r v. NICOLA IAMMARRONE, 2019 QCCQ 7836

R. c. Iammarrone JW0200 Peine – Corruption – 2 ans moins 1 jour – Prison ferme 2019 QCCQ 7836 COURT OF QUÉBEC CANADA PROVINCE OF QUÉBEC DISTRICT OF MONTREAL "Criminal and penal Division" No: 500-73-003991-136

(002) DATE: December 10, 2019 ______________________________________________________________________ BEFORE THE HONOURABLE LORI RENÉE WEITZMAN, J.C.Q. ______________________________________________________________________ THE QUEEN Prosecutor v. NICOLA IAMMARRONE Accused ______________________________________________________________________ DECISION ON SENTENCE ______________________________________________________________________ [ 1 ] Mr.

Iammarrone pleaded guilty to two counts of bribery, which read as follows: Volet Les Placages Technospec inc. 6) Entre le ou vers le 4 juillet 2002 et le ou vers le 2 septembre 2005, Montréal, district de Montréal, et à Laval, district de Laval, Nicola IAMMARRONE Gennaro DI MARZIO pendant qu’ils étaient fonctionnaires publics, ont accepté de l’argent par corruption pour eux-mêmes ou pour une autre personne afin de faciliter la perpétration d’une infraction à savoir : une fraude d’un montant de 527 011$ à l’encontre de l’Agence du revenu du Canada contrairement à l’ article 380

(1) a) du Code criminel , commettant ainsi l’acte criminel prévu à l’ alinéa 120a) (ii) du Code criminel . Volet les Industries Tulyons 13) Résidant ou étant présumé résidant de Montréal, district de Montréal, entre le ou vers le 7 novembre 2007 et le ou vers le 18 avril 2008, à Laval, District de Laval, Nicola IAMMARRONE Pendant qu’il était fonctionnaire public, a accepté de l’argent par corruption pour lui-même afin de faciliter la perpétration d’une infraction à savoir : une fraude d’une valeur de plus de 5000$ à l’encontre de l’Agence de revenu du Canada contrairement à l’ article 380

(1) a) du Code criminel commettant ainsi l’acte criminel prévu à l’ alinéa 120a) (ii) du Code criminel . The facts [ 2 ] The charges against Mr. Iammarrone stem from a Canada Revenue Agency (CRA) search conducted in 2009 which uncovered corruption within the CRA, and led to an RCMP investigation.

[ 3 ] Mr. Iammarrone was an auditor for the CRA at the time of the offences and he used his position to obtain bribes in the files of two companies, namely, Les Placages Technospec (Technospec) and Les Industries Tulyons (Tulyons). [ 4 ] Firstly, regarding Technospec (count 6), the owner, Mr. D’Orsa, filed late returns for the fiscal year ending August 31, 2000. He thus owed penalties and interest to the CRA in the amount of $310,361.97. When he mentioned this to a friend, he was put in contact with Mr. Iammarrone at the Montreal Tax Services Office. [ 5 ] At first, Mr. Iammarrone properly suggested that Mr.

D’Orsa present a fairness request, which was allowed in part, providing him with a credit of $169,605.66 and reducing some of the penalties and fines due. Unsatisfied with this partial reduction, Mr. D’Orsa prepared a second fairness request, this time with the assistance of Mr. Ouellet, a corrupt official at the CRA. [ 6 ] When the second fairness request was refused, Mr. Ouellet informed Mr. D’Orsa and his accountant, Mr. Fiorino, that it could lead to an audit. This prompted Mr. D’Orsa to submit amended income tax returns for the year ending August 31, 2000. [ 7 ] Thus, in January 2005, Mr.

Iammarrone was put in charge of the audit of Technospec following the amended tax returns. This audit was performed fraudulently. More specifically, Mr. Iammarrone blindly followed the specific instructions of Mr. Fiorino, knowing that his strategy would ensure a favourable outcome for Technospec. In fact, the result of this audit was a change from an amount of $170,506.53 owing to a reimbursement of $357,068.02 due to Technospec. [ 8 ] The total amount of deprivation on this count, according to the parties’ joint statement of facts, amounts to $185,500. [ 9 ] The cost agreed upon between Mr. D’Orsa and Mr.

