r v. DANIEL, 2015 QCCQ 3731

R. c. Lavallée 2015 QCCQ 3731 COURT OF QUÉBEC CANADA PROVINCE OF QUÉBEC CITY OF MONTRÉAL "Criminal and penal division" N° : 500-01-084924-130 DATE : May 7, 2015 ______________________________________________________________________ BEFORE THE HONOURABLE JUSTICE LORI RENÉE WEITZMAN, J.C.Q. ______________________________________________________________________ THE QUEEN Prosecutor v. DANIEL LAVALLéE Accused ______________________________________________________________________ SENTENCE ______________________________________________________________________ [ 1 ] Mr.

Lavallée pleaded guilty to seven counts of fraud, two counts for a value not exceeding $5,000 and 5 counts for a value over $5,000. The accusations stem from purported investments made by the accused on behalf of seven different victims over a three-year period, between May 2005 and September 2008. In fact, the money obtained was never invested, as Mr. Lavallée simply cashed the cheques he received. The total amount of the fraud is $292,000, with an actual loss suffered of $267,000. [ 2 ] Although Mr.

Lavallée was once a successful life insurance broker, registered with the ‘’Autorité des marchés financiers’’ (AMF), by 2005, he was no longer a registered broker. Nevertheless, he was well known in his community as a successful broker, and used this reputation to defraud people in his milieu that he knew well. THE CHARGES Count 1: Fraud over $5,000 between April 1, 2007 and September 29, 2008 ▪ Mr. Robert Carter was a friend Mr. Lavallée. They would regularly meet at the bar where Mr. Lavallée was known as “the millionaire". Mr.

Carter was 72 years old at the time of his investment of $20,000 at the suggestion of Mr. Lavallée. He believed he was purchasing policies from Manulife and received false statements confirming the terms that Mr. Lavallée had described. Count 2: Fraud over $5,000 between November 1, 2006 and September 29, 2008 ▪ Michael Biduk was 75 years old in 2006 when he met Mr. Lavallée at a golf tournament. He made three investments through Mr. Lavallée for a total of $127,000 in what he believed were Manulife policies. It was thanks to Mr. Biduk inquiring with Manulife about his policies that the fraud of Mr.

Lavallée was exposed. As he explains in his Victim Impact Statement, Mr. Biduk intended to invest that money to benefit his wife who had undergone a kidney transplant. He hoped to thus provide for her, should he be unable to. The total loss of this money caused grief to both Mr. Biduk and his wife, who has recently passed away. Count 3: Fraud over $5,000 between May 1, 2005 and September 29, 2008 ▪ Angela Jones received a significant inheritance from her grandmother in 2005 with which she hoped to purchase a home. Her father knew Mr. Lavallée well and encouraged Ms. Jones to follow Mr.

Lavallée’s recommendations for purchasing a mutual fund, which would provide a 17% return. Ms. Jones was told that her money was invested with Manulife, and she received a fraudulent statement of account to that end. Ms. Jones is the only victim to have received partial compensation, as Mr. Lavallée later reimbursed $25,000 of the $45,000 defrauded. ▪ Ms. Jones filed a Victim Impact Statement in which she details the many consequences she has suffered due to this fraud. Ms. Jones viewed Mr. Lavallée as a father figure.

She trusted him implicitly and thus she still deals with the effects of having been deceived by someone so close to her. She feels ashamed for having been duped. She lost a total of $20,000 (after $25,000 was reimbursed) and was left in the embarrassing position of having to beg family and friends for assistance to cover her debts. The initial shock at the extent of the deception caused her psychological consequences that she felt at home, at work and in her social circle. As a physical manifestation of her psychological effects, she lost her hair and suffered from insomnia.

Count 4: Fraud over $5,000 between July 1, 2007 and September 29, 2008 ▪ Mr. Lavallée gained the trust of Sylvain Pilon who invested twice with him, for a total of $65,000. Mr. Pilon received fraudulent statements that appeared to be from Manulife. Count 5: Fraud over $5,000 between November 1, 2007 and September 29, 2008 ▪ Robert Pilon was told by his brother, Sylvain, that it would be worthwhile to invest through Mr. Lavallée. He thus invested $25,000. Count 6: Fraud under $5,000 between April 1, 2007 and September 29, 2008 ▪ Mr. Gordon Doe knew Mr. Lavallée from the bar they frequented. Mr.

