Knowledge

Criminal Fraud Sentences in Canada: The Case of the Unrepentant Advisor

Rehana MoosaBy Rehana Moosa

Jail sentences for fraud in Canada are lower when compared to other countries, such as the U.S.  For example, Bernie Madoff was sentenced to 150 years in prison after pleading guilty to various charges related to his infamous billion dollar Ponzi scheme.  In comparison, the maximum sentence for fraud over $5,000 per the Criminal Code of Canada was 10 years until 2004, when it was increased to 14 years.

 

The first case where an individual was given the maximum 14 year sentence was R. v. Reeve (2018 ONSC 3744).  However, the sentence was appealed and recently, in June 2020, was eventually reduced.

 

Case Background

 

Daniel Reeve was a financial planner who owned and operated multiple businesses in the Kitchener area.  He had also written several books providing financial and investment advice.

 

In 2007, Daniel Reeve’s life began to unravel – he separated from his wife and was required to make substantial support payments, the license which entitled him to provide financial advice was revoked, and his businesses was struggling.  Reeve found himself short of cash and devised a way to finance his expensive lifestyle.

 

Reeve concocted various Ponzi schemes from 2007 to 2009, targeting vulnerable individuals and convincing them to invest in low-risk real estate and commercial projects.  This was an attractive opportunity to many, given the volatility of the stock market during this period.  However, instead of investing these funds as promised, Reeve used the money to issue shareholder loans to himself and his wife, and pay various business expenses.

 

As is the case with most Ponzi schemes, Reeve was unable to continue the fraud, as investors demanded their money back.  Eventually, Reeve’s businesses closed in 2009, leaving several investors with depleted life savings.  Criminal charges were filed against Mr. Reeve and in 2017, he was convicted of one count of fraud and one count of theft.  The trial judge concluded that Reeve had defrauded 41 investors of more than $10 million.

 

Sentencing Judge’s Findings

 

Reeve was sentenced in 2018, and in his decision, the judge documented the factors that were taken into consideration:

  • The judge reviewed several victim impact statements, which described dissolved marriages, financial struggles, physical ailments, and emotional and psychological issues.  The judge stated that many of the hardships faced by the victims appeared to be permanent.
  • A pre-sentence report prepared for Mr. Reeve outlined his lack of remorse: “The subject does not take responsibility for his offences and shows no remorse for any of his offences.  Of concern the subject appears to have little or no empathy for the victims’ losses.”  Although Reeve did apologize to his victims at the end of his sentencing hearing, the judge found it to be “hollow”.
  • Mr. Reeve was a trusted advisor for many of his victims.  The judge stated that he abused that trust and was aware that the defrauded investors were relying on his advice.
  • Mr. Reeve had not made any restitution to his victims, and in the court’s view, was unlikely to do so in the future.  The judge stated that despite knowing that he would be unable to repay the investors, Mr. Reeve continued to enter into various repayment agreements, promising his victims that they would recover their funds.
  • The fraud was sizable, at $10 million, and involved a large number of victims.

After factoring in the above, the judge sentenced Reeve to the maximum jail sentence allowed under the law of 14 years.

 

Appeal

 

Reeve filed an appeal of his sentence, raising numerous grounds.  The Court of Appeal, however, only dealt with one issue, which was whether the sentencing judge inappropriately used Reeve’s lack of remorse as an aggravating factor.

 

The Court of Appeal found that while a demonstration of remorse can be a mitigating factor in determining a sentence, a lack of remorse cannot be used to increase a sentence.  Specifically, the court stated, “Punishing an accused for failing to express remorse comes ‘perilously close’ to punishing him or her for exercising the right to make full answer and defence…. Even after a guilty verdict, an accused is entitled to maintain his or her innocence and cannot be punished for maintaining that stance.”  Therefore, the appeal of the 14 year sentence was allowed.

 

In deciding what the appropriate sentence should be, the Court of Appeal reviewed similar fraud cases, and found that sentences ranged from 8 to 12 years.  Ultimately, Mr. Reeve’s jail sentence was reduced from 14 years to 10 years.

 

The Crown introduced evidence to the court that Mr. Reeve had a high risk of reoffending, after being made aware of Mr. Reeve’s attempts to engage in another investment scheme while on day parole.  His parole was eventually revoked, and the Crown submitted that this behaviour demonstrated a low likelihood of rehabilitation.

 

The Court of Appeal disagreed and stated, “It is important to start with the observation that the appellant can only be punished for the conduct that he was convicted of.  He cannot be punished, or be seen to be punished, for conduct that is alleged to have occurred a year after his sentence was imposed.”

 

Takeaways

 

The above case demonstrates that there are a variety of factors taken into account by the courts during sentencing.  While the funds lost by the victims is considered in the sentence, other considerations include the magnitude and complexity of the fraud, the impact of the fraud on its victims, and whether the accused was in a position of trust.

 

While there is a case where a defendant convicted of fraud received a 13 year sentence (R. v. Lacroix – 2009 QCCS 4519), the case involved thousands of investors who collectively lost more than $100 million. 

 

The maximum sentence of 14 years has yet to be imposed, but as frauds increase in frequency, it is yet to be seen whether courts will be more likely to apply higher sentences.

 

Contact us to learn more.   647-426-0146  |  rehana@rmforensics.ca

Communications are intended for informational purposes only and do not constitute legal advice or an opinion on any issue. For permission to republish this content, please contact Rehana Moosa Forensic Accounting Professional Corporation.

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