R. v. Sy, 2020 ONCJ 527

ONTARIO COURT OF JUSTICE CITATION: R. v. Sy, 2020 ONCJ 527 DATE: November 18, 2020 BETWEEN: HER MAJESTY THE QUEEN — AND — MATTHEW PIERSON SY Before Justice John North Reasons for Sentence released on November 18, 2020 R. Weinberg............................................................................................... counsel for the Crown S. Weinstein…………………………………………………………......counsel for Matthew Sy NORTH J.: INTRODUCTION [ 1 ] On February 25, 2020, Matthew Sy pleaded guilty to one count of fraud. Mr.

Sy used his position as a senior employee of a company to defraud his employer of over one million dollars. He is before the court today for sentencing. THE OFFENCE [ 2 ] Payfare Inc. (“Payfare”) is a financial technology company based in Toronto. It employs over 40 people. Payfare has developed a backend platform that consolidates the daily earnings made by on demand gig economy employees. Payfare provides gig economy employees access to their earnings in real time or at the end of a shift. An example may assist to understand some of the services provided by Payfare. Uber is a client of Payfare.

Payfare’s backend platform transfers funds from Payfare’s funding account to an Uber driver’s account. By using Payfare, Uber drivers have access to their earnings almost instantaneously. When an Uber driver requests that funds be sent in real time, Payfare will transfer the funds (via Interac e-transfer) from its cash reserve at DirectCash Bank (“DC Bank”). An Uber driver receives text and e-mail notifications informing them that a transfer has been made to their mobile wallet. [ 3 ] Mr. Sy was hired as a full-time senior accountant at Payfare on March 1, 2017. On April 7, 2018, Mr.

Sy began working on a part-time basis. Sometime after that, he moved to Singapore to be with his wife. Mr. Sy worked remotely from Singapore until August, 2018. [ 4 ] Mr. Sy’s duties at Payfare included setting up wire and electronic transfer payments, cash reconciliation, accounts receivable and monitoring cash and wallet balances. [ 5 ] On February 20, 2019, members of Payfare’s finance team noticed a spike in the volume of e-transfers that occurred in the previous week. More than $51,000 in e-transfers had been sent to one e-mail address.

Payfare contacted DC Bank to inquire about these transfers and had the bank stop all future transfers. The recipient e-mail address on the transfers was matthewp@gmail.com. The funds had been deposited into a bank account – the account holder’s name was Matthew Sy. [ 6 ] Payfare reviewed e-transfers that had been completed via the DC Bank portal from April 17, 2018 to February 20, 2019.

Payfare found three recipient e-mail accounts connected to Mr. Sy. There were 582 attempted e-transfers to these e-mail addresses, with a total value of approximately $1,271,000. However, 25 of the transfers (approximately $40,000) had not been successful. The Payfare funds had been deposited into TD Bank accounts. Payfare advised TD Bank about the fraud. A suspicious activity alert was placed on these accounts. [ 7 ] On February 22, 2019, two Payfare employees received the following text message from Mr. Sy: “Hi Lorraine Marco. I wanted to apologize to you both for letting you down.

I did not listen to my loved ones and jus [sic] kept digging a bigger and bigger whole [sic]. And I didn’t ask for help. I Fell trap [sic] to the demons and temptation.” [ 8 ] On February 22, 2019, a Payfare employee received a phone call from Mr. Sy. During this conversation, Mr. Sy said that he had improperly taken funds from Payfare because he “dug a hole for himself.” During this conversation, Mr. Sy alluded to a gambling problem. He admitted to using the funds for gambling and other purposes. When asked whether he still had any of the funds that he had taken from Payfare, Mr.

Sy said that there was approximately $80,000 to $90,000 in a TD Bank account and approximately $30,000 in a Singapore bank account. The Payfare employee told Mr. Sy not to touch the remaining funds. Mr. Sy stated that his TD Bank account had been blocked. Mr. Sy apologized for his actions and stated that he would return to Canada to “pay the consequences.” [ 9 ] In short, Mr. Sy was able to commit this fraud after he found a loophole in the DC Bank portal. Unbeknownst to Payfare, DC Bank had inadvertently given this portal e-transfer capability. After discovering this capability, Mr.