Lavallée convinced Mr. Doe to make two investments for a total of $5,000. Although Mr. Doe was not sure what type of investment was involved, he trusted Mr. Lavallée as he had heard of his experience in the insurance business. Mr. Doe was 68 years old at the time of this fraud. Count 7: Fraud under $5,000 between March 16, 2007 and September 29, 2008 ▪ David James Parker was a friend of Mr. Lavallée and they would meet on a weekly basis at the local bar. Mr. Lavallée convinced Mr. Parker that he could guarantee a good return on his $5,000 investment. In his Victim Impact Statement, Mr.

Parker explains that he was duped by Mr. Lavallée mainly because he viewed him as a trustworthy friend. He was left feeling aggressive toward M Lavallée, as well as insecure with respect to forming friendships in general. His retirement plans were also affected as he was left without any compensation for his loss. He was 62 years old at the time of this fraud. [ 3 ] When the fraudulent nature of all these investments came to light, Mr. Lavallée was nowhere to be found.

In fact, he had moved to England, and he was not arrested until February 2013, which explains the lengthy delay between the charges laid and his arrest. [ 4 ] Mr. Lavallée pleaded guilty to all seven counts on September 17, 2014. The matter was put off for the sentencing hearing during which time he was rearrested, in December 2014, on matters involving possession of drugs for the purpose of trafficking. He has served his sentence in one file and is presently detained awaiting trial in another. The position of the parties The Crown [1] [ 5 ] The Crown asks for a sentence that will reflect Mr.

Lavallée’s breach of trust and the fact that he abused his reputation as an insurance broker to deceive his victims. With respect to the impact on the victims, the Crown underscores that four of the victims were in their 60s and 70s, thus at an age where it is difficult to rebuild savings for a retirement fund. For all seven of the victims, their financial security was affected.

With respect to Angela Jones, she also suffered notable psychological consequences stemming from the fact that her financial loss was an inheritance from her grandmother, and due to the close relationship she had with the accused. [ 6 ] The total amount of the fraud in question is significant, (almost $300,000) and represents an important portion of savings for many of the victims. [ 7 ] Another aggravating factor is the ongoing nature of these transactions. There is no doubt that this is not an isolated instance of bad judgment, but represents a calculated scheme maintained by Mr. Lavallée for over three years.

During that time, he lured his victims, whose trust he had gained, into investing their savings with false promises of significant return, and then forged documents intended to reassure them that their investments were secure. [ 8 ] The Crown refers to

section 380.1 of the Criminal Code and the aggravating factors listed therein which apply to the present case: a. The significant magnitude, complexity, duration or degree of planning of the fraud committed : in the present case the frauds were committed over several years and involved considerable deceitful planning to maintain the victims’ trust. b.

The offense adversely affected, or had the potential to adversely affect, the stability of the Canadian economy or financial system or any financial market in Canada or investor confidence in such financial market : The Crown concedes that the fraud in question is not of the magnitude generally considered in this subsection of the Criminal Code , but the prosecutor asks the Court to consider the potential effect on the reputation of Manulife, a well-known entity, as false policies were sent out in their name without their knowledge. c.

The offense involved a large number of victims : Whereas this case does not involve hundreds or even dozens of victims, as some large- scale frauds do, the Court must nevertheless consider as an aggravating factor the fact that seven victims were defrauded in the present case. c.1. The offense had significant impact on the victims given their personal circumstances including their age, health, and financial situation : as previously stated, four of the seven victims were close to, or past retirement age. The individual personal circumstances of each victim, as detailed above must also be considered. d.

