COURT FILE NO.: CR-18-1178
DATE: 2020 11 16
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
HER MAJESTY THE QUEEN
– and –
HUGH WALKER
E. Weis and A. Rodrigo, for the Crown
N. Kelsey for the Defendant
HEARD: March 13 and September 24, 2020
REASONS FOR SENTENCE
1. Introduction
[1] A jury found Mr. Walker guilty of fraud over $5,000.00, possession of proceeds of crime and uttering a forged document. There was no dispute that over 1.8 million dollars flowed through Mr. Walker’s bank accounts that were sent by two individuals from the United States. Mr. Walker testified that he was asked to use his bank accounts for a business deal that was operated by Mr. Licktieg and that he did not know there was a fraud. The guilty findings by the jury demonstrate that they did not believe Mr. Walker and were satisfied beyond a reasonable doubt based that Mr. Walker was guilty of the offences for which he was charged.
[2] The Crown seeks a sentence of five years imprisonment and restitution payable to one victim, Mr. Scheckel, in the amount of $1,454,970.98 CAD.
[3] The Crown also seeks several ancillary orders including a fine in lieu of forfeiture in the amount of $1,862,009.53 CAD to be paid within four years of Mr. Walker’s release from imprisonment as well as default sentence of imprisonment of five years if the fine is not paid. The Crown agrees that any restitution paid should offset the fine in lieu of forfeiture. The Crown also seeks a DNA order and a prohibition order pursuant to s. 380.2 of the Criminal Code.
[4] Counsel for Mr. Walker submits that an appropriate sentence is two years imprisonment concurrent on all charges and submits that no restitution order should be granted. However, if a restitution order is granted it should be a stand-alone order.
[5] Mr. Walker’s counsel also submits that no ancillary orders should be made. There should not be a fine in lieu of forfeiture. If, however it is ordered, Mr. Walker should have between ten and twenty years to pay in light of his age. Counsel also submits that it is not in the interests of justice to make a DNA order or a prohibition order pursuant to s. 380.2 of the Criminal Code.
[6] Mr. Walker’s sentencing was delayed when the courts closed due to Covid-19. Further submissions were heard on September 24, 2020 regarding what impact, if any COVID-19 should have on Mr. Walker’s sentence.
2. The Facts
a) Circumstances Related to the Offence
[7] Mr. Scheckel owns a large farm in Kansas. The farm had an operating budge of over two million dollars annually. Between 2010 and 2012, Mr. Scheckel lent a family friend, Mr. Licktieg, approximately $300,000. Mr. Scheckel believed that the money was for an agricultural deal in the Caribbean. Mr. Licktieg told him there would be a six-month turn around for the deal and he would receive a 20% return on his investment. Mr. Scheckel sent money to Mr. Hugh Walker through Western Union. Mr. Scheckel believed that Mr. Licktieg trusted Hugh Walker because Mr. Licktieg vouched for him. Mr. Scheckel never met Hugh Walker. Mr. Scheckel did not recover his money from that investment.
[8] Shortly after Mr. Scheckel stopped sending money to Mr. Licktieg, Mr. Scheckel received six calls from a David Braum. Mr. Walker admitted that he is David Braum. Mr. Scheckel testified that on the sixth call, Mr. Scheckel talked to Mr. Braum (Mr. Walker). Mr. Braum (Mr. Walker) told him that he worked for the Commonwealth of the Caribbean. He told Mr. Scheckel that he could get his money back from the agricultural deal in Jamaica. Mr. Scheckel believed that his money was going to set up an agricultural deal, there would be grant funds that would match, and Mr. Scheckel would get his invested money back. The United States also had grants for farming. There was no indication that Mr. Licktieg was involved in this deal aside from Mr. Walker’s testimony.
[9] Mr. Scheckel wired various amounts of money from 2012 to 2015. $744,036.05 was wired directly from the Scheckels’ bank account to Hugh Walker’s bank account in Toronto. Mr. Scheckel also had Mr. Constant wire a further $710,934.93 from monies that Mr. Constant owed to Mr. Scheckel for gain purchases. Mr. Constant also wired $407,038.55 of his own money to Hugh Walker.
[10] Mr. Scheckel explained how the request and receipt of money generally occurred. Mr. Braum (Mr. Walker) requested or begged for money. The timing to gather the funds was usually urgent. The funds were needed to close the deal so that Mr. Scheckel would get his pay out. Mr. Braum (Mr. Walker) called repeatedly until the funds were wired.
[11] Once the funds were wired, Mr. Scheckel or Mr. Constant called or texted Mr. Braum (Mr. Walker) and provided the confirmation number. Mr. Scheckel tried to contact Mr. Braum (Mr. Walker) to find out when he would get the funds that Mr. Braum (Mr. Walker) promised. Mr. Braum (Mr. Walker) avoided responding to Mr. Scheckel’s texts and telephone calls.
[12] Two or three weeks later, Mr. Braum (Mr. Walker) would make a similar request for more funds. The bank records that were filed as exhibits showed the wire transfers. In addition, Mr. Constant had copies of the wire transfers that he made at the request of Mr. Scheckel.
[13] Mr. Scheckel requested paper documentation from Mr. Braum (aka Mr. Walker) many times and was told that he would receive it. Mr. Scheckel received several letters. He testified that he received these letters in response to his requests to Mr. Braum. Mr. Scheckel received three letters on CIBC First Caribbean International Bank letterhead dated May 2013. These letters stated that the bank held funds for Mr. Scheckel. In August 2014, Mr. Scheckel received letters from the Department of the Treasury signed by Bruce Sterling. These letters stated that the U.S. Department of the Treasury held Mr. Scheckel’s funds and was trying to release them to him.
