WEIZHEN TANG’S GROUNDS OF SENTENCE APPEAL FOR OCT. 5

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PART III – GROUNDS OF APPEAL

 

45.       The Appellant advances the following grounds of appeal:

 

 

1)      The Honourable trial Judge erred by not taking the Appellant’s pre trial custody into consideration in sentencing the Appellant; and

2)      The Honourable trial judge erred in imposing a fine in lieu of forfeiture for $2,849,459.50 without taking into consideration the personal assets frozen by regulatory authorities that are subject to forfeiture and without taking into consideration the amount of money of 2 million dollars that the Appellant himself contributed to the Overseas China Fund, which would reduce the amount that the Appellant benefitted from the fraud.  The Honourable trial judge knew and ought to have known that there was no personal gain and no proceed of crime.

 

1) The Honourable trial Judge erred by not taking the Appellant’s pre trial custody into consideration in sentencing the Appellant

 

46.       A Court may take the time that an accused spends in pre trial custody into consideration in determining the sentence to impose on a person convicted of an offence.  Section 719 of the Criminal Code of Canada maintains:

719. (3) In determining the sentence to be imposed on a person convicted of an offence, a court may take into account any time spent in custody by the person as a result of the offence but the court shall limit any credit for that time to a maximum of one day for each day spent in custody.

(3.1) Despite subsection (3), if the circumstances justify it, the maximum is one and one-half days for each day spent in custody unless the reason for detaining the person in custody was stated in the record under subsection 515(9.1) or the person was detained in custody under subsection 524(4) or (8).

 

50.       The Criminal Code gives the trial judge discretion to consider pre trial custody.  However, the jurisprudence delineates the pre trial custody as credit that should ordinarily be taken into consideration when determining a just and appropriate sentence.  Not considering pre trial custody in determining a fit custodial sentence is the exception, not the norm, and should only be done in rare and specialized circumstances. 

 

The jurisprudence surrounding the denial of pre trial custody has established some accepted grounds for the trial judge for doing so.  These accepted grounds include denying consideration of pre trial custody for breaching bail, for serving a sentence on an unrelated matter and for causing delay that necessitated additional time in custody such as firing one’s lawyer.  In R. v. Rezaie, the Appellant appealed a sentence of five years imprisonment on convictions for sexual assault, forcible confinement, choking and uttering threats.  The trial judge did not give the Appellant credit for pre trial custody because the Appellant failed to appear when he “jumped” bail and attempted to flee the country, fired his lawyer when the trial was scheduled and caused a delay which required the victim to be brought back from Japan three times for trial.  Justice Laskin granted leave to appeal the sentence and varied the sentence.  The Appellant spent 11.5 months in custody.  The reasons that the trial judge gave for denying pre trial custody consideration accounted for only five months of the total time spent in pre trial custody.  Therefore, Justice Laskin varied the sentence to account for the pre trial custody of six months.  In doing so, Justice Laskin commented on section 719(3):

25     Although this section is discretionary, not mandatory, in my view a sentencing judge should ordinarily give credit for pre-trial custody. At least a judge should not deny credit without good reason. To do so offends one’s sense of fairness. Incarceration at any stage of the criminal process is a denial of an accused’s liberty. Moreover, in two respects, pre-trial custody is even more onerous than post-sentencing custody. First, other than for a sentence of life imprisonment, legislative provisions for parole eligibility and statutory release do not take into account time spent in custody before trial (or before sentencing). Second, local detention centres ordinarily do not provide educational, retraining or rehabilitation programs to an accused in custody waiting trial. For these reasons, pre-trial custody is commonly referred to as “dead time”, and trial judges, in deciding on an appropriate sentence, frequently give credit for double the time an accused has served. [note: the court is citing section 721(3) not 719, but it is the same content]

 

R v Rezaie [1996] OJ No 4468, 112 CCC (3d) 97

 

In R. v. Wust, Justice Arbour tackled the question of whether or not pre trial custody should be taken into consideration by the trial judge in reducing a sentence for which there is a mandatory minimum.  Justice Arbour allowed the appeal, and in doing so established that trial judges could use pre trial custody in reducing sentences of imprisonment that are subject to mandatory minimums.  Justice Arbour positively cited R. v. Rezaie and stated:

30 “…Considering the severe nature of pre-sentencing custody, and that the accused person is in fact deprived of his or her liberty, credit for pre-sentencing custody is arguably less offensive to the concept of a minimum period of incarceration than would be the granting of statutory remission or parole. It is therefore ironic that the applicability of s. 719(3) has encountered such difficulties in the case of minimum sentences, [page472] simply because the “interference” with the minimum is at the initial sentence determination stage and thus more readily apparent.”

