides at least a right of recovery, property does not pass for the purpose of the criminal law. If the recipient then converts the property to his own use, fraudulently and without colour of right, and with intent to deprive the transferor of the property, he is guilty of theft.

Misappropriation

[46] The misappropriation of money held under direction is a specific form of theft that is prohibited by s. 332 of the Criminal Code. It provides:

(1) Every one commits theft who, having received, either solely or joint with another person, money or valuable security or a power of attorney for the sale of real or personal property, with a direction that the money or a part of it, or the proceeds or a part of the proceeds of the security or the property shall be applied to a purpose or paid to a person specified in the direction, fraudulently and contrary to the direction applies to any other purpose or pays to any other person the money or proceeds or any part of it.

(2) This section does not apply where a person who receives anything mentioned in subsection (1) and the person from whom he receives it deal with each other on such terms that all money paid to the former would, in the absence of any such direction, be properly treated as an item in a debtor and creditor account between them, unless the direction is in writing.

[47] The elements of the actus reus that the Crown must prove beyond a reasonable doubt are as follows (see R. v. Skalbania, 1996 CanLII 2595 (BC CA), [1996] B.C.J. No. 1906 (C.A.), aff’d 1997 CanLII 337 (SCC), [1997] 3 S.C.R. 995, at para. 11):

i. That the accused received money from another person;

ii. That the accused received a direction that the money or part of it shall be applied to a purpose specified in the direction

iii. That the accused applied it to any other purpose, contrary to the direction.

[48] The mens rea will be made out where the Crown shows “an intentional misappropriation, without mistake”. This is all that is meant by the use of the word “fraudulently” in section 332 – “[t]he dishonesty inherent in the offence lies in the intentional and unmistaken application of funds to an improper purpose”. An intent to steal is not required: Skalbania, 1997 CanLII 337 (SCC), [1997] 3 S.C.R. 995 at paras. 4 and 6.

What constitutes a “direction”

[49] The jurisprudence supports the position that a direction may be implicit. In R. v. Legare, 1977 CanLII 156 (SCC), [1978] 1 S.C.R. 275 (S.C.C.), the court held at para. 23 that it was open to the trial judge to find that the “receipt of funds [by the accused] in the circumstances in which it took place implied, by the very terms of the confirmation, a direction to apply the sum to a particular purpose”. A similar view was also articulated in R. v. Lowden, 1982 CanLII 194 (SCC), [1982] 2 S.C.R. 60 at para. 27, where the court held

[e]xpectations, standing alone, are not directions, but when known by the recipient of the money (or thing), they may, given the proper setting, be “tantamount to a direction”. Expectations known to the recipient of the money as a result of “express instructions” … are directions. It is not, in my view, necessary that the recipient be further told expressly what not to do with the money for the direction to exist or, again, what to do with the money if the expectations cannot be met; this may … be implicit as a result of the nature of the relationship.

[50] Finally, the jurisprudence suggests that the offence may be proved when the funds are not applied as directed in a timely fashion: see Legare at paras. 12-13, and R. v. Bodnarchuk, 2007 BCCA 417 at para. 33. In the latter case, the court held that the actus reus of the offence “was the appellant’s use of the monies and failure to timeously have issued that for which the monies had been furnished.” The accused’s intent to keep the investors out of their property as long as possible to serve his own economic ends was found to constitute the mens rea of the offence. The court found “an intentional and unmistaken misappropriation of the funds provided by the investors”, which went beyond a “mere civil wrong” and amounted to a crime under s. 332 of the Criminal Code: see para. 33.

Forgery offences

[51] The indictment includes charges under ss. 368(1) and 366(1) of the Criminal Code.

Uttering a forged document

[52] Section 368(1) prohibits the use of a forged document. It provides:

Everyone commits an offence who, knowing or believing that a document is forged,

(a) uses, deals with or acts on it as if it were genuine;

[53] The elements of this offence which the Crown must prove beyond a reasonable doubt are (see Watt’s Manual of Criminal Jury Instructions at pp. 995-997):

i. That the document specified was forged;

ii. That the accused knew or believed that the document was forged;

iii. That the accused dealt with the document;

iv. That the accused represented the document as genuine.

Forgery

[54] Section 366(1) addresses the making of a false document and the offence of forgery. It states:

366 (1) Every one commits forgery who makes a false document, knowing it to be false, with intent

(a) That it should in any way be used or acted on as genuine, to the prejudice of any one whether within Canada or not; or

(b) That a person should be induced, by the belief that it is genuine, to do or to refrain from doing anything, whether within Canada or not.

(2) Making a false document includes

(a) altering a genuine document in any material part;

(b) making a material addition to a genuine document or adding to it a false date, attestation, seal or other thing that is material; or

(c) making a material alteration in a genuine document by erasure, obliteration, removal or in any other way.

(3) Forgery is complete as soon as a document is made with the knowledge and intent referred to in subsection (1), notwithstanding that the person who makes it does not intend that any particular person should use or act on it as genuine or be induced, by the belief that it is genuine, to do or refrain from doing anything.

(4) Forgery is complete notwithstanding that the false document is incomplete or does not purport to be a document that is binding in law, if it is such as to indicate that it was intended to be acted on as genuine.

[55] In turn, section 321 defines the term “false document”:

“false document” means a document

(a) The whole or a material part of which purports to be made by or on behalf of a person

i. Who did not make it or authorize it to be made, or

ii. Who did not in fact exist,

(b) That is made by or on behalf of the person who purports to make it but is false in some material particular,

(c) That is made in the name of an existing person, by him or under his authority, with a fraudulent intention that it should pass as being made by a person, real or fictitious, other than the person who makes it or under whose authority it is made.

[56] The elements the Crown must prove beyond a reasonable doubt for this offence are (see Watt’s Manual of Criminal Jury Instructions at pp. 988-991):

i. That the accused made a false document;

ii. That the accused knew the document was false when he made it;

iii. That the accused intended that the document be considered genuine; and

iv. That the accused intended that someone would be prejudiced by treating the document as genuine.

[57] Proof of prejudice does not require proof of actual loss. Prejudice means deceived or cheated: Watt at p. 991. The accused need not intend to cause prejudice, but need only have an intent to deceive: R. v. Sebo, [1988] A.J. No. 475 (C.A.) at para. 32.

[58] A false document is any document that is false in some material particular: R. v. Gaysek, 1971 CanLII 11 (SCC), [1971] S.C.R. 888.

II. Overview of the evidence

[59] Evidence of a general nature was given by the London Life investigator, Gary Schmidt, as well as the accused. I summarize below the evidence which assists in assessing the issues in this case.

The evidence of Gary Schmidt

[60] Gary Schmidt is employed as the manager of the special investigations unit of Great West Life. He has been an investigator for a number of years, including as a police officer.

[61] Mr. Schmidt testified that Great West Life owns London Life, and that Quadrus is their mutual fund branch.

[62] A number of documents were tendered during the evidence of Mr. Schmidt. They include the contractual agreement between London Life and the accused. This agreement includes various directions regarding the receipt of payment for London Life products. It provides that “[a]ll money received for London Life and its Intercorporate Partners … will be paid to London Life for distribution to the appropriate company, without any deductions or delay”.

[63] Documentary evidence was also filed showing the accused’s “Statement of Compliance” for London Life, and the “Statement of Acknowledgment for Quadrus”. The accused acknowledged in signing the first document that he was familiar with London Life’s Code of Business Conduct and Ethics for corporations and agreed to comply with its provisions. He signed the documents in both 2009 and 2010.

[64] The Code of Business Conduct and Ethics For incorporated representatives addresses the handling of client funds. It states: “You are not authorized to collect premium payments from clients, other than the initial premium. Premium cheques are to be made payable to London Life or the issuing company, and under no circumstances should they be made payable to you, your corporation, if applicable, or any other person.” Mr. Schmidt was aware that the accused had not always followed that directive. He confirmed that he saw no documentary evidence during his investigation that London Life had ever communicated with the accused to suggest that his practice of remitting funds to them through Gilden Financial was inappropriate.

[65] In late July of 2011, Mr. Schmidt was alerted by a regional manager for London Life to a complaint in relation to the accused by Claude Laroche. On August 2, 2011, he spoke with Mr. Laroche to clarify his concerns. He subsequently contacted the accused on August 16, 2011. At that time, he told the accused he wanted to talk to him about his client files, and about Mr. Laroche’s file in particular. He testified that he did not expand on any details of the complaint at that time.

[66] Mr. Schmidt interviewed the accused on August 23, 2016. On that date, the accused was also terminated as a contracted financial advisor with London Life. Following that date, he was not permitted to sell or service London Life products.

[67] On August 25, 2011, Mr. Schmidt spoke with Helene Crawford. She had been referred to him by the London Life ombudsman. Mr. Schmidt had some communication with the accused about Ms. Crawford by email on August 25, 2011. He did not recall if they had communicated about her before that.

[68] With these two investigations under way, Mr. Schmidt reached out to the accused’s clients by sending “audit verification letters”. This was in early September. He was unsure how many letters he sent. According to Mr. Schmidt, London Life also sent letters, though he could not identify which clients would have received them.

[69] Mr. Schmidt further detailed the dates on which he became involved with the complainants in this case. He said that on November 15, 2011, he received a complaint from Jacques and Marlene Roy. On November 19, 2011, Mr. Schmidt received an email from Micheline Larocque. He also referred the matter to police on that date. Next he had contact with Lucille Lauzon. On November 28, 2011, he had contact with Sharon Bruyere. On December 7, 2011, Mr. Schmidt was in contact with Denise Nutting. On December 14, 2011, he was in contact with the Lacombes. At some point in the latter part of 2011, he was in contact with June and Howard Ross. In May of 2012, he was in contact with Paul and Lise Proulx.

[70] Mr. Schmidt communicated with the accused twice after referring the matter to police. On November 29, 2011, he called the accused and offered to assist him in identifying other clients whose funds had not been remitted to London Life as required. The accused said he would get back to him. The accused did not call him back and they did not speak again.

[71] On May 29, 2012, Mr. Schmidt sent an email to the accused in relation to his dealings with the Proulxs. He told the accused in that email that he should “grow up and deal with your clients with some integrity”. He explained that he used this language because after having dealt with 10 of the accused’s clients, he was frustrated with how the accused was dealing with them.

The evidence and admissions of the accused with respect to general matters

[72] The accused became a financial advisor after a history of working in banking. He held a contract with London Life as a sales representative initially in May 1996, following which he contracted himself as Gilden Financial Solutions Service Corporation in December 2003 and continued to sell London Life and Great West Life products and other investments. At the time the investigation of this matter commenced he had 3500 clients. He was also designated as an Elder Planning Counselor.

[73] The accused explained that it was his practice with new clients to explain that he operated as Gilden Financial. He would explain that he offered products through London Life and other companies. In addition to life insurance, he could assist them in obtaining financial products such as mortgages, lines of credit, and investments with companies other than London Life. If a client was interested in his services the accused would discuss that his process was to minimize taxes, create tax sheltered growth, create a legacy for the client’s beneficiaries, and provide them with tax preferred income. Following a needs analysis for the client he would then make recommendations. These recommendations were made in accordance with his client’s best interests.

[74] The accused testified that life insurance was the simplest way to take a person’s registered investments and provide income to them tax free. He explained that permanent or whole life insurance has an investment component that permits cash to be built up within the policy. After a period of time during which the funds are locked in they can then be withdrawn. So long as the funds deposited into the policy do not exceed certain amounts determined by reference to the adjusted cost base, the insurance company would pay dividends on the deposited funds which would grow tax free. The dividend could then be paid out in cash and received as tax free income or used to buy additional insurance. Since the policy would also provide additional money to beneficiaries it also served the objective of legacy planning.

[75] At the time of the alleged offences, there was no requirement or recommendation that the accused have a trust account. When Gilden received money from a client, they would be deposited into one of Gilden’s two operating accounts and then forwarded to the local London Life office. With respect to when the monies would be forwarded, the accused said he saw his responsibility as requiring him to “forward those monies to companies as required and when required.” However, he said there were instances when it was not in the client’s best interest to forward the monies immediately. For instance, if too much money was deposited into a life insurance policy it could become taxable.

[76] Another example he gave involved scenarios where a client’s policy premium was not due for a number of months but the client had need of the money in the short term. In those instances, he said “we would always tell the client that there was, you know, that we would manage their funds, and that we would create other investment opportunities to maintain that rate of return that we always talked about”. When he was asked what kind of return a client would get in those circumstances, the accused answered: “If you overpay, it goes into a deposit account which has – it’s like a chequing account, it has no interest, so they’re not making any money on their money. Secondly, it’s in there, in this deposit account, they can’t access it, and as I’d mentioned before, annual premiums are set for like five years locked in, and when you’re doing a financial needs analysis, income is part of the – is one factor that we always worked with, so access to cash was very important, and so if we’d throw everything into a life insurance policy, not only did we risk making it taxable, we risked not being able to meet that commitment of providing the client with income”.

[77] The accused confirmed that in those scenarios, Gilden would do other types of investments for the clients, depending on what they had discussed. In some cases investments were made with third party companies. In other instances the client would want them to send off the funds in increments. He would make this recommendation so they could “maintain” their product and answer their financial need to be able to access cash at the same time. He said that his responsibility to the client vis-à-vis the insurance policy and the premium payment was to ensure that the policy stayed in force in case of premature death.

[78] The accused acknowledged the Code of Business Conduct and Ethics that governed his work with London Life clients. However, he suggested he was effectively under duress when he signed it since signing it was a “contractual obligation” that was required to do business with London Life. His evidence as to whether he read the document varied from saying he read only its first page, to saying he would “breeze through” or speed read it every time he signed it. Regardless, he said he was familiar with its contents.

[79] The accused was asked about how some of his practices accorded with various directives in the Code of conduct pertaining to the maintenance of client files. He said that he always kept client files and kept sufficient information to be able to justify his recommendations. He said he had a paper trail for every client and that he could substantiate all steps he took with his clients.

[80] With respect to the handling of client funds, the accused was aware of the directive that premium cheques were to be made payable to London Life, and that under no circumstances should they be made payable to him or his corporation. He said he understood that directive. He explained that the reason premium payments were made by some of his clients to Gilden was because of his experience with the transfer of funds between clients and London Life. The funds often went missing or were distributed into the wrong account. He made complaints about this on a regular basis. He said “it became apparent that we had to take direct responsibility, so we had the payment given to us. It would allow us to track it to make sure it got deposited in the right account, otherwise the onus was completely on the client and it would confuse them”.

[81] The accused said that he had never encountered any difficulties with London Life because Gilden received the funds and then forwarded them to London Life. The local London Life manager was aware of his practice and had given his approval for it. At no time was the accused told that they would not accept the funds. The funds would be cashed at the head office for London Life. If they were not deposited into the correct account, the accused was able to call them and rectify the matter. He did this on several occasions.

[82] With respect to how long he could retain his clients’ funds before forwarding them to London Life, the accused said he presumed he could do so for a “reasonable time”. This time would be assessed by reference to the client’s needs and “the ability of the product to receive the funds”. He said that his clients were aware at all times when he retained their funds in his business account. He said he made this abundantly clear to the client and that if they had any questions because of any ambiguity in the situation, all they had to do was call the office to ask. In cross-examination, he agreed that client funds in his account were like a hot potato that he should not hold for too long, and that if he received client funds they should leave his accounts without delay.

[83] As for the investigation of the alleged offences, the accused agreed that Gary Schmidt had contacted him about a week before the recorded interview with Mr. Schmidt on August 23, 2011. He was aware that Mr. Schmidt intended to ask him about his dealings with Claude Laroche, but said that he understood that there was supposed to be a general audit. He prepared for the interview by reviewing some of his files.

[84] The accused agreed that during the recorded interview with Mr. Schmidt he was asked if he was allowed to receive cash or a cheque from a client and deposit it into his business account and that he had said he was not. He explained the difference in his response to Mr. Schmidt and his evidence in court by saying that with Mr. Schmidt he was answering what he thought was a generic question, whereas he had been permitted to offer more of an explanation during his in-court testimony.

[85] The accused denied that he had paid interest on funds that were not actually invested in order to cover up his improper conduct. He said that when he paid interest to any of his clients notwithstanding that these funds were not earned from investment he was doing so as a gesture of goodwill.

Overview and analysis of evidence relating to each complainant

[86] What follows is a review of the evidence and my findings in respect of each client, in no particular order. I have analysed the evidence as it pertains to each client’s allegations individually. Later in my reasons I will address the application of the evidence across counts. I will also expand on my discussion of certain elements of the offences following my individual findings.

[87] Before doing so, however, I confirm my consideration of the defence argument that the Crown case “rests critically upon two false pillars”. The first pillar is that the accused breached London Life’s Code of Conduct and therefore committed an offence. The second pillar is the notion that the accused should have maintained a trust account.

[88] I confirm that my analysis in no way rests on these assumptions. I agree with counsel that the issue before me is not whether the accused followed the terms of the Code of Conduct – it is whether the Crown has proved criminal conduct beyond a reasonable doubt.

[89] Further, the evidence before me is that there was no requirement that the accused maintain a trust account for his clients. My analysis is in no way premised on the notion that he did.

Howard Ross (counts 6 (fraud), 7 (misappropriation) and related count 8 (using a forged document)

[90] The accused is alleged to have defrauded Howard Ross and to have misappropriated his funds. A further related count alleges the accused used a forged document, in particular, a client portfolio statement from Hammond Financial.

The evidence of Howard Ross

[91] Howard Ross was 83 years old when he testified. He had retired from employment with Pfizer in 1994. He and his wife both had investments with the accused.