[14] Mr. Scheckel received a letter dated June 15, 2015, that formed the basis of the uttering a forged document conviction. That letter was on letterhead from the Department of the Treasury and signed by Bruce Sterling. The letter stated that David Braum was in immigration custody and that the Department held Mr. Scheckel’s money, but Mr. Sterling was still trying to release the funds to Mr. Scheckel. Mr. Walker agreed in cross-examination that he was not in immigration custody.
[15] Mr. Scheckel met with Mr. Braum (Mr. Walker) six to seven times at various locations. They met in Toronto, Jamaica, Louisville and in Kansas. Mr. Scheckel requested these meetings because he wanted more information about the deal and who was involved. Mr. Braum (Mr. Walker) repeatedly told Mr. Scheckel that the deal was going to go through. Mr. Scheckel was supposed to meet the investors in Jamaica but no one aside from Mr. Braum (Mr. Walker) appeared.
[16] Mr. Scheckel repeatedly asked Mr. Braum (Mr. Walker) for identification. Eventually, Mr. Braum provided Mr. Scheckel with Hugh Walker’s passport and told him that he used the passport to travel because he was still waiting for his papers from Jamaica. Mr. Walker testified that he told Mr. Scheckel at that time that he was in fact Mr. Hugh Walker.
[17] Mr. Scheckel explained that he kept sending money because he had already given so much money and was deep into the situation. He began to become suspicious in the fall of 2014 but by the summer of 2015 he knew he had been duped and he decided to stay in it until he could make someone accountable.
[18] In October 2015, Mr. Scheckel came to Toronto and saw Mr. Braum (Mr. Walker). Mr. Braum (Mr. Walker) drove him to a TD bank. A gentleman came out well dressed and tried to convince Mr. Scheckel to send more funds to release the money. Mr. Scheckel eventually wired the funds.
[19] Mr. Scheckel returned to Kansas. He decided that he would report the matter to police and returned to Toronto to do so. Mr. Walker was charged in January 2016, after the police investigated the matter.
b) Mr. Walker’s Role in the Fraud
[20] Mr. Walker’s position before the jury was that he did not know there was a fraud and if there was a fraud, he was not part of it. He testified that he was a dupe and simply let others use his bank account to receive the funds and distributed the funds minus his commission. In finding Mr. Walker guilty, the jury did not accept his evidence. It is not clear from the jury’s verdict if they found that Mr. Walker was the directing mind of the fraudulent scheme or had a lesser role as the receiver and deliverer of the money that he knew to be obtained by fraud. Determining Mr. Walker’s role in the fraud is important as it relates to his degree of moral culpability and the issue of restitution.
[21] Section 724(2)(a) of the Criminal Code states that the sentencing judge “shall accept as proven all facts, express or implied, that are essential to the jury’s verdict of guilty.” Section 724(2)(b) states that the judge “may find any other relevant fact that was disclosed by evidence at the trial to be proven”.
[22] In R. v. Ferguson, 2008 SCC 6, [2008] 1 S.C.R. 96, the Supreme Court of Canada held that the sentencing judge is only required to make those factual determinations necessary for deciding the appropriate sentence. Where the jury’s verdict is ambiguous the trial judge should come to his or her own independent determination of the relevant facts. If the fact is an aggravating factor the trial judge must be satisfied that it has been proven beyond a reasonable doubt: at paras. 16 to 18; Criminal Code, s. 724(3)(e).
[23] Mr. Walker testified that Mr. Licktieg contacted him in 2012 to invest money. Mr. Walker understood that Mr. Licktieg was in charge of the money. He had previously invested with Mr. Licktieg and had made a significant amount of money. In 2012, Mr. Walker did not have the money to invest. Mr. Walker owned a bar. Mr. Walker testified that Mr. Licktieg asked him to open up bank accounts to receive funds because the bank closed Mr. Licktieg’s Canadian Bank account. Mr. Walker also said that Mr. Licktieg told him that he did not want to use his account in the United States because the International Revenue Service would hold the money. Mr. Walker stated that he never met Mr. Licktieg but spoke to him on the phone and on video. Mr. Licktieg died in early 2019.
[24] Mr. Walker testified that he understood his role in this investment was to receive wire transfers and to give cash to Mr. Licktieg’s partners, Prince and Abu, who were located in Canada to assist with the Caribbean agricultural deal.
[25] Mr. Walker agreed that he opened the TD accounts in Toronto and the wire transfers were received into the accounts. Mr. Walker stated that Mr. Licktieg would call him and tell him how much cash to take out of the account and to give to Prince and Abu. Mr. Walker testified that he took out the cash from various bank branches and ATMs and gave it to Prince and Abu. He did not recall sending any money abroad.
[26] Mr. Walker testified that he met Prince and Abu at his bar in 2012. He said they were from Africa. He did not have any contact information for them and did not know their last names or where they lived. He explained that Mr. Licktieg would call, and Mr. Walker would tell Mr. Licktieg where he would be and then Prince and Abu would meet him, and he would give them the cash.
[27] Mr. Walker testified that he spent the remaining cash because that was his commission and he had to clear out the account before the next payment was made. He spent his commission on purchases from Harry Rosen, the LCBO, beer store and other expenses. He purchased a Mercedes, for approximately $40,000 as he says he was instructed to do so by Mr. Licktieg.