 

31     As was pointed out by Rosenberg J.A. in McDonald at p. 73, Parliament enacted the forerunner to s. 719(3) of the Criminal Code as part of the Bail Reform Act, R.S.C. 1970 (2nd Supp.), c. 2, for the very specific purpose of ensuring that the well-established practice of sentencing judges to give credit for time served while computing a sentence would be available even to reduce a sentence below the minimum fixed by law. During the second reading of what was then Bill C-218, An Act to amend the provisions of the Criminal Code relating to the release from custody of accused persons before trial or pending appeal, Justice Minister John Turner described Parliament’s intention regarding what is now s. 719(3):

 

                    Generally speaking, the courts in deciding what sentence to impose on a person convicted of an offence take into account the time he has spent in custody awaiting trial. However, under the present Criminal Code, a sentence commences only when it is imposed, and the court’s hands are tied in those cases where a minimum term of imprisonment must be imposed. In such cases, therefore, the court is bound to impose not less than the minimum sentence even though the convicted person may have been in custody awaiting trial for a period in excess of the minimum sentence. The new version of the bill would permit the court, in a proper case, to take this time into account in imposing sentence.

 

                    (House of Commons Debates, 3rd Sess., 28th Parl., Vol. 3, February 5, 1971, at p. 3118.)

 

R v Wust [2000] 1 SCR 455, 2000 SCC 18

 

            The Appellant’s pre trial custody was not taken into consideration by the Learned Trial Judge upon sentencing.  The Appellant was sentenced to six years in custody without any reduction for his pre trial custody.  In fact, there was no mention of the pre trial custody that the Appellant served by the Trial Judge or any other party at any time throughout the Appellant’s sentencing hearing. 

 

            The Appellant’s pre trial custody time should have been taken into consideration upon sentencing, which would have effectively reduced the custodial portion of the Appellant’s sentence.  The Appellant spent two periods of time in pre trial custody before being sentenced on February 1, 2013; amounting to a total of 122 days in custody.  The first period of incarceration occurred upon the Appellant’s arrest on January 13, 2010 until his release on a Recognizance of Bail on April 20, 2010; amounting to 98 days of pretrial custody.  The second period of pretrial custody occurred with the Appellant was ordered into custody upon the jury’s verdict on October 30, 2012 until he was granted bail on November 22, 2012, amounting to 24 days.  The Appellant spent a total of 122 actual days in pretrial custody.  Given that the Appellant was charged before the amendments to section 719(3) pursuant the Truth in Sentencing Act came into force on February 22, 2010 his pretrial custody should be considered at a ratio of 2.0 to 1.0.  At that rate, the Appellant should be credited with 144 days of pre trial custody (4.5) months.  His effective sentence after being afforded credit for pre trial custody should be reduced to 67.5 months (5 years and 7.5 months).     

 

2)  The Honourable Trial Judge erred in imposing a fine in lieu of forfeiture for $2,849,459.50 without taking into consideration the personal assets frozen by regulatory authorities that are subject to forfeiture and without taking into consideration the amount of money that the Appellant himself contributed to the Overseas China Fund, which would reduce the amount that the Appellant benefitted from the fraud.

 

In addition to sentencing the Appellant to a term of imprisonment of six years, the Honourable Mr. Justice O’Mara imposed a fine in lieu of forfeiture on the Appellant in the amount of $2,849,459.50.  The Appellant was ordered to pay this fine within five years of his release.  If the Appellant defaults on payment of the fine he was ordered to be imprisoned for a term of five years consecutive to any other term of imprisonment. 

           

O’Marra J. set the amount of the fine in lieu of forfeiture at $2,849,459.50 based on the evidence of the Crown’s forensic accountant, Michael de Verteuil.  This amount represented money that was transferred from the Overseas Chinese Fund by the Appellant to himself, his wife Hong Xiao, and to the various entities that he controlled; the Weizhen Tang Wealth Club, Weizhen Tang Corporation and Weizhen Tang & Associates.           

