2014 QCCQ 5219, 2014 QCCQ 5219

Unofficial English Translation JB1582 R. c. Perron 2014 QCCQ 5219 COURT OF QUEBEC CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL LOCALITY OF MONTREAL "Criminal and Penal Division" No.: 500-01-002508-080 DATE: July 2, 2014 ______________________________________________________________________ PRESIDED BY: THE HONOURABLE LOUISE BOURDEAU, J.C.Q. ______________________________________________________________________ Her Majesty the Queen Prosecutrix v. Serge Perron Alexander Philips Gérald O’Reilly Accused ______________________________________________________________________ SENTENCING ______________________________________________________________________ [ 1 ] The accused took

part in cigarette smuggling and were convicted of the following charges: SERGE PERRON - defrauding the governments of Canada and Nova Scotia of an amount exceeding $5,000 (2 counts, s. 380(1)(

a) Cr. C. ); - conspiracy (s. 465(1)(

c) Cr. C. ). Position of the defence: ranges from a suspended sentence and community work to a conditional sentence. Position of the prosecution: 2-year prison sentence. ALEXANDER PHILIPS - defrauding the governments of Canada and Nova Scotia of an amount exceeding $5,000 (2 counts, s. 380(1)(

a) Cr. C. ) ; - conspiracy (s. 465(1)(

c) Cr. C. ); - commission of an offence for the benefit of a criminal organization; (s. 467.12 Cr. C.) - laundering the proceeds of crime (s. 462.31 (2)(

a) Cr. C. ). Position of the defence: there is no submission on sentencing aside from reparation by donating cords of firewood from the accused's land to citizens in need. Position of the prosecution: on the counts of fraud and conspiracy – 6 years; on the count of criminal gang activity – 2 years, to be served consecutively; and on the count of laundering the proceeds of crime – 3 years, to be served concurrently.

Section 743.6 Cr. C. must be applied. GERALD O'REILLY

- defrauding the governments of Canada and Nova Scotia of an amount exceeding $5,000 (2 counts, s. 380(1)(

a) Cr. C.); - conspiracy (s. 465(1)(

c) Cr. C.); - commission of an offence for the benefit of a criminal organization (s. 467.12 Cr. C.); - laundering the proceeds of crime (s. 462.31(2)(

a) Cr. C.). Position of the defence: on the counts of fraud and conspiracy – a conditional sentence of 8 months less a day; on the count of criminalgang activity – a suspended sentence of 6 months and 3 years' probation, with 240 hours of community work; on the count of launderingthe proceeds of crime – a suspended sentence and 3 years' probation with the obligation to organize at least 3 fairs a year for children orcharity, using the equipment belonging to the accused and his staff.

Position of the prosecution: on the counts of fraud and conspiracy – 6 years; on the count of criminal gang activity – 2 years to be servedconsecutively; and on the count of laundering the proceeds of crime – 3 years to be served concurrently.

Section 743.6 Cr. C. must beapplied. [2] No witnesses were heard and a pre-sentence report was not filed. [3] As it is described in the admission on the facts underlying the charges and filed as exhibit P-23, the period covered is from July 13,2006, to March 12, 2008. According to the prosecution, 473 boxes of cigarettes were sent to Nova Scotia, representing a minimum of 21million cigarettes.

According to the table filed under exhibit S-1, the fraud is assessed at $5,000,000 for the period from September 20,2006, to February 21, 2008. [4] The accused contest not only the number of boxes, submitting first that there were 436 boxes (exhibit P-23, para. 30.1) and later thatthere were in fact 452 boxes (exhibit P-23

schedule 1), but also the amount of the fraud.

In particular, they argue that there is no proofbeyond any reasonable doubt that all the boxes reached Nova Scotia and that they contained cigarettes, especially since there is noguarantee that they were not counted twice. [5] The Court reiterates that similarities in packaging, the fact that these were same-sized cardboard boxes with two metallic straps oneither end, that the transport always took place in refrigerated trailers, which are often used in cigarette smuggling to mask the odour(report of Martin Renaud, which is admitted) that this was done by the same persons, and furthermore, the electronic surveillanceconversations, the surreptitious entries into Nova Scotia and Quebec, and the analyses all point to the fact that the boxes that were seencontained contraband cigarettes.

