



COURT OF APPEAL FOR ONTARIO

CITATION: R. v. Caporiccio, 2017 ONCA 742

DATE: 20170925

DOCKET: C61925

Laskin, Trotter and Fairburn JJ.A.

BETWEEN

Her Majesty the Queen

Respondent

and

David Caporiccio

Appellant

Peter Lindsay and Maleeka Mohamed, for the appellant

Rachel Young, for the respondent

Heard: September 11, 2017

On appeal from the convictions entered by Justice Nancy
    L. Backhouse of the Superior Court of Justice on December 18, 2015, and from
    the sentence imposed on May 11, 2016.

REASONS FOR DECISION


A.

Overview

[1]

The appellant was convicted in a judge alone trial of
    two counts of fraud over $5,000, each relating to small business loans obtained
under Industry Canadas Small Business Loan Program. Under this program,
    loans could only be obtained for specified expenditures relating to the
    purchase and improvement of real or leased property or equipment. Restricting
    the loans to tangible items that could be recovered in the event of default
    allowed banks and the government to limit their exposure.

[2]

It was not in dispute that the appellant was a professional loan broker
    and that he brokered loans for Megaplex Enterprises Inc. and Plava Consulting
    Inc. Nor was it in dispute that the stated purposes for which these loans were
    obtained was false. In fact, it was conceded that the loans were fraudulently
    obtained. The sole issue at trial was one of
mens rea
:

did the
    appellant knowingly participate in the frauds?

[3]

The trial judge found beyond a reasonable doubt that the appellant was
    guilty of fraud in relation to the Megaplex and Plava loans. She had a reasonable
    doubt as to whether the appellant was knowingly involved in a third fraudulent
    loan taken out by a company called Pro Sport, and entered an acquittal on that count.

[4]

The appellant appeals both his conviction and sentence. We have
    distilled his arguments into three alleged errors that he says require a new
    trial: (1) the trial judge misapprehended the evidence; (2) the trial judge
    erred in her credibility and reliability analysis; and (3) the trial judge
    reversed the burden of proof. The appellant also maintains that the trial judge
    erred in law when she imposed sentence. He seeks leave to appeal against the sentence
    imposed.

B.

Conviction Appeal

(1)


Misapprehension of the
    Evidence

[5]

The appellant argues that the trial judge
    misapprehended the evidence in two ways: (a) by finding that he was the
    recipient of $25,000 obtained from the Plava loan; and (b) by misconstruing the
    evidence of a witness.

[6]

In her reasons for judgment, the trial judge
    correctly summarizes the evidence regarding the movement of the Plava loan
    money. She specifically notes that while the proceeds from the loan went to companies
    associated with Mr. Sabato, a friend of the appellant who was his co-accused
    before pleading guilty, no funds were paid out during this period directly to
    Mr. Caporiccio or his companies.

[7]

Despite containing a proper summary of the evidence,
    the reasons for judgment later state that $25,000 of the Plava loan can be
    traced to the appellants company during the relevant period of time. This is
    incorrect. While the forensic accounting evidence suggests that within a month
    of loan proceeds going into a Sabato account, $25,000 was disbursed to the
    appellants company, this money was traceable to the Pro Sport loan  the count
    upon which the appellant was acquitted.

[8]

The appellant argues that this was a critical
    misstatement of fact that infected the trial judges entire set of reasons. He points
    to other locations in the reasons where he claims that the trial judge incorrectly
    found that he and Mr. Sabato took the proceeds of the loans. He emphasizes a
    passage where the trial judge called them major benefactors of these loans.

[9]

In order to succeed on this ground of appeal,
    the appellant must demonstrate that the trial judges misapprehension of
    evidence is more than peripheral to the reasoning process, in the sense that it
    is not simply part of the narrative: see
R. v. Lohrer
,

2004 SCC
    80, [2004] 3 S.C.R. 732, at para. 2. Only where the misapprehension plays an
    essential part in the reasoning process resulting in a conviction, can it be
    said that the verdict is not true, in the sense that it is not based
    exclusively on the evidence:
R. v. Morrissey

(1995), 22 O.R. (3d) 514, at p. 541.

[10]

While the trial judges misstatement of the
    evidence is material, it is not essential to the reasoning process resulting in
    conviction. The actual frauds were conceded in the sense that it was agreed
    that the loans were not obtained for the purposes laid out in the loan
    requirements. The loan registration forms themselves suggest that the loans
    were for the purchase or improvement of real property or immovable or leasehold
    improvements, and for financing leasehold improvements. Yet there was evidence
    that the Megaplex loan was actually for the purpose of paying for licensing rights
    to a soccer curriculum, and the Plava loan was largely for the purpose of expanding
    a concert promotion business.

[11]

The question for the trial judge was whether the
    appellant knew that the purpose of the loans did not meet the requirements as
    set out by the bank.

