



COURT OF APPEAL FOR ONTARIO

CITATION: R. v. Erez, 2019 ONCA 204

DATE: 20190314

DOCKET: C64068

Watt, Huscroft and Roberts JJ.A.

BETWEEN

Her Majesty the Queen

Respondent

and

Tzvi Erez

Appellant

Gregory Lafontaine and
    Ricardo Golec, for the appellant

Jennifer A.Y Trehearne, for the respondent

Heard: January 31, 2019

On appeal from the judgment
    of Justice John B. McMahon of the Superior Court of Justice, dated May 23, 2017
    and the sentence imposed on July 24, 2017.

Reasons for Decision

[1]

After an unsuccessful application to stay proceedings for unreasonable
    delay, the appellant, who was represented by counsel, pleaded guilty to 12
    counts of fraud. The sentence imposed included:

i.

imprisonment in a federal penitentiary for a period of eight years, less
    credit for time spent on restrictive terms of release;

ii.

a free-standing restitution order in respect of each complainant
    amounting to a total of $6,261,632; and

iii.

a fine of $6,261,632 in lieu of forfeiture, payable within ten years of
    his release from custody, with an additional period of imprisonment of seven
    years for non-payment.

[2]

The appellant appeals both conviction and sentence.

[3]

At the conclusion of argument, we dismissed both appeals. We promised
    that we would provide reasons for our decision. Those reasons follow.

THE APPEAL FROM CONVICTION

[4]

On the appeal from conviction, the appellant advances two arguments. He
    says that:

i.

the plea judge erred in failing to strike his plea of guilty; and

ii.

the motion judge erred in failing to stay proceedings for a breach of s.
    11(b) of the
Charter
.

Ground #1: Striking the Guilty Plea

[5]

Some brief background is essential to an understanding of this ground of
    appeal and our disposition of it.

The Essential Background

[6]

The appellant was originally charged in an information that contained 26
    counts of fraud. He was ordered to stand trial after a brief preliminary
    inquiry.

The Section 11(b) Application

[7]

At the outset of trial proceedings in the Superior Court of Justice, the
    appellant sought to have the proceedings stayed on account of a breach of s.
    11(b) of the
Charter
. He was represented, as he had been throughout,
    by very experienced senior criminal counsel.

[8]

After several days of submissions, the motion judge
[1]
dismissed the motion and declined to stay the proceedings for unreasonable delay.

The Trial Proceedings

[9]

On the day following dismissal of the s. 11(b) application, the
    appellants trial began. That evening, the Crown provided some further
    disclosure to trial counsel. This consisted of copies of electronic
    communications from the appellant. Its effect was devastating to the single
    defence available to the appellant  that the complainants did not rely on his
    deceitful representations to part with their money.

[10]

The
    appellant also provided additional material to his counsel. But this material
    was of no assistance because it tended to confirm that the evidence on which
    the appellant had planned to rely in his defence had in fact been altered from
    its original state to support that claim.

The Resolution Discussions

[11]

After
    receipt of the additional disclosure, the appellant met with counsel to discuss
    its impact on the future course of trial proceedings. The thin reed of defence
    available to counsel had been dealt a fatal blow.

[12]

The
    appellant instructed his counsel to open resolution discussions with the Crown.
    These instructions were memorialized in a written direction provided to
    counsel.

[13]

Trial
    counsel and the Crown appeared before another judge of the Superior Court of
    Justice to discuss resolution and its terms. They reached an agreement about
    disposition.

The Guilty Pleas

[14]

When
    arraigned on a fresh indictment containing the substance of the counts
    contained in the original indictment but reduced in number to 12, the appellant
    pleaded guilty to each count.

[15]

The
    plea judge confirmed with trial counsel that he (trial counsel) had conducted
    a full and extensive plea inquiry of the appellant. The plea judge conducted
    a further inquiry before proceeding with the arraignment and the formal entry
    of the pleas of guilty.

