



COURT OF APPEAL FOR ONTARIO

CITATION: R. v. Schoer, 2019 ONCA 105

DATE: 20190213

DOCKET: C61721, C61839

Pepall, Lauwers and Fairburn JJ.A.

BETWEEN

Her Majesty the Queen

Respondent
(Appellant on Crown Sentence Appeal)

and

Roger Schoer

Appellant
(Respondent on Crown Sentence Appeal)

Paul Alexander, for the appellant

Mabel Lai, for the respondent

Heard: September 18, 2018

On appeal from the conviction entered on August 6, 2015
    and the sentence imposed on February 12, 2016 by Justice Cory A. Gilmore of the
    Superior Court of Justice, sitting without a jury.

Fairburn J.A.:

A.

OVERVIEW

[1]

The appellant was a registered investment
    advisor. Over the course of eight years he persuaded unsuspecting friends,
    acquaintances, neighbours and clients to make investments in return for what
    they believed were positions or shares in various companies. Fourteen complainants
    testified about their dealings with the appellant, what he had told them, and
    how they had been relieved of their money under false pretences.

[2]

The trial judge rejected the appellants claim
    that he had told the complainants the truth about their investments and that he
    should not be found liable for any misunderstanding on their part. She found the
    appellant to have been a combative, belligerent, disingenuous, and sarcastic
    witness. In her detailed reasons, she said that the appellants evidence
    pressed the limits of reality, had no relationship to reality, and was
    preposterous and nonsensical.

[3]

In the end, the appellant was convicted of fraud
    over $5,000 in the context of what was essentially a large-scale Ponzi-type scheme
    and sentenced to four years in custody. Focusing on the fourteen complainants
    who actually testified, the trial judge concluded that they had been defrauded of
    $413,500. She ordered the appellant to pay restitution to five complainants,
    who she said had specifically asked for restitution, totaling $109,150. A fine
    in lieu of forfeiture in the same amount was also imposed.

[4]

The appellant appeals against his conviction. He
    says that the trial judge erred by:

(a)     misapprehending
    the evidence;

(b)     improperly
    applying the rule in
Browne v. Dunn
(1839), 6 R. 67 (U.K. H.L.)
;

(c)     wrongly
    relying upon hearsay evidence; and

(d)     failing
    to properly apply the single transaction rule.

[5]

In addition, both the appellant and Crown appeal
    against sentence, the appellant claiming that the fine in lieu of forfeiture was
    too high, the Crown claiming it was too low. The Crown also objects to the
    failure to grant a restitution order to one of the complainants, Peter Edwards,
    who the Crown says specifically asked for an order of restitution.

[6]

For the reasons that follow, I would dismiss the
    conviction appeal, grant leave to appeal sentence, dismiss the appellants
    sentence appeal and grant the Crowns sentence appeal.

B.

GENERAL
BACKGROUND
FACTS

[7]

Although the Crown alleged that the fraud
    involved many complainants and over $1.8 million in loss, the prosecution focused
    upon the appellants dealings with the fourteen complainants who testified at
    trial. They came from different walks of the appellants life. Some were his long-time
    friends, some the friends of his father, some his neighbours, and some his clients
    from his time working with various investment firms. None were sophisticated
    investors. Each testified about the trust they had placed in the appellant. With
    the exception of one complainant, the trial judge accepted their credibility
    and the accuracy of their evidence.

[8]

The appellant told the complainants that he knew
    of private companies that were selling positions or shares in order to raise
    money to go public, or improve their financial picture. He told the complainants
    that they would double or triple their money. He often promised quick returns,
    sometimes claiming that money would double or triple within a matter of months.
    After they invested, the complainants were often told about how well their
    investments were doing.

[9]

Though the appellants pitch morphed over time
    and between complainants, he generally used the same types of lies to get the
    complainants to believe that they were making good investments. The complainants
    testified about how they made their investments. At the appellants
    direction, they were told to forward him cash, cheques made out in his name,
    cheques made out to him in trust, cheques given to him with the payee left
    blank, and cheques to third parties whom the complainants did not know.
    Although the complainants testified about their concern for the unconventional manner
    in which their investments were made, their trust in the appellant prevailed.

[10]

Contrary to his promises, the appellant did not
    broker a sale of shares or positions in the named companies for his clients. No
    documentation was provided to the complainants confirming that they were
    entitled to shares or debt in the private companies. The private companies, in
    turn, had no record of the complainants buying their investments. Instead, the
    appellant converted the money to his own use. Much of it was intermingled with
    his own funds. Later, when some complainants were demanding an explanation,
    documentation, or a return of their money, he found new investors and arranged
    for them to write cheques that could be delivered to the early investors.

[11]

The appellant testified at trial and maintained
    that he did not misappropriate the funds. Rather, the appellant maintained that
    he was himself the owner of shares or positions, and he was facilitating their
    resale to his clients. They may have misunderstood the nature of the
    transaction, but it was through no fault of his own. The complainants may have
    lost the value of their investment, but that was the nature of private
    investments. The trial judge did not believe the appellant when he testified
    that he had any right to the shares in either the various private companies, or
    the shell company Hyberlab. As mentioned, the trial judge entirely rejected the
    appellants evidence, finding his insistence on this fabricated reality to be
    disingenuous and not believable.

[12]

The trial judge meticulously detailed the
    particulars of the appellants fraudulent conduct in her reasons for
    conviction. I will address the facts as they arise in the conviction appeal.

C.

CONVICTION APPEAL


(1)

Alleged
Misapprehensions
of Evidence

[13]

The appellant argues that the trial judge
    misapprehended the evidence in a number of respects, any one or combination of
    which he says had a material impact on the verdict.

[14]

Misapprehensions of evidence must relate to
    material pieces of evidence that play an essential role in the reasoning
    process that results in conviction:
R. v. Sinclair,
2011 SCC 40, [2011] 3 S.C.R. 3, at para. 56. They can involve failures
    to take into account items of evidence, mistakes about the substance of
    evidence, or failures to give proper effect to evidence:
R. v.
    Morrissey
(1995), 97 C.C.C. (3d) 193
(Ont.
    C.A.), at p. 218. Those kinds of errors can give rise to unreasonable verdicts
    under s. 686(1)(a)(i) of the
Criminal Code
or miscarriages of justice caught under s. 686(1)(a)(iii) of the
Criminal
    Code
:
Morrissey
, at p.
    219.

