R v MacMullin, 2014 ABQB 661

Court of Queen ’ s Bench of Alberta Citation: R v MacMullin, 2014 ABQB 661 Date: 20141029 Docket: 110295011Q1 Registry: Edmonton Between: Her Majesty the Queen Crown - and - Allan Dawson MacMullin and Roy Elander Offender Corrected judgment: A corrigendum was issued on October 30, 2014; the corrections have been made to the text and the corrigendum is appended to this judgment. _______________________________________________________ Reasons for Sentence of the Honourable Mr. Justice A.W. Germain _______________________________________________________ I.

Introduction............................................................................................................................. 2 II. The Position of the Parties....................................................................................................... 2

A. The Crown........................................................................................................................... 2 B. Mr. MacMullin..................................................................................................................... 3 III. A Short Factual

Summary................................................................................................... 4 IV. Documented Economic Loses............................................................................................. 8 V. Victim Impact Statements....................................................................................................... 9 VI. Other Victims...................................................................................................................... 9 VII. Mr. MacMullin’s Background and Statement to Court.................................................... 10 VIII.

Legal Analysis................................................................................................................... 12 A. The Changing Sentencing Regime.................................................................................... 12 B. Restitution......................................................................................................................... 13 C. The Specific Sentence Imposed on Mr. MacMullin.......................................................... 14 1.

The Mechanics of the Sentence..................................................................................... 14 2. How Much Jail Time?.................................................................................................... 15 IX. Conclusion......................................................................................................................... 19 I. Introduction [ 1 ] On Aug. 1, 2014 I convicted Mr. Allan Dawson MacMullin [“Mr. MacMullin”] of 38 counts of mortgage fraud ( Criminal Code , RSC 1985, c C-46, s 380(1)(a)). A co-accused Mr. Roy Elander [“Mr.

Elander”] was convicted of 14 of the counts. The factual details about this fraud are found in R v MacMullin , 2014 ABQB 476 . Sentencing was adjourned to Oct. 23-24, 2014. [ 2 ] However in the interval Mr. Elander’s health had deteriorated. A medical certificate was produced confirming that he was required in the province of British Columbia to participate in a series of dialysis treatments for kidney failure, two of which would be on Oct. 23-24. This made Mr. Elander’s attendance at the sentencing hearing improbable, impractical, and at considerable health risk to him.

I indicated to counsel that the sentencing of Mr. Elander’s matter would be adjourned and Mr. MacMullin’s sentence hearing would go forward. [ 3 ] These reasons discuss the sentence imposed on Mr. MacMullin. II. The Position of the Parties A. The Crown [ 4 ] The Crown asserts that this was a major, sophisticated mortgage fraud in which nearly $1 million of identifiable actual losses were sustained by straw buyers and financial institution insurers. The potential for loss was much greater. It submits that Mr.

MacMullin should serve 10 years in a federal penitentiary for his role as the ringleader of this mortgage fraud. It also asks for an order of restitution. B. Mr. MacMullin [ 5 ] Mr. MacMullin’s position is that as a first-time offender with a young family his sentence should be less than the Crown suggests. While the sentence handed out to the co-accused Mr. Seremet has to be the practical floor to any sentence Mr.

MacMullin might receive, Defense counsel suggests that an appropriate sentence is four and a half years in prison for the following reasons: 1. 10 years is in fact the maximum sentence for a single count of fraud; his client should not get the maximum sentence individually or globally; 2. Mr. MacMullin produced a group of positive support letters from family and acquaintances in the community; 3. Mr. MacMullin has rehabilitated himself in the extensive number of years since the offenses occurred; 4. the long delay between criminal conduct and sentencing should mitigate the sentence;

5. the sentencing regime that existed at the time must apply and that the Court should be cautious about using sentence decisions that occurred after the legislation changed increasing the penalties for fraud; and 6. the Crown is asking for nearly $1 million in restitution orders as part of the sentence; this goes to general and specific deterrence and in result 10 years imprisonment on top of that level of restitution is not warranted. [ 6 ] Defense counsel submits that the restitution in favour of the straw buyers (representing the portions of the CMHC and GE Capital claims that were paid by straw buyers in the foreclosure collection process) should be granted.

The requests of CMHC and GE Capital should be rejected for several reasons: 1. the law requires that claimants not profit from the transaction and since they received an insurance fee, at a minimum it, and all of the insurance fees for all counts, even those without claim, should be deducted; and 2. based on Mr. MacMullin’s age and the fact that he will be sent to the penitentiary, his ability to repay a restitution order throughout his remaining life is remote and therefore a full restitution order should not be granted. III. A Short Factual

Summary [ 7 ] This was a six-month trial. A short factual

summary cannot do justice to the sophistication of the fraud, nor the related unindicted criminal activity that was undertaken to advance the fraud. However, many will not need to review the extensive reasons for judgment and this

summary will suffice to put the case in context. [ 8 ] Before drawing conclusions from the facts that go directly to factors that mitigate or aggravate the sentencing I want to discuss the fraud by its concept and four of the cases. They provide a sense of what was going on here. All counts leading to conviction left a trail of heartache, loss, victimization and collateral damage. The fact that I do not mention them all does not mean that I am insensitive to the pain and suffering of the victims. I have chosen the counts that I summarize as stage setting, revealing the worst human characteristics of Mr.

MacMullin: greed, deceit, dishonesty, and a lack of empathy to his victims. [ 9 ] Mr. MacMullin orchestrated a series of frauds on Canada’s financial institutions. Mr. MacMullin used various techniques to obtain first mortgages from financial institutions that they would not have granted had they been aware of the true facts. One of his simplest ploys was to acquire property, and resell it at marked up value before the actual closing date. Mr.

