Court File and Parties

COURT FILE NO.: CR-23-90000072-0000 DATE: 20230825 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

TRI-CAN CONTRACT INCORPORATED, HARALAMBOS VLAHOPOULOS, 912547 ONTARIO INC., JOSE DE OLIVEIRA, LIDIO ROMANIN CONSTRUCTION COMPANY LIMITED, LIDIO ANTHONY ROMANIN Applicants – and – HIS MAJESTY THE KING Respondent

Counsel: Alan D. Gold and Ellen C. Williams, for the Applicants Lidia Anthony (Tony) Romanin and Lidio Romanin Construction Jonathan Shine and Megan Schwartzentruber, for the Applicants Jose De Oliveira and 912547 Ontario Inc. Jay Naster and Maureen Salama, for the Applicants Tri-Can Contract Incorporated and Haralambos (Bob) Vlahopoulos

Moray Welch and Craig Power, for the Respondent

HEARD: July 28, 2023

REASONS FOR DECISION

Bawden J.

Introduction

[1] The applicants are charged with committing a fraud on the public and conspiracy to defraud the public. They seek to quash both charges on the ground that the evidence does not disclose a fraud on the public but rather a fraud on 38 known companies. It is the position of the applicants that when the identity of the alleged victims is known, they must be named in the indictment and the failure to do so renders the charges a nullity.

[2] The Crown opposes the application and maintains that the counts are properly framed as offenses against the public. The Crown submits that there is a sufficient connection between the 38 iterations of the fraud to support a single count of fraud against the public. Moreover, the criminal conduct of the accused victimized many parties beyond the 38 companies identified by investigators. It is impossible to identify and name all the victims of the alleged frauds and it is therefore appropriate that the charges be laid as offenses against the public.

The Facts

[3] The defendants were contractors engaged in the condominium refurbishment industry between 2009 - 2014. The Crown alleges that during that period, the defendants engaged in a conspiracy to rig bids on condominium refurbishment projects tendered by condominium corporations in the Greater Toronto Area.

[4] The bidding process proceeded in two stages. A condominium corporation which was contemplating repairs to its building would first put out a tender for designs. Competitors would submit designs and the corporation would select a winner. The corporation would then put out a second tender to build the selected design. The Crown alleges that the defendants conspired to rig the second stage of the bidding process by ensuring that if one of the members of the conspiracy won the bid at the design stage, that party would also be the successful bidder at the build stage. The other members of the conspiracy would go through the motions of bidding at the second stage, but the pre-determined winner would advise them of his anticipated bid and the other members would deliberately exceed that number. This anti-competitive practice allegedly deprived the condominium corporations (and by extension, individual condominium owners) of the economic advantages of an authentic competition.

The Position of the Applicants

[5] The applicants submit that the charge of fraud on the public should be quashed as a nullity because the evidence precisely identifies the companies that are said to have been victimized by their allegedly fraudulent actions. A fraud on the public is different from a fraud against an individual. A fraud on the public has consequences which ripple out to victimize unidentifiable parties such as unknown investors or purchasers. The applicants rely on the following passage from Martin’s Criminal Code, 1955:

It is submitted that the section, by its reference to the public, covers what was known as an indictable cheat at common law and extends it by reference to “any person whether ascertained or not”. It is said in Halsbury, 2nd ed., Vol. 9 p. 563, that to obtain the property of another by fraud does not amount to a cheat at common law unless it is effected by a deceitful and illegal practice, not amounting to felony, which directly affects the public, and that a mere private cheat or imposition, even if accompanied by a false affirmation, is not indictable as a cheat at common law, if no false token is used.

[6] The applicants submit that the only parties that would suffer adverse consequences from the allegedly fraudulent activity are the 38 condominium corporations which are named in the disclosure. The applicants rely on the case of R. v. Cull, [1969] B.C.J. No. 366.