[92] Mr. Ross testified about an occasion when he discussed investing in a “tax savings account” with the accused. It was Mr. Ross’s idea. He wanted a safe investment sheltered from tax obligations. On November 16, 2011 he provided the accused with a cheque for $15, 000 and instructed that it go into a “tax savings account”. He understood the account would be at Manulife and that he would get between two and three percent tax-free.

[93] Mr. Ross did not receive any confirmation that the money was invested so he went back to see the accused. He thought two days passed after that before the accused called to tell him the copy was in. He went in to pick it up. The form was very “fady”. He recalled it had “Manulite” written at the top of the page. He went home, thought about it, and went back to see the accused. He asked for the return of his money. The accused complied.

[94] Mr. Ross reviewed several documents during his evidence. One document was a “client portfolio” with the name “Hammond Financial Incorporated” at the bottom of the page. The document showed a plan breakdown for Mr. Ross between October 1 and December 31, 2011. The document indicated a “net invested” amount of $15,000 with a start date of November 16, 2011. The investment was noted to have a fixed term of 4%. The fund holding the investment, which shows a specific account number, is described as follows: “DBT-6787 – Cp CI – CIB Deb Fixed Term – 4% NR – 3 years”. The value of the funds as of December 31, 2011 is given as $15,073.97. Mr. Ross was asked if the investment listed corresponded with any investments he had with the accused. He noted the rate of interest was 4%, whereas the accused had said it would be 2-3%.

[95] Mr. Ross also testified about a letter from the accused dated February 16, 2012. The letter confirmed that Mr. Ross had received $15,150 from Gilden Financial. It stated: “[t]hese funds are considered a return of deposit which was not credited to the appropriate accounts. They were received as part of an investment that could not be placed as requested and must be returned to you. Due to this error, we are crediting additional interest charges that may have been applicable to your carrier at a rate of Four percent (4%) from the deposit date to the present”. The letter confirmed an original deposit amount of $15,000, and interest of $150, for a total payment of $15,150.00. Mr. Ross testified that he did not understand what was being referred to as the error referenced in the letter. However he was not concerned because he got his money back and “washed [his] hands of it”.

[96] Mr. Ross testified that he did not recall hearing anything about Hammond Financial Incorporated in conversation with the accused.

The evidence of the accused

[97] The accused confirmed he received the $15,000 cheque from Mr. Ross on November 16, 2011 and that those funds were deposited into Gilden’s Unity Savings account the next day. He testified that when Mr. Ross provided him with these funds the intention was that they would be invested.

[98] In examination in-chief, the accused said that he and Mr. Ross had discussed that Gilden offered a third party investment that was making about 4%. In cross-examination he agreed that on the date Mr. Ross provided him with the cheque, he assisted Mr. Ross in completing a Manulife Financial Form directing a lump sum contribution to a fund named “CIBC/Manulife Deposit Note 3YR”. He said they did not discuss placing the funds in a tax-free savings account. He explained that this was because there was a cap on annual contributions of $5,000 and Mr. Ross was investing $15,000. Nevertheless, the accused said that Mr. Ross’s instructions to invest the funds with Manulife were clear to him.

[99] The accused said that at the time Mr. Ross came to him with these funds he was able to place investments with Manulife Financial through a broker named RG Packman. Because that broker terminated the relationship with him shortly after the accused received the funds from Mr. Ross, he “created a relationship” with Hammond Financial so that the Manulife investment could be made through them. The accused described Hammond Financial as one of the third party companies he dealt with. When he testified in examination-in-chief, the accused said that they were in the process of placing the funds through Hammond Financial when he was asked by Mr. Ross to return the funds.

[100] With respect to the client portfolio statement generated by Hammond Financial which the Crown alleges is a forgery, the accused said that the document was generated by Hammond Financial and provided to him. The accused also produced a copy of the articles of incorporation for Hammond Financial dated December 9, 2011, a date about three weeks after he received the cheque from Mr. Ross. The accused said he obtained the client portfolio from Hammond Financial and forwarded it to Mr. Ross. Ultimately, he said that because he had not been able to place the investment for Mr. Ross his investment was returned with interest.

[101] In cross-examination, the accused said that to his knowledge the funds were invested at Hammond based on his review of the client portfolio generated by that company. He said he had forwarded the funds to Hammond Financial and assumed they invested them. He disagreed that the impression he left with his evidence in chief was that the investment had not been made as of yet but was “in the process”. He said he reviewed the Hammond Financial client portfolio statement before it was sent to Mr. Ross. He offered no explanation for how he had arrived at the conclusion that the investment had not been successfully placed (as he stated to Mr. Ross in his letter of February 16, 2012), given the contents of this document. He agreed that the document made no reference to Manulife.

[102] The accused was asked further questions about when he sent the funds to Hammond Financial. He was provided with banking records from Gilden’s Unity Savings Account. He agreed that those records show funds of $15,000 being credited to this account on November 17, 2011. He could point to no corresponding debit entries in the months following. He suggested that the funds might have been sent as part of a larger sum.

[103] In cross-examination, and for the first time, the accused testified that the director of Hammond Financial was his sister, Elise Beauvais. The “Operation of Account Agreement” for the Unity Savings and Credit Union Limited” filed as Exhibit 110 confirms that Ms. Beauvais also acted as the Secretary and Treasurer for Gilden Financial and had signing authority for that corporation. The accused disagreed that there was any conflict of interest in providing Mr. Ross’s funds to his sister’s corporation for the purposes of investing them with Manulife. He disagreed with the suggestion that he had worked with his sister to create the impression that Mr. Ross’s funds were invested. He said that the intention was always for those funds to get to Manulife.

[104] As to the contents of his letter of February 16, 2012 to Mr. Ross confirming the return of Mr. Ross’s funds, the accused agreed that it made no reference to either Manulife or Hammond Financial. He said that the additional $150 provided to Mr. Ross represented the “lost interest” from his intended investment. It was intended to compensate Mr. Ross for any losses he may have incurred because the investment could not be placed on the date he deposited it. This money came from his Gilden account and was treated as an expense to Gilden.

The positions of the parties

[105] The Crown argues that the accused failed to apply the funds received from Mr. Ross to a TFSA or investment as he was directed and never invested the funds. He further failed to advise Mr. Ross he was retaining his funds and instead provided him with misleading documentation to indicate that the funds were invested. The Crown says the accused’s letter upon return of the funds at Mr. Ross’s request is a vague letter which does not accurately describe what transpired. In this case, the accused retained the client’s funds for a period of 92 days.

[106] The defence says that the accused made sincere but unsuccessful attempts to place Mr. Ross’s funds with Manulife. He was unable to do so with his usual broker because his contract with that broker was cancelled. He then made efforts to do so through Hammond Financial. Those efforts were not successful because by that point in time Mr. Ross had changed his direction and asked for his money back. The defence says the accused did not deprive Mr. Ross of anything because when asked to do so, he immediately returned the funds to Mr. Ross with interest.

Analysis

Credibility and reliability assessments

[107] I have considered the credibility and reliability of the accounts given by Mr. Ross and the accused. With respect to my assessment of Mr. Ross, his account was sometimes difficult to follow, particularly as it related to the timing of various events. However, the documentary evidence meets the material gaps in his recollections.

[108] As far as his recollections of his directions to the accused are concerned, Mr. Ross was very firm and consistent in his recollection that he wanted an investment in a “tax-savings account”, which I take to be a reference to a tax-free savings account [“TFSA”]. I accept Mr. Ross’s evidence that this was the direction he provided to the accused. While I have considered the accused’s evidence that he did not receive that direction, his evidence suggests the issue was at least discussed. He says that this kind of investment could not be made because any TFSA contribution would be limited to $5,000, whereas Mr. Ross wanted to invest $15,000. This tends to confirm that when Mr. Ross attended at his office with his cheque, he was indeed requesting an investment in a TFSA.

[109] In any case, given the accused’s admission that he understood that he had been directed to invest Mr. Ross’s funds with Manulife, and Mr. Ross’s direction to him to so invest the funds, whether the scope of the direction also included the use of a tax-free savings account in doing so is of no consequence. The more critical issue is whether I accept the accused’s account for why he was unable to invest the funds with Manulife. I do not. I find the accused’s account is incredible for a number of reasons.

[110] First, I do not accept that the accused ever forwarded funds to Hammond Financial for the purposes of investment with Manulife. I find that the accused was vague and confusing in his evidence about that in court. In-chief he said he was in the process of placing the funds through Hammond Financial when Mr. Ross asked for their return. In cross-examination, he said he had sent the funds to Hammond and assumed they had invested them. I cannot reconcile these accounts. When I consider the banking records in conjunction with this evidence, I am satisfied beyond a reasonable doubt that the money was never sent to Hammond Financial for the purposes of investment, contrary to the accused’s evidence before me.

[111] Second, I find that the accused knowingly provided documentation to Mr. Ross from Hammond Financial that was misleading. I cannot reconcile his letter to Mr. Ross saying that he was returning funds which were “not credited to the appropriate accounts” and the contents of the client portfolio. A reasonable person could only conclude from reading that document that Mr. Ross’s funds had been invested in some fashion. I find that the accused was deceitful in his dealings with Mr. Ross. This evidence of deceitfulness counts against his credibility.

[112] Third, the material omission in the accused’s evidence in chief about his sister’s role in Hammond Financial is troubling. While his failure to make Mr. Ross aware of her potential role in the handling of his funds doesn’t speak well of his ethics, my concern in this trial is not with whether the accused breached ethical standards or a corporate policy. The accused’s credibility as a witness is another matter. A witness who omits important facts in their account risks a finding that they are not completely honest or forthcoming in their evidence. They risk giving the impression they are trying to hide something. I have these concerns about the accused as a witness and find his credibility was impaired by this omission.

[113] Finally, the account given by the accused in his evidence makes little sense when considered against the totality of the evidence. While I accept that his contract with RG Packman was terminated in the days following his receipt of Mr. Ross’s funds, there is no evidence that the accused had attempted to forward the funds to that broker in the time that was available to him. There is no evidence of other efforts to place the investment as directed, or an attempt to seek further instructions, in the face of any difficulty in placing the money with Manulife. While the accused testified that he intended to place the funds with Manulife through Hammond Financial, the documentation allegedly produced by that company makes no reference to a Manulife investment. Whatever dealings the accused had with his sister’s company in relation to Mr. Ross’s funds, I do not believe that there was ever a genuine attempt to place the funds with Manulife, nor do I have a reasonable doubt about that.

[114] The accused’s letter of February 16, 2012 says that Mr. Ross’s funds were never “credited to the appropriate accounts”. This explanation of events, coming some three months after receipt of the money, and prompted by the client’s request for the return of his funds, is difficult to rationalize with any sincere attempt to invest the money as directed. I do not believe that the accused ever attempted to do so.

Findings of fact

[115] After consideration of the totality of the evidence applicable to these counts, I am satisfied beyond a reasonable doubt that:

a. The accused received $15,000 from Mr. Ross on November 16, 2011 with the direction that it be invested in a tax-free savings account and more particularly, with Manulife.

b. The accused did not invest that money with Manulife as directed.

c. The accused maintained control over those funds for a period of roughly three months without informing Mr. Ross.

d. The accused did not forward those funds to Hammond Financial or any other financial firm for investment.

e. The accused provided Mr. Ross with the Hammond Financial client portfolio document to give him the impression his money was invested when it was not.

f. The accused returned Mr. Ross’s funds to him upon his request and paid him an additional $150 in interest.

The facts applied to the elements of the offences

####### Fraud (count 6)

[116] I am satisfied beyond a reasonable doubt that the accused retained Mr. Ross’s funds contrary to his direction for a period of three months and that this was a deceitful act. The accused’s deceit is further confirmed by his use of a misleading document to suggest that Mr. Ross’s funds were invested when he knew they were not.

[117] I am satisfied beyond a reasonable doubt that deprivation was caused to Mr. Ross by this deceitful act. It placed Mr. Ross’s financial interests at risk. The accused’s conduct placed Mr. Ross at risk of not getting the benefit of the thing he bargained for – the investment of his funds in a known investment product, as opposed to the placement of the funds in the accused’s bank account or wherever else he might direct the money. I am satisfied beyond a reasonable doubt that by retaining the funds personally, which left them available for his own use without the knowledge or direction of Mr. Ross, some risk was created for Mr. Ross’s financial interests, no matter how confident the accused was that he would be able to return these funds to Mr. Ross if and when asked to do so.

[118] I further find that the Crown has proved the requisite mens rea beyond a reasonable doubt. The accused had subjective knowledge of the prohibited act – he knew he was retaining his client’s funds contrary to Mr. Ross’s direction. I am further satisfied that the accused knew that his deceitful act could have as a consequence the deprivation of his client. His conduct was not reckless, accidental, or negligent. It was not the product of poor business practices. That this is so is amply demonstrated by his use of a misleading document to give his client the impression the money was invested. I find this deceitful conduct demonstrates his ongoing intention to keep his client in the dark about his own retention and control of the funds. The accused’s deceitful conduct was intentional, continued over a period of months, and placed his client’s pecuniary interests at risk.

[119] The accused will be found guilty of this count.

####### Misappropriation (count 7)

[120] I am satisfied beyond a reasonable doubt that the accused received funds from Mr. Ross with a direction that the funds be applied to an investment with Manulife. I am satisfied beyond a reasonable doubt that the accused did not apply those funds as directed. Instead, he applied them to another purpose by retaining those funds for three months without his client’s knowledge and contrary to his direction. As I have already said, I find the accused’s conduct was intentional, fraudulent, and was not the product of a mistake. Accordingly, he will be found guilty on this count.

####### Use of a forged document (count 8)

[121] The client portfolio from Hammond Financial is at the centre of this allegation. I am satisfied beyond a reasonable doubt that it is a forged document. This is because I am satisfied that no funds were ever sent to Hammond Financial by the accused. The representation in the document that the funds were invested is both a “material particular” and false. While I cannot determine who created the document, I am satisfied that it is a false document, and that it was created with the intention that it be acted on as genuine. I am further satisfied beyond a reasonable doubt that the accused knew the document was forged when he provided it to Mr. Ross, but that he represented it as genuine. The accused will therefore be found guilty on this count.

Claude Laroche (counts 30 (fraud), 31 (theft), and 32 (misappropriation))

[122] The accused is alleged to have defrauded Claude Laroche, to have committed theft by converting the sum of $55,187.43 of Mr. Laroche’s funds and making it his own, and to have misappropriated those funds.

The evidence of Claude Laroche

[123] Mr. Laroche was 65 years old at the time of his testimony. He had worked for over twenty years at the local newspaper ultimately becoming its editor. Following that, he operated a small business.

[124] The accused and Mr. Laroche met sometime in the early 2000s. At the time, Mr. Laroche owned his small business with his wife. Together they purchased a life insurance policy with the assistance of the accused. Mr. Laroche understood that Great West Life and London Life were owned by the same corporate entity and that the accused had access to policies from both. At some point after purchasing life insurance, the accused also assisted Mr. Laroche with other investments.

[125] In late 2009 Mr. Laroche and his wife were in the process of obtaining a divorce. Mr. Laroche determined he no longer required the same life insurance protection. He asked the accused to assist him in obtaining a policy with a lesser value. The accused told him that he would look into it. He later told Mr. Laroche that London Life would not agree to reduce the policy coverage, and that he would have to cancel it completely. Accordingly the policy was cancelled and Mr. Laroche obtained a new one. His objective in reducing his coverage was mainly to reduce his premiums and to get a policy that better reflected his needs at that time. While he understood that cash value would accumulate in the policy over time he said this was not important to him.

[126] Mr. Laroche understood that he would receive some cash value from the old policy which he intended to use to fund the new one. He discussed this plan with the accused. He received redemption cheques from the old policy in May of 2010.

[127] On May 6, 2010, Mr. Laroche re-directed those funds to the new policy. He did so by writing a cheque for $30,187.43 to the accused’s corporation, Gilden Financial. He had asked the accused whether the cheque should be written to Great West Life or Gilden. He said he was wondering, “if the cheque is to go to Great West Life, how do we get it there”. The accused told him to write it to Gilden Financial. Mr. Laroche did so, for the purpose of having it added to his new life insurance policy.

[128] Later in 2010, Mr. Laroche approached the accused for assistance with the investment of $25,000. At the time, he already had a sum of money invested in an account with Quadrus, which he understood was an investment vehicle with London Life. Mr. Laroche asked the accused whether he might obtain another quarter percent increase to the interest payment from that account if he brought the total of the funds contributed up to $50,000. The accused told him it probably could. Mr. Laroche then provided a cheque dated December 16, 2010 in the amount of $25,000 to the accused. He wrote the cheque out to Gilden Financial because he was instructed to do so.

[129] Sometime later, Mr. Laroche mentioned to the accused that he was not seeing evidence of this investment or paperwork. The accused told him he decided to invest it with his life insurance company because he thought he could get a better rate of return than with Quadrus. Mr. Laroche testified he was disappointed with that answer because it would only have taken an email or phone call to get his permission to go with the option that would generate the better return. Instead, he found out after the fact.

[130] At another point, Mr. Laroche received paperwork from Gilden that “didn’t jive” with other documentation he had received about the insurance policy from the insurance company. He made a phone call to the accused who told him there must have been a secretarial error and they would “fix it up”. He could not recall if this was before or after he made the additional $25,000 investment with the accused’s assistance.

[131] In June of 2011, Mr. Laroche met with a financial advisor at RBC who had offered to prepare a retirement plan for him. Following that meeting, he became concerned about his life insurance policy. He contacted the accused to make him aware of the concerns. He recalled addressing those concerns in person with the accused which caused even more confusion.