As for the difference in the number of boxes submitted by the prosecution and the defence, it is notdeterminative. [6] Counsel for the accused submit that this case is unique given the fact that the charges were laid not under the Excise Tax Act, whichusually carries economic sanctions, but under the Criminal Code. Furthermore, evidence has been adduced through the expert report ofMartin Renaud, which was admitted, that the contraband cigarettes were produced on Aboriginal territories, where their sale is toleratedby the government and is not prosecuted. [7] Specifically, referring to R. v.

M. (C.A), (SCC), [1996] 1 S.C.R. 500 at para. 79, on how the moralblameworthiness of the accused determines the sentence to be imposed and how a person may think he or she is committing an offencethat is so serious as to entail a prison term when this offence is tolerated for other individuals. [8] Although it is not a mitigating factor, this specific situation should be taken into consideration and the sentences should be on thelower end of the applicable spectrum.

OBJECTIVE SERIOUSNESS [9] Parliament has set a maximum sentence of 14 years for counts of fraud exceeding $5,000, and a sentence of 14 years to be served sentence consecutively has been imposed for the commission of an indictable offence for the benefit of, or in association with, a criminalorganization. The offence of laundering the proceeds of crime carries a 10-year sentence. LAW [10] The general principles and purposes of sentencing Parliament sets out the purposes and principles of sentencing in

section 718 Cr. C. et seq. 718. Purpose The fundamental purpose of sentencing is to contribute, along with crime prevention initiatives, to respect for the law andthe 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 acknowledgment of the harm done to victims and to the community. The Criminal Code also provides that the judge must impose a sentence that is proportionate to the seriousness of the offence and thedegree of responsibility of the offender. The judge must adapt the sentence in light of any aggravating or mitigating circumstancesrelating to commission of the offence or to the situation of the offender. The judge must impose a sentence that is similar to those imposed on similar offenders for similar offences committed in similarcircumstances.

An offender should not be deprived of liberty unless the judge has considered the possibility of less restrictive sanctions. [11] The imposition of a sentence remains an individualized process, but it must still comply with the principles and purposes set outin the statute while also responding to the circumstances of each case. One principle, however, is elemental: that of proportionality. Asentence must be proportionate to the seriousness of the offence and the degree of responsibility of the offender (R. v.

Nasogaluak, 2010SCC 6 , [2010] 1 S.C.R. 206 at paras. 39 and 40). [12] As Lamer J. has pointed out, the imposition of a sentence is a delicate exercise: Retribution in a criminal context, by contrast, represents an objective, reasoned and measured determination of an appropriatepunishment which properly reflects the moral culpability of the offender, having regard to the intentional risk-taking of the offender, theconsequential harm caused by the offender, and the normative character of the offender's conduct Furthermore, unlike vengeance,retribution incorporates a principle of restraint; retribution requires the imposition of a just and appropriate punishment, and nothingmore.

R. v. M (C.A.) (SCC), [1996] 1 S.C.R. at 500. CASE LAW [13] Prison sentences are frequently handed down for offences prosecuted under the Excise Tax Act, as a way of meeting theobjectives of denunciation and general deterrence in the face of the scourge represented by cigarette smuggling. [14] R. v. Serge Bergeron, [2010] J.Q. No. 1866: The accused pleaded guilty to possession of tobacco products that were notstamped, 185 cases of cigarettes, or more or less 1 million cigarettes: 21-month sentence of unconditional incarceration. [15] Daniel v.

