COURT FILE NO.: CR-16-10000689

DATE: 20190925

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

HER MAJESTY THE QUEEN

– and –

STEVEN NOWACK

Renna Weinberg, for the Crown

Paul Slansky, for Steven Nowack

HEARD: July 29, 2019

R.F. GOLDSTEIN J.

REASONS FOR JUDGMENT ON ABUSE OF PROCESS APPLICATION

[1] Mr. Nowack held himself out as a successful currency trader. He persuaded investors that he could make enormous returns. In fact, he defrauded the investors. He spent some of the money on himself and his family members. He used the funds of later investors to pay earlier investors. He did trade currency and lost all of it. He did not, however, disclose the losses. He continued to claim great returns. He created false “demonstration” accounts and false “account statements”. He showed the demonstration accounts to the investors in order to induce them to invest. The false account statements persuaded investors that they were doing very well. In some cases, the lies induced investors to invest more money. In other cases, the lies induced investors not to request their money back. He lied to the investors about what he had done with their money.

[2] Many, although not all, of the investors became complainants in the criminal case. These investors lost $21.5 million in total. Many, although not all, of the complainants sued Mr. Nowack.

[3] A jury convicted Stephen Nowack of 12 counts of fraud over $5000 on April 26, 2019. I then heard the remainder of a disclosure application and this application for a stay of proceedings based on an abuse of process. That abuse of process is said to be coordination between the complainants who have sued Mr. Nowack and the Crown and the police.

[4] I heard submissions in relation to this abuse of process application at the same time that I heard submissions on an application for disclosure. I required the defence to show that this application had a reasonable prospect of success: R. v. Cody, 2017 SCC 31, [2017] 1 S.C.R. 659 at para. 38; R. v. Kutynec (1992), 2004 12555 (ON SC), 70 O.R. (3d) 277 (C.A.). I found that it did not. I dismissed both the abuse of process application and the disclosure application on August 2 2019. I indicated that my reasons would follow for both.

[5] I found that the abuse of process application does not have a reasonable prospect of success. These are my reasons for dismissing the application.

THE EVIDENCE AT TRIAL:

[6] This summary of the evidence is taken from my reasons for judgment on the disclosure motion: R. v. Nowack, 2019 ONSC 5345; and my reasons for sentence: R. v. Nowack, 2019 ONSC 5344.

[7] Commencing in 2009, Mr. Nowack held himself out as a knowledgeable and skilled currency trader. He was never registered with the Ontario Securities Commission. He opened multiple trading accounts in London using an online trading platform provided by a company called FXCM. He told people the accounts were actually in New York. That was one of many lies. He also told people that FXCM granted him the ability to leverage his trading up to 400x. That was another lie used to induce investment from people who could not otherwise obtain that kind of extraordinary leverage in their personal trading. Between November 3 2009 and October 2019 several investors transferred funds to Mr. Nowack. Mr. Nowack was to trade currency. Most of the investors signed an agreement with Mr. Nowack. Some did not. Currency trading profits were to be split 37.5% to Mr. Nowack and 62.5% to the investors, although there were some variations. Mr. Nowack represented to the investors that 100% of their money would be invested in currency trading. That was untrue.

[8] There were several ways in which the jury could have arrived at a guilty verdict. Since it is unclear which route the jury took, I made my own findings of fact in order to determine sentence: Criminal Code, s. 724, R. v. Punko, 2012 SCC 39 at paras. 11-12. The same findings are made for the purposes of this application.

[9] There were three aspects of the fraud: the diversion aspect, the misrepresentation aspect, and the “live trading” aspect. Members of the jury could have convicted Mr. Nowack any one of those bases, or on all of them. I found in my reasons for sentence that Mr. Nowack committed the fraud in each of these ways:

(a) The Diversion Aspect Of The Fraud

[10] Mr. Nowack did not invest each investor’s money into foreign currency trading. Instead, he diverted some of their money for his own purposes. The fraud was also a Ponzi scheme: Mr. Nowack diverted some of the funds of some of the investors in order to pay other investors. He did not disclose the diversions.

[11] Between October 1 2009 and July 1 2013 a total of the $19,576,515.21 (combined Canadian and US dollars) was transferred to Mr. Nowack’s FXCM accounts from his Canadian bank accounts. Mr. Nowack’s trading losses amounted to US$19,249,162.82. FXCM shut down Mr. Nowack’s accounts in June 2013. The accounts were left in a deficit position of US$854,399.16. A total of US$1,905,002.36 was returned from FXCM accounts to Mr. Nowack’s accounts in Canada.

[12] During the course of the fraud Mr. Nowack used a total of $2,703,468.54 for personal purposes (combined US and Canadian dollars). Mr. Nowack, his wife, and his mother received $1,321,198.22 in cash. Mr. Nowack used $480,096.55 for legal fees. He used $479,528.30 for credit card payments. Mr. Nowack used $324,581.59 to pay personal expenses directly. He diverted $98,063.88 to his music business.

[13] Mr. Nowack testified that he did not perpetrate a Ponzi scheme. He simply moved money that he was otherwise entitled to in order to pay investors. He also believed he was entitled to take profits. He was therefore entitled to divert some investor money because he could account for it using the profits in the FXCM account.

[14] Mr. Nowack’s evidence was not credible on this point. If he was accounting for funds moved around by setting off profits in the FXCM accounts, where are the spreadsheets or working papers showing those calculations? None were found. In my view, the jury did not believe him.

(b) The Misrepresentation Aspect Of The Fraud

[15] Mr. Nowack told investors that he was making millions of dollars. That was a lie. He told investors that his investment fund had tens of millions of dollars in it. That was also a lie. Mr. Nowack sent out “account statements” that showed individual investors making excellent returns. Those account statements were works of fiction. He lied to investors when they asked for the return of their funds. He invented reasons for failing to pay profits or to return the original investment. He blamed banking or regulatory problems.

[16] At trial Mr. Nowack testified that he was making huge profits from trading currency “pairs”. Trading currency pairs is a zero-sum game: if one party makes money the other party must lose. He was trading billions of dollars. He claimed that large investment banks, such as Goldman Sachs and J.P. Morgan, were very upset about the massive losses he was causing them. The management of FXCM therefore decided to hide his profits in “demonstration” accounts. He said that he still had over US$146 million in these accounts, including the so-called 979 accounts. He said FXCM was still hiding his money. FXCM has manipulated the trading records in order to hide the fact that it has stolen his money. He pointed to FXCM’s very real regulatory offences in the United States and the U.K.

[17] Mr. Nowack’s evidence on this point was also not credible. In my view, the jury clearly rejected his evidence. The 979 account and other demonstration accounts did not hold real money. The trading records showed that Mr. Nowack lost all of the investor money – and those records balanced. Mr. Nowack used these demonstration accounts holding fake money to induce investors to put up real money.

