Court File and Parties

COURT FILE NO.: CR-16-00000-625 DATE: 20200207 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN: HER MAJESTY THE QUEEN – and – DAVID HOLDEN

Counsel: David Friesen and Matthew Asma, for the Crown David Burke, for the Accused

HEARD: March 4 – 27 and June 18, 2019

REASONS FOR SENTENCE

M. Dambrot J.

1David Holden was tried by me, without a jury, on two counts in an indictment alleging that from the beginning of 2005 to the end of 2012, he committed the offences of fraud and money laundering. In count one, the Crown alleged that Mr. Holden defrauded investors in Seaquest Corporation (“SC”) and Seaquest Capital Corporation (“SCC”) of monies having a value exceeding $5,000. In count two, the Crown alleges that Mr. Holden dealt with monies invested in SC and SCC with the intent to conceal or convert those monies knowing that all or part of them was derived from the commission of the offence of fraud.

2I found Mr. Holden guilty of both offences. I specifically found that the amount of his fraud in count 1 was $54,159,737. I am now called upon to impose sentence.

THE OFFENCES

3I gave extensive reasons for judgment in this case and made detailed findings of fact (see R. v. Holden, 2019 ONSC 5220). I see no need to repeat those reasons, or to again summarize my findings of fact. I will describe the nature of the offences committed by Mr. Holden briefly.

Count 1: Fraud

4Mr. Holden was the owner of SC and SCC, which were often referred to collectively throughout this trial as the Seaquest companies, or simply Seaquest. Through these companies, Mr. Holden committed an overarching fraudulent investment scheme of the kind generally referred to as a Ponzi scheme, a scheme in which money contributed by later investors generated artificially high rates of return for the original investors, whose example attracted additional, often larger investments. Money from the new investors, rather than being used to make the promised investment on their behalf, was instead misappropriated, and used directly to repay or pay interest to old investors, usually without any revenue-producing activity other than the continual raising of new funds.

5More specifically, Mr. Holden personally solicited funds from investors in SC and SCC by: (1) making false, deceitful and fraudulent representations to them about the nature of their investments, what would be done with their funds, and about the security for their investments; and (2) directing that money contributed by later investors be used, in whole or in part, not for the intended purpose, but instead to repay principal or pay interest to earlier investors at artificially high rates of return and to cover the operating costs of SC and SCC, all with minimal revenue-producing activity other than the continual raising of new funds.

6Mr. Holden was the architect and directing force of the scheme. He was in control of the Seaquest companies and their activities, including: controlling the bank accounts of SC and SCC, dealing with virtually all the investors and directing how investor funds were used. He engineered numerous transactions with investors in which he solicited their funds with false promises of exceptionally high rates of interest on the basis of intentional misrepresentations about the nature of each investment, what would be done with the funds, and about the security for each investment. The soliciting of new investments, and efforts to have large investors roll over their existing investments rather than cashing out, was constant, and necessarily so, because SC and SCC had minimal revenue, and did not otherwise have the ability to repay the principal at the maturity of at least the larger investments. Funds received from investors were used to repay principal and interest to earlier investors, and to pay the operating costs of SC and SCC.

7When one large investor, Brian Tucker, demanded the return of his investments, Mr. Holden attempted to make up the shortfall by obtaining funds from one of his own associates as well as by soliciting new investments. Ultimately, his inability to satisfy Mr. Tucker’s demands brought the scheme to an end.

8The individual transactions with investors, as well as the overall investment scheme, were fraudulent, and Mr. Holden intended to defraud the investors. The Crown established beyond a reasonable doubt that: Mr. Holden deprived a great many of his investors of something of value; he caused the deprivation by deceit, falsehood and other fraudulent means; he intended to defraud his investors who were deprived of something of value; and the value of the property in question exceeded $5,000.

9I concluded that the most appropriate measure of the amount of the overall fraud in this case is the total amount owed by SC and SCC to investors at the time of bankruptcy. On the day before bankruptcy was declared, all of the investor funds in SC and SCC were clearly at risk as a result of the Ponzi scheme. The investor funds outstanding at bankruptcy totalled $54,159,737 ($40,766,924 from SC and $13,392,813 from SCC).

