R. v. Allison, 2018 ONCJ 64

ONTARIO COURT OF JUSTICE CITATION: R. v. Allison , 2018 ONCJ 64 DATE: 2018 01 31 COURT FILE No.: Newmarket 14 09038 BETWEEN: HER MAJESTY THE QUEEN — AND — RICHARD GLEN ALLISON Before Justice David Rose Heard on November 14, 15, 16, 17, 2017, January 11, 12, 18, 26, 2018 Reasons for Judgment released on January 31, 2018 Mr. L. O’Neill......................................................................................... counsel for the Crown Mr. N. Stanford................................................. counsel for the accused Richard Allison David Rose J.: [ 1 ] Mr. Allison is charged with the following: i.

Defrauding No Panic Computing Over $5000 between 19 March 2014 and 16 September 2014; ii. Knowing a Document to be forged, using it as if it were genuine between 19 March 2014 and 16 September 2014; iii. Obtaining Merchandise from Larry Keating and No Panic Computing over $5000 by false pretence and with intent to defraud from 19 March 2014 and 16 September 2014; iv. Make a false statement in writing for purposes of paying himself $91,875.00 between 19 March 2014 and 16 September 2014; [ 2 ] The trial commenced on an 11 Count Information, but at the close of the Crown’s case Mr.

O’Neill directed stays under s. 579(1) of the Criminal Code for Counts 6 – 11. Count 5 was dismissed on a Motion for non-suit. Various admissions were made by the defence through the course of the trial. Mr. Allison elected not to call any evidence. Although this case has appeared before me for trial on several days since November of 2017 there were only some 4 days of evidence. These are my reasons for judgment on the remaining Counts. Background [ 3 ] The allegations relate to Mr. Allison’s involvement with a company No Panic Computing (“NPC”), which was incorporated in 2008. Mr.

Larry Keating, the President and CEO of NPC, testified at the trial, and identified documentation including contracts and emails between him, and Mr. Allison. Much of his evidence was not seriously challenged. NPC builds secure managed computers. One of the investors in NPC is the president of another computer firm Compugen. As a result, NPC does business with Compugen. It was through NPC’s relationship with Compugen that NPC’s director of sales Ken Heinrich came to know Mr. Allison, who had been working for Compugen as a sales manager, apparently for a short time. Mr.

Allison had stopped working for Compugen and approached Mr. Heinrich with a view to selling NPC’s products into other areas. Larry Keating identified Mr. Allison as Glenn Allison. That was how the accused was initially identified. Emails from Glenn Allison and Glenn Allison’s CV were identified in evidence by Larry Keating. Mr. Allison’s CV represents him as having extensive, impressive, and executive level sales experience. It holds him out as

being “Sr. Management, Global Client Relations” and “Strategic and Directional Thinker – Profitable Revenue Growth – Coach, and Highly accomplished Sr. Executive”. The work experience outlined suggests that Mr. Allison led sales teams in several firms over the last 20 years. [ 4 ] In March of 2014 Mr. Allison was looking for a job. Mr. Heinrich spoke to Larry Keating about hiring Mr. Allison. Mr. Keating testified that he rejected that idea. In his evidence there was no role for him in NPC. Mr. Allison persisted and kept coming back to Larry Keating and Mr. Heinrich. Ultimately NPC and Mr.

Allison came to an agreement Larry Keating described as a Champion Agreement, which made Mr. Allison an independent sales agent for NPC products. The compensation structure was notable insofar as it provided for payment of sales commissions up front, or as soon as any sale was made. Paragraph 4b of the agreement stipulates that 50% of the commission fee is to be paid within 72 hours of confirmation of delivery of the product to the client and receipt by NPC of Mr. Allison’s invoice. The balance is paid 45 days later. No commissions were to be paid on returned product. Mr.

Allison put TLSCR holdings as the name on the Champion Agreement. It appears to have been executed on May 10, 2014. First deal – Credera [ 5 ] As soon as the Champion Agreement was signed by NPC Mr. Allison lined up two deals for NPC product. One was a sale to a Texan firm named Credera, the other was for the Horn River project for the energy firm Encana. Credera wasn’t a large company and the deal itself was valued at between $634,000 and $637,000. On that basis Mr. Allison’s compensation was to be $136,000. Larry Keating testified that the Credera deal unfolded very quickly.

