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Why The Criminal Process is Secondary in Fraud Recovery – Part III Lenient Sentencing where No Restitution or Cooperation

In our prior blog post, Why the Criminal Process is Secondary in Fraud Recovery – Part I – Criminal Search Rights Override Victim Recovery Rights, we summarized the recently released case of R. v. Tashanna Mullings, 2019 ONSC 2408, published by the Ontario Courts. The bottom line of that case is that fraud victims need to understand that the Canadian criminal justice system, in its application of the Canadian Charter of Rights and Freedoms, does not put the interests of victims ahead of the rogues who do them wrong. Rather, the interests of victims play second fiddle to the Charter rights of rogues, thus making the criminal justice system a secondary system for fraud victims whose priority is to recovery lost funds.

We also discussed that fraud victims also need to understand that the Canadian criminal justice system will prioritize punishing the police for violating some Charter “right” of a rogue before respecting the rights of fraud victims, even though governmental policy encourages the issuance of criminal restitution orders and retribution by way of a conviction and sentence. We reviewed the unfortunate state of Canadian Charter of Rights and Freedoms litigation in Canada as discussed in the 2018 decision of R. v. Villanti, 2018 ONSC 4259.

In the second part to this series, Why the Criminal Process is Secondary in Fraud Recovery – Part II – Criminal Funding Rights Override Victim Mareva Recovery Rights, we summarized Canadian Court decisions since the release of CIBC v. Credit Valley Institute of Business and Technology, 2003 CanLII 12916 (ONSC). In the CIBC v. Credit Valley case, the Court created a four part test which would allow a rogue access to their ill-gotten funds, frozen by a Mareva injunction, to pay for their criminal defence. This sort of decision creates a rationale for fraud victims to consider a criminal complaint only after the civil litigation has run its course, thus making the criminal justice system a secondary justice system with respect to fraud.

In this third part to our blog series, we review the recent sentencing case of R. v. Auckbaraullee, 2019 ONSC 2498, wherein the criminal justice system declined to impose incarceration in the case of a “serious fraud” involving a breach of trust where no restitution was made and where the rogue never disclosed who she conspired with nor who received the benefit of the stolen funds. It is our view that if a recovery is not made from the rogue before sentencing, or if the rogue does not at least cooperate to assist in their victim’s recovery, there should be no claim to mercy on sentencing. This is yet another case where house arrest, with the usual trappings of television and internet use, visitors, and access to the community are somehow equated in the eyes of the Courts to the punishment of incarceration necessary to fulfill a political agenda.

Another Payroll Fraud Story

The story of Anissah Auckbaraullee’s payroll fraud scheme is similar to thousands of such occurrences in this country. In October 2010, the Royal Bank of Canada contacted the Manager of Finance of the Ontario Hospital Association (“OHA”) advising that a “person” was attempting to deposit a cheque from the OHA payable to a “MW Management” into an account that had just been opened that day. The OHA Manager asked RBC to hold the cheque while he made inquiries.

Upon learning that OHA staff had not heard of “MW Management”, the OHA launched an internal investigation and discovered other vendors that cheques had been issued to that had not provided services to the OHA. These vendors were “Sarnia H. Improvement, HG Distributors, Elite Distributors, HUS Services, and JN Distributors”. The bank records indicated that these vendors had opened accounts just days before the OHA cheques had been deposited into them.

Further inquiries revealed that the invoices received by the OHA to support the cheques had spelling errors and were missing key information, and were all tied to a conference ran by the OHA. The companies were not registered, and the banks did not have bona fide client information for the individuals associated with the accounts of the vendors. What was known was that OHA payroll clerk Anissah Auckbaraullee had issued all the cheques.

As a result of these findings, the OHA retained Dave Perry and Ron Wretham of Investigative Solutions Network Inc. (“ISN”) to conduct interviews. ISN interviewed all OHA staff who had access to creating cheques, and then interviewed Ms. Auckbaraullee. She denied issuing the cheques and denied knowledge of the vendors and the persons associated with them. The circumstantial evidence, however, all pointed at Ms. Auckbaraullee. A criminal complaint was filed and Ms. Auckbaraullee was charged.

The judgment in the criminal case against Ms. Auckbaraullee makes reference to the decision in R. v. Villaroman, 2016 SCC 33, which stands for the proposition that in cases based on circumstantial evidence, the Crown must demonstrate that an inference of guilt is the only reasonable inference available on the totality of the evidence. The R. v. Auckbaraullee case then goes on for a whopping 774 paragraphs before it reaches a conclusion that Ms. Auckbaraullee had perpetrated an $80,000 fraud. The findings of fact included, amongst other things, that the signature of the manager of the OHA was forged on new vendor forms and cheques.

Another remarkable aspect to this case is that the trial started in September 2017 and then was heard on 14 different hearing dates until September 2018 before a guilty finding was rendered. The issue of proportionality of this prosecution is raised when one considers the sentencing. The liability phase of this trial can be reviewed at R. v. Auckbaraullee, 2018 ONSC 5545.