R., [2013] QCCA 1681: The accused made 12 trips to Quebec, Alberta, and British Columbia with tobacco productsthat were not stamped. The accused did not have a criminal record and proceedings were by way of

summary conviction. The sentencefor the 13 counts was 18 months conventional incarceration. [16] R v. Robichaud,

(2009) NBBR 172 : The accused Robichaud played a primary role and the accused Roussel a lesserone. They pleaded guilty to about 300,000 cigarettes over a period of 10 months, with 391 cases attributed to Robichaud and 192 cases toRoussel. In the absence of of criminal records, the sentences were of 18 months and 12 months of unconditional incarceration to meet theobjective of general deterrence. [17] R v. Lottin, [2008] QCCQ 21653: The accused pleaded guilty to selling 106,120 cigarettes and 16,800 grams of tobacco inviolation of the Excise Tax Act.

The judge associated the offences with the charge of fraud set out in the Criminal Code and the sentencewas 40 months. [18] For large-scale frauds involving several aggravating factors, sentences of 18 months to 5 years are handed down, with mostfalling between 3 to 5 years (Hugues Parent and Julie Desrosiers,”La Peine” in Traité de droit criminel, Vol. 3 at 616. [19] R. v. Gosselin-Robitaille, [2010] QCCS 11444 : $4 million fraud. Investments in non-existent projects over 3 years. Thevictims were farmers. The sentence was 4 years. [20] R. v. Cantin, [2010] QCCQ 18066 : $4.5 million fraud. "Dorade" Project.

The accused was 33 years old and sent fake invoicesto construction companies that then defrauded the government over a period of 17 months using these fake invoices. The sentence was 3years. [21] R. v. Prokifiew, [2010] ONCA 423: $3.25 million fraud. Fake sale of materials, generating taxes that were not remitted to thefederal government. The accused played a central role.

The sentence was 3 years. [22] A custodial sentence was necessary to achieve the objectives of denunciation and deterrence even where the offender had norecord, enjoyed a good reputation in his or her milieu, had partially repaid the victims in some instances, had expressed remorse, and wasunlikely to re-offend. (R. v. Coffin, [2006] J.Q. No. 3136 at para. 61) ANALYSIS [23] Counsel for the accused submit that this case can be distinguished from R. v. Chicoine, [2012] QCCA 1621 and R. v. Coffin inthat it concerns cigarette smuggling.

It is sufficient to recall the remarks of the Court of Appeal in Coffin at paras. 45 and 46: [translation] Taxes are levied to collect the funds necessary to fulfil the needs of citizens, particularly the most impoverished. …The government of the country has no assets itself; rather, it manages sums common to all of its citizens. Defrauding the governmentis equivalent to stealing from one's fellow citizens. [24] These remarks may certainly be applied to tax evasion. The accused deprived the government of an appreciable amount ofmoney.

Although there is an attempt to downplay the seriousness of the offence, one aspect of it is shocking because honest citizens whoregularly pay their taxes were indirectly wronged by the loss of government income. Consequently, the courts must enforce the

objectives of denunciation and general deterrence. Not only do these offences deprive the state of appreciable income, but the investigations require considerable human and financial resources. [ 25 ] Although the criminal organization was not large-scale, it was well-run, with appointed providers, meetings that were often held in the same place, transport in refrigerated trucks with stops at various businesses where cigarettes were placed between two other loads to better hide them, coded telephone conversations, and money from the smuggling sent in soap boxes and then deposited by way of automatic tellers.

This was structured, planned, and organized. SERGE PERRON [ 26 ] The accused is 54 years old and has 2 children. His criminal record contains five prior offences that occurred between 1987 and 1997: charges of fraudulent personation and use of a counterfeit document, offences relating to impaired driving, failing to stop at the scene of an accident, uttering threats, bribery of officials, and possession of stolen goods. The sentences imposed were fines.

The Agence de Revenu du Québec is claiming $333,225 from him for having assisted Gérald O'Reilly in storing non-compliant tobacco. (Exhibit SD- 11) [ 27 ] The accused is an occasional provider of cigarettes for the organization. He is connected to two incidents. According to the prosecution, the fraud that concerns him is for an amount of $380,000 (table filed under exhibit S-1b). - surreptitious entry on March 28, 2007, led to the observation of 36 cases of "Tabec" brand tobacco, which was revealed by an analysis to be illegal; - the delivery of 106 cases of cigarettes on October 31, 2007.