A contract was signed by Dave Dobat, the CFO of Credera, on May 24, 2014. On May 25, 2014 Larry Keating received an email from Mr. Allison saying that “David has signed the contract!” and it would be sent to him either that night or the next morning. The contract entered into evidence appears to have been signed on May 24, 2014 by David Dobat the CFO of Credera Inc. [ 6 ] Larry Keating testified that Mr. Allison told him that he had a relationship with Mr. Dobat going back 4 – 5 years, and that he had sold him things in the past. He also told Mr.

Keating that there was urgency to the deal because Credera needed NPC’s product quickly. Larry Keating also testified that NPC needed a credit check for Credera before going forward, and they paid for one through a credit rating agency Transunion. That came back with insufficient information. The NPC director of sales, Ken Heinrich, testified that the creditworthiness of Credera was an issue for NPC. An email string between Mr. Heinrich and Mr. Allison which refers to insufficient credit being one reason why the Credera deal was, in the words of Mr.

Allison “…we are not moving forward”. [ 7 ] From Larry Keating’s perspective, the Credera deal was rejected by NPC because NPC wasn’t satisfied with the credit check. Because there was no product to ship that meant no commission payable to Mr. Allison. Next Deal – Encana [ 8 ] The other deal Mr. Allison pursued for NPC product came to be known as the Horn River Project for Encana. Horn River was held out by Mr. Allison as a remote project which required Encana to outfit its staff with NPC product. According to Larry Keating, it happened at the same time as the Credera deal.

Once the Credera sale was halted the Horn River deal was left. [ 9 ] Larry Keating testified that he knew Encana and there was no need for a credit check on that firm. He was told by Mr. Allison that he had a long relationship with an executive at the firm David Hill, and it was Mr. Hill who was in charge of the Horn River project. Mr. Allison told Mr. Keating that he had vendor or record status with Encana, which is the formal purchase process for such a large firm. In an email on May 19, 2014 from Mr. Allison to Ken Heinrich, Mr.

Allison said that “I am already a vendor with them, so by saying my name first on letters and invoices “agent to…” that will avoid vendor registration.” Because of that the Encana deal could be accelerated. Mr. Keating described the formation of the Encana deal as a whirlwind. The deal had a variety of components. The first was for 350 computer units at a price of $1.6 million. On that basis Mr. Allison’s commission was to be $181,000. Larry Keating testified that Mr. Allison was always seeking as much commission up front as possible and that Mr.

Allison was always quite protective of his relationship with the client, meaning David Hill. Although Mr. Allison had wanted 100% of his commission up front, NPC eventually agreed to pay 50% of Mr. Allison’s commission up front, meaning within 15 days of shipment with the rest payable after 45 days of shipment. Larry Keating testified that, while NPC had a Champion Agreement with Mr. Allison, Mr. Allison was wanting to modify it with each deal, which I took to mean alter in his favour. [ 10 ] Larry Keating described the Encana deal as a game changer for his company.

NPC was only 15 people and it was looking for a breakthrough. Up to that point they had done business on the basis of a few or several computers at a time. Encana was a different order of magnitude. Larry Keating testified that, while the deal moved quickly, the NPC personnel were being more cautious than Mr. Allison. As a result Mr. Allison arranged a telephone conference call between David Hill, Ken Henrich, Mr. Wooley the Chief Financial Officer of NPC, and Larry Keating. As Mr. Keating testified, that call was preceded by one between himself and Mr. Allison about what would happen in the call with David Hill.

Mr. Allison said that Mr. Hill would be asking NPC about its business and that he tended to favour small Canadian technology companies. To Mr. Keating it seemed quite real. In an email June 19, 2014 to Larry Keating and Ken Heinrich, Glen Allison said that “Todays call will not be to discuss terms and conditions. He wanted to talk to the company that he is about to do business with”. That email went on to make various Encana contract language suggestions. [ 11 ] When the Encana call began they were told that they would be doing the deal. It required NPC to buy $500,000 of computers up front.

