R. v. Blumenthal, 2018 NSSC 282

SUPREME COURT OF Nova Scotia Citation: R. v. Blumenthal, 2018 NSSC 282 Date: 20181115 Docket: CRH 464566 Registry: Halifax Between: Her Majesty the Queen v. Darren Hersh Blumenthal D E C I S I O N Judge: The Honourable Justice James L. Chipman Heard: October 29 and 30, 2018, in Halifax, Nova Scotia Oral Decision: Written Decision: November 15, 2018 November 15, 2018 Counsel: Erica Koresawa, Provincial Crown Geoffrey Newton, Defence By the Court (Orally): Overview [ 1 ] By amended Indictment Darren Hersh Blumenthal pled not guilty to these counts: 1.

That he on or between the 2 nd day of September, 2015, and the 6 th day of May, 2016, at or near Lower Sackville, Nova Scotia, did by deceit, falsehood or fraudulent means, did unlawfully defraud Melanie Pottie and Christopher John Ford Bezanson of a sum of money, a total value exceeding $5,000.00, contrary to Section 380(1) (

a) of the Criminal Code ; 2. AND FURTHER, that he at the same time and place aforesaid, having received a motor vehicle and a sum of money from Melanie Pottie and Christopher John Ford Bezanson on terms that require him to account for or pay it or the proceeds of it or a part of the proceeds to the Royal Bank of Canada, fraudulently failed to account for or pay it or the proceeds of it or a part of the proceeds of it, of a total value exceeding $5,000.00, contrary to Section 330(1) of the Criminal Code ; 3.

AND FURTHER, that he at the same time and place aforesaid, by a false pretense did obtain from Melanie Pottie and Christopher John Ford Bezanson a motor vehicle and a sum of money of a value exceeding $5,000.00, contrary to section 362(2) (

a) of the Criminal Code .

[ 2 ] At the end of the trial the Crown acknowledged the evidence was such that they would not seek a conviction on the third count. In the result, I accepted the Defence’s motion to dismiss this charge. [ 3 ] The Crown called six witnesses and eleven exhibits were entered by consent. The Defence did not call evidence. [ 4 ] The matters in issue date back to August, 2015. A young couple purchased a used car and a short while later one of them lost his job. Following up on a representation made by the accused when they bought the car, the couple returned the vehicle with the understanding he would buy it back.

As part of the arrangement, the couple had to obtain further financing to cover off borrowing and other charges from when they purchased the vehicle. In addition to turning in the car, they ultimately handed over the proceeds of their second loan – $11,500.00 – to Mr. Blumenthal. Neither the buy back amount (approximately $25,000.00) or the $11,500.00 was ever applied to the couple’s loan, nor did they receive any part of the $36,500.00, or retain the vehicle. In the result, the police became involved and ultimately Mr. Blumenthal was charged with the crimes in question.

As well, the lending institution, the Royal Bank of Canada (RBC) commenced a civil action against a number of parties, including Mr. Blumenthal. [ 5 ] RBC initiated an internal corporate investigation and their investigation analyst’s detailed affidavit deposed March 21, 2016, together with five exhibits became trial exhibit 1. As well, the Bank of Montreal (BMO), Mr. Blumenthal’s business’ bank, responded to a production order for documents and an affidavit sworn April 11, 2016 by a BMO employee was entered as exhibit 2. Attached to this affidavit is the production order and in excess of 700 pages detailing Mr.

Blumenthal’s business’ accounts at BMO between June 1 and December 31, 2015. Evidence Melanie Pottie [ 6 ] Ms. Pottie is 28 years old and has worked for about eight years as a continuing care assistant. She testified that she and her boyfriend, Christopher Bezanson were looking for a vehicle and saw the car they wanted on the lot at Great Buys Auto Sales (Great Buys) in Lower Sackville, Nova Scotia. She dealt with Mr. Blumenthal, Great Buys’ general manager. Ms. Pottie said the couple was “a little reluctant” to go through with what she characterized as a big purchase. She explained that Mr.

Blumenthal reassured her and Mr. Bezanson as, “if anything would happen, he’d buy back the car from us”. [ 7 ] Mr. Blumenthal advised the couple they were pre-approved and that they would have to go to a neighbouring car dealership, Carsville, “to do the actual financing and sign the papers”. Ms. Pottie and Mr. Bezanson were then driven by someone who worked at Great Buys up Sackville Drive to Carsville.