MacMullin would create this apparent increase in value with fictional agreements, to individuals who had no intention to either live in the home or fund any part of its purchase price. Mr. MacMullin would find a credit worthy borrower, or one that could be made credit worthy by deceitful financial information. These individuals, whom we called straw buyers, would apply for a high ratio mortgage financing property to 95% of the property’s value, which was often overstated to begin with. The straw buyer was doing this for a fee; the equity always was with Mr.

MacMullin, his related companies, or close associates. [ 10 ] Occasionally, Mr. MacMullin would encourage other homeowners to transfer their property in one of these straw deals so that he could pocket the cash raised by the new mortgage. I outline one of those transactions later. Not all of Mr. MacMullin’s straw buyers were, in fact, credit worthy, so he would create credit fictions for them including the creation of false investment documents which would become part of the mortgage application. Mr.

MacMullin proved to be very adaptable at shifting the situation to deal with the facts that he was presented with, but in all cases this is a mortgage fraud in which individuals were held out as being bona fide purchasers for value when that was not the case. The value of the property and its worth was often overstated, the credit worthiness of the borrower was often overstated, and there was a fiction created that the borrowers had made a down payment and would reside in the property to make them eligible for high ratio financing. [ 11 ] The first case I mention occurred in 2003 [count 34, property 27].

A property in Edmonton was owned by the Chins and purchased by Mr. Ouellette under the direct supervision and coaching of Mr. MacMullin. Mr. MacMullin was approached through his church by a desperate Mrs. Chin. Her husband had been in a motor vehicle accident, their car was ruined, he was unable to work, and her clerk salary did not allow her to make ends meet. Mr. MacMullin sold her on the concept that the way to get out of debt was to go deeper in debt. He would arrange a sale of her home to Mr. Ouellette in a pretend deal at an inflated price. He persuaded Mr.

Ouellette to do this for a fee but also to help someone else. Mr. MacMullin persuaded Mrs. Chin to do this on the basis that her investment would pay her mortgage payments and by being rid of mortgage payments she could handle her other bills. [ 12 ] The mortgage was registered. Mr. MacMullin pocketed the new cash. There was no legitimate investment. Mr. Ouellette was paying the mortgage payments. When Mr. Ouellette found Mr. MacMullin less than cooperative in reimbursing him for the mortgage payments he approached the Chins to at least see where the rent was going.

After discussion with the Chins they both realized that they had been victimized. [ 13 ] The financial institution did not lose money because Mr. Ouellette worked with the Chins allowing them to buy back their home and pay him his losses over time. The Chins ended up with a larger first mortgage than they had historically at a much higher interest rate and second financing to Mr. Ouellette. It was only Mr. Ouellette’s kindness that allowed the Chins a chance to retain their property. [ 14 ] The Chins are now divorced.

They were unable to hold onto the property because they ended up with a larger first mortgage at a higher rate after the transaction. The entire deal was a sham. There was no real change of ownership and the financial institution was defrauded into believing that this was an arm’s-length transaction designed to provide a home for the Ouellettes, not increased financing for the Chins (but which went into Mr. MacMullin’s pocket). [ 15 ] This deal is illustrative of another concept. The Crown submitted it identified nearly $1 million in actual losses by the mortgage insurers. That is an understatement.

This is a deal in which there is no third party claim however it is clear that Mr. MacMullin extracted money from this property. If it is estimated that he extracted only $10,000.00 from each piece of property in which a financial

claim was not made his criminal proceeds could be understated by at least $220,000.00. We know that in one transaction [count number 28] Mr. MacMullin pocketed at least $35,000.00 from a victim, Mr. Jim Large, by using straw buyers to finance the property at an amount greater than what Mr. Large had agreed to pay, and absorbing completely Mr. Large’s entire down payment. [ 16 ] Further, in the Chin and Ouellette deal collateral to the mortgage fraud Mr. MacMullin extracted significant personal savings from the Ouellettes. It is not unrealistic therefore to assess the actual monies that went into Mr.

MacMullin’s pocket at 1 ¼ million dollars. Recognizing that this fraud ran on for about four years, Mr. MacMullin was paid handsomely for four years of fraud. [ 17 ] I next review count 37 [property 30]. This transaction occurred toward the end of the frauds. Mr. MacMullin was getting desperate. The new deals were drying up and he was getting pressure from many sources for repayment. A couple, the Lamouches, were approached to invest. After listening to the sales pitch they decided that the deal did not seem right. They declined to participate. Mr. MacMullin did not give up; he suggests that Mrs.

Lamouche could be put on title with another man to do a deal. Mr. Lamouche told the Court that it just didn’t seem right, his wife being on title with another man. [ 18 ] Mr. MacMullin was not deterred. He fraudulently borrowed Mrs. Lamouche’s identity and browbeat Mr. Seremet to witnessing a signature that he had, in fact, not seen applied to the document. It was a fraudulent signature. Again, the whole transaction was a mortgage fraud. A financial institution was convinced that this was an arm’s-length transaction to fund a principal residence for a new home buyer.

The deal was, in fact, to purchase a property for Mr. MacMullin and finance it for more than the purchase price. [ 19 ] The third transaction I wish to review is count seven [property five]. Shane Anderson and Lisa Anderson began the downward spiral to the end of their relationship by believing that Mr. MacMullin was honest when he advised him that he would take their existing home as a trade-in to put them in a brand-new home in Blackfalds, Alberta. Mr. MacMullin arranged for Mr. Wintringham to purchase the property and the monies from the sale would become the down payment for the Andersons’ new home.

However Mr. MacMullin further abused the Andersons by pocketing their rent and not paying Mr. Wintringham’s new mortgage, so that in the middle of the night around Christmas time they were put out of the home by a Sheriff’s bailiff following through on a foreclosure action. [ 20 ] The Andersons moved into a property close to the new home that was being constructed for them, only to quickly realize that Mr. MacMullin was not going to deliver on his promise. This case is illustrative of the compounding fraudulent elements of Mr. MacMullin’s dealings with these straw buyers.

