Mr. Speaker, I am pleased to participate in this debate at third reading of Bill . The provisions of this bill would amend the Criminal Code to strengthen sentences in cases of fraud.
In our entire legislative arsenal to combat white collar crime, the charge of fraud is the most important weapon. It criminalizes a wide range of acts of deception. That said, there are two very general elements that characterize fraud, and the general nature of these elements is what makes the charge of fraud the most effective tool to combat white collar crimes.
The first element is deception or some other form of dishonest conduct, which can exist in all kinds of situations and take on many different forms. The second element is a financial loss, which includes not only the actual loss of money or other valuables, but also the risk of such a loss.
The combination of these two elements constitutes a case of fraud. Essentially, fraud exists when someone uses deception to get another person to hand over their money. Theft involves taking someone's property without permission, while fraud exists when a thief is cunning or smooth enough to convince the victim to voluntarily hand over their property. This deception exacerbates the financial loss since the victims feel ashamed and humiliated because they feel as though they contributed to their own misfortune.
The broad and flexible definition of fraud can also apply to securities fraud, such as accounting fraud based on overestimating the value of securities to shareholders and investors, incorrect declarations regarding a company's financial situation and Ponzi schemes, which we have seen recently in Canada and the United States.
Fraud charges are also an effective tool to combat other types of fraud dealing with mass marketing, mortgages, property titles, home renovation, health care and other types of insurance, and also taxes, not to mention the scams recently found on the Internet, for example, on eBay, where an article for sale is never sent to the purchaser even after it has been paid for.
The various measures contained in Bill for determining sentences for fraudsters aim to ensure that the crimes they commit are taken seriously. Currently, the maximum prison sentence for fraud is 14 years. This is the second highest maximum penalty in the Criminal Code, after life imprisonment. In that sense, it is a satisfactory maximum. However, it is possible to do more so that sentences correspond better to the devastating effects that fraud can have on its victims.
To begin, Bill establishes a mandatory minimum sentence for fraud over $1 million. Currently, the value of the fraud is considered to be an aggravating factor, which means that the sentence should be increased according to existing maximum sentences. As a result of Bill , this aggravating factor will automatically lead—yes, automatically—to a mandatory sentence of at least two years. Whether it was a single fraud or a series of them, only a complex, well-orchestrated and well-executed scheme results in more than $1 million in losses, and it has likely included other types of crime, such as falsifying documents.
Fraud resulting in such significant losses must be considered a serious crime. The proposed two-year mandatory sentence is simply a starting point—yes, a starting point—that allows for the appropriate sentence to be determined. In fact, sentences for major fraud will also take into account all the other objectionable aspects of the offence, many of which are considered to be aggravating circumstances under section 380.1 of the Criminal Code.
Bill would add these new aggravating circumstances: the magnitude, complexity, duration or degree of planning of the fraud committed was significant; the fact that the offence had a significant impact on the victims, given their personal circumstances; the fact that the offender did not comply with rules or licensing requirements; and the fact that the offender concealed or destroyed relevant records.
In addition to the aggravating circumstances already set out under section 380.1 of the Criminal Code and the general circumstances set out in section 718.2, sentencing courts will take these new aggravating circumstances into consideration in order to determine a sentence that reflects the specific facts of each case.
Bill would also create a new prohibition order to prevent individuals convicted of fraud from reoffending. Specifically, it would allow the courts, when sentencing an offender convicted of fraud, to prohibit him from having authority over the real property, money or valuable security of others. That makes good sense.
The court would set what it considers an appropriate prohibition period. It would be an offence to violate such an order. The Criminal Code already provides for a prohibition order to prevent recidivism among individuals convicted of designated sexual offences involving children and child abduction offences. The proposed new prohibition order would offer the same protection, and the judge would have discretionary authority to make such an order. The judge would not make the order before the prosecution and the defence had the opportunity to comment on the impact such an order could have on the offender's ability to earn a living and other relevant considerations. In addition, the offender or the Crown could ask the court to vary the order.
Bill would also improve how the justice system meets the needs of fraud victims, with provisions on restitution and community impact statements.
At present, under the Criminal Code, the judge can order an offender to compensate victims when the situation warrants in order to offset losses, especially financial ones, suffered as a result of the crime. Bill goes further by requiring that the judge consider making a restitution order whenever an offender is convicted of fraud. Moreover, the judge would have to ask the Crown whether reasonable steps had been taken to provide the victims with an opportunity to indicate whether they are seeking restitution. The purpose of this measure is to avoid situations where the sentence is handed down before the victims have a chance to indicate that they would like restitution from the offender and to set the amount of their losses.
If the judge were to decide not to make a restitution order, he would have to give reasons for his decision. This should prevent the court from inadvertently disregarding the issue of restitution. What is more, the victims would be able to understand why the judge decided not to order restitution, where applicable.
In its original version, Bill required that the judge give reasons for his decision every time he decided not to make a restitution order.
For instance, if the victim has not made a request for restitution, the judge could simply indicate that reason in his or her justification. However, in the version amended by the House of Commons' Standing Committee on Justice and Human Rights that we currently have before us, Bill now only requires a judge to provide reasons for not ordering restitution where the victim has made an application for it. While this may seem logical and inconsequential, it does somewhat diminish the bill’s goal of ensuring that restitution is always considered in fraud cases, even in the rare situation where a victim does not seek restitution, but when restitution could and should be ordered by the judge. However, in order to get this bill passed, we are pleased that the provisions pertaining to restitution can remain in effect despite this minor change.
Bill also urges judges to consider the impact that fraud can have, not only on individuals, but also on groups and the community. The Criminal Code currently requires courts, when sentencing an offender, to consider victim impact statements describing the harm done to or loss suffered by the victims. In some cases, the courts allow such statements to be submitted on behalf of a community. Bill would explicitly allow courts to consider a statement made on a community's behalf describing the harm done to or losses suffered by the community when imposing a sentence on an offender found guilty of fraud.
Bill is but one aspect of this government's wider initiative to improve the criminal justice system's response to major fraud cases. I therefore urge all members here today to support the expeditious passage of Bill C-21.
Madam Speaker, this bill is long overdue. The government introduced this bill in the previous session of the 40th Parliament and played political games with it. The government killed this bill with prorogation. Basically, the decided that prorogation would be good for his party and his government.
After the throne speech was read on March 3 and the House resumed sitting, the government waited 60 days before reintroducing the same bill. It was identical to the bill that came before the House in the second session of the 40th Parliament. Not one comma was changed. Every dot on every i was the same. Not a single letter or word was changed. It was identical. This Conservative government nevertheless waited about 60 days after the throne speech before reintroducing the bill. The Conservatives finally reintroduced it at first reading. Those familiar with the House rules know that only the government can introduce a bill at second reading. Neither the official opposition, nor the Bloc Québécois, nor the NDP can do so. Only the government can. So how long did it take the government to propose debate at second reading of Bill on white collar crime? The government boasts that it alone looks after the victims, believes that victims' needs are important, and is working on criminal justice.
The government left Bill at first reading for over 200 days. During that time, who was asking, praying, urging and begging the government to move debate at second reading? The victims. The official opposition. The Bloc Québécois. The NDP.
I have not heard a single Conservative member publicly ask his or her government to stop dragging its feet with Bill at first reading and to move forward with a debate at second reading. I have not heard one single Conservative member publicly demand that, but I heard the opposition demand it. I heard the Bloc members calling for it. I heard NDP members calling for it. I also heard many victims wondering why this Conservative government, which claims that victims and Bill are important, was not following through.
The used every possible opportunity this weekend to say that there were criminal justice bills that absolutely had to be passed in the House and that he urged the opposition to stop opposing these bills. We just heard the same things from the chair of the Standing Committee on Justice and Human Rights, who rose to ask a question of the . He asked the parliamentary secretary to explain why the opposition was opposed to this bill. That is not true. The opposition has always supported the government's desire to act quickly and effectively with respect to white collar crime and fraud. During the other session of the 40th Parliament, we tried to work with this government to ensure that this bill would pass.
However, the government and the decided to kill this bill by proroguing the House and Parliament. Then, when the House resumed, they waited some 60 days before reintroducing it. And once it was introduced, they waited more than 200 days to move debate at second reading.
How many days did the House spend debating Bill at second reading after having waited more than 200 days to debate it at second reading? The House took only two days to debate this bill because the opposition parties, notably the official opposition, want this bill to become law in our country. The opposition does not oppose this bill, and none of the three opposition parties slowed down the process of passing this bill. It was the government.
I believe it is important to remind the members of these facts because I am not making this up. Anyone who has a calendar can figure this out based on the date that the government prorogued the House in December 2009. The prorogation lasted nearly two and a half months, and the House resumed its work on March 3, 2010, with the Speech from the Throne. But it was not until about 60 days later that the government reintroduced its bill. Then the government waited more than 200 days to debate it at second reading—if my memory serves me correctly, it was 216 days. I know that it was more than 200 days; I am quite certain about that.
And now for the content of the bill. The bill establishes mandatory minimum sentences for those found guilty of fraud. That is what victims were calling for. Victims called for other things as well, but the government, in its wisdom, decided not to include them in this bill.