Sy created fictitious contact e- mail addresses and names to disguise fraudulent payments. [ 10 ] Mr. Sy used the names of former Payfare employees to create contact information in an effort to divert attention away from himself. As a result of this false contact information, the Chief Financial Officer of Payfare (Charles Park) initially suspected that another person was responsible for the fraudulent transfers. [ 11 ] After the fraud was discovered, approximately $143,000 was recovered from Mr. Sy’s accounts and returned to Payfare. The total loss was approximately $1,088,000. [ 12 ] Mr.

Sy used most of the funds for gambling, leisure, travel, daily expenses and credit card payments. Mr. Sy spent a large amount of money at casinos. Mr. Sy used some of the funds to make payments on a $330,000 loan from his mother-in-law. This loan had been made to Mr. Sy in 2013 to purchase a Bubble Tease franchise. This business venture did not do well, and Mr. Sy sold the franchise after a few years. By 2019, Mr. Sy still owed his mother-in-law over $270,000. INSURANCE AND CIVIL SETTLEMENT AGREEMENT [ 13 ] As a result of Mr. Sy’s fraud, Payfare made an insurance claim for its loss.

That claim was paid to Payfare by Markel International, subject to a $25,000 deductible. As a result of Mr. Sy’s fraud, Payfare’s insurance premiums increased by $250,000 a year. [ 14 ] Payfare commenced a civil lawsuit against Mr. Sy. On April 28, 2020, Mr. Sy and Payfare entered into a settlement agreement. This agreement requires, over a five-year period, that Mr. Sy pay $85,000 to Payfare in full and final settlement of Payfare’s claims. By May 1, 2020, Mr. Sy had paid $30,000 to Payfare. THE POSITIONS OF THE PARTIES [ 15 ] On behalf of the Crown, Ms.

Weinberg takes the position that the Court should impose a term of imprisonment of three years. Ms. Weinberg also argues that the Court should impose a free-standing restitution order to Markel International in the amount of $998,126 and a five-year prohibition order under s. 380.2 of the Criminal Code . [ 16 ] On behalf of the defence, Mr. Weinstein takes the position that the appropriate sentence is a term of imprisonment of two years. In support of this position, Mr. Weinstein argues that Mr. Sy committed this offence as a result of a gambling addiction.

The defence is opposed to the imposition of a s. 380.2 prohibition order and a restitution order. THE OFFENDER [ 17 ] Mr. Sy is 34 years old. He is a Canadian citizen. Mr. Sy has no criminal record. After graduating from a Toronto-area high school he went directly into the work force. Prior to working at Payfare, he owned a Bubble Tease franchise. Mr. Sy’s business failure put him in a dire financial position. [ 18 ] According to Mr. Weinstein, in an effort to recover his losses, Mr. Sy started to frequent casinos. Mr. Sy’s gambling caused him to go deeper in debt. Mr. Sy became addicted to gambling. Mr.

Weinstein asserted that Mr. Sy committed the fraud against Payfare because of his gambling addiction. Mr. Weinstein did not agree with Crown counsel’s suggestion that the fraud was committed to support Mr. Sy’s “lifestyle.” [ 19 ] Mr. Sy and his wife are separated. They have no children. [ 20 ] Mr. Sy currently lives with his parents. [ 21 ] According to the defence, Mr. Sy has no assets. After he returned to Canada, Mr. Sy had two jobs. I was told that he was attempting to make as much money as he could to repay Payfare. [ 22 ] Since he was arrested, Mr.

Sy has been receiving treatment for his gambling addiction. [ 23 ] Mr. Sy, in a letter written to the court on this sentencing hearing, expressed remorse and shame for his actions. He acknowledged that he hurt a lot of people. While Mr. Sy stated that he has a gambling addiction, he accepted responsibility for his

crime. Mr. Sy stated that he has come to realize the importance of addressing his gambling and mental health issues. He expressed acommitment to continue receiving treatment for his gambling addiction. LETTERS OF SUPPORT [24] The defence filed 14 letters from Mr. Sy’s friends and family members. [25] Mr. Sy comes from a close and supportive family. His parents said that he is a good son who has always been there for them. His family and friends describe Mr. Sy as a kind, hard-working, and conscientious person. A number of them stated that Mr. Sy is trulyremorseful for his actions. [26] Mr.