He would cheat them in acquiring their home; he would cheat them in pocketing their rent money; and he would put them in a dire situation where they effectively lost everything. This example also illustrates that proceeds from this crime spree are understated by the Crown because there is no accounting for the several months of rent pocketed by Mr. MacMullin. [ 21 ] The last transaction I want to review is count 23 [property 18]. This involves a straw buyer by the name of Rick Ngeth. Mr. Ngeth was traded in some fashion to Mr. MacMullin from another one of his business acquaintances to see if Mr.

Ngeth could be used to obtain some mortgages. One such mortgage was this property. Here all pretense or interest in covering up the fraud was stripped away. Mr. MacMullin purchased this property for $124,000.00. Working through a mortgage broker he supplied a fraudulent purchase agreement selling to Mr. Ngeth for over $140,000.00. The financial institution lent over $140,000.00 on a $124,000.00 purchase. [ 22 ] The four transactions that I have outlined are merely samples. There were 38 of these mortgage frauds. [ 23 ] Mr.

MacMullin used fictional agreements, falsified down payments, created investment accounts where there were none, and utilized professionals who were less caring and themselves more gullible. Mr. MacMullin went through many lawyers looking for those desperate for fees, professionally weak, and also with a larcenous streak. Mr. MacMullin also found and corrupted Mr. Seremet, who would assist him in these frauds, and who would later plead guilty to these frauds and be sentenced to a period of prison. [ 24 ] The reality is that Mr.

MacMullin would create any type of paper fiction, state any level of falsehood, and pay or say anything to anyone to induce them to help him defraud a financial institution. He was the ringleader of this mortgage fraud and he must be sentenced as the ringleader. Mr. MacMullin epitomizes the definition of a racketeer: a person who makes money through dishonest or illegal activities. [ 25 ] These are some of the important critical facts: 1. The fraud was extremely sophisticated, with Mr. MacMullin as its ringleader. As it progressed Mr.

MacMullin adapted to more carefully hide his involvement behind corporations, fictional entities, and straw buyers. 2. The fraud went on from early in the year 2000 until the spring of 2004. 3. The fraud had many victims. These include 15 financial institutions, mortgage insurers, and 35 straw buyers who participated in the fraud with Mr. MacMullin not knowing what they were getting into. Mr. MacMullin appeared heartless in who he would exploit, including his second wife, mortgage brokers, lawyers, people from his church, his Amway contacts, his relatives, friends, and others. Who were his victims?

Virtually anyone he could cheat. With those like Mrs. Lamouche who were too smart for him, he stole their identity. 4. The economic financial losses were significant and there was little care or empathy exhibited about the commercial jeopardy the straw buyers were getting into. 5. Frightened straw buyers who wanted out were on occasion intimidated to do another deal. 6.

Imbedded within these frauds were many other elements of other criminal activity including: abuse of a Commissioner for Oath designation, identity theft, uttering false and forged documents, and possession of monies knowing they had been obtained by criminal activity. [ 26 ] It is important in Canadian criminal law that individuals charged with crime have their trial. However here, as the Crown fought for every single conviction, the downside to Mr. MacMullin is that the Crown laid a trail of economic deceitfulness that took me

numerous pages in my final judgment to describe. Day after day Mr. MacMullin would sit in the dock looking at straw buyers describing their ruined lives and economic chaos, all caused by his callous indifference and insensitivity. [ 27 ] During the trial Mr. MacMullin elected to give evidence. He concluded by describing in great detail what a religious man he was, and how he was doing all of this to help these victims. [ 28 ] Sometimes a trial achieves more than proof beyond a reasonable doubt. It exposes the evil embedded in the individual on trial.

It strips away any suggestion that the victims here were simply Canada’s financial institutions, and removes any Robin Hood mentality of a clever individual just trying to get ahead and put deserving people in houses they could not otherwise acquire. The trial exposed Mr. MacMullin for what he is: a pathologically dishonorable, deceitful individual who cared little about who he hurt as long as it was not him who got hurt. Sometime Canadian criminal law trials do more than just prove the crime beyond a reasonable doubt, sometime they give us a window into the soul of dishonesty. IV.

Documented Economic Loses [ 29 ] There were many economic losses, and many indirect adverse economic consequences to the straw buyers. However the losses were generally born by two organizations. These are the mortgage insurance corporations who operated in Canada at the time. One was the well-known Canada Mortgage and Housing Corporation [“CMHC”] the other was a commercial variant: Genworth Financial Canada [“GE Capital”] [ 30 ] Their mandate is to provide insurance to financial institutions so that the financial institutions can make high ratio mortgages.

A high ratio mortgage, with its smaller down payment, carries with it increased risk. When a mortgager is based on a fraudulent set of circumstances, the risk is greater yet. In addition, some of the insurers pursued the straw buyers and received some recovery from straw buyers. That recovery is also documented and was part of the Crown’s application for restitution orders. [ 31 ] However other losses, such as straw buyers staying with the property to make the best of a bad situation, or working out their losses together like the Chins and the Ouellettes, are not documented in the Crown’s brief.

It is clear that those losses did exist, caused economic damage to straw buyers, and left a lifetime of hurt. My discussion now is about the documented loss picture. [ 32 ] Exhibit S-1, contains a

summary of the loss picture flowing from these 38 convictions. On 22 of the properties circumstance worked out that there was no loss to the mortgage insurers. However, on the remaining 16 the loss total is $982,530.79, of which the various financial institutions through their insurers recovered from straw buyers $237,187.00 and sustained at the insurance level a net loss of $745,343.79. This loss is split between the two mortgage insurers.