The victims were asking for two things. One, they wanted to see stiffer sentencing for white collar criminals; and the government, with its mandatory minimum sentencing of two years for criminal offences that are what we would deem white collar crime, responds to the victims' request.
However, the victims had a second request. The victims wanted the government to eliminate accelerated parole review for white collar criminals. The bill does not address that at all. This is something that opposition parties have been asking for, for several years now, and the government has not addressed it. It does not address it in the bill.
Liberals attempted to bring an amendment to the bill that would have amended the Corrections and Conditional Release Act in order to eliminate the accelerated parole review for the criminal offences that are dealt with in Bill . The chair of the committee ruled it out of order because nothing in Bill C-21 dealt with the conditional sentencing and parole legislation.
I challenged the chair's ruling. However, I have to admit that his ruling was correct because my amendment, which would have eliminated the one-sixth accelerated parole review for the offences contained in this particular legislation, was in fact beyond the scope of the bill.
The chair ruled my amendment out of order. I challenged the chair, and unfortunately the Conservatives, the Bloc and the NDP upheld the chair's ruling.
There is a piece of legislation in front of the public safety committee of the House of Commons that deals with the issue of accelerated parole review. However, that as well is a bill that the government has been playing political games with and has been holding up, not moving second debate reading and letting it sit on the order paper at first reading for days and days.
We believe the government must act to respond to the request of victims, and not just the victims but of a variety of civil shareholders, that the one-sixth accelerated parole be removed, be eliminated, and not just for the white collar criminal offences but for virtually every offence, if not indeed all offences. In fact, one could describe it as being an offence to the sensibilities of Canadians and of our criminal justice system.
There is another point of white collar crime that the bill does not address. That is the issue that it does not in any way, shape or form attach these criminal offences to institutions.
I would like to read an article by Darcy Henton that was published in the Edmonton Journal on May 5, 2010, headlined “Alberta wary of white-crime bill”. It states:
|| A white-collar crime bill reintroduced by the federal Conservatives this week received a lukewarm reception Tuesday in Alberta from both a financial crime crusader and a fraud victim.
|| The justice bill, which had to be reintroduced after it died on the order paper when the prime minister prorogued Parliament last winter, sets a mandatory minimum two-year sentence for frauds over $1 million.
|| The bill also requires judges to look at several aggravating factors that could increase the sentence and to consider victim impact statements and restitution.
|| Retired investment broker Larry Elford, who advocates on behalf of investors, said the new bill still appears to contain a loophole that exempts it from being applied to investment institutions.
|| “It's a wonderful gift to the investment industry,” he said. “It would exempt the largest fraudsters in Canada. I can't understand why they would reintroduce the law with the same loophole.”
|| Elford said the law wouldn't apply to corporations like Goldman Sachs which is currently the subject of a civil fraud suit brought on by the Securities and Exchange Commission, the national securities regulatory authority in the U.S.
|| “Any Bay Street operator could sell any product in any fraudulent and misleading manner and this bill would not apply,” Elford said.
|| Edmontonian Jason Cowan has been pressing for tougher white-collar crime laws since he and a partner were allegedly defrauded of more than $2 million in 1996.
|| “I think it's absolutely necessary that there are some checks and balances,” he said. “These white-collar criminals are getting off all the time.”
|| [The federal justice minister] said the legislation will make jail mandatory for fraudsters who bilk their victims out of more than $1 million.
|| “Our government is standing up for victims of white-collar crime,” he said when the bill was reintroduced Monday.
The justice minister then waited over 200 days before moving second reading debate. That is really what I would call standing up for victims of crime: using their misery, using their hardship as a political ball game. It is shameful.
The official opposition supports this bill. We have from the outset. We have never hidden that. Every single member of the Conservative Party and every single member of that Conservative government knows that the official opposition supports the bill. We supported it in the last session of the 40th Parliament. We made it clear. We were very public about our support. So for any member of the Conservative Party to rise in this House, or outside of the House, and claim that the opposition is opposing this bill or holding up this bill is simply an untruth. Pure and simple, it is an untruth, and no Canadian should believe that Conservative MP who rises in this House, or outside of the House, to claim that the official opposition does not support and has not supported Bill , the white-collar crime bill.
Canadians should then ask themselves, if a Conservative, a member of Parliament, is willing to tell an untruth on something that is so clearly not true and easily refuted, what else are they telling untruths about? What other issues are they not telling the truth about? What other issues are they spreading untruths about? Canadians should ask themselves that question, because why would someone tell an untruth on the issue of claiming that the opposition, the official opposition, is opposing or has opposed this bill or attempted to hold up this bill when the facts clearly show that the government has held up its own bill in order to play political games with victims of crimes? That is despicable. It is scurrilous. It is deplorable.
Madam Speaker, the bill is going to pass. It is going to have support from all parties.
However, this debate is important because of the usual manner in which the government, in a more partisan manner than the Conservative Party, is presenting this bill to the Canadian public. When we look at the bill, we can ask whether it accomplishes what the Conservatives would like the Canadian people to believe it accomplishes. The answer to that is an absolute no.
This is a very narrow bill in its ability to fight white collar crime because of the different natures of white collar crime. One might ask: If that is the case, why are the opposition parties supporting it? It is because it does a little. The more important question would be: Why are the Conservatives so reluctant to go after white collar criminals when they do not seem to have any problem going after criminals of any other nature?
We have heard this comparison. In one of my questions earlier today I mentioned the Ponzi scheme in Toronto, Ontario that occurred in the period of 2007-08. Just a few weeks ago, prosecutors in the justice ministry in Ontario decided not to proceed with the charges that they had laid. The amount of money taken in that Ponzi scheme was somewhere between $23 million and $27 million and they opted not to proceed.
At the same time, if we look at any number of other cases, such as a corner store being robbed or an elderly woman having her purse ripped off on the street, those charges would be proceeded with. In both cases, the amounts of money that would be taken would be minimal by comparison to the $23 million to $27 million. However, those charges would be proceeded with and, if either one of those involved violence or a weapon, the people who committed those crimes would certainly be incarcerated and, in some cases, especially if it were a repeat offence, for lengthy periods of time.
If we take that same elderly woman who had her purse stolen and lost $100 or $200 and she, instead, had been ripped off by a fraud artist for hundreds of thousands of dollars, all too often that person would get away with it. The charges that were withdrawn in that Ponzi scheme was not an isolated case.
This is part of the delay that the Conservatives accused the opposition of, but we heard evidence from lawyers who acted for those victims. In the situation where charges are not proceeded with, in some cases charges not even being laid, people will complain that they have just been ripped off for hundreds of thousands or millions of dollars. Sometimes they are individuals and sometimes they are corporations. They will go to the police and talk to prosecutors and be told that is more of a civil case and that they will not even investigate. That is quite common, not just in Ontario but right across the country. The reason is that these cases are complex. They require a good deal of attention by investigators, the front-line police, who do this work and there are very lengthy trials in most cases, unless the individual pleads guilty.
That is the situation in the country and this bill would not address those problems at all. It would not make it easier, for instance, for the prosecutor to lay charges and get convictions. It would not make it at all easier for the investigators, the police, the forensic accountants and all the rest. There is no provision in this bill that would make their job easier.
Therefore, we have the same problem, in what is arguably the vast majority of cases, in white collar crime. If they are at all complex, we will continue to see this embarrassing process of victims not being cared for by our criminal justice system. They will be told that the crime will not be investigated or, if it is investigated, that charges may not be laid and that if charges are laid that they may be withdrawn because the prosecution cannot afford a one month, two month or three month trial.
The prosecutor estimated that the Ponzi scheme in Toronto, which I mentioned earlier, would take somewhere between three to six months. The prosecutor opted to spend the money on other crimes. This bill would do nothing about that. We are being dishonest with the Canadian people if we lead them to believe otherwise.
This goes back to begging the question: Why are we supporting the bill? This bill would do a couple of things that are worth moving forward on. Perhaps, if we start down this road, the Conservatives will see their way at some point to introducing more meaningful amendments to the code and to other legislation.
Get tough on crime.
Mr. Joe Comartin: As my colleague from Manitoba suggested, they might seriously get tough on crime. It is worth starting down this path.
I want to spend more of my time on what we should be doing as opposed to what the bill would do.
The bill introduces a mandatory minimum sentence. However, the committee did some research on this and a mandatory minimum sentence would be under some circumstances. Fraud, for example, would have to be more than $1 million. There are also provisions for aggravating factors.
We had our researchers pull recent cases and it was found that the mandatory minimum sentence of two years has been, in the last three to five years, generally applied already, even though under the existing Criminal Code sections there is no mandatory minimum for this type of crime.
However, our judges have been imposing harsher sentences and, in most cases, sentences of more than two years. I acknowledge that there have been exceptions to that, and we will probably hear that from members on the other side, but if we do an analysis of the cases that have come down in the last three to five years, we would find that a significant majority of them have had sentences imposed of more than two years.
Members of the House know that I am far from being a supporter of mandatory minimums. They do work in very narrow cases and white collar crime is one of the areas where they do have some impact. To understand the reason that they have some impact, we would need to go back and analyze the nature of the crime.