 

Section 462.37 of the Criminal Code of Canada contains the provisions relating to the fine in lieu of forfeiture regime.  The subsections of section 462.37 that are relevant to this sentence appeal are section 462.37(1), 462.37(2), 462.37(2.01), 462.37(3) and 462.37(4):

Order of forfeiture of property on conviction

  • 462.37 (1) Subject to this section and sections 462.39 to 462.41, where an offender is convicted, or discharged under section 730, of a designated offence and the court imposing sentence on the offender, on application of the Attorney General, is satisfied, on a balance of probabilities, that any property is proceeds of crime and that the designated offence was committed in relation to that property, the court shall order that the property be forfeited to Her Majesty to be disposed of as the Attorney General directs or otherwise dealt with in accordance with the law.
  • Marginal note:Proceeds of crime derived from other offences

(2) Where the evidence does not establish to the satisfaction of the court that the designated offence of which the offender is convicted, or discharged under section 730, was committed in relation to property in respect of which an order of forfeiture would otherwise be made under subsection (1) but the court is satisfied, beyond a reasonable doubt, that that property is proceeds of crime, the court may make an order of forfeiture under subsection (1) in relation to that property.

  • Marginal note:Order of forfeiture — particular circumstances

(2.01) A court imposing sentence on an offender convicted of an offence described in subsection (2.02) shall, on application of the Attorney General and subject to this section and sections 462.4 and 462.41, order that any property of the offender that is identified by the Attorney General in the application be forfeited to Her Majesty to be disposed of as the Attorney General directs or otherwise dealt with in accordance with the law if the court is satisfied, on a balance of probabilities, that

    • (a) within 10 years before the proceedings were commenced in respect of the offence for which the offender is being sentenced, the offender engaged in a pattern of criminal activity for the purpose of directly or indirectly receiving a material benefit, including a financial benefit; or
    • (b) the income of the offender from sources unrelated to designated offences cannot reasonably account for the value of all the property of the offender.
  • Marginal note: Fine instead of forfeiture

(3) If a court is satisfied that an order of forfeiture under subsection (1) or (2.01) should be made in respect of any property of an offender but that the property or any part of or interest in the property cannot be made subject to an order, the court may, instead of ordering the property or any part of or interest in the property to be forfeited, order the offender to pay a fine in an amount equal to the value of the property or the part of or interest in the property. In particular, a court may order the offender to pay a fine if the property or any part of or interest in the property

    • (a) cannot, on the exercise of due diligence, be located;
    • (b) has been transferred to a third party;
    • (c) is located outside Canada;
    • (d) has been substantially diminished in value or rendered worthless; or
    • (e) has been commingled with other property that cannot be divided without difficulty.
  • Marginal note: Imprisonment in default of payment of fine

(4) Where a court orders an offender to pay a fine pursuant to subsection (3), the court shall

    • (a) impose, in default of payment of that fine, a term of imprisonment
      • (i) not exceeding six months, where the amount of the fine does not exceed ten thousand dollars,
      • (ii) of not less than six months and not exceeding twelve months, where the amount of the fine exceeds ten thousand dollars but does not exceed twenty thousand dollars,
      • (iii) of not less than twelve months and not exceeding eighteen months, where the amount of the fine exceeds twenty thousand dollars but does not exceed fifty thousand dollars,
      • (iv) of not less than eighteen months and not exceeding two years, where the amount of the fine exceeds fifty thousand dollars but does not exceed one hundred thousand dollars,
      • (v) of not less than two years and not exceeding three years, where the amount of the fine exceeds one hundred thousand dollars but does not exceed two hundred and fifty thousand dollars,
      • (vi) of not less than three years and not exceeding five years, where the amount of the fine exceeds two hundred and fifty thousand dollars but does not exceed one million dollars, or
      • (vii) of not less than five years and not exceeding ten years, where the amount of the fine exceeds one million dollars; and
    • (b) direct that the term of imprisonment imposed pursuant to paragraph (a) be served consecutively to any other term of imprisonment imposed on the offender or that the offender is then serving.

       The Supreme Court of Canada held in Lavigne that the sentencing court has a very limited discretion when imposing a fine under subsection (3). The court has discretion over whether or not to impose the fine, and in determining the value of the property to be forfeited. That limited discretion “must be exercised in light of the evidence.” The court has no discretion over the amount of the fine; it must be equal to the value of the targeted property.

