Her Majesty the Queen - v. -, 2015 SKPC 39

IN THE PROVINCIAL COURT OF SASKATCHEWAN Citation: 2015 SKPC 039 Date: March 11, 2015 Information: 24388435 Location: North Battleford _____________________________________________________________________________ Between: Her Majesty the Queen - and - Adelia Kaminsky Appearing: Alexandra Findlay For the Crown Nicholas Stooshinoff For the Accused SENTENCING DECISION D. O ’ HANLON , J [ 1 ] Ms. Kaminsky has pleaded guilty to a charge that she did between May 1, 2006 and February 28, 2013 in North Battleford and elsewhere in the Province of Saskatchewan commit fraud over $5,000.00 by defrauding investors through deceit, falsehood or other fraudulent means contrary to s. 380.1 (

a) of the Criminal Code . [ 2 ] The guilty plea was entered on January 9, 2015 and sentencing was adjourned to February 25, 2015. No Pre-sentence Report was ordered for that date. On the 25 th of February I heard submissions by counsel, from some of the victims and from the accused herself. I reserved my sentencing decision to today to consider a fit and proper sentence. This is my sentencing decision.

[ 3 ] Ms. Kaminsky was a contract worker with Sentinel Financial Management Corporation and had her own business known as AK Financial. She had also been associated in the past and previously employed by the Credit Union. She assisted people in investing their money and was paid a commission to do so. I am told that during the period of her fraud, 2006 to 2013, 12 people were involved however only 10 of those people suffered monetary loss. Those 10 people ranged in age from 52 to 86 years of age and together they were defrauded $639,700.00. Ms.

Kaminsky used her association with Sentinel Financial to earn their trust and even their friendships. She had her victims invest their money in two entities, Envirocan and Forex. One of these entities, Envirocan, did not even exist. The other, Forex, was a high risk exchange in foreign currencies with no one in the province licensed to trade in it. All monies invested by the victims in this Forex entity were never put into that entity by the accused. Instead the monies went into one or more of the seven bank accounts used by the accused. With regards to the fictitious Envirocan, Ms.

Kaminsky drafted a document entitled Envirocan Private Placement

Summary, offering “guaranteed investments” with an 8% return over five years, in other words the principal was guaranteed. [ 4 ] This fictitious document was accompanied by a subscription form for her victims to subscribe to an investment opportunity conjured up by Ms. Kaminsky which in fact did not exist. During the course of her fraud the vast majority of money was spent on herself, with $124,000.00 spent on the Shopping Channel and most of it spent at the casino in North Battleford.

I am told that according to the forensic audit she spent almost $5.8 million at the casino but got back about $5.1 million, only losing about $665,000.00.

In other words she lost slightly more at the casino than she stole or defrauded from her victims and this even though I am told she did not have a gambling addiction. [ 5 ] During the course of her fraud when victims requested to get their money out, she dissuaded them from doing so, telling them there would be tax consequences and when some asked for documentation of their investments they simply never received it. [ 6 ] Finally an anonymous report to the Financial Consumer Affairs Authority in February, 2013 began to bring the fraud to an end.

I am told warrants were obtained for her bank records, her computer and other documentation. A forensic accountant was engaged and the extent and duration of her fraud was uncovered and each of the victims were advised of the sad reality surrounding their investments. [ 7 ] Both the Crown and Mr. Stooshinoff emphasized that the accused cooperated with the investigation and audit as far as she could. The Victim Impact Statements display the extent of the harm suffered by many of the victims. Many were senior citizens. All of them had invested hard earned money. They were generally unsophisticated in investing.

Many viewed the accused not only as a financial investment adviser but also as a friend and even as a confidante. Many are now suffering from stress, depression and anxiety, along with other health concerns. Perhaps age related, but nonetheless illnesses and suffering not made easier by the accused’s breach of their trust. Not only did she violate the trust of people who had befriended her, but she also defrauded her sister and her mother.

It has to be emphasized she committed this fraud over an extended period of time, some seven years and with a high degree of planning as emphasized by Exhibit P-2, documents she prepared for the non-existent investment opportunity. [ 8 ] In order to determine a fit and proper sentence I must consider s. 718 through to 718.2 and s. 380.1 of the Criminal Code .

Section 718 states: The fundamental purpose of sentencing is to contribute, along with crime prevention initiatives, to respect for the law and the maintenance of a just, peaceful and safe society by imposing just sanctions that have one or more of the following objectives: (

a) to denounce unlawful conduct; (

b) to deter the offender and other persons from committing offences; (

c) to separate offenders from society, where necessary; (

d) to assist in rehabilitating offenders; (

e) to provide reparations for harm done to victims or to the community; and (

f) to promote a sense of responsibility in offenders, and acknowledgement of the harm done to victims and to the community.