10In addition, the minimum amount of Mr. Holden’s personal benefit from the Ponzi scheme is $4,888,374 during the period from 2006-2011. This amount includes payments that benefitted Mr. Holden and his wife, including net payments to their bank accounts, mortgage payments on two Ontario properties in which they lived during the relevant time period, payments to Mr. Holden’s wife and ex-wife, and payments on an Aston Martin automobile. It does not include any cash withdrawals from the SC or SCC bank accounts, payments relating to the Hawker aircraft or payments relating to the Bahamian condo or yacht. It is a conservative figure. While these amounts do not come directly from any particular sub-fraud, they were available to Mr. Holden directly and exclusively on account of the overarching Ponzi scheme. The fact that Mr. Holden was enriched to this extent makes it clear that this was not a desperate scheme to defraud investors to save a failing company. It was a fraud perpetrated for purposes of personal gain.

Count 2: Money Laundering

11In this count, the Crown established beyond a reasonable doubt that Mr. Holden dealt with the monies invested in SC and SCC that were the subject matter of count 1 with the intent to conceal or convert those monies knowing that all or part of them was derived from the commission of the offence of fraud. He laundered those fraudulently obtained funds by depositing them into bank accounts, co-mingling them with other funds, and making use of them for purposes other than those stipulated by him when he solicited them from investors, all with the intention of converting them. He intended, from the outset, to convert those fraudulently obtained funds for purposes other than the purposes for which the funds were solicited, specifically to pay other investors, to pay corporate expenses, and to enrich himself.

THE IMPACT OF THE OFFENCES COMMITTED BY THE OFFENDER

12There are 65 victims of this fraud. Most of them are individuals or their closely-held companies. They are largely not sophisticated investors, and they are not large institutions. It is fair to say that this is not a case where the offender set out to defraud highly vulnerable people such as the elderly or the emotionally vulnerable. Some of Mr. Holden’s victims were quite wealthy; but many of them were not. Some of them were defrauded of all of their assets, or their life savings. Some were of an age where they cannot recoup those losses. And all of the victims are people who were vulnerable to the slick salesmanship and calculated predation of Mr. Holden. The Crown has obtained and filed a number of victim impact statements. I will not discuss them in any detail. But as the Crown rightly submits, several common themes emerge from those victim impact statements:

a. Feelings of betrayal and violation of trust by Mr. Holden b. Shame, anger and grief at being victimized by Mr. Holden c. Physical and mental health effects related to stress, shame, and financial insecurity d. Serious and lasting financial consequences.

13As one victim explained:

I suffered a financial loss of $112,000. I am 56 years old, and consequently, this poor decision on my part will force me to postpone my retirement by 10 years. My mother and father lost $400,000 – most of their retirement savings. My father died in 2013 and my mother now lives with me. This financial loss has put stress on my marriage and family relationships.

14Of particular note, Mr. Holden did more than simply violate the trust placed in him by investors who gave him their money. He also violated the trust placed in him by people he cultivated as friends. The daughter of one investor put it this way:

We lost this money to a person who infiltrated our family, became a part of our inner circle, lied to our faces, manipulated us and intentionally spent through every cent we ever gave him to invest. I am standing here in solidarity to represent a group of people including, but not limited to: my grandparents, uncles, aunts, great aunts and uncles, my second cousins, and extended family. All people who loved and accepted David Holden and his children into our family, only to be manipulated, mocked, and taken completely advantage of.

15In general, the overall effect of this fraud on the victims can be characterized as catastrophic and devastating.

THE OFFENDER

16Mr. Holden is 57 years of age. After completing high school, he enrolled in an apprenticeship program and operated his own business as an electrician. After completing a semester of a business management program he moved to London and worked as an insurance agent. By the early 2000s, he began operating a financial business. He has worked in that industry ever since.

17Mr. Holden told the probation officer who prepared his pre-sentence report that he is currently working as a consultant for various companies, helping them restructure during financial difficulties. He is not involved in sales or marketing of any investment products. His personal debt exceeds $3.5 million, and his marriage is now destroyed.

18Mr. Holden also expressed “remorse” to the probation officer for what happened in this case because, he said, most of the people affected were family members and friends. It is plain that that is not truly remorse, but simply regret, since Mr. Holden went on to say that if he started a new business he would put less trust in others and be more involved in daily operations. This, of course, is simply a reiteration of his defence – that others were at fault for the failure of his business, and it did not result from his own fraudulent conduct.