[18] Mr. Nowack provided Mr. Auciello with an email, ostensibly from FXCM, indicating that he had over US$146 million in account 979. Nobody at FXCM sent that email. It was not sent from a recognized FXCM address. Moreover, it makes no sense that FXCM would send an email indicating that he had $146 million in an account when it was supposedly hiding those profits. That email was a forgery. Mr. Nowack quite obviously and deliberately created that email in order to mislead Mr. Auciello and his colleagues.

[19] Over the course of the fraud, FXCM charged US$10,811,268.95 in commissions. That amount represented just over half of the total amount invested by the investors. How did Mr. Nowack generate such enormous fees? Every time Mr. Nowack traded he did so at a furious pace. Every time he clicked on his mouse he generated a trade. He was constantly clicking his mouse. That is what Mr. Nowack testified to. That is what the investors who watched him trade testified to. Those investors watched Mr. Nowack generate trades in a demonstration account, but some of the trading was probably genuine.

[20] Because of Mr. Nowack’s high volume of trading, FXCM rebated US$11,260,684.20. Mr. Nowack did not disclose the rebates to the investors – he took the position at trial that he was entitled to the rebates and was not required to disclose them.

[21] The rebate scam meant that Mr. Nowack made money whether or not his investors lost. The investors were not aware of the rebates. The rebates were ploughed back into trading, but they represented pure profit for Mr. Nowack. Whether the rebates were a diversion or a misrepresentation (or both) they were part of the fraud

(c) The Live Trading Aspect Of The Fraud

[22] Mr. Nowack traded “live”. He let several investors watch him trade on his computer or on his mobile phone. I find that every investor who watched Mr. Nowack trade live on-screen watched him trade using demonstration accounts. A demonstration account is an account opened by an investor in order to practice trading or try out an investment strategy. No real money is used. Some investors may have seen real accounts at some point but Mr. Nowack presented the demonstration accounts as real accounts. He did that in order to induce the investors to invest. The investors, of course, did not know that the accounts were not real.

[23] Mr. Nowack never had more than US$5.7 million in his FXCM accounts at any one time. Therefore, any time an investor saw more than US$5.7 million in an account onscreen he was watching a demonstration account. The FXCM accounts were shut down in June 2013. Any investor who saw an onscreen account after that time was watching a demonstration account.

[24] Stephen Chan, Vito Galloro, Desi Auciello, Rino Montemarrano, Mark Rynties, Manuel DaCosta, and Anthony Montemarrano all watched Mr. Nowack trade live on-screen. I find that Mr. Nowack showed each one of them a demonstration account in order to induce them to invest. David Weenen, Vince Saragosa, and Joseph Greenberg never actually saw Mr. Nowack trade live on-screen. Instead, he told them that he was making vast profits. Those were also misrepresentations designed to induce them to invest.

[25] Mr. Chan took an undated photograph of Mr. Nowack’s trading screen showing account 381. The account showed over US$88 million in it. Mr. Chan took another photograph of Mr. Nowack’s trading screen showing account 981 on July 7 2013. The account showed over US$16 million in it. Those accounts were clearly demonstration accounts.

[26] Mr. Galloro took a photograph of one of Mr. Nowack’s trading screens in February 2013. The balance in the account was US$56 million. In July 2013 he saw a trading screen with a balance of over US$100 million. Those accounts were clearly demonstration accounts. [22] Mr. Auciello testified that Mr. Nowack had more than US$10 million in the account he saw. Rino Montemarrano testified that he dropped by Mr. Nowack’s house to watch the trading with Mr. Auciello. Anthony Montemarrano also watched Mr. Nowack trade onscreen. I infer from the circumstances that Rino Montemarrano and Anthony Montemarrano watched at the same time as Desi Auciello and saw the same demonstration account.

[27] Dr. Rynties testified that he watched Mr. Nowack make US$750,000 over the course of four hours. Mr. Nowack only had 36 trades – among thousands in almost four years – where he made more than US$10,000. He had only one where he made more than US$20,000. I infer from that evidence that Mr. Nowack showed Dr. Rynties a demonstration account in order to induce him to invest.

[28] Mr. DaCosta testified that he saw Mr. Nowack trade live on a mobile phone. He did not testify to the number, but he did say that Mr. Nowack appeared to be very successful. In my view, it is unlikely that Mr. Nowack showed demonstration accounts to the other investors but a real account to Mr. DaCosta. I find that Mr. Nowack likely showed him a demonstration account in order to induce him to invest.

[29] Dan Cusimano and Joe Ferraro testified for the defence. Both saw Mr. Nowack trade live on-screen. Both saw balances as high as US$160 million. Both believe that they saw Mr. Nowack trade real money using a real account. I have no doubt that Mr. Nowack also lied to them about what was happening on-screen. Both men saw demonstration accounts, not real accounts.

(d) The Losses

[30] Most of the investors lost all of their money. None of the investors received their original investment back. Those that received some money obtained it from other investors through Mr. Nowack. None of the investors received profits. The only person who came out ahead was Mr. Nowack.

[31] The total loss to the criminal complainants was C$15,679,087.59. Other investors did not make a complaint to the police. These other investors lost about $6 million. Thus, some $21.9 million (combined Canadian and US dollars) flowed into Mr. Nowack’s Canadian and U.S. dollar accounts from all the investors over the course of the fraud.

THE CIVIL LITIGATION:

[32] Several of the investors sued Mr. Nowack. Two of the lawsuits resulted in substantial litigation: one lawsuit involving Dr. Joseph Greenberg, and one lawsuit involving a numbered company, 256523 Ontario Inc. That company was the corporate vehicle of Desi Auciello, Rino Montemarrano, and Anthony Montemarrano. They used 256523 Ontario Inc. to make investments with Mr. Nowack. The rest of the lawsuits resulted in default judgments against Mr. Nowack. None of the complainants have recovered funds through the lawsuits, with the exception of Dr. Greenberg: Mr. Nowack returned just over $500,000 to Dr. Greenberg. It is clear from the criminal case that Mr. Nowack diverted all but $50,000 of that amount from other investors. Mr. Nowack consented to a judgment for the rest. Dr. Greenberg (and later his estate) has not recovered any of the remaining $3.5 million. David Weenen, the first person to complain to the police, did not sue Mr. Nowack.

THE CHRONOLOGY:

[33] I set out the key dates in my reasons for judgment on the disclosure application: R. v. Nowack, 2019 ONSC 5345 at para. 39. There is no need to repeat it here.

ISSUES:

[34] Prior to trial the defence indicated that it would bring an application to stay the proceedings based on an abuse of process. I ruled that the abuse of process must wait until the end of trial, in the event of a conviction: R. v. La, 1997 309 (SCC), [1997] 2 S.C.R. 680 at para. 27. My impression after hearing the trial evidence was that there was insufficient evidence of an abuse of process to show a reasonable basis of success. I called on the defence to articulate the basis for the two-week hearing anticipated by the defence: Kutynec at para. 31.

[35] The defence position is that there is a basis for a full hearing on the issue of improper coordination between Crown and civil counsel. That coordination was for the purpose of advancing the civil case against Mr. Nowack. There is evidence that Ms. Weinberg facilitated the disclosure of the Crown brief to Mr. Groot. Ms. Weinberg also authored an article with Mr. Groot. The article provided a “road map” for coordination between counsel. The article was highly improper.