[132] In early July 2011, Mr. Laroche received a statement of account from the accused. It did not address his concerns so he sent an email to the accused outlining his questions about why the $30,187 and $25,000 were not reflected in the policy values showing on his statement from London Life.

[133] The accused replied by email on July 19, 2011. He told Mr. Laroche that there was a “notional account held at London Life that is not available on their statements”. He went on to say that there were tax implications for the funds that had been considered in their management. He explained: “…these policies are tax-exempt and based on the tax rules they cannot show cash that exceeds their ACB or adjusted cost base”. Mr. Laroche had no recollection of having discussed a “notional account” with the accused, or the implications of an adjusted cost base. He had never given the accused instructions to do the things described in the email. He replied to the accused the next day by asking to get a copy of “that account statement”, and other documentation showing how his funds had grown. By this point the accused was scheduled to leave on a two week holiday and he said he would address Mr. Laroche’s concerns when he came back.

[134] In the meantime, Mr. Laroche had further discussions with his accountant about the situation. He then contacted a regional manager for London Life and was ultimately in touch with Mr. Schdmit. On Mr. Scdhmidt’s advice, Mr. Laroche had no further dealings with the accused. He was contacted a few times by the accused’s office, including on August 8, 2011. He followed the direction of Mr. Schmidt and “just deflected” the suggestion that he meet with the accused.

[135] In cross-examination, Mr. Laroche agreed that he had a level of trust in the accused and he trusted him to invest with the best return possible in mind. He did not have the level of comfort with him that he used his services for all his investments.

Additional evidence

[136] In addition to several documents including cheques, statements, and emails, there was additional evidence from Gary Schmidt. He testified that he contacted the accused on August 16, 2011 to discuss Mr. Laroche’s concerns. He also testified that London Life does not have “notional accounts” and that lump sum payments could be paid into whole life insurance policies.

[137] Sometime after Mr. Schdmidt’s initial contact with the accused, the accused remitted bank drafts in the amount of $30,187.43 and $25,000 payable to London Life. The drafts are dated August 22, 2011. Mr. Schdmidt testified that Quadrus had not previously received a payment in the amount of $25,000.

The accused’s evidence

[138] The accused acknowledged that Gilden Financial had received the funds described by Mr. Laroche in two cheques. The first cheque for $30,187.43 dated May 6, 2010 was deposited into his TD account on May 10, 2010. The accused said that the intention for those funds was to incorporate them into Mr. Laroche’s personally owned life insurance policy. He explained that using a corporate policy would have tax implications and that Mr. Laroche’s accountant (Mr. Mattice) was involved in determining how best to direct the funds.

[139] As regards the cheque for $25,000 dated December 16, 2010, the accused confirmed those funds were deposited into his TD account on the same date. In examination-in-chief he said these funds were intended to be investments. He testified about a meeting when he had discussed with Mr. Laroche the possibility of an additional investment of $50,000. The next step was to discuss the tax consequences with Mr. Mattice. In explaining Mr. Laroche’s circumstances, the accused referenced the different tax treatment of investments personally or through his corporation as one of the factors to be considered. Mr. Laroche dropped off the cheque for $25,000 after these meetings.

[140] The accused acknowledged that he held the funds from the $25,000 cheque during an 8 month period culminating with the funds being sent to London Life on August 22, 2011. He said that during that time he had monthly meetings with Mr. Laroche because he was a business owner and he was going through a divorce. He was also in constant communication with Mr. Laroche’s accountant. He said they were trying to co-ordinate with Mr. Laroche who was finalizing asset transfers to his former spouse in this time period. The accused’s recollection was that at some point Mr. Laroche consulted a financial advisor from RBC because he was thinking about retiring. After this time, and before the accused could present an alternative retirement plan to Mr. Laroche, they had a communication breakdown in the relationship.

[141] In cross-examination, the accused said that when the $25,000 cheque was dropped off, he did not have a clear direction and he shouldn’t have accepted it. He explained that this is what led to the need to communicate with the client.

[142] The accused ultimately agreed that he did not forward any of Mr. Laroche’s funds to London Life until August 22, 2011. He explained that there had been delays in receiving input from Mr. Laroche and that eventually, a communication breakdown occurred. Consequently, he was unable to obtain clear instructions from him. The accused also said that these deposits were not made earlier because they had tax consequences and these issues needed to be resolved with the assistance of Mr. Laroche’s accountant. This also contributed to the delay. Without clear instructions from Mr. Laroche, the accused was unable to act.

[143] The accused agreed that the period of time during which he says he was unable to obtain clear instructions from Mr. Laroche was a minimum of 6 months and a maximum of 12. He agreed that during that time period, he kept Mr. Laroche’s funds in his operating account without instructions from Mr. Laroche. He did not return the funds to Mr. Laroche in that time.

[144] The accused explained the statement of account he provided to Mr. Laroche on July 7, 2011. He said that the “cash value” column figures for the life insurance entry shows the “effect of applying all these funds to the policy if we did it”. He was referencing the $30,187 and $25,000 he had received from Mr. Laroche. He said the statement showed this in the “cash value” column because he would put additional funds intended to go to the life insurance policies in that column. He agreed that nothing in this statement indicated that the funds were still in Gilden’s account.

[145] The accused also explained the email he sent to Mr. Laroche on July 19, 2011 and his statement that there was a “notional account” held at London Life that “is not available on their statements”. He said that a cash account was an account used by insurance companies to allow deposits of additional money, like a chequing account, where no interest would accumulate. He said this type of account was used to apply to future premiums. The terms “cash account”, “notional account” and “deposit account” referred to the same type of account and were the same thing. He said that if Mr. Laroche had wanted to see what was in those accounts he would have to ask London Life for an additional statement because they were never included in advisor records.

[146] Later in cross-examination, however, the accused agreed that when he sent this email he knew he had not sent the funds to London Life. He further testified that he was telling Mr. Laroche that if the $55,000 were applied to his insurance policy it would go into his cash account and would not show on his statement. When it was put to him that nowhere in this email did the accused disclose that he still had the money, the accused answered by posing his own question to counsel: “Well, did he write the cheques to Gilden?”

[147] The accused sent another email to Mr. Laroche on August 18th. Because he had determined that the relationship was strained, his intention in sending this email was to ask Mr. Laroche how he wanted to proceed. One of the options the accused presented in the email was to “leave” the additional cash in the policy. He received no response. Four days later, on August 22nd, the accused provided bank drafts to London Life for $30,187.00 and $25,000. When asked why he did so, he said that if there was not going to be a client relationship he had to start closing down the file.

[148] The accused was interviewed by Gary Schmidt on August 23, 2011. This was one day after he had sent Mr. Laroche’s funds to London Life. Notwithstanding that, he told Mr. Schmidt that he had sent the funds to London Life some time earlier and London Life must have lost them. He explained this by saying that he interpreted Mr. Schmidt’s question as asking “what is the process you follow”. He also agreed, however, that he had told Mr. Schmidt that he had had to follow up with his bank to cancel all those transactions. He said he was again speaking in general terms.

[149] The accused said that at this point in his discussion with Mr. Schmidt they were “talking shop” and he was comfortable with the interview. He explained his later comments about having sent the funds without disclosing that this occurred the day before by saying that perhaps he had been arrogant but that Mr. Schmidt was becoming intimidating.

[150] Later still, when discussing the $25,000, the accused was asked how long the money had been in his corporate account. The accused told him it was “probably three months”. When asked to explain that the accused said he was speaking in general terms. He agreed he knew he had just sent the funds off the day before.

[151] After this point in the interview, Mr. Schmidt asked the accused if had any documentation to show when he sent the funds to London Life. The accused said he had none. He said that he did not have the documents available at the time of the interview because he was not aware it was going to be an interrogation. He said that had he been asked for all that he had on Mr. Laroche he would have produced those documents.

[152] Mr. Schmidt raised the accused’s use of the term “notional account” in his email of July 19th to Mr. Laroche. During his interview, the accused agreed with Mr. Schmidt that this was a term he had made up. In his evidence before me, however, he denied that this was a term he created. The interview with Mr. Schmidt was put to him, and he was asked again if he acknowledged this was a term he made up. The accused replied to counsel, “If that makes you happy, yes”.

[153] While the accused agreed that he never disclosed to Mr. Schmidt that he had sent the funds the day before, he denied that he was intentionally misleading Mr. Schmidt. He said that he omitted something. If Mr. Schmidt had asked him when he sent it, he would have told him.

[154] Some of the accused’s banking records from this time period were put to him during cross-examination. He agreed that he used the account into which he deposited Mr. Laroche’s funds for purchases at Zellers and McDonalds. He initially agreed that there was no reason for Mr. Laroche’s funds to have left that account, and then said that he had two operating accounts so he was not sure.

[155] The accused acknowledged the bank records showing that when he received the first cheque of $30, 187 from Mr. Laroche in May of 2010, the account balance was $80,663.48. He agreed that during the month of December 2010 after he had deposited Mr. Laroche’s second cheque for $25,000, the balance on the account went from in excess of $49,000, to $32,000 on January 10, 2011. The account was in overdraft by $66,000 by July 4, 2011. On the date he sent the funds to London Life, August 22, 2011, it was in overdraft by $56,000. The accused agreed that the difference in the balance of the account from the time both of Mr. Laroche’s cheques had been deposited to when they were refunded was approximately $100,000.00. He confirmed that he had never notified Mr. Laroche any time he was transferring his funds from one of his accounts to another. He further agreed that during the time Mr. Laroche’s funds were in the account he wrote himself a cheque in excess of $6,000.

The positions of the parties

[156] The Crown emphasizes that the accused only sent Mr. Laroche’s funds to London Life after having received notice from Mr. Schmidt that there had been a complaint from Mr. Laroche. The Crown says the accused’s duplicity in not disclosing this to Mr. Schmidt shows that the accused went to great lengths to deceive and create a reality that did not exist. Counsel highlights the transaction ledger and other documents that were provided to Mr. Laroche which suggest that the funds were actually with London Life when the accused knew that those funds had not yet been sent to London Life. The Crown argues that the accused’s evidence of a communication breakdown with Mr. Laroche should be rejected. In none of his communication with Mr. Laroche does he ever suggest that he is having difficulty reaching him and getting instructions from him. Instead, he contorts himself by making reference to Mr. Laroche’s funds being in a “notional account”. The Crown says the court should accept Mr. Laroche’s account as credible and reliable. Whereas the documentary evidence corroborates Mr. Laroche’s account, it undermines that of the accused.

[157] The defence says that Mr. Laroche was a business man who understood what he was doing when he wrote cheques payable to Gilden Financial. He was not coerced to do so. Mr. Laroche was also candid in his acknowledgement that perhaps there had been some misunderstanding about his intentions for the $25,000. The defence argues that the accused’s explanation for how the funds were handled is logical and supported by the various emails between the accused, Mr. Laroche’s accountant, and Mr. Laroche. There were complex tax issues that required consideration and these communications show the efforts made to do so. The defence argues that the accused received no direction from Mr. Laroche until the end of their dealings with one another, at which point the accused returned the money in full. The defence points to various notes made by the accused and emails as confirmatory of the accused’s account and a basis to prefer the evidence of the accused.

Analysis

Credibility and reliability assessments

[158] I found Mr. Laroche to be both credible and reliable. He gave a cogent account of his dealings with the accused. He had a solid recollection and understanding of his financial affairs, even if he did not have a nuanced understanding of the tax treatment of investments using corporate or personal funds. He testified without any hint of an agenda. He appeared to be doing his best to answer counsel’s questions. I have no compelling reason to disbelieve anything Mr. Laroche related to the court other than the accused’s account is different in some respects.

[159] With respect to the accused’s account, I have several compelling reasons to doubt that he was telling the court the truth and I do not believe his account.

[160] I begin with the interview by Gary Schmidt. I find that the accused deliberately mislead him. His failure to disclose during the interview with Mr. Schmidt that he had forwarded Mr. Laroche’s funds to London Life only the day before speaks volumes. I find he deliberately withheld the truth from Mr. Schmidt.

[161] The accused’s explanation for what he said in the interview about what had happened to the funds (e.g. that he had sent the funds and had followed up with his bank to cancel those transactions because London Life must have lost them) is also incredible. It is clear he understood the specific nature of the questioning by Mr. Schmidt. To say now that he was speaking generally about his process offers an answer for his conduct, but not a good one. I don’t believe this explanation.

[162] The accused was also contradicted on an important fact, that is, his creation of the term “notional account”. Quite apart from the implications of creating a new term to explain why his client could not account for where his money had gone on his statement from London Life, the accused gave contradictory accounts of whether he made that term up.

[163] I find that the accused also misled Mr. Laroche. Staying with the issue of the “notional account”, he told Mr. Laroche that such an account existed when it did not. He was intending to give Mr. Laroche the impression that his funds were at London Life when he knew they were not.

[164] The accused is clear in his evidence not only that he did not forward Mr. Laroche’s funds to London Life until August 22, 2010, he also admits that he knew that when he provided him with various documents which represent that the money is with London Life. These documents include a transaction ledger dated July 7, 2011, the statement of account dated July 7, 2011, an email from July 19, 2011 (“there is a notional account held at London Life that is not available on their statements”), and an email dated August 18, 2018 (“We were to review the insurance policy to respond to your concerns about the additional cash associated with your policy”). The accused misrepresented the true state of affairs consistently and repeatedly.

[165] Having found that the accused deliberately misled the investigator from London Life and his client, I have every reason to doubt that he told the truth in this court. But in assessing the accused’s credibility I also consider the logic of his account before me and the extent to which it accords with the documentary evidence.

[166] I do not believe the accused’s account that a breakdown in communication with his client led to a lack of clear direction from Mr. Laroche. The accused’s own evidence is that they met monthly, which would seem to provide any number of occasions to obtain directions. This explanation also does not accord with the documentary evidence before me, and in particular, the email exchanges between Mr. Laroche and the accused. If nothing else, it is clear that in at least July of 2011 the accused had his client’s email address and could easily have obtained instructions.

[167] Further, the email exchanges that did occur make no reference to the fact that the accused still had the funds and needed his client’s instructions. If he was genuinely interested in clarifying Mr. Laroche’s instructions, the email exchange on July 19, 2011 would have been an ideal moment to do so. The fact that the accused did not do so suggests there was no need to clarify them – the issue was not that he had received no instructions or instructions that were to be confirmed following consideration of the tax issues – it was that the accused had not followed the instructions he was given. I also think that if the accused had not understood the directions to place the funds with London Life, it is a remarkable coincidence that the accused is telling Mr. Laroche in his email of July 19th that his funds are in a notional account at London Life.

[168] I also reject the accused’s explanation for the statement of account he provided to Mr. Laroche on July 7, 2011. His claim that this was an attempt to show the effect of applying Mr. Laroche’s funds to the policy “if we did it” is incredible. No reasonable person would view this statement as being a statement of intention, as opposed to fact. It was deliberately misleading.

[169] I have considered the additional documents which were entered as Exhibits 60, 61, and 91-93 and are said to be a basis to prefer the accused’s evidence. The Storybook entered as Exhibit 91 references a meeting with Mr. Laroche on October 20, 2010. The following note is made: “Met with Claude Laroche for his semi-annual review. The cheque he gave is for the CSV amount of the GWL policy. We discussed that we added to the personal insurance and he should find out if this was personal or corporate cash. The GWL was corporate owned and not sure if the CSV is personally owned? He will advise and we can leave in the cash account if he chooses, use as premiums; otherwise we will return the funds that were previously sent”. [emphasis added]

[170] Exhibit 92 notes a call by the accused to Lee Mattice on December 21, 2010: “Lee Mattice the accountant as [sic] already told me that Claude wants the money from the original GWL policy to go into the cash account. I explained to Lee the funds will stay there and London Life was paying an estimate of 3% or 4%, not sure, on the cash account and we agreed that it was better than his bank account”. [emphasis added]

[171] Exhibit 93 includes an entry from February 15, 2011 that says: “Client came in to review his financial position. We prepared a statement to view the products held by London Life and Quadrus. We indicated the CSV amount as part of the cash and assumed the additional $25,000 is to be applied to his insurance and if we have to make a change, still need to confirm. We discussed how the permanent life insurance has tax advantages, versus straight investing.” [emphasis added] This entry accords with the evidence of Mr. Laroche that the accused told him that he had directed the $25,000 to the insurance policy instead of Quadrus, which upset him because all he had to do was call or email to get approval to do so.

[172] As I read these notes, the references to Mr. Laroche’s funds are equally consistent with moving funds within London Life once his tax issues were assessed, and the reference to a “return of funds” with a return of the funds from London Life. They are not a basis to prefer the accused’s evidence.

[173] Further, as I have said, there is no reference to ongoing discussions with the accountant or any need to confirm Mr. Laroche’s directions in any of the emails between the accused and Mr. Laroche in July and August 2011. This is telling.

[174] The fact that there was a tax-treatment issue that was discussed regarding Mr. Laroche’s funds is not sufficient to corroborate the whole of the accused’s account of why he personally held onto those funds for in excess of a year with respect to the first cheque, and for 8 months in respect of the second. This additional documentary evidence does not resuscitate my faith in the accused’s account.

[175] In summary, because of the many issues which undermine the credibility of the accused’s account, I reject it.

