R. v. Fast (R.J.) et al., 2015 SKCA 86

• Judge: Richards, C.J.S., Herauf and Whitmore, JJ.A.
• Court: Court of Appeal (Saskatchewan)
• Case Date: August 05, 2015
• Jurisdiction: Saskatchewan
• Citations: 2015 SKCA 86;(2015), 465 Sask.R. 96 (CA)

R. v. Fast (R.J.) (2015), 465 Sask.R. 96 (CA);

    649 W.A.C. 96

MLB headnote and full text

Temp. Cite: [2015] Sask.R. TBEd. AU.024

Danielle Gail Fast-Carlson (appellant) v. Her Majesty the Queen (respondent)

(CACR2450; 2015 SKCA 86)

Indexed As: R. v. Fast (R.J.) et al.

Saskatchewan Court of Appeal

Richards, C.J.S., Herauf and Whitmore, JJ.A.

August 5, 2015.

Summary:

The accused father and daughter were involved with a company owned by the father (Marathon) that allegedly defrauded investors by operating as a Ponzi scheme. Investors were given promissory notes with high interest rates. As revenues were insufficient to pay interest, initial investors were paid from monies provided by subsequent investors. As a result, Marathon's deficit increased over the relevant years (2005 to 2008) until it went bankrupt because it could no longer access investor monies. Almost $17 Million was owed to the unsecured investors. Investors were denied access to financial statements. The limited financial information provided was misleading and hid actual financial performance. When the Saskatchewan Securities Commission ordered that Marathon cease receiving monies from investors, related companies (including one co-owned by the daughter) acted as conduits to funnel needed investor funds to Marathon. Investors were not told of the securities investigation or Marathon's insolvency. The accused were charged with fraud (Criminal Code, s. 380(1)(a)), making false statements respecting Marathon's financial status with intent to enter a security for Marathon's benefit (s. 400(1)(c)(ii)) and possession of the proceeds of crime (ss. 354(1)(a) and 355(a)). The father pleaded guilty to all three counts. The daughter pleaded not guilty.

The Saskatchewan Court of Queen's Bench, in a judgment reported (2014), 441 Sask.R. 23, found the daughter guilty of fraud and making false statements. She was acquitted on the charge of possession of the proceeds of crime. Both the father and daughter sought conditional sentences.

The Saskatchewan Court of Queen's Bench, in a judgment reported (2014), 441 Sask.R. 92, sentenced the father to seven years' imprisonment for each offence (concurrent) and restitution in the amount of $16,742,441.12. The daughter was sentenced to 30 months' imprisonment for fraud and restitution in the amount of $1,000,000. The daughter appealed against conviction and sentence. The court subsequently affirmed the conviction and term of imprisonment, but reserved judgment on the appeal of the restitution order.

The Saskatchewan Court of Appeal allowed the appeal in part to vary the restitution order to protect against the theoretical possibility of over-recovery by the fraud victims. The court reduced the daughter's liability for restitution to $250,000, less any amounts paid by the father in excess of the $16,492,441.12, being $250,000 less than the total amount of the fraud.

Criminal Law - Topic 5792

Punishments (sentence) - Restitution - When appropriate - [See Criminal Law - Topic 5795 ].

Criminal Law - Topic 5793

Punishments (sentence) - Restitution - Considerations (incl. conditions precedent) - [See Criminal Law - Topic 5795 ].