I am losing my voice because I have spoken so much in the last 10 days on crime bills in order to meet the agenda that the Conservatives have set. I will use that as an excuse to move away from what I was going to say on this bill and argue that I would use my voice less and we would have less debate in this House if the Conservatives simply used omnibus bills rather than introducing a bill for every section of the Criminal Code.
I will now get back to the point of this bill. With regard to the mandatory minimums and the nature of white collar crime, it is not a spontaneous crime. It is planned, generally speaking, over a lengthy period of time. Much like the senior level of organized crime, the majority of individuals who commit these crimes do know the potential penalties. They know at this point that we do not have mandatory minimums with regard to fraud charges in this country, in the white collar area in particular. I am convinced that it is one of the few areas where it may have a beneficial impact on reducing white collar crime. I am not a big proponent of it but it is worth trying if it will have even a minor impact.
The other provisions in the bill that we support would provide some additional guidelines and authority for our judges to take into account aggravating factors. Those are important in terms of the judges' being able to exercise discretion in determining aggravating factors, and we actually list those for them. It is hard to say that most judges would not see them there but it now formally authorizes them, which is a worthwhile step in terms of giving the judges greater jurisdiction.
I must admit that I had mixed feelings about having introduced, for the first time in the Criminal Code, the concept of a community being able to come forward and say that, overall, as a community, it has been a victim of this particular white collar crime. Up until this point, the only provisions for victims' statements were those from individuals. That could be a corporation but an individual corporation.
This would allow a whole group of people to have a representative speak on their behalf. I do have some concerns about this section because it is the first time we have tried it. The provisions within the bill, in terms of how this will be conducted, for instance , will more than one representative be allowed to speak for the community that has been so negatively impacted by this type of crime, are not clear. That will be left to the judges to sort out. The bill does not define, in any way adequately, what a community of interest is, and I think that will pose some problems for our judges.
Having said that, I am still supportive of experimenting with this but I thought it would have been much better for the government to have come forward with clearer guidelines for our judiciary when they are allowing community statements to come forward. I cannot forecast whether this will be a worthwhile experiment and a successful one or whether it will not be used.
What is certain, and this goes back again to resources, is that it would make trials longer on the sentencing side. I do not think there is any doubt that would produce some additional hours, if not days, added on to these trials. If the individual is convicted, the sentencing process will be much more extensive. That is a worthwhile risk to take because, if it works, it would allow victims to have meaningful representation. I have heard this from my clients when I was practising and I have certainly heard it from victims' groups that game before committee at various times, that the criminal justice system is intimating to them as individuals.
If they can afford to hire their own counsel, and the vast majority of them cannot, especially since they have suffered large wealth losses in these cases, this process would make it easier for them to have a representative for both themselves and the rest of the group that has been affected. It would also allow the judge to hear better evidence of how extensive the fraud was and how damaging it was.
There would be better evidence going in than we get at the present time because individuals would do this or a prosecutor, who is way overburdened, would need to attempt to get that kind of evidence in front of a judge in order for the judge to understand just how severe the impact was of the white collar crime.
For those reasons, I think this is a very worthwhile step to take. Hopefully it will work and hopefully this government will see its way. As opposed to spending billions of dollars on prisons, it would put more money into the transfer of dollars from the federal government to the provinces so that the numbers of our prosecutors, police and judges could be expanded to deal with this problem. So we would not have the situations we do now.
In the majority of cases of white collar crime, there are significant complexities and charges are being dropped or plea bargaining done so that the penalties are either minimal or certainly not in keeping with the severity of the crime itself. Resources have to be put in place. Rather than spending an estimated $9 billion or $11 billion over the next few years for expanding our prisons, we need to be using a good deal of that money to transfer to the provinces to give them the opportunity to have more judges appointed, more prosecutors in place and certainly more investigators, so that these cases can be effectively prosecuted.
It is very clear that if we are going to combat any type of crime, the individuals who are contemplating committing those crimes will have second thoughts. We know this, and all of the evidence we have tells us this. It is almost a certainty that if they think they are going to get caught, they have second thoughts about committing the crime.
We need to show that we have a meaningful system in place to fight white collar crime: investigate, prosecute, convict and sentence. That message needs to be out there for the perpetrators, who are generally fairly sophisticated people. If they understand that system is in place, that they will be caught, prosecuted and receive harsh penalties for the crimes they have committed, the amount of white collar crime will be reduced. I firmly believe that. However, we do not have that system in place now, and this bill does not do anything to put it in place.
I would also like to raise some of the alternatives. As I have said repeatedly, this bill does not go far enough. Some of the evidence we got in committee, called by the opposition parties and not by the government, showed other legislative mechanisms that we could put in place. I will point to one that we heard on the final day of evidence before we went clause by clause on this bill.
We had two lawyers come before us. One was a former prosecutor for the Ontario Securities Commission and the other was a lawyer who, for almost his entire practice at a large Toronto firm, worked with victims of a variety of natures of white collar crime.
The prosecutor, who had spent a good deal of his professional career working for the Ontario Securities Commission, pointed to one of the things that was occurring in the United States that they had found to be fairly effective. This was on the stereotypical Ponzi scheme.
The way a Ponzi scheme works is that those people who first buy into it tend to get paid with money from the subsequent victims of the scheme. The initial so-called victims of the scheme, in a lot of cases, make a lot of money. The rates of return are not the 1% or 2% that we currently get at banks and financial institutions. They get returns of 40%, 50%, 100% to 200% in the first few years of the scheme. Of course, the people coming in at the end, before the Ponzi scheme is identified and the person is caught, so it stops, end up losing all of their money.
A number of states, New York being the leading one, have begun to lift the veil on all of those transactions. They go back to the initial “victims” who have, in many cases, made huge profits as part of the Ponzi scheme, even if they did not know it was a Ponzi scheme; or they might have known. They are required to put the money back into a central pool and whatever money is left is distributed throughout.
We need to put in place regulations that would allow us to do the same thing in Canada.
Madam Speaker, I would like to begin by saying that we are going to vote for this bill, albeit somewhat reluctantly, as the bill has clearly been cobbled together and is deeply flawed. Still, it is true that Parliament must give the impression that it is doing something about major fraud of the sort that has made the headlines in recent years, especially in the financial sector.
We will vote for this bill, even though it provides for a minimum sentence. I am confident that the sentence will likely never be imposed, for the good reason that frauds over $500,000 or $1 million have always led to much longer sentences than two years, which is what the government wants to add.
Nevertheless, it is disturbing because, as usual, when the government sets minimum sentences, it is thinking of the worst criminals. The government tends to forget that minimum sentences do not apply just to the worst criminals, but also to minor accomplices to crime.
I get the feeling, though, that this law is so complicated that no one will dare apply it to people who have played a lesser role in frauds of $1 million, such as the telephone operator for a business or a secretary in an office.
The government is forgetting that the definition of “accomplice”, which the Criminal Code calls “parties to offence” or “participants à une infraction” in the poor French that is a direct translation of the English, applies only if there is abetment. Subsection 21(1) states:
|| Every one is a party to an offence who
||(b) does or omits to do anything for the purpose of aiding any person to commit it; or
||(c) abets any person in committing it.
Paragraph (b) is the most significant.
This has to be coupled with the doctrine of wilful blindness. The doctrine of wilful blindness means that an individual has to know something in order to commit an offence. Knowledge is therefore a key element. In the case of a company that begins systematically defrauding its clients, as Vincent Lacroix's companies did, when some people begin to suspect that activities or money collected for clients are being used to defraud people, they cannot use the excuse that they did not know because, in fact, they had suspicions but may not have wanted to ask any questions.
This doctrine may apply to the employees of a company that has every appearance of legality at first or the employees of a brokerage firm that misuses funds and where people play minor roles, such as a young bond seller who did not initially think the money he was collecting would be used for that purpose.
This brings me to the clerical staff, who at some point begin to wonder if the business is in fact seriously involved in fraud worth millions of dollars. I do not think anyone would even consider sentencing these people to two years in prison. However, they are accomplices if they decide to stay, given that, by continuing to perform their duties, they are encouraging the company to continue committing fraud.
Wilful blindness is important because clearly, the secretary, junior salesperson or telephone operator is going to realize sooner or later that the company is not a regular investment firm, but rather has a criminal purpose. At some point, they will say they had their doubts, but that they were just secretaries after all. Consider the example of the Canadian woman who was caught in Mexico around six months or a year ago, who said exactly that about some frauds that had been committed.
When someone suspects that something may have an illegal purpose, but refuses to ask any questions because they do not want to know the answer, that is known as wilful blindness. Wilful blindness is the same as knowing. That theory is beginning to be widely accepted in drug-related cases. Looking at a real case, someone is asked to bring back some scuba diving tanks. He decides to do it for someone he has met only once, who offers to pay him well for doing so—more in fact, than the actual value of the tanks. He does not know what is inside, and does not want to know. When he is arrested, he will be very surprised to learn that the tanks were full of drugs. This is an example of wilful blindness regarding what was in the tanks. Accordingly, he would be guilty of importing the drugs that were in the tanks.