NPC would get that money back in the price of the contract. Larry Keating testified that the person on the phone held himself out as David Hill on the phone in that call, and appeared to be knowledgeable about Encana and asked good questions. He seemed to know about NPC, and said he wanted to support Canadian tech companies. When the call ended they proceeded with the order. Emails on June 24, 2014 outlined the progress of the contract with Mr. Allison giving Mr. Heinrich contact information regarding David Hill and the shipping address for the order, which was to be 2316 Portland Street E, Calgary.

Invoicing was to be to 3223 10 th Street E, Calgary”. The contract executed by David Hill on June 24, 2014 reflects that information. Paragraph 2 of the contract stipulated payment 45 days from the date of NPC’s first invoice. That meant that NPC owed Mr. Allison the first payment of his commission 15 days after shipment of the computers even if payment was due from Encana 30 days after that. In other words, NPC had agreed to pay Mr. Allison his commission before it got paid from Encana.

[ 12 ] Larry Keating testified that NPC worked more or less non-stop for two weeks to get the Encana order filled in time. In order to do that NPC bought computers from Compugen worth a total of $534,000 for the purpose of modifying and then selling them to Encana. The order was, at least initially, the cause of enthusiasm at NPC and the firm worked hard to complete its side of the deal. Mr. Allison told Larry Keating that Encana needed the computers in a hurry. The computers were duly shipped by Purolator on July 14, 2014. Mr.

Allison was paid $32,812. 50 as a first installment of his commission on July 10, 2014. A second commission installment of $52,062.50 was wired to Mr. Allison on July 17, 2014. [ 13 ] In the days and weeks that followed shipment of the computers to Encana only one of the shipped computers was turned on. NPC knew this because they were not merely selling computers but also a support system which was tracked from NPC. That network told them that only one of the computers of the 350 was in use.

NPC had contact with someone named Shawn Brackel at Encana, who was held out as the tech person on the purchaser side of the deal, but no payment was ever received. Glen Allison had told Larry Keating that all of NPCs invoices to Encana should go through him as opposed to NPC directly sending an invoice to Encana. Within weeks Mr. Allison had told Mr. Keating that there was an internal re-organization at Encana and that the Horn River project which required the computers would be sold.

He told Larry Keating that, as a result he was not sure that Encana would need the computers, or whether NPC would be paid. [ 14 ] By early August Larry Keating had concerns about the bona fides of the Encana deal and contacted Encana directly as well as the police. Notably, when Larry Keating followed up with Encana directly, he sent an email to Nancy Brennan at nancy.brennan@encana.com. The emails for the NPC deal with Encana were to persons such as David Hill, with a slightly different URL, ie, dave.hill@encanahornriverproject.com, even though Mr. Hill was held out as the Vice-President of Encana Corp.

By August 8, 2014 Larry Keating had knowledge that Encana knew nothing of the computers shipped to them and had never signed the contract with NPC. As Larry Keating testified, there was real concern that several hundred thousand dollars in NPC product was sitting in a warehouse in Calgary. If it wasn’t recovered, Larry Keating had real concerns about the viability of NPC as company. He then continued to engage with Mr. Allison without telling him what he knew so that the computers could be recovered. [ 15 ] Telephone calls between Mr. Allison and Mr. Keating were played at trial. Mr.

Keating identified the voices as being his and Mr. Allison’s. The calls show Mr. Allison sharing concerns about the loss of computers but saying at the same time that Encana is not communicating with him. In one of them he told Larry Keating that “I’m not suggesting that you are not getting paid”. Mr. Allison’s telephone calls to Larry Keating are that the deal was precarious, but not dead. In one of them he tells Larry Keating “…I mean we can talk about redeploying the 350 to some other group; meaning some other group within Encana. Um, or we, you know, we can – we push the units back to them”.