[15]

In explaining why I reject this ground of
    appeal, I will address the alleged misapprehensions under three categories. The
    first pertains to the appellants arguments about evidence informing what I
    will refer to as the Magnet transactions. I will then consider his arguments
    related to other transactions and conclude by addressing his arguments about alleged
    misapprehensions of evidence relating to industry standards.

(i)

Magnet
    Transactions

[16]

I agree with the appellants observation that the
    verdicts turned largely on the trial judges findings relating to the transactions
    associated with the shell company Hyberlab. I disagree with his observation
    that the trial judges reasons reflect six misapprehensions of evidence in
    relation to those transactions.

[17]

Some background is required. The appellant
    testified that Gregg Galbraith, who did not testify at trial, was an executive
    within Hyberlab. Galbraith was said to hold a term promissory note with
    Hyberlab, dated January 5, 1999, entitling him to 9.15 million common shares or
    $183,000. The Ontario Securities Commission (OSC) issued a cease trade order
    against Hyberlab on June 24, 1999, meaning that Hyberlab would need OSC
    approval before it could resume trading. Hyberlab was in significant debt.

[18]

The appellant testified that in 2002, Galbraith
    asked him to help get Hyberlab trading again. The appellant maintained that he
    could accomplish that by merging Hyberlab with a private corporation by way of
    a reverse takeover. The appellant said that Galbraith and he entered into an
    agreement that, upon a successful merger, the appellant would receive the 9.15
    million shares (one million to be returned to Galbraith) or $183,000. The
    appellant produced a signed agreement to that effect, dated February 17, 2003, something
    that was referred to as both a promissory note and a debenture. The agreement
    stipulated that should the merger referenced in the agreement not take place,
    the appellants interest in the debenture would be ended.

[19]

The Crowns position was that the merger
    referenced in the agreement did not take place, and the appellant did not have
     at any material time  an interest in the 1999 Hyberlab promissory note. The
    appellant testified that the 2003 agreement was open ended and he was looking
    for a company with which to complete the merger since that time. The trial
    judge accepted the Crowns position and rejected the appellants evidence.

[20]

In 2005, Magnet Innovations was looking to go
    public and needed a clean shell with which to merge. Many of the complainants
    testified about their belief that the appellant had sold them shares and
    positions in Magnet.

[21]

Although two letters of intent between Magnet
    and Hyberlab were signed in April and September, 2005, those letters had
    expired by December, 2005 and were never renewed. The lawyer for Magnet
    confirmed in evidence that nothing happened after the second letter of intent
    was prepared. Although Magnet continued looking for a viable shell company, there
    was no particular attachment to Hyberlab, and the appellants former investment
    firm told Magnet that Hyberlab was not a viable clean shell company. The merger
    never happened.

[22]

Magnet also decided to raise capital through
    promissory notes and loans. Magnets lawyer testified that the appellant was to
    assist in raising capital, but that he was difficult to deal with and that his
    paperwork had concerning discrepancies. The lawyer said that Magnet was not
    able to rectify many of the discrepancies that arose from the appellants
    transactions. Indeed, at the time of trial, the witness was still dealing with
    people who thought that they had loaned money to Magnet through the appellant.
    Yet, Magnet had no record of those people. In any event, at no time was the
    appellant authorized to sell shares in Magnet.

[23]

The appellant makes several arguments.

[24]

First, the appellant complains that the trial
    judge misapprehended the relationship between Hyberlab and Magnet, and the
    appellants authority to sell positions in them. I disagree. The trial judges comprehensive
    reasons demonstrate that she clearly understood that Hyberlab was a shell
    company that was subject to a cease trade order and that Magnet was a company
    looking for a clean shell. She also clearly understood the appellants
    testimony that he was selling his own positions in Hyberlab and his position
    that his clients were confused through no fault of his own.

[25]

It was open to the trial judge, however, to
    reject that evidence and find that it was actually the appellant who conflated
    Hyberlab and Magnet in order to effect the fraud, leading many of the
    complainants to believe that they were buying shares in Magnet. It was also
    open to the trial judge to find on the evidence that the appellant was not
    entitled to trade shares in Magnet, he did not have an interest in the 1999
    Hyberlab promissory note, and in any event did not inform the complainants they
    were ostensibly sinking their money into the highly questionable 2003 Hyberlab
    debenture. Even if it was a legitimate debenture, it would never be realized if
    a merger with Magnet did not crystalize. I agree with Crown counsel that the fraud
    lay in the fact that the appellant did not reveal to the complainants the true
    state of affairs, misled them about what their money was directed at, and did
    not reveal to them the actual risks associated with their investments. The
    reasons for judgment demonstrate the trial judges clear understanding of those
    facts.

[26]

Second, the appellant says that the trial judge
    erred in rejecting his evidence by noting that the letters of intent between Hyberlab
    and Magnet did not make reference to a portion of Hyberlabs debt being held by
    a third party. He also argues that she was wrong to suggest that the appellant claimed
    that the letters of intent were binding, when in fact he acknowledged that they
    were not.

[27]

I need not get into this issue in any detail. While
    I see no problem with the trial judges approach to the letters of intent, even
    if she was wrong, the letters played only a peripheral role in her rejection of
    the appellants otherwise implausible evidence. The fact is that the
    appellants evidence was rejected for a multitude of reasons that far surpassed
    the issue relating to the letters of intent.

[28]

Third, the appellant argues that the trial judge
    erred by failing to consider that some of the complainants acknowledged that their
    investments would be illiquid and non-refundable and that, if the deal with
    Magnet did not succeed, another merger with Hyberlab would have to be sought. Although
    the appellant is right that some of the complainants acknowledged that they
    knew they were assuming risk, the trial judge found that the appellant diverted
    their funds to his own use and misled the complainants about the nature and extent
    of risk associated with their investment. In light of that factual finding,
    there was no need to repeat the minutiae of each complainants evidence.

[29]

Fourth, the appellant claims that the trial
    judge erred by finding that there was no possibility for a merger between
    Hyberlab and Magnet after 2005. He says that she ignored evidence of ongoing,
    good faith talks between the lawyer to Magnet and the appellant, long after
    that time frame. I do not agree. Read contextually, the lawyers testimony does
    not support that position. While Magnet continued to look for a clean shell
    company to merge with after the letters of intent had expired, the appellants
    former employer, the investment firm Standard Securities, discouraged Magnet
    from dealing with Hyberlab because it was not a clean shell.