This also applies to fraudulent businesses that appear to be legitimate. They hire people who, in the beginning, believe that they are working for a perfectly reputable company; however, at some point, they realize that the business is fraudulent. A young single mother with two or three children to care for would want to keep her employment. From now on, she will be guilty of a crime with a minimum sentence of two years in prison. When we bring this type of case to the attention of the Conservatives, they say that the police or a prosecutor would never lay charges in such cases. In all likelihood, this is true, but what does that say about this legislation, which is not serious enough for the police to use or for crown attorneys to prosecute? In my opinion, this is bad legislation that must be amended to cover specific cases.
We previously proposed that, with this bill and others, we follow the example of other Commonwealth countries that also fell into the trap of imposing minimum sentences for everything but, at a certain point, felt they needed to implement safeguard clauses. In some circumstances, when a judge finds that, given the role the accused played and the few benefits they obtained from the crime, the minimum sentence is really unfair to the accused, the judge could have recourse to these provisions and justify, either orally or in writing, why he was not imposing the minimum sentence.
The Conservatives hate judges so much and have so little trust in them that they would rather trust the police. They tell us that the police or prosecutors would not lay charges in these cases. They do not want to give this discretion to a judge who has experience hearing such cases and who would render a decision after hearing from both parties. Instead, they would rather have the police or crown attorneys act as judges and decide not to prosecute before the issue goes before the courts. This is a major flaw.
Then there are provisions for ordering the restitution of the proceeds of fraud. Once again, that is very good and it is being done already. It is already provided for in the Criminal Code, although it is not a requirement. There are many instances when it is not practical. Furthermore, a criminal court cannot easily intervene in civil matters. Quite often, fraud on this scale is not committed by just one person, but by many. Although they are all guilty of the same offence, their participation must differentiated.
The accountants, secretaries and junior salespeople just hired by the company must be treated on a case-by-case basis by the judges. When it comes to the restitution order, the court must suddenly transform into a civil court and determine that one party will be responsible for 50%, but that the accountant is responsible for 20%. As for the young salespeople who sold the first, legal securities, but who then allowed the fraud to continue in order to pay back the funds, they have a lesser responsibility.
If 15 people are involved, the judge will have to determine the order of restitution. In civil law, this is not really a problem because everyone shares the responsibility for the entire amount. However, in criminal law, the share of responsibility must be established. If a judge sentences one individual to repay 50% and another to repay 3%, what happens to the person who does not repay his 50% compared to the person who, according to the judge, is responsible for 3%? In any event, this will give rise to many problems.
Other problems have been pointed out by two Toronto lawyers with rather extensive experience. I believe that one of them has even served as the chair of the Ontario Securities Commission, the equivalent of our Autorité des marchés financiers in Quebec. They too said that it would complicate trials considerably. That makes me think of something I often say: bad laws make good lawyers wealthy. I know something about that; I can attest to it. More complicated trials, and minimum sentences that may one day be applied to cases that do not warrant it, will result in pre-trial negotiations and the prospect of a great deal of work for lawyers.
Among the restrictions the judge will have to consider, one is very intriguing and it involves real estate activities. Really. I remember a judge who was convicted of money laundering. His fall was total. He was never able to practice law again. He ended up working as a building caretaker. Under this bill, he would not be able to do that any more because being a caretaker involves real estate activities. He could no longer collect rent, wash the stairs or make repairs to apartments because all that involves real estate. We see that the government still wants to take away discretionary power from judges. Would it not be better to leave it to judges to apply conditions to sentences, as they currently do? I have not heard any complaints about the way judges exercise the very broad powers they have for imposing conditions on parole and on this punishment, because quite often, it is imprisonment with a probation period during which certain conditions have to be respected.
By leaving them this discretionary power, we will have conditions that are perfectly suited to each specific case. Here the government is introducing a great deal of rigidity. In fact, the Conservatives lacked imagination when they established the various conditions available to a judge during sentencing. It is as though they copied the ruling in the Vincent Lacroix case and pasted it into the legislation. Obviously, the Vincent Lacroix ruling was perfectly suited to that case. We can expect that future conditions will probably differ from those in the Vincent Lacroix case, even if they are equally deplorable and significant.
The other thing that strikes me is this constant desire to show that they are tough and their attempt to apply that to very objective criteria such as sums of money. That is truly very important. In practice, fraud involving small amounts of money can be much more heinous than fraud involving banks or major financial institutions. I remember seeing some rather remarkable examples.
I was retained as one of the lawyers who had to help a judge determine which of the offenders known as habitual criminals met the new definition in this part of the Criminal Code when the part entitled “habitual criminals” was removed from the Criminal Code and redefined as “dangerous offenders”. The term “dangerous” implied a risk of violence. The government therefore appointed a judge. I think there was even a commission headed by a single judge who was directed to examine, one by one, all cases where there had been no violence and where the people had been declared to be habitual criminals but were not violent.
Anyone sentenced as a habitual criminal was sentenced to an indeterminate sentence. Ordinarily, the end of a sentence is always known, but in this case, the sentence served was indeterminate and it was reviewed every two years to see whether the person was still a so-called habitual criminal.
In the section, we had several examples of con men. In fact, the way they operated was sometimes quite funny. One case I remember was a con man who operated on a regular basis. I have to point out that this was really several years ago. At the time, there were more women at home than today, because a lot of women work during the day now and are not at home. This con man would generally arrive at a woman’s home with packages that bore a resemblance to Canadian Tire packages, and tell the woman that her husband had ordered some tools. He handed her the tools and asked to be paid in cash. The women had not heard anything about it. So he collected $10 or $15 or $20, amounts that seem negligible today, but that were significant at the time because people earned less than $100 a week. It seems that his success rate was about one out of five.
What the police officer who had arrested him and put together the evidence for him to be declared a habitual criminal rightly observed was that he was taking money from disadvantaged and somewhat naive people, and it was a very serious thing for them.
Another con man used this trick: he would go to someone’s home and tell them he had been sent by the landlord to repair something that was not working. Is the heating system not working? Right, he would check it out. And then he looked at it, he took the pieces of the furnace apart, and he said he absolutely had to go and get an essential part at the store. Then, since he unfortunately had no money on him, he asked the victim to lend him $40 so he could buy the missing part. I do not know whether that con man’s success rate was one out of 12 or one out of five, but it was still a very substantial rate.
These are not major frauds, and the technique was actually quite crude, but what is important is that they often succeeded. It was more serious than some bank frauds, because money was being taken from people who genuinely needed it, people who were already in need. It amounted to taking advantage of their naivety.
At the time, these people were considered to be dangerous enough to be declared habitual criminals and left in prison for an indeterminate period.
In the case of fraud, there are many different things to consider, beyond the amount. For example, jurisprudence exists for fraud committed by someone in a position of trust and for specific types of fraud, for example, if the individual took advantage of seniors or naive individuals. Jurisprudence also exists for the impact of fraud on victims. All of these elements are regularly taken into consideration.
We must give judges the discretion they need to deal with each case individually. I am not saying that the Conservatives have taken that away here, but they have made it very strict.
I have only one minute left, so I will conclude by saying that this bill does not do any harm. However, this is far from the major reform we would have liked to have seen and that should have applied the six points. I am sure that my colleagues will talk about the plan presented by the Bloc Québécois over a year ago.
Mr. Speaker, it is my pleasure to rise in the House to speak to Bill . Following on the remarkable comments of my friend and colleague from the justice committee and the Bloc member's comments, it is a good theme to continue.
Much of the Conservatives' anti-crime agenda purports to help victims. It purports to take victims' rights over those of offenders, over those of politicians, over those of many other groups in the community. However, much of what they actually do in terms of the legislation has little positive impact on the victims at all.
I think in the area of white collar crime more than anything where what was taken away, in terms of assets or wealth, is sought to be restored, this is the most apt example of how not seizing on the goal of anti-white collar crime, which is the restoration, restitution, recovery of wealth lost, the government is doing a disservice.
In other forms of crimes, I suppose one could argue very cogently that that which was taken away, whether it was life, liberty, or sense of security, cannot be easily returned. They are not things that are in the marketplace. It is very difficult in the case of a violent crime to return the victim's sense of security. It is not a market commodity.
In this case, however, we are talking about the victims of white collar crime whose wealth, nest eggs and futures have been stolen through deceitful and fraudulent means by someone else. It would seem to me that in addition to increasing penalties, which is really all this bill would do, the government, which has now been in power for five years, even administratively without having to come to this place, which it really does not like to do very often anyway as its record on prorogation shows, might have administratively notched up its game on the recovery of assets.
Instead, as I will show in my speech, it has been left to the devices of the provinces with respect to their powers under property and civil rights.
I want to apologize in advance if my speech seems a little familiar, but there is a recurring theme on these bills in justice. I sit on the committee; I have for five years. All the time we see bills, and this case is no different, that seem to the other side to be strong electorally and politically, but not so strong on policy.
We have seen bills on auto theft, on the reporting of child Internet pornography, and now this one on white collar crime, all of which have pithy and exciting titles which, on a quick reading of the short title, would lead people to believe that the problem is solved, that we have a cure and there will be no more white collar crime, no more child pornography, no more auto theft.
That is not at all the case. The government's steps are baby steps toward those evils in our community and, as with all Conservative government agendas, the sound bite of the short title is more important than the pith and substance of the legislative tool.
The government's publicity machine will go to work and tell everyone that Bill emphasizes standing up for the victims of white collar crime and that Canadians will feel a lot safer about their nest eggs.