Sy’s older brother, Mark Sy, stated that Mr. Sy drifted away from his family after he moved to Singapore. Mark Syunderstood that his brother was having marital problems that stemmed from the failure of his Bubble Tease franchise. Mark Sy statedthat since returning to Canada his brother has made significant progress in dealing with his gambling addiction. VICTIM IMPACT STATEMENT [27] Mr. Park prepared a victim impact statement. Mr. Park said that Mr. Sy had been a trusted employee. Mr. Park believes thatMr.

Sy understood the terrible situation that he had created for his colleagues at Payfare by stealing over one million dollars from “astruggling start-up company.” Mr. Park stated that if Payfare had not been able to secure last minute financing from a bank (at a veryhigh interest rate) the company would have been shut down. [28] Mr. Park states that Mr. Sy’s actions caused financial and emotional harm to his former colleagues.

LEGAL PRINCIPLES [29] A sentencing judge must impose a sentence that reflects the fundamental purpose and relevant sentencing objectives andprinciples. [30] The fundamental principle of sentencing is proportionality.

Section 718.1 of the Criminal Code provides that: “A sentence must be proportionate to the gravity of the offence and the degree of responsibility of the offender.” [31] The “gravity of the offence” refers to “the seriousness of the offence in a generic sense as reflected by the potential penaltyimposed by Parliament and any specific features of the commission of the crime which may tend to increase or decrease the harm or riskof harm to the community occasioned by the offence”: R. v.

Hamilton (2004), (ON CA), 72 O.R. (3d) 1 (C.A.), atpara. 90. [32] The “degree of responsibility of the offender” refers to “the offender’s culpability as reflected in the essential elements of theoffence – especially the fault component – and any specific aspects of the offender’s conduct or background that tend to increase ordecrease the offender’s personal responsibility”: Hamilton, at para. 91. [33] The fundamental purpose of sentencing is to protect society and to contribute to respect for the law and the maintenance of ajust, peaceful and safe society by imposing just sanctions that have one or more of the following objectives: • to denounce unlawful conduct and the harm done to victims or to the community that is caused by unlawful conduct; • to deter the offender and other persons from committing offences; • to separate offenders from society, where necessary; • to assist in rehabilitating offenders; • to provide reparations for harm done to victims or to the community; and • to promote a sense of responsibility in offenders, and acknowledgment of the harm done to victims or to the community. [34] The weight to be given to these objectives will vary depending on the nature of the crime and the circumstances of the offender.[1] [35] Courts have consistently held that there is a need to emphasize denunciation and general deterrence for large-scale fraudscommitted by persons in positions of trust: R. v.

Dobis (2002), (ON CA), 58 O.R. (3d) 536, at paras. 42-47 (C.A.). In such cases, “mitigating factors and even rehabilitation become secondary”: R. v. Bogart (2002), (ON CA), 61O.R. (3d) 75, at para. 30 (C.A.). [36] While the efficacy of the theory of general deterrence has been questioned in some contexts, in my view, general deterrence is effective when dealing with sophisticated and large-scale frauds.[2] A large-scale fraud is “not a crime of impulse and is of a type that isnormally committed by a person who is knowledgeable and should be aware of the consequences.

That awareness comes from thesentences given to others”: R. v. Gray (1995), (ON CA), 76 O.A.C. 387, at pp. 398-399. [37] The following sentencing principles are also important in this case: • a sentence should be increased or reduced to account for any relevant aggravating or mitigating circumstances relating to theoffence or the offender; and

• a sentence should be similar to sentences imposed on similar offenders for similar offences committed in similar circumstances; [38] Sections 380.1(1) and (1.1) of the Criminal Code provide that when a court imposes a sentence for the offence of fraud thereare certain circumstances that must be considered as aggravating, including: • Where the magnitude, complexity, duration or degree of planning of the fraud committed was significant; • Where the offence has a significant impact on the victims given their personal circumstances including their age, health andfinancial situation. • In committing the offence, the offender took advantage of the high regard in which the offender was held in the community; and • The fact that the value of the fraud exceeded one million dollars. [39]