[36] I must determine whether the evidence respecting these three issues discloses a reasonable prospect of success:

(a) Was there improper coordination between Crown counsel and civil counsel?

(b) Did Crown counsel facilitate the disclosure of the Crown brief to civil counsel?

(c) Did Crown counsel co-author an Article With Mr. Groot?

[37] The answer to all three of these questions is “no”.

ANALYSIS:

[38] A trial judge’s management duties require him or her to minimize delay as the majority of the Court stated in Cody at para. 38:

In addition, trial judges should use their case management powers to minimize delay. For example, before permitting an application to proceed, a trial judge should consider whether it has a reasonable prospect of success. This may entail asking defence counsel to summarize the evidence it anticipates eliciting in the voir dire and, where that summary reveals no basis upon which the application could succeed, dismissing the application summarily…

[39] Although Cody specifically speaks to pre-trial delay, I have no doubt that this principle applied to a post-conviction application for a remedy. The Court in Jordan intended to discourage complacency and encourage a more efficient trial process. An application with no chance of success is a waste of resources whether it is pre- or post-trial.

[40] In R. v. Walton, 2019 ONSC 928 the accused brought an application to stay proceedings on the grounds of an abuse of process. The abuse was alleged to be very similar to that which is alleged here: improper coordination between Crown counsel and civil counsel for the complainant. The Crown brought a motion to summarily dismiss the application on the grounds that it had no reasonable prospect of success. Code J. reviewed the authorities and articulated the principles to apply at para. 52:

• the “anticipated evidentiary basis” for a Charter or abuse of process Application refers to “the facts as alleged by the defence” or “the facts upon which it relies” (Kutynec and Vukelich);

• an “irresponsible allegation made solely for the purpose of initiating a fishing expedition” or “a bare allegation of abuse of process” does not displace “the presumption that prosecutorial discretion is exercised in good faith” (Durette, Nixon, and Anderson);

• a “colourful... allegation” made by counsel in argument or “conjecture and speculation” in an affidavit do not amount to “an offer of proof” or “evidence” or “an evidentiary foundation” (Perks and Papasotiriou-Lanteigne);

• a “reasonable likelihood that the [evidentiary] hearing can assist” and a “reasonable prospect of success” appear to be analogous standards that have both been applied by the Supreme Court (Pires, Nixon, Anderson, and Cody).

[41] I respectfully adopt Code J.’s analysis.

[42] A stay of proceedings is available in the “clearest of cases” where there has been an abuse of process: R. v. O’Connor CITE; Canada (Minister of Citizenship and Immigration) v. Tobiass CITE; R. v. Babos, 2014 SCC 16. There are two main categories of abuse of process. The first, the main category, occurs where state conduct compromises the fairness of the trial. The second, or residual category, occurs where state conduct does not compromise the fairness of the trial but risks undermining the integrity of the judicial process: Babos at para. 31. The Court in Babos set out the test for granting a stay for both categories at para. 31:

(1) There must be prejudice to the accused's right to a fair trial or the integrity of the justice system that "will be manifested , perpetuated or aggravated through the conduct of the trial, or by its outcome'' (Regan, at para. 54);

(2) There must be no alternative remedy capable of redressing the prejudice; and

(3) Where there is still uncertainty over whether a stay is warranted after steps 1) and 2), the court is required to balance the interests in favour of granting a stay, such as denouncing misconduct and preserving the integrity of the justice system, against "the interest that society has in having a final decision on the merits" (ibid., at para. 57).

[43] The principles set out in Cody and Kutynec must be applied to the evidence in light of the test in Babos. One of the problems on this application is that it was unclear to me whether the defence intended to ask for a stay based on the main category or the residual category. I have assumed, based on Mr. Slanksy’s submissions, that he did not argue that the fairness of the trial had been compromised. Rather, I believe that his argument was founded on the residual category. Ultimately it does not matter because there is no evidence that there was any abuse.

(a) Was there improper coordination between Crown counsel and civil counsel?

[44] The defence position is that the the authorities, and particularly the Crown, engaged in improper coordination with counsel for the complainants. This cooperation was specifically for the purpose of helping the complainants advance the civil case, and using the complainants to advance to Crown’s case. As such, there is a basis for having a full hearing on the matter to determine the full extent of the coordination.

[45] I respectfully disagree. There is a full record of the email contact between the police, Crown counsel, and the complainants. An evidentiary hearing is unnecessary. That evidence discloses no prospect that an abuse of process application could succeed.

[46] Where the “machinery of prosecution” is used for the collection of a civil debt it may amount to an abuse of process: R. v. Finn, 1997 398 (SCC), [1997] 1 S.C.R. 10, upholding the Newfoundland Court of Appeal: R. v. Finn (1996) 1996 6632 (NL CA), 106 C.C.C. (3d) 43 (Nfld.C.A.). In that case, the Court of Appeal stated:

Where there has been neither police nor Crown involvement, nor acquiescence, in the perceived misuse of the criminal justice system through complaints laid by the alleged victim to enforce recovery of moneys from the accused, the Attorney General's power to prosecute ought not to be impaired. The complainant's motivation for laying the complaints should not have the effect of absolving the accused from responsibility to respond to legitimate charges.

[47] Thus, a mere threat by a complainant to go to the police unless the accused pays up is not enough to be an abuse of process. An accused person would have to show that the police failed to make an independent to decision to lay charges: R. v. Meyer, [1998] O.J. No. 2331, 1998 CarswellOnt 2369 (C.A.). I infer that an accused would have to show the same of Crown counsel of a decision to continue a prosecution.

[48] The reason is not complicated: Crown counsel conducts prosecutions in the public interest. The Crown’s interest in a fraud prosecution is very different from a private litigant’s interest in a civil lawsuit against an alleged fraudster. A prosecution (and potential conviction) signals the community’s denunciation of the fraud. A prosecution also serves a deterrent function. The community criminalizes deceitful deprivation or risk of deprivation because the harm is not only to an individual victim. Fraud also undermines trust, which is a foundation of the market economy upon which we all depend. Thus, the Crown conducts fraud prosecutions in the public interest. In contrast, a private litigant seeks to recover a loss as a result of a civil wrong. The result is best illustrated by the fact that actual deprivation is not an element of the offence. If there is no deprivation, then the victim suffers no monetary damage. There can, therefore, be a conviction for fraud but no basis for a civil judgment.

[49] In R. v. McCague, 2006 ONCJ 208, Trotter J. (as he then was), sitting as a judge of the Ontario Court of Justice, examined the abuse of process doctrine in the context of a fraud prosecution. The victims had contracted with a home renovator. They paid a series of deposits. The renovator simply took the money and did not do the work. The victims threatened to go to the police and eventually did. Trotter J. reviewed the authorities. He noted that none of the decisions indicated how thorough or extensive an investigation had to be in order to “insulate a prosecution from an allegation of abuse of process”: para. 31. Trotter J. also said this in the same paragraph:

Requiring a judge to make an appraisal of the thoroughness of an investigation in a context such as this is, of course, problematic. However, for this to be done at all, there must be an appropriate evidentiary foundation for the inquiry. In this case, no evidence was adduced on this issue by the accused, who bears the onus of proof on this aspect of the proceedings.

