Justice Committee on Nov. 18th, 2009

[The Chair, Conservative, Ed Fast]

I call the meeting to order.

Today is meeting number 48 of the Standing Committee on Justice and Human Rights. It's Wednesday, November 19, 2009, and I note that today's meeting with the minister is being televised.

You have before you the agenda for today. First, we have the Honourable Rob Nicholson with us to open our review of Bill C-52. During the second hour, we have with us Shirish P. Chotalia, the government's order-in-council appointee as chair of the Canadian Human Rights Tribunal.

At the end of today's meeting we'll leave a little time for an in camera meeting to discuss adoption of a steering committee report for our work plan going forward.

Once again, a reminder to turn off your BlackBerrys or switch them to vibrate, and if you do have to take calls, please take them outside of this room. Thank you.

By order of reference, we are now considering Bill C-52, an act to amend the Criminal Code on sentencing for fraud. To help us with our review of this bill, we have with us the Honourable Rob Nicholson.

Welcome back, Minister. I understand you have some support with you: Catherine Kane--welcome back--as well as Joanne Klineberg.

Minister, you have ten minutes for presentation, and then we'll open the floor to questions.

[The Honourable Rob Nicholson, Conservative, Rob Nicholson]

Thank you very much, Mr. Chair.

The short title of this was just pointed out to me. You can refer to it as the Retribution on Behalf of Victims of White Collar Crime Act. It's also known as Bill C-52. This enhances the sentencing provisions for fraud, in particular white collar crime.

The Criminal Code already criminalizes a vast array of what could be called white collar crime, such as bribery, credit card fraud, and forgery, and with the passage of Bill S-4, identity theft, Mr. Chairman. I'm glad to get that one passed. That's an important contribution in this area.

The offence of fraud is the most important offence in our arsenal against white collar crime. Fraud consists of two elements: deception or dishonesty, coupled with an actual loss of money or other items of economic value or merely the risk of such loss. So you can see the breadth and flexibility of this offence is adequate to capture security-related frauds like accounting frauds that overstate the value of securities issuers to shareholders and investors, misstatements about the state of the company, or Ponzi schemes of this sort, which has attracted so much attention recently in the United States and Canada.

The fraud offence is also an effective weapon against other kinds of fraud, such as mass-marketing fraud, real estate or title fraud, home renovation fraud, health care fraud, or other kinds of insurance fraud, tax evasion, and old scams now perpetrated with new technologies.

For too long I believe our justice system has not focused enough on the scam artists who take advantage of the trust of others. With the global economic downturn, as I indicated, massive Ponzi schemes have been revealed. I think that underlines the point we've made here and in the House of Commons and to the public at large that we must send a new, stronger message in this area.

The government has a comprehensive plan for sending that message. As members of the committee, you are all aware that the key aspect of the government's response is Bill C-53, which eliminates accelerated parole under the Corrections and Conditional Release Act. This is the responsibility of the Minister of Public Safety, but of course it is a legislative initiative I strongly support.

Another piece of our plan is Bill C-42, which will put an end to conditional sentences for fraudsters, among others.

Let me return to Bill C-52, the Retribution on Behalf of Victims of White Collar Crime Act. To improve the law quickly the government wanted this piece of legislation to be entirely focused. For this reason, the various sentencing measures in this bill are targeted at fraud offenders specifically. The current maximum penalty is 14 years imprisonment, the highest maximum in the code short of life. The maximum sentence is adequate, but we believe that more can be done to ensure that sentences reflect the devastation caused by fraud.

The first amendment in Bill C-52 is a mandatory penalty for fraud in excess of $1 million. Fraud over $1 million is currently a statutory aggravating factor. This bill will convert that aggravating factor into a circumstance that results automatically in a mandatory penalty of at least two years in prison. Any fraud or series of frauds that result in the loss of more than $1 million must necessarily have been the result of a complex, well-organized, well-planned scheme and quite likely supported by additional crimes, like forgery. Any fraud that rises to this level of loss must be considered serious.