In committing the offense, the offender took advantage of the high regard in which the offender was held in the community: In this case, it was thanks to his reputation as a successful registered broker that Mr. Lavallée was able to gain the trust of his victims.

e. The offender did not comply with a licensing requirement, or professional standard, that is normally applicable to the activity or conduct that forms the subject matter of the offense: this aggravating factor applies here as Mr. Lavallée was no longer registered as a broker with the AMF. [ 9 ] Considering the aggravating factors in this file, the Crown suggests that three years is an appropriate sentence. In addition, she asks that the Court impose a prohibition order pursuant to

section 380.2 for a period of five years in order to ensure that Mr. Lavallée is not in a position to have authority over any property or money of another person. (Given that Mr. Lavallée is now 59 years old, a five- year prohibition is deemed sufficient by the Crown.) [ 10 ] Finally, the prosecutor asks for a restitution order pursuant to sections 380.3 and 738 of the Criminal Code [2] . This will allow the victims to claim the money they lost, without having to incur the fees normally associated with instituting civil proceedings. Although the prosecution admits that Mr. Lavallée does not presently have the means to make the reimbursement due, the

section allows for a readily ascertainable amount to form the subject of a restitution order, which the victims may attempt to claim if and when Mr. Lavallée ever has the means to reimburse. The Defence [3] [ 11 ] The defence acknowledges most of the aggravating factors that have been underscored by the Crown, specifically the premeditation involved and the breach of trust towards the victims who were known to the accused. Nevertheless, he asks the Court to consider the mitigating factor of his guilty plea, which had the advantage of sparing the victims the need to testify in court. [ 12 ] With respect to the considerations listed in

section 380.1 the defense does not take issue with the representations made by the Crown except to contest that the present offenses might have had the potential to adversely affect investor confidence in financial markets. The defense states that

section 380.1 (

b) is meant to apply to large-scale frauds affecting the Canadian economy as a whole. At the very least, the defence correctly points out that there is certainly not proof beyond reasonable doubt that the fraud committed here had consequences reaching beyond those noted by the seven named victims. No evidence has been presented as to the adverse affect on Manulife. [ 13 ] Regarding restitution, there is no evidence that Mr. Lavallée lived an extravagant lifestyle with the money he obtained. The defense states that Mr.

Lavallée is presently unable to reimburse any further sums and should not be subjected indefinitely to a sword of Damocles over his head, preventing him from being able to have a fresh start and eventual rehabilitation. Moreover, the defence urges the Court to recognise that any order of restitution must be viewed as part of the sentence, engaging the totality principle.

As such, the overall sentence imposed, including any order for restitution, must not be unfairly harsh. [ 14 ] The defense suggests that the objectives of deterrence and denunciation may be properly met by the imposition of a two-year sentence followed by a probation order which will ensure the strict control of Mr. Lavallée’s actions. The defense refers to several decisions within this sentencing range, many of which impose a conditional sentence in lieu of incarceration. Although the defense does not request a conditional sentence, having due regard to the fact that Mr.

Lavallée is presently incarcerated and awaiting trial, he nevertheless suggests that a two-year jail period is entirely appropriate in the circumstances. Analysis [ 15 ]

Section 718 of the Criminal Code provides that the fundamental purpose of sentencing is to contribute to the respect for the law and the maintenance of a just, peaceful and safe society by imposing just sanctions that have one or more of the following objectives: a. to denounce the unlawful conduct; b. to deter the offender and others from committing similar offenses; c. to separate offenders from society where necessary; d. to assist in rehabilitating offenders; e. to provide reparation for harm done to victims or the to the community; and f. to promote a sense of responsibility in offenders and acknowledgment of the harm done to victims and to the community. [ 16 ] As the Supreme Court reminds us in R. v.

Nasogaluak [4] “the determination of a "fit" sentence is an individualized process that requires the judge to weigh the objectives of sentencing in a manner that best reflects the circumstances of the case”. In order to decide this fit and appropriate sentence, the judge must consider the aggravating and mitigating factors particular to the offence and the offender (section 718.2(a)). The fundamental principle of any sentence is that it must be proportionate to the gravity of the offence and the offender’s degree of responsibility (section 718.1).