Later in that conversation he said “I think it’s a good idea to pull your inventory, was to protect it from being locked up. Not the deal was dead”. Later in that conversation he said to Larry Keating “I don’t to lose – well I’m not going to lose Encana as a client…I’m kind of wondering do you – do you even want to…you know move for product into Encana?” At the end of the conversation Mr. Allison said “…they did take your product Larry, I – I was the one that took it away from them”. In another he suggests that, because the deal is not dead, he should finance Mr.

Allison’s commission by third party funding, or factoring, whereby a portion of the profit from a contract is sold to a third party in exchange for upfront payment. In an email much later, October 10, 2014 Glen Allison would hold out to NPC he intended to continue to get more sales for NPC and intended to keep future commissions too. He resisted the suggestion that his commission from the Encana deal be deducted from future sales commissions. [ 16 ] On August 12, 2014 Glen Allison sent an email to Larry Keating which summarized the status of the Encana deal, from Mr. Allison’s perspective.

He said that there had been a change of direction in Encana because they had sold off the Horn River project and the best thing would be to get the computers back. Mr. Allison’s position to Larry Keating was that the contract with Encana was bona fide but the sale of the Horn River project put the deal in limbo. Larry Keating testified that he knew otherwise but if getting his computers back meant playing along with this narrative he would do it.

Ultimately all of the computers were returned to NPC. [ 17 ] After the computers were returned from Calgary to Toronto Glen Allison con​tinued to assert as late as August 25, that “…this deal is not dead”. He said on that day that it was to be strengthened. That was in reply to an email from Larry Keating to Glen Allison on August 20, 2014 that he would have to return the commissions if there was no sale.

On September 3, 2014 Glen Allison wrote to Larry Keating that “Encana will be taking the units back to a new department”. [ 18 ] Once Larry Keating determined that there never was a deal with Encana, and the entire contract was a fiction, there was no basis for any commission to be paid to Glen Allison. The impact of the incident resulted in a loss of about $380,000 to NPC. The Encana computers were sold at a loss which meant that NPC had to lay off 2 directors and technical staff. [ 19 ] In an email dated October 10, 2014 Mr. Allison told Mr.

Keating that the “customer took a pause and now you want your commissions back…I am not going to send you commissions back…”. [ 20 ] In cross-examination Larry Keating was questioned about the Champion Agreement and its terms. He described them as being unusual insofar as they were overly favourable to Mr. Allison. He said that he negotiated it, agreed to it even though he didn’t have it in any other agreement. He was firm that the Champion Agreement did not agree to payment of a commission for a fraudulent deal.

There was no sale, and therefore no commission was to be paid. [ 21 ] Larry Keating’s brother Bill Keating also gave evidence. Bill Keating was the Vice-President of Technology for NPC, and was familiar with the Encana deal. Bill Keating identified various emails which held out two persons as being responsible at Encana for implementation of the computers. Of those two persons, only Shawn Brackel was on the phone calls with Bill Keating. Bill Keating thought it was odd that Jason Arthur appeared in the email correspondence to be an important person but he never showed up on any of the implementation phone calls.

The emails which Bill Keating suggested that Encana was having issues with the operation of the computers NPC shipped to Calgary. That said, only one of the 350 computers NPC shipped to Encana was ever opened. NPC knew that because when one of the computers was logged on it became connected with NPC’s network. [ 22 ] Jason Wooley testified as the Vice-President of finance for NPC. It was his role to ensure the credit worthiness of NPC clients, where NPC was extending credit in a sale. That included Credera. He testified about his discussions with David Dobat at Credera.

He said that, on behalf of NPC, he was looking for trade references for Credera and didn’t get any. He confirmed that Encana never paid

any of the invoices he sent to them on behalf of NPC. On the other hand he confirmed that NPC did pay Glen Allison his commission onor about July 10, 2014. The payment was confirmed by an Electronic Funds Transfer receipt. The first payment of $32,812.50 wasfrom HBC on July 14, 2014. Mr. Wooley confirmed that on August 8, 2014 $59,062.50 was sent to Mr. Allison as the second installmentin his commission for the Encana deal. HBC bank records were introduced into evidence on this point. [23] Ken Heinrich was the last witness to testify for the Crown.