[30]

Fifth,
    the appellant takes issue with the trial judges findings about letters that Magnet
    investors received from Gregg Galbraith, who owned the promissory note in
    Hyberlab. The letters said that Galbraith undertook to deliver shares in
    Hyberlab or any successor company upon the completion of a reverse takeover and
    financing. The appellant took the position that the letters confirmed that the
    complainants had made investments in his 2003 Hyberlab debenture.

[31]

Leaving
    aside the fact that many of the complainants had been led to believe that they
    had actually bought shares in Magnet, the trial judge understandably questioned
    the authenticity of the Galbraith letters. She was skeptical for a few reasons,
    including that Galbraith did not testify at trial. She also questioned how
    Galbraith could promise his interest in the debenture to the complainants when
    he had already promised it to the appellant, and how he could give those
    promises while the cease trade order was still in place.

[32]

I
    disagree with the appellant that the trial judge misunderstood his evidence
    about Galbraith. She understood his evidence, she just rejected it. The trial
    judge was not required to accept the appellants explanations about the
    operation of the letters of undertaking and she was not required to accept the
    letters as authentic.

[33]

In
    the absence of Galbraiths evidence, the trial judge showed understandable
    skepticism about the origin of the letters. Additionally, she was right to note
    the fact that any shares that Galbraith
may
have had, had already been
    promised to the appellant. The same shares were later being promised to the
    complainants. Having rejected the appellants evidence as a fabrication, there
    was nothing precluding the trial judge from making those factual observations.

[34]

Finally,
    the appellant argues that the trial judge misapprehended the evidence about
    promissory notes  from both Magnet and another company called ESSX  that he
    sold to some of the complainants, and wrongly concluded that this formed part
    of the fraud. These notes, he says, were acknowledged to be legitimate by
    Magnets lawyer and some of them have been honoured. Any loss in value is due
    to Magnet failing as a business, not any misconduct on his part. Again, I
    disagree.

[35]

The
    trial judge fairly summarized the evidence of the complainants, including where
    their dealings with the appellant involved these promissory notes. As Crown
    counsel points out, these complainants thought they were purchasing shares
    directly from the companies, and it appears that the manner in which the
    appellant dealt with these  promissory notes was consistent with the
    appellants practice of deliberately obfuscating the nature of his clients
    investments.

[36]

There
    was no misapprehension of the evidence. The manner in which the appellant dealt
    with his clients was part of the narrative at trial. Most importantly, the
    genuine sales of promissory notes were not considered by the trial judge to be
    part of the fraud, as is made clear in her reasons for judgment and sentence.

(ii)

Other Transactions

[37]

The
    appellant had been hired by Paul Brent to raise funds for a corporate entity
    that resulted in a publicly traded company called Airesurf. Unfortunately,
    Brent died before trial. Accordingly, most of the information about Brent came
    from the appellants testimony.

[38]

The
    appellants commission for raising funds for Airesurf was to come in the form
    of Airesurf shares. The appellant sold Airesurf shares to his clients. He said at
    trial that Brent owned the shares that the appellant was selling, but did not
    tell his clients this at the material time. When Brent died, the appellant testified
    that there was nothing the appellant could do to remedy the fact that many of
    his clients had not yet received their shares.

[39]

The
    appellant says that the trial judge misapprehended the evidence when she
    concluded that the appellant had taken no steps to deliver the Airesurf shares
    to the complainants after Brents death. He says that the trial judge
    misunderstood to whom the shares belonged. I disagree.

[40]

The
    trial judge rejected the appellants evidence. She found as a fact that the
    fraud lay in the appellants efforts to have the complainants believe that they
    were purchasing positions or shares in Airesurf, when the appellant had no
    ability to complete the sale. The trial judges reference to the appellants failure
    to take any steps to have the Airesurf shares delivered to the complainants after
    Brents death simply revealed one of the many reasons for why she rejected the
    appellants explanation as to what had happened. After all, if the appellant
    had sold Brents shares to the complainants, surely he would have taken steps
    to have those shares delivered after Brents untimely death.

[41]

The
    appellant also objects to the trial judges allegedly mistaken conclusion that
    he had sold portions of the Hyberlab debenture in relation to a merger with a
    company named EnerBrite/ESSX. He says that there was no evidence about a
    proposed merger between EnerBrite and Hyberlab. I disagree. Read contextually,
    the trial judge was simply drawing parallels between the appellants approach
    to Magnet and his approach to Enerbrite/ESSX. She was not saying that the
    appellant told investors that there would be a merger between Hyberlab and
    Enerbrite/ESSX, she was saying that the appellants deceit in relation to
    Magnet and Enerbite/ESSX was of a similar nature.

(iii)
Industry Standards

[42]

The
    appellant claims that the trial judge misapprehended the evidence regarding
    whether he was under an obligation to report any business he was doing outside
    of the investment company that employed him, Standard Securities. He also
    complains that the trial judge misapprehended the expert evidence in the same
    way. I disagree.

[43]

The
    trial judge understood that neither the witness from Standard Securities, nor
    the expert witness, could point to written policies or rules that prohibited
    the appellant from engaging in outside business or off-book trading. Even so,
    taken in context, the evidence clearly supported the trial judges findings
    that outside business activities had to be disclosed and that off-book trading
    had to be reflected in the records of the brokerage.

[44]

Regardless,
    I agree with the Crown that any potential misapprehension of evidence regarding
    industry or business standards would be immaterial to the result in this case.
    The trial judges reasons turned on the overwhelming evidence that the
    appellant failed to disclose material facts to the complainants, took advantage
    of their trust in him, deliberately obfuscated what they were investing in,
    and directed the funds to his own use.

(iv)

Conclusion

[45]

There
    were no misapprehensions of evidence and, even if there were, they were not
    material in nature and did not play an essential role in the reasoning process
    that resulted in convictions.


(2)

The Application of the
    Rule in
Browne v. Dunn

[46]

The appellant says that the trial judge
    improperly invoked the rule in
Browne v. Dunn
in her reasons for judgment
.

[47]

During the course of his examination-in-chief, the
    appellant produced for the first time his day planners and what he referred to
    as his trade blotters. The Crown took no objection to the appellant making
    reference to those documents to refresh his memory or to the admission of those
    documents in evidence. The difficulty was that, as the appellants evidence continued
    to unfold, the day planners and blotters were used to suggest that the
    appellant and complainants had engaged in discussions and that he had done
    transactions on their behalf, a great deal of which had not been put to the complainants
    when they testified.