The first of these is CMHC, a crown corporation owned by the taxpayers of Canada, whose mandate is to create homeownership buying opportunities, often to first-time homebuyers. A fraud on that institution is a fraud on all taxpayers of Canada. It strikes at the heart of affordable housing for our most vulnerable. The CMHC loss was $483,739.93. The other loss was sustained by GE Capital at $261,603.86. While this is not a government agency their mandated goal is the same: to make reasonable fees by providing an opportunity for Canadians to own houses. V.

Victim Impact Statements [ 33 ] Monetary victimization is not the only victimizing that occurred here. Some of the victims filed written victim impact statements. Many indicated the financial hole that Mr. MacMullin dug for them, how his activities ended and destroyed their marriage and quality of life. Some have been pursued by the mortgage insurers. [ 34 ] I have listened carefully to the victims who gave their statement in court. I also heard some of their anguish when they gave evidence in the trial. I have read all of the victim impact statements, some more than once.

I am moved by the plight and circumstances of the victims. [ 35 ] Both Mr. and Mrs. Chin supplied written victim impact statements. They described the destruction of their marriage and the loss of their home, flowing directly from Mr. MacMullin’s impact upon them. Mr. and Mrs. Ouellette both gave victim impact statements. Mrs. Ouellette expressed concern for the depth of despair into which her husband fell, arising out of the betrayal of trust that he had placed in Mr. MacMullin. I recall in this trial that Mr. MacMullin seduced Mr.

Ouellette to invest partly on the basis as a call to invest was a call from God, thereby taking advantage of Mr. Ouellette’s Christian beliefs to further hook him into a fraudulent mortgage scheme. [ 36 ] By far the most poignant victim impact statement was delivered by Shane Anderson who exhibited visible grief and anguish while on the witness stand reading his victim impact statement. It is clear that he feels that through Mr. MacMullin he has lost everything. He certainly lost his marital relationship to a sensitive and caring woman, his ex-wife Lisa Anderson. Mrs.

Anderson also read her victim impact statement, speaking in a clear voice and looking directly at Mr. MacMullin. She asked him: where is the mercy for her family? [ 37 ] In fact the reality is there was no mercy for her family. She was the victim of an economic predator who appears to have little empathy for those he abused. Mr. MacMullin showed no mercy to anyone, any time. Whether he was taking advantage of young Amway marketers who were looking to him for inspiration, or taking advantage of an individual such as Mr. Seremet who viewed Mr.

MacMullin almost as a surrogate father, there was no mercy shown to anyone. Mr. MacMullin’s responses would go from religious prayer, to aggressive implied threats of taking straw buyers down with him if they threatened to go to the authorities. VI. Other Victims

[ 38 ] Mortgage fraud has a rippling effect through society. In addition to the actual victims identified in the crime there were other victims. One of the financial institutions stopped dealing with mortgage brokers as a result of their experience with Mr. MacMullin and perceived that mortgage brokers would be less reliable than their own employees in sifting through fraudulent applications. The mortgage broker industry in Canada plays a significant role in homeownership because a mortgage broker will scratch below the surface and try and find a lender who will help a Canadian resident obtain financing.

An unintended victim of this fraud is the embarrassment sustained by the mortgage broker industry. VII. Mr. MacMullin’s Background and Statement to Court [ 39 ] Defense counsel did not dwell on Mr. MacMullin’s background in his submission. We do know that Mr. MacMullin is currently with his third wife, and we do know that he has two young children plus adult children from his first marriage. It is difficult to get a handle on what he is doing for a living. In his statement to the court he indicated that the only job he could get is working with his son. In the support letter written about Mr.

MacMullin by his son it was implied that he was working in the southern Alberta area and responsible for approximately 22 employees. The usual background, such as education and employment, were not brought to the Court’s attention. [ 40 ] Sentencing Exhibit 2 is a few support letters. Despite Mr. MacMullin’s expressed wide business involvement there are no support letters from business colleagues, confidants, or peers. There is a letter from his minister, an individual who Mr. MacMullin put in a home with no down payment, but not before inflating the price and extracting from the home cash for his own pocket.

The minister paid more for the home that it was worth because he could not afford a down payment. The difference went to Mr. MacMullin. Nevertheless the minister expresses gratitude for Mr. MacMullin’s Christian effort, including a trip to Africa where he distributed the word of God. [ 41 ] Mr. MacMullin’s oldest son wrote a lengthy letter urging the court to see through the crime and conclude that his father is really a good man. He indicates it makes no sense to put his father, a good man, in jail.

He indicates that his father taught him strong moral values and that the world is a better place because of his dad. He expresses the view that he loves and respects his father. [ 42 ] Mrs. Langley, Mr. MacMullin’s, mother also wrote a support letter. She indicates that she could not have gotten through her life the last few years without his love and help. She indicates that he helped her financially. She appears oblivious to the fact that he was helping her financially by fraud on others. [ 43 ] Mr. MacMullin apparently did some charitable work with those that were less fortunate and living at the Cecil Hotel.

Through that connection a retired schoolteacher writes indicating that Mr. MacMullin works hard employing many workers that have problems like mental illness, alcoholism, and that he cares about his workers. Mr. MacMullin also cares about his family and spends time with his young children. Overall Mr. MacMullin is an asset to society in the way he helps many people. [ 44 ] Mr. MacMullin’s current wife also indicates that she has been married to Mr. MacMullin since 2005. She was attracted to him because he was a caring and kind person who would go out of his way to help others. They met because she worked for Mr.

MacMullin at the Westridge Park Lodge, one of his other failed businesses. She indicates that the charges happened so long ago in the past that she urges the court not to imprison her husband. She indicates he should not be imprisoned because of the impact to her and her family. [ 45 ] Mr. MacMullin’s daughter is a paramedic. She indicates that her father was always trying to help the little guy and pass on the word of God. She comments that his health is not ideal and that the trial has taken its toll on him and his family. [ 46 ] The final letter is from an acquaintance with whom Mr.