Criminal Law - Topic 5795

Punishments (sentence) - Restitution - Quantum - The accused father and daughter were involved with a company owned by the father (Marathon) that defrauded approximately 250 unsecured investors of $17 Million by operating a Ponzi scheme over a number of years - Investors were given promissory notes with high interest rates - As revenues were insufficient to pay interest, initial investors were paid from monies provided by subsequent investors - As a result, Marathon's deficit increased over the relevant years (2005 to 2008) until it went bankrupt because it could no longer access investor monies - Investors were denied access to financial statements - The limited financial information provided was misleading and hid actual financial performance - When the Saskatchewan Securities Commission ordered that Marathon cease receiving monies from investors, related companies (including one co-owned by the daughter) acted as conduits to funnel needed investor funds to Marathon - The father pleaded guilty to fraud, making false statements respecting Marathon's financial status with intent to enter a security for Marathon's benefit, and possession of the proceeds of crime - The daughter was convicted of fraud and making false statements - Aggravating factors included the magnitude of the fraud (one of the largest in Saskatchewan history) and the breach of trust - The daughter was brought in after the scheme was well underway and knew or should have known of the fraud, yet continued to assist her father - Approximately $6 Million was defrauded during her involvement - The daughter earned the salary she obtained and obtained no other personal gain - The average age of the investors was over 70 and most were financially and emotionally devastated - Neither attempted restitution out of personal funds, nor did they present a realistic plan for restitution - The trial judge sentenced the father to seven years' imprisonment for each offence (concurrent) and restitution in the amount of $16,742,441.12 - The daughter was sentenced to 30 months' imprisonment for fraud and restitution in the amount of $1,000,000 - The Saskatchewan Court of Appeal allowed the daughter's appeal against the restitution order in part - Restitution was appropriate, even though the daughter lacked the present ability to pay, where fraud was involved - However, $1,000,000 was demonstrably unfit - The court varied the quantum to $250,000, less any amounts paid by the father in excess of the $16,492,441.12, the latter being to protect against the theoretical possibility of over-recovery by the fraud victims.

Cases Noticed:

R. v. Siemens (K.G.) (1999), 138 Man.R.(2d) 90; 202 W.A.C. 90 (C.A.), refd to. [para. 11].

R. v. Devgan (R.) (1999), 121 O.A.C. 265 (C.A.), refd to. [para. 12].

R. v. Zelensky, Eaton (T.) Co. and Canada (Attorney General) et al., [1978] 2 S.C.R. 940; 21 N.R. 372, refd to. [para. 14].

R. v. Scherer (1984), 5 O.A.C. 297 (C.A.), refd to. [para. 15].

R. v. Fitzgibbon, [1990] 1 S.C.R. 1005; 107 N.R. 281; 40 O.A.C. 81, refd to. [para. 16].

R. v. Griffiths (R.J.), [2005] A.R. Uned. 66; 2005 ABCA 131, refd to. [para. 16].

R. v. Castro (C.) (2010), 270 O.A.C. 140; 102 O.R.(3d) 609; 2010 ONCA 718, refd to. [para. 17].

R. v. Melnychuk (A.) (2006), 275 Sask.R. 319; 365 W.A.C. 319; 2006 SKCA 4, refd to. [para. 19].

R. v. Nanos (D.A.) (2013), 342 B.C.A.C. 22; 585 W.A.C. 22; 2013 BCCA 339, refd to. [para. 20].

R. v. Johnson (J.R.) (2010), 493 A.R. 74; 502 W.A.C. 74; 2010 ABCA 392, refd to. [para. 21].

R. v. Perciballi (P.) et al. (2001), 146 O.A.C. 1 (C.A.), affd. [2002] 2 S.C.R. 761; 289 N.R. 376; 161 O.A.C. 201; 2002 SCC 51, refd to. [para. 26].

R. v. Biegus (J.S.) (1999), 127 O.A.C. 239 (C.A.), refd to. [para. 32].

Statutes Noticed:

Criminal Code, R.S.C. 1985, c. C-46, sect. 738(1)(a) [para. 10].

Counsel:

Brian R. Pfefferle, for the appellant;

Andrew S. Davis, for the respondent.

This appeal was heard on March 27, 2015, before Richards, C.J.S., Herauf and Whitmore, JJ.A., of the Saskatchewan Court of Appeal.

On August 5, 2015, Whitmore, J.A., delivered the following judgment for the Court of Appeal.