They were introduced to Justin Cormier who went over the paperwork (RBC Fixed Rate Conditional Sales Contract and Bill of Sale, both dated August 11, 2015 and contained at pp. 7, 8 and 11 of exhibit 1, tab A), which they signed in order to finance and purchase the 2013 Subaru BRZ for the retail price of $24,500.00 plus various fees, warranty and taxes for a total of $33,577.97. Given that they chose to finance at a rate of 6.24% over 72 months, the total cost of borrowing (in excess of $6,700.00) would bring the couple’s ultimate cost to just over $40,300.00 [ 8 ] Ms. Pottie testified that about a week later Mr.

Bezanson learned he was going to be laid off work. Accordingly, after possessing the Subaru for about two weeks, “we realized we couldn’t afford the payments so we went back to Darren Blumenthal to see about him buying the car back… he said he’d buy it back, but not at the cost of the loan”. Ms. Pottie testified Mr. Blumenthal agreed to buy the vehicle back for around $25,000.00 and told her she would have to obtain, “a smaller loan to pay the larger loan”. [ 9 ] Ms. Pottie and Mr. Bezanson went to the RBC Lower Sackville branch where they met with loans officer Candice Rempel.

With the aid of exhibit 1 (tab B, pp. 46 – 55, the RBC Loan Agreement and Cost of Borrowing Disclosure Statement), Ms. Pottie stated the couple borrowed $11,500.00 (the date of advance is shown as August 31, 2015). Upon receiving these funds, Ms. Pottie said, “I tried to get the Bank to get him to bring in his half and then I’d bring in my half”. Apart from the obvious apportionment error, this statement is supported by exhibit 9 (introduced during Ms.

Rempel’s testimony), an email exchange which reads: On August 31, 2015, at 2:16 PM, Rempel, Candice … wrote: Hi Darren Please send me a letter indicating that you are purchasing the car back from Chris and Melanie and the amount that you are taking it back for. Once this is done, I can work on increasing the loan approval to $11,500 and get everything straightened away.

From: Great Buys Sent: 2015, August 31, 3:19 PM To: Rempel, Candice Subject: Re: Letter Hi it’s Darren from Greats buys autosales I am letting you know at 11,500 HST included that we will be paying the lien off in full for the 2013 Subaru BRZ if you’ve any further questions please feel free to give me a call 902-579-1212 or just email thank you Darren Blumenthal the general manager. Sent from my iPhone

[ 10 ] Notwithstanding Mr. Blumenthal’s reassuring email, Ms. Pottie testified that she soon received a call from him which was, “very angry”. She said she was at work and that Mr. Blumenthal had an “aggressive tone of voice”, when he called stating: “… who do you think I am, I don’t have that much money lying around”. She added that he threatened to refuse to pay his agreed upon portion if she did not bring in her portion. Shortly following this phone conversation Ms. Pottie went to the Lower Sackville RBC and obtained an $11,500.00 bank draft dated September 3, 2015, payable to Great Buys (exhibit 3).

Upon providing this to Mr. Blumenthal on September 3, 2015, she was told, “the larger loan would be paid off by the end of the week”. Exhibit 4 and exhibit 2, p. 153, confirm the $11,500.00 bank draft was deposited into the Great Buys account at BMO (branch 2194) on September 3, 2015. [ 11 ] Ms. Pottie said that based on what she was told by Mr. Blumenthal she assumed the loan would be paid off. Unfortunately, she later learned that this did not happen. Ms. Rempel informed Ms. Pottie that Mr. Blumenthal’s cheque was NSF (not sufficient funds). Ms. Rempel gave Ms.

Pottie a copy of a Returned Item Notice dated September 25, 2015 (exhibit 5). The Returned Item Notice shows a Great Buys’ cheque signed by Mr. Blumenthal and dated September 16, 2015 payable to RBC in the amount of $33,272.75 (presumably representing the $11,500.00 plus $21,772.75) with the reason for the return “insufficient funds”. Ms. Rempel wrote on the copy of the Returned Item Notice that the new payout amount (given further interest) would be $33,577.97. [ 12 ] Ms. Pottie thought she received the Returned Item Notice in mid October and then called Mr. Blumenthal. According to Ms.