The accused subsequently received $11,000 from Gérald O'Reilly between October 3 and December 12, 2007. MITIGATING FACTORS - secondary role within the operation; - complied with the conditions of his release.

AGGRAVATING FACTORS - objective and subjective seriousness of the offences: the duration, level of organization and quantities that were transacted; - the offences were committed for the benefit or under the instructions of a criminal organization or in association with one. [ 28 ] The accused admits his involvement in the delivery of 106 cigarette cases on October 31 but contends that the evidence is inconclusive with respect to the link to the "Tabec" brand cigarettes from March 28, 2007, since the accused's factory was closed and not in operation.

The Court considers that they are related to the accused because of: - the conversation on February 4, 2008, between the accused and Gérald O'Reilly regarding old "Tabec" brand cigarettes that Gérald O'Reilly could sell for $500 per case; - the conversation between Gérald O'Reilly and Alexandre Philips regarding the "Tabec" brand cigarettes. [ 29 ] The investigator admits, however, that there is no evidence that they were delivered to Nova Scotia. [ 30 ] The accused's involvement is similar to that of Peter Martin, the co-accused and secondary delivery man of 92 cases over 6 deliveries for which he received $30,000, and to that of Winworth Sampson, who unloaded 96 cases in his home, both of whom were sentenced to 2-year less one day suspended sentences as a result of their guilty pleas.

ACCORDINGLY [ 31 ] Serge Perron is sentenced to a prison term of 2 years less one day to be served in the community on the following conditions: − keep the peace and be of good behaviour; − appear before the court when required to do so by the court; − meet with a probation officer today before 4:30 p.m.; then, meet according to the times and in the manner determined by the probation officer; − remain within the jurisdiction of the court, subject to written permission to travel outside given by the court or by the probation

officer; − inform the court or the probation officer of any changes of address, employment or occupation. [ 32 ] For the first twelve months of the conditional sentence, to be home 24 hours a day except: − for the purpose of legitimate and paid employment; − for medical treatment or in the event of a medical emergency concerning yourself or the members of your family; − − to buy food necessary for life, according to the

schedule that will be established; − to meet with the probation officer; − for religious worship; − to perform community work; − for December 24, 25, 31, 2014, and January 1, 2015; − you must provide your permanent telephone number to the probation officer and answer his or her calls and be present for the probation officer's home inspections; − you must perform 200 hours of community work under the supervision of your probation officer within 14 months. [ 33 ] For the next 12 months, the accused must be home between 10 p.m. and 7 a.m., subject to the same exceptions.

ALEXANDER PHILIPS [ 34 ] The accused submits that the Court should take into account the violation of his constitutional rights and consequently reduce his sentence: R v. Nasogaluak at para. 47 . [ 35 ] On March 18, 2011, the accused presented a motion pursuant to sections 7, 11(

e) and 24 of the Charter . In the affidavit submitted to the Nova Scotia judge for the territorial visa to arrest the accused, Officer Pelletier claimed to recognize the issuing judge's signature. In his testimony at the preliminary inquiry, he stated that it was the principle investigator who had recognized the signature and then told him about it. The accused later discontinued his motion, admitting that it was bound to fail.

This situation is very different from the one in Nasogaluak . [ 36 ] The accused is 63 years old and has one prior offence of marijuana trafficking in his criminal record from 1970, for which he received a 6-month sentence. MITIGATING FACTORS - complied with the conditions of his release.

AGGRAVATING FACTORS - principal role of the accused within the organization; - nature and scope of the fraud and the financial losses caused to two levels of government; - the system's level of organization, duration and amounts transacted; - the offences were committed for the benefit or under the instructions of a criminal organization or in association with one.