[7] The applicants stress that they are not obliged to demonstrate prejudice to succeed in this application, but maintain that the framing of the Indictment does prejudice them in two respects:

• By framing the allegations as a single fraud committed against the public, the Crown hopes to circumvent the similar fact rule. The Crown has acknowledged that not every project has the same level of proof and to prove its case, the Crown will have to rely on inferences drawn from patterns of conduct. If the indictment was framed as 38 individual counts of fraud committed against named corporations, the Crown could not simply invite the jury to apply the evidence across counts. The Crown would have to meet the stringent test for cross count applicability of the evidence, a test which could not be met given the wide variation in the conduct alleged in the 38 incidents described in the disclosure.
• An essential element of the offence of fraud is deceit. The applicants anticipate that there will be evidence at trial that the 38 corporations were entirely aware that the successful bidder at the design stage would also submit the lowest bid at the build stage. No one was deceived. If the indictment was properly framed as 38 individual frauds, the Crown would be held to its burden of proving that each of the 38 victims were deceived. By framing the allegations instead as an offence against the public, the Crown hopes to skirt the burden of proof, relying on an amorphous “pattern of conduct” rather than hard evidence of actual deception.

The Position of the Crown

[8] The Crown begins with the observation that the framing of the indictment conforms to section 581(1) of the Criminal Code. A series of events that are sufficiently connected may properly be described as a single transaction: R. v. Kanagarajah, 2018 ONCA 121, at para. 31. In this case, the acts are connected by the identity of the perpetrators, the similarity of the alleged conduct and the timeframe of the offences. The purpose of the single transaction rule is to ensure that the defendants are aware of the charges which they face and are able to make full answer and defense. There is no dispute that this has been accomplished.

[9] The word “public” as it appears in section 380(1) of the Criminal Code is interpreted broadly and includes a fraud which targets a segment of the community. In this case, the fraud targeted condominium corporations, which represent both a segment of the public and the collective interests of individual condominium unit owners. The fraud allegedly perpetrated by the defendants against the condominium corporations necessarily affected the interests of the unit owners through increased condominium fees. Recognizing the impossibility of identifying and naming all the owners of condominium units in the 38 fraudulently rigged projects, the Crown has properly framed the indictment as a single offence against the public.

Analysis

[10] The defendants do not allege a breach of the single transaction rule. Mr. Gold acknowledges that the indictment could have been framed as a single count naming all 38 of the allegedly victimized corporations. His position is that each victim must be named, and that argument relies primarily on the ruling in Cull.

[11] In Cull, the accused was arraigned at his preliminary inquiry on a charge of committing a fraud on the public. Although the charge alleged a fraud on the public, it went on to particularize the offence as having been committed against identified lessors and lessees who had contracted with the accused. The Crown disclosed ten allegedly fraudulent transactions, each of which involved an identified victim. Counsel for Cull argued that the information did not disclose an offence known to law. The Magistrate rejected that submission and conducted the preliminary inquiry. The accused applied to review the Magistrate’s jurisdiction to conduct the hearing on the basis that the charge should have been declared a nullity. The Court agreed:

“7 Counsel argued before me that the information is a nullity upon a number of grounds, the first of which is that it fails to disclose any offence known to the law. This submission in my view is well founded.

8 Section 323(1) says "Everyone who, by deceit, falsehood or other fraudulent means ... defrauds the public or any person ... of any property, money or valuable security, is guilty of an indictable offence... (the italics are mine). The information here charges the accused with defrauding the public rather than named persons, but it goes on to set out the nature of the fraud. This additional information constitutes the allegation that certain individuals, some dealing with the accused as lessors and others dealing with him as lessees, were defrauded of money by him. Consistent with this is information as to the Crown's evidence informally given to Mr. Greenfield by the prosecutor's office containing particulars of ten separate transactions, each involving a different person and different premises.

9 The word "public" as used in s. 323(1) means people grouped on some basis and taken as a whole. An example of an appropriate charge of defrauding the public is Regina v. Lemire, [1965] S.C.R. 174, 45 C.R. 16, [1965] 4 C.C.C. 11, 51 D.L.R. (2d) 312. The accused in that case was an employee of the Quebec Liquor Police. He had applied for an increase in salary. It was agreed that he was entitled to better remuneration, but circumstances made it impossible to grant an increase at the time. Lemire dealt with the situation by submitting fictitious expense accounts which were paid, and amounted to about $50 each month. He was charged with defrauding the public in general and the Government of Quebec.