More specifically, in matters of fraud, the Criminal Code underscores certain aggravating circumstances to be considered, such as the magnitude, complexity, duration or degree of planning of the fraud; the number of victims and the impact on them (

section 380.1 ). [ 17 ] In balancing these factors, the Court must also respect the principle in

section 718.2(

b) that a sentence should be similar to sentences imposed on similar offenders for similar offenses committed in similar circumstances. [ 18 ] The aggravating factors, as canvassed above can be summarized as follows: - the breach of trust: Mr. Lavallée relied on his reputation as a successful insurance broker, with financial acumen, despite no longer being licensed to invest for others;

- the duration of the fraud (3 years); - the amount of the fraud ($292,000); - the number of victims (7); - the planning involved in orchestrating and perpetuating the fraud, in particular forging documents meant to confirm their investments and assuage any concerns by the investors; - the consequences on the victims (3 of whom filed a Victim Impact Statement), such as: the effect on retirement savings; the shame and embarrassment at having been duped; and the difficulty in forging future trusting relationships. As well, because the victims were friends of Mr.

Lavallée, and in some instances long-standing close friends, the predictable consequences of the fraud on their financial well-being was known to Mr. Lavallée; - the absence of any restitution or plans to reimburse (except for the $25,000 paid to Ms. Jones); - the motivation for the crimes is simple greed- no other explanation or motivation has been suggested by the defense; - although the criminal record of Mr.

Lavallée cannot be considered here as an aggravating factor, since he had no record at the time he committed these offenses, it does bear noting that his arrest in this case was of no deterrence to his committing a subsequent offense involving drug trafficking. At a minimum, one can seriously question his prospects of rehabilitation to date. [ 19 ] The mitigating factors are Mr. Lavallée’s guilty plea and his admission of responsibility, and in the case of Angel Jones (count 3) a partial reimbursement. [ 20 ] In 2006, the Québec Court of Appeal in R. v.

Coffin [5] underscored the principles that apply in matters of fraud and the general rule that in cases of important and planned fraudulent schemes, perpetrated over a lengthy period, a term of imprisonment is required. It is well established that the goals of deterrence and denunciation must take precedence in matters of fraud involving breach of trust. The Quebec Court of Appeal has recently reiterated this principle in R. v.

Wellman [6] emphasizing, once again, that despite an offender’s good reputation, absence of a criminal record, remorse, rehabilitation, and even partial reimbursement, jail terms are necessary in order to meet the objectives of general deterrence and denunciation. In Wellman , the Court of appeal confirmed a 30-month jail term imposed on an accused who was a compulsive gambler and who, as treasurer of his union, stole almost $900,000 from the union. A small portion was reimbursed.

The Quebec Court of Appeal endorses the following sentencing range summarised by the first instance judge [7] : [65] Ainsi, en établissant une fourchette des peines rendues en matière de fraude, on peut conclure que des peines d'incarcération variant de six mois à trois ans sont imposées pour des fraudes, comme les qualifie la Cour d'appel dans Coffin , réparties sur une période plus ou moins longue. [66] Bien entendu, on retrouve des exceptions pour des peines ou bien moins sévères ou encore plus sévères, soit des peines de plus de trois ans de pénitencier dans les cas où des facteurs particuliers soutiennent l'une ou l'autre de ces peines. [67] Aussi, on retrouve des peines dans la collectivité dans les cas où les facteurs aggravants sont peu nombreux ou encore lorsque l'on retrouve des facteurs atténuants particulièrement significatifs. [ 21 ] In view of all of the aggravating factors noted above, and the very few mitigating factors, and considering the sentences rendered in similar matters, the appropriate sentence here certainly lies at the high end of this proposed range.

Restitution [ 22 ] According to

section 380.3 of the Criminal Code , the court imposing a sentence pursuant to

section 380 must consider an order of restitution. In the present matter, the amounts of loss sought to be recovered by each victim are readily ascertainable and are not contested. [ 23 ] The issue in the present matter is whether it is appropriate to render such an order despite the offender’s inability to pay. In R. v. Fitzgibbon [8] the Supreme Court of Canada noted that a restitution order (or compensation orders as they were called) “ benefits the victim by providing a speedy and inexpensive manner of recovering the debt” [9] .