[48]

Crown counsel made an immediate objection to
    what was happening, raising a concern that the appellant was testifying to
    matters that could be seen to diminish the complainants credibility, but to
    which the complainants had been given no opportunity to respond. Defence counsel
    responded that, although it was possible that he had failed to put certain
    matters to the complainants, it would have been an oversight on his part and
    the remedy was not to preclude the appellant from testifying about those
    matters. The trial judge permitted the appellant to continue and said that she
    would determine an appropriate remedy at the end. The appellant kept using the
    planners and blotters to testify about conversations and transactions that he
    said had taken place with the complainants and, where necessary, the Crown
    continued to voice an objection.

[49]

It is against that backdrop that the trial judge
    made the impugned comments in her reasons for judgment. She recounted that the
    appellant had relied on his day planners and blotters to verify what he had
    described as a proper documenting of the transactions. She then identified the
    problem:

The problem was that neither the accounting
    nor the circumstances related to it was ever put to any of the complainants. I
    accept that the Crown was left in a difficult position in not being able to
    respond to this documentary evidence.

I agree with the Crown that the reliability of
    the blotters and the day planners is therefore diminished considerably and that
    they can be considered no more than self-serving statements of Mr. Schoer that
    he only thought of at trial.

[50]

The appellant maintains that the trial judge
    erred by concluding that the appellant was under an obligation to put the
    entries on his internal records to the complainants. He also maintains that the
    trial judge erred by finding that the appellant had fabricated the documents
    during the course of the trial and using that fabrication as circumstantial
    evidence of guilt.

[51]

I see no error in the trial judges approach.

[52]

The rule in
Browne
    v. Dunn
is rooted in the principle of fairness. Although
    counsel are not required to confront a witness with every bit of evidence upon which
    he or she may be contradicted, fairness requires that the witness be confronted
    on contradictory matters of substance so that the witness can be given an
    opportunity to explain:
R. v. Quansah,
2015
    ONCA 237, 125 O.R. (3d) 81, at para. 81, leave to appeal refused [2016]
    S.C.C.A. No. 203;
R. v. Vorobiov,
2018 ONCA
    448, at paras. 42-43. A trial judge has a broad range of discretion in
    fashioning an appropriate remedy when the rule is breached and significant deference
    must be shown to that exercise of discretion:
Vorobiov,
at para. 43.

[53]

Here, the trial judge exercised her discretion in
    an understandable way. She decided to place less weight on the reliability of
    the evidence arising from the blotters and day planners because they were used
    to partially advance a narrative that had not been put to some of the
    complainants. Although defence counsel initially raised the possibility of
    recalling the complainants, the trial Crown voiced a strong objection and the
    defence did not press the matter. There were simply too many witnesses and too
    many transactions to make recalling the witnesses practical. Against that
    contextual backdrop, the trial judges decision to deal with the matter in her
    reasons for judgment was understandable. In these circumstances, it was
    entirely open to her to place less weight on the appellants evidence arising
    from the blotters and day planners.

[54]

Fairness required that the complainants be
    confronted with the appellants version of what had happened between the
    appellant and complainants, including when, how and in what circumstances they
    had parted with their money. Moreover, prior to the impugned comments being
    made, the trial judge had already expressed concern about the credibility of
    the appellants evidence and the authenticity of documents he had produced. In
    the circumstances, it is unsurprising that the trial judge said that the
    reliability of the blotters and day planners had been diminished
    considerably. I see no error in that approach.

[55]

Even if the trial judge had been wrong to approach
    the day planners and blotters that way, the appellants evidence as a whole
    provided support for a complete rejection of his credibility. As previously
    mentioned, the trial judge found him combative and sarcastic, belligerent and intent
    on advancing a narrative that had no relationship to reality. The application
    of a remedy for a breach of
Browne v. Dunn
was
    only one small piece that led to that conclusion.

[56]

Finally, it was open to the trial judge to conclude
    that the blotters and day planners were self-serving statements that were
    only thought of at trial. That was a finding of fact that was open to the trial
    judge to make. She came to that view based on the totality of the evidence and
    in the context of lengthy and considered reasons as they related to the
    appellants credibility. I do not agree that the trial judge went further and
    used the finding as circumstantial evidence of guilt.


(3)

The Hearsay Complaint

[57]

The appellant suggests that the trial judge
    erred by relying on a hearsay statement in the form of an October 22, 2002 letter
    sent to the OSC by a lawyer involved with Hyberlab. The letter inquired into a
    number of things, including whether Galbraith could sell, transfer or assign
    his interest in the term promissory note to a third party purchaser,
    particularly in light of the cease trade order. The appellant introduced that
    letter into the trial record, claiming that he was told that the OSC had
    responded, saying that trading on a debenture was permitted. There was no
    documentary evidence to support that claim.

[58]

The letter was tendered by the appellant, not
    for the truth of its contents, but to explain what he said was his good-faith
    basis to believe that he could trade on the debenture. The appellant argues
    that, rather than using the letter as he suggested, the trial judge used it for
    the truth of its contents, to find that he must have known from the letter that
    Hyberlab was under a cease trade order and, therefore, a debenture could not be
    traded upon.

[59]

I do not agree that the trial judge used the
    letter for an impermissible hearsay purpose. Indeed, she used the letter for
    the very purpose the appellant asked her to use it for, to gain insight into the
    appellants state of mind. The fact that she drew a different inference than
    the one the appellant asked her to draw does not mean that the letter was used
    for the truth of its contents. It was simply used as a piece of circumstantial
    evidence informing the appellants state of mind respecting what he knew at the
    time that he was purporting to trade on the debenture. It was open to the trial
    judge to use the letter to draw a different inference about the appellants
    state of mind than the one he asked her to draw.


(4)

Single Transaction Rule

[60]

The appellant contends that the trial Crown
    failed to prove the fraud as particularized as a single count on the
    indictment. Rather than proving a single fraud over $5,000, the appellant
    contends that the Crown proved at least three separate frauds involving Hyberlab,
    Airesurf, and Magnet and ESSX. To be clear, the appellant does not claim that
    he was prejudiced by the prosecutorial decision to proceed on a single count of
    fraud over $5,000. Instead, he argues that, having chosen to proceed on a
    single transaction, the Crown was duty bound to prove a single transaction.
    Because the Crown proved multiple frauds, the appellant says that he is
    entitled to an acquittal.