[50] I interpret Trotter J.’s comments to mean that it is not the function of a trial judge to inquire into the independent decisions that constitute the core of prosecutorial discretion: Krieger v. Law Society of Alberta, 2002 SCC 65, [2002] 3 S.C.R. 372 at para. 46. There would have to be a proper evidentiary foundation for a judge to do so. Trotter J. found that no such foundation had been laid. He was satisfied that the police had conducted an independent investigation. He found that the victims did not intend to use the criminal process to obtain leverage against the accused.

[51] In Walton, Code J. conducted a detailed analysis of the authorities on this point. He adopted Trotter J.’s analysis in McCague. He noted that even if the complainant had been improperly motivated to go to the police in order to use the threat of criminal prosecution, the law is clear that “there is no abuse of process if the police and Crown are not implicated in the complainant’s improper demands and, instead, proceed with their own independent investigation and assessment of the appropriateness of criminal charges”: para. 89.

[52] I respectfully agree with and adopt the analyses of Trotter J. in McCague and Code J. in Walton. I agree with Quigley J.’s comment in R. v. Gerstein, 2014 ONSC 1617 at para. 138:

Where individuals may have pursued both civil proceedings and reported the matter to police authorities, like in this case, what is important is that the police and Crown prosecutors pursue their public duty to investigate, to assess the facts after an investigation, to lay charges where there are reasonable and probable grounds to do so, and to pursue prosecution when there is a reasonable prospect of conviction and there is a public interest in doing so.

[53] Thus, in order to proceed with a full inquiry into the alleged abuse of process in this case, the defence would have to show that there is a reasonable prospect that it could succeed in showing the following:

• That there has been state misconduct in the investigation or prosecution;

• That the state misconduct prejudiced Mr. Nowack’s right to a fair trial or risked undermining the legitimacy of the judicial process;

• That there is a basis upon which a judge could find that this is one of the “clearest of cases”.

[54] In this case, the evidence of state misconduct falls far short of demonstrating an abuse of process. I need not, therefore, consider whether the state misconduct prejudiced Mr. Nowack’s right to a fair trial or undermined the legitimacy of the judicial process. I also need not consider whether this is one of the clearest of cases. Mr. Nowack testified that several of the complainants threatened to go to the police if he did not pay them. That may be so. The mere fact that complainants threatened to go to the police is not enough to invoke the abuse of process doctrine, as I will explain in the following paragraphs:

Dr. Greenberg Litigates

[55] Dr. Greenberg invested just under $4.1 million with Mr. Nowack between October 2009 and February 2011. Dr. Greenberg was in his 80’s when he became involved with Mr. Nowack. He gave permission to Mr. Nowack to withdraw money from his investment account. Dr. Greenberg’s children apparently became aware that Dr. Greenberg had invested a great deal of money with Mr. Nowack.

[56] The Greenberg family retained counsel, Martin Greenglass, to recover the money. Mr. Greenglass issued a statement of claim against Mr. Nowack on behalf of Dr. Greenberg and his wife. In July 2013 the Greenbergs obtained a judgment for $3.5 million against Mr. Nowack. Mr. Nowack consented to the judgment after he paid about $500,000 towards the judgment (using funds almost entirely provided by other investors). Mr. Nowack has paid nothing else. The subsequent litigation has revolved around attempts to recover the judgment debt. To that end several judges have ordered Mr. Nowack to produce financial records. In 2015 Morgan J. found that Mr. Nowack wilfully failed to do so and found him in contempt: Greenberg v. Nowack, 2015 ONSC 2015. Justice Morgan sentenced Mr. Nowack to 15 days in jail.

[57] In May 2017, C. Brown J. made further disclosure orders. She ordered (again) that Mr. Nowack disclose financial documents and provide an accounting. In January 2018 she found Mr. Nowack in contempt. She found that he had failed to comply with her orders. She gave him an opportunity to purge his contempt. He failed to. She sentenced Mr. Nowack to six weeks in jail: Greenberg v. Nowack, 2018 ONSC 416.

The Auciello/Montemarrano Group Litigates

[58] In June 2013 Mr. Auciello and the Montemarranos sued Mr. Nowack through their vehicle of 256523 Ontario Inc. There was an appearance before Justice David Brown (prior to his appointment to the Court of Appeal) in October 2013: 256523 Ontario Inc. v. Nowack, 2013 ONSC 7479. In his affidavit and draft statement of defence Mr. Nowack noted that the funds had been lost. He did not suggest that FXCM was hiding them. Justice David Brown made several orders. One of the orders was that Mr. Nowack provide an accounting. No such accounting was ever provided. In 2015 Master Abrams struck Mr. Nowack’s statement of defence with leave to bring a fresh as amended statement of defence. Mr. Nowack failed to file one. The plaintiffs noted him in default. Justice Diamond granted a default judgment. Mr. Nowack moved to set the default judgment aside. Justice Diamond gave him leave file material to do so until October 2 2015. Mr. Nowack did not. The default judgment stands.

[59] Mr. Nowack was again ordered to produce financial records and answer questions as a judgment debtor. Justice Dunphy found Mr. Nowack in contempt again in April 2016. Mr. Nowack did not purge his contempt. Justice Dunphy sentenced him to 30 days in custody: 256523 Ontario Inc. v. Nowack, 2016 ONSC 2518. Mr. Nowack appealed. The appeal was dismissed: 256523 Ontario Inc. v. Nowack, 2016 ONCA 951.

[60] Justice Dunphy again found Mr. Nowack in contempt of different orders in August 2016. He found that Mr. Nowack again failed to purge his contempt. Justice Dunphy sentenced him to a further 21 days in custody: 256523 Ontario Inc. v. Nowack, 2017 ONSC 5240.

[61] Mr. Nowack testified that the Auciello/Montemarran group put great pressure on him to return the money. He testified that he met with Mr. Auciello and the Montemarranos at Yorkdale Mall in October 2013. He testified that they told him to take money from other investors to pay him, if necessary. He also testified that the promised to “screw up his life” if he did not pay them back.

[62] Mr. Auciello testified that he initially retained a law firm named Stevenson’s to commence the litigation. Later he retained Norman Groot. They did eventually go to the police. He agreed that there was a meeting at Yorkdale with Mr. Nowack. It was the day before Mr. Nowack was arrested. Mr. Nowack was still telling them that he would get their money back. Mr. Auciello denied a suggestion that he knew that Mr. Nowack was about to be arrested. He also denied that he went to the police because he believed he would be unsuccessful in a civil action. There is no evidence to suggest otherwise.