Findings of fact

[176] Given the totality of the evidence, I am satisfied beyond a reasonable doubt of the following facts:

a. The accused received $30,187.43 of Mr. Laroche’s funds along with a direction that they be directed to London Life to fund his new life insurance policy.

b. The accused did not place those funds as directed.

c. The accused retained control of those funds without informing his client between May 10, 2010 and August 22, 2011, a period of over 15 months.

d. The accused received $25,000 of Mr. Laroche’s funds along with a direction that they be directed to his investment account with Quadrus.

e. The accused did not place those funds as directed.

f. The accused retained control of those funds without informing his client between December 16, 2010 and August 22, 2011, a period of over 8 months.

g. On multiple occasions the accused provided Mr. Laroche with documentation (the statement of account, the transaction ledger, emails) intended to falsely convey to him that his money had been forwarded to London Life when the accused knew it had not.

h. The accused forwarded bank drafts of $30,187.00 and $25,000, dated August 22, 2011, to London Life, after being advised that London Life had received a complaint from Mr. Laroche which it was investigating. This is .43 cents shy of the funds Mr. Laroche originally provided to the accused.

i. Mr. Laroche’s funds were received into the accused’s TD account and transferred from that account while the accused retained control of the funds.

j. The balances in the TD account over the period of time the accused controlled the funds, as well as the relevant transactions pertaining to the accused’s own use of those funds, were as I have set out above.

The facts applied to the elements of the offences

####### Fraud (count 30)

[177] I am satisfied beyond a reasonable doubt that the accused retained Mr. Laroche’s funds contrary to his direction for a period of over 15 and 8 months respectively and that these were deceitful acts. The accused’s deceit is further confirmed by his use of misleading documents to suggest that Mr. Laroche’s funds were invested when he knew they were not.

[178] I am satisfied beyond a reasonable doubt that deprivation was caused to Mr. Laroche by these deceitful acts. I find that it placed his financial interests at risk in the same manner as I have articulated with respect to Howard Ross.

[179] I further find that the Crown has proved the requisite mens rea beyond a reasonable doubt. The accused had subjective knowledge of the prohibited act – he knew he was retaining his client’s funds contrary to Mr. Laroche’s direction. I am further satisfied that the accused knew that his deceitful acts could have as a consequence the deprivation of his client. His conduct was not reckless, accidental, or negligent. It was not the product of poor business practices. That this is so is amply demonstrated by his use of various misleading documents over a period of time to give his client the impression the money was with London Life. I find this deceitful conduct demonstrates his ongoing intention to keep his client in the dark about his own retention and control of the funds. The accused’s deceitful conduct was intentional, continued over a period of many months, and placed his client’s pecuniary interests at risk.

[180] The accused is found guilty of this count.

####### Theft (count 31)

[181] I am satisfied beyond a reasonable doubt that the accused retained control over Mr. Laroche’s funds contrary to his direction and without his knowledge. In retaining the funds within his sole control for a global period of over 15 months, he converted Mr. Laroche’s funds to his own use. The fact that the specific use he made of those funds has not been proven is irrelevant. The evidence that the funds were transferred from his TD account demonstrates the complete control he had over the funds. This was also demonstrated by the fact that the accused’s bank statements show a progressively diminishing balance, to the point of being overdrawn by $66,000, as the funds were within his control.

[182] The accused had sole control of the funds for a period of time that far exceeded any time required for a genuine effort to invest the funds as directed, even allowing for a genuine effort that reflected careless or negligent business practices. So long as the accused retained control of the funds in these circumstances they were available to him for his own use.

[183] Given my conclusions with respect to the fraud count I am also satisfied that the accused converted Mr. Laroche’s property fraudulently and without colour of right. I am satisfied that the accused’s conduct was intentional and that he knowingly deprived Mr. Laroche of his interest in his funds.

[184] He will be found guilty of this count.

####### Misappropriation (count 32)

[185] I am satisfied beyond a reasonable doubt that the accused received funds from Mr. Laroche with a direction that the funds be directed to his life insurance policy and Quadrus investment account, both of which were held by London Life. I am satisfied beyond a reasonable doubt that the accused did not apply those funds as directed. Instead, he applied them to another purpose by retaining those funds for many months without his client’s knowledge and contrary to his direction. As I have already said, I find the accused’s conduct was intentional, fraudulent, and was not the product of a mistake.

[186] Accordingly, he will be found guilty on this count.

Helene Crawford (counts 33 (fraud), 34 (theft) and 35 (misappropriation), and count 36 (utter forged document)

[187] The Crown alleges that the accused defrauded Helene Crawford of a sum exceeding five thousand dollars, that he committed theft by converting $17,541.00 of Ms. Crawford’s funds and making them his own, and that he misappropriated her funds. In a related count, the accused is alleged to have uttered a forged document, in particular, a Quadrus transfer authorization for non-registered investments.

The evidence of Helene Crawford

[188] Ms. Crawford was 67 years old at the time of her testimony. When she met the accused she was a retired mental health worker who supported herself with a small insurance policy payout received upon her husband’s death.

[189] Ms. Crawford’s sister referred her to the accused. She met with him for the first time in 2010. Ms. Crawford understood that the accused was a representative of London Life. With his assistance, she applied for a London Life insurance policy. The policy was in effect by February 14, 2011.

[190] Ms. Crawford understood based on her discussions with the accused that the money she deposited into this policy would permit her to withdraw a monthly interest amount which would assist her with her living expenses. While she testified that it was not clear to her how the investment with life insurance would work, she understood there would be tax advantages to investing her money in this fashion.

[191] At the time the life insurance policy came into effect, Ms. Crawford was in Florida. While there she remained in contact with the accused. She recalled seeing him there around mid-March and signing documents. She recalled writing a cheque for $10,000 to London Life and providing it to the accused. She understood the $10,000 to be a deposit for the life insurance.

[192] Ms. Crawford was shown documents signed by her and dated May 25, 2011, authorizing an application for a Retirement Income Fund [“RIF”] with London Life. She said she did not quite remember what the document was about. The document provided for the transfer of $24,597.38 from an RRSP. When shown a cheque relating to a transfer of $24,992.57 from Sun Life to London Life, Ms. Crawford said she remembered signing something while she was in Florida relating to an RRSP her husband had accumulated at work. She said the accused wanted this money to go to London Life into her life insurance and she signed a document for that purpose.

[193] In cross-examination Ms. Crawford agreed that the transfer from Sun Life was okay with her as long as it did not attract tax implications, but that she understood it would be going to the life insurance. She said she was not told that the money would be taxed if it went into the life insurance but not if it went to a RIF. She agreed with the suggestion put to her that setting up a RIF with London Life was consistent with what she wanted because the funds were registered and benefitted from tax sheltering, and they would provide her with an income.

[194] Ms. Crawford was also shown a London Life form which authorized the transfer of over $18,000 in non-registered investments from Scotiabank. The document is dated June 1, 2011 but that date was not written by her. Ms. Crawford recalled that she had signed the document while in Florida. She did not write a date because the accused said he would fill in the rest.

[195] Ms. Crawford said she signed the form because she understood it would permit the transfer of her mutual funds from Scotiabank. She believed the money would go to the London Life “insurance investment” she had applied for. She said she formed that belief because this is what the accused told her. Ms. Crawford said she understood the funds would go through Gilden Financial to London Life. She agreed that a bank draft from Scotiabank in the amount of $19,351 made payable to London Life care of Gilden Financial represented the funds that were ultimately transferred from her mutual funds at Scotiabank. Ms. Crawford’s understanding was that these funds would go into the life insurance policy along with the $10,000. She understood that once she invested this money in the insurance policy she could start to withdraw up to 6% annually on the interest and this would provide her with a monthly income.

[196] At some point in July of 2011, Ms. Crawford asked the accused for $1,900 because she needed the cash. It was Ms. Crawford’s understanding that all the money directed to her London Life policy remained accessible to her. The accused sent her those funds as requested.

[197] In mid-July 2011, Ms. Crawford indicated to the accused that she was going to be coming to Cornwall to visit her sister. The accused suggested that they meet. The meeting ultimately did not take place.

[198] Ms. Crawford testified that at some point after that she started questioning the accused because she had not received any documentation from him about where her money had gone. She said she believed it was with London Life but she wanted to know. She also said that the accused had told her she would be able to start drawing $300 per month to supplement her income right away and she wanted to know where that money was.

[199] In response to her query, Ms. Crawford said the accused sent her something by email proving that London Life had received the $10,000. At this time she learned that the funds from the RRSP at Sun Life had been directed to a RIF and not the life insurance policy. Ms. Crawford was upset that this was the source of the additional $300 and not the life insurance. She believes she learned that the money was in a RIF in July.

[200] Ms. Crawford believed that she received $300 from the RIF in July but that she eventually “changed it”. She said she did not want the money in a RIF because she felt she would have to pay taxes on it and the accused had promised her that she would not have to pay taxes. She said she believed all her money would go into the life insurance policy, that it would be tax-exempt, and that she could withdraw up to 6% annually on the interest which would give her a certain amount every month to live on.

[201] Over email, Ms. Crawford expressed her concerns to the accused. While she was satisfied about where some of her money was she still did not know where the roughly $19,000 from Scotiabank had gone. She eventually told the accused that she would be going to London Life to take all her money out. Ms. Crawford recalled this exchange occurring sometime at the end of August of 2011.

[202] After that, Ms. Crawford received a cheque from the accused for $17,457.85. The cheque was dated July 20, 2011 and was to be drawn on the accused’s account at TD Canada Trust. Ms. Crawford testified she received it in the mail on August 29, 2011. The amount of the cheque corresponded to the roughly $19,000 she said she transferred to the accused for the purpose of deposit into the policy with London Life less the sum of $1, 900.00, plus an additional amount of $6.69. A letter from the accused accompanying the cheque (and also dated July 20, 2011) explained that the sum of $6.69 represented daily interest at 2% as of July 13, 2011. Ms. Crawford testified that there had been no agreement between her and the accused in respect of any interest. She said the agreement was that her money would all go to London Life to her life insurance policy.

[203] Ms. Crawford said she did not receive a phone call from the accused or anyone at his office on July 13, 2011 advising her that the cheque from Scotiabank had arrived but that it could not be applied to segregated funds.

Additional evidence presented by the Crown

[204] The Crown filed various documents, including the bank draft dated June 21, 2011 from Scotiabank for $19,351.16. The draft is made out to “London Life Insurance c/o Gilden Financial Solutions”.

[205] The Crown also filed a “transaction ledger” for transactions up to July 13th, 2011, which the accused provided to Ms. Crawford. It shows $19,351.00 was credited to an account number matching the number for Ms. Crawford’s policy at London Life. This transaction is dated July 12, 2011. The ledger shows a further transaction on July 13, 2011 relating to a withdrawal of $1,900. Both sets of figures appear in a column entitled “insurance cash value” and reference the account number of Ms. Crawford’s policy at London Life in a column entitled “account credited”. The accused confirmed that he sent this transaction ledger to Ms. Crawford.

[206] Gary Schmidt testified that no funds for Ms. Crawford’s policy were received by London Life between June 21, 2011 and August 29, 2011.

[207] Email correspondence between Ms. Crawford and the accused on August 23th, 2011 was filed. The initiating email from Ms. Crawford on August 23, 2011 references her intention to go to London Life to get her money back.

The evidence of the accused

[208] The accused testified that after meeting with Ms. Crawford and assessing her circumstances he recommended a London Life whole life insurance policy to her for investment purposes. After some delay due to Ms. Crawford’s medical issues, that policy issued. A payment of $10,000 was made for the first premium by way of a cheque from Ms. Crawford’s bank account dated March 14, 2011 and made payable to London Life.

[209] The accused identified an application signed by Ms. Crawford for a RIF at London Life. The application is dated May 25, 2011. He explained the tax advantages to collapsing an RRSP to a RIF. The accused said he understood that Ms. Crawford wanted $300 per month in supplemental income. The application form indicates this payment amount was to commence on June 10, 2011. The accused testified that the funds for this account ($24,597.38) came from Sun Life and related to Ms. Crawford’s deceased spouse. Documentary evidence confirms that Sun Life issued a cheque on June 8, 2011 to London Life for the full amount of the funds. Notwithstanding this, the funds were only credited to the London Life RIF on July 14, 2011. This resulted in a delay of the first $300 monthly payment to Ms. Crawford.

[210] The accused also identified a document signed by Ms. Crawford authorizing a transfer of just over $18,000 from non-registered investment accounts Ms. Crawford held at Scotiabank to London Life, care of Gilden Financial. This document was signed on June 1, 2011. The accused said that these funds were misplaced by Scotiabank but that eventually Scotiabank provided a draft to Gilden. The accused said that the intention was that these funds would be transferred over time to the insurance policy as part of a plan to transfer $226,000 in assets over a period of 10 years. This would be a portion of the money that would provide Ms. Crawford with additional tax free income.

[211] The accused testified that there was a delay in transferring these funds. At some point, he told Ms. Crawford that she needed to contact Scotiabank to find out where her money was. Ms. Crawford indicated in that conversation that she was intending to come to Cornwall. They discussed that the accused’s investment recommendations for these funds would be discussed when she came to Cornwall.

[212] The accused recalled that after Ms. Crawford got involved and Scotiabank found a draft they had lost, the money was eventually transferred. Gilden Financial received a draft from Scotiabank for $19,351.16. These funds were deposited into his Unity account on July 11, 2011.

[213] The accused testified that the intention for those funds was that they would pay the $10,000 insurance premium for the following year. He said that he and Ms. Crawford would do a needs analysis when they met in Cornwall and decide then what type of investment they were going to put this in for her. After that meeting they would determine if the funds were going to go to London Life or another company.

[214] However, Ms. Crawford needed money and requested $1,900 before he had received the funds from Scotiabank. The accused said he spoke with Ms. Crawford about her need for that money on July 11th, 2011 and sent her $1,900 on July 13th, 2011.

[215] During his conversation with Ms. Crawford on July 11th, the accused says they also spoke about Ms. Crawford’s RIF. Ms. Crawford was concerned about its impact on the receipt of her Guaranteed Income Supplement. They discussed that given her circumstances additional income of $3,600 per year from the RIF would have no tax implications.

[216] When the accused was asked what if anything he was able to do with Ms. Crawford’s $19,351, he said that on July 14th Ms. Crawford indicated her intention to come to Cornwall and she “advised us to put it on hold until we meet”. In the end, that meeting never occurred. Because of the delay in London Life receiving the funds from the RRSP, she had not received $300 on June 1st and she was starting to get upset.

[217] The accused testified that it had become clear in communications with Ms. Crawford that she was unsatisfied and he attempted to resolve matters with her. He said this breakdown in the relationship became apparent by July 20th, 2011. He believed that within a couple of weeks of the breakdown becoming clear he said he would send back her funds, documents and other personal information. He identified a cheque for $17,457.85 and a letter, both dated July 20th, 2011, as the funds returned to her. This was the return of the funds he had received in the Scotiabank draft for $19,351 less the $1,900 previously sent to Ms. Crawford, and including interest of $6.69. The interest was calculated at 2% daily from July 13, 2011.

[218] The accused had no explanation as to why the envelope used to send the cheque and letter dated July 20th, 2011 showed a postage stamp of August 26th, 2011.

[219] In cross-examination, the accused agreed that other cheques being written on that same account by Gilden in July (the TD account) did not correspond sequentially to the cheque sent to Ms. Crawford. He said that his staff prepared the cheques and while it would make sense that they would issue sequentially this did not necessarily occur in all cases. He had no control over which cheque number was chosen to issue the funds he directed his staff to send to Ms. Crawford. He denied that he had directed his staff to back date the cheque.

[220] The accused confirmed two email exchanges he and Ms. Crawford had in August of 2011. One exchange on August 11, 2011 included a suggestion from the accused that he and Ms. Crawford should get together in mid-September to plan her budget. He was asked “how did that represent your position in light of the fact that you had sent the monies, sent money back to her?” The accused said this was a last effort to maintain the client relationship.

[221] The accused agreed that the $19,351.16 he received in the Scotiabank bank draft from Ms. Crawford, and made payable to London Life care of Gilden Financial, was never sent to London Life. He said these funds were never intended to go there. He said the intent for those funds was that they would be directed to an investment product but that they could not be deposited and so were returned to Ms. Crawford. When it was suggested to him that this was the first time in his evidence that he had indicated that the funds could not be deposited and that in his evidence in-chief he said he returned the funds because it had become clear that Ms. Crawford was unsatisfied with his services, the accused said that during his evidence in-chief he was answering the question he thought he was asked.

[222] The transaction ledger filed by the Crown was further reviewed with the accused in cross-examination. He did not agree that the logical conclusion in looking at that document was that the sum of $19,351 had been credited to London Life. He said the funds were listed in the “insurance cash value” column because the purpose was that they be credited to that policy. He agreed that the funds were in the same account credited column as the $10,000 premium payment. He said that “funds coming in show it is going to that policy, what we do in the interim is have a temporary investment deposit and that money did have that application, but when she asked for $1,900.00 we couldn’t send that application in because the numbers were incorrect”.

[223] At this point in the cross-examination, the accused produced another transaction ledger that was current to July 20th, 2011, and showed a “reversal of funds” on that date of $17,451. “London” is listed in the “location” column for the funds and the number of the account credited is Ms. Crawford’s life insurance policy at London Life. The sum of -$17,451 is noted in the “insurance cash value column”. The accused said he had sent this updated transaction ledger to Ms. Crawford as an attachment to an email dated August 16, 2011 (Exhibit 113).

[224] With respect to the interest payment included in the funds returned to Ms. Crawford, the accused testified that these funds came from Gilden’s general account. He disagreed with the suggestion that he had made the interest rate up. He said he had an agreement and contract with Ms. Crawford for an investment application that did have an interest rate indicated on it, but that he could not apply those funds because she immediately asked for $1,900.00. Since she was going to be coming to Cornwall they were going to discuss those things at that time. He said the interest rate came from the investment she was going to have for the $19,351. He felt she should not be penalized so he paid her from Gilden funds. This is what he referred to as “interest” in his letter to her.