Many frauds, as we know, are larger than this, so it's important to be clear that two years is the floor, not the ceiling. The actual sentence imposed for a larger fraud will obviously reflect all the additional blame for the elements of that fraud, many of which are captured by existing aggravating factors under section 380.1 of the code. This bill will supplement those aggravating factors with new ones if the duration, complexity, magnitude, or degree of the planning was significant; if the offence had a significant impact on the victim, given their personal circumstances; if the offender failed to comply with applicable regulatory or licensing regimes; or if the offender concealed or destroyed relevant records.

All of these factors highlight, in one way or another, conduct or results that are completely unacceptable to Canadians. The new aggravating factors, in conjunction with the existing ones, will be applied by sentencing courts to arrive at a just sentence on the particular facts of each case.

Another new measure is the introduction of a prohibition order that can be part of the sentence. The Criminal Code has several prohibition orders in place that are designed to help prevent offenders from reoffending. One such example is the order that is often made against a person convicted of a number of child sexual offences. The order, for instance, could prohibit them from, among other things, working in schools or other places where they would be in a position of trust or authority over young people.

Along the same lines, this bill will enable the court to order that the convicted offender be prohibited from having control over or authority over another person's money or real or valuable securities--up to life. Breaching this prohibition order will itself be an offence.

Other aspects of Bill C-52 focus on improving the responsiveness of the justice system to the needs of victims. It contains provisions designed to encourage the use of restitution orders in fraud cases. The Criminal Code currently enables judges to order offenders to pay restitution to victims in appropriate circumstances. Restitution may be ordered to help cover monetary losses incurred by victims, among other things as a result of the loss of property caused by a crime. Bill C-52 would require judges to consider restitution in all cases in which an offender is found guilty of fraud. If a judge decides not to make a restitution order, he or she would have to give reasons for declining to do so.

The bill would require a judge, before imposing a sentence on an offender, to inquire of the crown whether reasonable steps had been taken to provide victims with an opportunity to indicate whether they are seeking restitution. This is designed to ensure that sentencing does not take place before victims have had a chance to indicate that they would like to seek restitution from the offender, as well as allow time for victims to establish their monetary losses.

The bill contains provisions aimed at encouraging courts to consider the impact that fraud can have, not only on individuals but also on groups and communities. The Criminal Code currently requires courts, when sentencing an offender, to consider a victim impact statement describing the harm done to or the loss suffered by a victim of the offence. Canadian courts have already in previous cases considered impact statements made on behalf of a community.

This bill would explicitly allow courts to consider a statement by a person on a community's behalf describing the harm done to or the losses suffered by the community when imposing a sentence on an offender found guilty of fraud. A community impact statement would allow a community to express publicly, and to the offender directly, the loss or harm that has been suffered in order to allow the community to begin a rebuilding and healing process.

Mr. Chairman, those are the major elements of this bill. I look forward to the speedy passage of this important piece of legislation.

Thank you.

[The Chair, Conservative, Ed Fast]

Thank you, Minister.

We'll move to Mr. Murphy, for seven minutes.

[Brian Murphy, Liberal, Moncton—Riverview—Dieppe, NB]

Thank you, Mr. Chair.

Thank you, Mr. Minister, for appearing again.

I want to say, first of all, that form 34.1 is an excellent idea. I think all of us who have had some experience in listening to or hearing about cases before provincial courts know that in some cases the issue of an ask for restitution is missed. It's a very good housekeeping item. I know that most competent prosecutors and provincial court judges and police forces don't miss them, but it's a very good housekeeping measure, I would say.

I do want to ask you two questions about this bill, Mr. Minister. One is based on what must be a difficult job for a judge, in certain circumstances involving what we're now calling white collar crime, to grapple with. The second question can only be posed to you in the House because you've had such a long history in justice issues.

The first question comes from the Red Deer Advocate. It's a very difficult case involving a 49-year-old woman who stole more than $5,000 from her company. In sentencing, the judge was really between a rock and a hard spot because that woman was a single mother and caregiver of foster children, and the need to put her away had to be balanced with respect to community interests. At the time I had this article I don't know what the judge did, but I want you to comment on the hard case that this presents for a judge in a case where there is white collar crime and where prosecutors are making statements in court that white collar crime has a major impact on our society, and the federal government wants to introduce legislation to enhance penalties for white collar criminals.