Iammarrone for the preparation of this fraudulent audit was $62,500. Mr. Iammarrone received the entire amount by cheque, and kept $50,000 for himself. There is no evidence of who received the remaining $12,500. [ 10 ] Secondly, count 13 involves the Tulyons file, another company owned by Mr. D’Orsa, for which he had never filed tax returns. In 2007, Mr. D’Orsa was worried about a possible audit, and contacted Mr. Iammarrone again, who informed him that he could expect to owe at least a million dollars in taxes for Tulyons. [ 11 ] Mr. D’Orsa asked Mr.

Iammarrone how much it would cost for him to take care of this file and Mr. Iammarrone responded, $300,000. The price was further negotiated and settled at $250,000, which was paid in cash instalments to Mr. Iammarrone, between the end of 2007 and the beginning of 2008. The CRA received income tax returns for Tulyons for the years 2001 to 2007 on August 6, 2007.

The company was then audited for the years of 2001 to 2007 by another corrupt CRA agent and a fraudulent audit concluded that Tulyons had paid all its taxes due to the CRA. [ 12 ] In the case of Tulyons, there is no evidence regarding the actual amount of loss suffered by the CRA. [ 13 ] In this file, Mr. Iammarrone admits to having pocketed $50,000 of the $250,000 received. Here too, the evidence does not disclose who received the balance of $200,000.

The position of the parties [ 14 ] Both Crown and Defence agree that the Court should order a fine in lieu of forfeiture in the amount of $100,000 and impose a sentence of two years less a day. They disagree, however, on whether the sentence should be a conditional [1] or a custodial one. [ 15 ] The Court agrees with the suggestion of the parties that a term of two years less a day is appropriate. Regarding the application of

section 742.1 Cr. C ., it is uncontested that the first two criteria are met, namely that 1) the offence is not punishable by a minimum term of imprisonment and the actual term imposed is less than two years; and 2) the serving of the sentence in the community would not endanger the safety of the community. The issue is solely focused on whether a conditional sentence would be consistent with the fundamental purpose and principles of sentencing set out in sections 718 to 718.2 Cr. C. The Defence [ 16 ] Mr.

Iammarrone asks the Court to consider the mitigating circumstances, namely his guilty plea, the fact that he has no criminal record and a previous good character. He is 59 years old, has been married for 34 years and has two adult children, one of whom still lives at home. He has mortgaged his home in order to repay the amount of $100,000 and he is willing to perform 240 hours of community service. He has been employed consistently since 1982, and he worked as a tax auditor for 20 years at the CRA without any disciplinary issues.

He was fired from the CRA following these charges in 2009 and since then he has worked part-time as a bookkeeper. [ 17 ] Mr. Iammarrone also asks the Court to consider several other circumstances which have an impact on the sentence to be imposed. Firstly, he refers to the media coverage surrounding the present matter which has made it very difficult for him to find employment. As an example, he provided a letter refusing to hire him as an Uber driver in 2015, which specifically refers to articles found on the internet linking him to bribery and corruption at the CRA.

He also asks the Court to consider that this case has been

hanging over him and his family for over six years, since the charges were first laid in 2013. [ 18 ] Mr. Iammarrone adds that he suffers from certain health problems. He is diabetic and requires regular insulin injections. He is currently followed by the Montreal Heart Institute, where he recently had a permanent defibrillator implanted surgically, which requires constant monitoring. [ 19 ] Further, both of Mr. Iammarrone’s elderly parents rely on him and will struggle without his help.

His father suffers from an advanced form of Parkinson’s and his mother, with her own heart condition at 81 years old, acts as her husband’s primary caregiver. Thus, she relies on the help of her son for respite and for assistance with all of their medical appointments. [ 20 ] Finally, with regard to the loss suffered, the Defence notes that the CRA never pursued further audits of Mr. D’Orsa, who was complicit with Mr. Iammarrone in these fraudulent schemes. As such, although the amount of the loss remains an aggravating circumstance, Mr.