The positions of the parties

[225] The Crown submits that the court should accept the evidence of Ms. Crawford that the roughly $19,000 from Scotiabank was intended to be directed to her life insurance policy and that the accused failed to follow that instruction. Counsel points to the fact that the bank draft from Scotiabank was made payable to London Life care of Gilden Financial as evidence supporting that account. The Crown argues that the evidence supports the conclusion that the accused back dated the cheque he sent to Ms. Crawford reimbursing those funds. The postage stamp on the envelope suggests that these funds were returned to her three days after the accused was interviewed by Mr. Schmidt. Counsel says the accused’s conduct with respect to the return of the funds is evidence of his subjective intent to commit fraud. The Crown argues that the transaction ledger is part of the similar act evidence in that it reflects a course of conduct where the accused created transaction records that did not accurately represent the true state of affairs with respect to his handling of client funds. Counsel says the decision to pay interest to Ms. Crawford was made to placate her and minimize the impact of any complaint, particularly at a time when London Life was investigating his conduct.

[226] The defence submits that Ms. Crawford’s evidence suffered from lapses in her memory and the weakness in her understanding of financial issues. The defence says the evidence shows that Ms. Crawford became upset when she learned her money was placed in a RIF, even though she had given the direction to place the funds in a fashion that was tax-sheltered and would give her a monthly income. The accused’s conduct was consistent with that direction. The accused provided Ms. Crawford with documentation of where her money was when she became upset. Counsel argues that any directions given by Ms. Crawford for the roughly $19,000 were buried when within 48 hours of the accused receiving the Scotiabank draft Ms. Crawford was asking for $1,900. The defence says it is ridiculous to think that the payment of the modest sum of $6 in interest was made to placate Ms. Crawford.

Analysis

Credibility and reliability assessments

[227] Ms. Crawford demonstrated some lapses in her recollections about the financial transactions which were performed by the accused. It is also clear that there were limits on her understanding of certain financial instruments, at least at the time of the events. She was candid about occasions when she did not fully understand something she was told. However, she presented as a straightforward witness and no significant issue has been raised with respect to her credibility. The reliability of many of her recollections is confirmed by the documentary evidence. Ms. Crawford also presented as a person who was engaged in her own financial affairs. I consider all of that in assessing the totality of the evidence and I find that she was credible and, for the most part, reliable.

[228] The accused’s evidence leaves me with concerns about his credibility. Most critically, this is because his account of how and why he handled the $19,351 from Scotiabank as he did shifted a number of times throughout his evidence. At first he said the funds were intended to go to the London Life policy premium payment for the following year and that a decision about how to invest the funds in the meantime would be made when Ms. Crawford met him in Cornwall. On this version, he said that the funds were returned to Ms. Crawford because there had been a breakdown in their relationship.

[229] Then the accused said the funds were returned because they could not be deposited. The account shifted again later when he said that there was an application prepared for the investment of those funds that could not be sent in because Ms. Crawford had asked for the return of $1,900 and the numbers in the application were incorrect. This application had specified a rate of interest and that is what he used to calculate interest in his reimbursement of the funds.

[230] I fail to understand how if an application for a specific investment had been prepared, with the participation of Ms. Crawford as the accused suggested (he said that he had an “agreement” and “contract” with her for an investment application with a specified rate of interest), the accused would not have recalled that in his evidence in-chief. I do not believe this was an innocent lapse in memory. I do not believe there was an application. If there had been, surely the accused would have advised Ms. Crawford that the return of her $1, 900 would impact this application when she asked for those funds. The accused gave no such evidence. Because the issue of a contract for an investment application was not raised with Ms. Crawford, neither did she. The accused’s account has shifted and makes little sense. These difficulties with a fundamental issue in the evidence severely impacts the credibility of his account.

[231] It also makes little sense that if the accused had decided on July 20th or within a few weeks of that that his relationship with Ms. Crawford had broken down to the point that he should return her funds to her that he would be emailing her on August 11th and suggesting that they meet and plan a budget. I do not believe his explanation that this was a last effort to maintain a client relationship. The contents of his email on this date make little sense considered against the account he gave in his evidence.

[232] The accused’s account is also hard to reconcile with the documentary evidence. The Scotiabank bank draft clearly stipulates that the funds are payable to London Life in the care of Gilden Financial. This evidence supports Ms. Crawford’s account of the direction for the funds while it is inconsistent with the accused’s account. I accept that Ms. Crawford directed the accused to apply the funds to her life insurance policy at London Life.

[233] The transaction ledgers also show that the funds were directed to the life insurance policy at London Life. There is no other reasonable interpretation of those documents. The fact that the accused prepared documents showing the funds were at London Life in the life insurance policy confirms his understanding that this was the direction he was given. It also shows he intentionally misled Ms. Crawford since he gave her this documentation when he knew he retained the funds in his own accounts.

[234] Finally, there is the evidence relating to the return of Ms. Crawford’s funds. I do not believe it is a coincidence that the envelope is post marked for a date after Ms. Crawford said she was going to London Life to obtain her funds. While I accept that the accused’s office staff generally prepared cheques for clients and that the sequencing of the cheques is not dispositive, when I consider the totality of the evidence, I do not believe the cheque and letter from the accused were prepared or sent in July.

[235] In arriving at this conclusion, I also consider the accused’s evidence that the relationship between him and Ms. Crawford had not deteriorated until after he sent Ms. Crawford $1,900 on July 13th. His evidence was that it was apparent by July 20th that there was a breakdown in the relationship and that he returned the funds within a couple of weeks of the breakdown becoming clear. Given this evidence, it makes little sense that the cheque and letter returning the funds was prepared on July 20th rather than some time later.

[236] I do not believe the accused’s account that the cheque and letter were prepared on July 20th, or that the funds were sent within a few weeks of his realization that Ms. Crawford was dissatisfied with his services. I find that the decision to return Ms. Crawford’s funds was made after Ms. Crawford said she was going to London Life to obtain her money and after the accused had become aware that London Life was investigating a complaint from another client.

Findings of fact

[237] Given the totality of the evidence, I am satisfied beyond a reasonable doubt of the following facts:

a. The accused received $19,351.16 of Ms. Crawford’s funds along with a direction that they be directed to her London Life insurance policy.

b. The accused did not place those funds as directed.

c. The accused retained control of $17,451.16 of those funds ($19,351.16 less the $1,900 cash provided to Ms. Crawford on July 13th) without informing his client between July 13th, 2011 and August 26th, 2011, a period of about 6 weeks.

d. The accused returned the funds to Ms. Crawford after she emailed him on August 23, 2011 and advised him she intended to go to London Life to get her money back, and after he met with Gary Schmidt on August 23rd, 2011 in relation to the complaint made by Claude Laroche.

e. The accused provided Ms. Crawford with documentation (the transaction ledgers) showing that the funds were placed in her insurance policy at London Life when they were not.

f. The accused reimbursed Ms. Crawford in the amount of $17,457.85, which sum included daily interest of $6.69 calculated at 2% as of July 13, 2011.

g. The accused deposited the funds into one account and reimbursed them from another.

The facts applied to the elements of the offences

####### Fraud (count 33)

[238] I am satisfied beyond a reasonable doubt that the accused retained $17,451.16 of Ms. Crawford’s funds contrary to her direction for approximately 6 weeks and that this was a deceitful act. The accused’s deceit is further confirmed by his use of misleading documents (the transaction ledgers) to suggest to Ms. Crawford that the funds were invested in her policy at London Life when he knew they were not.

[239] I am satisfied beyond a reasonable doubt that deprivation was caused to Ms. Crawford by these deceitful acts. I find that it placed her financial interests at risk in the same manner as I have articulated with respect to Howard Ross.

[240] I further find that the Crown has proved the requisite mens rea beyond a reasonable doubt. The accused had subjective knowledge of the prohibited act – he knew he was retaining his client’s funds contrary to her direction. I am further satisfied that the accused knew that his deceitful act could have as a consequence the deprivation of his client. His conduct was not reckless, accidental, or negligent. It was not the product of poor business practices. That this is so is amply demonstrated by his use of misleading documents to give his client the impression the money was with London Life. I find this deceitful conduct demonstrates his ongoing intention to keep his client in the dark about his own retention and control of the funds. The accused’s deceitful conduct was intentional, continued over a period of weeks, and placed his client’s pecuniary interests at risk.

[241] The accused is found guilty of this count.

####### Theft (count 34)

[242] I am satisfied beyond a reasonable doubt that the accused retained control over Ms. Crawford’s funds contrary to her direction and without her knowledge. In retaining the funds within his sole control for a global period of about 6 weeks, he converted Ms. Crawford’s funds to his own use. The fact that the specific use he made of those funds has not been proven is irrelevant. The accused had sole control of the funds for a period of time that far exceeded any time required for a genuine effort to place the funds as directed, even allowing for a genuine effort that reflected careless or negligent business practices. So long as the accused retained control of the funds in these circumstances they were available to him for his own use.

[243] Given my conclusions with respect to the fraud count I am also satisfied that the accused converted Ms. Crawford’s property fraudulently and without colour of right. I am satisfied that the accused’s conduct was intentional and that he knowingly deprived Ms. Crawford of her interest in her funds.

[244] He will be found guilty of this count.

####### Misappropriation (count 35)

[245] I am satisfied beyond a reasonable doubt that the accused received funds from Ms. Crawford with a direction that the funds be directed to her life insurance policy at London Life. I am satisfied beyond a reasonable doubt that the accused did not apply those funds as directed. Instead, he applied them to another purpose by retaining those funds for many weeks without his client’s knowledge and contrary to her direction. As I have already said, I find the accused’s conduct was intentional, fraudulent, and was not the product of a mistake.

[246] Accordingly, he will be found guilty on this count.

####### Utter forged document (count 36)

[247] Very little evidence was adduced with respect to the circumstances in which the Quadrus transfer authorization for non-registered investments (Exhibit 7, Tab 5) came to be signed by Ms. Crawford. This transfer of funds resulted in the $19,351.16 bank draft from Scotiabank made payable to London Life care of Gilden Financial. The Crown has made no focused submissions with respect to how it has proved its case beyond a reasonable doubt on this count. Having regard to the totality of the evidence, I am left with a reasonable doubt that this document was forged and that the accused knew that this was the case when he used it. He will be acquitted on this count.

Sharon Breyer (counts 24 (fraud), 25 (misappropriation)) and 26 (using a forged document))

[248] The Crown alleges the accused defrauded Sharon Breyer, misappropriated her funds, and used a forged document in his dealings with her.

The evidence of Sharon Breyer

[249] Ms. Breyer was 71 years old when she testified. She was retired from her previous employment in operating a delicatessen. She had been divorced for some time.

[250] Ms. Breyer said she came to know the accused because he became her representative for her life insurance policy. He replaced another individual with whom she and her former husband had obtained London Life products in the past. It was her understanding that the accused took over representing London Life on those products.

[251] Ms. Breyer’s recollection was that in 2009, she had investments or policies with London Life. The funds she received in her divorce went into London Life products. She believed they were directed to a guaranteed investment though she could not recall the type of investment it was. She explained that her husband bought the policies and she did not understand “most of the stuff”.

[252] On October 2, 2009, Ms. Breyer made an investment of $5,000 with the assistance of the accused. At the time she understood that he was her representative on her life insurance policies with London Life and that he also worked “for himself”. In providing him with the $5000 by way of a cheque in that amount made out to Gilden Financial, Ms. Breyer said she understood that the accused would invest it wherever he could get her the most money. He told her that he would get her a 4% return on the investment. He did not tell her where she could get the most money and she trusted him to invest it wherever he thought was best. He did not say specifically that he would invest it with London Life. She believed he would invest it with London Life because he worked for London Life and she was a client of theirs. She confirmed “GIC” was written in the memo line of the cheque.

[253] At some point, Ms. Breyer heard that the accused no longer worked for London Life. After learning this she asked him for her money back.

[254] Ms. Breyer confirmed that she signed and dated a “letter of direction” that she gave to the accused. The letter requests that her monies in the amount of $5,000 “plus or minus market value adjustments” from her “non-registered; bearing account number 421121604/012509” be sent to her. The letter of direction is addressed to “Maunilfe Bank” at an address in Winnipeg. The letter shows the date written by Ms. Breyer as November 8, 2011. This document is the subject of count 26 alleging the use of a forged document.

[255] Ms. Breyer also confirmed that she signed a letter from the accused dated November 8, 2011 (and showing a signature date for Ms. Breyer of November 21, 2011). The letter sought a release from liability for the accused in regards to his dealings with Ms. Breyer. Ms. Breyer received this letter with a cheque from the Unity Savings and Credit Union Limited in the amount of $5,305. She understood the $305 in excess of the $5,000 she had previously provided to the accused was interest. She could not identify the source of that interest. When she received this money back, Ms. Breyer thought it had been invested with London Life. She said she did not receive any records or statements from Manulife.

Additional evidence adduced by the Crown

[256] Documents were filed confirming that Ms. Breyer signed an “Application for Guaranteed Interest/Marketwatch/Freedom Fund” with London Life on two occasions in 2006. The account numbers on those applications do not correspond to the account number listed in the “letter of direction” to “Maunilfe Bank”.

[257] The London Life investigator, Mr. Schmidt, testified and confirmed the nature of the investments Ms. Breyer had with London Life. He said that none of Ms. Breyer’s holdings with London Life received deposits in the amount of $5000. He also testified that the account number in the “letter of direction” did not correspond with any account number at London Life.

The evidence of the accused

[258] The accused indicated that Gilden Financial received Ms. Breyer’s cheque for $5,000 and that it was deposited on October 9, 2009. The purpose of the money was for an additional investment.

[259] The accused said Ms. Breyer gave no stipulation as to where the money should go and placed no conditions on this transaction. He said that she would have been given some indication from him as to the interest that would be achieved with the investment, but he did not recall that discussion. When asked why she wanted to place the money in a GIC he said it was because she would need the funds and she had other investments with London Life that were performing poorly. He agreed that what was implied by the notation on the cheque was that she wanted her money to be placed in a GIC.

[260] The accused said that the funds were ultimately returned to Ms. Breyer after she came into the office in a distraught condition. He said she had heard he was terminated by London Life, that she felt uncomfortable with him, and that she wanted her money back. He said he asked his staff to print him a letter immediately and he did not notice the obvious typographical error it contained in referencing Manulife as “Maunilfe Bank”.

[261] The accused returned Ms. Breyer’s funds with interest. He could not say offhand what the rate of interest was but confirmed that those funds came from the general account. He agreed that the time that had elapsed between the time he deposited the cheque and returned the funds to her was over two years and that he had not sent any portion of the funds to London Life in that period. He agreed that none of these funds were invested with Manulife and said that there was perhaps some confusion because it was McKenzie that the money was going to go to, not Manulife.

[262] The accused agreed that when he had Ms. Breyer sign the letter of direction to “Maunilfe Bank” the information contained in the letter about where the money was held was inaccurate.

[263] Finally, the accused agreed that the money that was returned to Ms. Breyer did not come from either Manulife or McKenzie and was instead from his general account. He agreed he was unable to identify any investment where the $5,000 was placed and that he could not substantiate the steps he took with respect to where that money was invested.

The positions of the parties

[264] The Crown says that the accused failed to invest $5,000 contrary to Ms. Breyer’s direction and withheld those funds from her for over two years. While the specifics of how that money would be invested may not be clear, the Crown says Ms. Breyer did give the accused the basic direction to invest the funds. When asked for the return of the funds, the Crown says the accused used false documentation to create the impression that the funds were invested with Manulife when in fact there was no investment at all. While the Crown concedes that Ms. Breyer had some difficulty testifying, he argues that her evidence is sufficient to establish the elements of the offences charged when it is considered and compared with the documentary evidence, which shows her account to be credible and reliable.

[265] The defence argues that while Ms. Breyer’s knowledge of investing was slim, she understood that the accused worked for London Life and himself. Ms. Breyer discussed obtaining a rate of 4% on her investment with the accused and trusted him to invest wherever he thought best. While her cheque did say “GIC”, it made no reference to London Life. The defence argues that the court should accept that the document referring to “Maunilfe bank” simply contains a typo and this does not make it a forged document. He urges the court to accept that the accused tried to place the money with Manulife, was unable to do so, and then tried to place it through McKenzie. In any event, Ms. Breyer was not deprived of anything because the accused reimbursed her funds with interest.

Analysis

Credibility and reliability assessments

[266] Ms. Breyer presented as an unsophisticated investor. She was frank in acknowledging her limited understanding of her investments. She appeared tentative in her evidence. She was, however, able to identify various documents and to provide an account of her dealings with the accused. She was not shown to be inconsistent in any aspect of her account. Further, the fundamentals of her evidence are confirmed by the accused’s evidence.

[267] The accused’s evidence suffered from a number of frailties. For instance, the Crown put to him his own evidence that there had been no conditions or stipulations on the money when Ms. Breyer gave it to him and he said this was not correct. This was one of many examples of the Crown putting the accused’s own account in-chief to him during cross-examination and the accused disagreeing with facts or language he himself had introduced.

[268] I find that the accused’s evidence about what he did with the funds was vague and shifting. In his evidence in-chief, he said the money was invested “in a third party company” which paid interest on the funds. He provided no further details about that. When it was suggested to him that contrary to the letter of direction provided to Ms. Breyer she did not have $5,000 invested at Manulife, he said he could not say for sure, or yes or no to that. Then he said there was perhaps some confusion because the money was supposed to go to McKenzie. In the end, while he continued to deny that the funds had remained in his account, he agreed he could not identify any investment where the funds were placed. He also agreed that he had reimbursed Ms. Breyer from his own general account, including an interest payment on the funds. I do not accept this vague and shifting account of what the accused did with Ms. Breyer’s funds or his denial that he maintained control over the funds.