Electorally it is a gamble. There is the saying that one can fool all of the people some of the time, or one can fool some of the people all the time, but the message to the government today on these legislative bills toward crime with their very sexy short titles is that the government cannot fool all of the people all of the time.
It has been five years. We have to start thinking in the Parliament of Canada that the Conservatives have driven the government's legislative agenda for five years. I would love to see a survey as to whether people feel safer in all areas, but let us concentrate on white collar crime. I would love to know whether people feel they are less likely to be made the victims of losing their nest eggs and fortunes than five years ago when many of the tools that the Conservatives possess as government could have been used.
Let us take a quick look at the history. It has been a very prolific period these last five years for embezzlers and fraudsters. Today, Madoff and Earl Jones are household names, but they were not 5 or 10 years ago. There has been a real run on fraud, Ponzi schemes, investment schemes, direct mailing and direct investment schemes. These have taken a lot of wealth out of communities in Canada, largely from people who have saved all their lives for retirement, which in some cases now they cannot afford.
If we look at the title of this bill, it is obvious the bill falls short of the expectations. It does not make Canadians safer. The Earl Joneses and Vincent Lacroixs of this world are still around. Last month, in fact, Carole Morinville was arrested in Montreal in another Ponzi scheme investigation. These investigations are not carried out solely by the Conservative Party or the government; they are all conducted by police forces.
What do we hear from police forces? They are under-resourced. What do we hear from the government? The government says that it has added 1,000 more RCMP members. It has not. It is a shell game. The government does not deliver on what it promises with respect to manning police forces across the country. Ask any police force that question.
Ask the people of Moncton—Riverview—Dieppe whether they are happy that the government has not moved on giving the 10% subsidy it gives to every other RCMP force in Canada, except the one in Moncton—Riverview—Dieppe. That is the same as saying that one out of ten crimes will not be investigated or prosecuted. That may be okay for the nine cases where the criminals are prosecuted, but what about that other case? There will never be the chance to have an investigation and prosecution in that other case because the government will not stand up for its principles with respect to prosecuting criminals.
The government has been in power for five years and gives lip service with short titles and publicity bills. It is not enough. Over five years, as I have mentioned, serious things have happened. White collar crime is far more serious than it was when I was first elected.
White collar crimes and tax fraud are very serious problems. These crimes wreak havoc on the lives of victims. People can lose an entire lifetime's worth of savings overnight. When people lose their entire life savings, they lose faith in the idea that if they are doing their part, if they work, they will get their fair share.
This nation-wide loss of faith is dangerous because it can be passed on from one person to the next. The government is thus called upon to take action to protect the victims of these financial crimes and to protect people's faith in the integrity of the financial system. We all saw the damage that a pyramid scheme or Ponzi scheme can cause to the victims and to a country's reputation when Bernard Madoff was caught in the United States. We cannot allow such a thing to happen again.
We cannot stand by idly. The bill simply does not follow up on its promise to protect victims of white collar crime entirely. What does a mandatory minimum sentence of two years do for the victims of Earl Jones when he is already in jail under sentence for 11 years?
The lessons of the Madoff affair in the United States tell us that the damage to the victims would have been far less if the financial authorities had been better empowered by regulation and better equipped in resources and staff to apprehend and stop the carnage.
Why is the government peddling its minimum sentences into this area? Is this comforting to the victims of Earl Jones? He is in jail for 11 years. There may be a requirement to reconsider a restitution order, but the money is usually gone. The money is gone and the person is usually locked away for more time than the mandatory minimum set out in the bill.
I really think the government should take the next step outside of an amendment to the Criminal Code and review the financial regulatory system and the funding of our financial regulation enforcement, because it is what Canadians need to protect their investments.
The response from the might be that the Conservatives have a financial regulation overhaul, review and reform under way, that they are proposing a single regulatory agency, which will be voluntary, and will be located in Toronto. I assume that is the plan; it is where the finance minister is from. I have not heard a lot of people against that in the government, but if it was suggested it be moved to Moncton, they might have a different song to sing. I have nothing against Toronto. There is no question that the TSX is the largest index in the country.
It is an issue of provincial regulation. We have seen the government step into areas of provincial domain on many occasions before. Occasionally it takes a first ministers conference on these issues to decide what are the real ills in society with respect to white collar crime and what are the tools best suited to combat them.
People whose life savings have been taken away by a scheme will not be comforted by a Criminal Code amendment. They might be comforted by a federal-provincial announcement that a joint task force, which applies throughout the country, will concentrate on cracking down on Ponzi schemes and fraud in the general sense. They might, at that press conference, say that they are quite comfortable with the Criminal Code and with what has existed before.
If the had a TV show, it might be called “PJ”, pure justice. The Conservatives march in here before the evening news with a bill to protect Canadians from white collar crime, and the government indicates that is the cure. What Canadians will not know, and maybe it is our job to let them know, is that part X of the Criminal Code between sections 380 and 432, and on pages 280 to 304 of the short version of the code, those 25 pages in the compact pocket Criminal Code cover fraud.
So on the idea that someone looking at a newscast would think the government is enacting new legislation, legislation that did not exist before, that is just misleading.
We ought to say, yes, there are some amendments here that we can certainly stand behind, no question. But our response is three-fold.
First, these are minor amendments to the Criminal Code. The Criminal Code already has provisions in place to combat fraud.
Secondly, there is so much more that the government could have done in five years in office, working with the provinces to surgically crack down on the sources of fraud through the regulatory reforms that might be proposed.
Finally, if the government really cared about moving legislation along, especially legislation such as this that is not going to be opposed, why did it prorogue? Why did the government limit debate? Why did it shut down Parliament if it really wanted bills passed?
It is a good question, but we have never heard a real good answer. We did hear the word “recalibration”. Tell that to the victims of white collar crime. We could tell them that we are waiting to crack down on white collar crime, so could they recalibrate their losses? That one would not really fly.
There were fake fears about the governance of the country. People who have lost their savings want a government that will respond.
They might be shocked to know that, five years after the government took power, there was a bill that moved the yardsticks a little bit, a bill that no one would really object to, that could have been passed a long time ago, but the and his gang decided to pull the plug on Parliament, so it could not be passed. People should know that every time the plug is pulled on Parliament by prorogation, bills that are on the order paper, bills such as this, are killed. Prorogation stops everything.
This bill had a previous incarnation, called Bill . It never became law because it was stopped in its tracks, and here we are, debating Bill .
Ironically, sometimes the new incarnation is better. Because they have let it go so long, there are changes in the communities and in law enforcement techniques that have been incorporated into the new bills. So the argument that it is exactly the same bill and we are just bringing it back in every case does not fly. We want to hear the evidence to date about what is going on, in order to get the best bill on the books to combat white collar crime.
What was the reason for prorogation? Did the government think opposition parties were for white collar crime? Has anyone ever seen in a pamphlet, on the news, on the airwaves, in the blogisphere, in Twitter, Facebook or otherwise, that any Liberal, NDP or Bloc member is for white collar crime? Has anybody ever stood up and said that? I do not think so. It is preposterous. So why did the government not come forward earlier with this legislation?
The chairman of the justice committee asks, why do we not fast-track the 80 bills, or whatever number there are now? Why can we not get the job done? Why do we not stand up for Canada? It is a tired speech. The Conservatives are the ones who pulled the plug on their own bills, cutting off their nose to spite their face, and when they do come forward with legislation, it only effects change in the most minor of ways.
Carole Morinville is the case that I mentioned a minute ago. She was an unlicensed security adviser who was arrested for what financial authorities believed to be another Ponzi scheme. That case might have been better dealt with by a task force, by people knowledgeable in the financial regulation industry. It might have been something that the government would oversee and help with, rather than saying that opposition parties are against bills with Criminal Code amendments that really do not affect what is going on out there.
I have gone on at some length about the government attitude of not really helping victims. The provinces have really leap-frogged the federal government. We have seen it with respect to auto theft and many other areas, such as white collar crime.
Since the government came to office, a number of provinces have ratcheted up the provisions they have under the property and civil rights sections of the Constitution to enhance their powers of seizure and forfeiture for crimes committed, and not just in the white collar crime area. The provinces did that pretty much on their own, because they were not getting a lot of legislative resources through funding of policing or joint task force help from the federal government.
Then the other end of it is, what could the government have done with respect to the proceeds of white collar crime? It does not all just disappear into ether; it does not just disappear into thin air.
There is no way Bernie Madoff could have spent all the money he took, nor Earl Jones, so it went somewhere. The usual suspects are the international banking community. What has the government done with respect to international banking reform?
When we bring up the government and the international stage, we could be here for days talking about how it has embarrassed Canada, whether it is a seat on the United Nations, whether it is Copenhagen, whether it is the environment, and so on. But what has it done with respect to reforming the international banking system? What pronouncement has come forward from the , the , the and others with respect to saying, “We want to crack down on white collar crime because we know where some of this money may be going; we have looked into it; we are doing our job; we are getting the job done”? They are not getting the job done. We have heard of no serious reforms in this regard.
What Canada needs, much as every other country, is an overarching national scheme of financial regulation with international components. We cannot wait for these crimes to happen and then say that we will be tough on crime with mandatory minimums. This approach is proven not to work. It will not keep Ponzi schemes from happening and it will not bring the money back to our church programs, our school programs, the family nest eggs and investment funds and community funds in general that have disappeared. We need to stop these funds from being defrauded in the first place, before it is too late.