Other Complainants Litigate

[63] Several other complainants sued Mr. Nowack. Manuel DaCosta and Stephen Chan were among them. Some aggressive litigation took place. Some litigants sued Mr. Nowack’s former wife, mother, and mother-in-law. Mr. Nowack testified that the litigation was pursued very aggressively. It appears that several default judgments were obtained against Mr. Nowack. None of the complainants has recovered any part of the investment through litigation.

David Weenen Makes A Complaint

[64] On July 30 2013 Rick Goldman, a criminal defence lawyer, left a message on Detective Constable Valerie Dahan’s telephone. DC Dahan was a TPS fraud investigator at 53 Division. She returned his call. Mr. Goldman and DC Dahan had a conversation shortly after that. Mr. Goldman stated he wanted to report a fraud involving his son-in-law (Mr. Weenen later testified that Mr. Goldman is his stepfather). David Weenen was the complainant. DC Dahan did not know Mr. Goldman. She knew he was a lawyer but did not know at the time that he was a criminal lawyer.

[65] On August 15 2013 DC Dahan spoke again to Mr. Goldman. Mr. Goldman indicated that Mr. Weenen had provided funds to Mr. Nowack. Mr. Weenen alleged that Mr. Nowack had defrauded him. Mr. Goldman indicated that he had spoken to Mr. Nowack on August 12 2013. He told DC Dahan that the call was from a San Francisco area code number. He believed that Mr. Nowack was in Las Vegas. He told DC Dahan there had been a hit on his website one minute before the call. The hit was from Las Vegas. Mr. Nowack told Mr. Goldman that he would return the money to Mr. Weenen. On August 23 2013 Mr. Weenen and DC Dahan spoke over the telephone.

[66] Mr. Nowack suggested to DC Dahan that Mr. Goldman had told her that he would arrange with the police to have Mr. Nowack charged if he did not return Mr. Weenen’s money. He suggested that Mr. Goldman had a relationship with her and that he could arrange or control the police. DC Dahan denied that anything like that had occurred during her conversations with Mr. Goldman.

[67] Mr. Nowack testified that Mr. Goldman threatened to use his contacts with the police to have him charged. Mr. Goldman said he could make the charges go away if he paid Mr. Weenen back.

[68] I accept DC Dahan’s evidence that her conversation with Mr. Goldman did not unfold as Mr. Nowack suggested. Even if Mr. Goldman did threaten Mr. Nowack that he would use his relationship with the police to have Mr. Nowack charged (and I make no finding on that point) there is no evidence that DC Dahan did not conduct an independent investigation and make an independent decision to lay charges.

[69] Mr. Weenen clearly bears an animus towards Mr. Nowack. He took steps to harass Mr. Nowack – as Mr. Weenen very candidly admitted in court. He backed off when he was warned by the police. There is no evidence of any state participation in Mr. Weenen’s campaign of harassment against Mr. Nowack. More importantly, Mr. Weenen did not use the police to advance a lawsuit against Mr. Nowack – he never sued Mr. Nowack.

[70] DC Dahan testified that she consistently tells complainants that the police are not a collection agency and that complainants should obtain counsel in order to recover money. I accept her evidence on that point.

Aaron Greenberg Makes A Complaint; The Police Launch An Investigation

[71] On August 22 2013 Aaron Greenberg, Dr. Greenberg’s son, spoke to DC Sandhu. DC Sandhu was a TPS officer working at the 23 Division CIB, or Criminal Investigation Bureau. Mr. Greenberg provided information about the alleged fraud on his father. On August 27 2013 DC Sandhu spoke to Martin Greenglass. Mr. Greenglass was Dr. Greenberg’s lawyer.

[72] DC Dahan and DC Sandhu shortly determined that they were both investigating Mr. Nowack. They agreed to conduct a joint investigation. They asked the Ontario Securities Commission to become involved and lend financial expertise. The police obtained production orders for Mr. Nowack’s bank accounts. They interviewed complainants. On October 23 2013 they executed a search warrant at Mr. Nowack’s home and arrested Mr. Nowack. He was released on bail. The next day, October 24 2013, the police issued a press release about Mr. Nowack’s arrest and charges. People began to call the police with information about Mr. Nowack. DC Sandhu testified in cross-examination that he contacted several victims after the arrest. It was a normal thing for him to do. He always contacted the victims under those circumstances.

[73] There is no evidence that the police launched an investigation or laid charges in order to put pressure on Mr. Nowack at the behest of either Mr. Weenen or Dr. Greenberg’s family. Mr. Weenen did not even sue Mr. Nowack. It is not clear when the Auciello/Montemarrano Group contacted the police – or whether the police contacted them. DC Sandhu testified that he learned about Mr. Auciello from Mr. Greenglass after Mr. Nowack had been arrested. There is no significant evidence of communication with the other complainants prior to the laying of charges. There is certainly no evidence that the police were aware of any threats by any complainants to go to the police if Mr. Nowack did not pay up. I see no evidence that the police failed to conduct an independent investigation or make an independent decision to lay charges. It should be noted that an independent judicial officer was satisfied that there were reasonable grounds to believe that Mr. Nowack had committed fraud. There has been no challenge to that warrant, on either evidentiary or Charter grounds.

[74] There is simply no evidence that the police laid charges for the purpose of collecting a civil debt. There is no evidence that the police failed to conduct an independent investigation. The defence has failed to meet its burden.

Post-Charge Contact Between the Police and Civil Counsel

[75] DC Sandhu had multiple conversations with Mr. Greenglass about the status of the charges against Mr. Nowack. He obtained legal advice from Crown counsel before doing so. He also obtained legal advice from in-counsel for the Toronto Police Service when dealing with Mr. Greenglass and other lawyers. Mr. Groot became counsel for the Auciello/Montemarrano group at some point. Mr. Groot apparently became counsel for some of the other complainants. Mr. Groot provided DC Sandhu with updates on the civil litigation.

[76] DC Sandhu testified that several lawyers provided him with documents from their clients. He provided updates on court appearances to Neil Wilson, who acted for the Auciello/Montemarrano group. He also provided updates on court appearances to Andrew Munroe, a lawyer for Manuel DaCosta. He may have also provided updates to Mr. Groot.

[77] DC Sandhu testified that he did not discuss the police investigation with Mr. Wilson, Mr. Monroe, Mr. Greenglass, Mr. Groot, or other lawyers or complainants. He and Mr. Groot may have had conversations at the courthouse but it was always about scheduling. He did not provide any of them with information about the criminal investigation itself. DC Dahan testified that she also exchanged emails with Mr. Groot. The emails were at all times initiated by Mr. Groot except for one occasion. Mr. Groot asked for information regarding scheduling. She likely inserted her opinions in some emails.

[78] Indeed, DC Dahan indicated in an email that Mr. Nowack would do anything he could to delay. Mr. Nowack testified that he did things to vindicate his legal rights and not to delay the trial. With respect, I think the evidence is clear that Mr. Nowack did, indeed, do everything he could to delay his trial. Perhaps DC Dahan should not have been more careful in her language, but she was communicating something to the frustrated complainants that was obvious to everyone. Ducharme J., who heard the s. 11(b) argument pointed out that Mr. Nowack did not take “meaningful steps that demonstrate a sustained effort to expedite the proceedings”: R. v. Nowack, 2018 ONSC 826 at para. 28. In any event, DC Dahan’s email is hardly state misconduct that arises to the level of an abuse of process.