19A long-time friend of Mr. Holden described him to the author of his pre-sentence report as a generous, kind, and thoughtful person and a good father, and believes that this offence is out of character. Sadly, I do not share her view because of the nature of this offence and its long duration, and because of Mr. Holden’s record of criminal and regulatory offences.

20A Chartered Accountant who has known Mr. Holden for 15 years said in a letter filed with the court that “David has at all time in my dealings with him been honest and forthright.” He went on to say that “David, in my opinion is an astute businessman, well versed and cognizant of corporate matters.” I accept the latter statement. The evidence leads me to discount entirely the former.

21Counsel for Mr. Holden filed a number of other character letters attesting to his honesty and other positive qualities. I can only say that I view them with a jaundiced eye. At the very least, they attest to the fact that Mr. Holden remains able to deceive others and conceal his dishonesty.

22In 1995, Mr. Holden pleaded guilty to 46 offences under the Securities Act. He was sentenced to imprisonment for 90 days to be served intermittently and two years of probation. Forty-four of the convictions were for trading in promissory notes issued in his name without registration and without a prospectus, and the remaining two convictions were for the sale of debentures issued by Holden Acceptance Inc. without registration and without a prospectus. As the president and directing mind of Holden Acceptance Inc., Mr. Holden had conceived of a scheme involving sales of promissory notes and debentures to investors. The 13 investors who were the victims of the 46 offences lost a total of $821,954.46. Mr. Holden was prohibited from trading in securities, being a director or officer of a public company or being involved in any business accepting investments or funds from the public while subject to the probation order.

23In 2000, Mr. Holden pleaded guilty to three counts of fraud over $5,000 and was sentenced to imprisonment for six years. Mr. Holden had misused investor funds for purposes other than those promised to investors, including to cover operating expenses, and failed to provide the promised security for investors’ funds. Close to 350 investors were defrauded, many of whom had invested their retirement savings. The total amount of the three frauds was approximately $4.3 million. The six-year sentence imposed on the offender was upheld by the Court of Appeal. The offence was described by Doherty J.A. as “a massive complex fraud perpetuated on hundreds of victims as a result of the appellant’s dishonesty and blatant breach of the trust the victims place in him.”

24Mr. Holden was released on parole in 2002 after serving one third of his sentence. He was recommitted 19 months later for violating his parole. Unfortunately, the retention period for the Parole Board records that would shed light on the nature of the parole violation has lapsed, and the records no longer exist. However, Mr. Holden asserts that his parole was revoked on account of a driving offence. Crown counsel made diligent efforts to ascertain if this was true, and very fairly advised me that it appears that it is.

25I have not been told when Mr. Holden was ultimately re-released on parole in relation to his six-year sentence, but he was still on parole when he created Seaquest Corporation, which became the primary vehicle for the commission of this fraud. However, Crown counsel candidly concedes that the Crown cannot establish that Mr. Holden was still on parole when the fraud began.

26The offence in this case might be characterized in precisely the same language as was used by Doherty J.A. in describing Mr. Holden’s earlier offence of fraud. And as in this case, Mr. Holden took no responsibility for his actions in 2000. After pleading guilty, Mr. Holden was quoted telling a Hamilton Spectator reporter the following:

There was no malice. I was the controlling mind [of his companies], but I should have kept things tighter… We expanded too fast. But when things take off, you go with it. Our accounting fell behind and we lost track of the scoreboard. …

27Mr. Holden’s defence in this case, and, more importantly, his comments to the probation officer as well as his comments to the court when asked if he wished to say anything before I imposed sentence, echo his remarks in 2000. Nothing has changed. He takes no responsibility for his actions. He blames his inadequate supervision of his business and his placing his trust in employees for the losses suffered by those he defrauded. But it is Mr. Holden who breached the trust placed in him by his investors. He used monies entrusted to him by investors for specified unauthorized purposes, particularly operating expenses, funding the ongoing Ponzi scheme and self-enrichment. In a word, Mr. Holden is incorrigible. He is polite, personable and cordial, characteristics that are not generally found in recidivist criminals. But they are the stock in trade of the fraudsman. They do not enhance his standing in the determination of an appropriate sentence for him.

THE POSITIONS OF THE PARTIES

28Crown counsel submits that I should impose the maximum sentence of imprisonment for 14 years for the fraud offence, having regard to its large-scale, sophisticated nature and its duration, that it involved a breach of trust and was motivated by a desire for personal gain, and having regard to Mr. Holden’s history of fraud-related offences. The Crown seeks a 10-year sentence for the money laundering offence.