The Sentencing

The trial judge, Justice Nola Garton, issued a 103 paragraph sentencing decision. She acknowledged that general deterrence is the most important factor when assessing a sentence for large scale frauds involving a breach of trust. She then went on to find that conditional sentences (house arrest) are not excluded in breach of trust cases, that empirical evidence “suggests” that the deterrent effect of incarceration is “uncertain”, and that house arrest can provide a “significant deterrent if sufficient punitive conditions are imposed.”

Justice Garton held that Auckbaraullee’s scheme involved “a breach of trust on the low end of a large scale fraud” – that $80,000 is a significant amount of money. What fraud victims will find perplexing is that Justice Garton then went on to state that Auckbaraullee’s failure to make any restitution payments before sentencing, her failure to disclose where the ill-gotten money went, and her failure to disclose who else was involved in the fraud were “non-mitigating or neutral factors”. In our view, if a rogue does not disclose at least who else was involved, there should be no claim to sentencing leniency.

Justice Garton sentenced Auckbaraullee to two years less one day of home arrest. The sharp points of the home arrest were further dulled by permitting Auckbaraullee access to society to go shopping, attend medical appointments, employment, and attending her parole supervisor’s office. There are no restrictions on television or internet use, having friends over, or really anything else that ordinary people would miss if they were incarcerated. The obvious question is where are the “punitive conditions” that the Court thought would make this house arrest equivalent to incarceration for general deterrence purposes. To most reasonable persons, “house arrest” and incarceration are two very different concepts. The rationale behind this leniency seems to be that Ms. Auckbaraullee is a victim of sorts of a different type – that she was born into a Muslin African family, shipped to Canada as a child bride, abused by an alcoholic Muslim husband, abandoned by her children, and has lived under the stigma of the criminal fraud charges for 8 ½ years while this case slowly made its way to resolution. She had a criminal record for other offences while awaiting trial.

A restitution order was issued in this case, but there are no terms on repayment, and importantly, there is no consequent to Ms. Auckbaraullee if she does not make a payment. Given the Court’s perspective that Ms. Auckbaraullee’s failure to make a payment was a non-factor in her sentencing, it would be more appropriate to refer to the restitution order as a restitution “suggestion”. Ms. Auckbaraullee is not a Canadian citizen. Under the Immigration and Refugee Protection Act, S.C. 2001, c.27, as a permanent resident she would have been subject to deportation if a six month jail sentence had been imposed.

The Bottom Line

No one seriously will quibble with Ms. Auckbaraullee’s right to silence in a criminal case. The problem with sentences such as this is that it emboldens the rogues who pushed Ms. Auckbaraullee to engage in the fraud and those who benefited financially to continue on with their schemes. If Ms. Auckbaraullee seriously wishes to stay in Canada and obtain lenient sentencing, it should be incumbent on her to disclose who was also involved in the fraud, or be sentenced to jail. In our view, her sentencing should have had an election: cooperate or be deported.

From the victim’s perspective, the punishment was not meaningful, and there was no recovery. From a public interest perspective, one has to question what was gained from such an immense use of judicial resources over an $80,000 fraud if the Court is in the end too reluctant to accomplish its general deterrence objective. We also wonder aloud why Justice Garton takes such a negative view on general deterrence. In the criminal fraud sentencing case of R. v. Pavao, 2018 ONSC 4889, at para 23, Justice Molloy held:

The Criminal Code requires that the principles of denunciation, deterrence and rehabilitation be considered in sentencing.  There is considerable legitimate debate as to whether significant sentences imposed on offenders truly have a deterrent effect, either for the individual offender or for others who might be tempted to commit similar crimes.  However, it is well recognized that if deterrence is relevant at all, it is particularly so for crimes of this nature, involving individuals who are intelligent and who deliberately set out to plan and execute sophisticated frauds.  It is important that such individuals be aware that the significant risk of a long jail term outweighs any benefit or financial reward they may obtain from the fraud.  This is relevant to the individual offender, and also to others in the community who are tempted towards such crimes.

Maybe the most productive aspect of this case is that a court declared $80,000, when coupled with a breach of trust, to be a “large scale fraud”.  Most fraud recovery lawyers would not have thought $80,000 to be a significant fraud, especially when you compare it to the economics of prosecuting it. Another benefit of this blog is that it now makes Ms. Auckbaraullee visible on a Google search.

Inquiries

At Investigation Counsel PC, we investigate and litigate fraud recovery cases. If you discover you are a victim of fraud, contact us to have your case assessed and a strategy for recovery mapped out before contacting police or alerting the fraudster. We also promote victim advocacy and academic discussion through various private and public professional associations and organizations. If you have an interest in the topics discussed herein, we welcome your inquiries.

Norman Groot

About Norman Groot

Based on my police experience and my experience thereafter as a litigator, I have joined forces with other lawyers with police experience and created the law firm Investigation Counsel Professional Corporation.

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