[28] The banking records filed showed the cash withdrawals and the direct payments to various venders. In addition, there was a payment for off-track betting transfer. Mr. Walker testified that it was for Abu. He also explained when he took out change, that was for Prince and Abu because they liked to play poker. Mr. Walker testified that all of the cash withdrawals were for Prince and Abu, even an ATM withdrawal for $62.00. Mr. Walker testified that he went to different banks and different ATMs because that is what they wanted him to do.
[29] Mr. Walker stated that Mr. Licktieg told him to say he was David Braum and he did. Mr. Walker agreed that he told Mr. Scheckel to send the money to Hugh Walker, not himself. He agreed that he would hear that Mr. Scheckel did not get his money and that he did not pay any money to Mr. Scheckel or Mr. Constant. Mr. Walker testified that he told Mr. Scheckel who he was when he showed Mr. Scheckel Hugh Walker’s passport in 2015. Mr. Scheckel denied this.
[30] The text messages filed showed conversations between Mr. Scheckel and Mr. Braum (Mr. Walker). These text messages were from phone number 647-760-5323. Mr. Walker testified that Prince gave the phone to him. He was then shown the Roger subscriber information, which showed that the phone was in his name and address. This phone number was also on his banking information. The phone records also showed that there were other phone numbers contacted that were related to Mr. Walker, such as the car dealership that he purchased the Mercedes from and his girlfriend.
[31] Mr. Walker testified that he asked Prince to respond to the texts from Mr. Scheckel. He explained that when Prince was at the bar he would take his phone and text Mr. Scheckel. Mr. Walker said he was too busy working at his bar. Mr. Walker also testified that Mr. Licktieg called him on the bar phone and never his cell phone and that the bar phone is gone because the business ended.
[32] I am satisfied beyond a reasonable doubt that Mr. Walker was a directing mind of the fraud. I reject Mr. Walker’s evidence that he was simply the conduit for the money to be received and distributed for the following reasons.
[33] While Mr. Licktieg was originally involved in convincing Mr. Scheckel to invest with him, Mr. Walker was the recipient of the money. Mr. Walker was aware that Mr. Scheckel had sent money to him in the past but stopped.
[34] Mr. Scheckel testified that Mr. Braum (Mr. Walker) contacted him six times. He told Mr. Scheckel that he could help get his money back and that he worked for the Caribbean government.
[35] There is no indication of Mr. Licktieg’s involvement, aside from Mr. Walker’s testimony. There are no phone calls between Mr. Licktieg and Mr. Walker on the phone that Mr. Walker says was given to him by Prince to facilitate calls between Canada and the United States. Mr. Licktieg apparently resided in the United States. I do not accept Mr. Walker’s evidence that he only spoke to Mr. Licktieg on the bar phone and not his cell phone, particularly as there were personal calls to other individuals on that cell phone.
[36] The only person who spoke to Mr. Scheckel regarding the investment and the transferring of the funds was Mr. Walker. I do not accept Mr. Walker’s evidence that Mr. Scheckel spoke to anyone other than Mr. Walker. I accept Mr. Scheckel’s evidence that he only dealt with Mr. Braum (Mr. Walker).
[37] There are numerous texts from Mr. Walker’s phone requesting that Mr. Scheckel send more money. I do not accept Mr. Walker’s evidence that “Prince” would borrow his cellphone and respond to all of the texts sent by Mr. Scheckel. There are numerous text messages. The timing of the texts and calls is also interspersed with other personal calls that it can be inferred Mr. Walker made. I also do not accept Mr. Walker’s evidence that he was not text savvy. There were texts that Mr. Walker sent to personal contacts.
[38] The phone was registered in Mr. Walker’s name. It was listed as his phone number in the bank account information. In addition, there were personal messages on the phone.
[39] I do not accept Mr. Walker’s evidence that he would give all the cash to Prince and Abu. His evidence on this point was fanciful. He had no names or contact information for either of these individuals. His evidence was that Tom Licktieg would contact him, only on the bar phone, tell him where to withdraw money and how much and that Prince and Abu would meet him to obtain the money. In addition, the amounts of the withdrawals varied significantly from approximately $20.00 to $3000.
[40] Based on the evidence that was before the jury I am satisfied beyond a reasonable doubt that Mr. Walker was not simply the conduit to pass the money on to other individuals, but he was a directing mind of the fraud.
c) Facts Related to the Offender
[41] Mr. Walker is 55 years old. He was born in Jamaica and immigrated to Canada when he was 11 years old. He had a positive upbringing.
[42] He has three sons ages 34, 31 and 12. He sees his youngest son on the weekends. He is concerned that his youngest son will be deeply affected if he is incarcerated. Mr. Walker also has an on and off again girlfriend.
[43] Mr. Walker is a few credits shy from obtaining a high school diploma. He has a diploma from the Toronto School of Business in hotel management, as well as some education in recreation and leisure from Humber College. He is passionate about sports. He stated that he has been employed as a basketball referee since 2015 when he closed down his restaurant. He stated that he owned a restaurant with a friend but that he was pushed out of the business.
[44] Mr. Walker stated that he has been employed throughout his adult years. He started working in the kitchen of the Westin Harbour Castle. He then worked as a courier. He moved to Vancouver where he is reported to have owned several businesses including garbage removal, after market car part sales, as well as owning racehorses. He moved back to Mississauga twelve years ago when his youngest child was born.