[ 9 ]

Section 718.1 states: A sentence must be proportionate to the gravity of the offence and the degree of responsibility of the offender. [ 10 ]

Section 718.2 states: A court that imposes a sentence shall also take into consideration the following principles: (

a) a sentence should be increased or reduced to account for any relevant aggravating or mitigating circumstances relating to the offence or the offender, and, without limiting the generality of the foregoing: (

i) and (ii) have no application (iii) evidence that the offender, in committing the offence, abused a position of trust or authority in relation to the victim. (iv) evidence that the offence was committed for the benefit of criminal organization has no application and nor does (v), but it shall be deemed an aggravating circumstance if there is evidence the offender abused a position of trust. [ 11 ]

Section 718.2(b): A sentence should be similar to sentences imposed on similar offenders for similar offences committed in similar circumstances. (

c) where consecutive sentences are imposed, that has no application; and (

d) an offender should not be deprived of liberty, if less restrictive sanctions may be appropriate in the circumstances; and (

e) has no application. [ 12 ]

Section 380.1 which has particular application to a fraud states as follows: Without limiting the generality of s. 718.2, where a court imposes a sentence for a fraud it shall consider the following as aggravating circumstances: (

a) the magnitude, complexity, duration or degree of planning of the fraud committed was significant; (

b) the offence adversely affected or had the potential to adversely affect the stability of the Canadian economy has no application; (

c) the offence involved a large number of victims; and (c.1) the offence had a significant impact on the victims, given their personal circumstances including their age, health and financial situation; (

d) in committing the offence, the offender took advantage of the high regard in which the offender was held in the community; (

e) the offender did not comply with a licensing requirement, or professional standard, that is normally applicable to the activity or conduct and forms the subject-matter of the offence; and (

f) the offender concealed or destroyed records related to the fraud or to the disbursement of the proceeds of the fraud. [ 13 ] Subsection (2) of s. 380.1 states: When a court imposes a sentence for fraud, it shall not consider as mitigating circumstances the offender’s employment, employment skills, or status or reputation in the community if those circumstances were relevant to, contributed to, or were used in the commission of the offence.

This

section then requires me on the record to give both aggravating and mitigating circumstances and I will do so. [ 14 ] The cases provided by counsel were of great assistance in my deliberations. I would note however the sentencing decision of my sister Judge Gordon in R v Bethky was overturned by the Court of Appeal. Judge Gordon had sentenced Ms. Bethky to a Conditional Sentence Order of two years less a day. Ms. Bethky was the treasurer for a CUPE local in Moose Jaw when she wrote herself some 60 cheques, totalling about $180,000.00 over a five year period.

She was 56 years of age, entered a guilty plea and had no criminal record. The Saskatchewan Court of Appeal citing several of the cases provided to me set aside the Conditional Sentence Order stating that a 15 month period of incarceration was appropriate, but they gave her credit for six months of house arrest and imposed a jail term of 9 months. [ 15 ] Also there is the case of R v Deborah Parkes , a decision of Mr. Justice Acton.

He imposed a three year federal penitentiary sentence for two frauds committed over a four year period; frauds of $112,000.00 and a second one of $67,500.00 for a total of about $180,000.00. The 56 year old mental health care operator had no criminal record and perpetrated the fraud on a victim who was vulnerable and under her care.

The Saskatchewan Court of Appeal dismissed her appeal from conviction, granted her leave to appeal her sentence and dismissed the appeal, therefore upholding Justice Acton’s three year federal penitentiary sentence. [ 16 ] Going back to the Saskatchewan Court of Appeal decision in Bethky , as I stated, in that decision several of the cases provided to me are referred to.

In looking at denunciation and deterrence, the first two objectives of sentencing cited under s. 718, the Court of Appeal states at para. 40: The relative importance of the sentencing objectives of denunciation and deterrence resonate throughout the cases referred to above. [ 17 ] R v Gopher , another case that was provided to me and with which I am quite familiar, in that case for example the Court of Appeal states: This court concluded its review of the case authority pertaining to sentencing for comparably large scale frauds by persons in a position of trust by noting the importance of these objectives in this context. [ 18 ] Mr.

Justice Richards, now Chief Justice Richards, spoke to this with the concurrence of Justices Vancise and Gerwing saying: This review of sentencing authorities indicates not surprisingly that there is no rigid set of rules which determines when a fraud or breach of trust offence warrants jail or penitentiary time. It cannot be otherwise given that sentencing decisions must be geared to the specific circumstances of each offender.

Nonetheless the authorities do clearly reveal a general view that denunciation and deterrence are key objectives in sentencing these type of offences and that substantial frauds by persons in positions of trust will generally attract sentences involving substantial periods of incarceration. [ 19 ] Then at para. 42 the Court of Appeal states: True Ms. Bethky is at a low risk to re-offend and is currently experiencing some health related problems. This is undoubtedly a stressful and difficult time for her which is not lost on any of us.