Pottie, in response to hearing his cheque had not gone through, Mr. Blumenthal said it was Mr. Cormier who, “deals with finances.” She was told Mr. Cormier would have to be approached because of the “altered amount due to the change”, presumably referring to RBC’s new payout number noted by Ms. Rempel. In the result, Ms. Pottie went to Carsville to see Mr. Cormier and provide him with the Returned Item Notice and explain the situation. Mr. Cormier responded by stating it was not him but Mr. Blumenthal who should pay off the loan. Ms. Pottie gave the Returned Item Notice to Mr.

Cormier, who said he would take it up with Mr. Blumenthal. [ 13 ] Ms. Pottie followed up with two phone conversations with Mr. Blumenthal. During the first call, she was told she could pick up a receipt proving he paid the loan off. Accordingly, she attended Great Buys but received no such receipt. Rather, during their meeting in Mr. Blumenthal’s office, he provided her with a cheque for $350.00. Ms. Pottie took the Great Buys $350.00 cheque dated October 26, 2015 and signed by Mr.

Blumenthal (exhibit 6) but did not cash it because it was not made payable to anyone (this portion is left blank), and because, “his last cheque came back NSF”. On cross-examination Ms. Pottie agreed that although Mr. Blumenthal did not tell her to “go pound sand… the cheque didn’t help me”. Pressed on cross-examination as to whether he was still trying to remedy the problem, she replied, “I guess, I don’t know”. [ 14 ] During the second call, which she initiated on October 30, 2015, Mr. Blumenthal told her, “he had sent a cheque to RBC on his end and it had gone through”. Ms.

Pottie responded by stating she would contact RBC. Upon reaching Ms. Rempel she was told a cheque had not been received. [ 15 ] To this day, Ms. Pottie has not received notification the car loan has been paid. She testified the outstanding loan, “… has caused a lot of stress. It has completely and totally destroyed my credit”. The couple continues to make payments on the $11,500.00 loan. [ 16 ] During cross-examination it was established that along with Ms. Pottie and Mr. Bezanson, it was Mr. Cormier who signed the Conditional Sales Contract and Bill of Sale and that Carsville was the seller. Further, Mr.

Cormier explained all of the banking and financing provisions. As well, it was the warranty and other charges that brought the cost of the vehicle to over $33,000.00, and with the full maturity of the loan to more than $40,000.00. In the result, Ms. Pottie agreed that at least at first she did not see anything nefarious about the required extra $11,500.00. Christopher Bezanson [ 17 ] Mr. Bezanson is 26 years old and works as an operational driver at Autoport. He characterized the 2013 pearl white Subaru BRZ as his “dream car”.

Based on his dealings with Great Buys he felt it was, “Darren Blumenthal who we bought the car from and who we returned the car to”. Since they needed financing, Mr. Bezanson recalled speaking to Mr. Blumenthal who informed him and Ms. Pottie that it was, “Carsville who deals with financing for Great Buys”. Given that he had job security concerns, Mr. Bezanson said they were told by Mr. Blumenthal not to worry as, “we’ll buy the car back if something arises”. [ 18 ] Mr. Bezanson’s direct evidence with respect to his interactions with Mr. Cormier mirrored Ms. Pottie’s evidence.

He added that when he initially tried to insure the Subaru, he was told the Vehicle Identification Number (VIN) he quoted from the Bill of Sale must be incorrect. This prompted him to obtain the VIN directly from the car and the realization that the last digit recorded on the Bill of Sale was incorrect. [ 19 ] Mr. Bezanson said that he was laid off work and then arranged for a meeting with Mr. Blumenthal. The couple were told he would buy back the price of the car but given the interest, they would have to make up the difference. Mr. Bezanson said Mr.

Blumenthal “scribbled down a few numbers and then said $22,500.00 is what he would pay”. [ 20 ] Mr. Bezanson gave evidence consistent with Ms. Pottie’s with respect to their dealings with Ms. Rempel. [ 21 ] On cross-examination he agreed that when they purchased the car all of the financial dealings were with Mr. Cormier. He said they did not go to Carsville for remedies because it was his understanding Carsville only did the paperwork. He was not aware that Carsville actually received money as part of the transaction. [ 22 ] Asked about the $350.00 cheque received from Mr. Blumenthal, Mr.