[45] It appears that Mr. Walker is currently refereeing basketball games on the weekends. Mr. Walker’s mother expressed frustration that Mr. Walker does not appear to be working and is not contributing financially to the household. He has lived with her for the past four years because she is his surety.
[46] Mr. Walker does not have any substance abuse issues. He enjoys gambling in sports, but he denies any addiction issues. His mother, brother and girlfriend describe him as a man with a big heart who is a good father to his youngest child.
[47] Mr. Walker has no criminal record.
3. Impact on the Victim
[48] Mr. Scheckel filed a victim impact statement. In this statement he indicated that he not only lost the money he invested with Mr. Walker, his marriage suffered. He experienced stress induced physical ailments and alienation from his community. He suffered extreme financial stress. He indicated in text messages to Mr. Walker that John Deere Financial was repossessing his farm equipment and he had to sell his family’s farmland to pay his debts. Mr. Scheckel stated that selling the farmland was one of the hardest things he had to do because of the family’s connection to the land.
4. Applicable Legal Principles
[49] Section 718 of the Criminal Code sets out the following purpose and objectives of sentencing:
718 The fundamental purpose of sentencing is to protect society and to contribute, along with crime prevention initiatives, to respect for the law and the maintenance of a just, peaceful and safe society by imposing just sanctions that have one or more of the following objectives:
(a) to denounce unlawful conduct and the harm done to victims or to the community that is caused by unlawful conduct;
(b) to deter the offender and other persons from committing offences;
(c) to separate offenders from society, where necessary;
(d) to assist in rehabilitating offenders;
(e) to provide reparations for harm done to victims or to the community; and
(f) to promote a sense of responsibility in offenders, and acknowledgment of the harm done to victims or to the community.
[50] Further, s. 718.1 of the Criminal Code provides that the sentence must be proportionate to the gravity of the offence and the degree of responsibility of the offender. The fundamental purposes of sentencing set out in s. 718 are deterrence, denunciation, rehabilitation and reparation.
5. Sentencing Range in Fraud Cases
[51] The Crown submits that Mr. Walker should receive a five-year sentence of imprisonment plus a restitution order payable to Mr. Scheckel in the amount of $1,454,970.98 CAD.
[52] Defence counsel submits that the appropriate sentence is two years imprisonment and no restitution order. In the alternative, if a restitution order is made it should be a free-standing order.
[53] While rehabilitation must have a role in sentencing, in the case of large-scale frauds denunciation and deterrence are the prominent factors to consider. As the Court of Appeal held in R. v. Drabinsky, 2011 ONCA 582, at para. 160:
… it would seem that if the prospect of a long jail sentence will deter anyone from planning and committing a crime, it would deter people like the appellants who are intelligent individuals, well aware of potential consequences and accustomed to weighing potential future risks against potential benefits before taking.
See also: R. v. Nowack, 2019 ONSC 5344, at para. 71
[54] It is also worth noting that prior to September 15, 2004, the maximum sentence for fraud over $5,000 was ten years imprisonment. After that date, the maximum sentence was increased to fourteen years.
[55] In addition, a mandatory minimum penalty for fraud over 1 million dollars was introduced in November 2011. In this case, while the date on the indictment commences in September 2011, Mr. Walker did not contact Mr. Scheckel until January 2012 and the first wire transfers were not September 2012. Defence does reasonably agrees that in the circumstances, the mandatory minimum sentence would apply.
[56] It is my view that the range for large-scale frauds is between three and to ten years depending on the circumstances. Several examples in the jurisprudence demonstrate the range.
6. Crown Cases
[57] Crown counsel relies on several cases in support of the Crown’s sentencing position.
[58] For example, in R. v. Dhanaswar, [2014] O.J. No. 6388, aff’d 2016 ONCA 172, the offenders were husband and wife. They were convicted of two counts of fraud over $5,000.00 following a jury trial. She held an executive position in the companies and participated in the marketing of the various fraud transactions and made statements in support of her husband’s credibility to prospective investors. She was sentenced to six years imprisonment and ordered to pay restitution in the amount of $2,372,702.00. A fine in lieu of forfeiture was also ordered payable in six years following her release and a further five years imprisonment in the event of non-payment of the fine. The Court of Appeal upheld the conviction and the sentence.
[59] In R. v. Drakes, 2006 CarswellOnt 8638, aff’d 2009 ONCA 560, the trial judge sentenced Mr. Drakes to five years imprisonment, plus two years concurrent for money laundering. The trial judge did not make a restitution order because there was not evidence that the accused could pay. Mr. Drakes was involved in an advance fee fraud where the victims were advised that there would be a large sum of money transferred out of Nigeria once a payment was made. The victims were located throughout the world. Mr. Drake defrauded the victims of approximately $850,000.00 U.S. His co-accused Mr. Brewster defrauded victims in the amount of $550,000 U.S. Mr. Brewster was sentenced to four years for fraud and a further two years for money laundering to be served concurrently. The Court of Appeal upheld Mr. Drakes’ sentence.
[60] In R. v. Nichols, 2001 CanLII 5680 (ON CA), [2001] O.J. No. 3220 (C.A.) the appellant had convinced the victim to send him $900,000 U.S. He told her that she had won a thirteen million dollar lottery but that she had to advance him $1 million dollars to pay the tax and insurance costs to receive the money. Mr. Nichols was 29 years old and had no criminal record. Approximately $800,000.00 had been recovered. The trial judge imposed a sentence of five years and three months imprisonment. The Court of Appeal held that absence the recovery of the money an appropriate sentence would have been seven years. The Court of Appeal reduced his sentence to four years. There was no restitution order in this case because the Crown did not seek one at trial.