29The Crown also asks that I impose a restitution order in accordance with a draft order and a fine instead of forfeiture in the amount of $54,159,737.

30Counsel for Mr. Holden argues that I should impose a concurrent sentence of imprisonment for eight years on each count. While recognizing that the offences must attract sentences of imprisonment of a significant length, counsel says that a sentence approaching the maximum is too long given the range of sentence usually imposed for large-scale frauds.

31Counsel for Mr. Holden makes no argument with respect to restitution. With respect to the imposition of a fine instead of forfeiture, counsel for Mr. Holden argues that there is property that can be forfeited that would reduce the amount of the fine.

Analysis

Imprisonment

32In determining the appropriate sentence to be imposed in this case, I bear in mind that the fundamental purpose of sentencing, as set out in s. 718 of the Criminal Code, is to protect society, to contribute to respect for the law and to promote a just, peaceful and safe society by imposing just sanctions. The imposition of just sanctions requires me to consider the sentencing objectives referred to in that section, which include denunciation, deterrence, separation from society where necessary, rehabilitation, provision of reparations for the harm done to victims or the community, and promotion of responsibility in the offender and acknowledgement of the harm done to the victims and society.

33Denunciation and general deterrence are the paramount purposes of sentence for large-scale frauds. Mitigating factors and rehabilitation are secondary. That is particularly the case here. In this case, I must emphasize denunciation, general deterrence and separation. Given his history and his age, there is little hope that whatever sentence I impose will deter the offender, meaningfully contribute to his rehabilitation, or provide or awaken in him a sense of responsibility or an acknowledgement of the harm he has done. I give those purposes of sentence very little effect here.

34I must also take into consideration the sentencing principles found in s. 718.1 and s. 718.2 of the Criminal Code.

35Section 718.1 of the Criminal Code requires that the sentence be proportionate to the gravity of the offence and the degree of responsibility of the offender. As I have made clear, this offence is a particularly egregious example of fraud. It was a sophisticated, large-scale fraud of long duration with many victims. The offender was the architect of the scheme and directed its execution. The harm done to the victims was catastrophic and devastating. It had physical and mental health effects related to stress, shame, and serious and lasting financial consequences for some of the victims.

36Section 718.2(a) requires me to take into consideration aggravating and mitigating circumstances. Some of those circumstances are enumerated in the section. Amongst the enumerated aggravating circumstances are: abusing a position of trust (s. 718.2(a)(iii)) and having a significant impact on the victim, considering their age and other personal circumstances, including their health and financial situation (s. 718.2(a)(iii.1)).

37The list of aggravating circumstances in s. 718.2(a) of the Code that apply generally to criminal offences is augmented by an additional list of aggravating circumstances for fraud offences in ss. 380.1(1) and (1.1) of the Code. Many of these apply here, specifically: that the magnitude, complexity, duration or degree of planning of the fraud committed was significant (s. 380.1(a)), that the offence involved a large number of victims (s. 380.1(c)), that the offence had a significant impact on the victims given their personal circumstances including their age, health and financial situation (s. 380.1(c.1)) (I note that this replicates s. 718.2(a)(iii.1)), and that the value of the fraud committed exceeded one million dollars (s. 380.1(1.1)).

38In addition, the other non-enumerated circumstances also aggravate this offence, including the age and antecedents of the offender, his record of prior offences also involving dishonest dealing with the money of others, albeit on a smaller scale, the fact that the offender was still on parole when he created Seaquest Corporation, the primary vehicle for this scheme, the fact that the scheme was orchestrated for personal gain, and the fact that he benefitted almost five million dollars from it.

39With respect to mitigating circumstances, I see none. I note that s. 380.1(2) provides that a court sentencing a person for fraud shall not consider as mitigating circumstances the offender’s employment, employment skills or status or reputation in the community if those circumstances were relevant to, contributed to, or were used in the commission of the offence. Some of these considerations apply to the offender and must not be taken into account. In addition, as I have already noted, the offender has not displayed any remorse for his wrongdoing. Counsel for the offender submits that Mr. Holden has an excellent pre-sentence report, was co-operative with the author of that report and has ties and support in the community. However, I see nothing in the report that could be characterized as excellent, or even particularly positive. Further, Mr. Holden’s co-operativeness with its author, and his ties and support in the community, are not mitigating.