[269] I also find that the accused’s account at trial cannot be reconciled with his representations to Ms. Breyer. The accused admitted that the letter of direction directing “Maunilfe Bank” to return Ms. Breyer’s funds to her was inaccurate. He argued about whether or not it could be described as “false”. The defence argument is in essence that the presentation of this document to Ms. Breyer was a careless error as evidenced by the typo in “Maunilfe Bank”. In my view, it goes much further than that. The accused represented to Ms. Breyer that she had an investment at Manulife when he now effectively acknowledges that she had none. I do not accept that this was an innocent mistake or that the funds were at McKenzie. The accused’s shifting representations about what he did with the funds significantly diminishes his credibility.

[270] When I consider the totality of the evidence, I do not believe the accused’s account. I do not believe the funds were ever invested. Nor do I believe, or have a reasonable doubt, that the accused ever tried to invest the funds despite having a two year window in which to do so before he was asked to return the funds by Ms. Breyer.

[271] The accused agrees Ms. Breyer provided him with $5,000 for the purposes of investment. He further agrees that what was implied by the notation on Ms. Breyer’s cheque was that she wanted her money to be placed in a GIC. While I have considered the frailties in Ms. Breyer’s evidence, and for reasons I will amplify further later in my remarks, I find that the accused received and understood the direction to place Ms. Breyer’s money in a GIC.

Findings of fact

[272] On the totality of the evidence, I am satisfied of the following facts beyond a reasonable doubt:

a. The accused received $5,000 from Ms. Breyer along with a direction to invest those funds in a GIC.

b. The accused did not invest that money as directed.

c. The accused maintained those funds in his control for over 2 years without informing Ms. Breyer.

d. The accused provided Ms. Breyer with documentation intended to falsely convey to her that her money had been invested with Manulife when no such investment was made with those funds.

e. The accused returned Ms. Breyer’s $5,000 to her upon her request and paid her an additional sum of $305 out of his own account which he described as interest.

The facts applied to the elements of the offences

####### Fraud (count 24)

[273] I am satisfied beyond a reasonable doubt that the accused retained Ms. Breyer’s funds contrary to her direction for a period of over two years and that this was a deceitful act. The accused’s deceit is further confirmed by his use of misleading documents to suggest that Ms. Breyer’s funds were invested when he knew they were not.

[274] I am satisfied beyond a reasonable doubt that deprivation was caused to Ms. Breyer by this deceitful act. I find that it placed Ms. Breyer’s financial interests at risk in the same manner as I have articulated with respect to Howard Ross.

[275] I further find that the Crown has proved the requisite mens rea beyond a reasonable doubt. The accused had subjective knowledge of the prohibited act – he knew he was retaining his client’s funds contrary to Ms. Breyer’s direction. I am further satisfied that the accused knew that his deceitful act could have as a consequence the deprivation of his client. His conduct was not reckless, accidental, or negligent. It was not the product of poor business practices. That this is so is amply demonstrated by his use of two misleading documents to give his client the impression the money was invested. I find this deceitful conduct demonstrates his ongoing intention to keep his client in the dark about his own retention and control of the funds. The accused’s deceitful conduct was intentional, continued over a period of two years, and placed his client’s pecuniary interests at risk.

[276] Because the funds at issue here do not exceed $5,000, the accused will be found not guilty of the offence of fraud over $5,000 under s. 380(1)(a) specified in the indictment. He will be found guilty of the lesser and included offence under s. 380(1)(b), which applies to frauds of amounts up to and including $5,000.

####### Misappropriation (count 25)

[277] I am satisfied beyond a reasonable doubt that the accused received funds from Ms. Breyer with a direction that the funds be invested in a GIC. I am satisfied beyond a reasonable doubt that the accused did not apply those funds as directed. Instead, he applied them to another purpose by retaining those funds for two years without his client’s knowledge and contrary to her direction. As I have already said, I find the accused’s conduct was intentional, fraudulent, and was not the product of a mistake. Accordingly, he will be found guilty on this count.

####### Use of a forged document (count 26)

[278] The letter of direction to Manulife Financial is at the centre of this allegation. I am satisfied beyond a reasonable doubt that it is a forged document. This is because I am satisfied that no funds were ever sent to Manulife by the accused. The representation in the document that the funds were so invested is both a “material particular” and false. I am satisfied that it is a false document, and that it was created with the intention that it be acted on as genuine. I am further satisfied beyond a reasonable doubt that the accused knew the document was forged when he provided it to Ms. Breyer, but that he represented it as genuine. The accused will therefore be found guilty on this count.

Denise Nutting and Ronald Nutting (counts 27 (fraud), 28 (theft by fraud), and 29 (misappropriation)

[279] The Crown alleges that the accused defrauded Denise and Ronald Nutting that he converted $40,000 belonging to them and made it his own, and that he misappropriated those funds.

The evidence of Denise Nutting

[280] Ms. Nutting was 68 years old when she testified. She and Mr. Nutting were divorced at the time. She retired in her late fifties following a heart attack. She had previously worked at a bridal store. Her husband had run his own business.

[281] Ms. Nutting testified that she had known the accused for some time. He had replaced their previous representative from London Life. At the time she and her husband met the accused, she had three existing policies with London Life. During their relationship with the accused she and her husband also invested with him through Gilden Financial.

[282] Ms. Nutting recalled giving the accused $20,000 to “invest in a package of some kind”. Her impression was “it was kind of like an insurance, kind of frozen for a little while”. Ms. Nutting confirmed she had signed a cheque made out to London Life for $20,000 in March of 2010. She understood that the accused would be “taking care of that for us”, meaning “investing it in London Life”. She understood that at some point in time, she would receive four or six percent interest. At the time, there was a lot of trouble at home in her marriage and Ms. Nutting was reluctant to invest that money. She said it was her husband’s decision to provide the accused with these funds.

[283] Ms. Nutting thought she had provided the accused with another $20,000 in the same year for a total of $40,000. She was shown a cheque written to Gilden Financial in the amount of $40,000 and dated April 15, 2010. She knew she had signed the cheque because it was her writing.

[284] In January of 2012, the Nuttings received a letter from the accused and a cheque for $28,282 dated January 31, 2012. The letter confirms that an additional payment of $15,000 was made to London Life on their behalf and attached a letter for their signature. That letter requested the cancellation of policy B651617-9 and the surrender of the cash value in the policy. The letter also refers to a “return of deposit” as a result of the decision by the Nuttings to end their “planning process” with the accused’s firm. The letter indicates an initial deposit amount of $25,000, and an interest payment of $3,282. Ms. Nutting agreed that subtracting the payment of $15,000 to London Life from the total funds she and her husband had provided to the accused left a sum of $25,000. She did not know where the interest had come from. Ms. Nutting confirmed her signature was on both letters and that she understood she was instructing London Life to cancel that particular policy. She confirmed the Nuttings did receive the cash value from that policy from London Life.

[285] Ms. Nutting agreed in cross-examination that the accused had given them even more money over and above that cheque. On May 3, 2012, there was another letter and accompanying cheque from the accused. This letter indicated the “funds are considered a return of deposit which is the result of your intent to cancel your planning process with our firm. This was a partial payment received as part of your estate planning process and are now being returned”. The letter indicated two payments of $8,000 would be made “to resolve and close this file”. A cheque for $8,000 was attached.

[286] Another letter of July 17, 2012 attached a second cheque, this one for $8,100. The letter said: “The amount paid is $8,100 to conclude our financial dealings together. We have included an additional $100 as interest due to the delay”. She did not know where the interest of $100 came from and could recall no agreement that the accused would pay that interest.

[287] Ms. Nutting confirmed that she and her former husband did not lose any money.

Additional evidence adduced by the Crown

[288] Gary Schmidt testified that the Nuttings held a life insurance policy with London Life which had an annual premium payment of $20,000. The cheque written by Ms. Nutting in March of 2010 was received and cashed by London Life as a premium to activate that policy.

[289] Mr. Schmidt further testified that London Life did not receive the amount of $40,000 after the issuance of the cheque in the same amount on the Nuttings’ account dated April 15, 2010.

[290] London Life did receive cheques from the accused totalling $15,000 that were applied to London Life policy #B651617-9. Those cheques were as follows: $1,000 (February 24, 2011), $4,000 (March 25, 2011), $5,000 (April 6, 2011) and $5,000 (May 18, 2011). Mr. Schmidt also testified that overage charges started to accrue for this policy on March 30, 2011 because the premium was past-due.

The accused’s evidence

[291] The accused testified that as of March 31, 2010, the Nuttings had life insurance policies with London Life and Great-West Life as well as other London Life products. He said they had obtained no other products through him.

[292] The accused agreed he had received cheques of $20,000 and $40,000 from the Nuttings in 2010. The first cheque for $20,000 dated March 31, 2010 represented their first annual premium on a whole life insurance policy with London Life. If future premiums were not paid by the anniversary date, London Life would apply an “overage charge” and charge the Nuttings interest.

[293] The accused said that the second cheque for $40,000 was intended for additional investment. It was deposited into the accused’s account 6 days later on April 21, 2010. He said there was no discussion with the Nuttings about using those funds to pay the premium of the London Life policy because the plan was for Mr. Nutting to liquidate his assets at some undetermined time and because the annual premium had already been paid.

[294] The accused said there was no discussion with the Nuttings about where those funds would go and that they only discussed the interest rate. The Nuttings wanted a 6% return but set no conditions on how the money would be invested. He said they had a plan set up where they would sell off their assets and deposit those funds into the insurance policy over a 10 year period on the anniversary dates of the policy. This would require consideration of the adjusted cost base and the limits on the amount (in this case $20, 000) that could be transferred into the policy. The intention was that eventually $200,000 would be transferred into the life insurance policy. As I understand his evidence, the plan was that any sums in excess of the allowable $20, 000 investment on the anniversary date of the insurance policy would be invested in third party companies.

[295] With respect to what transpired with the $40,000, the accused said that the funds were eventually returned to the Nuttings. As to where they had been held in the meantime, in examination-in-chief, he said the funds were received by Gilden and then invested in third party companies.

[296] The accused agreed that between February 24, 2011 and May 18, 2011, he forwarded $15,000 of the $40,000 he had received from the Nuttings to London Life on their behalf. He said these were incremental payments based on the financial needs of the client.

[297] The accused also acknowledged sending a letter to the Nuttings in January 2012. The purpose of the letter was to return their $40,000 investment. The letter referenced the $15,000 paid to London Life and an interest amount of $3,282. The interest came from his general account and was calculated at a rate of 6%. He explained that this rate of interest had been agreed to in his discussions with the Nuttings about their estate planning process.

[298] The accused confirmed that he forwarded further funds to the Nuttings in July of 2012. He said that the sum of $8,100 represented a partial refund of the $15,000 he had previously sent to London Life. He acknowledged the evidence from Ms. Nutting that she had received that $15,000 from London Life and that this payment was in addition. He provided no further explanation for why he sent her $8,000, or the additional $8,100, in the circumstances.

[299] In cross-examination, counsel put to the accused his evidence in-chief that whatever funds were not placed into the policy were invested with third party companies in the meantime. He agreed. The accused was asked what portion of the $40,000 provided to him by the Nuttings was invested with a third party company. Upon review of his notes the accused then said that none of the funds were so invested. When asked to explain the discrepancy in his evidence the accused said that in reviewing his notes he could now see that this is not what happened. He was changing his evidence based on his notes.

[300] Upon review of the cheques he sent to London Life on the Nuttings’ behalf, the accused agreed that between the time he had received the funds and issued those cheques he had moved the Nuttings’ funds between his accounts. He agreed that by March 31, 2011, the Nuttings’ premium payment was underfunded by $15,000 as he had only sent $5,000 to London Life by that point.

[301] In explaining why the funds were not invested, the accused said he had a meeting on February 6, 2011 with the Nuttings during which he learned that they were having marriage difficulties. He said he was not sure what to expect so he made a note to his staff directing them to not forward the Nuttings’ funds anywhere.

[302] When it was suggested to the accused that there was nothing preventing him from returning the funds to the Nuttings, the accused said that Ms. Nutting was concerned that these funds would be credited to Mr. Nutting and she would receive nothing. He said that if the funds were forwarded to London Life the Nuttings would not receive their money back. Therefore, he held onto the funds until the Nuttings provided further direction. He said that since both the Nuttings were his clients he could not favour one over the other and he needed clear direction that their marriage was dissolved, pending which the financial planning program they had in place would be maintained. Eventually he was approached by Ms. Nutting who told him that she and her husband wanted to cancel the investment. He said he was providing this account for the first time at this point in his evidence because he had reviewed his notes.

[303] With respect to the funds returned to the Nuttings on January 31, 2012 and the $3,282 in interest paid to them, the accused confirmed that a 6% interest rate was used because it was the rate of return for the insurance policy. Since they had cancelled that, he calculated 6% on $25,000 to credit them these funds. The letter was silent as to any place the funds had been invested and any instructions received from the Nuttings. The funds were returned by means of a cheque on his TD account after having been initially deposited into the Unity Savings account.

[304] In re-examination, the accused said that his firm was in the process of reimbursing the $25,000 when the Nuttings told him they wanted the $15,000 back as well even though it had been sent to London Life. Consequently, he arranged for the return of those funds.

The positions of the parties

[305] The Crown acknowledges that Ms. Nutting’s recollections were imperfect but submits that on the totality of the evidence the court should accept her evidence that the funds she provided to the accused were intended for London Life. Even if the court does not accept that this specific direction was given, it is clear that she gave the general direction that the funds should be invested, and this was not done. The fact that there may have been marital problems during the time the accused had her funds did not affect the accused’s duty to administer those funds as directed. In any case, if he felt he was unable to do so, the accused should have sought further directions. Finally, the Crown says that if the issue preventing the investment of the funds was the client’s lack of directions, it makes no sense that the accused would pay the Nuttings interest of $3,200. He says this was paid to the Nuttings to placate them. He says the letter provided to the Nuttings in returning their funds is another example of the accused’s vague and deceitful communication with a client.

[306] The defence says Ms. Nutting had significant memory problems and that her marital problems at the time have also led to some confusion in her recollections. The defence position is that while the accused was given $40,000 by the Nuttings for the purpose of investment, the marital problems of the Nuttings complicated that direction. The defence says this placed the accused in a difficult position because he did not want to favour one of his clients over the other. While he paid London Life $15,000 to preserve the Nuttings’ life insurance policy, he held onto the remaining funds in light of the absence of a unified direction from both of the Nuttings. However, when they wanted their money back, the accused immediately provided it with interest. He also facilitated the return of the money sent to London Life.

Analysis

Credibility and reliability assessments

[307] Ms. Nutting demonstrated a great deal of confusion during her evidence. She did not impress me as having been a knowledgeable investor. She was frank about the difficulties in her marriage at the time and the difficulties this caused. She was able to identify various documents, however, and to provide a basic account of her dealings with the accused. While I have no concerns about her credibility as a witness, I do consider that some of her understanding of these events as they transpired, and her ability to recall them now, gives rise to reliability concerns.

[308] In any case, there is some commonality in the evidence provided by Ms. Nutting and the accused. On both accounts, it is clear that $40,000 was provided by Ms. Nutting to the accused for the purposes of investment. There is also no dispute in the evidence that this investment was not made, save for the incremental payments totalling $15,000 that were made to London Life.

[309] With respect to the accused’s evidence, I reject his account of why he was unable to invest the funds he received from Ms. Nutting for the following reasons.

[310] First, his account of what happened with the funds and why was contradictory. In chief, he said the $40,000 was invested in third party companies. In cross-examination, he testified they were not. Whether or not the money was ever invested is an important fact. The accused’s material inconsistency on this issue seriously undermines his credibility.

[311] The accused’s account changed significantly during cross-examination. He made no reference to the marital difficulties of the Nuttings in his evidence in-chief, presumably because the account at that time was that he had invested the funds. On that scenario, the Nuttings’ marital difficulties were immaterial. In cross-examination, the account was that the funds were never invested, but that there was a reason why. I have my doubts that this evolution in his evidence, or the fundamental inconsistency about whether or not the money was ever invested, can be accounted for by the review of his notes as he suggested. I am inclined to view the introduction at this point in his evidence of his concerns about the Nuttings’ direction given their marital difficulties as a way to explain his new version of events, which was that the funds were not invested.

[312] In any case, I also reject his evidence because his account of why the funds were not invested, with London Life or elsewhere, makes no sense. It makes no sense that he would hold onto the funds if the issue was his concern about the currency of the direction to invest those funds in the face of the Nutttings’ marriage breakdown. It makes no sense that in this scenario that he would not seek explicit direction from the Nuttings if he genuinely believed that the earlier direction might be revised. I would expect that at a minimum, he would have asked them what to do about the upcoming premium anniversary on their life insurance policy.

[313] I also do not see how this account explains why the accused had retained the funds prior to his meeting in February of 2011, almost a year after he received the funds. Nothing about this explanation for why the funds were not invested is logical and I reject it.

[314] I find it curious as well that when the accused reimbursed the Nuttings’ funds with interest he used an interest rate of 6%. He said this was because this was the rate of return they had agreed to in their estate planning process using the “insurance solution”. This is some evidence which tends to support Ms. Nuttings’ general recollection of giving money to the accused for the purposes that it be invested in the life insurance policy. The accused’s evidence that the Nuttings had no other investment products outside of London Life also tends to support the idea that this is where any funds were intended to be invested.