Section 380.1(2) provides that when a court imposes a sentence for the offence of fraud it shall not consider as mitigatingcircumstances the offender’s employment, employment skills or status or reputation in the community if those circumstances wererelevant to, contributed to, or were used in the commission of the offence. SENTENCING AUTHORITIES [40] The maximum sentence for the offence of fraud over $5,000 is a term of imprisonment of 14 years. Prior to 2004, themaximum sentence for fraud was a term of imprisonment of ten years.

Crown counsel argues that when considering the sentencingauthorities that pre-date the 2004 amendment, a court must take into account that the amendment is an expression of Parliament’s viewthat offenders who commit this offence should be punished more harshly: R. v. Friesen, 2020 SCC 9, at para. 97. The maximumsentence for an offence helps determine the gravity of the offence: Friesen, at para. 96. [41] Sentencing ranges provide guidance for the application of all of the relevant sentencing principles and objectives. However,they are not hard and fast rules: R. v. Lacasse, 2015 SCC 64, 3 SCR 1089, at para. 26.

Sentencing is “first and foremost an individualizedexercise”: R. v. Boudreault, 2018 SCC 58, at para. 58. [42] A number of authorities from this province have concluded that the appropriate range of sentence for a large-scale fraudcommitted by an offender who was in a position of trust is a penitentiary term of three to five years: R. v. Dobis, (ONCA), [2002] O.J. No. 646 (C.A), at para. 47; R. v. Atwal, 2016 ONSC 3668, at para. 42, aff’d, 2017 ONCA 228; R. v. Alves, [2015] O.J.No. 770 (Sup. Ct.), at para. 12; and R. v. Goncalves, [2015] O.J. No. 6410 (Sup. Ct.), at paras. 27-38. Mr.

Weinstein argues that therange of sentence starts at two years’ imprisonment. [43] While some judges have imposed sentences that fall below the three to five-year range, that is to be expected as sentencingranges are only guidelines. Sentencing is a highly individualized process and there will be cases where “the particular circumstances ofthe offence and/or the offender call for a sentence that falls outside of the normal sentencing range”: R. v. Suter, 2018 SCC 34, at para. 4;Goncalves, at para. 38.

After reviewing the relevant authorities, I have concluded that the applicable range of sentence for a large-scale fraud of this magnitude committed by a person in a position of trust is three to five years.[3] ADDICTION [44] In some circumstances, addiction can be a relevant consideration in sentencing. [45] In this case, I am satisfied that there is a reasonable basis in the evidence to conclude that Mr. Sy has a gambling addiction. [46] I am also satisfied that there was a connection between Mr. Sy’s gambling addiction and the commission of this offence.

However, I have concluded that his addiction was not the only reason that he committed this offence. This offence was the product ofMr. Sy’s gambling addiction and his greed. [47] Mr. Sy has attempted to address his addiction. Prior to the COVID-19 pandemic, Mr. Sy attended weekly group therapysessions at CAMH for about a year. Since then, he has continued to meet with a therapist. [48] I have concluded that Mr. Sy’s moral blameworthiness is somewhat reduced because of his gambling addiction.

AGGRAVATING AND MITIGATING FACTORS Aggravating Factors [49] There are a number of aggravating factors in this case, including: • The value of the fraud exceeded $1.2 million.[4] • The large number of fraudulent transactions. • The duration of the fraud. • This offence was not spontaneous or the product of a momentary lapse in judgment. • This was a sophisticated scheme. It involved a great deal of planning by Mr. Sy.[5] • In an effort to avoid detection, Mr. Sy used the names of former employees of Payfare on some of the e-mails. For a period of

time, this resulted in suspicion being cast on an innocent person.[6] • Mr. Sy abused his position of trust as a senior accountant to commit this offence.[7] • This fraud had a significant impact on Payfare. • While I accept that addiction played a role in this offence, Mr. Sy was also motivated by greed. • Mr. Sy was caught, he did not terminate the fraud on his own.[8] Mitigating Factors [50] The following are mitigating factors: • Mr. Sy pleaded guilty. By pleading guilty, Mr.