Post-Charge Contact Between Crown Counsel and Civil Counsel

[79] The crux of the defence argument is that emails between Crown counsel and civil counsel disclose the core of the improper conduct. The emails demonstrate that there is an evidentiary basis upon which to order a full hearing.

[80] I disagree. The emails also contain a full record. I can evaluate the allegation of improper coordination based on a review of those emails. It is unnecessary to have a full hearing. Moreover, Mr. Nowack proposes calling the lawyers as witnesses. There is no point in doing that. The key questions would generate privileged answers. Ultimately, there is nothing in the emails that gives rise to a reasonable prospect of success on a full application.

[81] Mr. Greenglass contacted the original Crown on the case, Stuart Rothman, in the fall of 2014. That contact was in relation to Mr. Greenglass’s motion to obtain documents seized by the police from Mr. Nowack. As I will deal with later in these reasons, Mr. Rothman took no position. Further correspondence between Mr. Greenglass and Mr. Rothman concerned the progress of the motion, and information from Mr. Rothman about the progress of the criminal cases. Mr. Rothman did not release any seized information or information generated as a result of the police investigation. This correspondence does not disclose anything that could possibly be considered improper.

[82] Ms. Weinberg and Mr. Groot had email contact after she became Crown counsel on the case. I have reviewed the emails in detail. In my view they show an exchange of information between Crown counsel and counsel for the civil complainants. Mr. Groot provided detailed information and documents about the progress of the civil litigation to Mr. Rothman, and later to Ms. Weinberg. Ms. Weinberg and Mr. Rothman, while very receptive to receiving information, were quite careful throughout not to impart any information beyond court scheduling. There was some exchange of case law among counsel, and some general observations about dealing with fraud cases.

[83] At one point, Mr. Groot sent Ms. Weinberg information about his application for an order to obtain documents that the police had seized from Mr. Nowack. Ms. Weinberg replied:

Norm – please don’t include me on any of your civil emails, especially since Nowack himself is being copied. I like keeping the civil and criminal separate. Otherwise it looks like we have ulterior motives.

[84] Ms. Weinberg did ask if Mr. Groot had any information about Mr. Nowack’s health. At that point, Mr. Nowack had indicated that he was seriously ill and was seeking an adjournment of the criminal proceedings. Ms. Weinberg was understandably suspicious that he was using his health as an excuse. In the end, of course, Mr. Nowack was gravely ill and required cancer surgery.

[85] I see no evidence that the information provided by Crown counsel went beyond what is mandated in the Crown Policy Manual. Section D.35 of the Ontario Crown Prosecution Manual includes the following language:

Where necessary, the Prosecutor should be available to discuss the case with the victim…

The Prosecutor must ensure that efforts are made to advise the victim of significant information throughout the proceedings.

[86] Prosecutors are to keep complainants informed about the results of bail hearings; the withdrawal of charges; the progress of charges; resolution discussions; and any appeals.

[87] The responsibility of prosecutors to keep complainants informed at all stages of a prosecution – and in many cases to solicit their views – seems to be universal across Canada and the common law world generally. See, for example: the Public Prosecution Service of Canada Deskbook, s. 56(5); the U.K. Crown Prosecution Service Code for Crown Prosecutors (Victims and Witnesses); the U.S. Department of Justice Manual, Title 9.27; the Australian Commonwealth Director of Public Prosecutions Prosecution Policy of the Commonwealth.

[88] The Canadian Victims Bill of Rights provides a statutory basis for complainants to demand information about a case, be kept abreast of developments, and express views to Crown counsel. The Ontario Victims Bill of Rights contains similar provisions.

[89] Thus, contact between prosecutors and complainants is proper and even mandated. There is no evidence that the Crown in this case went beyond providing information about the progress of the criminal case. Certainly Mr. Groot provided a great deal more information to Crown counsel than Crown counsel provided to Mr. Groot. There is no evidence that the Crown accepted any information improperly obtained by Mr. Groot.

[90] There is no question that Mr. Groot and other counsel conducted civil litigation very aggressively against Mr. Nowack. It also seems reasonable to conclude that Mr. Groot provided information to Crown counsel because he had an interest, on behalf of his clients, in seeing the criminal case succeed. I make no comment on the propriety of Mr. Groot’s tactics. The key point is that whatever Mr. Groot or other lawyers were doing in the civil litigation, the authorities played no role in it.

[91] I have one further point about the emails between Crown counsel and counsel for the complainants. At times they showed a degree of familiarity that could be mistaken for close cooperation. A careful reading shows that there was no cooperation or coordination. Crown counsel, of course, occupies a public office and must at all times approach cases in a fair and even-handed manner – and must be seen to do so. It is right and proper that all counsel, including Crown counsel, have collegial relations with other members of the bar. Counsel must take care not to cross the line from collegial relations to improper coordination. I am satisfied that did not happen. I am satisfied that no ethical or legal lines were crossed, or even approached.

Conclusion: There Is No Evidence Of Coordination

[92] As a practical matter the defence argument about coordination is mis-conceived. The civil litigation was never about proving the facts of the fraud. All of the complainants obtained judgments against Mr. Nowack – and all of them, with the exception of the Greenberg judgment (which Mr. Nowack consented to) were default judgments. “Coordination”, whatever that meant, would not have advanced the civil cases against Mr. Nowack. The civil litigation was therefore only about two things: the complainants wanted to know what happened to their money; and they wanted it back. If she were so inclined, Crown counsel could have helped with the first thing; she could have done nothing about the second.

[93] Crown counsel was not, however, so inclined. Ms. Weinberg knew what happened to the complainant’s money: her position throughout has been that Mr. Nowack lost or spent all of it. The forensic accounting report prepared by Ms. Toledano made that crystal clear. Mr. Nowack obviously knew what he had done with the complainant’s money. He also knew what the Crown knew – he had the forensic accounting report (although it appears that he didn’t read it until just before the criminal trial: R. v. Nowack, 2019 ONSC 5345 at para. 85).

[94] It is a very serious matter for a judge to review an investigation. The police, the Crown, the defence, and the judiciary are all independent from each other. The duties of each are often in tension. That independence and the tension it generates is a cornerstone of the criminal justice system in our democracy. In order to take this very serious step and proceed to a full hearing there must be an evidentiary foundation. Ultimately, I can find none.

[95] The only thing Ms. Weinberg could really have done to assist the complainants would have been to provide the forensic accounting report to them. That is the only thing that would have been of real, tangible value to the complainants. There is no evidence whatsoever that she, or anyone else associated with the Crown, the police, or the Ontario Securities Commission did so improperly – as I relate next.

(b) Did Crown counsel facilitate the disclosure of the Crown brief to civil counsel?