[61]

I do not agree with those submissions.

[62]

Each count on an indictment shall contain a
    single transaction: s. 581(1) of the
Criminal Code.
A single transaction can include a single act, or circumstances
    that are
successive and cumulative and which
    comprise a series of acts that have a sufficient connection:
R. v.
    Kanagarajah et al.,
2018 ONCA 121, at para. 31;
R.
    v. Rocchetta,
2016 ONCA 577, 352 O.A.C. 130, at para. 44;
R. v. Manasseri,
2016 ONCA 703, 132 O.R. (3d)
    401, at paras. 71-73, leave to appeal refused, [2016] S.C.C.A. No. 513;
R.
    v. Hulan,
[1970] 1 C.C.C. 36 (Ont. C.A.), at pp. 44-45. The
    sufficiency of connection can be established in different ways, such as through
    proximity in time or place, identity of the parties, relationship between the parties,
    the similarity in conduct and any other factor that may demonstrate why the
    offence is properly construed as a single transaction:
Rocchetta,
at para. 44.

[63]

The question is not whether the frauds could

have been charged separately. The
    question is whether there is sufficient connection to charge them in a single
    count. As the Crown notes, the appellants conduct, as found by the trial
    judge, was similar across all of his dealings with the complainants. In his
    capacity as an investment advisor, he actively and intentionally preyed upon
    people who trusted him, by deceiving them into thinking that their money was
    being used to invest, either in shares or some other position in corporate
    entities. Although the corporate entities changed from time-to-time, and his
    lies morphed according to the story being told, at its core, the deception
    remained essentially the same.

[64]

Moreover, the appellant was well aware of the
    charge against him and the circumstances that made up that charge. He does not
    suggest otherwise. Even though he does not raise prejudice, I agree with the trial
    judges observations that he was not prejudiced by the manner in which the
    count was framed. Demonstration of prejudice is a critical component in any
    determination of whether a count offends the rule. The remedies for breach of
    the rule  particulars or severance  are similarly grounded in alleviating
    that prejudice:
Kanagarajah,
at paras. 22-26. Finally,
    the appellant has not provided us with any authority for the proposition that an
    acquittal is among the remedies available for breach of the rule.

[65]

This was properly charged as a single count of
    fraud over $5,000. Had the appellant been concerned about the trial he was
    facing, he could have asked for clarity. He stayed silent because the
    fraudulent conduct was a single transaction, connected by time, place, and
    similarity of conduct.

D.

SENTENCE APPEAL


(1)

Overview

[66]

Even though both parties appeal sentence, I will
    continue to refer to Mr. Schoer as the appellant throughout this portion of my
    reasons, even where I am referring to his submissions in response to the Crown
    appeal. He received a four-year custodial sentence, combined with restitution and
    fine in lieu of forfeiture orders. There is no objection to the custodial term
    imposed.

[67]

The sentence appeals relate to restitution and
    fine in lieu of forfeiture. The Crown appeals against the failure of the trial
    judge to impose a $17,000 restitution order in respect of one of the
    complainants, Peter Edwards. Both the Crown and appellant appeal against the fine
    in lieu of forfeiture order in the amount of $109,150. The Crown claims that it
    was too low and the appellant claims it was too high.

[68]

I will start with the issue of restitution.


(2)

Restitution Order: Peter
    Edwards

[69]

The Crown maintains that
    the trial judge erred by failing to impose a restitution order in the amount of
    $17,000 in favour of Peter Edwards. The Crown says that Mr. Edwards addressed
    his loss in his victim impact statement and that the trial judge accepted that
    loss as a fact. Accordingly, she should have imposed a restitution order.

[70]

The appellant contends
    that the trial Crown did not request restitution for Mr. Edwards and it is too
    late to do so now.

[71]

I find that the
    restitution order should have been made.

[72]

The sentencing hearing took place on October 30,
    2015, shortly after certain amendments to the
Criminal Code
were brought into force by the
Victims Bill of Rights Act
, S.C. 2015, c. 13.
These amendments included adding section 737.1 of the
Criminal Code,
governing
    how restitution requests can be made and creating Forms 34.1 (Statement of
    Restitution) and 34.2 (Victim Impact Statement) in Part XXVIII of the
Criminal Code
. Section
    737.1(4) provides that, for purposes of restitution, the court may use Form
    34.1 or any other method approved by the court. Section 737.1(5) further
    provides that if a victim seeks restitution, and the court does not make a
    restitution order, it shall include in the record its reasons for not doing so.

[73]

With the consent of the defence, the trial Crown
    filed a book of materials at sentencing that included various victim impact
    statements. Again with the consent of the defence, not all were read aloud, but
    it was indicated that all would be relied upon. The majority of complainants
    who filed victim impact statements and statements of restitution did so in the
    newly codified
Criminal Code
forms. Mr.
    Edwards filed a victim impact statement using a form provided by the Ministry
    of the Attorney General predating the amendments, and included in it his loss
    of $17,000. The new Form 34.2 contains a warning that it is not an application
    for compensation or restitution. In contrast, the Ministry form that pre-dated
    the legislative change states that providing information about the financial
    impact of a crime may not necessarily lead to payment for your losses or
    expenses through the criminal justice system.

[74]

In fairness to the
    trial judge, this was a document intensive trial and sentencing. Certain
    complainants who testified at trial did not fill out victim impact statements
    and did not claim any restitution. The Crown indicated during the sentencing
    hearing that he was only seeking restitution for those people who had claimed
    it. In light of the Crown submission about what restitution was being sought, it
    is possible that the trial judge misunderstood the extent of the request.

[75]

However, I accept  as
    did the trial judge  that Mr. Edwards did address his $17,000 loss in the
    victim impact statement he prepared. The victim impact statement was accepted
    as an exhibit and relied upon by the trial Crown. There is nothing in the form
    submitted by Mr. Edwards to suggest he was not claiming $17,000. The trial
    judge should have addressed it.

[76]

The appellant has not
    identified any prejudice in his ability to respond to the appeal. Based on the
    findings made by the trial judge in her judgment and reasons for sentence, I
    have no doubt that she would have ordered restitution to Mr. Edwards had she turned
    her mind to the issue. She found him to be a credible witness and accepted his
    loss. It appears to have been nothing more than an oversight. Accordingly, I
    would order restitution in the amount of $17,000 to Mr. Edwards.