Bezanson said, “we didn’t’ do anything with it after the first payment bounced, to us, it didn’t feel right”. [ 23 ] Mr. Bezanson said he and Ms. Pottie ultimately contacted the police and had their first interaction with police in January, 2016. He agreed that if he had thought their car had been stolen, he would have called the police right away. He said they initially thought

their best option was to allow the proceedings to go ahead. Justin Cormier [ 24 ] Mr. Cormier is 42 years old. He recently returned to the work force as business manager for a car dealership in Dartmouth. In the summer of 2015 he was the financial services manager at Carsville. The Agreed Statement of Facts (exhibit 11) confirms RBC commenced a civil action (which is ongoing) in respect of the matters in issue against Mr. Blumenthal, Great Buys, Mr. Cormier, Carsville and the principal of Carsville, Alan Jewell. In closing argument Defence counsel asked the Court to treat Mr.

Cormier as a “ Vetrovic ” witness; i.e., a Crown witness of unsavoury character. In this regard, Mr. Cormier may well have an interest in the outcome of this case such that he might be prone to minimizing his involvement and maximizing Mr. Blumenthal’s involvement in the matter. Accordingly, I carefully scrutinized this witness through the Vetrovic lens as I considered his evidence and the weight I would afford it. [ 25 ] Both Great Buys and Carsville have now gone out of business. While they were operating, Mr. Cormier said he and Mr. Blumenthal worked together for approximately 10 years.

On cross-examination Mr. Cormier admitted the RBC lawsuit seeks to recover around $150,000.00 and that the number in issue here is only a portion of what is sought after. In this regard, the civil suit pertains to the 2013 Subaru BRZ as well as three other cars whereby Carsville did the financing for Great Buys. More precisely, in this case and “at least fifty with Darren Blumenthal”, Carsville would actually buy the car from Great Buys and then sell it to the purchaser (as reflected here in the Fixed Rate Conditional Sales Contract and Bill of Sale where Carsville is shown to be the seller).

It was further developed on cross-examination that the initial estimate of fifty was inaccurate as Mr. Cormier acknowledged, “lots more deals than fifty”. [ 26 ] Mr. Cormier agreed he pocketed approximately $1,000.00 in commissions on this transaction. He was taken to exhibit 2, p. 149 and a $2,725.86 cheque payable to him from Great Buys dated August 25, 2015. The note at the bottom of the cheque reads, “3 deals and next trade”. Mr. Cormier denied that being paid this way (rather than by Carsville) was done to avoid paying income tax. Further, he denied that this cheque represented (in part) payment from Mr.

Blumenthal on the sale of the 2013 Subaru BRZ. [ 27 ] Mr. Cormier confirmed he prepared the purchase and loan documents for Ms. Pottie and Mr. Bezanson. This was done at his Carsville office. During his testimony Mr. Cormier made notes (exhibit 8) detailing the break-down of add-ons to the purchase price including insurance, administrative fee and warranty. All of these add-ons involve what I would describe as non-disclosed commissions for the benefit of Great Buys, Carsville and Mr. Cormier.

In this regard there is no break-down shown for the commission amounts and in the case of insurance (in the event of a buyer losing his or her job, such as Mr. Bezanson), the overall amount, $1,650.00, is placed in a column on the form for “license fee”. [ 28 ] Mr. Cormier explained the process whereby once RBC approved the financing, Carsville obtained the funds from the bank and then paid Great Buys. Having regard to exhibit 8 and Mr. Cormier’s oral evidence, the amount paid, inclusive of the aforementioned add-ons and HST was $32,422.33. According to Mr.

Cormier this amount would have been deposited within 1 to 7 days of August 11, 2015 (the date of the transaction with Ms. Pottie and Mr. Bezanson). It was later clarified (with the aid of exhibit 2, p. 414) that the Carsville cheque was for $33,988.63 payable to Great Buys, deposited August 13, 2015. [ 29 ] On the question of the inaccurate VIN (on both the Bill of Sale and the Fixed Rate Conditional Sales Contract), Mr. Cormier said that he took this information from the Great Buys’ website which listed their inventory. As to whether the VIN was incorrect on the website, Mr.

Cormier agreed on cross-examination that the error could have been in the keystroke (his entry) as this “sometimes happens.” Further, he acknowledged that he “got in trouble for this with his boss”. Pressed as to whether his error led to “this, the loan never getting paid out”, Mr. Cormier responded by stating, “it’s my understanding this [the criminal case against Mr. Blumenthal] is about what happened after the error”. [ 30 ] Mr. Cormier stated during cross-examination that Ms. Pottie called him about returning the car, and “I assume she thought she bought from us”.