[16]

At
    the joint request of counsel, the plea judge adjourned sentencing proceedings
    for about five months to enable counsel to determine the amounts to be proposed
    in a free-standing restitution order.

The Death of Trial Counsel

[17]

Prior
    to the conclusion of discussions about restitution, senior counsel who had
    represented the appellate throughout the proceedings passed away.

The Motion to Strike the Guilty Plea

[18]

The
    appellant retained new counsel.

[19]

About
    18 months after the pleas of guilty had been entered and 12 months after the
    death of his former counsel, the appellant applied to the plea judge to set
    aside his guilty pleas on the ground that they were involuntary and uninformed
    due to the intolerable pressure applied and inadequate advice given by former counsel.

The Judges Decision

[20]

The
    plea judge dismissed the application.

[21]

In
    his lengthy reasons, the plea judge said he was satisfied that the appellants
    pleas of guilty were not uninformed or involuntary. No miscarriage of justice
    had occurred as a result of their entry.

[22]

The
    reasons of the plea judge included several findings of fact based on the
    conflicting evidence given on the application. Among those findings of fact
    were lengthy reasons explaining why the judge rejected, as unworthy of belief,
    the testimony of the appellant. In the end, the plea judge was satisfied not
    only on a balance of probabilities, but also beyond a reasonable doubt that the
    appellants pleas of guilty were at once voluntary and informed and that no
    miscarriage of justice had occurred.

The Arguments on Appeal

[23]

In
    this court, the appellant acknowledges that the plea judge correctly set out
    the essential elements of a valid guilty plea as well as the test applicable
    when an accused seeks to set aside that plea. The appellant also accepts that a
    reviewing court affords significant deference to findings of fact made on
    controverted evidence in courts of first instance.

[24]

In
    this case, the appellant says we should not afford deference to the plea
    judges findings of fact. This is so, he contends, because the judge
    misapprehended the evidence of a crucial defence witness and failed to
    appreciate its destructive effect on the evidence of another lawyer in trial
    counsels office upon which the trial judge relied in ultimately finding the appellants
    guilty plea voluntary.

[25]

To
    fortify this claim of error, the appellant seeks leave to introduce as fresh
    evidence an affidavit of the appellants sister to which her cellphone records
    were attached. This evidence is proffered ultimately to support the argument
    that the appellants guilty pleas were involuntary because of the unbearable
    pressure exerted upon him by trial counsel to plead guilty. The route it
    follows to this ultimate destination is that the proposed evidence confirms the
    appellants account of two meetings that fateful day rather than one as
    described by the lawyer in the office of trial counsel who participated in the
    discussions and gave evidence on the application.

[26]

The
    respondent resists the claim that the plea judge misapprehended the evidence
    adduced on the application to set aside the pleas of guilty and thus erred in
    the ultimate conclusion he reached. The plea judge was very much alive to
    different recollections about the meeting. He made specific findings that
    counsels recollection about the timing or sequence of meetings may have been
    erroneous. But the judge also found that this inconsistency did not afford any
    reason to reject the core of associate counsels evidence which was that no
    pressure was applied to induce the appellants plea.

[27]

The
    respondent also opposes the application to introduce the proposed fresh
    evidence on the grounds that it fails to meet the cogency requirement and also
    cannot survive the due diligence test. The evidence does not bear upon a
    decisive or potentially decisive issue. Further, it is not reasonably capable
    of belief since it does not confirm that the calls to which the deponent refers
    were actually incoming calls from the appellants phone as he claimed. In the
    end, the proposed evidence founders as a result of its dependency on the
    veracity of the appellants assertions for its cogency. The plea judge provided
    persuasive reasons for rejecting the appellants testimony, none of which is
    compromised by the fresh evidence.

Analysis

[28]

We
    are not persuaded that there is any basis upon which the appellants pleas of
    guilty should or even could be set aside.