[12]

Read as a whole, the reasons for judgment make
    clear that this case was not about whether the appellant actually benefited
    from the fraudulent funds. The fraud was complete when the bank and government
    were put at economic risk. The trial judge found that, Mr. Caporiccio knew
    that these loans did not comply from the outset and yet he proceeded with them.
    There is no honest basis for such conduct.

[13]

Based on the conclusion that the appellant knew the
    loans he brokered did not comply with their stated purpose (a misrepresentation
    that was acted upon), it did not matter whether he ended up with money in hand.
    The bank and government were put at economic risk based upon the
    misrepresentation that the appellant  as the broker of the loan  was
    knowingly involved in. As such, the trial judges misstatement that the $25,000
    came from the Plava loan is not essential to the reasoning process that
    resulted in the appellants conviction on the Plava count.

[14]

In addition, while not essential to her finding
    of fraud, the trial judges characterization of the appellant as a major
    benefactor of the loans was a finding of fact that was available to her. This
    observation was not dependent on the misapprehension regarding the $25,000 or
    the forensic accounting evidence.

[15]

While there was no evidence that directly linked
    the appellant to the Megaplex and Plava loan money, there was other evidence
    upon which the trial judge could properly characterize the appellant as a
    major benefactor of the fraudulent scheme. There was evidence that the loan money
    flowed directly to Mr. Sabatos accounts. There was evidence that Mr. Sabato,
    who pled guilty prior to trial, was good friends with the appellant. There was
    evidence that the appellant moved his office into Mr. Sabatos home. There was
    evidence that a bank account belonging to Mr. Sabato disbursed money to one of
    the appellants companies during the relevant time for the Megaplex loan. And there
    was evidence that the appellant received commissions for his brokerage work
    from the owners of Plava and Megaplex.

[16]

In these circumstances, there was ample evidence
    upon which the trial judge could infer that the appellant was a major
    benefactor of the loans. Read in context, it cannot be said that she came to
    this conclusion only because she misapprehended the origin of the $25,000.

[17]

The appellant also argues that the trial judge
    misapprehended the evidence of a witness named Majit Khan. The owner of Plava
    testified that she discussed leasing a property from Mr. Khan. The appellant claims
    that the trial judge incorrectly summarized Mr. Khans evidence by stating that
    he testified that the owner of Plava had come to see him about leasing a
    property in the future for her business.

[18]

We have considered Mr. Khans evidence. While his
    evidence is not a model of clarity, considering it as a whole, it was open to
    the trial judge to summarize it in the manner she did. In particular, Mr. Khan testified
    in-chief that while the Plava owner did not ask to rent the property, she asked
    to see it and if she can use  in future. The trial judge did not
    misapprehend this evidence. If she did, it was peripheral to her reasoning
    process.

(2)

Credibility and Reliability Issues

[19]

The appellant raises concerns about the trial
    judges approach to the credibility and reliability of two key Crown witnesses:
    the owner of Megaplex and the owner of Plava. He argues that the trial judge
    erred in two ways in finding the loan applicants credible and reliable: (a) by
    bolstering their credibility through a finding that they had no motive to lie;
    and (b) by failing to deal with evidence that is said to have undermined their
    credibility.

[20]

The appellant argues that the trial judge erred
    by stating that the owners of Plava and Megaplex had no reason to be anything
    but honest in their evidence. He submits that the trial judge essentially
    reversed the burden of proof by requiring him to lead positive evidence of a
    motive to fabricate. The appellant maintains that the trial judge then used the
    absence of a motive to fabricate to support the credibility of the witnesses.

[21]

This issue must be considered in context. The only
    reason that the trial judge considered whether there was a motive to fabricate
    is that the appellant raised the issue in his closing submissions. He argued
    that the subject witnesses alleged he committed a fraud because when they
    defaulted on the loans they tried to lay the blame at his feet.

[22]

The reasons for judgment reflect nothing more
    than a response to the appellants submission on this point. The trial judge
    did not reverse the burden of proof when she rejected the suggestion of motive.
    It was open to her to reject that the witnesses had a motive to mislead. She
    gave a reason for coming to this conclusion. She did not then use her rejection
    of a motive to fabricate as evidence supporting the credibility of the
    witnesses.

[23]

The appellant also suggests that the trial judge
    erred by failing to specifically address evidence that undermined the credibility
    and reliability of the lead Crown witnesses. For instance, the appellant argues
    that the trial judge failed to consider important facts testified to by the
    owner of Megaplex. By way of example, he argues that the trial judge failed to
    deal with the witness acknowledgment that it was possible that he had been
    advised that there were limitations regarding what the loan could be used for.
    On this point, we note that the trial judge specifically adverted to the fact
    that the witness agreed in cross-examination that it was possible that when he
    began the application process, he understood there were certain limits on how the
    funds could be used.