7. Defence Cases
[61] Defence counsel relies on the following cases in support of her position on sentence and notes that most of these cases involve larger amounts being defrauded.
[62] In R v. Cisar, 2014 ONCA 141, the Court of Appeal upheld a thirty-month sentence of imprisonment. The appellant had fraudulently obtained a source code that had a value of twelve million dollars. The trial judge could not put a value on the harm caused to the company. In determining the proper sentence, the trial judge also considered the delay in proceeding with the charges. A warrant was issued for the accused arrest in 1999 and he was not arrested until 2007.
[63] In R. v. Dieckmann, 2017 ONCA 575, leave to appeal to the Supreme Court of Canada refused March 15, 2018 No. 37788, the Court of Appeal upheld a sentence of four years imprisonment. The fraud was driven by greed, was complex and prolonged. The appellant was convicted of seven counts of fraud in relation to $5.7 million that was diverted from the Canada Revenue Agency.
[64] The Court of Appeal for Ontario upheld a three-year sentence and a fine of $448,000 in R. v. Whiten, 2014 ONCA 694. The appellant was a tax preparer and assisted in making false expense claims in his client’s tax returns over a five-year period. He was charged in 2005. The government was defrauded over $1 million.
[65] The appellant in R. v. Ajise, 2018 ONCA 494, was a tax preparer that made false claims for charitable deductions between 2003 and 2005. The refunds totalled approximately $1.4 million. The Court of Appeal upheld the appellant’s sentence of thirty months imprisonment.
[66] The Court of Appeal also upheld a three-year sentence in R. v. Boghossian, 2019 ONCA 169. In that case, Mr. Boghossian, along with others, participated in negotiation of a stolen and forged TD Canada Trust bank bank draft in the amount of $1,895,751.00. They used this money to buy gold bars. His role was to coordinate with an unidentified person in the TD branch from which the draft was stolen and who facilitated the commission of the fraud.
[67] Finally, in R. v. Wa, 2015 ONCA 117, the appellant defrauded the Salvation Army of over $2.3 million by creating fictitious invoices in the names of two separate companies. Mr. Wa admitted the fraud and $1 million was recovered. He plead guilty and was sentenced to two years imprisonment and two restitution orders totalling approximately $1.3 million.
8. Appropriate Sentence in this Case
[68] While sentencing ranges provide some guidance to the court in determining an appropriate sentence, they are not binding on the court. Sentencing is a fact specific exercise.
a) Mitigating Factors
[69] There are a few mitigating circumstances in this case.
Mr. Walker does not have a criminal record.
He appears to be a good father who loves and provides for his youngest son.
He also appears to have the love and support of mother and brother.
b) Aggravating Facts
[70] There are several aggravating factors in this case.
[71] First, the quantum of the fraud. Counsel for Mr. Walker reasonably agrees that this is a large-scale fraud. The total value of the fraud is approximately $1.8 million.
[72] Second, this was not a spontaneous crime. The fraud lasted from 2012 2015. It took a high level of planning and sophistication to continue the fraud. It involved trips to various places including Kansas, Toronto, Louisville and Jamaica. Mr. Walker and Mr. Scheckel both flew to Jamaica to meet with the “investors”. The fraud also involved various fraudulent documents that were sent to Mr. Scheckel. Mr. Walker relied upon at least one of those forged documents to perpetrate the fraud, given the conviction for uttering a forged document. There were also over 3,000 contacts between Mr. Scheckel and Mr. Walker and dozens of wire transfers.
[73] Third, this was a scam. Where the fraud involves a “scam” as opposed to fraud committed in the course of the operation of a legitimate business, a longer sentence is normally called for: Drabinsky, at para. 173. The sole motivating factor was greed. The intention was to take Mr. Scheckel’s and Mr. Constant’s money. There was no intention to distribute any funds back to them. This was not an investment deal that went bad. This was not a real investment.
[74] Fourth, the scope and nature of the dishonesty. While all frauds involve dishonesty, in this case, Mr. Walker told lie after lie about the investment to obtain further money. He relied on forged documents to perpetrate the fraud.
[75] Fifth, the degree of callousness in this offence is also an aggravating factor. At various points Mr. Scheckel told Mr. Walker in text messages the impact that this was having on him, yet Mr. Walker continued to make requests for more funds. For example, on July 15, 2014, Mr. Scheckel told Mr. Walker that he could not afford to take out his wife for dinner for their anniversary. He told Mr. Walker that John Deere Financial was repossessing his farm equipment and that he has no money. The response he received from Mr. Walker was to send the money because they were running out of time and to be a “grizzly bear and stop being such a bitch.” Mr. Scheckel told him he was behind on his payments for crop insurance and for a heritage tractor on August 1, 2014. Mr. Scheckel told Mr. Walker that he had to sell real estate in January 6, 2015. Mr. Scheckel continued to explain to Mr. Walker that he was financially ruined throughout 2015. Mr. Walker knew the devastating impact this was having on Mr. Scheckel, yet he continued to convince Mr. Scheckel using more lies to continue to give him money for Mr. Walker’s own benefit.
[76] Sixth, the cross-border nature of the fraud. While crime knows no borders, borders make it more difficult to uncover and prosecute cross-border offences. Such conduct should be denounced and deterred.