Sy provided certainty of result and avoided a potentially long trial which wouldhave required many witnesses to testify on behalf of the Crown. I accept that Mr. Sy’s guilty plea is an expression of his remorse. • The conclusion that Mr. Sy is remorseful is supported by the contents of the letters that were written by his friends and familymembers. • Mr. Sy has taken responsibility for his actions. Prior to defence counsel reviewing the disclosure, Mr. Sy told his lawyer that hewanted to plead guilty. • As soon as the fraud was discovered, Mr. Sy apologized and said that he would return to Canada.

He voluntarily returned toCanada. • Mr. Sy is a first offender. However, Mr. Sy’s previous good character as a mitigating factor is blunted by the reality that“generally only a person of unblemished character can achieve a position of trust allowing them to handle someone else’s financialaffairs”: Atwal, at para. 45;

Section 380.1(2) of the Criminal Code. • As I have already stated, Mr. Sy’s gambling addiction is relevant to an assessment of his moral blameworthiness. It is also amitigating factor. • Since returning to Canada, Mr. Sy took some steps to make partial restitution to Payfare. PROHIBITION ORDER –

SECTION 380.2 OF THE CRIMINAL CODE [51]

Section 380.2 of the Criminal Code provides, inter alia, that where an offender is convicted of fraud a court may impose anorder prohibiting the offender from seeking, obtaining or continuing any employment or becoming a volunteer in any capacity, that involves having authority over the real property, money or valuable security of another person.[9] [52] A s. 380.2 prohibition order excludes an offender from “participating in a wide variety of otherwise lawful activities”,including many forms of employment: R. v. Hooyer, 2016 ONCA 44, at para. 47.

The imposition of a s. 380.2 prohibition order canresult in “significant restrictions” on an offender’s liberty and security of the person: Hooyer, at para. 46. [53] Mr. Weinstein argued that the Court should impose a probation order, with appropriate conditions, instead of a s. 380.2prohibition order. RESTITUTION ORDER [54] Section 738(1)(

a) of the Criminal Code provides that a sentencing judge may order that an offender make restitution bypaying to another person an amount not exceeding the replacement value of the property that was damaged, lost or destroyed as a resultof the commission of an offence as of the date the order is imposed, less the value of any property that is returned to that person wherethe amount is readily ascertainable. [55] The concept of restitution is essential to the sentencing process, as it emphasizes the sanction imposed on the offender, itmakes the offender responsible for making restitution to the victim, it prevents the offender from profiting from crime and it provides aconvenient and inexpensive means of recovery for the victim: R. v.

Castro, 2010 ONCA 718, at para. 24. [56] Restitution orders are “not a substitute for civil proceedings nor are they intended to displace the civil remedies necessary toensure full compensation to victims”: R. v. Popert, 2010 ONCA 38 , 2010 ONCA, at para. 38. [57] A court has a broad discretion to determine whether to impose a restitution order: R. v. S.S.M., 2015 ONSC 3840, at para. 50. A restitution order must be made with “restraint and caution”: R. v. Robertson, 2020 ONCA 367, at para. 7; R. v. Mohamad (2004), (ON CA), 69 O.R. (3d) 481, (C.A.), at para. 72.

A restitution order should not “be made as a mechanical afterthoughtto a sentence of imprisonment”: Castro, at para. 23. [58] An order of restitution forms part of a sentence: Robertson, at para. 6. It is “one factor in the total punishment imposed on anoffender”: Popert, at para. 43. When a sentence includes imprisonment, a sentencing judge must consider the combined effect ofimprisonment and the restitution order when determining a fit sentence: R. v.