40This brings me to consideration of the appropriate range of sentence. First, with respect to the offence of fraud, I note that s. 380(1)(a) provides that a person found guilty of this offence is liable to a term of imprisonment not exceeding fourteen years where the value of the subject-matter of the offence exceeds five thousand dollars. In addition, I note that s. 380(1.1) provides that where, as in this case, the value of the subject-matter of the offence exceeds one million dollars, there is a minimum punishment of imprisonment for two years. However, that provision was enacted after the commission of Mr. Holden’s offence, and has no application here. With respect to the offence of money laundering, the maximum sentence is 10 years’ imprisonment (s. 462.31(2) of the Code). I will focus on the offence of fraud, since it is the principal offence.

41In R. v. Dobis (2002), 58 O.R. (3d) 536 (C.A.) and R. v. Bogart (2002), 61 O.R. (3d) 75 (C.A.), the Court of Appeal for Ontario said that ordinarily, large-scale frauds merit a sentence of three to five years’ imprisonment. I make three observations about that range. First, the range was identified prior to 2004, when the maximum sentence for fraud was increased from ten years to fourteen years. Second, the size of the frauds in those two cases pale in comparison to the fraud in this case. And third, in a number of fraud or fraud-like cases before Dobis and Bogart (for example, R. v. Scherer (1984), 16 C.C.C. (3d) 30 (Ont. C.A.) (seven years); R. v. Gaudet (1998), 40 O.R. (3d) 1, 125 C.C.C. (3d) (eight years); R. v. Holden, [2000] O.J. No. 3481 (C.A.) (six years); R. v. Villanueva, [1999] O.J. No. 4939 (C.A.) (six years); and R. v. Montemurro, [1984] O.J. No. 631(C.A.) (six years)), and in a number of subsequent cases (for example, R. v. Bjellebo, [2003] O.J. No. 3946 (C.A.) (seven years and ten years); R. v. Waxman, 2014 ONCA 256 (eight years); and R. v. Kaziuk, 2013 ONCA 217 (eight years)) sentences greater than five years have been approved by the Ontario Court of Appeal. Indeed, in some of those cases, a range of three to eight years has been identified (see R. v. Drabinsky, 2011 ONCA 582, 107 O.R. (3d) 595 and R. v. Erez, 2019 ONCA 204).

42In any event, what is most important is that sentence ranges are guidelines intended to assist judges in achieving rough parity for comparable offences and offenders. They are not straight jackets or limits. An appropriate sentence may well fall outside the range (see R. v. Lacasse, 2015 SCC 64, [2015] 3 S.C.R. 1089). Counsel for the offender in this case concedes that the appropriate sentence here falls outside the three to five-year range. In my view, it also falls outside the three to eight-year range. A sentence at or approaching the maximum is justified.

43Maximum sentences should be imposed rarely, and only if the offence is sufficiently grave and the offender sufficiently blameworthy. A maximum sentence is available if it achieves proportionality in view of the individual offence and the individual offender (see R. v. Cheddesingh, 2004 SCC 16, [2004] 1 S.C.R. 433 and R. v. L.M., 2008 SCC 31, [2008] 2 S.C.R. 163). There is precedent in Ontario for imposing a maximum 14-year sentence for fraud. In R. v. Reeve, 2018 ONSC 3744, the offender was found guilty of a predatory Ponzi-type investment scheme fraud in which he defrauded 41 victims over 2 ½ years, causing them to lose about $10 million. He stood in a position of trust toward all 41 victims. The impacts on victims were severe and lasting. The offender had no prior criminal record. He was convicted after trial. He showed no remorse.

44Crown counsel argues that Mr. Holden’s offence is materially worse than Mr. Reeve’s. It lasted longer. There were more victims. The value of the fraud was higher. And Mr. Holden has a significant prior record of related offending.

45There is much to be said for the Crown’s position. However, in my judgment a 12-year sentence of imprisonment sufficiently achieves the pertinent objectives of sentencing, and I impose that sentence. I impose an eight-year sentence of imprisonment for the money laundering offence. Having regard to the principle of totality, that sentence will be served concurrently. I deduct from the sentence a period of ten days in recognition of the seven days Mr. Holden spent in custody after his arrest.

