What is the sentence for white-collar crime?

What is the sentence for white-collar crime?

The court weighs many factors when deciding the sentence in a white-collar crime, which includes securities fraud, embezzlement, tax evasion and money laundering. While the Criminal Code spells out maximums (two years less a day and a $5,000 fine for fraud below $5,000 and a maximum of 14 years in prison for fraud above $5,000), in almost every white-collar crime the Crown will be seeking a sentence that includes incarceration. That is because courts want to show they are taking financial crimes seriously and the prospect of incarceration can deter others from similar actions.

Tax evasion is taken seriously

According to information from the Canadian Revenue Agency (CRA), 408 individuals and businesses were convicted of tax evasion involving approximately $122 million from April 1, 2012 to March 31, 2017. The sentences handed down for those crimes totalled $44 million in court fines and 3,103 months behind bars.

During that same period, the CRA states, 75 tax scheme promoters from across Canada were convicted of tax offences, resulting in $7.15 million in court-imposed fines and a total of 936 months of incarceration.

In addition, more than 80 investigators from the CRA and the United Kingdom’s tax authority executed searches in both countries as part of an ongoing investigation of an alleged carousel tax fraud scheme against the government.

The CRA document also notes that “being convicted of tax evasion can also lead to fingerprinting, court-imposed fines, jail time, and a criminal record. When taxpayers are convicted of tax evasion, they must still repay the full amount of taxes owing, plus interest and any civil penalties assessed by the CRA. In addition, the courts may fine them up to 200% of the taxes evaded and impose a jail term of up to five years.”

Government cracks down on white-collar crime

In 2011 the Standing up for Victims of White Collar Crime Act came into force in Canada. According to a federal statement, it amended the Code to:

• provide a mandatory minimum sentence of imprisonment for a term of two years for fraud with a value that exceeds $1 million;

• provide additional aggravating factors for sentencing;

• create a discretionary prohibition order for offenders convicted of fraud to prevent them from having authority over the money or real property of others;

• require consideration of restitution for victims of fraud; and

• clarify that the sentencing court may consider community impact statements from a community that has been harmed by the fraud.

According to information from the attorney general’s office, the legislation requires judges to consider imposing a restitution order, meaning those convicted of fraud would have to repay their victims. It also permits the court to prohibit the offender from taking employment or doing volunteer work involving authority over other people's money.

The principles of sentencing

Section 718 of the Code deals with the purposes and principles of sentencing. As it notes: “The fundamental purpose of sentencing is to contribute, along with crime prevention initiatives, to respect for the law and the maintenance of a just, peaceful and safe society by imposing just sanctions that have one or more of the following objectives:

• to denounce unlawful conduct;

• to deter the offender and other persons from committing offences;

• to separate offenders from society, where necessary;

• to assist in rehabilitating offenders;

• to provide reparations for harm done to victims or to the community; and

• to promote a sense of responsibility in offenders, and acknowledgment of the harm done to victims and to the community.

The Code notes that a “sentence must be proportionate to the gravity of the offence and the degree of responsibility of the offender, and the judge must take into account both mitigating and aggravating circumstances related to the offence.” Sentences must also be “similar to sentences imposed on similar offenders for similar offences committed in similar circumstances.”

Remediation agreements

In 2018, the federal government amended the Code to create a new tool called a remediation or deferred prosecution agreement. According to a Department of Justice (DOJ) news release, “prosecutors would be able to use this tool at their discretion to address specified economic crimes if they consider it to be in the public interest and appropriate in the circumstances.”

A remediation agreement is described as a “voluntary agreement between a prosecutor and an organization accused of committing an offence.” A judge must confirm that the agreement is in the public interest and that its terms are “fair, reasonable and proportionate.”

To enter into this agreement, the corporation or individual must first accept responsibility and “relinquish any benefit gained from the wrongdoing.” They also have to pay a financial penalty and make reparations to victims “as appropriate.” If they comply with the agreement, charges could then be stayed and no criminal conviction would result.

According to the DOJ document, the main purposes of a remediation agreement is to:

• To denounce an organization’s wrongdoing and the harms that such wrongdoing has caused to victims or to the community.
• To hold the organization accountable for the wrongdoing.
• To require the organization to put measures in place to correct the problem and prevent similar problems in the future.
• To reduce harm that a criminal conviction of an organization could have for employees, shareholders and other third parties who did not take part in the offence.
• To help repair harm done to victims or to the community, including through reparations and restitution.

Rehabilitation is part of sentencing

A 2015 Supreme Court of Canada (SCC) judgment offered its view on what the court tries to achieve when it hands down a sentence in a criminal trial.

“Sentencing remains one of the most delicate stages of the criminal justice process in Canada … the credibility of the criminal justice system in the eyes of the public depends on the fitness of sentences imposed on offenders. A sentence that is unfit, whether because it is too harsh or too lenient, could cause the public to question the credibility of the system in light of its objectives.”

The judgment continues, “One of the main objectives of Canadian criminal law is the rehabilitation of offenders. Rehabilitation is one of the fundamental moral values that distinguish Canadian society from the societies of many other nations in the world, and it helps the courts impose sentences that are just and appropriate.”

An important change with conditional sentences

People convicted of serious white-collar crimes are usually given lengthy prison sentences and they have not been eligible for conditional sentences such as house arrest. A DOJ document explains that’s because the Code states that conditional sentences are not available to those convicted of an offence “punishable by a maximum term of imprisonment of 14 years or life imprisonment.”

However, that legislation was upended by a 2020 Ontario Court of Appeal decision, which saw an indigenous woman convicted of smuggling cocaine given a conditional sentence instead of the 17 months in jail handed down by the lower court.

Her lawyer argued that the sections of the Code that make conditional sentences unavailable for indictable offences where the maximum penalty is 14 years or more are arbitrary and overbroad. The appeal court agreed and gave her a conditional sentence to be served at home.

The judgment included this passage from a 1999 SCC judgment: “[O]ne of the unique circumstances of aboriginal offenders is that community-based sanctions coincide with the aboriginal concept of sentencing and the needs of aboriginal people and communities. It is often the case that neither aboriginal offenders nor their communities are well served by incarcerating offenders, particularly for less serious or non-violent offences. Where these sanctions are reasonable in the circumstances, they should be implemented. In all instances, it is appropriate to attempt to craft the sentencing process and the sanctions imposed in accordance with the aboriginal perspective.”

Pandemic one reason for conditional sentence

A Burnaby woman with a history of securities fraud was sentenced to a year of probation after defying a lifetime ban on trading in B.C.'s capital markets, according to a CBC story.

In 2017, a B.C. Securities Commission panel found that she had committed fraud by raising about US $3.2 million from investors for a manufacturing company that had been the subject of a cease trade order since 2009, the story states.

She breached her ban on trading not long after it was issued, the story adds, when two victims of the scam demanded she return their investments.

After citing “the COVID-19 pandemic and the non-violent nature of [her] offence,” the judge sentenced her to probation and 90 days of house arrest and she and a partner were ordered to pay administrative penalties of US$2.42 million, the story states.

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