Area of Law: Fraud and Fraud Recovery
Answer # 1525
Criminal sentencing and fraud recoveryRegion: Ontario Answer # 1525
Sentencing for fraud convictions
If a Criminal Court convicts a person of fraud, the judge can make an order which includes several dispositions, such as:
- prohibition, and
In Canada, the maximum sentence a Criminal Court can impose on a fraudster is 14 years per count (for each charge). There may be multiple counts of fraud, which may be ordered to be served consecutively (one after the other) or concurrently (at the same time).
1. General factors a court considers in sentencing
The fundamental principle that guides the Court is that the sentence must be proportionate to the severity (seriousness) of the offence and the degree of responsibility of the offender (fraudster).
The factors a court considers when sentencing a person for fraud include:
- general deterrence,
- specific deterrence,
- separation of the offender from society,
- rehabilitation of the offender,
- acknowledgement by the offender of responsibility for the crime committed, and
- reparation by the offender to the victim from the harm they have done.
General and specific deterrence are the most important factors. General deterrence means a sentence serious enough to discourage other people from committing a similar type of fraud.
Specific deterrence means a sentence serious enough to discourage the convicted fraudster from committing another fraud.
2. Aggravating factors considered in sentencing
The Court will also consider aggravating factors and mitigating factors. In law, an aggravating factor is a relevant fact or circumstance that increases the seriousness of the crime.
Aggravating factors that a court considers in sentencing a fraudster include:
- size of the fraud in terms of the value of the amount taken,
- complexity and length of time that the fraud was carried out,
- degree of planning of the fraud,
- effect of the fraud on the stability of the Canadian economy or financial markets (such as in a stock fraud),
- effect of the fraud on investor confidence,
- impact of the fraud on the victims given the victim’s age, health and financial circumstances,
- degree of trust that was broken to perpetrate the fraud,
- non-compliance with licensing by the offender to perpetrate the fraud (e.g. was the fraudster a fiduciary such as the victim’s accountant),
- fraudster’s concealment or destruction of records upon discovery of the fraud,
- motivation of greed (usually proven with evidence that the fraudster used the money to live an extravagant lifestyle, or if the money was used by the fraudster to increase their own wealth), and
- number of victims that were affected by the fraud.
In addition, it is an automatic aggravating factor if the value of the fraud is greater than $1 million. Under the Criminal Code, frauds greater than $1 million require that the fraudster be jailed.
3. Mitigating factors
In law, a mitigating factor is a relevant fact or circumstance, or an extenuating circumstance, that if proven, may help to decrease the sentence that will be imposed by the Court.
Mitigating factors include:
- the lack of a criminal record (or security commission licensing breaches in stock market cases),
- having entered a guilty plea,
- showing remorse, and
- paying restitution.
The Court will also consider individual characteristics of the offender, such as:
- ill health,
- lack of education,
- fraud not perpetrated for personal gain (such as to help someone else in need), and
- lack of a position of trust.
4. Victim impact statements
Victim impact statements are statements made by the victim showing the impact that the fraud had on the victim. The statements should not talk about how the crime occurred, the character of the fraudster, or the amount the victim may be asking to recover under a criminal restitution order. Victim impact statements are given consideration as part of the general list of issues a court reviews when sentencing.
Victim impact statements can include many different types of information about the victim, such as:
- the percentage of their net worth which was lost because of the fraud,
- the loss of lifestyle resulting from the fraud,
- the need to continue or return to work because of the fraud,
- the inability or postponement of retirement due to the fraud,
- the inability to pay for every day expenses, such as health care and children’s education,
- the necessity of selling assets to pay for everyday expenses because of the fraud,
- the emotional turmoil experienced because of the fraud,
- the shame, embarrassment, and rejection by friends and family resulting from the fraud,
- the marriage difficulties such as arguments, separation and divorce linked to the fraud,
- the thoughts of suicide resulting from depression because of the fraud, and
- the physical illness resulting from depression linked to the fraud.
Restitution orders and restorative justice
Restorative justice is a system or an approach that attempts to rehabilitate the offender by having the victims and the offenders mediate a restitution agreement to the satisfaction of each, as well as involving the community.
Under the Criminal Code, in fraud recovery cases restorative justice can include restitution orders (an amount ordered by the Court to be paid to the victim) and fines-in-lieu-of-forfeiture (which is a fine imposed by the Court if the fraudster cannot or will not repay the amount taken).
Unfortunately for victims, Criminal Courts are often reluctant to make restitution orders for various reasons such as:
- the amount of the loss cannot be determined with accuracy,
- the situation is too complicated,
- there is not enough evidence, or
- there are so many victims that the Court can’t determine the amount lost by each victim.
Civil litigation option
It is a good idea for fraud victims to consult with a civil fraud recovery lawyer to discuss their case and find out how to preserve their right to recovery – even if they are not going to try and recover their money until after the criminal case is finished. After discussing their case with a lawyer, if the victim decides that they may want to try and recover their money, the lawyer can issue a claim and then monitor the criminal case. This will ensure that the victim does not run out of time under the provincial Limitations Act.
If a restitution order is made in the criminal case it can be registered as a civil judgment and also used for obtaining another judgment for a higher amount in Civil Court. If a restitution order is not made by a Criminal Court, at least the victim will have the option of starting a civil case to get their money back.
If you discover you are a victim of fraud, it is a good idea to contact a fraud recovery expert for advice.
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