(3)

Fine in Lieu of Forfeiture

(i)


The Reasons of the Trial
    Judge

[77]

As the trial judge noted, the appellant
    perpetrated a large-scale and complex fraud, making it difficult and, in many
    cases, impossible to locate the victim investors money. Accordingly, while the
    trial Crown maintained that the amount of the fraud was just over $1.8 million,
    when addressing the fine in lieu of forfeiture, he limited his request to
    $413,500 or what he described as the most conservative transactions possible.
    Those transactions covered situations where complainants had testified about
    how they had been directed by the appellant to pay for their investments:

(a)     writing cheques payable to
    the appellant;

(b)     writing cheques in trust
    to the appellant;

(c)     giving the appellant
    cash;

(d)     giving cheques to the
    appellant with the payee left blank, cheques that were later directed to and
    cashed by third parties; and

(e)     writing cheques to other people at the appellants
    request.

[78]

The appellant took the position,
    repeated in this court, that the forfeiture provisions should not apply to any
    of the complainants money that went to third parties. Excluding the payments
    to third parties, the appellant maintained at trial that the maximum fine in
    lieu of forfeiture would be $103,500.

[79]

The trial judge found as a fact that the
    appellants direction to the complainants to pay third parties constituted part
    of the fraud. On that basis, she agreed with the Crown that the total amount
    defrauded from the complainants who testified at trial was $413,500.  She
    reasoned, though, that any fine in lieu of forfeiture had to be considered in
    the context of the entire punishment. She found that the fine had to be proportionate
    because it is a component of the punishment. As the appellant was receiving a
    sentence in the mid-range for the fraud (four years custody) and a $109,150
    restitution order, the trial judge determined that a fine in lieu of forfeiture
    in the same amount as the restitution order was appropriate. Accordingly, she
    imposed a fine in lieu of forfeiture in the amount of $109,150.

[80]

The trial judge refused to deduct any
    amounts from that fine in lieu of forfeiture. Although she acknowledged that the
    appellant had repaid a couple of the victims, those payments had been made from
    commingled property the appellant received from those and other victims. Consequently,
    the payments arising from the conclusion of civil proceedings were not taken
    into account. The appellant was given six years from the date of release from
    custody to repay the fine.

(ii)

The Parties Positions on Appeal

[81]

The Crown maintains that the trial
    judge erred by applying sentencing principles to the fine in lieu of
    forfeiture. Having determined the value of the fraud, the Crown argues that the
    trial judge was duty bound to impose a fine in lieu of forfeiture in an equal amount.

[82]

The appellant argues that the trial
    judge imposed too heavy a fine in lieu of forfeiture. He points to a few errors
    in the chart used by the trial judge to calculate the total amount of the
    fraud. In light of those alleged errors, and in light of his argument that the
    fine should not include complainants money flowing to third parties, he maintains
    in this court that the most he should have been ordered to pay as a fine in
    lieu of forfeiture was $96,150, a slightly reduced amount from what he
    acknowledged at the sentencing hearing as his maximum exposure. He also
    contends that the fine in lieu of forfeiture should be decreased by the amount
    of $72,000 to reflect his payment of a complainant arising from a default judgment.

[83]

Crown counsel on appeal fairly
    acknowledges the errors in the chart used at the sentencing proceeding. That
    position leaves the Crown on appeal suggesting that the defrauded funds total
    $403,750, and there should be a fine in lieu of forfeiture in that amount. Crown
    counsel does not agree that the $72,000 payment should be deducted from that
    amount.

[84]

In light of the Crown concessions, the parties
    are apart on only two issues that this court must resolve: (a) should the fine
    in lieu of forfeiture have taken into account the funds that the complainants
    transferred to third parties; and (b) should the $72,000 be deducted from the
    fine in lieu of forfeiture.

[85]

I will first explain why I conclude
    that the trial judge erred in her approach to determining the amount of fine in
    lieu of forfeiture. I will then address why I conclude that in the context of this
    Ponzi-type scheme, the funds that went from the complainants to third parties
    should be included in the fine in lieu of forfeiture. I will conclude by
    addressing why I find that the payment of $72,000 should not be deducted from
    the total fine in lieu of forfeiture.

(iii)
A Fine in Lieu of Forfeiture is not Punishment for the
    Designated Offence

[86]

At the time of sentencing, s.
462.37(1)
    of the
Criminal Code
allowed that where an
    offender had been convicted of a designated offence and the trial judge was
    satisfied on a balance of probabilities that any property is proceeds of crime
    and that the designated offence was committed in relation to that property, the
    court shall order that the property be forfeited.
[1]


[87]

The
    term proceeds of crime is granted an expansive definition in s. 462.3(1):

proceeds of crime means any property, benefit or
    advantage, within or outside of Canada, obtained or derived directly or
    indirectly as a result of

(a) the commission in
    Canada of a designated offence .

For the property to be the
    proceeds of crime for purposes of forfeiture, the offender must have had possession
    or control of the property in question at some point:
R. v.
    Angelis,
2016 ONCA 675
,
133 O.R. (3d) 575,

at para. 35,
    leave to appeal refused, [2016] S.C.C.A. No. 484
. See
    also:
R. v. Dwyer
, 2013 ONCA 34, 296 C.C.C. (3d)
    193
(Ont. C.A.), at paras. 21 and 24; s. 2,
Criminal Code
.

[88]

Where the sentencing judge is satisfied on a balance of
    probabilities that the property is the proceeds of crime, that the offender had
    possession or control of it at some point, and the designated offence was
    committed in relation to that property, a forfeiture order must be made:
R.
    v. Lavigne,
2006 SCC 10, [2006] 1 S.C.R. 392, at para. 14;
Angelis,
at
    para. 35.
As noted in
Lavigne,
at para. 15:
    Parliament has made this provision mandatory by requiring forfeiture and
    making the provision apply to the widest possible range of property.

[89]

Where a forfeiture order should
    be made, but the property is not available to be forfeited, the court may,
    instead of ordering the property  forfeited, order the offender to pay a fine

in an amount equal to
the value of the property: s. 463.37(3).