Iammarrone submits that he should not be further punished for the failure of the CRA to mitigate its losses [2] . [ 21 ] Considering all of the circumstances, Mr. Iammarrone suggests that the sentencing goals set out in sections 718 and following of the Criminal Code can be achieved without the two-year sentence being served in a jail. He emphasizes that when examining all available sanctions other than incarceration, as mandated by

section 718.2 (

e) Cr. Code , it should become clear that a conditional sentence is appropriate on these facts. [ 22 ] The Defence recognizes that these crimes mandate that the objectives of denunciation and reprobation be highlighted, however, referring to the Supreme Court of Canada in R. v. Proulx [3] , the Defence emphasizes that a conditional sentence with restrictive conditions can provide significant denunciation and deterrence [4] . Moreover, a conditional sentence achieves the restorative objectives of rehabilitation, reparation and the promotion of a sense of responsibility and recognition of harm done [5] .

The Defence adds that this is particularly true where the proposed sentence includes a payment of $100,000 as well as the fulfilment of the maximum hours of community service. [ 23 ] The Defence refers to R. c. Harbour [6] , in which a borough mayor illegally claimed expenses for English lessons and for certain business meals, for a total of $2,191. The facts in Harbour , although certainly not trite, are not commensurate with the case at bar, particularly where the crime was not motivated by greed and did not involve any aspect of corruption. Nevertheless, of interest is the

summary [7] prepared by the Court of Appeal providing examples of sentences imposed in matters of fraud against an employer, including conditional sentences, despite the need for denunciation. Applying the same reasoning in this case, Mr. Iammarrone argues that a conditional sentence is appropriate here. [ 24 ] Mr. Iammarrone also refers to other cases of fraud involving breach of trust where conditional sentences were imposed. - In R. c . Kordzian [8] the accused, a real estate agent, was operating a pyramid scheme, defrauding 24 investors of a total of $868,000 over a period of 8 years.

A two-year conditional sentence was affirmed on appeal. - In R. c . Corbeil [9] , the coordinator for the Liberal Party accepted a $50,000 bribe in exchange for his influence over the expropriation of a parcel of land. On the corruption charge, he was sentenced to a $20,000 fine. The Court of Appeal notes that such a sentence is not truly appropriate for a charge of corruption which normally requires a term of imprisonment, but that sentence was not appealed [10] .

Corbeil was also charged with fraud for his participation in a scheme whereby he knowingly approved bogus invoices providing payments to the right-hand man of a federal government minister. The 15-month sentence and restitution order were overturned by the Court of Appeal and a 12-month conditional sentence was substituted on the fraud count. The Court held that since Corbeil did not profit from the fraud personally, and the Liberal Party did not attempt to recover the money, the restitution order was not proper [11] . - In R. c .

C.L . [12] , the accused was found guilty of seven counts of breach of trust and fraud against the Québec government. Despite the valid conviction for breach of trust, the role of the accused was more akin to that of a consultant than a true public officer. On appeal, both Crown and Defence agreed that the 18-month sentence should be served in the community. - In R. c . Toman [13] , the accused committed a fraud of $2.5 million by inflating his business accounts receivable to secure credit from the bank.

The Court of Appeal confirmed the conditional sentence of two years less a day and 240 hours of community service, underscoring that it was not a case where the accused set up a system aimed at defrauding the public [14] . - In R. c . Gauthier [15] , the accused committed a $150,000 fraud against the Government while she was employed at the RAMQ. A conditional sentence of 18 months, prioritizing rehabilitation, was confirmed by the Court of Appeal.

The Prosecution [ 25 ] Considering the absence of prior convictions, and repayment of the money received, the Crown agrees that a sentence of two years less a day is appropriate. Nevertheless, they submit that the aggravating circumstances mandate a custodial sentence. [ 26 ] They underline the fact that the crimes were premeditated. The fraudulent audit required planning and was not done on the spur of the moment. After committing the first offence and receiving $62,500, of which he kept $50,000, Mr.

Iammarrone reoffended two years later, negotiating a higher payout of $250,000 and pocketing another $50,000. [ 27 ] The Prosecution refers to the following cases: - In R. c. Morency [16] , the Court of Québec provides an extensive review of sentences imposed in matters of corruption. The

summary of the decisions canvassed allows the Court to conclude that the majority of cases impose a custodial term, despite mitigating

factors such as a guilty plea, the absence of a prior record, remorse, the absence of risk of reoffending and complete rehabilitation [17] . - In R. c . Thibault [18] , the Lieutenant Governor of Québec pleaded guilty to fraud over $400,000 against the Québec government and breach of trust. In essence, although she claimed the reimbursement of expenses for official duties, she used much of those amounts for family or personal purposes. Here too, an extensive review of sentences imposed in matters of fraud and breach of trust committed by offenders in positions of trust is attached to the decision.