Restitution

46Crown counsel also asked that I impose a restitution order in respect of the convictions for fraud and laundering proceeds of crime in certain amounts pursuant to s. 738(1)(a) of the Criminal Code to nine individuals who have indicated in an approved manner that they are seeking forfeiture pursuant to s. 737.1(4) of the Code.

47A restitution order should not be made as a mechanical afterthought to a sentence of imprisonment. It should be made with restraint and caution. Care must be taken not to simply add a restitution order to a sentence of imprisonment which, in itself, is a fit punishment for the crime, as this can amount to excessive punishment and offend the totality principle (R. v. Castro, 2010 ONCA 718, 102 O.R. (3d) 609, at para. 23). In cases involving a breach of trust, the paramount consideration is the claim of the victims. Ability to pay is not the predominant factor. A restitution order may be made even where there does not appear to be any likelihood of repayment (Castro, at para. 28). In this case, the offender has offered no evidence about his ability to pay the amounts in question.

48Before making a restitution order, the objectives and factors listed in Castro at para. 24 must be considered. I have done so. Of note, in this case:

• the amounts of the losses are readily ascertainable
• no legal or factual impediments have been advanced
• some of the money was used to maintain the Ponzi scheme and cannot be recovered
• some of the money was used to enrich the offender and its location is unknown
• the offender has offered no evidence about his ability to pay the amounts in question.

49As a result, I will make the order requested. The details will be in accordance with a draft order filed by the Crown, which I have signed.

Fine Instead of Forfeiture

50The Crown also asks that I impose a fine instead of forfeiture in the amount of $54,159,737.

51Section 462.37(1) provides that, subject to the remainder of the section, if an offender is convicted of a designated offence and the court imposing sentence, on application of the Attorney General, is satisfied, on a balance of probabilities, that any property is proceeds of crime obtained through the commission of the designated offence, the court shall order that the property be forfeited to Her Majesty to be disposed of as the Attorney General directs or otherwise dealt with in accordance with the law. In R. v. Schoer, 2019 ONCA 105, 371 C.C.C. (3d) 292, at para. 88, the court emphasized that the provision is mandatory.

52However, s. 462.37(3)(a) provides that where the property cannot, on the exercise of due diligence, be located, and as a result cannot be made the subject of a forfeiture order, the court may order the offender to pay a fine in an amount equal to the value of the property instead.

53In this case, the offender stands convicted of fraud and money laundering, both designated offences as defined in s. 462.3(1). I have already found, in my reasons for judgment, that the offences were committed in relation to $54,159,737, and, in effect, that that money was the proceeds of those crimes within the meaning of s. 462.3(1). Accordingly, but for s. 462.37(3), I would be obliged to make a forfeiture order for the money in question. However, the money is gone due to the offender’s fraud. It cannot, on the exercise of due diligence, be located. As a result, instead of making an otherwise mandatory forfeiture order, I order the offender to pay a fine in an amount of $54,159,737.

54As I have noted, counsel for Mr. Holden argues that there is property that can be forfeited that would reduce the amount of the fine. Specifically, he points to the Seaquest companies, which Mr. Holden owns. He says that there is still some unascertained value in those companies. Specifically, there is evidence that Valucap and Northstar, two companies that some of Mr. Holden’s clients invested in at his urging, are still operating and are still owned by the Seaquest companies. The problem with this argument is that Valucap and Northstar were legitimate, independent companies that had their own assets. There is no evidence that they or any of their assets are the proceeds of crime. Accordingly, forfeiture of Seaquest to recover their assets is unavailable.

55Returning to the operation of s. 462.37(3), I note that while I have a discretion under s. 462.37 with respect to the ordering of a fine, that discretion is a very limited one, and I see no basis to exercise it here.

56In R. v. Lavigne, 2006 SCC 10, [2006] 1 S.C.R. 392, at para. 21, Deschamps J. stated, for the court:

… the court has a limited discretion when it imposes a fine, but the offender’s ability to pay is not a factor that may be taken into consideration. This is what the prosecution is suggesting, correctly in my opinion, in the instant case.