The case I come back to in conclusion is that of Carole Morinville, who was not even an accredited investor. She should never have got her hands on the honest citizens' investments. At the very least there should have been officials with some authority tracking her activity to stop her before it was too late.
What it comes down to is resources and support beyond tinkering with the Criminal Code. The government has not shown its trust in police officials by funding them adequately. It has not shown its co-operation with provincial and territorial partners by having adequate and frequent meetings on this topic. It has not stuck its head out of the foxhole of its own parochialism on the international stage to be even a follower, let alone a leader, on reforming the international banking system to find the money that has left so many Canadians destitute and without hope.
As parliamentarians, we must restore hope in the system. I hope the government will get to work on these needed reforms.
Mr. Speaker, I am pleased to speak to Bill . I believe I was fortunate enough to speak to it earlier and I do not think I had enough time.
I want to point out for my friends across the way that this is our job. We are not trying to hijack the process. We are doing our job in opposition. A lot of the time we will suggest the glass is half empty and the government members will suggest it is completely full, but that is okay. We still have a job to do and we want the record to show our concerns and misgivings. No bill is perfect. Every bill will get criticized usually in some way. That is my job and that is what I will do today.
Reflecting on some of the earlier comments, there is an air of pretense surrounding the bill. There is a sense that the bill will do a whole lot more than it really does. One of my colleagues said that this was just a sentencing bill, that it did nothing to stop crime. The sentencing occurs after a conviction. The conviction occurs after the criminal act. It has done nothing to deter or prevent that particular criminal act. By pretending a bill that has a whole lot to do with sentencing will have a whole lot to do with crime prevention is pretentious and we in the opposition have spotted that pretense. Whether or not the pretense is on the six o'clock news, as my colleague from Moncton just suggested, or whether it is in the short title of the bill, it is our job to identify it as pretense, which allows me to speak about the short title of the bill.
For the last couple of years, the government has consistently hijacked the short title of these bills. Not everyone knows the short title is section 1 of the bill, which tries to describe what the bill is about, but the government has hijacked that for a commercial. Conservatives want to spin what is in the bill. In fact, some of the time, as has been pointed out, they are spinning something that is not even in the bill. Therefore, members of the House have taken objection to some of the bills that go to committee.
The member opposite asked why were we concerned about semantics. It is not about just semantics; it is about hijacking the bill for a political purpose. We did not fire the first shot on this. It was whatever clever bird in the backroom that helped to prepare the bill decided to hijack the title and put something really different and sexy in the short title of the bill. It will get attention and every time people refer to the bill they will repeat this politically torqued short description. Most of my colleagues in the House, not on the government side, are saying no, that we will not do that. If the government wants to have a short title, put it in. Let it describe what is in the bill and do not torque the thing for the six o'clock news.
Also, by dealing with sentencing, I really do not think it will provide a lot of deterrence for future crime: denunciation, yes. However, by standing in this place and talking about the badness associated with any number of criminal acts, by telling the courts that when they process these crimes, when they attempt to address the needs of victims, it will be done in a certain way, shows a very reasonable level of societal denunciation with respect to the crime. I cannot imagine anyone would not be in favour of that. Putting a crime on the front page of the newspaper pretty much does the same thing. Denunciation is there, but deterrence is not.
My experience in this field over the last 20 years, not as a criminal but as a member of the justice committee, has always led me to believe that criminals who commit this type of offence and many other types of offences are not deterred by what is in the Criminal Code. It does not matter what the sentence is, they do not think they will be caught.
Torquing the sentencing in some of these areas, yes, because it reflects increased denunciation. It is like saying that we are really mad at people who commit criminal acts. That is okay, but it will not deter the person because that person does not think he or she will be caught.
In relation to white collar crime, at which this bill is said to be targeted, a lot of those perpetrators really do not think they will be caught. They think they have a really neat scam. Usually these things start small in the beginning and then they become bigger and a lot of people are hurt.
The objective, from a public policy point of view, really ought to be to get out in front with some kind of crime prevention, some early warning system that can intervene and protect the people who are about to be hurt. In almost all of these scams, once the money is in, it is gone. It is down the road somewhere. It is in lifestyle, gambling, whatever.
In some cases, these white collar crimes started off all right. There was an investment in real estate. Maybe the real estate investment was a little wonky, but it was still an investment in real estate. It could be swamp land, but it starts off with something tangible. Then things go sideways. The money gets diverted. The fraud and deceit begin. People are lied to. After a year or two or three, whether it is a Ponzi scheme or something else, the people are hurt, the investment is seen to be bad and lost.
This bill is almost like a fairy tale. It suggests that we will deal with the loss of the money. We will step in and make the court deal with restitution. That sounds great, but so do fairy tales. If restitution had been possible, the bozo who began the scam would have been able to pay back all or most of the money in the first place.
It is because the money is gone. I suppose there might be one case in hundred where the person who is convicted has a restitution order made against him or her may go back to work, or may go back into business, if the individual gets out of jail, and start to work to pay some of those restitution orders.
I wanted to reflect on the pretense, the fairy tale involved in this type of legislation. I do not, for a moment, want to suggest that I am not favour of victims getting restitution. That is the concept, that is the fairy tale and that is the hope.
I suppose we could say that if in one case out of hundred victims received restitution, it was worth it. I would have to agree with that. I just do not want the record to accept the pretense that this legislative solution will solve all of the problems, and there are a lot. Fraud is a very old section of the Criminal Code. It is based on the common law tort of deceit, and it is a criminal offence. It always has been.
However, since the Second World War there has been a huge increase in community interconnectivity in terms of money. We are not just moving dollar bills around. We have credit cards, cheques, money orders, debit cards, ABM cards and cash cards. There is no end to the money or money's worth in all the vehicles we have for spreading it around. We have chequing accounts, savings accounts, RRSPs, home ownership savings plans, RESPs, RIFFs, stocks and bonds, treasury bills, GICs, life insurance and pension plans, some of which are self-administered. However, with all of that financial interconnectivity, there is huge potential for money going sideways or being stolen.
I often think about how lucky we are that with all the billions and trillions of dollars moving around there is not more of it that goes sideways. It is probably because we in Canada and a lot of the rest of the world have at least some financial infrastructure that works. I am reasonably assured that the money I put into my bank I will be able to get back and I can transfer money safely.
There is certainly a whole lot more potential for fraud. Individuals who make one mistake in the beginning when handling people's money, which then leads to a second mistake, and then it escalates. All of this multiplies 1,000-fold when we put it all on the Internet. It can happen with collective amounts. I have to accept that there is a need to update our law on fraud in the Criminal Code provisions.
I want to look at the process in this bill that governs restitution. I had a question that was never answered throughout the process. I wanted to know what would happen if there were a conviction. The court must ask, under the provision, whether victims have had an opportunity to indicate if they would like a restitution order. It does not mean they get one, but the judge must ask if they have had that opportunity. The prosecutor will then respond yes, no or maybe and there is a form that victims can use. That is a step up. It is more like something in a small claims court but there is a form victims can fill out to describe their losses. That is not a bad thing.
The part that caused me to raise the question is in subclause 380.3(5). This is after there has been a request by a prosecutor or victim for a restitution order. It states:
|| If...the court decides not to make a restitution order, it shall give reasons for its decision and shall cause those reasons to be stated in the record.
That is in a case where the judge says that for particular reasons, he or she will not give a restitution order because it would be useless. I cannot imagine all of the circumstances that could be involved but the judge has that capacity to make a decision. What I am curious about is what happens if the court does not make a decision. It does not really say that the court has to make a decision. There could be a scenario where the court does not decide yes or no and no reasons are given.
After reading through the section, I got the impression that there was a gap. We have the situation where a judge decides to make a restitution order and the situation where the judge decides not to make a restitution order and those two situations are covered off in the bill. However, there is a third scenario where a decision is not made. The process that is outlined in the bill leaves it rather unclear and that usually causes problems down the road for judges, lawyers, victims or those who are accused.
Quite naturally, the government wants to pretend that this is a great bill but there is no place in this bill to discuss what happens with such things as the impact of a bankruptcy. As well, there may be some who will resist the obvious policy position of the government that, where there has been a theft or a fraud, a criminal court would be turned into a small claims court. I do not think the two fit. The work of a criminal court has a lot of bad stuff reflected in it. It is not the kind of environment where one would think there would be much positive coming out of small claims court atmosphere, which is being imposed in part by this bill.
However, we will see how it works out. If some victims, even a few, are happier to have had the chance to put their loss on the record and a chance, however small it might be, of some restitution, then I am happy about that and I do not want to carp about it. This could be a good change.
I suppose we could look at this from a public policy point of view. For example, let us say that we did have a criminal conviction but that there was no restitution order made for the victim. Let us say that the amount involved was manageable, not one of these $20 million scams, but about $10,000 or $20,000. If there was no restitution order and the person convicted serves a one or two year sentence, whatever it is, the victim in that case would probably need to go to civil court to recover those moneys. This provision would pre-empt that and put them together. The citizen who had been defrauded would not need to go to the civil courts. He or she has the court order and it is good for the sheriff. It is good to go if there are assets that can be seized to pay the debt.