He was the business director and sales manager for NPC, and wasinvolved in the winter and summer of 2014 with the arrangements to bring Glen Allison on as a sales person at NPC, and also with boththe Credera and Encana deals. In his evidence, once Mr. Allison was signed on to his sales agency contract the Credera and Encanadeals came fast. May 15, 2014 was the Credera proposal and Encana was only 4 days later. Both proceeded at the same time. He saidthat the address for the Encana Horn River project deals came from Mr. Allison. He commented on various emails which were part ofthe Encana deal.

He confirmed that Mr. Allison was the one who sent the signed Encana contract to NPC, and it was him who suppliedthe delivery address. He also told Mr. Heinrich on August 12, 2014 that he was aware that the Horn River project had been sold. In KenHeinrich’s testimony if the Encana deal had gone through it would have been a game changer for NPC. [24] The Crown closed its case with 4 statements from Encana personnel. Those were put into evidence as Admissions by thedefence. David Hill stipulated that he is the Vice-President of Encana based in Denver. He knew nothing of NPC, Mr. Keating, or Mr.Allison.

He knew nothing of any sale of computers to Encana from NPC. Lastly, he knew nothing of the email addressdave.hill@encanahornriverproject.com. Mr. Hill is involved with exploration for Encana and has no responsibilities for InformationTechnology. He denied ever signing the NPC computer sale deal. Other admissions confirm that there is no Shawn Brakel, JasonArthur, or Glen Allison with any connection to Encana. Others at Encana confirmed that Encana never used the URL“encanahornriverproject.com”, and that the shipping address for the 350 computers of 2316 Portland Street SE Calgary which wasprovided by Mr.

Allison in the June 24, 2014 email to Ken Heinrich was not a valid Encana address. The admissions in sum are that thereal Encana has no knowledge of the NPC computer sale deal in any way, or the persons identified with it. Issues [25] On behalf of Mr. Allison Mr. Stanford took the position that the there was no issue with the commission amount paid to Mr.Allison, and there was no issue of it being paid to Mr. Allison. Mr. Stanford also submitted that there is no dispute that the Encana dealwas a fake one and there were no credibility issues with the Crown witnesses. These were reasonable admissions.

After hearing theevidence I found the viva voce witnesses consistent in their testimony. Much of their evidence was confirmed by emails, documents andrecordings of phone conversations. It assisted Larry Keating’s credibility that he admitted in evidence that the deal he signed with Mr.Allison was a bad deal because of the commission structure. While hindsight surely assists his wisdom in this regard, Larry Keatingmade no effort to deny his responsibility in a bad decision. Legal test [26] Fraud has been defined in any number of cases. It involves a level of falsehood, dishonesty or deceit: see R. v.

Sebe (1987), (SK CA), 57 C.R. (3d) 348 (Sask. C.A.); R. v. Theroux, [1993] 2 S.C.R. 1175; R. v. Olan, (SCC), [1978] 2S.C.R. 1175. Dishonesty is determined objectively by reference to what a reasonable person would consider a dishonest act, see R. v.Zlatic, (SCC), [1993] 2 S.C.R. 29. To complete the offence the Crown must prove a risk of deprivation, if not actualdeprivation; see R. v. Riesberry, 2015 SCC 65. The Crown must prove that the accused was subjectively aware of his dishonest act, seeR. v. Wendel (1992), (MB CA), 78 C.C.C. (3d) 279 (Man. C.A.). [27] Forgery is more than mere falsity.

The forgery must be regarding something material in the document, such as the very purposefor which the document was created: see Gaysek v. R., (SCC), [1971] S.C.R. 888; R. v. Benson (2012), 2012 MBCA 94, 294 C.C.C. (3d) 109 (Man. C.A.). [28] The Crown’s case is circumstantial. When the evidence proffered by the Crown is circumstantial, the burden of proof is metonly when there is no reasonable inference available other than guilt; see R. v. Youssef, 2018 ONCA 16. Findings [29] There is undisputed evidence that the Encana deal was a complete fiction, unbeknownst to NPC.