[96] Dunphy J. ordered the release of the Crown brief to the plaintiffs in the Auciello/Montemarrano litigation. Morgan J. did the same thing in the Greenberg litigation. The defence argues that Crown counsel inappropriately authorized the release of the Crown brief to the civil plaintiffs. That is because the judges involved had no authority to release the Crown brief without Crown counsel’s consent. Since Ms. Weinberg consented, the defence argues, she facilitated this abuse of process.

[97] This argument is wholly without merit. It assumes that a judge cannot make an order unless counsel agrees. That is obviously not the case. The argument also mis-conceives the Wagg process: P.(D.) v. Wagg, 2004 39048 (ON CA), 2004 CarswellOnt 1983, [2004] O.J. No. 2053, 184 C.C.C. (3d) 321, 71 O.R. (3d) 229 (C.A.). That case outlined a screening mechanism for providing the Crown brief to civil litigants. As Rosenberg J.A. pointed out, the Crown brief is not the property of the Crown. It is the property of the public to be used to ensure that justice is done: Wagg at para. 53 quoting Fullowka v. Royal Oak Mines Inc., 1998 CarswellNWT 18, [1998] N.W.T.J. No. 45 at para. 15. See also: R. v. McNeil, 2009 SCC 3 at para. 46.

[98] At para. 17 of Wagg Rosenberg J.A. adopted the screening mechanism set out by the Divisional Court:

• the party in possession or control of the Crown brief must disclose its existence in the party's affidavit of documents and describe in general terms the nature of its contents;

• the party should object to produce the documents in the Crown brief until the appropriate state authorities have been notified, namely the Attorney General and the relevant police service, and either those agencies and the parties have consented to production, or on notice to the Attorney General and the police service and the parties, the Superior Court of Justice has determined whether any or all of the contents should be produced;

• the judge hearing the motion for production will consider whether some of the documents are subject to privilege or public interest immunity and generally whether "there is a prevailing social value and public interest in non-disclosure in the particular case that overrides the public interest in promoting the administration of justice through full access of litigants to relevant information"

[99] Wagg applications are heard pursuant to Rule 30.02 (and other rules) of the Rules of Civil Procedure, not the Criminal Code or the Criminal Proceedings Rules. The practice in this province is that the prosecuting Crown does not represent the Attorney General at a Wagg hearing. The Attorney General appears through civil counsel who is unconnected to the criminal case. That happened in this case.

[100] The screening process contemplates that Crown counsel would routinely disclose material. As Rosenberg J.A. stated in Wagg at para. 17:

I would expect that the parties and the state agents could usually agree to disclosure of the materials in many circumstances. Where the party in possession of the Crown brief has access to the materials, fairness will generally dictate that they be produced to the other side. This was the view of the Divisional Court in Lang v. Crowe, [2000] O.J. No. 653 (Div. Ct.) at para. 11:

This Court accepts that there are serious policy and public interest issues which must be considered where counsel in subsequent civil proceedings seek production of Crown briefs prepared in related criminal proceedings. In this case, however, where one party has had and continues to enjoy access to certain documents which it has intimated it intends to use in its defence of the civil proceedings brought against it, documents still in the possession of its counsel of record, we are of the view that in these peculiar and particular circumstances, the overriding consideration should be fairness to all the parties. It seems to us to be inherently unfair for Goodyear [a defendant], to have the Crown Brief while it is denied to the other parties.

[101] Even if Crown counsel did “consent” to the disclosure of the Crown brief, it is difficult to see how that was an abuse of process. That is exactly what Rosenberg J.A. contemplated in Wagg.

[102] In any event, there is no evidence that Crown counsel did facilitate the release of the Crown brief in any improper way.

[103] As I noted earlier in these reasons, Mr. Greenglass wrote to Mr. Rothman in 2014. Mr. Greenglass’s purpose was to inform the Crown regarding a motion to obtain financial disclosure from Mr. Nowack. Mr. Greenglass referenced the Wagg case. On October 7, 2014 Mr. Rothman wrote to Mr. Greenglass. He indicated that if the Wagg case applied to the documents seized by the police from Mr. Nowack, then the Crown took no position as to whether they ought to be released to Mr. Greenglass.

[104] On March 20 2015 Morgan J. found Mr. Nowack in contempt of court for failing to provide any disclosure to Dr. Greenberg, despite four court orders. Mr. Nowack again relied on the notion that he could not disclose anything obtained by way of criminal disclosure. It is not clear whether the Crown was even represented on the motion. Morgan J. said this in his handwritten endorsement:

Mr. Nowack has now failed to act pursuant to the terms of 4 consecutive court orders. He has not assisted by the process by coming to court on consecutive occasions and re-arguing his position based on the Wagg case. That case has already been considered and rejected by the previous judges in this matter as inapplicable to documents that the police and Crown seized from the defendant – it is only applicable to documents that the Defendant could not have but for the disclosure by the Crown in the criminal case.

[105] Mr. Groot, on behalf of the Auciello/Montemarrano group, also took steps to obtain the Crown materials. Dunphy J. first ordered Mr. Nowack to provide a list of all documents he had received by way of Crown disclosure: 2363523 Ontario Inc. v. Nowack, 2016 ONSC 2518 at para. 126. In October 2016 Dunphy J. ordered Mr. Nowack to provide the Crown brief to the court, under seal, so that the plaintiffs could obtain a copy: 2363523 Ontario Inc. v. Nowack, 2017 ONSC 5240 at para. 16.

[106] Eric Wagner, civil counsel for the Attorney General, represented the Crown. Mr. Nowack testified that outside of court he had a conversation with Mr. Wagner, who was civil counsel for the Attorney General. According to Mr. Nowack, Mr. Wagner had to “check” with Ms. Weinberg before the brief could be released. She had to consent.

[107] Leaving aside the hearsay nature of this conversation, even if true (which I seriously doubt) it obviously did not mean that Ms. Weinberg facilitated the release of the Crown brief. It meant that Mr. Wagner was obligated, under the Wagg process, to consult with the prosecuting Crown counsel in order to determine whether any public interest, privilege, or privacy interest prevented disclosure of any part of the Crown brief: Wagg at para. 17, which I have already referred to.

[108] Mr. Slansky also points to an email from Dr. Rynties to DC Dahan dated January 16, 2018:

Valerie,

I have been dealing with the Canadian Court system and with Nowack for 4 years. The pathetic games and delays perpetrated by him and allowed by the courts has been beyond mind boggling. My availability times will be shared when I see the Canadian Court system really wants to deal effectively with this horrible psychopath who has hurt so many and destroyed so many dreams. Watch the video of the late Dr. Greenberg crying because Nowack stole $3.5 million from him and his wife Pepe is probably near destitute. So sad! Norman Groot told me Nowack is the worst psychopath and most obstinate defendant he has dealt with in his career. Let us see if the Canadian Criminal Courts allows his games and wants to protect the many victims and not the criminal who has absolutely no conscience or remorse. I will help you any way and thank you for all you are doing and have done.

Mark A. Rynties M.D.

[109] Mr. Slansky argues that I should draw the inference that Dr. Rynties saw the video. He says I should also draw the inference that Mr. Groot improperly obtained the video from Crown counsel and shared it with Dr. Rynties. He argues that this email is evidence of improper coordination between the Crown and the civil litigants.

