R. v. Granger, 2014 ONCJ 408

Newmarket DATE: 29 January, 2014 Citation: R. v. Granger , 2014 ONCJ 408 ONTARIO COURT OF JUSTICE BETWEEN: HER MAJESTY THE QUEEN — AND — JEFFREY GRANGER REASONS ON SENTENCE Mr. David Moull ..................................................................................................... for the Crown Ms. Eleanor Shaw .............................................................................................. as Amicus Curiae Mr. Jeffrey Granger ........................................................................................... Self Represented KENKEL J.: Introduction 1 . Mr.

Grainger pled guilty to: • Breach of Trust by a Public Officer contrary to s.122 of the Criminal Code • Accepting Secret Commissions contrary to s.426(1) (

a) of the Criminal Code • Defrauding the Government of Canada contrary to s.380(1) (

a) of the Criminal Code 2 . The Crown is seeking a three year penitentiary term. Mr. Granger seeks a sentence of two years less one day with a significant period of probation to follow with terms to assist his rehabilitation. 3 . Given the complexity of the charges, the fact that the accused was unrepresented and the significant potential penalties, amicus counsel was appointed to assist the court in identifying the appropriate range of sentence and the factors that aggravate and mitigate sentence for these offences. Circumstances of the Offences 4 .

Jeffrey Granger worked for the Canada Revenue Agency (CRA) from October of 1999 to the investigation of these offences in 2010. From 1999 to 2005 he was an audit officer in Toronto. In 2005 he was promoted to the position of “Team Leader, Verification and Enforcement” within the Audit Division of the Toronto Centre Tax Service Office. He was responsible for the direct supervision of auditors whose mandate was to investigate the underground economy within the construction and entertainment industries. 5 . Mr.

Granger was subject to the Canada Revenue Agency Conflict of Interest Code and Guidelines which he was required to review on an annual basis. The Code sets out specific warnings to employees regarding conflict of interest and procedures that must be followed including confidential reports to the Agency of any outside business activity involving the employee.

6 . Ignoring the CRA Code, Mr. Granger set up several companies that were registered to provide services such as “translation” but were in fact vehicles by which he could pose as a tax “consultant” and receive and hold funds indirectly. Despite the plain conflict of interest, Mr. Granger was referred as a tax consultant to several businesses in the construction industry by chartered accountant Edward Favot. 7 . In 2007 Mr. Favot told his client land developer Benedetto Marotta that he knew of an employee with the Canada Revenue Agency who was in a position to investigate the Mayor of Caledon. The developer Mr.

Marotta had made significant investments in the Caledon area but later learned that under provincial Places to Grow legislation development in the lands he purchased might be restricted from development until 2031. 8 . Mr. Granger accessed the tax records of the mayor, then logged into the Agency audit system and generated a false audit for her. Mr. Granger charged Revenue Canada for overtime in relation to the false investigation and audit. Revenue Canada was unaware of the illegal activity at that point and paid the overtime claim. Mr.

Granger admits in the agreed statement of fact marked as Exhibit #1 that he created the audit of Caledon’s mayor at the request of the developer Mr. Marotta. 9 . Mr. Granger assigned one of his junior auditors to conduct the audit. Her review took two months to complete. Minor adjustments resulted but there was no evidence of impropriety. 10 . In December of 2007, Mr. Granger met with a Toronto Police officer who happened to be a friend of Mr. Marotta. Granger identified himself as an employee of the Canada Revenue Agency but he used a false name (Jeffrey Green) when speaking with the officer.

Granger told the officer that the Mayor of Caledon was being investigated by his office for tax violations and was suspected of corrupt links to other developers. In February of 2008 the officer met with then OPP Commissioner Fantino and relayed the information he’d received from Marotta and Granger about possible corruption in relation to the elected official. The Ontario Provincial Police launched an investigation into the allegation of corruption in March of 2008. After several months of investigation the OPP determined that there was no evidence to support the allegation. 11 .

In July of 2008 there was a second police investigation in which the original police investigation was reviewed. Further investigation revealed that Mr. Granger was the source of the false tax and audit information provided to the police in relation to the mayor and that led to the arrest of Mr. Grainger. 12 . Mr. Granger was paid $269,545.88 by Mr. Marotta for the “services” he provided in 2007 and 2008. From 2005 to 2009 Marotta’s company Solnar Development paid 8 cheques to two companies set up by Mr. Granger. Those payments totalled $255,037.56. 13 . Antonio Lima was also introduced to Mr.

Granger by his accountant Edward Favot. Mr. Lima owns the Limen Group of companies which operate as masonry contractors. Through Mr. Favot, Mr. Lima hired Mr. Granger to assist with problems he was having with a disallowed tax shelter. Mr. Granger used his position at Revenue Canada to stop an existing audit of the Limen Group. He then created his own audit of Limen which was not in his jurisdiction and he assigned an inexperienced member of his own audit team to conduct an audit which was beyond her ability. He also contacted the Sudbury GST office and asked that holds on refunds to Limen be removed.