The range of sentences is summarized as follows [19] : Penitentiary sentences In this category, the range of sentences varies from 26 months to 6 years of incarceration in a penitentiary. The common denominators in these examples are the amounts involved, the duration of the fraud, the high degree of sophistication, greed, breach of trust, the lack of reimbursement in many cases, and the significant impact on the victims. Prison sentences At the provincial level, the sentences range between 12 months and 2 years less one day of incarceration.

In this category of sentence, the courts can be seen to consider the aggravating factors of a high degree of moral culpability, the fact that the acts were deliberate and planned, and that significant amounts were often in play. The most frequent reasons justifying a custodial sentence are breach of trust and the fact that the frauds took place over a relatively long period of time. Some accused present health or substance abuse problems, and often the risk of reoffending is low. In several cases, reimbursements are made.

Sentences to be served in the community This final category contains sentences ranging between twelve months and two years less one day. An analysis of the judgments reveals that they generally involve few aggravating factors and there are often significant mitigating factors, which are highlighted in favourable pre-sentence reports. They rarely involve cases of breach of trust. There is no risk of reoffending, the duration of the crimes is relatively short, and the amounts defrauded are less significant.

Often, the methods used are unsophisticated and the behaviour is rooted in a psychological disorder. - In Directeur des poursuites criminelles et pénales du Québec c. Michaud [20] , the accused was found guilty of fraud and conspiracy to commit fraud. Michaud was an engineer who was complicit in corrupt and fraudulent schemes through which the municipality of Boisbriand awarded contracts to engineering firms. The amount of loss was in the hundreds of thousands of dollars, although there was no evidence of Michaud’s personal monetary benefit.

The Court of Québec summarized several sentencing decisions in matters of fraud involving breach of trust and corruption, and noting few mitigating factors, imposed an 18-month custodial sentence. [ 28 ] Finally, the Prosecution insists that the sentence must reflect the public condemnation of this crime which affects all of society, particularly because it strikes at the heart of our taxation system [21] . They submit that the damage caused to the reputation of our public institutions must be addressed by the imposition of a significant sentence [22] .

Analysis [ 29 ] The Court will begin with an overview of the general principles that apply to all sentences and then apply these principles to the circumstances of this matter. [ 30 ] The overarching goal of any sentence is to contribute to "respect for the law and the maintenance of a just, peaceful and safe society" (s. 718 of the Cr. Code ).

The more specific objectives of sentencing include general and specific deterrence, denunciation, protection of society, rehabilitation of the offender, reparation for harm done to victims or to the community, and promotion of a sense of responsibility on the part of the offender. [ 31 ] The sentence must reflect the principle of proportionality, ensuring that the sentence imposed will be proportionate to the gravity of the offence and the degree of responsibility of the offender (s. 718.1 of the Code ). As the Supreme Court of Canada stated in R. v.

Ipeelee [23] , 37 […] Proportionality is the sine qua non of a just sanction. First, the principle ensures that a sentence reflects the gravity of the offence. This is closely tied to the objective of denunciation. It promotes justice for victims and ensures public confidence in the justice system. [...] Second, the principle of proportionality ensures that a sentence does not exceed what is appropriate, given the moral blameworthiness of the offender. […] [ 32 ] The objective gravity of an offence is determined by the maximum penalty provided by the legislator.