[77] Seventh, the Crown submits that this was a breach of trust, which is an aggravating factor. Defence argues that there was no breach of trust because this was not a case where the person was a tax preparer, or a lawyer or even a licensed investment broker. This is not a traditional breach of trust case; I have already considered the factors that one would consider if there was a breach of trust in discussing the callousness of Mr. Walker’s acts. Mr. Walker used his ongoing relationship with Mr. Scheckel to continue to exploit Mr. Scheckel to give him more money. I note that Mr. Walker used the trust that Mr. Scheckel had in him to try and convince other persons to invest, in particular Mr. Constant. As noted by a text Mr. Scheckel sent to Mr. Walker., “I trusted you with my life look where it got me, I stood up for you with Randy and my wife and you’ve fucked me”.
[78] Eighth, the impact on Mr. Scheckel was significant and long-term. It was not just the lost of the $1.4 million. Mr. Scheckel’s marriage suffered. He experienced stressed induced physical ailments. He stated that he has lost friends and his reputation because of the situation. The text messages Mr. Scheckel sent to Mr. Walker demonstrate the financial consequences he suffered.
[79] While, not an aggravating factor, there has not been any recovery of money.
c) Consideration of the Pandemic
[80] Mr. Walker has been out on bail pending his sentence. What if any impact should COVID-19 have on any term of imprisonment imposed? Mr. Walker does not have a specific condition that makes him more vulnerable to COVID-19. Different approaches have been taken in the jurisprudence about how to consider COVID-19 in sentencing.
[81] Defence relies on the analysis in R. v. Hearn, 2020 ONSC 2365, [2020] O.J. No. 1648 in support of her position that a two-year sentence is appropriate given the harsh conditions Mr. Walker will face in prison as a result of COVID-19. In Hearn, Pomerance J. discussed how to consider COVID-19 in determining a sentence yet to be served. She took judicial notice of the fact that we are experiencing a worldwide pandemic and that to control the pandemic requires social distancing which is difficult to maintain in custodial settings. Therefore, inmates are at greater risk of infection in prison settings that translates into increased risk for the community at large. See also, R v. M.W., [2020] O.J. No. 2590, at paras 46-48.
[82] Pomerance J. also held that COVID-19 may soften the requirement of parity and it is a relevant factor in determining the fitness of the sentence. As she noted, “fitness of the sentence looks at not just the length of the sentence but also the conditions under which the sentence is served. Prisons have become harsher environments either because of the risk of infection or, because of restrictive lockdown conditions aimed at preventing infection.”
[83] In coming to this conclusion, Pomerance J. noted that the Supreme Court has used extraneous circumstances to reduce a sentence including collateral consequences and noted that the question is whether the effect of those consequences means a particular sentence would have a greater impact on the offender because of their circumstances. She recognized that the sentence if reduced cannot justify imposition of a sentence that “disproportionately lenient”.
[84] In M.W., Boswell J. applied a similar analysis and found that going forward, M.W. would be subject to the same COVID-19 related restrictions as he had been experiencing while in pre-trial custody. On that basis, the sentence was further reduced.
[85] Crown counsel submits that the court can take judicial notice of COVID-19 and its impact on Canadians generally. She states that it is a collateral consequence. She however submits that this does not result in a reduction of all offender’s sentences. Relying on R. v. Morgan, 2020 ONCA 279, at para. 9, she submits that the court must determine whether the effect of the pandemic “means that a particular sentence would have a more significant impact on the offender because of his or her circumstances”: at para. 9. In this case, there is no evidence that Mr. Walker is at greater risk from COVID-19 due to his personal circumstances.
[86] The Crown also submits that it is speculative to reduce Mr. Walker’s sentence when the consequences of COVID-19 is unknown. In support of her argument she relied on R. v. Audet, [2020] O.J. No. 3553 (S.C.) where Smith J. held that there was no reliable prediction about the length of the pandemic and therefore he had no evidence to use as a basis for calculating an appropriate reduction. Any reduction “would therefore be arbitrary and capricious”. He was of the view that the National Parole Board would be in a much better position to decide what to do about COVID-19.
[87] I agree that COVID-19, as a collateral consequence, cannot be used to create a sentence that is “disproportionate to the gravity of the offence or the moral blameworthiness of the offender”; Morgan, at para. 10, quoting R. v. Suter, 2018 SCC 34.
[88] I find, however that COVID-19 is a factor that should be considered in determining what is a fit sentence. The general implications arising from COVID-19, including harsher conditions in prison are a relevant factor to consider in sentencing Mr. Walker. The fact that Mr. Walker does not have a particular vulnerability to COVID-19 does not detract from the fact that the conditions he will face in prison will be harsher, to some extent because of COVID-19. Where an accused has a particular vulnerability, the impact of COVID-19 may have greater weight in determining what is a fit sentence.
[89] I recognize that no one knows for sure how long the pandemic will last, however, the public has been repeatedly told that until there is a vaccine the pandemic will remain with us. Predictions for when there will be a vaccine range from January 2021 to the fall of 2021. Regardless, life as we knew it prior to COVID-19 will not be same for at least some time. As such, I do not find it arbitrary to give some consideration in determining what is a fit sentence to the fact that Mr. Walker will serve his sentence under harsher conditions than if there was no global pandemic. That being said, COVID-19 is simply one of many factors that must be considered in determining an appropriate sentence including the principles of denunciation, deterrence and rehabilitation.
d) Restitution Order
[90] Prior to determining the appropriate custodial sentence, I must also consider the Crown’s request for a restitution order because it forms part of the totality of the sentence.