Such funds are supposed to be held until audit issues are resolved. 14 . Mr. Lima’s company paid Mr. Granger a total of $406,055 in a series of six cheques. 15 . Edward Favot referred another client Lido Wall Systems to Mr. Granger for help with a tax dispute with Mr. Granger’s employer the CRA. Granger and Favot drafted a letter of appeal to the Canada Revenue Agency to obtain an extension of time with respect to an audit. Mr. Granger made multiple queries within the CRA database regarding the Lido audit although he had no legal reason to do so. 16 . Lido Wall Systems paid Mr.

Granger’s numbered company a total of $52,750. One cheque was issued by the company and the other was issued on their behalf by Edward Favot. The owner of Lido Wall systems was suspicious of Mr. Granger and felt he was dishonest but he trusted his accountant Mr. Favot and paid Granger those monies on Favot’s advice. 17 . The total amount of secret commissions received by Mr. Granger was $1,109,518.07.

18 . Mr. Granger did not report any of the income he received from his illegal activities on his personal or business tax reports. He defrauded the Government of Canada of $569,312.08 in taxes. He also failed to remit $61,234.17 that he’d collected as Goods and Services Taxes. The Accused’s Personal Circumstances 19 . Mr. Granger’s personal circumstances are set out in the Pre-Sentence Report marked as Exhibit #2 and in Mr. Granger’s submissions to the court. 20 . Mr.

Granger says he was earning $75,000 a year from his employment with Revenue Canada but as stated in Justice Fuerst’s ruling [1] regarding the property restraint order, from 2006 to 2008 his earnings did not in fact exceed $35,000 annually, perhaps due to the personal leave mentioned in Exhibit 1. 21 . Despite his limited income in those years Mr. Granger and his wife purchased a house in Stouffville for $1,050,000 in July of 2008. He also owned a condominium in Barrie. 22 . Mr.

Granger reports that he had problems with alcohol and gambling during the period of the offences but there’s no evidence that these behaviours motivated the offences and Mr. Granger candidly admitted that greed was the central motivation for the offences. 23 . As a result of his actions and subsequent arrest, Mr. Granger has lost his family, his property assets and of course his job with Revenue Canada. He’s now divorced with no contact with his two children.

Although he worked briefly in a call centre he’s not employed at present and says that prospective employers balk when they Google his name and learn of his offences. Mr. Granger has been homeless at times post arrest. He spent some time living in shelters until he managed to set up social assistance and rent a room. 24 . Mr. Granger states that he’s attended Alcoholics Anonymous meetings and progressed through their program. He also states that he’s attended a similar program for counselling in relation to gambling. He undertook life counselling through his church.

He’s committed to changing his life and submits he’s taken steps to do that. 25 . Mr. Granger advised that one of the requirements of the AA and gambling programs is that the person try to make amends for harm that they’ve caused. Mr. Granger submits that given his plea and apology he’s done everything he could do to make amends. While those are both important steps, missing is any mention or explanation as to what happened to the million dollars Mr. Granger received beyond the very small portion recovered from the house sale. Given Mr.

Granger’s business education and his experience as a tax auditor and team leader, it’s not credible that the money simply disappeared. 26 . Mr. Granger stated that he lived a lavish lifestyle but there’s no evidence to support that statement and nothing in that vague assertion that reasonably explains what happened to such a large sum of money. I don’t accept Mr. Granger’s statement on this point. The Statutory Range of Sentence 27 . Fraud over $5000 carries a maximum sentence of 14 years in prison. Breach of Trust by a Public Official carries a potential 5 year sentence.

Accepting Secret Commissions is punishable by a maximum 5 year term. Breach of trust is deemed to be an aggravating circumstance on sentence [2] with respect to the two offences where that circumstance is not a component of the offence. Aggravating Factors 28 . The circumstances that aggravate sentence in this case include:

a) The accused’s position of trust in a government agency that deals with highly sensitive personal and corporate information.

b) The fact that the accused was in a senior position as an audit team leader

c) The fact that the accused ignored CRA conflict codes and guidelines

d) The degree of sophistication and planning in the fraudulent schemes

e) The scope of the schemes which amounts to a large scale fraud

f) The fact that the dishonest conduct continued over a three year period and would not have stopped but for the accused’s arrest. The numbered companies necessary for the fraudulent scheme were set up years earlier.