It further established that “ the means of the offender should not in every case be the controlling factor” [10] in deciding whether the order should be made. [ 24 ] The Ontario Court of Appeal in R. v. Castro [11] considered the appropriateness of imposing a restitution order on an offender who was unemployed and collecting monthly disability benefits.

In reviewing the applicable principles, the Court concluded that the imposition of this discretionary order must reflect the individual circumstances of each case, and should include consideration of the nature of the offence and what has happened to the money taken [12] .

Citing the case of Fitzgibbon , the Ontario Court of Appeal states that “in cases involving breach of trust, the paramount consideration is the claims of the victims” [13] , allowing for a restitution order “even where there does not appear to be any likelihood of repayment” [14] . [ 25 ] As the Ontario Court of Appeal summarizes in Castro [15] : […] a restitution order is simply part of the determination of an overall fit sentence, and general sentencing principles apply.

While consideration of the offender's ability to pay and the impact of a restitution order on an offender's rehabilitation are factors to be considered, the weight to be given to these factors will vary depending on the nature of the offence and the circumstances of the offender. When the offence involves a breach of trust, a primary consideration is the effect on the victim; rehabilitation is a secondary consideration . [ 26 ] The goal of a restitution order is to allow victims of crime an expeditious and less onerous way in which to reclaim their due by

shortcutting costly and lengthy civil proceedings, particularly in cases where the amount at issue is readily ascertained and not in dispute. Such an order also ensures that offenders do not benefit from the fruits of their crimes. As the Alberta Court of Appeal notes in R. v. Johnson [16] . Economic predators should not be permitted to walk away in the future from any obligations to their victims, especially where the proceeds of the fraud remain unaccounted for in whole or in part. [ 27 ] The following basic characteristics of a restitution order were recently reiterated by the Ontario Court of Appeal in R. v.

Wa [17] : - A restitution order is part of the total sentence imposed; - One of its primary purposes is to deprive criminals of the fruits of their crime; - Although the offender’s ability to pay must be considered by the sentencing judge, in cases presenting particularly egregious circumstances, such as those involving a breach of trust, a restitution order may be imposed even absent any likelihood of repayment; - In fraud cases, bald assertions by offenders that they have no means to make restitution deserve little weight where there is no explanation as to where the assets have gone. [ 28 ] In the present case, the parties have indicated that Mr.

Lavallée has no present means to comply with a restitution order. However, if and when he is in a financial position to reimburse the full amount or part of the money at issue, a restitution order would provide the victims with a simple and inexpensive means to recover the uncontested amounts of money due. It is an order which strives to meet several sentencing goals listed in

section 718 : - the goal of rehabilitation: by allowing the offender to “work towards self-correction” and by preventing or at least discouraging the offender's committal to a life of crime [18] ; - the goal of reparation of harm done: by providing an efficient way for the victims to claim their money; - the goal of deterrence: by sending a clear message that criminal activity will not pay; and - the overall goal of contributing to a just, peaceful and safe society: by providing the community “a measure of protection, security and savings.

Depriving offenders of the fruits of their crimes or ensuring that offenders assist in compensating victims for their losses should assist in discouraging criminal activity” [19] . [ 29 ] Despite the advantages of a restitution order as a meaningful and effective sentencing tool, particularly in matters of breach of trust, the application of

section 380.3 has been inconsistent. As aptly noted by Bellefontaine, J. in R. v. Cruz : “[…] Many cases can be found where an emphasis has been placed on the impediment that a restitution order will create for an individual's rehabilitation [20] . Many others emphasize the restorative justice nature of the restitution order and the need to place priority on addressing the needs of the innocent victims” [21] . [ 30 ] For example, the Quebec Court of appeal overturned a restitution order of over a million dollars in Legault v.

R. [22] and concluded: En conclusion, une ordonnance de dédommagement doit être rendue avec pondération et circonspection afin de remplir les objectifs et principes de la détermination de la peine soit, plus particulièrement, la réparation des torts, la conscience de la responsabilité, la dénonciation et la dissuasion. Cette ordonnance ne constitue pas le substitut à un recours civil. Lorsque la capacité de payer est absente, comme en l'espèce, il est déraisonnable de rendre une ordonnance de dédommagement de plus d'un million de dollars.