We might say as was said in the case of R v Bettrilick , a 2002 decision of the Saskatchewan Court of Appeal: no judge can fail to take into account the personal circumstances of the offender and in doing so few are unmoved by them. We too are driven by compassion when we see the predicament the offender and his parents are in today but we must do our duty as must other judges and give effect to the law. [ 20 ] This is indeed similar to the case before me in that I am told the accused has health problems and I have been provided with a doctor’s letter, Exhibit D-3, attesting to her health issues.

As to whether she is a low risk to re-offend, that would simply be speculative to determine at this point. As I stated earlier, a Pre-sentence Report was not prepared and therefore a Risk Assessment was not

conducted. What I take from the above quote is that her health concerns and issues will not stop me from giving effect to the law and imposing a just sentence in the circumstances. What many of the cases referred to by our Court of Appeal tell me is that I must have primary consideration for denunciation and both specific and general deterrence. I must consider the principles enunciated in s. 718.2 and the specific aggravating factors enunciated in s. 380.1.

In order to apply the objectives and principles of sentencing I will first look at the mitigating factors and then the aggravating factors. [ 21 ] Although many of them have already been stated, I will reiterate them. With regard to the mitigating factors, once the fraud had been uncovered the accused cooperated with the investigation. Cooperating with every request as far as she could. There is no evidence of destruction of any records. She is 54 years of age with no prior criminal record. She entered an early guilty plea, negating the need for what would have been a lengthy trial.

I am told that she did not live an extravagant lifestyle off the proceeds of her fraud, however that is contradicted by some of the spending she did and will not serve as a mitigating factor. I will come back to that. [ 22 ] She is said to be deeply, deeply remorseful and ashamed. She does not have a drug or alcohol addiction nor does she feel she has a gambling addiction. I will come back to that as well. [ 23 ] With regard to aggravating circumstances under s. 718.2(a)(3), the accused did abuse a position of trust or authority in relation to all of the victims and under s. 380.1 (

a) the magnitude, complexity, duration or degree of planning of the fraud committed was significant, especially with regard to the amount of money, the duration over which it occurred and as stated earlier, the degree of planning. [ 24 ]

Section 380.1: (

b) there is no effect to the financial markets. (

c) it involved 12 victims, 10 of whom lost a great deal of money. (c.1) the offence did have a significant impact on the victims considering their ages, their health and their financial situations with many of them in retirement. (

d) this fraud could not have been perpetrated by the accused but for the high regard she had in the community and her associations with the Credit Union and Sentinel Financial. (

e) she did not comply with the standards required of her as a licensed financial planner and mutual fund representative. [ 25 ] And under s. 380.1(2) as I have stated before, when a Court imposes a sentence for fraud it shall not consider as mitigating circumstances employment etc. and I will therefore not consider that although those have application to her, they do not mitigate in this circumstance.

Also even though she is said not to have lived an extravagant lifestyle and that she denies a gambling addiction, as I said I would come back to this, it has been stated that she spent $124,000.00 on the Shopping Channel and that she spent almost $5.8 million at the casino with $5.1 million being returned. It may not indicate a gambling problem, but it does speak greatly and conclusively to extravagances in her lifestyle. Consequently this assertion does not provide her with any mitigation and finally, as mitigation, I am told that she is deeply remorseful and ashamed.

Perhaps she is ashamed but her degree of remorse is at best suspect, as she stated that she hurt the victims unintentionally, that her intent was always to help them, the victims were true friends, that she forgot about herself, that she too has been hurt and that she has been kind and considerate. All of this shows an abject lack of comprehension of the harm she has done and the crime she has perpetrated. Remorse flows from an understanding of the harm that a person has done.

She is not remorseful therefore this does not provide mitigation. [ 26 ] The Crown puts forward a range of sentence of 3 to 5 years and asks the Court to consider a 4 year sentence with restitution orders. Mr. Stooshinoff suggests a sentence of 18 months in a Provincial Correctional Centre. I will deal first with the restitution request. [ 27 ] In R v Danielle Adrien , a decision of Mr. Justice Danyliuk from 2014, the Saskatchewan Court of Queen’s Bench, he states at para. 78 in the CanLII decision that was provided to me:

78 Finally I have considered the case of R v Yates, a decision out of British Columbia. There the Court indicated that restitution ordershave several underlying objectives including denunciation, specific and general deterrence, rehabilitation, providing reparations todamaged parties and promoting responsibility among offenders. While ability to pay is to be considered it is not the sole or even thepredominant factor. Even if full payment is unlikely, restitution may be ordered and such an order still has utility. I am not prepared toaccept Ms.