g) The fact that greed was the central motivation for the offences

h) The creation of false audit and tax information in relation to the Mayor of Caledon

i) The relaying of false information to the police in relation to the Mayor of Caledon

j) The waste of police resources in the two unnecessary investigations that resulted

k) The significant impact on the victim Mayor of Caledon and her family as described in her Victim Impact statement marked as Exhibit #3

l) The impact on the community where persons attempt to intimidate elected public officials through false reports and false audit orders

m) The impact on public confidence in Canada’s government where persons in a position of trust in a highly sensitive agency abuse that position for their own gain. Mitigating Factors 29 . The factors that mitigate sentence include:

a) The plea of guilty. Although the plea came at the end of a preliminary hearing, Mr. Granger was representing himself and the preliminary hearing was highly focused given his numerous concessions. I find it fair in these circumstances to give full weight to the plea as an expression of remorse.

b) The significant savings to the administration of justice of 2 to 3 months trial time.

c) The direct apology Mr. Granger made to the government, to the victim Mayor and her family, and to the community.

d) The fact that Mr. Granger has engaged in counselling for alcoholism and gambling and life strategies.

e) The fact that Mr. Granger is an intelligent man who says he’s genuinely motivated to change.

f) The lack of a prior record. Analysis 30 . Persons employed with the Canada Revenue Agency are placed in a very special position of trust. They have access to sensitive and detailed information about taxpayers and corporations. That information is provided by taxpayers on the understanding that it will be dealt with in a confidential and fair manner. Taxes fund all public works and functions of the government and it’s essential that citizens have confidence in the integrity of the Canada Revenue Agency and the persons employed there. 31 . As Justice Durno pointed out in R. v.

Lall [3] breaches of trust by persons employed by Revenue Canada are not common but they aren’t rare either. There is a strong need for general deterrence to ensure that others similarly situated will understand that if they abuse their position of trust within the Canada Revenue Agency they can expect to pay a heavy price. 32 . These offences are the type of offences for which general deterrence may be most effective. Smart persons like Mr. Granger who are

trained in business and tax matters and who do not have prior criminal records calculate the prospective gain from these offences against the risk of apprehension and penalty. Deterrence is most likely to work in that context 33 . There is also a strong need for denunciation given the impact of the accused’s offences on the victim mayor and her family, the Caledon community, the accused’s family, and public trust in the Canada Revenue Agency. 34 . Her Worship Mayor Morrison notes that she’s been under constant pressure in regard to land development in her region.

While some of that may go with the position, the attempted intimidation of an elected public official through false audits and false police reports strikes at the heart of our democratic process of government. In my view this is a very serious aggravating factor that distinguishes this case from many of the other cases cited by counsel. 35 . The scope of the secret commissions, the number of incidents and the multi-year term of conduct all distinguish this case from others cited where sentences of 1 to 3 years were imposed. 36 .

The lack of a prior criminal record is a relevant mitigating factor, but it’s a factor common to all persons charged with breach of public trust within Revenue Canada so does not distinguish Mr. Granger from others similarily situated who have committed similar offences. 37 . Mr. Granger concedes he’s not likely a candidate for a conditional sentence and asks as a first offender to be sentenced to the maximum reformatory term. While that would meet the objective of rehabilitation, I find that such a sentence would otherwise not address the remaining purpose and principles of sentence and would be unfit. 38 .

In my view, given the aggravating features of this case even on a guilty plea a global sentence of 5 years or more could reasonably result. I’m mindful though that Mr. Granger gave up his right to trial knowing that the Crown’s position would be a sentence of 3 years. I agree with the Crown that a three year term gives effect to every aspect of mitigation mentioned and I find that it’s generous even in that context but not outside the range. It’s not a crushing sentence and certainly provides for rehabilitation. Given Mr. Granger’s commitment to changing his life there’s a reasonable prospect that he will do so.

Sentence 39 . Mr. Granger will be sentenced to a penitentiary term of 3 years on each count concurrent for a total sentence of 3 years. Proceeds 40 . The Crown has applied for forfeiture [4] of the monies seized from the sale of the residential home. While those monies represent a very small portion of the amount outstanding, I’m mindful that the accused’s former wife may well have a property interest in half that amount.

I commend the Crown for contacting the accused’s former wife, giving her notice of the application, confirming that she did have such an interest, and conveying that information to the court although the former wife did not attend court or have someone attend on her behalf. 41 . I will order that 50% of the monies restrained from the sale of the Stouffville home be forfeit to the Crown as proceeds of crime. I will leave the determination with respect to the remaining funds to the civil process.

Released 29 January 2014: Signed: Justice Joseph F. Kenkel [1] R. v. Granger [2012] OJ No.5162 (SCJ) at para.15 [2] Criminal Code s.718.2 [3] R. v. Lall [2007] OJ No.5213 (SCJ) at para.35 [4] Pursuant to s.462.37(1) Criminal Code