MacMullin has met in Medicine Hat. She opines “Alan is no harm to anyone or anything. I have seen such destructive behavior for many people in my life, many businesses and even government institutions - but not from Alan or any of his companies.” [ 47 ] I make two comments about the support letters. If a person could stay out of jail because of the love of their mother, spouse, children or their minister, there would be nobody in jail. The individuals who wrote these letters supporting Mr. MacMullin simply do not get it.

They believe that he is a good, kind, caring man who does not deserve to go to jail. [ 48 ] With respect to their honorably held views, the evidence of Mr. MacMullin’s character as portrayed in these 38 crimes of moral turpitude which set off a wave of economic and social destruction clearly indicate that he is not a good person. He is a morally corrupt man who hides behind good deeds and Christianity because he wants the respect and adulation of those he comes in contact with. Since he cannot earn it honestly, he attempted to earn it by deceit and fraud. [ 49 ] Mr. MacMullin also addressed the Court.

In a subtle way, he again attempts to divert blame to Joe Seremet. He does not admit that he did wrong but simply concedes that some in society have concluded that he has done wrong. He has been greatly hurt by this process! Mr. MacMullin has been beaten, his family have been harmed. Again, as when Mr. MacMullin gave evidence at trial, it’s all about him. The trial process has taken too long and this affected his health. If the police had moved quicker to stop his scheme some of this hurt may have been avoided.

His assessment of justice is that it is wrong to put a white-collar, harmless criminal like himself in jail. That there has to be a better way. [ 50 ] In sentencing Mr. MacMullin, I conclude from listening carefully to his comments that he does not understand his guilt and his role in this. He simply believes that he has been convicted because of legal technicalities, and that he was throughout trying to do good but failed to execute the plan of goodness properly. [ 51 ] Mr. MacMullin is going to be sentenced by me as an unrepentant unapologetic fraudster.

He says the right things, expresses his sorrow to the victims, but still continues to divert blame and declines to accept responsibility. When one listens carefully to his final address to the court, as when he gave evidence in his trial, his real submission is that he is the victim here, but now expanded to include his other family members.

VIII. Legal Analysis A. The Changing Sentencing Regime [52] The sentencing regime for those convicted of fraud changed between the date of these offenses and the current regime:Criminal Code, ss 380-380.4. The law obliges me to sentence as if the changes did not occur: Canadian Charter of Rights and Freedoms,Part 1, Constitution Act, 1982, being

Schedule B to the Canada Act 1982 (UK), 1982, c 11, s 11(i).

This means that cases which occurredafter the maximum fraud sentence increased from 10 years to 14 years must be considered cautiously. [53] In addition in the new fraud sentencing regime the courts are now mandated to consider certain aggravating circumstanceswhere historically a court might, but was not obliged to consider common sense issues that would aggravate a fraud sentence such as theextent of the victimization: Criminal Code, ss 380(1.1), 380.1, 380.4. [54] At its heart, the sentencing regime starts with the proposition that on any one count a maximum 10 year sentence can beimposed.

This is what the Crown suggests is an appropriate global sentence against Mr. MacMullin for all 38 convictions on a globalsentencing basis. [55] The principles of sentencing are set out in Criminal Code, s 718. They focus on deterrence, denunciation, and rehabilitation.The concepts are not always reconcilable; if a court focuses on the rehabilitation of an offender, victims and society feel concerned thatthere has not been enough punishment or a strong enough message sent to deter others who would move down the path of fraud. [56] The legal literature has made clear in Canada that fraud is a serious problem.

Fraud is the type of crime that people go into ona planned and deliberate basis, so the sentencing of fraudsters must focus on denunciation and deterrence in preference to rehabilitation:R v Davis, 2014 ABCA 115 at para 27, 572 AR 237. Fraudsters are often intelligent people. The sentences for fraud have to besufficiently punitive to discourage others: R v Steinhubl, 2013 ABCA 39 at paras 21-24, 542 AR 207. In the context of this case it meansthat Mr.

MacMullin must be sentenced to a significant period of federal penitentiary time to deter him and also to deter others who canprofit greatly from fraud. [57] Robert J. van Kessel and Paul S. Rand in, The Law of Fraud in Canada (Markham, LexisNexis: 2013) observe in paragraph1.2 that: ... concerns over fraud are more than abstractions. Estimates of the economic harm inflicted by fraud are ... astonishing. It is said to be aline of criminal activity which is as profitable as the trade in illicit drugs. The Royal Canadian Mounted Police estimates it to be a $10 to$30 billion problem in Canada annually.

Even at the low end of that range these figures speak to the massive scale on which fraud occurs... In terms of impact on the population, broad estimates suggest that in any given year, six out of 10 Canadians may be targeted byfraudsters ... Victims range from individuals duped by unscrupulous investment promoters, businesses who lose recourse against debtorsbecause of fraudulent preferences, financial institutions extending loans on fraudulently obtained mortgages, and government agenciesthat are deceived by identity fraud. These examples of course only scratch the surface.

In whatever manifestation fraud underminesconsumer confidence, compromises the economic system, erases people’s life savings, and promotes personal health problems in itsvictims. [Emphasis added.] B. Restitution [58] A restitution order may be part of the sentencing regime in appropriate cases. During the sentencing regime existing at thetime of these offenses the Criminal Code had not yet been amended to include Criminal Code, s 380.3, which specifically encouragesrestitution for fraud and directs that the court specifically inquire about this.

However even absent this change, at the time of theseoffenses Criminal Code, s 738(1) permitted restitution to victims of offenders. It is opened for me to make a restitution order underCriminal Code, s 738 as it existed at the time of these offenses. [59] A restitution order is part of sentencing and should take into account its global impact.