[110] I cannot agree. It is a reasonable (although not irresistible) inference that Dr. Rynties saw the video. It is also reasonable to infer that Mr. Groot showed the video to Dr. Rynties – if Dr. Rynties saw it. It is not reasonable to infer that DC Dahan showed the video to Dr. Rynties. During his lengthy cross-examination of Dr. Rynties, Mr. Nowack did not ask him about it. He also did not ask DC Dahan.

[111] Even if Dr. Rynties saw the video, I cannot draw the inference that the Crown provided it improperly to Mr. Groot. I am aware that Mr. Groot obtained the criminal disclosure. It is unclear if he obtained the video witness statements or only the forensic accounting report.

[112] Even if Mr. Groot had shown the video to Dr. Rynties, the only impact could have been on Dr. Rynties’ credibility. Mr. Nowack could have used the email to cross-examine Dr. Rynties to suggest that he was tainted. Whether he had not found the email until later (as he claimed) he did not use it.

[113] More importantly, there is no evidence that the Crown or the police had anything to do with showing Dr. Rynties the video. Indeed, the email suggests otherwise. I cannot find that state authorities were implicated in any misconduct by civil counsel. I see no reason to hold a full hearing on this issue.

(c) Did Crown counsel co-author an Article With Mr. Groot?

[114] Mr. Slansky suggested that Ms. Weinberg may well have co-authored an article with Mr. Groot. The article is entitled “Coordinating Criminal and Civil Justice as a Means of Recovery for Fraud Victims”. The article was posted on the website of the Association of Certified Forensic Investigators of Canada. It was posted with Ms. Weinberg’s name as co-author. The article was later removed and re-posted without Ms. Weinberg’s name. Ms. Weinberg had apparently been a presenter at a conference of the Association when Mr. Groot had presented his article. Ms. Weinberg has stated on the record that she did not co-author the article and that she did not even know it had been posted with her name.

[115] Mr. Nowack brought a pre-trial motion to have Ms. Weinberg removed as Crown counsel. One of the grounds was that she had allegedly co-written this article with Mr. Groot. I found that her name on the article was a mistake: R. v. Nowack, 2019 ONSC 2922 at paras. 13-15.

[116] Mr. Slansky brought up the issue again based on testimony by Mr. Nowack on the disclosure application. Mr. Nowack testified that he took it upon himself to do an undercover investigation. He called the Association of Certified Forensic Investigators. He spoke to a secretary there. He told the secretary that he was writing a paper on revisions to publications. He had noticed that they revised the authorship of the article on coordinating criminal and civil justice. He had noticed that Ms. Weinberg’s name had been removed as a co-author. The secretary told him that there were legal issues. She did not know the nature of the issues. She had heard some talk around the office. She stated that the association would not have published it originally with Ms. Weinberg’s name unless she were the author. Mr. Nowack asked the secretary her name. He says she got nervous and hung up the phone.

[117] There are many things that are wrong with this evidence. It is obviously hearsay. Indeed, it is double hearsay. It is self-serving. It is provided by a man who has been described – generously – as an inaccurate historian. It contradicts the materials that Mr. Nowack himself put before the court on the application to remove Ms. Weinberg. It is not evidence that Ms. Weinberg co-wrote the article.

[118] Code J. recently dealt with this very issue in Walton. In that case, the same allegation had been made about Ms. Weinberg’s alleged authorship of the article. Ms. Weinberg had been involved with providing advice and assistance to the police at the pre-charge stage in that case. She then dealt with bail and initial disclosure. A new Crown counsel was brought in to prosecute the case. It is considered good practice, and very common, for the pre-charge Crown and the trial Crown to be two different people – to ensure that “fresh eyes” are used to evaluate the reasonable prospect of a conviction. That is why Ms. Weinberg was removed in that case. In this case, Mr. Rothman was the original Crown and Ms. Weinberg replaced him.

[119] Justice Code assumed, without deciding, that Ms. Weinberg had written the article. I reproduce his lengthy and comprehensive analysis (paras. 73-74):

[120] Assuming for purposes of the present Cody and Kutynec Motion, that Weinberg and Groot co-authored the article and presented it at an ACFI meeting in May 2015 in Toronto, I agree that the article contains some improper language which the authors likely regret. They were trying to describe the practical “reality” in fraud cases, that making restitution can be an important mitigating consideration at the time of sentencing. See, e.g.: R. v. Castro (2010), 2010 ONCA 718, 261 C.C.C. (3d) 304 (Ont. C.A.); R. v. Bogart (2002), 2002 41073 (ON CA), 167 C.C.C. (3d) 390 at para. 39 (Ont. C.A.); R. v. Wilson (2003), 2003 48181 (ON CA), 174 C.C.C. (3d) 255 at para. 8 (Ont. C.A.). The authors unfortunately used the phrase “trading liberty for money” when describing this “reality”, and they also used a completely inappropriate heading, “Criminal Charges as Leverage for Restitution”. The entire context for this improperly worded part of the article was as follows:

Criminal Charges as Leverage for Restitution

Although fraud victims are not permitted to threaten criminal charges as a means to recover their money due to concerns that they themselves are in breach of the criminal extortion provisions, another reality of our criminal justice system is that Crown attorneys in fraud cases will often trade prison sentences in exchange for conditional sentences (house arrest) if the fraudster makes a full payment of the loss, or reduce the prison otherwise sought in exchange for partial payment of the loss. Thus while threats of criminal charges for recover of money is prohibited by fraud victims, trading liberty for money by Crown attorneys is lawful – and a mechanism that fraud victims should consider when coordinating their civil prosecutions with their criminal complaints.

[121] The legitimate point that the authors were trying to make, about the importance of restitution at the sentencing stage of fraud cases, could and should have been made in a much more professional and much less offensive way. However, the fact that lawyers sometimes write things in articles or say things at conferences, that are unprofessional and offensive, does not begin to rise to the level of an abuse of process. Assuming for purposes of this Motion, that Weinberg and not Groot was responsible for the offending language chosen in the above paragraph, her removal from the prosecution over two years ago in late 2016 is a complete remedy for what is at most an isolated failure of judgement and professionalism. See R. v. Babos, supra at paras. 58-72, where the Court addressed highly improper threats made to the accused “more than a year before trial by a Crown no longer on the case.” The majority held that “the Crown’s threatening conduct, while reprehensible, did not approximate the type of shocking conduct needed to justify a stay”.

[122] I agree entirely with Justice Code’s analysis. Even if Ms. Weinberg had written the article (and I emphasize that I accept her word, as an officer of the court, that she did not) it would hardly justify a stay of proceedings in this case. There is no evidence she made the kind of threat set out in the article. There is no basis to find that Ms. Weinberg had used this article as a playbook or a guide in the prosecution of Mr. Nowack.

DISPOSITION

[123] As I noted on August 2, 2019, the application was dismissed.

R.F. Goldstein J.

Released: September 25, 2019