In any event, he denied the overture, stating Carsville had no policy for returning vehicles. Candice Rempel [ 31 ] Ms. Rempel has been with RBC for approximately eleven years. She presently works as a financial advisor. In the summer and fall of 2015 she worked as a teller / banking advisor at RBC’s Lower Sackville branch. She first met Ms. Pottie and Mr. Bezanson at this time as they needed a loan to pay fees associated with returning their car. She ultimately approved them for an $11,500.00 loan (exhibit 1, tab B, pp. 46 – 55). [ 32 ] Ms. Rempel was in email contact with Mr.

Blumenthal and confirmed their exchange (exhibit 9) set forth at para. 9 of this decision. [ 33 ] After the $11,500.00 loan was advanced Ms. Rempel had another visit from the couple. Referring to herself and her clients she stated “we were under the impression the [original car] loan was paid off and then it re-appeared on their client profile”. She added, “it seemed paid, and then not”. Ms. Rempel then explained how this likely happened as after the cheque was initially processed it was determined there were insufficient funds. [ 34 ] On cross-examination Ms.

Rempel said the loan, “is now wiped out, after a certain time a bad debt is written off”. With respect to the cheque being bounced, Ms. Rempel stated, “it would be up to BMO to notify Mr. Blumenthal, I would be surprised if he was not notified”. Constable Brad Thomas [ 35 ] Constable Thomas has been with the RCMP for nearly 13 years. From July, 2011 until early this year he worked with the Halifax Integrated Crime Section. He became involved in this investigation in January, 2016. He contacted Ms. Pottie, took her statement and gathered documents inclusive of exhibits 1 and 2. He obtained a statement from Mr.

Cormier whom he described as, “the middle person, the financial person.” Constable Thomas contacted Mr. Blumenthal and they had a brief phone discussion in the spring of 2016. Mr. Blumenthal was arrested on May 18, 2016.

[36] On cross-examination Constable Thomas agreed this matter was first brought to the attention of the RCMP in mid-November,2015. He agreed that when he received the file in the new year he called RBC to determine if the matter was “fixed”. He said that hadthe situation been remedied, he would not have carried on with further steps, inclusive of the production orders for the banks’ files. [37] Constable Thomas was shown exhibit 2 and agreed that BMO banking information revealed there were seven NSF chequeswritten on the Great Buys account in September 2015. Evan van Norden [38] Mr. van Norden is 24 years old.

On October 9, 2015 he purchased the pearl white 2013 Subaru BRZ from Darren Blumenthalat Great Buys. He obtained a loan through RBC, and provided a $23,228.85 cheque to Mr. Blumenthal. Mr. van Norden insured the vehicle with Aviva Insurance and the pink card (exhibit 10) shows a policy period of October 9, 2015 to October 10, 2016. Within ayear he was in an accident and the car was written off. [39] On cross-examination he agreed when he took out the loan at the Lower Sackville RBC, he was not told there was already aloan on the car. He had no difficulty obtaining insurance.

Credibility and Reliability [40] In considering the oral evidence, I paid attention to the witnesses’ demeanor and especially their testimony against thebackdrop of the written records (exhibits 1 – 11). In this regard, I found five of the Crown’s six witnesses to be both reliable andcredible. All but Mr. Cormier gave straightforward testimony and (as demonstrated with specific examples within the above summaries),the exhibits buttressed their recounting of events. [41] As for Mr. Cormier, I accept the Defence argument that his evidence was largely self-serving. In considering his testimony itis apparent that Mr.

Cormier tried to downplay his involvement with Mr. Blumenthal. As well, he was initially less than forthright abouthow he benefitted from commissions for the add-ons purchased by Ms. Pottie and Mr. Bezanson. Finally, I found Mr. Cormier’sexplanation about the VIN mix-up as rather dubious. [42] Notwithstanding the above credibility and reliability concerns, there were other parts of Mr. Cormier’s evidence that I found tobe credible and reliable. For example, his explanation of how the Bill of Sale and Fixed Rate Conditional Sales Contract were completedas well as how Carsville paid Great Buys.