[90]

The use of the discretionary may
    connotes a discretion to impose a fine instead of forfeiture, a discretion that
    is only available where making an order of forfeiture is impractical or
    impossible:
Lavigne,
at para. 23. The exercise of discretion arising
    from the word may in s. 462.37(3) is restricted by the objective of the
    provision, the nature of the order and the circumstances in which the order is
    made:
Lavigne,
at para. 27;
Angelis,
at para. 37.

[91]

The objectives of the provision are
    twofold: (a) depriving offenders of the proceeds of crime; and (b) deterring
    offenders and others from committing designated offences:
Lavigne,
at
    paras. 16, 23, 26, 28;
R. v. Khatchatourov,
2014 ONCA 464, 313 C.C.C. (3d) 94, at paras. 55-56;
Dwyer,
at
para. 18. As noted in
Lavigne,
at para. 28, there
    may be circumstances in which the objectives of the provisions do not call for
    a fine to be imposed. For instance, Deschamps J. provides the example of an
    offender who commits an isolated offence on his own and does not profit from
    that crime.

[92]

The circumstances in which fines in
    lieu of forfeiture may be made are set out in s. 462.37(3) of the
Criminal
    Code.
Five examples are provided, three of which appear to be applicable in
    this case: ss. 462.37(3)(a), (b), (e). A fine in lieu of forfeiture may be
    imposed where the property:

-

cannot, on the exercise of due
    diligence, be located;

-

has been transferred to a third party; or

-

has been commingled with other property
    that cannot be divided without difficulty.

[93]

Although pursuant to s. 673, forfeiture
    and fine in lieu of forfeiture orders are technically part of a sentence,
    they are not to be considered in the context of the principle of totality. As
    this court held in
R. v. Saikaley,
2017 ONCA 374, at para. 181, leave to
    appeal refused, [2017] S.C.C.A. No. 284, a fine in lieu of forfeiture is not
    punishment or part of the global sentence to be imposed upon the offender and,
    accordingly, it is not to be consolidated with sentencing on a totality
    approach. Forfeiture and fine in lieu of forfeiture orders are not a means by
    which to punish offenders, but a means by which to replace the proceeds of
    crime:
Lavigne,
at para. 25. As noted in
Lavigne,
at para. 26,
    the objective of Part XII.2 of the
Criminal Code
is to deal with the
    proceeds of crime separately from, and in addition to, the punishment for
    committing a crime. While a term of imprisonment flows from a failure to pay
    without reasonable excuse, that term of imprisonment is a means by which to
    enforce the fine, not to punish the offender for the designated offence:
Khatchatourov,
at paras. 55-56.

[94]

The error in this case arose from the
    trial judge having considered the fine in lieu of forfeiture as part of the
    sentence to be imposed. Attempting to align it with the mid-range sentence she
    had chosen was in error. Forfeiture does not fall within a range. It is not
    meant to be measured by the gravity of the offence or the moral blameworthiness
    of the offender. Property that is found to be the proceeds of crime must be
    forfeited. Having found that the value of property being the proceeds of crime
    was $413,500, if that money had been available for forfeiture, the trial judge would
    have been duty bound to order it forfeited.

[95]

Where the proceeds of crime are no
    longer available to be forfeited, the sentencing judge must determine whether a
    fine should be imposed in lieu of that forfeiture. Once that determination is
    made, the sentencing judge determines the value of the property that would have
    been forfeited had it still been available for that purpose. Once that value is
    determined, then the statute governs how to calculate the fine in lieu of
    forfeiture. As Deschamps J. held in
Lavigne,
at para. 34, the statute is crystal clear, the fine is
    equal to the value of the property. Because the fine takes the place of the
    forfeiture, the fine must be of an equivalent value:
Lavigne,
at para.
    35.
[2]


[96]

Given that the property was not
    available to forfeit in this case, and having chosen to impose a fine in lieu
    of forfeiture, the trial judge was duty bound to impose a fine equal to the
    value of the property. Having determined that the value of the property was
    $413,500, an amount that the Crown now concedes is only $403,750, the trial
    judge should have imposed a fine in that amount.

[97]

The appellant maintains, though, that the trial judge erred
    in her original calculation of what should be taken into account as
    constituting the proceeds of crime in this case. The appellant emphasizes that,
    in order to constitute the proceeds of crime, the property must have been in
    his possession or control at some point:
Dwyer,
at paras. 21, 24.
    He contends that the funds that went to third parties were never in his
    possession or control and, therefore, he cannot be held accountable for them
    from a forfeiture perspective. I disagree.

(iv)

Should the money that
    went to third parties have been excluded from the fine in lieu of forfeiture?

[98]

As previously reviewed, the appellant
    acknowledges that the money that he received from the complainants by way of
    cash, cheques made directly to him and cheques made to him in trust, should
    factor into the amount of fine in lieu of forfeiture. He disputes that the
    funds that went to third parties should form part of that calculus. Those funds
    travelled to third parties in two different ways.

[99]

First, at the appellants request, some
    complainants gave him cheques with the payee left blank. Although the
    complainants testified about the oddity of those requests, the appellant would
    always give them a reason that it had to be done that way. The appellant would
    later fill in the names of third parties and provide the cheques to those
    parties to be cashed. In some cases, those third parties were other
    complainants. When the complainants who provided the money received their cancelled
    cheques back, they would sometimes ask the appellant about the identity of the
    third party who had cashed their cheques. He would give them different answers.
    For instance, he would sometimes tell the concerned complainants that they had
    bought that third parties shares in a company.

[100]

Second, at the appellants request, the
    complainants would sometimes write cheques made out to third parties. Inquiries
    about why they needed to pay someone whom they did not know would spawn answers
    similar to the last, that the third party was someone who was interested in
    selling shares to the complainant.

[101]

In both cases, the benefit to the
    appellant was the same. The appellant had multiple balls in the air all at
    once. His initial fraudulent conduct led to the taking of money from
    unsuspecting friends, clients and acquaintances who thought that they were
    making investments. He deposited a lot of that money directly into his own
    personal bank account. To keep the scheme going for over eight years, he needed
    to keep the wolves at bay. When investors eventually became suspicious, he had
    to find money to pay them off. Through further fraudulent conduct, he would
    find new investors to do so. Those new unsuspecting investors would sometimes
    give the appellant blank cheques that would go to third parties and they would
    sometimes make those cheques out directly to the third parties.