The deal was signed by afictitious David Hill using a fictitious email address with a delivery address which had nothing to do with Encana. Individuals followingup with NPC who held themselves out as Encana employees turned out to be unknown to Encana. The falsity of the deal includes thefact that the email addresses provided by Mr. Allison were close to the real Encana addresses but not exactly the same. Mr. Allisonprovided a URL of encanahornriverproject.com. This was a fake. The real Encana email addresses were in fact encana.com.

The falsityincludes a shipping destination in Calgary which is where Encana is located but a municipal address which is unknown to Encana. [30] The concept of selling product to Encana was brought to NPC by Mr. Allison alone. This is not a case where Mr. Allisonfollowed up on someone else’s lead. Mr. Allison held out the client as being bona fide at any number of points in the narrative. Hecontinued to tell Larry Keating in late August that the deal is not dead. The Crown has proven beyond a reasonable doubt that there wasnever a real deal. It was a complete fake. Mr.

Allison argues that he was as much a victim as NPC. There is no evidence whatsoever ofthat. It would be completely speculative to find that and I would not. The evidence is entirely, and overwhelmingly, contrary to thesuggestion that Mr. Allison was duped just like NPC. Mr. Allison held out to NPC that he was an established client of Encana andtherefore there was no need to do background checks. That was entirely false. He passed on to NPC a contract for the sale of computerssigned by a senior executive of Encana David Hill. Mr.

Hill’s signature on it and therefore Encana’s approval of the contract wasentirely false. Mr. Allison sent the document to NPC expecting it to act on it. [31] It is also highly inculpatory that Mr. Allison profited by the sum of over $91,000.00 in commissions on the fake contract. When confronted with the fact that the product was returned because the sale never was, he continued to assert that the deal was bonafide and therefore he was entitled to keep the commission money. His assertion on that was highly inculpatory. Therefore, the onlyperson who profited from the Encana deal was Mr. Allison.

Encana was a stranger to the contract. NPC was out of pocket for Mr.Allison’s commission as well as its up-front work to buy and develop the computers for sale, as they thought, to Encana.

[ 32 ] The Crown asks me to find that the Credera deal was also a fake. There are aspects of it which are troubling. This includes how quickly the deal fell through, the email addresses which are a prolongation of Credera, and deal abruptly falling through because of the reluctance of Mr. Dobat to provide fairly straightforward information regarding creditworthiness. That said, I would not go so far as to find that the Credera deal is demonstrably false. There is insufficient evidence before me to find that David Dobat, the email contact for Credera or the prospect of selling computers to Credera are false.

The Credera deal was one of two deals brought to NPC by Mr. Allison, and the failure of the Credera deal simply explained why the Encana deal was pursued. [ 33 ] The evidence that Mr. Allison defrauded NPC of both his commission and the value of the computers which they purchased from Compugen for purposes of modifying and then expecting to sell to Encana is not just proof of fraud beyond a reasonable doubt, it is overwhelming. There is no other possible explanation available on the evidence before me, and Mr. Allison is convicted of Count #1.

It follows that he is convicted of Count #2 given my findings that the David Hill signature on the Encana contract was a fake as was Encana’s purported agreement to purchase the computers. The Encana contract was therefore a forged document and Mr. Allison’s transmission of it to NPC for which he sought and obtained over $91,000 in commissions from NPC makes him guilty of Count #2. The fraudulent scheme caused NPC to pay Mr. Allison his commission and to ship computers to an address in Calgary not knowing that it was a completely fake transaction. Mr. Allison is convicted of Count #3. The invoice Mr.

Allison sent to NPC for his commission of $91,875 on the Encana deal is therefore a false statement. The evidence is overwhelming that Mr. Allison knew that there was no real contract with Encana. I find that he knew that he was not entitled to the commission, obtained it, and kept it anyway. His invoice for the commission was a false statement. He is convicted of Count #4. [ 34 ] This case was overwhelming, and fully supported by the evidence of persons involved, the real persons from Encana who were not involved but were thought to be contracting parties, and significant documentary evidence. Mr.

Allison is convicted of all charges. Released: January 31, 2018 Signed: Justice David S. Rose