Importantly, the latter evidence was supported by exhibit 2, p. 414, i.e. the cheque for almost$34,000.00 deposited into the Great Buys account on August 13, 2015. The Law [43] For Mr. Blumenthal to be found guilty of fraud, Crown counsel must prove each of these essential elements beyond areasonable doubt: 1. that he deprived Ms. Pottie and Mr. Bezanson of something of value; 2. that Mr. Blumenthal’s deceit, falsehood or other fraudulent means caused the deprivation; 3. that he intended to defraud Ms. Pottie and Mr.

Bezanson; and 4. that the value of the property exceed $5,000.00. [44] As for the second count, s. 330(1), for Mr. Blumenthal to be found guilty of theft, the Crown must prove, beyond a reasonabledoubt: That having received the car and $11,500.00 from Ms. Pottie and Mr. Bezanson on terms that require him to account or pay it or theproceeds of it or a part of the proceeds to them or another person, fraudulently fails to account for or pay it or the proceeds of it or thepart of the proceeds of it accordingly. [45] In R. v.

Colpitts, 2018 NSSC 40, Justice Coady drew on the seminal Supreme Court of Canada cases to guide his decision atparas. 468 - 476: Proving the offence of fraud: s. 380(1)(a) 468 From the statutory definition, it is clear that the actus reus for fraud under s. 380(1) consists of a conduct element (an act ofdeceit, falsehood, or other fraudulent means) and a consequence element (defrauds). 469 The Supreme Court of Canada in R. v.

Olan, (SCC), [1978] 2 S.C.R. 1175, 1978 CarswellOnt 49, considered thedefinition of "defraud" at para. 11: Courts, for good reason, have been loath to attempt anything in the nature of an exhaustive definition of "defraud", but one may safelysay, upon the authorities, that two elements are essential, "dishonesty" and "deprivation". To succeed, the Crown must establishdishonest deprivation. 470 The Court addressed the element of deprivation at para. 13: The element of deprivation is satisfied on proof of detriment, prejudice or risk of prejudice to the economic interests of the victim.

It isnot essential that there be actual economic loss as the outcome of the fraud. The following passages from the English Court of Appealjudgment in R. v. Allsop (1976), 64 Cr. App. R. 29, in my view correctly state the law on the role of economic loss in fraud, pp. 31-32:

Generally the primary objective of fraudsmen is to advantage themselves. The detriment that results to their victims is secondary to thatpurpose and incidental. It is 'intended' only in the sense that it is a contemplated outcome of the fraud that is perpetrated. If the deceitwhich is employed imperils the economic interest of the person deceived, this is sufficient to constitute fraud even though in the event noactual loss is suffered and notwithstanding that the deceiver did not desire to bring about an actual loss.

We see nothing in Lord Diplock's speech [in Scott, supra] to suggest a different view. 'Economic loss' may be ephemeral and not lasting,or potential and not actual; but even a threat of financial prejudice while it exists it may be measured in terms of money ... Interests which are imperilled are less valuable in terms of money than those same interests when they are secure and protected.

Where aperson intends by deceit to induce a course of conduct in another which puts that other's economic interests in jeopardy he is guilty offraud even though he does not intend or desire that actual loss should ultimately be suffered by that other in this context. 471 In R. v. Théroux, (SCC), [1993] 2 S.C.R. 5, 1993 CarswellQue 5, the Court confirmed that the followingprinciples, first set out in Olan, will govern the definition of the actus reus of fraud: (

i) he offence has two elements: dishonest act and deprivation; (ii) The dishonest act is established by proof of deceit, falsehood or "other fraudulent means"; (iii) The element of deprivation is established by proof of detriment, prejudice, or risk of prejudice to the economic interests ofthe victim, caused by the dishonest act. [para. 13] 472 Théroux indicates that where the actus reus of a particular fraud is an alleged act of deceit or falsehood, "all that need bedetermined is whether the accused, as a matter of fact, represented that a situation was of a certain character, when, in reality, it was not";on the other hand, where "other fraudulent means" is alleged, "the existence of such means will be determined by what reasonable peopleconsider to be dishonest dealing": para. 15. 473 In R. v.

Zlatic, (SCC), [1993] 2 S.C.R. 29, [1993] S.C.J. No. 43, McLachlin J. (as she then was), writing for themajority, explained "other fraudulent means" at para. 32: The fundamental question in determining the actus reus of fraud within the third head of the offence of fraud is whether the means to thealleged fraud can properly be stigmatized as dishonest: Olan, supra. In determining this, one applies a standard of the reasonable person.Would the reasonable person stigmatize what was done as dishonest? Dishonesty is, of course, difficult to define with precision.