[91] The court may impose a restitution order not to exceed the value of the loss: Criminal Code, s. 738(1)(a).
[92] The Court of Appeal set out a number of factors a trial judge should consider when determining if a restitution order is appropriate: R. v. Castro, 2010 ONCA 718, at para. 24. I have considered these principles and will address the concerns that counsel raised.
[93] A restitution order should not be granted where the court is required to interpret written documents. Counsel for Mr. Walker states that in this case, the money was sometimes paid in American dollars and the court should therefore not interpret the exchanges rate. I do not find this is a sufficient basis to deny a restitution order. The cash withdrawals were $1,352,936.32 CAD from one account $26,353.00 CAD from another account and $42,463.68 US. The amounts of the withdrawals and the calculations are set out and sourced to the exhibits in Tab 6 of the Crown’s sentencing materials.
[94] I also recognize that a restitution order should not be used as a substitute for civil proceedings. That does not mean however that a restitution order is barred where a person, as in this case, has commenced civil proceedings. It is my understanding that there is not a civil judgment, so the concern of double payment does not arise at this time. In addition, s. 741.2 of the Criminal Code states that a civil remedy “is not affected by reason only that an order for restitution” has been made.
[95] I have also considered Mr. Walker’s ability to pay because that is relevant to his rehabilitation. A restitution order survives bankruptcy and it is not intended to create such a burden that it affects the prospect of rehabilitation for the accused: R. v. Biegus (1999), 1999 CanLII 3815 (ON CA), 127 O.A.C. 239, at para. 15.
[96] There is no evidence before me regarding where the cash has gone. It is clear that some of the money was spent at Harry Rosen, Holt Renfrew and to pay for various utility bills and day-to-day expenses. For the reasons already outlined above, I do not accept that all the cash was paid to Prince and Abu. One of the main objectives of a restitution order is to deprive the offender of the fruits of his crimes: Castro, at para. 34.
[97] In addition, there was no evidence before me regarding Mr. Walker’s current financial situation. In the pre-sentence report, he stated that he previously worked in the kitchen at the Westin Harbour Castle and as a courier. He then moved out to Vancouver and he stated he owned several businesses, including garbage removal, after market car part sales and he owned racehorses. Mr. Walker stated that he moved back to Mississauga approximately 12 years ago when his youngest son was born.
[98] Mr. Walker is currently a 55-year-old man who seems quite capable of earning a living. However, it appears that since his arrest he has done very little to earn any money as evidenced by the concerns expressed by his mother. He only appears to be working on weekends refereeing. I see no reasoning why he cannot earn a good living lawfully: R. v. Waxman, 2014 ONCA 256, at para. 27; R. v. Nowack, 2019 ONSC 5344, at para. 78.
[99] As noted in Castro “where the circumstances of the offence are particularly egregious, such as where a breach of trust is involved, a restitution order may be made even where there does not appear to be any likelihood of repayment”: at para. 28; See also Waxman, at para. 25.
[100] I am satisfied that the circumstances of the offence are sufficiently egregious to warrant a restitution order despite the fact that I have no evidence of whether the restitution order will be repaid. The callousness shown by Mr. Walker in continually defrauding Mr. Scheckel even while knowing that it was financially destroying Mr. Scheckel, even if not characterized as a breach of trust, is sufficiently egregious to justify the inclusion of a restitution order.
[101] There will be a restitution order in the amount of $1,454,970.98 CAD. payable to Mr. Scheckel.
e) Period of Imprison
[102] In considering the length of sentence of imprisonment to impose, I must also consider that I have ordered a restitution order that forms part of the sentence.
[103] I do not find that the two-year sentence of imprisonment proposed by counsel for Mr. Walker to be appropriate given all the circumstances. It is outside of the range for this scale of fraud. I also do not find that COVID-19 is a collateral consequence that would render such a sentence appropriate. I also note that many of the cases relied upon by Mr. Walker where lower sentences imposed were before the maximum sentence for the offence of fraud was increased and therefore those sentences do not reflect Parliament’s current intention to more severely denounce and deter this type of conduct.
[104] I am satisfied that the appropriate sentence is 46 months imprisonment plus the restitution order for the fraud and money laundering are appropriate. Two-years imprisonment is appropriate for use of a forged document sentence.
[105] Denunciation and deterrence must be the primary goals in sentencing in this case. This was a large commercial fraudulent scam that occurred over a lengthy period of time. The sole motivation was greed and the impact on Mr. Scheckel was significant. I recognized that the impact on Mr. Walker, who has no previous criminal record will be significant and that this sentence will be devastating to him, his family and particularly his young son. As noted in Drabinsky, “personal hardship, if not ruin, is virtually inevitable upon exposure of one’s involvement in these kinds of fraud. It cannot be regarded as the kind of unusual circumstance meriting departure from the range”. In determining the appropriate sentence, I also considered the fact that Mr. Walker will likely be subject to harsher conditions in prison because of COVID-19 for some time.
[106] I also note that there was no indication from the parties that Mr. Walker had any period of pre-trial custody to be considered in determining the appropriate sentence.
f) Fine in Lieu of Forfeiture
[107] The Crown also seeks a fine in lieu of forfeiture in the amount of $1.8 million. The Crown agrees that the order should be offset by any amount paid as restitution. The Crown submits that the time to pay should be four years and that a sentence of five years be imposed if the fine is not paid.