In the present case, the offence of bribery carries a maximum penalty of 14 years of imprisonment, thus, it is among the most serious crimes in the Criminal

Code . Nevertheless, an offender should not be deprived of liberty if less restrictive sanctions may be appropriate in the circumstances (s. 718.2(

d) Cr. Code ) and the Court must consider available sanctions other than imprisonment that are reasonable in the circumstances (s. 718.2(

e) Cr. Code ). [ 33 ] Finally, every sentence must strive to be similar to sentences imposed on similar offenders for similar offences committed in similar circumstances (s. 718.2(

b) Cr. Code ). [ 34 ] The determination of the proportionate sentence in a given case must account for any relevant aggravating or mitigating circumstances relating to the offence or the offender (s. 718.2(

a) of the Code ). [ 35 ] On the mitigating side, the Court takes into account the following factors, not all of which are truly mitigating per se , but which are nonetheless relevant considerations in the determination of a just sentence. 1. The guilty plea : The Court considers the plea to be a mitigating circumstance as it provides evidence of Mr. Iammarrone’s acknowledgment of the crimes committed and it avoids the need for a full-blown trial on the merits.

However, the value of this plea is somewhat mitigated [24] , given the time that has passed (some six years after the information was sworn) and because the evidence against Mr. Iammarrone is overwhelming [25] . 2. Reimbursement : The Court considers as a mitigating factor the payment of entire amount of $100,000 that Mr. Iammarrone pocketed from these crimes. It represents only a part of the loss suffered due to his actions, but it represents a significant amount of money that Mr. Iammarrone has already put aside by obtaining loans to cover this debt. 3.

The passage of time : An accused will not benefit from the fact that his crime took time to come to light, but the Court notes that Mr. Iammarrone is under the weight of these charges for the past six years. This fact does not diminish his moral blameworthiness nor the seriousness of the offence; it is merely a factor to consider when analyzing the effect of the sentence on him. 4. Regrets : Mr. Iammarrone did not express regrets or remorse. However, through his counsel, he addressed regret for the shame he has brought on himself and his family.

Without a doubt, he has suffered personal consequences such as the loss of his employment and difficulty in finding employment, as well as the need to take out a loan to repay the money he took. It must be emphasized, however, that these regrets, related to the consequences he now faces, do not serve to mitigate the sentence as they are the direct result of the crimes he chose to commit. 5. Health issues : Mr. Iammarrone’s health issues, although significant, are not the type that allow a Court to reduce a sentence.

The Defence concedes that there is no evidence to suggest that he might not receive proper medical care in prison. As the Court of Appeal stated in Thibault c. R. [26] , without such evidence, this type of health issue does not preclude a custodial sentence. Recently, the Québec Court of Appeal in Christie-Sanguinet c. R. [27] stated that an offender’s state of health is a circumstance which may be considered in the process of individualizing the sentence.

This is more aptly referred to as a collateral consequence of the sentence which is neither aggravating nor mitigating and has no impact on an offender’s moral blameworthiness [28] . As the Court of Appeal stated in Côté c. R. [29] : While it is true that the poor health of an offender may be a mitigating factor in sentencing, it is not generally a factor for reducing the sentence, save in exceptional circumstances where, for example, the offender is suffering from incurable cancer and his death is imminent. 6. Effects on his family : Mr.

Iammarrone’s responsibilities for his ailing parents will affect the impact of the sentence on him and his family, but these are not mitigating factors serving to reduce the sentence. As the Court of Québec stated in R. c. Morency [30] , “les conséquences négatives pour l’accusé et ses proches résultant de la perpétration des infractions agissent à l’ombre des objectifs prioritaires qui sont reliés à la gravité du crime et au degré de responsabilité du délinquant”. 7. The prior good character of the offender : Mr. Iammarrone is well-educated and has no criminal record, nor even a disciplinary record at the CRA.

Although a prior record would, of course, have been an aggravating factor, his prior good character does not serve to attenuate the sentence where it is precisely his good reputation and position of trust that allowed him to perpetrate the crimes without suspicion [31] . [ 36 ] On the aggravating side, the following factors must be considered: 1 . The crimes were planned and deliberate : This is an important aggravating factor as it indicates that unlike a momentary lapse in judgment, Mr. Iammarrone made a reasoned decision to cheat the system. He did so using documents furnished by Mr.

Fiorino to ensure that the audit would be favourable to Mr. D’Orsa. The Defence notes, however, that the level of sophistication of the crime is low, given the fact that Mr. Iammarrone accepted payment by cheque (on the first count). 2 . The motivation was greed : Indeed, the only motivation for these crimes is greed as no other evidence suggests any underlying problem that may have led to the commission of the crimes. 3 . The amounts at issue : The Court takes into account the actual amount pocketed by Mr. Iammarrone, of $100,000. It is also relevant to consider the total amount of the bribes paid, $312,500.