Lavigne, supra at paras. 34-35

 

           

This Court held in R. v. Dwyer that “any property of an offender” in subsection (3) requires the sentencing court to be satisfied, on a balance of probabilities, that the targeted property “was originally in the possession or under the control” of the accused, or was at least in the accused’s possession at some point. This prerequisite ensures that the fine is consistent with the objectives of s. 462.37, which are “to deprive offenders of the proceeds of crime and ensure they do not benefit from those proceeds.” This Court further held in Dwyer that the Crown does not discharge its burden simply by proving the offender is the leader or directing mind of the offence. The sentencing judge may not infer that because an offender directed a fraud, he or she necessarily possessed, controlled or benefited from the fruits of that fraud. There must be evidence that the targeted funds or property were in the offender’s actual possession or control.

·         R. v. Dwyer, [2013] O.J. No. 277 (C.A.) at paras. 21-23

       In Waxman, 2011 ONSC 6207, the court ordered the accused to pay both restitution and a fine in lieu of forfeiture.  The accused also received a jail sentence.  The accused was convicted of four counts of fraud over.  The accused defrauded $17 million through illegitimate corporate transactions.  At the sentencing level, the court ordered restitution in the amount of $17,990,741, a fine of $15,514,644 in lieu of forfeiture, and an eight year jail term.  The court held that no notice was required from the Crown in seeking the fine, as the Crown was not seeking recovery of any specific, identifiable property.  The sentence reflected the fact that the accused had abused a position of trust, with regards to the relevant shareholders.  As aggravating factors, the court noted the fact that the accused was motivated by pure greed, and had used employees in the commission of his offences.  As mitigating factors, the court noted the mental anguish suffered by the accused and his family during the lengthy delays related to the relevant legal proceedings.  The court also noted the accused’s lack of a criminal record, and his service to the community.  Although the accused had spent the money obtained through fraud, the court held that he still had an obligation to repay it.

The court stated that claimed inability to pay was not a factor rendering the fine inappropriate as part of the sentence:

In Wu, [2003] 3 S.C.R. 530, the [Supreme] Court reviewed a few principles recognized by the common law including the following: (1) “If it is clear that the offender does not have the means to pay immediately, he or she should be given time to pay”, and (2) “The time should be what is reasonable in all the circumstances.” (para. 31) These general principles apply with equal force to a fine instead of forfeiture. While the court that imposes the fine has no discretion to vary the amount of the fine based on ability to pay, the ability to pay may nonetheless be taken into account in determining the time for payment. In addition, under Section 734.7(1)(b) of the Criminal Code, when the time allowed for payment of the fine instead of forfeiture has expired, the court asked to issue a warrant of committal may not do so unless it is satisfied that the offender has, without reasonable excuse, refused to pay the fine. According to Wu, failure to pay because of poverty cannot be equated to refusal to pay.

Accordingly, when ability to pay may not be taken into consideration by the court either in deciding to impose a fine instead of forfeiture or in determining the amount of the fine, it nonetheless comes into play at later stages that are not affected by the specific provisions relating to the proceeds of crime: Lavigne, 2006 SCC 10, at paras. 18, 25, 26, 32, 35, 45, 47 and 48.

            In Lavigne, 2006 SCC 10, the court held that, in deciding whether to impose a fine in lieu of forfeiture and fixing the quantity, the court has discretion in determining whether to impose the fine, and must not impose a fine greater than the value of the property relevant to the forfeiture.  However, the court has discretion in determining how much the relevant property is worth, given the evidence.  The ability of the accused to pay is irrelevant to the determination concerning the fine. Simultaneously, ability to pay can be a factor in determining the time-frame for payment, and non-payment due to poverty cannot be taken to constitute refusal to pay. 

            In Le, [2006] O.J. No. 2789 (S.C.J.), leave to appeal sentence dismissed 2007 ONCA 3775, the court applied Lavigne in holding that inability to pay is not a relevant factor in determining whether a fine should be ordered in lieu of forfeiture.  Significantly, the court held that neither s.12 nor s.7 of the Charter are violated by the rules regarding forfeiture and fines instead of forfeiture stipulated at s.462.36 of the Code.  The court also addressed the argument that imposing a fine as part of a sentence with other elements represents an instance of (at para. 34) “multiple recovery” by the state.  With regard to this argument, the court held that the argument was invalid because the fine in such a sentence is imposed not with the aim of providing restitution to the state, but so as to appropriately punish the accused.  The court stated (at para. 34):