It does,however, connote an underhanded design which has the effect, or which engenders the risk, of depriving others of what is theirs.

J.D.Ewart, in his Criminal Fraud (1986), defines dishonest conduct as that "which ordinary, decent people would feel was discreditable asbeing clearly at variance with straightforward or honourable dealings" (p. 99). 474 The mens rea of fraud was addressed by the Court in Théroux at paras. 21-23: [T]he proper focus in determining the mens rea of fraud is to ask whether the accused intentionally committed the prohibited acts(deceit, falsehood, or other dishonest act) knowing or desiring the consequences proscribed by the offence (deprivation, including therisk of deprivation).

The personal feeling of the accused about the morality or honesty of the act or its consequences is no more relevantto the analysis than is the accused's awareness that the particular acts undertaken constitute a criminal offence. This applies as much to the third head of fraud, "other fraudulent means", as to lies and acts of deceit. Although "other fraudulent means"have been broadly defined as means which are "dishonest", it is not necessary that an accused personally consider these means to bedishonest in order that he or she be convicted of fraud for having undertaken them.

The "dishonesty" of the means is relevant to thedetermination whether the conduct falls within the type of conduct caught by the offence of fraud; what reasonable people considerdishonest assists in the determination whether the actus reus of the offence can be made out of particular facts. That established, it needonly be determined that an accused knowingly undertook the acts in question, aware that deprivation, or risk of deprivation, could followas a likely consequence. I have spoken of knowledge of the consequences of the fraudulent act.

There appears to be no reason, however, why recklessness as toconsequences might not also attract criminal responsibility. Recklessness presupposes knowledge of the likelihood of the prohibitedconsequences. It is established when it is shown that the accused, with such knowledge, commits acts which may bring about theseprohibited consequences, while being reckless as to whether or not they ensue. 475 In Zlatic, the Court framed the mens rea requirement of fraud as follows at para. 40: ...

The accused must knowingly, i.e. subjectively, undertake the conduct which constitutes the dishonest act, and must subjectivelyappreciate that the consequences of such conduct could be deprivation, in the sense of causing another to lose his or her pecuniaryinterest in certain property or in placing that interest at risk. 476 Irrelevant to a fraud charge is any claim by an accused that their motives were pure and that they did nothing wrong. This is madeclear in Théroux at para. 33: Pragmatic considerations support the view of mens rea proposed above.

A person who deprives another person of what the latter hasshould not escape criminal responsibility merely because, according to his moral or her personal code, he or she was doing nothingwrong or because of a sanguine belief that all will come out right in the end. Many frauds are perpetrated by people who think there isnothing wrong in what they are doing or who sincerely believe that their act of placing other people's property at risk will not ultimatelyresult in actual loss to those persons.

If the offence of fraud is to catch those who actually practise fraud, its mens rea cannot be cast sonarrowly as this.

[ 46 ] I similarly find the above-cited authority to provide guidance in my determination of whether Mr. Blumenthal is guilty. Analysis and Disposition [ 47 ] Having regard to the evidence and law, I am convinced beyond a reasonable doubt that Mr. Blumenthal committed fraud within the meaning of both s. 380(1) (

a) and s. 330(1). On the evidence there is no question that he intentionally deceived Ms. Pottie and Mr. Bezanson and that they were deprived of something of value, in excess of $5,000.00. It was Mr. Blumenthal who reassured the couple when they were initially reluctant about making such a large purchase against the backdrop of Mr. Bezanson’s job uncertainty. Once Mr. Cormier took the couple through the financing process, it was Mr. Blumenthal’s business, Great Buys, that received the bulk of the purchase proceeds, receiving a cheque in the amount of $33,988.63. Mr.

Blumenthal also received the car back and sold it roughly two months later for $23,228.85. On top of this, it was Mr. Blumenthal who convinced Ms. Pottie to provide him with the $11,500.00 cheque made payable to his business, for absolutely nothing in return. [ 48 ] The Defence invited the Court to view Mr. Blumenthal’s actions within the context of a financially suffering business, clouded by the roles of Mr. Cormier and Carsville. It was also suggested that rather than telling Ms. Pottie and Mr. Bezanson to “pound sand”, Mr. Blumenthal tried to help them.