Adrian’s bald assertion that she cannot or will not pay any money back. She is 29, she appears bright and not withoutresourcefulness although those skills have been misapplied thus far. Should she use her capacity in an honest entrepreneurial fashion, Ihave no doubt she could deal with restitution. Given all that has happened she is not entitled to just throw up her hands and claim shecannot or will not pay back any money. [28] In the case before me, Ms. Kaminsky has obtained employment and her employer speaks highly of her as evidenced byExhibit D-2.

So even though she has not paid restitution to this point, I am satisfied that the order for restitution should be made andeven though she is 52 years of age, she is capable of working and earning money. Even if full restitution is not likely, it is a possibility. She is obviously intelligent and capable of pursuing other areas of employment and at least making some reparations.

Also as JusticeDanyliuk states: “Given all that has happened she is not entitled to just throw up her hands and claim that she cannot or will not pay backany money.” [29] I make an Order under s. 738 of the Criminal Code for each of the 10 victims who lost money and I make each of the Ordersin the amount shown on Exhibit P-1 for those 10 people shown on that exhibit who have lost money and I ask that the Crown provide theClerk of the Court with the full names and contact information for each of the 10 victims. [30] Now turning back to the fit and proper sentence.

As I stated, I have reviewed all of the cases provided to me and I havelooked at and studied the Court of Appeal sentencing digests. I have also looked in other jurisdictions. I will cite a few cases. The first:the case of R v Klaus Link, 2013 SKQB 163 . In that case Mr. Link committed a fraud in excess of $1.7 million. The fraudcontinued for more than six years. Elaborate steps were taken to conceal his criminal behaviour. He was an upstanding member of thecommunity and his only motivation was greed. The defence suggested a period of 3 years and the Crown was seeking 4 to 6 years.

There were 19 victims however, some of these victims were corporations and Mr. Justice Ball of the Saskatchewan Court of Queen’sBench noted that as a result of the corporations, there were a further 37 employees who were affected, bringing the total to 56 people. Mr. Justice Ball looked at sentencing decisions in Saskatchewan, Alberta, British Columbia and Ontario. At para. 28 he makes note ofthe case R v Galna, out of the Ontario Superior Court, it is cited at 2005 Carswell Ont 3933 Westlaw Canada. Mr.

Justice Ball states atpara. 28: In the R v Galna case the accused was convicted of defrauding investors of $662,000.00. He was sentenced to four years incarceration. In arriving at this sentence the sentencing judge reviewed a series of investor frauds at paras. 5 to 11, where the sentences range from 3to 6 years. The sentence for investor fraud exceeding $1 million consisted of incarceration for 5 to 6 years and as I said in the case of R vGalna, the sentencing judge sentenced Mr. Galna to a term of 4 years incarceration.

That case is very similar to the case at hand, in boththe aggravating and mitigating circumstances surrounding it. [31] Mr. Justice Ball then reviewed other cases and concludes at para. 32: Sentencing Mr. Link to 5 and ½ years in a federalpenitentiary. [32] Another case that I will refer to and was provided to me was the case of R v Parkes, 2012 SKQB 257 . In that casethere were two frauds over a four year period. One for $112,000.00 and the other for about $67,000.00, for a total of $180,000.00. Theaccused was 56 years of age, no criminal record and a mental health care home operator. Mr.

Justice Acton sentenced her to 3 years in afederal penitentiary. The sentence was upheld by the Saskatchewan Court of Appeal at 2014 SKCA 37 , 2014 SJ No 153. [33] And the final case I will make mention of is the case of R v Ronald Gerry Fast and Danielle Fast Carlson, 2014 SKQB 161. This is the Marathon Leasing Corporation and the ponzi scheme perpetrated by Mr. Fast. It began in the early 80's and lossesattributed to Ronald Fast were $16.7 million over 7 years and $6 million to Ms. Fast Carlson. Justice Danyliuk sentenced Mr. Fast to 7years and made orders for full restitution. He sentenced Ms.

Fast Carlson to 30 months and restitution of $1 million. These cases arenow under appeal. The case does however show an upper end sentence for a higher dollar value fraud over a larger period of time. [34] After considering all of the cases, I am satisfied that the fraud perpetrated by Ms. Kaminsky was carried out for longer thanthe two frauds perpetrated by Ms. Parkes. She received a sentence of 3 years. There were more victims, many of whom were elderly,vulnerable, trusting and unsophisticated and lost much of their savings. They may not have been under Ms. Kaminsky’s care but she did

have their trust. The dollar amount in this case was far greater than that in Parkes and the criminal offence occurred over a greater period of time. On that basis and considering all of the mitigating and aggravating factors in the case before me and comparing them to the Ontario case of R v Galna , cited previously, I am satisfied a sentence of 4 years in a federal penitentiary is an appropriate, fit and proper sentence. [ 35 ] Adelia Kaminsky I sentence you to four years in a federal penitentiary. The victim impact surcharge is payable by December 31, 2015. __________________________ D. O’Hanlon, J