At least one Canadian case points outthat a restitution order is more appropriate with a short period of imprisonment, and less appropriate where a longer period ofimprisonment is imposed: R v Siemens (1999), (MB CA), 138 ManR (2d) 90 at para 8, 136 CCC (3d) 353 (ManCA), citing R v Scherer (1984), (ON CA), 5 OAC 297, 16 CCC (3d) 30 at 36-37 (Ont CA). [60] In our case, the Crown submits that part of the reason it has asked for only a 10 year sentence is recognition of the impact ofrestitution.

The Ontario Court of Appeal in R v Devgan (1999), 44 OR (3d), 121 OAC 265 (Ont CA) indicated that restitution ordersshould be made with restraint and caution. The trial judge should consider the purpose of the victim in seeking the order, the extent orpursuit of civil proceedings, and the means of the offender. All cases reflect that the loss should be capable of ready calculation and ifthere is any serious dispute about legal or factual issue issues an order should not be made. [61] In my view a restitution order is important here.

The amount of losses as submitted by the Crown are carefully tracked andaccurate, based on submissions of documents from the third-party mortgage insurers [Exhibit S1]. To get their judgments in theforeclosure process against the straw buyers, the financial institutions’ valuations were carefully scrutinized. To insist that the insurersproceed to civil litigation to prove the obvious, or to force the straw buyers to re-litigate civilly against Mr.

MacMullin is inappropriate.It would again re-victimize these victims. [62] Despite the reality here that the prison sentence will be lengthy, it is appropriate for me to exercise my discretion in favor ofrestitution orders. The losses are clearly ascertained. To burden a civil law system with repetitive civil litigation and legal costs to thevictim would be re-victimizing them. The restitution orders are part of the sentence and to the concept of deterrence. [63] I listened to the evidence during this long trial and am aware in law that at the time a CMHC mortgage or GE Capital

mortgage in Alberta was a full recourse mortgage against the straw buyers. Mr. MacMullin pocketed the money and directly benefitedfrom this money. It represents in many cases the fictional increase in value of the property obtained by deceit. Funds went into Mr.MacMullin’s pocket and it would simply be wrong for restitution not to be made. [64] Further, a restitution order was made in favor of the mortgage insurers against Mr. Seremet by one of my colleagues.

For thereto be no restitution order in this case would be an unexplainable inconsistency between sentences of the same fraudsters in the same setof circumstance. There are numerous checks and balances to this process such that I am satisfied that the approach by the insurers of thefinancial institutions in claiming restitution is a reasonable one. Also, to salvage their credit some of the straw buyers actually paid GECapital or CMHC to settle out the case.

This reduces the claim of GE capital and CMHC but it also creates a claim in favor of the strawbuyers. [65] Learned Defense counsel suggests that the losses should be net of the CMHC or GE Capital insurance fee. However, it iscontrary to public policy for Mr. MacMullin to get the benefit of an insurance fee that insured normal default, not against default causedby fraud.

I reject the articulation of that argument and the restitution order will not be reduced beyond that which is set out precisely andmathematically accurate in Exhibit S1. [66] I adopt in its entirety sentence Exhibit S-1 in which the restitution claim is made as follows: 1. in favor of CMHC against Mr. MacMullin: $483,739.93; 2. in favor of GE capital against Mr. MacMullin: $261,603.86; and 3. I accept that that the straw buyers victimized by Mr. MacMullin were made to pay in total $273,187.00; those straw buyers eachin their lesser amounts are entitled to a restitution order against Mr.

MacMullin for their actual paid amount. If there develops any dispute about this the parties can address me further. [67] To assist Mdm. Clerk in preparing the appropriate restitution orders I would invite her to look at Count 7 involving LarryWintringham. Mr. Wintringham paid into the process $11,000.00 and now his estate must get a restitution order in that amount. In thisfashion all of the amounts that are indicated to have been recovered from straw buyer in sentencing Exhibit S-1 justify a restitution orderin favor of the straw buyer in that amount against Mr. MacMullin. C.

The Specific Sentence Imposed on Mr. MacMullin 1. The Mechanics of the Sentence [68] Both the Crown Attorney and the Defense address the court on the basis of a global sentence with the Crown seeking 10 yearsand the Defendant seeking 4.5 years. There are some mechanical issues that arise in how that sentence is actually recorded. Theexpedient method of sentencing for one count and then applying the same sentence to the 37 other counts is not technically correctbecause there is not a commonality of victims or crime in this case: R v BSM, 2011 ABCA 105 at paras 30-32, 502 AR 253.

Aconcurrent sentence regime may not be technically correct. [69] The other approach would be to take the global sentence, whatever it might be, and divide by 38 to get a series of smallconsecutive sentences. This also does not do justice to the sentencing regime because in this case depending on the actual time that Iimposed the per count sentence might range from the Crown’s view of three months and one third per count, to the Defense view of justover one month per count.

Sentencing that way makes each count appear trivial. [70] The other difficulty is that the court services are using an antiquated computer program and options to properly track globalsentences are not well accommodated. [71] On each individual count where Mr. MacMullin has been found guilty of a single count of fraud may well have attracted apunishment of two years in jail.

If we multiply that by 38 counts the absurdity of a 76 year sentence becomes obvious: Criminal Code, s718.2(c); R v CAM, (SCC), [1996] 1 SCR 500, 194 NR 321. [72] All should understand that I have considered the totality of the 38 crimes for which Mr. MacMullin was convicted andconcluded on a global sentence. How it is expressed as consecutive or concurrent is less important than its total proportionality. 2. How Much Jail Time? [73] The Crown’s comprehensively supported submission that Mr. MacMullin should receive a global sentence of 10 years iscompelling and highly persuasive.