GERALD O'REILLY [37] The accused is 81 years old and has a criminal record from 1998 for keeping a common gaming house, for which he was fined$10,000. He submits that in light of his age, the Court should impose prison only as a last resort. A fine would be appropriate, but thegovernment has seized all his money. [38] The accused has been operating his company since 1956. He had 200 employees, but there are now only 7 left. He has had todefend himself from unjustified prosecutions brought by the Minister of Revenue that caused him significant financial difficulties.

Hewas ultimately vindicated. [39] He has 5 children and 15 grandchildren. He has received various statements of offence totalling $500,000 from Revenue Quebecfor the same offences. He has some health woes. His arrest and guilty pleas were picked up by the media. MITIGATING FACTORS - the age of the accused; - he complied with the conditions of his release; - he supports at least 2 of his children; - the letters of thanks received from a reverend and a business manager in response to donations that were made to organizations,churches and hospitals that did business with his companies (exhibits SD-6 to SD-10).

AGGRAVATING FACTORS - principal role in the organization, directing mind; - nature and scope of the fraud and the financial losses caused to two levels of government; - the system's level of organization, duration and amounts transacted; - the offences were committed for the benefit or under the instructions of a criminal organization or in association with one. APPLICATION TO THE PRESENT CASE [40] Lévesque v. Québec, (QC CA), [1993] J.Q. No. 2006, long ago established the factors to be considered whenimposing sentences for fraud.

There are several that apply to this case: economic loss of over $5 million for the government; althoughthe organization was not exceedingly complex, the operations were planned and the strategy tried and true; the advantages of AlexanderPhilips using Canada Post to send 14 boxes containing $285,865 in cash, each one identified as coming from Mira Soap, his wife’scompany, to Gérald O'Reilly between September 6, 2007, and January 23, 2008; greed was the only motivation; and the laundering ofthis cash through an automatic teller connected to Gérald O'Reilly. [41] As for the media coverage, even if it could be taken into account, scholarly commentary has not deemed it to be a mitigatingfactor. (“La Peine”, Traité du droit criminel, vol. 3, at 80).

The accused is not a public or political personality, and like any other accusedwho is convicted, he must suffer the normal and usual consequences. It is true that the expression "gang-related activity" sparks thepublic imagination, but the media coverage, which was filed under exhibits SD-5 and 6, was not disproportionate or abusive: R v.Lussier, (QC CQ), [2005] R.J.Q. 1577 at para. 76. [42] Even if the Court could take into account Gérald O'Reilly's age, it is only one factor among many.

It cannot have adeterminative impact because of the great number of aggravating factors. [43] Sentences for these offences must reflect societal condemnation. Unconditional incarceration is necessary. As a result of hisguilty plea, the co-accused Matthew Lazare received a 3-year sentence for the counts of fraud and conspiracy, and a two-year sentence tobe served consecutively for committing an indictable offence for the benefit of a criminal organization.

In 1998, he was fined$2,820,000, failing payment of which a 5-year prison sentence, and another fine of $21,919,000, failing payment of which a 2-yearsentence to be served consecutively for the illegal sale of tobacco. ACCORDINGLY [44] Alexander Philips, Gérald O'Reilly will receive the following sentences: On counts 1, 2, and 3: 4 years. On count 4: 1 year, to be served consecutively. On count 5: 2 years, to be served concurrently.

Section 743.6 Cr. C. [45] Although the offence committed raises society's ire and the fraud committed is significant, the accused do not have a history of

violence. The case constitutes an exception (R. v. Quévillon, (QC CA), [1999] J.Q. No. 573) taking intoconsideration the accused's character and the circumstances in which the offence was committed. [46] In this case, it would preferable to let the Parole Board act. [47] EXEMPTS from payment of the victim surcharge in light of the detention. __________________________________ LOUISE BOURDEAU, J.C.Q. Mtre Isabelle Doray Criminal and penal prosecutor Mtre Isabel Schurman Defence counsel forGérald O’Reilly Mtre Gérald SoulièresDefence counsel for Serge Perron Mtre Dominique St-Laurent Defence counsel for David-Alexander Phillips