57The court further stated, at paras. 23-24:

The court’s discretion is necessarily limited by the purpose of the order to be made. It may be exercised only to impose a fine instead of forfeiture. This option is not available in every case. The discretion may be exercised only where the court cannot order forfeiture or where forfeiture is not practicable. Because the purpose of forfeiture is to deprive offenders of the proceeds of crime and in so doing to deter the offenders themselves as well as criminal organizations from committing the designated offences, the discretion must also be exercised having regard to the fact that Parliament is seeking to deter not only offenders, but also criminal organizations.

The list of circumstances in which the court may, inter alia, impose a fine instead of forfeiture also illustrates the limits of the discretion. For instance, the discretion may be exercised (a) where the property cannot, on the exercise of due diligence, be located or (b) where the property has been transferred to a third party. The list does not appear to be restrictive, given the use of the expression “in particular”, which suggests that there are other circumstances that do not appear on the list. However, those circumstances must be similar in nature to the ones that are expressly mentioned. The judge could not therefore decline to impose a fine simply because the offender is no longer in possession of the property or simply because (c) the property is located outside Canada. Thus, the judge cannot transform circumstances in which a fine may be ordered instead of forfeiture into circumstances that justify not imposing a fine.

58An example of the limited circumstances in which a court could exercise the discretion to refuse to order a fine is found at para. 28:

On the other hand, a court may face circumstances in which the objectives of the provisions do not call for a fine to be imposed. An example of this would be if the offender did not profit from the crime and if it was an isolated crime committed by an offender acting alone. In such a case, none of the objectives would be furthered or frustrated by a decision not to impose a fine instead of forfeiture. The word “may” allows for an exercise of discretion that is consistent with the spirit of the whole of the provisions in question.

59This is not such a case. Importantly, in Lavigne, at para. 37, the court excluded the ability to pay the fine as a consideration even in determining the amount of the fine. The court stated:

Given the clear objective, the fact that the words are equally clear, and the counter-productive effects of taking ability to pay into consideration, I conclude that the court may not take ability to pay into account in determining the amount of the fine to be imposed instead of forfeiture.

60Similarly, in R. v. Angelis, 2016 ONCA 675, 340 C.C.C. (3d) 477, leave to appeal to S.C.C. refused, 37288 (23 February 2017), at paras. 71-76, the court concluded that the availability of civil remedies is not a basis to refuse to order a fine instead of forfeiture, and the making of a restitution order can have no more than a limited application. Here I give it none.

61As a result, as I have indicated, I impose a fine in lieu of forfeiture in the amount of $54,159,737.

62Section 462.37(4)(a)(vii) provides that where a court orders an offender to pay a fine exceeding one million dollars instead of forfeiture, the court must impose a period of imprisonment in default of payment of not less than five years and not more than ten. Section 462.37(4)(b) provides that the court must direct that a period of imprisonment in default imposed pursuant to s. 462.37(4)(a) be served consecutively to any other term of imprisonment imposed on the offender. As a result, I impose a period of five years’ imprisonment, which I consider to be sufficient in all the circumstances, consecutive to the 12 years of imprisonment I have already imposed.

63Section 734.1 of the Criminal Code requires a court that imposes a fine pursuant to s. 734 to make an order setting out the time by which the fine must be paid. Section 734(8) provides that s. 734.1 applies to a fine imposed under any Act of Parliament, and accordingly it applies here. I have a broad discretion in setting the length of the time to pay.

64In R. v. Way, 2017 ONCA 754, 140 O.R. (3d) 309, the Court of Appeal increased a fine instead of forfeiture in a fraud case from $20,000 to $797,809.47. The respondent requested time to pay. Having regard to the amount of the fine, the court gave him eight years from the expiry of the global sentence of ten years’ imprisonment imposed by the trial judge. In view of the fact that the amount of the fine in this case is enormous, and that, while I do not know the offender’s ability to pay the fine, I do know that his ability to pay a fine in the amount ordered is limited, I will give him ten years from the expiry of his global 12-year sentence of imprisonment to pay the fine.

DISPOSITION

65I impose the following sentence and orders:

• Imprisonment for 12 years on the count of fraud
• Imprisonment for eight years on the count of money laundering to be served concurrently with the sentence imposed for fraud
• A restitution order in accordance with the draft order, which I have signed
• A fine in lieu of forfeiture in the amount of $54,159,737
• A period of ten years from the expiry of his global twelve-year sentence of imprisonment to pay the fine, with a term of five years’ imprisonment in default of payment to be served consecutively.

M. Dambrot J. Released: February 7, 2020