I want to draw attention to another area. Franchise sales are accepted to be a provincial jurisdiction. It is a commercial transaction but it involves someone who has a business concept and he, she or it, as a corporation, will then sell a franchise right to a purchaser. This is a common happening. Many of the large franchise grantors are known and it is a very successful commercial vehicle for a small or medium-sized investor. However, over the last few years I have been made aware of problems in the franchising industry. I represent a riding in Toronto, Ontario and the provincial legislation just was not up to snuff. However, if one can get evidence of fraud, it looks like this legislation would cover it.
We may be solving more problems here than the government has actually advertised. It may be possible to rectify what has been a sad situation involving the sale of weak, non-existent or fake franchises to people who put up the first deposit, and the second deposit might be up to $100,000 or more, just to find out that there is nothing there. The guy who sold it to them could be living in Halifax, Calgary, Moose Jaw or Toronto.
Mr. Speaker, I am very pleased to rise today to speak to this bill. Once again at the outset I have to say that we support the bill, as do all of the parties in the House, I believe. I think the bill will eventually achieve success.
To deal with some of the issues as to what the bill actually does and, further than that, what the bill should actually do and what the government should be doing to help with the problem gets the debate expanded a little bit.
The intent of the bill is to crack down on white collar crime and increase justice for victims through measures that include a two-year mandatory minimum sentence for fraud over $1 million, additional specified aggravating factors for the court's consideration at sentencing, a new type of prohibition order, new obligations on the judge with respect to restitution orders, and a new type of impact statement to consider at sentencing.
Those are the nuts and bolts of what this bill does. On that basis, for that purpose, we all support this bill. It has gone through committee at this point.
The problem is that the bill does not do some of the things we would like it to do, and will not put as big a dent in the area of fraud as the government pretends it will. It is really not going to solve a huge part of the problem.
For example, the fraud provisions of the Criminal Code were most recently amended in 2004 in response to the global impact of corporate scandals associated with such companies as Enron, Tyco and WorldCom.
These amendments created a new offence of improper insider trading, increased the maximum sentence for the offences of fraud and fraud affecting the market from 10 to 14 years and established a list of aggravating factors to aid the courts in sentencing.
The federal government also announced it would create a number of integrated market enforcement teams, which were the IMET teams, composed of Royal Canadian Mounted Police officers, federal lawyers and other investigators such as forensic accountants to deal with capital market fraud cases.
Now, that initiative was a positive initiative. That is sort of part of what best practices, as least best practices of the United States, would indicate that we should be doing. Those cases that I referred to, Enron, Tyco and WorldCom, were all American cases. We know that the Americans successfully charged, convicted and put in jail, I believe it was, 1,200 white collar fraudsters, including the executives of these three companies.
We were attempting in 2003, under the previous government, I gather, to come to grips with what would happen if such an experience as Tyco or Enron were to happen here. We had similar cases in Canada, such as Bre-X. I think members are familiar with the Bre-X situation. We adopted what I would think would be a positive initiative in that year, 2003.
The Government of Canada created the IMET program and funded it through the RCMP. Ten IMET operations were set up in four of Canada's major financial centres, and the mandate was to investigate and lay charges for serious criminal activity involving capital markets.
According to the 2007-08 IMET annual report, the program's total budget increased from $13.2 million in 2005 to $18.9 million in 2008, and then the budget decreased to $16.1 million in 2008-09. From December 2003, when the program began, until March 2008, 5 investigations led to 9 individuals being charged with a total of 29 Criminal Code offences.
In fiscal year 2008-09, however, 17 individuals were charged with 979 counts. A total of 5 individuals have been convicted since the IMET program was established, with sentences ranging from 39 months to 13 years.
The issue really becomes why and how the Americans can put away 1,200 white collar criminals in the last 5 years and Canada manages to convict only 5. Clearly it is an issue of resources, an issue of commitment on the part of the government to pursue these sorts of activities in this country.
The fact of the matter is that Conrad Black, while he committed his crimes right here in Canada, which involved the non-competition fees when he sold his newspapers to Izzy Asper and the Canwest organization, was able to pocket $20 million or $40 million in non-competition fees. While common in business, those fees were supposed to go to Hollinger, his company. When the Hollinger shareholders discovered that those fees had been diverted and that Conrad Black and his cohorts had pocketed the fees and made off, they of course went to the authorities to try to get restitution. It was the American system, as imperfect as it is, that actually got results and Conrad Black did get put in jail. I think he is out now, a bit too early, but at least he got put in there.
That to me is the difference between the American system and the Canadian system, in that it actually can show some results against white collar crime, whereas in Canada we have almost no good news on that front.
I gave the most recent IMET results, but I have a quote here from Canadian Business Online, from September 24, 2007. The headline was “Canada's losing war against white-collar crime”. The author was talking about the RCMP's launch of the IMET, the integrated market enforcement team that I spoke about, an elite squad of investigators who are supposed to work together to crack down on white collar crime, but the results are very disappointing. The United States justice department racked up 1,200 convictions against high-level executives, from Enron and other companies in the last 5 years, and at that time, in 2007, the IMET had only managed to get 2 charges and both of those charges were against the same person.
However what is interesting is that the author of the article went on to say:
|| Just ask people on Bay Street who they are afraid of. It's not the cops, it’s not the...[Ontario Securities Commission].
That is what they should be afraid of or concerned about.
|| It's the U.S. Securities and Exchange Commission because they have real teeth.
Is that not an irony, that on Bay Street, Toronto, the financial hub of Canada, the players are not the least bit worried about Canadian police? They are not worried about the Ontario Securities Commission. It is a regulator. They are not concerned about that regulator, but it is the U.S. Securities and Exchange Commission that has some real teeth and they are concerned about it.
Clearly we have to upgrade our system to be on par with the American system, and we all know that the Americans are not exactly happy with their system. They are making some changes to their system as well, because there was a lot of abuse during the last five years in the United States. It is just that they seem to be able to catch a lot more of it and they have managed to get results when they take action, as opposed to us.
I feel that part of the problem here, and it is also a problem in the United States, is that there is too cozy a relationship between the regulatory authorities and the people they are regulating. Rather than hire police-oriented people and enforcement-oriented people into these regulatory bodies, what they tend to be is a retirement ground for people from the industry. So if someone works in the insurance business or investment business for a number of years and then a job opening comes up in the Securities and Exchange Commission, they apply, they get the job, and now they are regulating the very company they were just working for the week before.
And so, it presents itself as an extremely cozy relationship when we have the regulators and the regulated companies attending the same Christmas parties, golfing together at golf tournaments, and it is no surprise that when something happens, they do not move quickly enough to deal with the problem.
I want to talk about Harry Markopolos because his is a very interesting case, too, in the United States, because when these schemes, Ponzi schemes and others in the United States, are uncovered, it is often discovered that in fact there is somebody who knew about the scheme, who blew the whistle on the scheme as much as 5 years to 10 years before the scheme actually fell apart.
That was the case with Bernie Madoff's Ponzi scheme. A number of years before, I believe as far back as 10 years before, Harry Markopolos discovered what was going on with Bernie Madoff. He, at the time, was working in the same type of investments that Madoff was. His company, Rampart Investment Management, in Boston, Massachusetts, came to Harry and said, “We have a competitor out there by the name of Madoff”, of whom not that many people were aware at the time although he had been around for many years, “and we have trouble understanding how he is managing to get consistent gains on a month-by-month basis”.
That is one of the red flags for irregularities and Ponzi schemes, when a fund someone has invested in is giving a positive return month after month when any fund manager, no matter how good he or she is, will have some months where they make a decent return because of selling off some of the assets and buying others. They are going to have some months where they make 20% and they will have some months where they may lose 2% or 3%.
However, in this case, Madoff was showing a positive return consistently, month after month, year after year.
Harry's boss asked him to check into this situation to see how Bernie did it, his thought being, “Whatever Bernie is doing, maybe we should be doing the same thing. We have to learn from what he is doing and follow his pattern”.
It only took Markopolos a half hour to prove that this strategy was not possible, on behalf of Madoff, and he reported it to the Securities and Exchange Commission on several occasions over a 10-year period. He documented his files and sent them in to the investigators and found that the investigators would say, “This man has been around a long time. Nobody else is complaining. You are the only person finding fault with him. Not only that, but you are a competitor, right? So we should not listen to you because you have an axe to grind. You want to find out what his secrets are so you can simply employ them as well”.
The sad part of all of this is that I think perhaps $65 billion has gone missing because of the Bernie Madoff situation.
Yes, he has been put in prison for 150 years and there is some type of restitution taking place but very little.
The fact of the matter is that these types of schemes are not all big ones like the Bernie Madoff scheme. We have them in Manitoba on a much smaller scale of $50,000 to $100,000 being stolen by investment fund people, investors and so on. This is a common problem.
What we will see is during good times these schemes tend to take off, they are very robust and tend to expand during good economic times. It is when the economy turns, whether a sector turns or whether the whole economy turns, flat lines, and drops a bit, particularly in a recession or depression, that these things are exposed
Essentially what happens is a Ponzi scheme is a type of scheme whereby the money that is brought in from the initial investors is paid out to the old investors to keep them in the scheme and no money is actually invested in the market.