[108] Counsel for Mr. Walker takes the position that a fine in lieu of forfeiture should not be ordered but if it is, it should be offset by any amount paid as restitution. Counsel requests that Mr. Walker have ten to twenty years to pay.
[109] Where the court is satisfied on the balance of probabilities that any property is proceeds of crime obtained by a designated offence, the court shall order the property to be forfeited to the Crown.
[110] There is no dispute that the money that was wired into Mr. Walker’s TD bank accounts are proceeds of crime.
[111] Fraud is a designated offence: Criminal Code s. 462.3, s. 462.37(1). I am satisfied that Mr. Walker had the proceeds from the fraud in his possession and that he had control of the property in question. As such a forfeiture order must be made: R. v. Lavigne, 2006 SCC 10, [2006] 1 S.C.R. 393, at para. 14; R. v. Agnelis 2016 ONCA 675, 133 O.R. (3d) 575, at para. 35, leave to appeal refused, [2016] S.C.C.A. No. 484.
[112] A court may order a fine in lieu of forfeiture where the proceeds of the crime cannot be located; the proceeds have been transferred to a third party, or the property has been diminished in value and rendered worthless: Criminal Code s. 462.37(3)(a), (b) and (d). The purpose of this provision is to deprive offenders the proceeds of crime and to deter offenders and others from committing designated offences. The trial judge does not consider the ability of the accused to pay the fine in determining the amount of the fine.
[113] A fine in lieu of forfeiture is appropriate in this case because it is consistent with the objectives of the provision. Mr. Walker directly benefited from the proceeds of crime as demonstrated by the items that he purchased using the money from the accounts, the cash transfers to various accounts and the cash withdrawals.
[114] As I have already explained, I do not accept Mr. Walker’s evidence that he was just a conduit for the payments of the fraud and only received the items that are debited from his account. In the circumstances, I find that the fine in lieu of forfeiture should be for the entire amount of the fraud.
[115] In determining the time to pay the fine, I am not prepared to give Mr. Walker ten to twenty years to pay this fine. Mr. Walker shall have five years to pay the fine in lieu of forfeiture from the date he is released from custody. In coming to this conclusion, I have considered that Mr. Walker has been out on bail for the past four years, he is capable of earning an income and that there is no evidence before me regarding his financial situation.
[116] Where the fine exceeds $1 million, the default period of imprisonment is between five and ten years. A fine in lieu of forfeiture is not a punishment when considered in the context of the totality of the sentencing. The purpose is not to punish the offender, but rather to replace the proceeds of crime: R. v. Schoer, 2019 ONCA 105, at para. 93. While a term of imprisonment flows from the failure to pay without reasonable excuse, that term of imprisonment is intended to enforce the fine, not punish the offender: Lavigne, at paras. 25-26.
[117] I agree with the Crown that the appropriate sentence should Mr. Walker fail to pay the fine without lawful excuse should be five years, which is the lowest period of imprisonment for the failure to pay the fine of this amount.
g) DNA Order
[118] I am satisfied that it is in the interests of justice to make a DNA order. Pursuant to s. 487.041(3) of the Criminal Code, fraud is a designated offence. I am satisfied that it is in the interests of justice to grant a DNA order. Identification was an issue in this case. I also recognize that taking DNA is not an overly intrusive process but there are still privacy issues that arise from DNA.
h) Prohibition Order
[119] In sentencing an offender for fraud, the court may prohibit the offender “from seeking, obtaining or continuing any employment or becoming or being a volunteer in any capacity, that involves having authority over the real property, money or valuable security of another person”: Criminal Code, s. 380.2(1). The purpose of this provision is to protect the public. However, this provision also imposes “significant restrictions” on the accused’s liberty and security of the person because it could prevent an accused from participating in a wide variety of otherwise lawful activities: R. v. Hooyer, 2016 ONCA 44, at para. 47.
[120] Given the nature and duration of the fraud, the little information that was provided regarding Mr. Walker’s previous businesses and the fact that there is no indication that Mr. Walker’s employment opportunities would be impeded by this prohibition, I am satisfied that it is appropriable to order a prohibition for 10 years. I find this is necessary to protect the public while recognizing the importance of rehabilitation in sentencing.
9. CONCLUSION
[121] Mr. Walker is sentenced as followed:
Count #1: Fraud over $5,000: 46 months imprisonment,
Count #2: Money laundering: 46 months imprisonment to be served concurrent to count one.
Count #3: used a forged document: two years imprisonment to be served concurrent to count one and two.
[122] Mr. Walker is ordered to pay restitution in the amount of $1,454,70.98 CAD to Mr. Gerald Scheckel.
[123] An order for a fine in lieu of forfeiture in the amount of $1,862,009.53 is made, with credit for any amount paid towards the restitution order. Mr. Walker will have five years to pay from the day he is released from custody. He will be subject to a further five years imprisonment in default of payment.
[124] A DNA order is issued pursuant to s. 487.051 of the Criminal Code.
[125] Mr. Walker is prohibited for ten years from seeking, obtaining or continuing any employment or becoming or being a volunteer in any capacity, that involves having authority over the real property, money or valuable security of another person.
Dennison J.
Released: November 16, 2020
COURT FILE NO.: CR-18-1178
DATE: 2020 11 16
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
HER MAJESTY THE QUEEN
- and -
HUGH WALKER
REASONS FOR SENTENCE
Dennison J.
Released: November 16, 2020