[29]

The
    plea judge confirmed with very senior criminal counsel who had represented the appellant throughout that he (counsel) had conducted a plea inquiry with the appellant. Counsel described that inquiry as "a full and extensive review", a characterization confirmed by the lengthy direction given and signed by the appellant the day before the plea was entered. The plea judge then conducted his own plea inquiry which included the following:

THE COURT: All right. Also, what is very important, sir, is that a person plead guilty voluntarily. You cannot plead guilty because you are being pressured by your family, your friends, your lawyer, the police, the Crown Attorney, or the court. Is anyone pressuring you to plead guilty to these charges?

THE ACCUSED: No, sir.

THE COURT: All right. Are you doing so voluntarily?

THE ACCUSED: Yes.

[30]

A
    review of the extensive reasons of the plea judge for refusing to set aside the
    guilty pleas as involuntary makes it clear that his core finding that the
    appellants plea was voluntary was not contaminated by any misapprehension of
    evidence. The judge was well aware of the disparity in recollection about the
    sequence of the meetings between the appellant and associate counsel. But
    whether the appellants pleas were voluntary was not determined by whether
    there was one seamless meeting as described by associate counsel or two
    meetings separated by an
inter

regnum
as described by
    the appellant. The long and the short of it was, and is, that the plea judge,
    for clearly articulated and sound reasons, did not believe the appellants
    claim that he was pressured into pleading guilty. Even if the fresh evidence
    were admissible, a conclusion we would not reach, this finding is unassailable.

Ground #2: The Section 11(b) Issue

[31]

The
    appellant accepts that if he is unsuccessful in setting aside the guilty pleas,
    he is foreclosed from advancing this ground of appeal on the basis of the prior
    decisions of this court in
R. v. Fegan
(1993), 80 C.C.C. (3d) 356
    (Ont. C.A.), at p. 360;
R. v.

Faulkner
, 2018 ONCA 174,
    at para. 99. This concession is at once proper and puts paid to his claim of
    error on this ground.

[32]

In
    the result, the appeal from conviction was dismissed.

THE APPEAL FROM SENTENCE

[33]

With
    respect to the plea judges decision on the
Gardiner
hearing, the
    appellant submits that the trial judge misapprehended the totality of the
    evidence and committed palpable and overriding errors in giving little weight
    to the reports of the defence expert, Mr. Ken Froese, concerning the losses
    suffered by the victims of the appellants fraud.

[34]

We
    do not accept these submissions.

[35]

As
    with any witness, it was open to the plea judge to accept some, all or none of any
    experts evidence. While he found both Ms. Patricia Harris and Mr. Froese to be
    professional and credible, the plea judge discounted Mr. Froeses opinion that
    the losses only amount to a few hundred thousand dollars because its validity
    depended on unreliable photocopied source documents provided by the appellant. The
    plea judge reasonably gave little weight to these unsourced documents based on
    the history of the appellants use of sophisticated fraudulent photocopies. The
    plea judge preferred the opinion of the Crowns expert, Ms. Harris, which was
    based on reliable bank statements and the receivership report. As the plea judge
    explained:

Mr. Froese, on the other hand, relies to a great extent on
    unsourced, unproven photocopies of bank records and purported e-mails. There
    are no books to examine. Mr. Erez kept no books, or at least there were none
    provided. The banking records produced by the bank are helpful as source
    information. It is for these reasons it is important to see how these source
    documents fit or do not fit with the rest of the evidence.

[36]

In
    careful and thorough reasons, the plea judge found that the unsourced documents
    provided by the appellant were also inconsistent with a debt chart that the
    appellant had earlier created, the conclusions of Mr. Froese based on bank
    statements and other reliable documents, FINTRAC reports, and the evidence of
    the victims defrauded by the appellant.

[37]

We
    see no error in the plea judges findings that are amply supported by the
    evidence and entitled to deference.