In my opinion, the impugned legislation [s. 462.36] is not contrary to either s. 7 or s. 12 of the Charter. The legislation is not offensive to the rights protected by s. 7 in that it affords the necessary protections to avoid deprivation of such rights except in accordance with the principles of fundamental justice. It does not permit incarceration in default of payment of a fine levied in lieu of forfeiture other than in circumstances where it is shown that there is no reasonable excuse for failing to pay the fine. While it directs that the quantum of the fine shall be the value of the proceeds of crime, where they are unreachable in specie, that is not offensive, particularly where, as interpreted by Lavigne, the opportunity exists to present evidence so as to show a minor or profitless involvement of an accused such as to engage the court’s discretion to order no fine in lieu of forfeiture. The argument that the legislation is offensive as contemplating “multiple recovery” by the state is untenable in that this legislation is for the purpose of penalizing an offender, and not providing restitution to the state.

 

In Dwyer, 2011 ONSC 6555, the accused was convicted of fraud over and four counts of using forged documents. She was sentenced to a three-and-a-half-year jail term.  Funds had been taken from the accused’s accounts to pay back the defrauded bank.  The Crown sought a fine in lieu of forfeiture.  However, the court held that the relevant forfeiture and fine provisions of the Code were not practical in the case at hand.  The accused defrauded Royal Bank of $633,750 through a fraudulent mortgage scheme.  The accused was still working in the financial sector, and committed her offences in a premeditated way.  The motive was greed.  As aggravating factors, the court noted that the accused blamed others for her actions.  She had a history of similar misconduct, and had abused her position of trust.  The fraud was significant in size.  No independent effort had been made to make repayment. Further, the accused used family members and other professionals in the commission of her offences, ruining their careers.  While insurance and freezing the accused’s accounts permitted the bank to regain much of its loss, there was still $207,700 outstanding as a loss after these steps. 

In ordering a jail term, but not imposing a further fine instead of forfeiture, the court explained (at paras. 31-33):

As much as it would be appropriate in the circumstances of this case, I cannot see that the provisions of sections 462.37(1), (3) and (4) of the Criminal Code relating to Forfeiture of proceeds of Crime are practical. If I were to impose a fine in lieu of forfeiture, that fine must be $207,700.00 [Lavigne, [2006] 1 S.C.R. 392] and as much as I believe that the defendant still has much of that money, section 462.37(4)(v) of the Criminal Code would necessitate that a two to three year jail sentence be imposed in default of payment of the fine.

During the sentencing hearing, the defendant asserted, through counsel, that she is unable to pay a fine, but adduced no evidence to support that assertion. She has blatantly avoided the issue of where the $207,700.00 is now and I conclude, as a result of that, that they are in her possession.

The three and a half year period of incarceration is sufficient in light of the outstanding funds received and kept by the defendant.

            The court noted the following relevant case law (at paras. 20-25):

In Dobis (2002), 58 O.R. (3d) 536 (C.A.) a first offender was granted a two year less one day conditional sentence after pleading guilty to theft from her employer and a fraud on her employer of over $1 million. That conditional sentence was overturned by the Court of Appeal and a jail sentence imposed of two years less one day, not including credit for twelve months of the conditional sentence already served by the time of the appeal. The court held that large scale frauds committed by persons in a position of trust attract a penitentiary sentence and conditional sentences are inappropriate.

In Semeniuk, [2004] B.C.J. No. 849 (B.C.C.A.), the British Columbia Court of Appeal dealt with a restitution order imposed by the trial judge after the appellant’s sentence of two and a half years in the penitentiary for mortgage fraud had been dismissed. The frauds amounted to about $395,000.00 and involved the appellant’s business as a sub-mortgage broker. He had knowingly created and provided false information and forged documents as part of the loan application process for several banks. The appeals court in this decision set aside the restitution order because s. 738(1) of the Criminal Code allows restitution only where the amount is readily discernable. The trial judge had erred in not allowing Mr. Semeniuk to show that the banks were not entitled to the amounts claimed and by then estimating the amounts lost by the banks involved.

In Mohebtash, [2007] B.C.J. No. 2078 (C.A.); appeal dismissed [2007] S.C.C.A. No. 343, the appellant’s eight month jail sentence for a single attempted mortgage fraud, where there was no actual loss, was upheld and the trial judge’s refusal to impose a conditional sentence was found to be correct.