[102]

This had elements of a Ponzi scheme,
    described by
Black's Law Dictionary
(10th ed., 2014), and cited
    approvingly by the British Columbia Court of Appeal, in
LLS America LLC
    (Trustee of) v. Dill
, 2018 BCCA 86, 8 B.C.L.R. (6th) 1, at para. 11, as:

A
    fraudulent investment scheme in which money contributed by later investors
    generates artificially high dividends for the original investors, whose example
    attract even larger investments. Money from the new investors is used directly
    to repay, or pay interest to old investors, usually without any operation or
    revenue-producing activity other than the continual raising of new funds. This
    scheme takes its name from Charles Ponzi, who in the late 1920's was convicted
    for fraudulent schemes he conducted in Boston.

The appellant did not
    necessarily pay dividends but that distinction is not material here. The core
    of the fraud was that the appellant was not actually investing the money on
    behalf of his clients. He was misappropriating it, and when certain clients
    became suspicious and demanded a return of their money, he effected this not
    through liquidating an actual investment (none existed), but by
    misappropriating more funds from more clients.

[103]

The appellant contends that he was
    never in possession or control of those third party monies and, therefore,
    should not be required to pay a fine in lieu of forfeiture when it comes to
    those funds. I disagree. The appellant was entirely in control. He was the
    directing mind of the fraud and of each individual payment. He controlled the writing
    of the blank cheques and redirecting them to pay his debt to third parties. He
    was also the one who was directing complainants to pay third parties. He took
    physical possession of the cheques and delivered them to the third parties. He
    did all of this under false pretences. He was in control of the transactions
    and the money was all the proceeds of crime as defined within s. 462.3. The
    appellant obtained an obvious benefit and advantage from that money that flowed
    to third parties, money that was obtained or derived directly or indirectly
    as a result of the Ponzi-type scheme.

[104]

The appellant wanted to keep the fraud
    alive as long as possible. The longer it went, the more he could benefit from
    it. The whole scheme would come crashing down if the earlier investors who had developed
    suspicions had made a complaint to the regulator or the police. The appellant
    needed to make good on those debts in order to keep things quiet. Who did he
    get to pay his debt? New complainants. What was his benefit? The continuation
    of his fraud, avoiding detection, and the ability to continue to take as much
    money as he could.

[105]

Nor should any of the individual
    payments be deducted from the fine in lieu of forfeiture on the basis that the
    appellant was defrauding one investor while making another whole. How the
    appellant decided to benefit from the proceeds of crime he controlled need not
    be the subject of the inquiry by the sentencing judge:
R. v. A.S.
, 2010
    ONCA 441, 258 C.C.C. (3d) 13, at para. 14. The amount of the fine is required
    to be equal to the value of the property which was possessed or controlled by
    the appellant, not the value of the benefit received by the appellant:
Lavigne
,
    at para. 34;
R. v. Piccinini
, 2015 ONCA 446, at paras. 18-19;
R. v.
    Siddiqi,
2015 ONCA 374, at para. 6.

[106]

Accordingly, I conclude that the fine
    in lieu of forfeiture must include the money that went to third parties. I
    agree with Crown counsels concessions regarding the minor errors made in
    calculating that amount by the trial Crown below. I find that the amount that
    should have been subject to forfeiture is $403,750.

[107]

This leaves the issue of whether the
    $72,000 paid to a complainant as a result of a civil judgment should be
    subtracted from the amount of the fine in lieu of forfeiture.

(v)

Should
    the fine in lieu of forfeiture be discounted from the total?

[108]

In this court, the appellant maintains
    that whatever the amount of fine in lieu of forfeiture, it should be decreased
    by $72,000. That is the amount that the appellant was ordered to pay to Mr.
    Dollenkamp after the appellant failed to defend against a civil action.

[109]

Crown counsel does not dispute that
    the payment was made, or that it was appropriately deducted from the amount of
    restitution the appellant was required to pay. Rather, Crown counsel maintains
    that the appellant should not be credited that amount toward an otherwise
    appropriate fine in lieu of forfeiture because he paid that money from funds
    that had been commingled with other complainants money. Specifically, the
    Crown maintains that a great deal of the money arising from the fraudulent
    scheme went directly into the appellants personal bank account that was being
    used to pay his mortgage. After the charges had been laid, the home where the
    appellant lived with his wife was transferred into her name and was then
    refinanced. During the sale, $72,000 of the proceeds was used to discharge a
    lien that had been secured by Mr. Dollenkamp to satisfy the judgment.

[110]

For the reasons given above, I would
    not reduce the fine in lieu of forfeiture. I defer to the trial judges finding
    of fact that the payment to Mr. Dollenkamp came from commingled funds. It was
    not the appellants money that paid Mr. Dollenkamp, but the commingled funds of
    complainants and other victims not before the court that furnished that
    payment.

[111]

In the context of this Ponzi-type
    scheme, the use of complainants funds to pay complainants does not reduce the
    amount of property that constitutes the proceeds of crime. While paying the
    civil judgment properly reduced the amount of restitution owing to Mr.
    Dollenkamp, the sentencing judge was right to conclude that it should not
    reduce the fine in lieu of forfeiture. The value of the property that was in
    control of the appellant is the value to be attached to the fine. In this case,
    that is $403,750.

E.

CONCLUSION

[112]

I would dismiss the conviction appeal.
    I would grant both parties leave to appeal sentence. I would dismiss the
    appellants sentence appeal, and grant the Crowns sentence appeal. I would
    impose a restitution order in the amount of $17,000 to be paid toward Peter
    Edwards. I would impose a fine of $403,750 in lieu of forfeiture. All payments
    toward that fine shall first go toward paying the restitution orders, until
    those orders are fulfilled. Like the trial judge, I would grant the appellant
    six years following the expiration of any term of imprisonment to pay the fine.
    In default of payment of the fine, I would impose a further term of
    imprisonment of three years, to be served consecutively to any other term of
    imprisonment the appellant may then be serving.

Released: MF Feb 13, 2019

Fairburn J.A.
I agree. S.E. Pepall J.A.
I agree. P. Lauwers J.A.





[1]

Section 462.37(1) has been amended to speak in terms of
    proceeds of crime obtained through the commission of the designated offence:
An
    Act to amend the Controlled Drugs and Substances Act and to make related
    amendments to other Acts
, S.C. 2017, c. 7, s. 59



[2]
Although the fine in lieu of forfeiture may be divided among co-accused, that
    is irrelevant in this case because the appellant stood alone:
R. v. Dieckmann
, 2017 ONCA 575, at para.
    99.