There are all sorts of different types of schemes. The Ponzi scheme was developed by Charles Ponzi who has a very storied history in the United States and actually a connection to Montreal. I spoke about that one other time in a previous speech. He had involvement and some training in what later became the Ponzi scheme concept in Canada, in Montreal.
We have other types of frauds that are very common and actually very close to home. We have mortgage frauds. One such mortgage fraud is defrauding essentially the bank. The bank turns the responsibility over to CMHC, so in fact it becomes a CMHC responsibility for most of this. There is one being uncovered right now in Alberta. As a matter of fact, one of the members of the government has been mentioned as having some connection to it. We are talking about millions of dollars that are being defrauded from the mortgage companies.
We had one in Manitoba in 1995. A gentleman came into my office with a box of files and gave us a lot of information on a scheme involving mortgage fraud. Essentially what it boils down to is an individual buys houses. He uses straw buyers, usually people who are just recently out of prison or first-time buyers who are sort of naive. He gives them a couple of thousand dollars cash and buys them some appliances and has them put the cash in the bank to get a receipt that the money is in the bank. That is in order to obtain a mortgage on a house that he has previously bought and now he is selling to them at a much higher price.
Perhaps he bought the house, in today's numbers, for $100,000 and practically the same week he turns around and gets the straw buyer to buy that house from him for $150,000 and he gets an appraiser to give him an appraisal for that amount.
It has to involve a real estate agent, appraisal, a lawyer and so on. In the Winnipeg situation with the RCMP we spent a lot of money uncovering this whole mess. At the end of the day what really happened? The guy that perpetrated the whole thing is still in a business, the window and door business now. I do not know whether anyone was really seriously disciplined, the lawyers, the real estate brokers, the appraisers, and whether anyone lost their jobs. It certainly got a few headlines at the time. However, there are many variations. It is not all just Ponzi schemes.
In the United States, and I know I am running out of time, so I may be able to deal with this issue in questions and comments, but my colleague, the member for had some answers to this--
Mr. Speaker, over the last three or four years, this has become a large issue. We have seen the reports on all the major television networks in North America. Bernie Madoff in the United States was sentenced to 150 years in prison, which gives us an idea of just how serious this has become. It also shows how one particular judge decided to engage the public to find out where the fever was on this. For the general public it is an incredibly large issue. It is beyond imagination. We do not realize how many people have been victims of this type of fraud and scam that has been perpetrated by people of despicable means and measure.
In this country we had the case of Earl Jones. It was so visceral to watch the coverage on television where as he was leaving the court and approaching his vehicle, he was attacked by the masses. I had never seen that before.
It gives us an idea of the heightened intensity about this issue. There are so many people involved and so many stories to be told that we would be amazed at some of the issues. There are people who come to me from my riding in Newfoundland and Labrador to talk about how destitute they are as victims of fraud. They are embarrassed at having lost their life savings. They do not want to bring up the situation with their children and other people in the community because they do not want to be embarrassed.
There are people out there, culprits who prey upon the weakest and most vulnerable of society. They know where they are and they know how to get them.
Bill goes a way to catching up with that. Perhaps it needs to go a bit further. The bill has been reported back to the House, and I think we are looking at one amendment.
Nonetheless, we will look at this and move on. This is something that we are going to be talking about again and again as the situation becomes more prevalent. In my own personal situation, people, primarily seniors, come to my office and talk about the sheer embarrassment of it. They tried to invest what little money they have to better themselves, and not so much themselves but their family, children and grandchildren.
It is incumbent upon us to have a serious debate about this. I appreciate everybody who is debating this in this House.
Bill , includes a mandatory minimum sentence, which is an expression we have used a lot in this House. It includes imprisonment for two years for fraud valued at more than $1 million, and provides additional aggravating factors for sentencing, which I will touch on in a few moments.
It requires consideration of restitution for victims, which is a highly contentious issue as we have seen from all the media coverage not just in Canada but also in the United States. In dealing with the seriousness of this issue, my colleague from mentioned that it is such a big issue in his riding. He has fought so well for this issue, and I want to thank him personally.
I do want to move on to the situation we find ourselves in right now regarding Bill . For this side of the House, we proposed earlier that the mandatory minimum sentence of two years should apply to practices such as market manipulation of shares and of course the Ponzi schemes.
Conservative, Bloc and NDP members, in my opinion, need to explain why they refuse to stand up for all the victims of white collar crime. There are some discrepancies within this that I would like to see addressed. However, we are moving in the right direction as the House of Commons is addressing the legislation today and will soon pass it.
Principles behind the stricter sentencing rules are very important, but we also know that they are not enough to prevent frauds from happening, which is why we also have to seriously consider working on the public campaign. That is where we are falling down on the job. We need to do more to improve the way we deal with the situation and public learning of this type of fraud.
Certainly when it comes to enforcement and how our law officials enforce this will be a contentious issue as we move forward with this type of legislation. It is one thing to put these sentences into place, but the enforcement is going to be a tricky situation as we have witnessed in the past. We are compelled in the House to call upon the government to provide those extra resources upon which it can exercise the principles of the bill, which are to bring people to account, people who are the lowest form of life, if I can use that term, and I will use it because I think I am very apt in that description.
We should consider this from two perspectives. On one hand, we have to alert the people of what this fraud is and how they can protect themselves from this type of offence. On the other hand, we have to provide the resources as a government to allow the officials to enforce this and make sure people are brought to account. That is what we have been talking about in the bill right from second reading through committee and now at third reading.
We are glad to finally see legislation on the issue. We have called on the government to act on white collar crime for many years now. We have had this discussion for quite some time. This legislation is going forward and it is good that it is. We have seen the anger heighten dramatically because of people like Bernie Madoff, Earl Jones and what we see in the media regarding Ponzi schemes and the originator of them, Mr. Charles Ponzi himself.
I would like to turn to some of the research that has been provided to us as legislators in the legislative summary from the Library of Parliament. I would like to thank Cynthia Kirkby and Dominique Valiquette, both from the Legal and Legislative Affairs Division, Parliamentary Information and Resource Services.
The background on this goes back for quite some time. We have seen prior amendments to the fraud provisions. These amendments created a new offence of improper insider trading, increased the maximum sentence for the offences of fraud and fraud affecting the market from 10 to 14 years, and established a list of aggravating factors to aid the courts in sentencing. I certainly think that provides an ample guide for judges to allow a sentencing situation to take place. When it comes to sentencing, the enforcement is one area we may be falling down on.
Let us look at the integrated market enforcement teams. In 2003, the Government of Canada created the IMET program. Its funding is through the RCMP. Ten IMETs are operational in four of Canada's major financial centres. Their mandate is to investigate and lay charges for serious Criminal Code offences involving capital markets. At that point the enforcement was happening. We need to take that one step further. It was a good start with the IMET teams in the financial centres. The IMETs, continue to this day. From December 2003, when the program began, to March 2008, five investigations led to nine individuals being charged with a total of 29 Criminal Code offences. In fiscal year 2008-09, however, 17 individuals were charged with 979 counts.
There in itself we see a perfect illustration of the criminal intent that permeates throughout the system. These people get into the system and it shows how hard it is to bring these people to law and how important enforcement must be in order for these rules and measures to have some effect on all these people.
As I mentioned, 17 individuals were charged with 979 counts. A total of five individuals have been convicted since the IMET program was established and sentences range from 39 months to 13 years.
Going back on the history alone, members will see some of the statistics from . This gives us a good glimpse of the situation. In 2007, 88,286 incidents of fraud took place in our country. About 10,001 cases of people were found guilty in the years 2006-2007. To break down those 10,001 cases, these are the following statistics: prison sentences, 3,580, resulting in 35.8%; conditional sentences being brought down on those people, only 8.7%; probation was the biggest at 60.3%; receiving fines, 12.1%; and restitution at that stage, 18.9%. Other sentences that were handed down included absolute conditional discharge, community service orders and prohibition orders as well.
Returning to the legislation at hand, let us take a look clause 2.1, which is the minimum sentence for fraud. This is the one that is probably getting most of the attention right now. Currently a person convicted of the general offence of fraud is liable under subsection 380(1) of the Criminal Code to a maximum term of imprisonment of 14 years where the value of the subject matter of the offence exceeds $5,000, or two years where the value of the subject matter of the offence does not exceed $5,000 and no minimum sentence is specified.
Clause 2 of the bill introduces a minimum sentence of two years imprisonment in case of fraud over $1 million. My colleague from Ontario brought up a good point earlier. When we try to come up with these numbers, in this case two years imprisonment minimum on a $1 million case, what if someone achieved $900,000? That is a pot of money. I know people who were working on $100,000 as their nest egg. What if they had been defrauded of $100,000? How do we address that in the situation where we make the cutoff at $1 million?
On the other hand, the minimum sentence applies solely to a person convicted of the general offence of fraud, again subsection 380(1) of the code. It does not seem to apply to other related offences, such as fraud affecting the market, fraudulent manipulation of stock markets, insider trading or the publication of a false prospectus. In the latter three cases, however, where the value of the subject matter exceeds $1 million, this remains merely an aggravating circumstance.