In Umair Sidchiqui, [2008] O.J. No. 1568 (C.A.), the court refused to disturb a twenty-one month sentence in jail for a guilty plea to six counts of fraud which the court characterized as large in scale. The court refused to substitute a conditional sentence in the matter.

In Pierre, [2009] O.J. No. 5753 (C.J.), the defendant pleaded guilty to seven counts of fraud involving the theft of identities of persons in order to defraud credit card companies. The court found that it was a deliberate scheme which netted a $298,500.00 loss to the credit card companies and negatively impacted the credit futures of the victims whose identities had been stolen. The court adopted the view that in large scale frauds, a penitentiary sentence of three to five years was fit.

In Chowbay et al [2011] O.J. No. 1334 (S.C.), a single complex mortgage fraud attracted a twelve month jail sentence where neither accused was shown to be the mastermind. They had no prior criminal history and the bank sustained no financial loss.

 

 

It is respectfully submitted that the Trial Judge erred in failing to consider and subtract the amount of money that the Appellant deposited personally into the Overseas Chinese Fund from the total amount that the Trial Judge determined was transferred to Appellant personally; $2,849,459.50.   

 

Facts in Support of Reduction of FILF

  • Canadian Court held $300,000 in receivership funds
  • US Court held  $950,000 US in receivership
  • Appellant claims - $600,000 profit from House Sale went to OCF or OCF investors
  • Deposited $200,000 into Oversea Chinese Fund through Peter Lin – this is money that client borrowed from TD bank and paid to OCF on March 12, 2009 – there is proof of this and Peter Lin testified this at the trial  –  why did he channel this through Peter Lin
  • OSC has $150,000 (e-mail from a lawyer)
  • Appellant deposited  $1,000,000 personal earning into OCF from trading for Xiaoyan Lu, which is evidence at the trial 
  • Appellant borrowed money of $500,000 dollars to pay OCF investors, the appellant  testified all this at trial, $100,000 through Mr. Xi Qin over three years, $195,000 through Ms. Ding Li In December,2008 and $200,000 through Xiaoyan Lu in Feb. 4, 2009.

Testimony of Weizhen Tang  

  • Appellant transferred $100,000 from his TD  personal account, fresh evidence
  • Appellant transferred $300,000 from his Bank of Montreal personal account to registered hedge fund, fresh evidence and all the salaries paid from Weizhen Tang Corp. transferred to OCF, $50,000 to $100,000, the account had no other activities.   
  • Appellant deposited $100,000 from  Weizhen Tang & Associates at CIBC into OCF, fresh evidence 

Prove the amount of money that into the OCF from WT personally, most of them were proved in court during the trial and civil court proceedings, some fresh evidence

Fine in lieu of forfeiture should account for this

Amounts to double recovery – money that the Appellant put into the fund is money that was recovered by the fund before the fraud was perpetrated

Forensic accountant came up with a $5 million dollar figure for administration.  What is that?  What are those expenses?  Why isn’t  part of the 2.84 million (the part for rent and marketing) subsumed under that number as well.   Is it just because that is money that was transferred to other entities?  If so, why is that not considered administration if it had to do with the OCF in some ways?

 

 

(ii)        The trial judge erred in ordering the fine in lieu of forfeiture in this case

 

       The evidence in this case did not allow the trial judge to order a fine in lieu of forfeiture. The evidence did not meet the statutory or jurisprudential requirements for such an order. According to Dwyer, the sentencing judge may not infer possession or control absent actual evidence of same.  There was no evidence that the $2.84 was proceeds of fraud.  Consequently, the evidentiary foundation for a fine in lieu of forfeiture was absent: the Crown failed to establish that the missing proceeds were “the property of” the Appellant within the meaning of Dwyer.

 

       In Dwyer, the appellant had fraudulently obtained mortgage funds, which were paid directly into the trust account of a lawyer. There was no suggestion that the lawyer was a party to the fraud. The Crown asked the trial judge to impose a fine equal to the full amount of the fraudulently obtained funds, less the amount later recovered by the bank. The trial judge found that Ms. Dwyer had had the outstanding funds in her possession, but declined to impose a fine in lieu of forfeiture because she had no ability to pay. The Crown appealed against the refusal to order the fine. This Court agreed that the trial judge had no discretion to refuse the fine on the basis of ability to pay. However, it held that it was also an error for the trial judge to find that the missing funds were ever in Ms. Dwyer’s possession. That finding was not supported by the evidence. Before this Court, the Crown relied on a letter apparently sent by Ms. Dwyer to the lawyer, directing him to pay out a portion of the funds. This Court found it could infer that Ms. Dwyer had control over only that portion of the funds specifically referred to in the letter. It declined to find that because Ms. Dwyer orchestrated and carried out the fraud, she necessarily exercised control over the entire proceeds. That she did so had to be established by the evidence.