Finally, to the extent there may have been wrongdoing, the Defence argued Mr. Blumenthal should properly be dealt with through the civil process initiated by RBC as well as Ms. Pottie and Mr. Bezanson. [ 49 ] I am not at all persuaded by the Defence arguments. Firstly, the fact that Great Buys was in a tight financial situation in no way absolves the general manager, Mr. Blumenthal, from his deception and intentional fraudulent activity. Mr. Blumenthal represented to Ms. Pottie that if she gave him the $11,500.00 cheque he would look after the couple’s outstanding loan at RBC.

This obviously did not happen and the deprivation (to the benefit of Mr. Blumenthal / Great Buys) was this amount, return of the car and the initial payment for the Subaru BRZ. Secondly, while I have concerns about the actions of Mr. Cormier and Carsville in the transaction, they do not in any way absolve Mr. Blumenthal of criminal responsibility. Indeed, one of my main concerns centers around the add-ons that vastly inflated the purchase price of the vehicle. Given the evidence of Mr.

Cormier, it is apparent that not only he and Carsville received what I would characterize as hidden commissions for administration, warranty and insurance, but that Mr. Blumenthal also was the beneficiary of significant percentage income from the sale of these “products”. [ 50 ] With respect to the notion that Mr. Blumenthal tried to help the couple, I am rather astounded. To my mind they would have been in a much better position if he had told them, as Mr. Cormier did, that he could not take the car back.

Instead, he took the keys and coerced them into parting with an $11,500.00 cheque on the guise that he would then hand it over, along with his agreed share of money, to RBC. At best, Mr. Blumenthal’s actions may be regarded as buying himself time to right the situation. At worst, he perceived a young, naïve couple whom he could “string along” to obtain more than the return of the vehicle, for no consideration whatsoever. In the final analysis we are dealing with deceit as Mr. Blumenthal misrepresented his future intentions to pay off the loan. [ 51 ] I would add that I find nothing altruistic in Mr.

Blumenthal initially offering to accept the return of the car and then following through with this part of the deal. To my mind the initial offer was made as an (ultimately successful) attempt to close the deal. The couple then paid for this reassurance when they met with Mr. Cormier and purchased the insurance. Mr. Blumenthal (along with Mr. Cormier and Carsville) received commission for the sale of the insurance. Given this, even if the agreement had been honoured and Ms. Pottie and Mr. Bezanson received their money back, they would not have received refund of the cost of insurance or any of the other add- ons.

Additionally, the return of the vehicle would afford Mr. Blumenthal (and the others) the opportunity to again attempt to recover commissions from a new buyer (albeit, given his purchase price it would appear Mr. van Norden did not opt to buy the add-ons). [ 52 ] The Defence similarly pitched Mr. Blumenthal providing the $350.00 cheque as the actions of someone trying to help. Given the entirety of the evidence, I completely reject this notion. In my view, this activity amounted to nothing more than a way for Mr. Blumenthal to once again put off Ms. Pottie and Mr. Bezanson. [ 53 ] At the end of the day, Mr.

Blumenthal’s deliberate and intentional actions resulted in a windfall for him. He received value of property well in excess of $5,000.00 from the $33,988.63 cheque, commissions, return of the car and the $11,500.00 cheque, all received from the innocent victims, Ms. Pottie and Mr. Bezanson. In addition to being deprived of their $11,500.00, they are still paying on the RBC loan for this sum of money. Their credit rating has taken a significant hit and undoubtedly they have experienced great stress through the entire ordeal. With respect to the second count, Mr. Blumenthal has never made payment to RBC.

The original loan slightly in excess of $40,000.00 has been written off by RBC; however, the bank is seeking recovery through the civil action against Mr. Blumenthal, Mr. Cormier, Mr. Jewell, Great Buys and Carsville. [ 54 ] To my mind this entire saga is rooted in Mr. Blumenthal’s fraudulent actions. His actions cannot be characterized as merely errant behaviour. Rather, on the totality of the evidence, I find Mr. Blumenthal preyed upon the young couple, relatively inexperienced in financial matters. Their dream car purchase turned into an absolute nightmare scenario. Civil remedies are for another day.

The task at hand pertains to whether the accused is guilty of the two remaining charges. For the reasons outlined, the answer is an emphatic, yes. I hereby find Darren Hersh Blumenthal beyond a reasonable doubt guilty of counts 1 and 2 as charged. Chipman, J.