[38]

The
    appellant submits that the plea judge erred in failing to reduce the total
    losses by the amount of brokerage fees paid by the appellant to secure the
    loans from the victims, and by the loans carrying criminal interest rates.

[39]

We
    agree with the plea judges conclusion that the appellant is responsible for
    all the losses caused by his fraudulent scheme. That he may not have benefitted
    from all the monies advanced under the loans because he chose to pay out
    brokerage fees does not affect his liability to his victims for the total
    amounts of the loans that he fraudulently induced them to make. Similarly, the
    fact that some of the loans contained criminal interest rates does not affect
    the appellants responsibility for the principal amount of those loans.

[40]

The
    appellant similarly argues that the plea judge erred in imposing a fine in lieu
    of forfeiture because he was not in possession of a large portion of the
    fraudulently obtained monies that were paid out in brokerage fees or because
    others contributed to the losses of over $6 million. The appellant also
    complains of the fines potential injustice to him because any income he makes
    would be taken by the Receiver to pay back lenders before it could be used to
    pay any restitution order or fine.

[41]

We
    do not accept these submissions.

[42]

First,
    as we earlier stated, the appellant is responsible for all the losses that his
    fraud engendered. That he was, but is no longer, in control of the monies does
    not preclude a fine in lieu of forfeiture, as provided for in s. 462.37(3) of
    the
Code
.

[43]

Second,
    there is no injustice to the appellant. Under s. 741(1) of the
Code
,
    an unpaid restitution order is enforced as a civil judgment. Sections 69.3(1),
    69.3(1.1) and 69.4 of the
Bankruptcy and Insolvency Act
, R.S.C., 1985,
    c. B-3, provide that the consent of the Bankruptcy Court is required before the
    execution of a restitution order can proceed. Moreover, the plea judge ordered
    that the restitution order take priority over the fine in lieu of forfeiture so
    that any monies paid towards the restitution order will be equally credited to
    reduce the fine.

[44]

Finally,
    the appellant submits that the sentence imposed was unduly harsh because the plea
    judge placed an undue emphasis on the appellants lack of remorse because of
    his unsuccessful application to strike his guilty plea, the appellant was the
    alleged dupe of unscrupulous brokers and loan-sharking lenders, and the
    sentence was not in parity with other decisions.

[45]

We
    disagree.

[46]

As
    the plea judge found, there were few mitigating but significant aggravating
    factors. For considerable personal monetary gain, over several years, the
    appellant masterminded and carried out through a corporation created for the
    fraud a large-scale, sophisticated Ponzi-like scheme involving numerous
    victims. He perpetuated and concealed the fraud by paying monies from one
    lender to another. He used several millions of the fraudulently-procured monies
    to pay gambling debts. The losses of over $6 million constituted an aggravating
    factor under s. s. 380.1(1.1) of the
Code
. The impact on the fraud was
    devastating. Most aggravating, (which distinguished this case from others cited
    to by the appellant, like
R. v. Drabinsky
, 2011 ONCA 582), is that the
    appellant had a prior criminal record for fraud-related offences committed in
    relation to his gambling debts; and he committed the bulk of the present
    fraudulent transactions when he was either serving a conditional sentence for
    the previous forgeries or on probation for them. The plea judge did not
    consider the appellants lack of remorse and application to strike his guilty plea
    as aggravating factors. Rather, the plea judge properly determined that the
    appellants lack of remorse attenuated the full mitigating effect of his guilty
    plea.

[47]

As
    a result, there was no error in the plea judges determination that the
    appropriate sentence in the circumstances of this case was at the top of the
    sentencing range.

[48]

For
    these reasons, the appeal from sentence was dismissed.

David Watt J.A.

Grant Huscroft J.A.

L.B. Roberts J.A.





[1]
This judge, who was to preside over the
    trial of the appellant, declared a mistrial at the request of counsel after
    counsel had attended before another judge (the plea judge) to pursue resolution
    discussions.