Dwyer, supra at paras. 3-4, 21-27

 

No reference was made by the trial judge to the Ontario Court of Appeal’s decision of R. v. Dwyer 2013 ONCA 34, which was released on January 22, 2013; 11 days before the Appellant was sentenced. 

      

1.        The absence of direct evidence as to the character of these funds distinguishes this case from those where this Court has ordered or upheld fines in lieu of forfeiture. In Dwyer, this Court relied on the letter from Ms. Dwyer to the lawyer with custody of the funds as evidence that she exercised control over those funds. In R. v. Khatchatourov, the Crown produced cheques made out in the name of the two appellants, and each was ordered to pay a fine equal to the amount made out in their names. In R. v. A.S., the appellant was fined an amount equal to the sum he received from an undercover officer to purchase drugs. And in Lavigne, the trial judge found that the offender personally received at least $150,000 from his involvement in a drug trafficking scheme. This finding does not appear to have been disputed by the offender, who claimed instead that he had spent the money on his friends and family and therefore did not personally benefit from it. Common to all these cases is an evidentiary link that was absent in the present case: characterization of this property as proceeds of fraud. Without proper characterization, there was no basis to impose the fine.

R. v. Khatchatourov, [2014] O.J. No. 2847 (C.A.) at paras. 50-52

R. v. A.S., [2010] O.J. No. 2532 (C.A.) at para. 9

Lavigne, supra at paras. 3-4; See also R. v. Lavigne, [2004] J.Q. No. 6963 (C.A.) at para. 7

 

(iii)       In the alternative, the trial judge erred in relation to the quantum of the fine

 

       It is the Appellant’s position that the $2.84 million fine imposed by the trial judge was arbitrary and did not comply with the requirements of section 462.37(3). Subsection (3) does not grant the sentencing judge any discretion over the amount of the fine. The trial judge in this case found that the Appellant controlled all the targeted funds.  The Trial Judge was required to impose a fine equal to the amount actually possessed or controlled by the Appellant.

Lavigne, supra at para. 35

 

It does not appear, on the face of the reasons for sentence, that the trial judge considered the fact that approximately $1,800,000 of the money had in fact been located and was subject to the restraint order under s.126 of the Securities Act and SEC of United States of America. It would be necessary to review the submissions of counsel on this issue more carefully to determine whether the issue was considered. This would have the effect of, at least, reducing the amount of the fine in lieu of forfeiture by $1,800,000. The deposit of 2 million dollars by the appellant into Oversea Chinese Fund could also be used to reduce the fine, Although this issue could be advanced without the need for counsel, there is a further issue as to the appropriateness of any order in the circumstances.

33. In R. v. Dwyer, Rosenberg J.A. provided further assistance to trial judges as to the appropriateness of making an order under s.462.37 of the Criminal Code. In Dwyer there was no question that the amount of the fraud was $663,750. Of that, the victim was able to recover $426,049 leaving a balance of $207,700 outstanding. Recognizing the limited discretion to refuse to make the order, he also noted as follows:

 

24 In my view, an order for a fine in lieu of forfeiture can be made under s. 462.37(3) only where the offender has possession or control of the property in question or at least had possession of the property at some point. This conclusion flows from the use of the phrase “any property of an offender” in s. 462.37(3) and the definition of “property” in s. 2. Such an interpretation is consistent with the objectives of s. 462.37, which are to deprive offenders of the proceeds of crime and ensure that they do not benefit from those proceeds: see R. v. Appleby, 2009 NLCA 6, 242 C.C.C. (3d) 229, at paras. 26, 32-33. Those objectives would not be furthered by making orders in relation to property that was never in the possession of the offender, over which the offender never had control and from which the offender did not benefit: see also R. v. Mackenzie, [2002] O.J. No. 2512 (C.J.).