En l'espèce, le montant du dédommagement est si excessif que le délinquant ne pourra jamais l'acquitter, ce qui met en péril le principe de réinsertion sociale. [ 31 ] Similarly, the Quebec Court of Appeal in Bendwell v. R . [23] overturned a restitution order [24] of over $340,000 against a 60 year-old offender who was battling cancer. The Court stated: 18 Compte tenu des faits qui révèlent une déchéance sociale et financière, il est irréaliste de prévoir que l'appelant puisse un jour satisfaire l'ordonnance de remboursement, même pour une

partie quelque peu substantielle. 19 Par ailleurs, les victimes ont intenté des poursuites civiles qui leur permettront possiblement de récupérer quelque chose - espérons-le - par transaction ou par exécution forcée. 20 La Cour est d'avis que les circonstances de l'affaire rendent contre-indiquée l'ordonnance de remboursement. [ 32 ] Thus, the concern is that a restitution order which cannot be fulfilled may offend the sentencing principle of rehabilitation.

On the other hand, the following observations of Bellefontaine J . are apposite: [...] the barrier to rehabilitation associated with the restitution order may be over-emphasized in some of the decisions. The restitution orders here and in most cases will only be a part of the claim that a victim would be entitled to make in the civil courts. As a clearly liquidated amount, the restitution orders represent an indefensible part of any civil claim that the victims' might choose to bring.

By introducing s. 725 (1) of the Criminal Code , which enables a victim to register the restitution order as a civil claim for collection purposes, parliament has granted victims a short cut to recovering their losses associated with the crime. The restitution order does nothing more . An offender's rehabilitation is enhanced by not making a restitution order, only to the limited extent that it passes on to the

individual victims the costs and trouble of suing the accused in a civil court. In any civil court action, the accused's ability to pay would be irrelevant to obtaining judgment. I do not view the refusal to grant a restitution order to do anything to meaningfully assist with an accused's rehabilitation but only to create significant costs and hurdles for the innocent victims of crime . In such a contest it should be rare for the innocent victims to be the losers [25] . (Emphasis added) [ 33 ] In addition, it should be noted that, as Justice Fish, speaking for the Supreme Court of Canada, underlines in R. v.

Topp [26] : “an offender who defaults on a restitution order — unlike an offender who defaults on a fine — is not subject to imprisonment as a consequence.

Thus, the imposition of restitution may greatly assist the victims but does not carry with it any additional penalty for the offender. [ 34 ] Nevertheless, I am bound by the principles established by the Quebec Court of Appeal, specifically the premise expressed clearly in Legault and Bendwell , that an restitution order which cannot ever be met may have the effect of maintaining an offender in a perpetual state of impoverishment, and as such, it is an obstacle to rehabilitation [27] . [ 35 ] FOR THESE REASONS, THE COURT: IMPOSES a sentence of 33 months, to be served on each count, concurrently; IMPOSES a prohibition order pursuant to

section 380.2, for a period of 5 years. _________________________________ LORI RENÉE WEITZMAN, J.C.Q. M e Mélanie Hébert Attorney for the DPCP M e Charles Benmouyal Attorney for the accused Date of hearing: April 10, 2015 [1] The Crown submits the following decisions in support of their position on sentence : - R. v. Jamal [2007] B.C.W.L.D. 3216 : the accused stole over $238,000 from eight clients over a six year period while working as a financial advisor. A sentence of 3 years plus $224,000 restitution was imposed. - R. v.

Dennis 2003 BCSC 2017 : the accused used his status as a financial advisor to encourage investments by four victims of a total of $247,000 over a three and a half year period. A sentence of 27 months and restitution of $106,000 was imposed. [5] 2006 QCCA 471 , para. 60 . The Court in Coffin attached an extensive

summary of sentences in fraud cases. However, as noted in R. v. Chicoine 2012 QCCA 1621 , the sentencing ranges in Coffin are those which applied prior to the legislative amendment in 2004, increasing the maximum penalty in

section 380 of the Criminal Code from 10 years to 14 years.