It takes into account the level of criminality in this case, the aggravating circumstances of the case,the number of individual counts, and the methodology utilized by the ringleader, Mr. MacMullin. It is also consistent with other legalliterature and sentences imposed for similar cases. I will consider some of these at this juncture. [74] In R v El-Sayed, 2013 ABQB 504 a Calgary-based fraudster was found guilty by a jury for mortgage fraud that occurred afterthe criminal sentencing regime increased to a 14 year maximum. Mr. El-Fayed was sentenced to 9 years.

Although the economic facevalue of the mortgages was higher due to inflationary tendencies in Alberta, there were fewer victims and the sophistication of thescheme was not as elaborate as Mr. MacMullin’s. [75] A closer to home case is a mortgage fraud that operated in Edmonton almost the same time of Mr. MacMullin’s: R v Pervez(February 7, 2008) Edmonton 070203260Q1 (Alta QB). There the ringleader, Mr.

Pervez, pled guilty and was sentenced to six years in afederal penitentiary, with a comment from the trial judge that had he not pled guilty but had been convicted after trial, a sentence of 10years may well have been appropriate.

[ 76 ] The Court of Appeal has also recently dealt, for different reasons, with two sentences relating to another mortgage fraud from the Edmonton area. In the case of R v Chamczuk , 2010 ABCA 380 , 499 AR 212 the Court raised a 2.5 year sentence to 4 years, indicating it was still at the low end of the range: at para 15. [ 77 ] The other co-accused, Mr. Steinhubl, went to trial and thereafter received a 42 month sentence: R v Steinhubl , at para 3 . The Crown succeeded in an appeal from some of the acquittals, so the Court of Appeal sentenced the accused to a total 6 year sentence: at para 32.

The sentence would have been greater except that the accused had already done his initial jail time and was out on parole: at para 31. In both of these cases the level of moral blameworthiness was less that Mr. MacMullin. [ 78 ] In this case Mr. MacMullin’s degree of culpability is very high. In my reasons for judgment convicting him, I described Mr. MacMullin as an “economic predator” that used people for his own personal gain (para 131). He put numerous people in harm’s way both economically and at criminal risk.

He hid behind straw buyers and sheltered himself from detection behind an elaborate network of corporations and straw buyers. When people he put in harm’s way begged Mr. MacMullin for help he responded by suggesting that they work with him again, committing another crime, and then he would get them out of trouble. He utilized his role as a highly respected member of the Amway organization to recruit people with whom he was notionally in a teacher-pupil relationship. He was in a surrogate father type role to Mr. Seremet and involved him in crime.

A global sentence equal to the maximum he could receive on any one count is logical and highly persuasive. However, to balance this I must deal specifically with the submissions of learned defense counsel. [ 79 ] The first defense submission is that Mr. MacMullin’s sentence after a lengthy trial should not be much more than the notional fair sentence that would have been handed out to the co-accused Mr. Seremet. Mr.

Seremet elected to plead guilty, indicated a desire to plead guilty early in the transaction, and went through a psychiatric assessment which established him as genuinely remorseful and unlikely to reoffend. Mr. Seremet actually made $16,000.00 of restitution. [ 80 ] Further, both Justice Macklin in his sentencing of Mr. Seremet (a document which I have read only in preparation for sentence and not prior) pointed out that Mr. Seremet was an assistant to Mr. MacMullin. I characterized him in my judgment the same way (paras 464-473). Certainly Mr. Seremet was not the brains of the organization.

Against that, can it really be argued that there would be sentencing parity if Mr. MacMullin, the ringleader who was convicted of more counts and who forced a lengthy six-month trial by the maintenance of his not guilty plea, would only receive a sentence marginally higher than Mr. Seremet? That submission defies reasonableness. If Mr. Seremet’s sentence would notionally have been four years (reduced to 3 ¼ years by the early plea of guilt and the other factors) would not Mr.

MacMullin as the ringleader be rationally submitting that a sentence of twice that amount or eight years is appropriate? [ 81 ] Let us analyze a 4 ½ year proposed sentence against the reality faced by Mr. Pervez who was running a mortgage fraud scheme around the same time as Mr. MacMullin. Mr. Pervez pled guilty and was given six years in jail. Is there any rational basis therefore that Mr.

MacMullin, who was exposed as a heartless racketeer in this case and who perpetuated numerous other indictable crimes in perpetuating his fraud, including the abuse and misuse of a Commissioner for Oath’s designation, would only get 4 ½ year sentence? That submission is rejected as being unrealistic and unsound. [ 82 ] What impact should be the letters of support have on the sentence? Mr. MacMullin relied heavily on his community involvement and the persona of respectfulness and generosity to attract straw buyers.

His letters of support simply confirm the obvious: he is an extremely charismatic individual who can get people to do things for him. His apparent community goodness was the launching pad from which this fraud became airborne. Fraudsters are often successful because of the image they convey. The support letters have to be reviewed in that context. [ 83 ] The next suggestion is that the long delay between the offense and the sentencing date should entitle this individual some leniency. That may be arguable had Mr. MacMullin spent the last 10 years attempting to make reparations but he did not.

He spent many of the last years fighting this case. Further; when he gave evidence on the witness stand at the end of the case it became clear to me that he had not come to appreciate, to any level, his criminality and his criminal behavior. There is nothing in Mr. MacMullin’s demeanor on the witness stand in the trial that leads me to believe that I am sentencing a different individual then who existed during the years of the fraud. [ 84 ] Mr. MacMullin is being sentenced following a long trial in which he was convicted of 38 individual counts of fraud.

At the time of the occurrence of these frauds the maximum sentence for any one count was 10 years. It is clear that Mr. MacMullin must be given a significant and substantial penitentiary term. Several features of the crime and related case authorities drive this conclusion. [ 85 ] There are many aggravating circumstances and few mitigating ones. By way of mitigation Mr. MacMullin is in his mid-50s. He appears before the court and is being sentenced as a first time offender. He is married and has several children.