25 The decision to order a fine in lieu of forfeiture must be based on the evidence. As the court in Lavigne said, at para. 35:

 

The fine, as that provision [s. 462.37(3)] says, is equal to the value of the property. Further, equivalency between the value of the property and the amount of the fine is inherent in the words “instead of”. The fine takes the place of forfeiture. For the substitution to be genuine, the value must be equal. The court’s discretion applies both to the decision whether or not to impose a fine and to the determination of the value of the property. It must be exercised in light of the evidence, and once this process has been completed, the court may not take the offender’s ability to pay into consideration as a basis for deciding either to impose no fine or to reduce the amount of the fine. [Emphasis added.] 18

 

The fine in lieu of forfeiture of 2.8 M has put the appellant in a cruel and unusual punishment and in a position of higher security classification and no chance of parole, punished worse than any murders and other serious violent crimes by CSC and Parole Board of Canada.

 

Decisions of Parole Board of Canada on June 4, 2014 for day parole application and decision of parole Board of Canada on March 25, 2015 for full parole application to deny parole. The appellant is released on legislated Accelerated Parole Review after appeal from Ontario Court of Justice on May 29, 2015 decision.      

26 In her reasons, the trial judge stated: “I believe that the defendant still has much of that money”; and “She has blatantly avoided the issue of where the $207,700 is now and I conclude, as a result of that, that they are in her possession.” The trial judge did not, however, identify any of the evidence upon which those findings were based and, in my view, that finding is not supported by the evidence. In argument before this court, Crown counsel could point to only one item in the record that showed the appellant had control of the missing funds. This is a direction to the lawyer, Mr. Atuobi-Danso, to pay out certain of the proceeds. It is a reasonable inference that this document was authored by the appellant and is some evidence of her control of the funds referred to in the direction. However, this document and the other supporting documents, such as cheques, only account for $436,756.38. There is no explanation for the remaining funds and thus no evidence that the appellant ever had control of the missing funds. Crown counsel at trial conceded in her submissions that it was difficult to trace the funds. For example, in respect of where the funds went, she told the judge that “all of that would be speculative”. The Crown made no attempt to identify the missing funds, so as to show they were the funds referred to in the direction and had not been recovered by the Bank. At its highest the evidence shows that the appellant had control of $10,700 more than the Bank recovered. I would therefore allow the Crown appeal only to the extent of ordering that the appellant pay a fine of $10,700. In default of payment the appellant is sentenced to a term of 6 months imprisonment consecutive pursuant to s. 462.37(4)(a)(ii) and (b) of the Criminal Code.

27 In my view, given the Crown’s failure to prove even on a balance of probabilities that the appellant had possession or control of the missing funds, I can see no basis for making the order for a fine in lieu of forfeiture except as stated above.

 

34. On the basis of the evidentiary record here, it is unclear whether the Crown proved that the $2.8M was traceable to the Applicant. In fact, on the basis of the forensic investigator’s evidence it appeared that large sums of money could not be traced to the Appellant. The witness acknowledged that the Applicant did not appear to be living a luxurious lifestyle and that, although the scheme may have been fraudulent and funds were invested in ways that the investors did not approve, the monies were lost through various trading activities and the Applicant did not appear to “benefit” personally from the fraud in the sense of diverting monies to off shore accounts (pp.530ff). Additionally, some of the money appeared to be paid to Hong Xiao (p.540). As Justice Baltman recently noted in R. v. Dieckman 2014 ONSC 717 (Sup. Ct.):

67 In my view, the emphasis on “benefit” in both Dwyer and A.S. is consistent with the exception allowed by the Supreme Court in Lavigne (at para. 28) for someone who “did not profit”; in all those cases the Court is motivated by the underlying purpose of the provision, namely to deprive the offender of his or her benefit so that crime does not pay. If, as in this case, a significant portion 19  was divided at source after being held only briefly by the offender, and never inured to her benefit, it would be both illogical and unfair to order her to repay that portion.

 

            In sentencing submissions, Mr. Tang denied everything personally benefiting from the Overseas China Fund.

Crown Appeal Book – Tab H – page 60 line 9

           

PART IV – ORDER REQUESTED

 

 

60.       It is respectfully submitted that leave to appeal sentence be granted, the appeal allowed and the sentence reduced accordingly to time served.

 

ALL OF WHICH IS RESPECTFULLY SUBMITTED this  8th  day of September, 2015.

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