As to the loss suffered by the CRA, the amount on the first count was $185,500. The amount of loss on the Tulyons file was never assessed. The evidence indicates that Mr. Iammarrone told Mr. D’Orsa that he could be assessed for an amount of 1 million dollars and that Mr. D’Orsa paid $250,000 to adjust his audit. This provides the Court with an overall idea of the amounts involved but does not provide evidence of the actual amount of deprivation to the CRA on the second count.

4 . Two offences over a lengthy period of time : The first crime was committed in 2005. Two years later, Mr. Iammarrone reoffended, in a file where the stakes were higher, and where he asked for over four times as much money as a payout. 5 . The effect on society : Just as underscored by the Québec Court of Appeal in R. c. Coffin [32] , “this type of fraud risks provoking cynicism in citizens and particularly taxpayers with respect to the public institutions that are the very foundations of democratic life”. 6 . A position of trust used to defraud the government : The position held by Mr.

Iammarrone, a trusted employee of the CRA for over 20 years, is particularly aggravating. [ 37 ] A review of the jurisprudence confirms that in cases where public officials holding a position of high trust accept bribes for personal gain , the objectives of general deterrence and denunciation must be prioritized. [ 38 ] In R. c.

Coffin [33] , a case of large-scale fraud against the government, the Québec Court of Appeal set aside a conditional sentence and imposed a sentence of 18 months in custody, stressing the need to give proper weight to the principles of denunciation and deterrence. [34] The Court in Coffin noted that in matters involving large-scale premeditated fraud committed over a relatively long period of time, a custodial sentence is generally necessary to achieve the objectives of denunciation and deterrence, even where the offender (1) had no record, (2) enjoyed a good reputation in his or her milieu, (3) had, on some occasions, partially repaid the victims, (4) expressed remorse and (5) was not likely to reoffend [35] . [ 39 ] After reviewing all of the evidence, the applicable principles and the range of sentences, I am of the opinion that the imposition of a conditional sentence of imprisonment in the community would not be consistent with the fundamental purpose and principles of sentencing set out in sections 718 to 718.2 Cr.

C. as it fails to adequately meet the needs for general deterrence and denunciation. [ 40 ] As for deterrence, the Court is mindful of the uncertain deterrent effects of incarceration [36] . Nevertheless, where planned crimes such as this one involve a cost/benefit analysis, the calculated decision to take the risk of offending must necessarily take into account the likelihood of harsh penalties upon conviction.

No doubt incarceration, a harsher sanction, can provide more deterrence than a conditional sentence [37] . [ 41 ] Regarding denunciation, it cannot be overstated that the proper working of our democratic society relies on a robust, fair and transparent system of taxation that can rely on public officers with undisputed integrity to fulfill their role in auditing taxpayers. When the reputation of an institution such as the CRA is tarnished by corruption within its ranks, the loss suffered by society as a whole is not only financial, but involves the erosion of public confidence in our government institutions.

As the Court of Québec underscored in R. c . Thibault , “it is important for the public to know that the conduct is highly reprehensible and that the criminal consequences are serious” [38] . [ 42 ] As such, this is one of the cases contemplated by the Supreme Court of Canada in Proulx , where “the need for denunciation is so pressing that incarceration is the only suitable way in which to express society’s condemnation for the offender’s conduct” [39] .

Although a conditional sentence may generally achieve both punitive and restorative objectives [40] , on these facts, the added denunciation [41] provided by a custodial sentence is essential. FOR THESE REASONS, THE COURT : Sentences Mr. Iammarrone to a period of imprisonment of two years less a day, on both counts to be served concurrently .

Imposes a fine in lieu of forfeiture of $100,000.00 payable within 30 days [42] ; in default 18 months incarceration consecutive to any other sentence. (payable to P. G. Québec 462.37 C.cr . ) __________________________________ LORI RENÉE WEITZMAN, J.C.Q. M e Alexis Gauthier M e Jeremy Van Doorn Public Prosecution Service of Canada Attorney for the Prosecution M e Julio Péris M e Pascale Girard Attorneys for the accused Date of hearing: November 1, 2019