[315] Further, the accused’s incremental remittance of sums to London Life makes no sense if, as he says, there was never any discussion with the Nuttings about using those funds towards the life insurance policy premium. There appears to have been no logic to his incremental payment scheme, as evidenced by the fact that it resulted in an underfunding of the policy. His evidence that these payments were “based on the financial needs of the client” strains credulity. As suggested by the Crown in cross-examination, it is difficult to see how underfunding the Nuttings’ life insurance policy was part of their estate planning process.

[316] The payment of $3,282 in interest to the Nuttings’ is difficult to reconcile with the accused’’ account. I agree with the Crown that his payment of interest in circumstances where he says the client’s circumstances prevented the investment, and not any fault of his own, makes little sense.

[317] Finally, I can make no sense at all of the accused’s additional payment of $16,100 to the Nuttings given his involvement in ensuring London Life remitted to the Nuttings the $15,000 he had forwarded to them, and his payment, with interest, of the remaining $25,000 from the original $40,000 received by him.

[318] Ms. Nutting’s difficulty in recalling the circumstances surrounding the $40,000 cheque are such that I cannot conclude beyond a reasonable doubt that this cheque was provided to the accused with the specific direction to invest the money with London Life, although I think this is likely what occurred. While I reject the accused’s account in most respects, I do accept his evidence that at the time he received the $40,000, he was given and understood the basic direction that these funds were for investment.

Findings of fact

[319] Given the totality of the evidence, I am satisfied beyond a reasonable doubt of the following facts:

a. The accused received $40,000 from Ms. Nutting along with a direction that the funds be invested.

b. The accused did not invest that money as directed.

c. The accused made piece meal payments to the London Life policy totalling $15,000. The payments commenced some 10 months after he received the $40,000.

d. The accused retained control of the entirety of the Nuttings’ $40,000 contrary to their direction and without informing them between April 21, 2010 and February 24, 2011, and $25,000 of those funds between May 18, 2011 and January 31, 2012 following the piece meal forwarding of $15,000 to London Life between February 24, 2011 and May 18, 2011. This is a period of roughly 21 months.

e. In retaining the funds the accused failed to ensure that the annual premium payment of $20,000 was made on the London Life policy anniversary date of March 31, 2011 and overage charges were applied to the Nuttings’ account.

f. The accused returned the Nuttings’ funds at their request. In addition to returning the Nuttings’ $25,000 with 6% interest ($3,282), the accused additionally provided the Nuttings with an additional $16,100 “to resolve and close” their file.

g. The accused used different accounts in depositing and reimbursing the funds.

The facts applied to the elements of the offences

####### Fraud (count 27)

[320] I am satisfied beyond a reasonable doubt that the accused retained the Nuttings’ funds contrary to their direction for a period of 21 months and that this was a deceitful act.

[321] I am satisfied beyond a reasonable doubt that deprivation was caused to the Nuttings by this deceitful act. I find that it placed their financial interests at risk in the same manner as I have articulated with respect to Howard Ross.

[322] I further find that the Crown has proved the requisite mens rea beyond a reasonable doubt. The accused had subjective knowledge of the prohibited act – he knew he was retaining his client’s funds contrary to their direction. I am further satisfied that the accused knew that his deceitful act could have as a consequence the deprivation of his client. His conduct was not reckless, accidental, or negligent. It was not the product of poor business practices. The accused’s deceitful conduct was intentional, continued over a period of 21 months, and placed his client’s pecuniary interests at risk.

[323] The accused is found guilty of this count.

####### Theft (count 28)

[324] I am satisfied beyond a reasonable doubt that the accused retained control over the Nuttings’ funds contrary to their direction and without their knowledge. In retaining the funds within his sole control for 21 months, he converted their funds to his own use. The fact that the specific use he made of those funds has not been proven is irrelevant. His acknowledgement that the funds had been transferred within his account demonstrates the complete control he had over the funds. The accused had sole control of the funds for a period of time that far exceeded any time required for a genuine effort to invest the funds as directed, even allowing for a genuine effort that reflected careless or negligent business practices. So long as the accused retained control of the funds in these circumstances they were available to him for his own use.

[325] Given my conclusions with respect to the fraud count I am also satisfied that the accused converted the Nuttings’ property fraudulently and without colour of right. I am satisfied that the accused’s conduct was intentional and that he knowingly deprived the Nuttings’ of their interest in their funds.

[326] He will be found guilty of this count.

####### Misappropriation (count 29)

[327] I am satisfied beyond a reasonable doubt that the accused received funds from the Nuttings with a direction that the funds be invested. I am satisfied beyond a reasonable doubt that the accused did not apply those funds as directed. Instead, he applied them to another purpose by retaining those funds for 21 months without his clients’ knowledge and contrary to their direction. As I have already said, I find the accused’s conduct was intentional, fraudulent, and was not the product of a mistake.

[328] Accordingly, he will be found guilty on this count.

Micheline and Marcel Larocque (counts 17 (fraud), 18 (theft by fraud), and 19 (misappropriation)

[329] The Crown alleges the accused defrauded Micheline and Marcel Larocque, that he converted $17,000 of their funds and made them his own, and that he misappropriated their funds.

The evidence of Micheline Larocque

[330] Micheline Larocque was 66 years old at the time she testified. She was employed as a public works assistant for her town. Her husband Marcel had recently retired from work as a truck driver.

[331] Ms. Larocque and her husband had a number of saving and investment products. At the time they met the accused, they had RRSPs with Caisse Populaire and life insurance with London Life. They were introduced to the accused through another representative of London Life.

[332] After meeting the accused, they became his clients for a number of years and purchased a number of products with his assistance. They arranged to have their RRSPs transferred over to London Life. They also purchased “estate insurance”. The annual premium on the policy was $17,000. It was due on September 1st of every year. Ms. Larocque understood that the life insurance premiums were to be funded using transfers from the RRSPs.

[333] In cross-examination, Ms. Larocque agreed that she had trusted the accused to take approximately $48,000 and transfer it from her RRSP to a RIF. She entrusted the break-down of how the money came from her RRSP to the accused. She did not recall if it had been explained to her that transferring the RRSP money to a RIF would save her the expense of withdrawal fees. At the time she signed an application for a RIF with London Life on November 22, 2010, she did not understand that. She understood that the result of the application was that $8,500 annually would be obtained. At the time, she also did not understand the nature of a RIF. She thought it was another kind of RRSP.

[334] In July of 2011, Ms. Larocque and her husband each received cheques from London Life in the amount of $8,500. Ms. Larocque was confused about why the cheques had been sent because in previous years London Life took $8,500 from the couple’s RRSPs and paid the premium for the insurance. This was the first time they had received cheques for $8,500.

[335] Because she didn’t know exactly why the couple had received the cheques, Ms. Larocque contacted the accused and asked. He told them to deposit the cheques and to make out a cheque for $17,000. Initially Ms. Larocque said she could not recall whether he told her to make it payable to Gilden or London Life. She said that the accused told her that London Life had changed their policy and from now on they would receive cheques at home. Ms. Larocque was uneasy with this explanation. She didn’t understand why London Life would change their system. She thought that usually people are advised before something changes.

[336] Nevertheless, on August 15, 2011, Ms. Larocque wrote a cheque to Gilden Financial for $17,000. She noted on the cheque’s memo line that it was for life insurance. When reviewing a copy of the cheque, she said that the accused told her to make it out to Gilden. He had explained to her that he was going to send it on to London Life. The life insurance premium was due so she understood he was going to send it immediately.

[337] Ms. Larocque was not aware that the accused was suspended by London Life about 8 days after her cheque was payable to the accused.

[338] On November 3, 2011, Ms. Larocque received a letter from London Life informing her the life insurance premium was overdue. Her first call that day after receiving that letter was to the accused. She asked what had been done with the money and whether it was sent to London Life. He told her that he had sent the money to London Life. Ms. Larocque then called London Life and was transferred at some point to Gary Schmidt. She learned from London Life that the funds had not been received by them. It was suggested to her that she should speak with the accused again. At some point in her dealings with London Life representatives she learned that the accused was suspended.

[339] Ms. Larocque contacted the accused once more. He told her the funds had been sent by UPS. She told him she wanted proof of that. On November 10th, she received a copy of a UPS shipping invoice from the accused. The document did not satisfy her because it showed no date and the UPS code was “half-missing”. An email from the accused on that day also informed her that the accused was no longer representing London Life or Quadrus and recommended other representatives to her.

[340] Later that month, Ms. Larocque received a cheque from the accused. It was dated November 24, 2011. The notation in the memo line is “Premium Replacement”. Ms. Larocque had told the accused she wanted a certified cheque or bank draft because she had her doubts and wanted the payment to be guaranteed.

[341] Ms. Larocque was asked in cross-examination about various conversations she had with the accused and calls she made to his office. She said she and the accused did not discuss the surrender of paid up additions to pay the policy premium. She denied that she told the accused on November 9th, 2011 that she did not want him to return the $17,000 to her and that he should hold onto her funds.

The accused’s evidence

[342] The accused recalled that the Larocques were referred to him by another advisor and that they required an advisor who spoke French. They had a financial plan that involved reduction in taxes and tax sheltered growth. When they first met, their investments were mainly at Caisse Populaire in RRSPs.

[343] The accused testified that he received the $17,000 cheque from the Larocques. He could not recall why it was made out to Gilden. The cheque was deposited into his account with the Unity Savings and Credit Union Limited on August 17, 2011. He acknowledged the memo line read “life insurance”.

[344] In examination-in chief the accused said that he received instructions to apply these funds to the Larocque’s life insurance policy on the anniversary date. When asked, “what can you say about the delivery of these funds for the premium?”, the accused said that within two days of meeting with Mr. Schmidt (which was 6 days after he received the $17,000 cheque) he was directed by London Life’s legal office not to “transact for any client, period”. While his practice was to forward funds received for life insurance premium payments by courier within the week if possible, I take his evidence referencing the direction from London Life as his explanation for why he did not forward the funds.

[345] Sometime after having deposited the $17,000 cheque, the accused had a meeting with the Larocques. The meeting was on October 15, 2011. When asked during examination-in-chief what was discussed at that meeting, the accused described various forms signed by the Larocques, including a disclosure document indicating that he did not represent London Life. They signed a letter of direction to get Dave McKinnon and Lisa Beaupre, who were advisors in the accused’s company, as their London Life advisors. He said they talked about their budgetary needs moving forward and scheduled another appointment. The Larocques initialed the accused’s notes of that meeting.

[346] The accused testified about various difficulties the Larocques were having with their funds in the time after he had received their $17,000 cheque. In the process of transferring some investments from Caisse Populaire, the bank made an error in respect of Mr. Larocque’s TFSA funds and deposited them into an RRSP at London Life. The accused had enlisted the help of Dave MacKinnon to help him in sorting things out because the accused could no longer deal with London Life.

[347] The accused said he spoke with Ms. Larocque about this error by the bank on November 9th. She was extremely upset. The accused says they discussed that he was still holding their $17,000 and because he was not sure if Mr. McKinnon was going to be able to assist them with London Life, he would return the funds to them. Ms. Laroque said she did not want the funds back. She was concerned that Caisse Populaire would put a hold on her funds for 10 days and this would affect the life insurance policy. The accused said he would try to send the funds to London Life but there was no guarantee they would get there. He said he could send it by UPS and that this seemed to satisfy Ms. Laroque.

[348] The accused explained his purpose in sending an email to Ms. Larocque the next day, November 10, 2011. He said he was trying to indicate to her that an error was made by her bank. He also let her know that he made efforts to send the premium to London Life. He provided her with a copy of the UPS waybill and the cheque to London Life. He said that subsequent to his conversation with Ms. Larocque on November 9th, he tried to get Dave McKinnon to send off the $17,000 on the client’s behalf. He said the waybill and draft had been handed over to Mr. McKinnon on about the same date as the UPS waybill. He said that Mr. McKinnon never accepted it.

[349] The accused also testified that he had faxed a copy of the first draft to Ms. Larocque and she “did not appreciate the fax” since it appears she could not make out certain information. She told the accused she wanted the money so he cancelled the first draft and got a new one made out for $17,000 to the Larocques. He personally delivered this draft from his TD account. It was dated November 24, 2011.

[350] In cross-examination the accused agreed that he had not sent the funds off to London Life in the 6 days he retained them before meeting with Gary Schmidt. He agreed it was approximately 2 days from that meeting that he was directed by London Life not to transact with any client. When he was asked if he interpreted that direction to mean he should keep the Laroque’s money in his Gilden account, the accused said no, and explained that Dave McKinnon was going to be involved in taking over the file. He said Mr. McKinnon was supposed to submit a paid up additions form to London Life to permit dividends to be used to pay the life insurance policy premium, and that he discussed with Ms. Laroque during their meeting in October that the $17,000 he had received would be an additional investment that he would maintain for her.

[351] The accused produced a note from his meeting with the Laroques on October 15, 2011 (Exhibit 96). The form is initialed by the clients. While the accused agreed that the four line note didn’t specifically reference the $17,000, he said the notes were general and that the reference to “revising their investments” (“prochain appointment pour revisez les investissement”) included the $17,000. He said that this note was the direction he received from the Laroques to hold onto the $17,000.

[352] The accused agreed that while he retained these funds they were not invested. He said they remained in his account. When he was asked how it benefitted the Laroques to have this money sitting in his account, the accused said it would have benefitted them with a new investment.

[353] The accused was asked about further communications he had with Ms. Laroque in November. He agreed that by November 7th, Ms. Larocque was concerned about why her premium to London Life was unpaid. He agreed that his email to her of November 10th referenced her concern about her $17,000 since he was attaching a draft for that amount. He said that Dave McKinnon had not processed the paid up additions form so Ms. Larocque had asked him to forward the funds he had for other investment purposes to London Life and to send her proof that he had done so.

Additional evidence

[354] Copies of the documents provided to Ms. Larocque by the accused as proof he sent the premium funds to London Life were filed. The UPS tracking number cannot be made out. The date on the draft to London Life cannot be made out.

[355] Mr. Schmidt testified that London Life was contacted by the Larocques. He further testified that London Life did not receive $17,000 from Gilden Financial or the accused after August 15, 2011.

The positions of the parties

[356] The Crown argues that Ms. Larocque’s testimony was clear and coherent and had all the indicia of credibility and reliability. He says Ms. Larocque’s memo on her cheque makes clear what the funds were for. Counsel notes that the accused did not send those funds off to London Life before Gary Schmidt interviewed him and continued to hold onto them despite being told he should not transact with any London Life client. He says the accused’s notes from October 15th, 2011 do not mention the $17,000 he was retaining and do not substantiate his account of receiving a direction to hold onto those funds on that date.

[357] The defence submits that Ms. Larocque was an upset witness who was perhaps the only witness who demonstrated any animosity towards the accused. He points out her denial that the life insurance premium was ever paid from other investments and documents she signed which show that this was not the case. The defence highlights evidence which suggests that Ms. Larocque did not fully understand the financial transactions she and her husband authorized and suggests the reliability of her account about the $17,000 is weakened by the imperfections of her recollections on these issues. The defence position is that the accused was responsive to Ms. Larocque’s directions, that the October 15th date was the earliest the Larocques could meet with him, that he made efforts to forward the funds to London Life, and he returned the funds to her when asked.

Analysis

Credibility and reliability assessments

[358] I agree with the defence that Ms. Larocque testified with some emotion. I think it is fair to say that Ms. Larocque was upset with the accused and I consider that in assessing her account. I also consider that she was a witness who fairly acknowledged gaps in her recollections and the limits on her understanding of some of the financial transactions she authorized, at least at the time she authorized them.

[359] To the extent that there were frailties in her recollections about transactions in 2008 and 2009 where she had authorized the transfer of funds from an RRSP to a RIF or to pay the policy premium, I do not find this significantly damages the credibility or reliability of her account of her directions for the $17,000 cheque she gave the accused in August of 2011. That is because both Ms. Larocque and the accused gave the same evidence about the direction given when the cheque was provided to the accused – the funds were to be directed to the policy premium. The memo line note “life insurance” confirms the direction.

[360] Further, it is clear from the accused’s own evidence that these funds were not sent to London Life and no other payment of the premium was made by way of paid up additions. In these circumstances, I believe Ms. Larocque when she says she was notified by London Life on November 3rd that the policy premium had not been paid. This accords with the accused’s evidence that by November 7th Ms. Larocque was concerned about the unpaid premium.

[361] As for why the premium remained unpaid, I have difficulty with the accused’s account. According to the accused, his own practice was to send off premium payments within the week if possible. He retained the funds for 6 days before meeting with Gary Schmidt. He gave no explanation for why he was unable to send the funds to London Life in that time period or in the following two days before he was directed to cease transacting for London Life clients. I also do not see how the accused could interpret the direction he received from the legal department at London Life that he was not to transact with London Life clients as somehow requiring him to continue to retain the funds. While he denied he was of this view during cross-examination, this is what was suggested by his evidence during his examination-in-chief.

[362] More importantly, the accused continued to retain the funds without notifying his client that a direction from London Life was preventing him from acting on her instructions. As their advisor, he would have known that the policy anniversary date was September 1st, 2011. On his own account, he did not receive the direction to retain the $17,000 for other investment until October 15th, almost 2 months after he received them. This significant gap in time tells against any genuine interest in acting on the direction the accused acknowledges he was given - to forward the funds to London Life for the payment of the life insurance policy premium.

[363] The defence submits that the October meeting date was the earliest the Larocques could meet with the accused. Given that at this point in time the Larocques had no knowledge that their life insurance policy premium had yet to be paid, certainly they were unaware of any urgency to meet with the accused. The accused’s failure to notify his clients of his issues with London Life and that he had yet to forward their funds remains the problem in the plausibility of the accused’s account.