[24]

As another example, the appellant claims that
    the trial judge failed to consider or give effect to the evidence that the
    owner of Megaplex picked up a large cheque made payable to one of Mr. Sabatos
    companies, yet could not recall this fact. Again, the trial judge essentially
    covered this off in her summary of the witness evidence when she recounted
    that he could not recall who the cheque was made payable to.

[25]

While the trial judge did not deal with every
    piece of evidence in the context of her credibility findings, she was not duty
    bound to do so. Credibility findings can be difficult to articulate with
    precision, particularly bearing in mind the complex intermingling of
    impressions that emerge after a full trial:
R. v. Gagnon
, 2006 SCC 17,

[2006] 1 S.C.R. 621, at para. 20; and
R. v. Dinardo
,

2008 SCC
    24, [2008] 1 S.C.R. 788, at para. 26. Making credibility findings does not
    involve science and attracts a high degree of deference: see
Gagnon
, at para. 20; and
R. v. Vuradin
,

2013 SCC 38, [2013] 2 S.C.R. 639, at
    para. 11.

[26]

No intervention is required here. The trial
    judge articulated why she accepted the evidence of the two main Crown witnesses.

[27]

Moreover, even if her reasons left out some
    evidentiary points that the appellant maintains should have been confronted
    head-on, it is important to recall that the focus of this case did not turn on
    the credibility of the owners of Megaplex and Plava.

[28]

While the appellant suggests that the Crown
    witnesses were complicit in the frauds and that the trial judge should have come
    to this conclusion, this would not have afforded him a defence. Whether the
    borrowers were complicit in the frauds or not, the question for the trial judge
    was whether the appellant knew that the purpose of the loans was being
    misrepresented when he brokered them. He was an experienced broker. He knew
    what small business loans could be obtained for and, conversely, what they
    could not be obtained for. It is on this basis that the trial judge concluded that
    he was knowingly involved in the frauds. This knowledge was squarely fixed in
    the documents contemporaneously produced at the time the loan applications were
    made.

(3)

The Burden of Proof

[29]

The appellant suggests that the trial judge
    reversed the burden of proof. He objects to various passages in the reasons
    where he claims it is clear that the trial judge required him to provide
    positive evidence of his innocence. We do not agree.

[30]

While on a few occasions the trial judge references
    the fact that there was no evidence to the contrary, taken in context this
    expression does not reveal a reversal of the burden of proof. At no time does
    the trial judge suggest that she accepts evidence
because
there was no evidence to the contrary. Instead, in using the
    impugned expression, she is simply signaling that there was no evidence
    contradicting certain pieces of evidence that she accepted as true. There was
    nothing wrong with making this observation.

[31]

The appellant also claims that the trial judge
    erred by noting the absence of evidence supporting the appellants position
    that the monies Mr. Sabato paid to the appellants companies were extraneous to
    the fraudulent loans. The trial judge was not bound to find that the money disbursed
    to the appellant by Mr. Sabato was clean money. Her observation that there
    was no evidence supporting the defence suggestion that the monies were
    extraneous to the fraud is true; there was no such evidence. There was nothing
    wrong with her saying this. She did not reverse the burden by making this
    observation.

[32]

Finally, the trial judge acquitted the appellant
    on the Pro Sport count. This acquittal provides further assurance that she was
    well aware of who held the burden and did not place an improper obligation on
    the appellant.

C.

Sentence Appeal

[33]

The appellant received a 90-day intermittent
    sentence on the Megaplex count, followed by a consecutive 12-month conditional
    sentence on the Plava count. Given the intermittent nature of the 90 days, she
    also imposed a term of probation. The parties agreed upon a restitution order
    in the amount of $31,500.

[34]

The appellant seeks leave to appeal his sentence
    on the basis that the trial judge erred with respect to the principle of
    parity. The appellant claims that since the offences were so similar, parity
    demanded that a 12-month conditional sentence be imposed on both counts.

[35]

We do not agree with this submission. The
    principle of parity, governed by s. 718.2(b) of the
Criminal Code,
speaks to sentences imposed on similar offenders for similar
    offences in similar circumstances. This case does not require consideration
    of similar offenders for similar crimes, but rather the same offender for
    similar crimes. In arriving at an appropriate overall disposition for this
    offender, the trial judge was not precluded from imposing different types of sentences
    for the crimes committed.

[36]

Sentencing is a highly individualized
    exercise and one that is owed deference:
R. v. Lacasse
,

2015 SCC 64,
    [2015] 3 S.C.R. 1089, at paras. 58-59. We see no error in principle or in the
    actual sentence imposed. We defer to the trial judge.

D.

Conclusion

[37]

The conviction appeal is dismissed. Although we
    grant leave to appeal the sentence, the sentence appeal is dismissed.

John Laskin J.A.

G.T. Trotter
    J.A.

Fairburn J.A.