10 In my opinion this information, which first charges Cull with defrauding the public, but in stating the nature of the fraud alleges in effect that certain individuals were defrauded, is a nullity.”

[12] The applicants submit that Cull stands for the proposition that if the victims of a fraud are known and each is involved in a distinct transaction, the offence cannot be charged as an offence against the public. With great respect, I am not certain that Cull does stand for that proposition.

[13] As I read Cull, the question was not whether the Information could have been framed solely as an offence against the public, but whether it could allege an offence against the public while at the same time particularizing the offence as having been committed against identified lessors and lessees. Section 323(1) of the Code permitted a charge of fraud against the public or fraud against a person, but not both.

[14] To find that a count is a nullity, a court must conclude that it does not disclose an offence known to law. The fact that a charge is inaptly drafted is not enough. As I read paragraph 10 from Cull, it is at least possible that the charge was declared a nullity not because it framed the charge as an offence against the public, but because it named both the public and individuals as the victim.

[15] Given my uncertainty about the interpretation of Cull, I turn to more recent authorities to determine whether the charges which are before this court are appropriately framed as offences against the public.

[16] In R. v. Romain, 2017 ONCA 519, the accused were alleged to have taken part in a telemarketing scam targeting residents of the United States. Telemarketers situated in Toronto called American residents and offered to lend them money on attractive terms. The victims were told that they would have to make an advance payment to receive the loan. The representations of the telemarketers were false, and no loans were made, but over $1 million in “advance payments” were received by the fraudsters.

[17] On appeal, the accused maintained that the Crown had improperly charged him with having defrauded the public when the charge should have named the individuals who were known to have been victimized by his conduct. The court rejected that submission at paragraph 95:

95 We do not accept counsel's submissions. The frauds alleged and proved by the Crown fell squarely within the kind of fraudulent scheme that has always been charged as a fraud on the public. The scheme targeted a segment of the public at large, as opposed to specific individuals identified as targets before the scheme was implemented. The scheme’s goal was to cheat anyone who answered the ads and called the "boiler rooms". There is nothing deceptive or prejudicial in describing the victims of this fraud as "the public". Indeed, to describe the frauds alleged and proved by the Crown as a number of individual frauds against individual victims would mis-describe the nature of the fraudulent scheme and significantly understate its seriousness.

[18] In R. v. Bernard, [2009] OJ No. 5366, the accused was charged with having committed a series of frauds against “big box” retail stores. The accused organized a group of young women to purchase goods from retail stores using counterfeit currency, then return the merchandise to receive the refund in legitimate currency. The count was framed as a fraud against the public rather than the individual retail stores, even though the identity and locations of the victimized stores was known. Defence counsel relied on Cull in arguing that the charge was improperly framed. The trial judge dismissed the argument, finding that the corporations which were victimized were properly characterized as “the public”. This finding was upheld on appeal, the Court of Appeal stating:

4 The indictment properly charged a conspiracy to defraud the public and the conspiracy proved, that is, an agreement to defraud the operators of "big box" retail stores of merchandise through the passing of counterfeit money and the subsequent exchange of the merchandise for real money, established a conspiracy to defraud the public.

[19] In R. v. Riesberry, 2014 ONCA 744, the accused injected a racehorse with a performance enhancing substance which was intended to increase the probability that the horse would win a prize race. The charge alleged an offence against the public, specifically those members of the public who had wagered on the outcome of the race. The trial judge acquitted the accused, reasoning that there was no evidence that any member of the public had placed a bet based on knowledge that the horse had been injected with prohibited substances. In the trial judge’s view, the only parties who were at risk of deprivation were the other participants in the race and they had not been named in the Indictment. The Court of Appeal found that the trial judge had erred in finding that the offence did not entail a risk of deprivation to the public. The Court stated at paragraph 21:

ln this regard, we agree with the Crown that the horse racing bettors are in a similar position to the investors in R. v. Drabinsky, 2011 ONCA 582. Just as investors were entitled to rely on the accuracy of the financial statements, bettors were entitled to assume compliance with the regulatory scheme. What occurred in this case was not a minor breach or minor non-compliance with the regulatory scheme. Where there is an attempt (successful or not) to affect the outcome of a race through the use of banned performance-enhancing substances, such a significant breach of the regulatory scheme necessarily places bettors at risk of being deprived of their bets. Indeed, as the trial judge found, the very purpose of the injection was to create "an unfair advantage" for the respondent's horse.