[364] Further, I do not accept the accused’s evidence that the note from October 15th serves as evidence of the Larocque’s direction to retain the funds. It is a very general note. It makes no reference to the $17,000 or the payment of the life insurance premium. I also consider that the accused’s account of having received that direction during that meeting was not given during his examination-in-chief. This was an important point. It appears to have evolved in the accused’s evidence during cross-examination. This conclusion is reinforced by the fact that Ms. Larocque was never asked about a meeting with the accused on October 15th or about having given the accused the direction to retain the $17,000 on that date.

[365] There are other aspects of the accused’s account which are convenient to him but strain credulity. For instance, it is curious that the copies of the UPS waybill and draft he forwarded to Ms. Larocque to prove he had sent the funds to London Life are illegible. His explanation of how this transaction was handled and how Dave McKinnon was involved was confusing at best. In the end, he said he cancelled the draft he had forwarded to London Life and provided a new one directly to Ms. Larocque. I do not believe there was ever a draft that was sent to London Life. When he sent the email to Ms. Larocque suggesting otherwise, and purporting to prove that he had sent it by UPS, I find he was attempting to mislead her.

[366] Because of these issues, I do not believe the accused’s account and I reject it. More specifically, I do not believe that the accused received a direction to hold onto the Larocques funds. I find that he was given the direction to direct the funds to the Larocques’ life insurance policy at London Life by the anniversary date (September 1st), that he understood that direction, and he failed to follow it. Consequently, the premium was left unpaid for a period of over two months.

Findings of fact

[367] Given the totality of the evidence, I am satisfied beyond a reasonable doubt of the following facts:

a. The accused received $17,000 of the Larocque’s funds along with a direction that they be directed to London Life to pay the premium on their life insurance policy.

b. The accused did not place those funds as directed.

c. The accused retained control of those funds without informing his client between August 17, 2011 and November 24, 2011, a period of over 3 months.

d. The accused provided Ms. Larocque with documentation (the email of November 10th, 2011, attaching copies of a UPS waybill and bank draft with illegible information) suggesting he had sent the funds to London Life when he had not.

e. Two weeks later on November 24, 2011, the accused reimbursed the Larocque’s directly with a bank draft for $17,000.

f. The accused deposited the funds into one account and reimbursed them from another.

The facts applied to the elements of the offences

####### Fraud (count 17)

[368] I am satisfied beyond a reasonable doubt that the accused retained the Larocques’ funds contrary to their direction for a period of over three months and that this was a deceitful act. The accused’s deceit is further confirmed by his use of misleading documents to suggest that the Larocques’ funds were placed with London Life in payment of the life insurance policy premium when he knew they were not.

[369] I am satisfied beyond a reasonable doubt that deprivation was caused to the Larocques by this deceitful act. I find that it placed their financial interests at risk in the same manner as I have articulated with respect to Howard Ross.

[370] I further find that the Crown has proved the requisite mens rea beyond a reasonable doubt. The accused had subjective knowledge of the prohibited act – he knew he was retaining his client’s funds contrary to Ms. Larocque’s direction. I am further satisfied that the accused knew that his deceitful act could have as a consequence the deprivation of his clients. His conduct was not reckless, accidental, or negligent. It was not the product of poor business practices. That this is so is demonstrated by his use of misleading documents (the email of November 10th, 2011 and attached copies of a UPS waybill and bank draft) to give his client the impression the money was sent to London Life. I find this deceitful conduct demonstrates his ongoing intention to keep his client in the dark about his own retention and control of the funds. The accused’s deceitful conduct was intentional, continued over a period of three months, and placed his client’s pecuniary interests at risk.

[371] The accused is found guilty of this count.

####### Theft (count 18)

[372] I am satisfied beyond a reasonable doubt that the accused retained control over the Larocques’ funds contrary to their direction and without their knowledge. In retaining the funds within his sole control for over three months, he converted their funds to his own use. The fact that the specific use he made of those funds has not been proven is irrelevant. The deposit of the funds into one account and their reimbursement from another demonstrates the complete control he had over the funds. The accused had sole control of the funds for a period of time that far exceeded any time required for a genuine effort to place the funds as directed, or to alert his client of any difficulties in doing so because London Life would not permit him to conduct transactions on the Larocque’s behalf. I am satisfied that the accused’s conduct was deliberate and was not simply careless or negligent. So long as the accused retained control of the funds in these circumstances they were available to him for his own use.

[373] Given my conclusions with respect to the fraud count I am also satisfied that the accused converted the Larocques’ property fraudulently and without colour of right. I am satisfied that the accused’s conduct was intentional and that he knowingly deprived the Larocques of their interest in their funds.

[374] He will be found guilty of this count.

####### Misappropriation (count 19)

[375] I am satisfied beyond a reasonable doubt that the accused received funds from the Larocques with a direction that the funds be directed to the payment of their life insurance policy premium with London Life. I am satisfied beyond a reasonable doubt that the accused did not apply those funds as directed. Instead, he applied them to another purpose by retaining those funds for three months without his client’s knowledge and contrary to their direction. As I have already said, I find the accused’s conduct was intentional, fraudulent, and was not the product of a mistake.

[376] Accordingly, he will be found guilty on this count.

Marlene Roy (counts 13 (fraud), 14 (theft by fraud), 15 (misappropriation), 16 (using a forged document))

[377] The accused is alleged to have defrauded Marlene Roy and to have committed theft by misappropriation and converting $15,042.00 of her money and making it his own. In a related count, he is alleged to have used a forged document, in particular, a receipt from Manulife Financial.

The evidence of Marlene Roy

[378] At the time she testified, Ms. Roy was 75 years old. She had retired from work at the local hospital where she was the volunteer services coordinator. Her husband was still working.

[379] Ms. Roy had known the accused since the 1990s. He became the life insurance agent for her and her husband when he took over from another agent. She understood the accused had his own company, Gilden Financial. While the accused assisted the couple with their life insurance policies at London Life he did not assist them with any other kinds of financial transactions.

[380] On August 10, 2011, Ms. Roy wrote a cheque for $15,042.000 to Gilden Financial. She had spoken to the accused about adding it to one of her policies. He told her he would do so and she provided him with a cheque. She wanted the funds to go to a policy at London Life.

[381] Because she had not received a receipt for that cheque Ms. Roy contacted the accused sometime in October. The accused told her she would be receiving a receipt shortly.

[382] About a week or two later, Ms. Roy received a receipt. It was on Gilden Financial letterhead. It showed a payee of Manulife Financial, “/co RG Packman”. It referenced a “short term investment open interest rate of 1.75%” in the amount of $15,000. Ms. Roy noticed that the amount listed was less than the cheque she had written to the accused by $42. At the time she received the receipt she thought someone had made a mistake because of this figure, and because it listed Manulife Financial as the payee. She said she had “no transactions with these people”. She did not recall ever having discussed an investment with Manulife with the accused. It had not been her intention to place those funds with Manulife.

[383] After receiving that receipt, Ms. Roy was directed to a new advisor at London Life. At the suggestion of the new advisor Ms. Roy contacted the accused. He effectively told her that the money was better placed with Manulife than London Life because it would get better interest.

[384] After she received notification that her money had been placed with Manulife, Ms. Roy also contacted Manulife. As a result of her dealings with Manulife, and a couple weeks later, she contacted the accused. She felt no need to put her money in Manulife and wanted it to come back to her.

[385] The accused agreed to reimburse her money. He presented Ms. Roy with a “letter of direction” requesting the cancellation of an application to deposit $15,042.00. The letter was addressed to “Maunilfe Bank c/o RG Packman”. It listed an account number that Ms. Roy did not recognize. Ms. Roy understood that signing this document would help her get her money back and she did so. She did not know where the money had gone after she gave it to the accused. She was under the impression it was still with London Life.

[386] A couple of weeks later, Ms. Roy received a cheque in the amount of $15,117.73. It was dated December 2, 2011. She understood this was the return of her money with interest. She did not know where the interest had come from. The same date, in the presence of the accused, she signed a document on Gilden Financial letterhead. She understood it to be a receipt for the money she had given him. The interest rate referred to on the document (1.75%) did not correspond to any of her dealings with the accused.

[387] Ms. Roy was asked in cross-examination if she trusted the accused to make the best investment possible for her. She replied “for sure I trusted him, and he was working for London Life and we had trusted London Life our entire lives”.

[388] Ultimately, Ms. Roy was contacted by Mr. Schmidt about her dealings with the accused.

Additional evidence presented by the Crown or by admission

[389] Admissions were made that the amounts of $15,042 or $15,000 were not invested with Manulife on behalf of Ms. Roy between August 10, 2011 and December 2, 2011. Nor were those amounts invested with London Life or Quadras in that time period.

[390] Gary Schmidt testified that Ms. Roy and her husband held a single policy with London Life (the number of that policy does not correspond to the account number given in the “letter of direction”). He also testified that neither London Life nor Quadras paid interest to the Roys of $75.73, the figure indicated in the statement of account given to Ms. Roy on December 2, 2011.

The accused’s evidence

[391] The accused testified that he began providing financial services and advice to the Roys from 2007. As of August, 2011 he had not assisted them with the purchase of any products outside of London Life.

[392] The accused agreed that he received a cheque dated August 10, 2011 from Marlene Roy for $15,042 that was made payable to Gilden Financial. That cheque was deposited into the Unity Savings account on August 16th, 2011.

[393] On or about the same date he discussed those funds with the Roys. He said they discussed that their life insurance policy was not an option for the funds because they were looking for a short term investment. The accused told them that Manulife offered short term investments and because he had a contract with RG Packman this might be a solution. He said that Manulife had a product that paid around 2% or a similar rate that was better than what Ms. Roy was being offered at the bank. The accused denied that the Roys directed him to invest the money into their life insurance policy as they always had.

[394] The accused agreed that an undated receipt was prepared in relation to these funds. He agreed with the general time line that this would have been the end of October 2011. The accused was asked about the statement’s reference to an investment of $15,000 in a “short-term investment” as opposed to the $15,042 provided to him by Ms. Roy. The accused said that the document was not prepared by him but by his staff. He agreed that the document did not identify where the funds actually were. When it was suggested to him that the statement would leave any reasonable person with the impression that the funds were with Manulife (the receipt shows the “Payee Name” as Manulife Financial), he said that this could be, and this is where the funds were supposed to go eventually. He denied that this receipt was intended to show the Roys that he had invested their money. He said he was trying to show them this is the company in which “we” were going to try to invest.

[395] The accused was asked about the “letter of direction” addressed to “Maunilfe Bank c/o RG Packman” signed by Ms. Roy. He said this represented her request for the return of her investment. He said the Roys had told him that they were thinking of selling their house and wanted to cancel their investment. He agreed.

[396] Ms. Roy was provided with a bank draft dated December 2, 2011 from his TD Bank account in the amount of $15,117.73. The accused agreed that the funds had been initially deposited into the Unity Savings account and that it was possible that the funds had been transferred from one account to another.

[397] Ms. Roy was also provided with a “statement of account” from the accused which showed that the funds in the bank draft reflected accrued interest of $75.73 for 105 days of investment at the rate of 1.75%. When it was suggested to the accused that the funds at no time were invested at that rate, and that this information was incorrect, he replied that what was correct was that the funds were not deposited with Manulife because of contractual issues. He agreed that he had retained the funds in his account for 105 days.

[398] By way of explanation for the interest paid, the accused said that the intention was that the funds would be placed through RG Packman with Manulife. This could not occur because RG Packman terminated his contract. He agreed that he held the funds for a period of at least 3 months before his contract with RG Packman was terminated. He also agreed that he retained the funds after he was notified that contract was cancelled on November 21, 2011. He retained the funds until December 2, 2011.

The positions of the parties

[399] The Crown argues that after receiving Ms. Roy’s cheque and being directed to invest her funds with London Life the accused provided her with a receipt which could only lead to the conclusion that her money had been invested with Manulife. The Crown says the court should reject the accused’s evidence that he was trying to place the funds for investment and notes that his contract with RG Packman ended sometime after he initially received the funds. Further, even if the court were to accept that the accused was trying to place these funds, that account cannot be reconciled with the statement of account or letter of direction showing an actual account number for funds that were never invested. The Crown says the accused persisted with this fiction even while returning the funds. He says it is inexplicable why he would do this other than he was knowingly committing fraud.

[400] The defence says that the cheque provided by Ms. Roy contained no reference in its memo line to anything that would suggest she intended it to be placed in a policy at London Life. The defence position is that the accused advised the Roys that the money was better placed with Manulife because it would obtain a better rate of interest and that this was the direction given. The defence says the evidence shows the accused tried to place the investment with Manulife as directed but that RG Packman cancelled his contract. Regardless, when Ms. Roy asked for her money back, it was immediately returned to her with interest, and there was no loss or risk of loss of her funds. Counsel refers the court to notes made by the accused as a basis to prefer the accused’s evidence.

Analysis

Credibility and reliability assessments

[401] Ms. Roy presented as a careful witness who had a reasonably firm grasp on her financial affairs. After she gave the cheque to the accused, she followed up and asked for a receipt. She noticed the discrepancy in what it related about the amount invested and where. She was paying attention at the time and she demonstrated no problems in recalling these events. I have no reason to doubt her recollections.

[402] The accused’s evidence is difficult to accept. For instance, I do not believe that he provided Ms. Roy with a receipt to show her where her money would be invested. This is manifestly incredible. It was a receipt prepared because the client asked for it. It contained no reference to any plan to invest that had yet to be realized. It can only be read as confirmation of a $15,000 investment that was made on Ms. Roy’s behalf with Manulife. The accused’s evidence about the receipt strains credulity and I do not accept it. I find that he provided this receipt to Ms. Roy to create the false impression that her money was invested.

[403] Moreover, even if there was a direction to place the funds with Manulife, which I will address shortly, I do not accept the accused’s evidence that he was unable to place the funds with Manulife because of contractual difficulties as he suggests. He was in receipt of Ms. Roy’s money for over three months before his contract with RG Packman was cancelled. The accused has offered no explanation for why the funds could not have been placed in that ample period of time. I do not believe him when he says that he did try to place them with Manulife.

[404] As to the direction that Ms. Roy gave for the investment of her funds, when I consider the totality of the evidence, I accept Ms. Roy’s evidence that the accused was directed to place the funds with London Life. I accept as genuine her account of being confused about receiving the receipt showing her money was with Manulife since she’d had no dealings with them. Ms. Roy did not impress me as a person who would have forgotten about a discussion to invest her money with a company that was new to her. In fact, she did recall a later discussion with the accused following her questioning of the receipt where he said Manulife would be the better investment. This conversation did not supplant the initial direction given by Ms. Roy, however.

[405] Further, it is common ground in the evidence that the Roys had never invested outside of London Life in their dealings with the accused. This tends to support Ms. Roy’s account that the direction on this occasion was also to invest with London Life, as does her conduct in requesting the money back because she had not directed that investment. In any event, I have no confidence in the accused’s account that he was directed to invest the funds at Manulife and I reject it.

[406] While wide latitude was granted to the defence in the use of the accused’s StoryBook notes, in part because they provided the court with an aide memoire in relation to evidence given by the accused based on those notes, it is conceded by the defence that the accused’s own notes cannot function as evidence that corroborates his account. Rather, the defence suggests that because the accused took contemporaneous notes, evidence given by the accused after he refreshed his memory with those notes should be preferred to that of the client where their accounts differ.

[407] With respect to Ms. Roy, one of the relevant notes is labelled “Internal Office Notes – Marlene Roy” (Exhibit 98). While it was introduced on the basis that it was a contemporaneous note of his dealings with Ms. Roy, the accused ultimately testified that he prepared that document after the preliminary inquiry for the benefit of counsel. It is of no value in my assessment of the reliability of his evidence.

[408] The accused says the Storybook entry filed at Exhibit 109 was made contemporaneously. In all the circumstances, however, I do not see that it provides a basis to reject the account of Ms. Roy. I assess the evidence in its totality in determining what evidence to accept. In this case, the serious deficits in the accused’s credibility suggest an even greater need for caution in relying on the notes as a basis to prefer his evidence.

Findings of fact

[409] After consideration of the totality of the evidence relating to the accused’s dealings with Ms. Roy, I am satisfied beyond a reasonable doubt of the following facts:

a. The accused received $15,042 from Ms. Roy along with a direction from her to invest that money with London Life.

b. The accused did not invest that money as directed.

c. The accused maintained those funds in his control for over three months without informing Ms. Roy.

d. On multiple occasions the accused provided Ms. Roy with documentation (the receipt, the letter of direction, and the statement of account) intended to falsely convey to her that her money had been invested when no investment was made with those funds.

e. The accused returned Ms. Roy’s funds to her upon her request and paid her an additional $75.73 in interest.

f. The accused used different accounts in depositing and reimbursing the funds.

The facts applied to the elements of the offences

####### Fraud (count 13)

[410] I am satisfied beyond a reasonable doubt that the accused retained Ms. Roy’s funds contrary to her direction for a period of over three months and that this was a deceitful act. The accused’s deceit is further confirmed by his use of misleading documents to suggest that Ms. Roys’s funds were invested when he knew they were not.

[411] I am satisfied beyond a reasonable doubt that deprivation was caused to Ms. Roy by this deceitful act. I find that it placed her financial interests at risk in the same manner as I have articulated with respect to Howard Ross.

[412] I further find that the Crown has proved the requisite mens rea beyond a reasonable doubt. The accused had subjective knowledge of the prohibited act – he knew he was retaining his client’s funds contrary to Ms. Roys’s direction. I