He has made no effort to make any restitution between the time of his conviction and today’s sentencing date, nor has his lawyer described any effort to do so. Frankly, he seems somewhat unrepentant about his role in this fraud. His suggestion that he gave Mr. Ngeth the $10,000.00 that Mr. Ngeth paid to the bank is without documentation or foundation, nor was this put to Mr. Ngeth during the trial. [ 86 ] Personal deterrence must be very high, even when there is a delay in concluding the case.

Between the $1 million of bank losses, and at least $200,000.00 more of diverted money where no bank losses occurred because the transaction was saved by inflation, Mr. MacMullin would have made $200,000.00 or more per year out of his frauds. I daresay that that is a lot more money than most of his victims made. A slap on the wrist jail sentence would not deter someone else who might be prepared to do a few years in jail for over $1 million in benefit. [ 87 ] I have no confidence whatsoever that this trial experience has rehabilitated Mr. MacMullin. Instead Mr.

MacMullin will continue to go through life using the manipulative skills that he possesses and he will continue to use people. He must be personally deterred and his sentence must be large enough to deter other would be fraudsters. [ 88 ] In my respectful view in the area of fraud in which considerable effort must be taken to track down and identify the true perpetrator of the crime a delay between the crime and the disposition should not significantly mitigate sentence. The Crown did everything they could to reduce the trial time here including preferring a direct indictment.

The courts did what they could to reduce the

trial time including the assignment of the case management judge. Mr. MacMullin concedes that he was initially going to conduct his own defense in front of a judge and jury. [ 89 ] It is true that in some factual circumstances the leading of an exemplary life between a period of crime and ultimate detection and prosecution may mitigate the sentence. It cannot be a significant factor in a case where the key sentencing criteria are personal and general deterrence. [ 90 ] As ringleader of this fraud Mr. MacMullin hurt many people emotionally and financially.

He utilized his credibility in the community and his religious zealousness to persuade people that he was a righteous man. Then he defrauded them, ruining their economic lives, and in some cases also their emotional well-being. He was an unscrupulous fraudster. He gave evidence at trial talking about his religious beliefs, while indicating that he never planned to hurt anybody. While it is not for me to judge whether he is a devout man or otherwise, he is a racketeer and a fraudster. [ 91 ] The crime spree went on for nearly four years. Mr. MacMullin would use the gullible more than once.

He would refuse to deliver even that which he had promised and instead encourage his victims to participate again so that he could make it all right. He had no moral reluctance to victimize people more than once. The more gullible one was the more one got used. This type of individual must be sentenced in a way that sends a loud, clear message to others who might be motivated to think that a life of crime is an easy life, to encourage them to think again. This indicates a lengthy sentence. [ 92 ] The total mortgages at risk in this case were over $6 million and the actual losses nearly $1,000,000.00.

The scheme was very elaborate utilizing corporate identities, false identities fictional trade names, and fictional addresses over the nearly four years of its run. Mr. MacMullin became a Commissioner of Oaths and used that quasi-legal authority to perpetuate this fraud. He involved numerous financial institutions, more than one mortgage broker, and numerous straw buyers, often putting them at risk more than once. His hands- on control as the ringleader and his attention to detail reflect a high level of sophisticated organization. In my lengthy judgment by which I convicted Mr.

MacMullin I even noted in one case where he went to a straw buyer’s account, made a deposit into that account to get a record of cash on hand, and then badgered the straw buyer to immediately withdraw the cash and give it back to Mr. MacMullin. No detail was too trivial for Mr. MacMullin to keep the cash train going and under his control. [ 93 ] Mr. MacMullin corrupted others along the way. He took young Mr. Seremet, turned him into a criminal, giving this young man an extensive fraud record and a period of federal imprisonment.

He corrupted his second ex-wife by getting her to go along with some of his real estate schemes. He involved his relatives and best friend. Mr. MacMullin would corrupt anything and anybody he came in contact with, if he could. He destroyed at least one lawyer’s career and affected badly the career of one mortgage broker. When one couple refused to accept his dream he stole her identity. He certainly betrayed his friends giving new meaning to the adage: ‘with friends like this you need no enemies’. In conclusion I can only say that Mr. MacMullin is a completely ruthless corrupting force.

Nothing other than an extensive period of imprisonment can prevail. [ 94 ] I have therefore concluded, taking into account all the circumstances of the case, that the position taken by the Crown is exact and fair. It did not develop a range of sentence allowing me in that traditional Canadian way to come in somewhere in the middle. It says that a 10 year prison sentence is appropriate and should be handed out together with the restitution order. [ 95 ] I agree. IX. Conclusion [ 96 ] Mr. MacMullin, would you please stand.

I sentence you to a global sentence of 10 years in a federal penitentiary for your role in the 38 counts of which I have convicted you. [ 97 ] To assist the clerks and proper tracking of this I direct that on the first five counts of which you were convicted (counts 1,2,3,4, and 6) you be sentenced to two years on each count and those sentences will run consecutive to one another. On the remaining 33 counts I sentence you to two years imprisonment on each count and direct that those sentences be served concurrently to the sentence on count one.

I have considered the 10 year prison sentence the appropriate global sentence under all the circumstances. [ 98 ] The victim fine surcharge will be waived. At the expiration of all appeal periods the exhibits will be returned to the crown for distribution and disposition in accordance with their practice. Heard on the 23 rd & 24 th days of October, 2014. Dated at the City of Edmonton, Alberta this 29 th day of October, 2014.

A.W. Germain J.C.Q.B.A. Appearances: James G. Pickard & Leah J. Boyd Alberta Justice for the Crown Alex S. Millman Alexander Millman Law Office for the Offender _______________________________________________________ Corrigendum of the Reasons for Sentence of The Honourable Mr. Justice A.W. Germain _______________________________________________________ Crown Counsel’s name has been corrected under the appearances.