[20] In my view, the charge of defrauding the public in the context of this case falls comfortably within the recent jurisprudence:

• A number of corporations can be characterized as “the public” for the purposes of section 380 of the Criminal Code, (Bernard).
• The fact that the Crown's case is proved by individual frauds committed against identifiable victims does not preclude a charge of defrauding the public (Romain).
• The fraud alleged in this case occurred in a tightly regulated industry. The condominium board seeking bids for refurbishments, the legitimate bidders who submitted tenders for that work, and the condominium unit holders who ultimately paid for the work all relied on the applicants to abide by a well-established legal framework (Riesberry).

[21] The ripple effect which is said to be the hallmark of a fraud against the public is apparent in the widespread but intangible effects of the fraud on competing bidders, subcontractors, and unit holders. Indeed, it might be said that the public is defrauded on almost any occasion where fraudulent activity has the effect of undermining a competitive marketplace.

[22] Mr. Gold seeks to distinguish Romain, Bernard and Riesberry on the basis that in those cases, the victims were not targeted at the outset of the fraud but rather became ensnared in a fraud which was designed to victimize random members of the public. By contrast, the fraud designed by the applicants only targeted those condominium corporations which invited tenders for refurbishment projects. Mr. Gold argues that in this case, the victims “self-selected”, meaning that the fraud was confined to an identifiable group and had no potential of rippling out to affect a wider, unidentifiable portion of the population. With great respect, I do not find that this is a distinguishing feature.

[23] In Romain, the accused put out an advertisement which the victims answered. There was a finite number of victims and they were all identifiable. It is true that the fraud targeted a wider segment of the public than the few victims who answered the ad, but that was not a salient consideration in assessing the validity of the offence charged. The goal of the scheme was to cheat anyone who answered the ads in the same sense that the goal of this scheme was to deceive any corporation which was seeking tenders for condominium refurbishment projects. The victims in this case did not “self-select” any more than the Big Box stores in Bernard or the bettors in Riesberry self-selected.

[24] There is nothing in Romain, Bernard, or Riesberry to suggest that the way the victim is selected by the accused is a material consideration in the framing of the charge. Rather, the inquiry focuses on whether the victims of the fraud can rationally be grouped as a whole for the purpose of assessing the guilt or innocence of the accused. There are risks to the prosecution in framing the indictment in this fashion, particularly if the evidence proves only a few frauds against identifiable targets and falls short of establishing a wider offence against the public. It is within the discretion of the Crown to take that risk in drafting the indictment. If the indictment discloses an offence known to law and does not cause unfair prejudice to the accused, the court must not interfere. This indictment meets those criteria.

[25] If I have erred in this conclusion, I would alternatively find that the indictment properly charges an offence against the public based on the fact that the offence also targeted individual unit holders within each of the 38 condominium corporations. Any loss to the corporation would necessarily be passed down to the unit holders through increased condominium fees. Artificially increased condominium fees would foreseeably result in diminished property values or increased mortgage costs for unit holders. It would be impossible to determine the identity of the many unit holders over the five-year period alleged in the indictment. These are precisely the circumstances, which have historically been prosecuted as a fraud against the public.

Conclusion

[26] The application to quash count number three on the indictment is dismissed. It follows the application to quash count number two, conspiracy to commit fraud, is also dismissed.

[27] The applicants submit that the current framing of the indictment effectively permits the Crown to circumvent the similar fact rule. I did not have fulsome submissions on the point and was only asked to rule on the validity of the indictment. I leave it to the trial judge to determine how the jury should be instructed regarding the use of evidence of multiple frauds in deciding whether the Crown has proven a single compendious charge of fraud against the public.

Justice Peter Bawden Released: August 25, 2023