Hoyt, (B.C.C.A.), at paras. 40-42. [59] The ability of an offender to pay a restitution order in a case of a fraud involving a breach of trust is not the predominate factorin determining whether a court should impose a restitution order: Castro, at para. 28; R. v. Wagar, 2018 ONCA 931, at para. 19. Instead,

the “paramount consideration is the claims of the victims”: Castro , at para. 28 . [ 60 ] As Weiler J.A. stated in Castro at para. 28 : “…where the circumstances of the offences are particularly egregious, such as where a breach of trust is involved, a restitution order may be made even where there does not appear to be any likelihood of repayment.” [10] [ 61 ] While the ability to pay is not a precondition to the making of a restitution order, it is an important factor: Robertson , at para. 8 . A court must consider both the offender’s present and future ability to make restitution: R. v.

Yates , 2002 BCCA 583 , at para. 17 . [ 62 ] A restitution order is not intended to undermine an offender’s prospects for rehabilitation. This is why a sentencing judge must consider ability to pay before making such an order: Robertson , at para. 8 . [ 63 ] In deciding whether and in what amount a restitution order should be made, it is important for a sentencing judge to consider what happened to the money that was improperly taken by the offender: R. v. Solleveld , 2014 ONCA 418 , at para. 44 . In this case, the funds that were fraudulently taken by Mr. Sy are gone. There is nothing left. [ 64 ] Mr.

Weinstein asserts that, following the insurance payout by Markel International to Payfare and the settlement agreement between Mr. Sy and Payfare, Payfare has been repaid the losses the company suffered as a result of Mr. Sy’s fraud. [11] While not agreeing with the defence position on this issue, Ms. Weinberg submitted that a restitution order be made to “the insurance company alone.” [ 65 ] In some circumstances, a court may make a restitution order under s. 738(1)(

a) to an insurance company that paid out monies on a claim that was made in relation to a criminal offence: Popert , at para. 32 . In this case, while Payfare was the direct victim of Mr. Sy’s crime, it is my view that the “loss” suffered by the insurance company was sufficiently proximate to the offence to support a restitution order. [ 66 ] I will now turn to the issue of Mr. Sy’s ability to pay a restitution order. [ 67 ] Mr. Sy is obviously intelligent, and he is still young. He will secure employment after he is released from custody.

However, given the amount of the proposed restitution order, it is unlikely that he would ever be able to make full restitution. [ 68 ] In considering the question of restitution, I have taken into account that this offence was connected to Mr. Sy’s gambling addiction. In my view, given the work that he has done to address his addiction, together with the support of his family and friends, Mr. Sy’s prospects for rehabilitation appear reasonable. However, I am concerned that a restitution order of close to one million dollars would impair Mr.

Sy’s chances of rehabilitation: Popert , at para. 42 . [ 69 ] While I am satisfied that it is appropriate to impose a restitution order, having regard to the principle of totality, the requirement that restitution orders be made with restraint and caution and Mr. Sy’s rehabilitative prospects, I am not prepared to impose an order requiring Mr. Sy to make full restitution. CONCLUSION [ 70 ] In this case, the gravity of the offence was high. This was a sophisticated fraud that continued for many months. This crime had the potential to bring Payfare to its knees. Mr.

Sy violated the trust that had been reposed in him. While Mr. Sy’s moral blameworthiness was somewhat mitigated by his gambling addiction, it was still relatively high. [ 71 ] I have concluded that a sentence of three years’ imprisonment, together with the ancillary orders that are set out below, is proportionate to the gravity of the offence and Mr. Sy’s moral blameworthiness. In my view, it is a sentence that satisfies all of the relevant sentencing objectives and principles. [ 72 ] Mr.

Sy is sentenced to three years’ imprisonment. [ 73 ] Given my conclusion that the appropriate length of the custodial portion of the sentence is three years’ imprisonment, probation is not an option. [12] Having regard to the duration, magnitude and sophistication of this fraud, for the protection of potential future employers and the public, I have concluded that it is necessary to ensure that Mr. Sy will not be in a position to have authority over the money of other people for a period of four years. Pursuant to s. 380.2 of the Criminal Code , Mr.

Sy is prohibited from seeking, obtaining or continuing any employment or becoming a volunteer in any capacity, that involves having authority over the real property, money or valuable security of another person for four years. [ 74 ] Finally, I am ordering Mr. Sy to make restitution to Markel International in the amount of $100,000. NORTH J.