I want to be sure from you, Mr. Minister, that judges won't be handcuffed when looking at cases of where to put a person like this—this 49-year-old single mother—in prison, and won't necessarily be goaded towards that.

The second question, then, is about your experience in 1992, if you can remember back that far. I, of course, was just a young lawyer. You were involved with Mr. Mulroney's government at that time when they adopted early day parole in cases involving people who had been involved in fraud for the same sections of the code we're dealing with. At the same time, that government moved towards being tougher with violent offenders. The point of the article here is that there has been a move away from that because this was all before Madoff, before Lacroix, and there has been recognition from all sides of the House, I think, that white collar crime at the higher level needs to be recognized with tougher sentences. What I'm saying is, do you recognize in the criminal justice issues that governments as astute and strong as Mr. Mulroney's in 1992 moved away from being tough on criminals, recognizing that there has to be a balance as to what is more prevalent in the day? In that time, white collar crime was not a priority, would you say?

So there are two questions.

[Rob Nicholson, Conservative, Niagara Falls, ON]

With respect to your first question, I never comment on specific cases. I don't know if this matter is up for appeal or what the sentence was.

The job that we have as legislators, members of the House of Commons and Senate, is to give guidance on the seriousness with which we view certain kinds of conduct. In this particular piece of legislation, we're talking about fraud in excess of a million dollars. Generally, when there is fraud in excess of a million dollars, we are talking about a sophisticated operation that has gone about the business of fleecing individuals or communities and making victims of innocent Canadians.

Are we giving the appropriate guidance to the courts? I have no doubt that we are living up to our responsibilities. For this kind of activity, we now have the most serious maximum penalty, short of life, under the Criminal Code. I think we're sending out the right message. We're saying that we'll start with two years imprisonment for people who are committing millions of dollars worth of fraud and fleecing individuals, making victims of poor innocent Canadians. They can build from there.

I'm also pleased about the aggravating factors that will be taken into consideration. For instance, we will now be looking at the impact on the community. Sometimes it's not just one individual but a group, an organization, that finds itself victimized. I'm glad this is being recognized. With respect to the changes in accelerated parole, I don't have direct responsibility for this matter. My colleague the Minister of Public Safety has that responsibility.

I disagree completely with your comments that the former Conservative government under Mr. Mulroney moved away from being tough on crime. That government passed the very first law to make it a crime to possess child pornography. The mere possession of it became a crime. You'd find it interesting to read the debates of the day. There was a lot of squealing by the naysayers and nervous nellies that were challenging us about bringing this forward. I said it then, and I'll say it again today: this was an important step in the protection of children.

There have been many changes over the years, Mr. Murphy. I think I was on 35 legislative committees looking at changes to the Criminal Code, updating it to catch up with the technology changes that have taken place. We've been sending out the correct message these last four years. Victims and law-abiding Canadians know they can count on this government to stand up for them. I'm proud to be a part of the government that helped to push that agenda.

[Brian Murphy, Liberal, Moncton—Riverview—Dieppe, NB]

I hope you understood what I was saying about the Mulroney government. I believe you were parliamentary secretary at the time. They established early day-parole for white collar and non-violent offenders as a counter to getting tougher on violent crimes. I'm not saying that you authored it or that it was a bad thing. At the time, white collar crime wasn't as hot a topic as it is today.

[Rob Nicholson, Conservative, Niagara Falls, ON]

You're partly correct. I was involved with justice issues as a member of this committee and as the parliamentary secretary. I wasn't Parliamentary Secretary to the Solicitor General, the predecessor of the public safety minister, so I wouldn't be in a position to comment on that. But you're correct about my role there. I believe I was on over 35 legislative committees, working on changing the Criminal Code. I am proud of the record we had at that time.

[The Chair, Conservative, Ed Fast]

Thank you.

We move over to Monsieur Guimond.

[Michel Guimond, Bloc, Montmorency—Charlevoix—Haute-Côte-Nord, QC]

Minister, in clause 2 of the bill, you take away a judge's discretionary power and you establish “[...] a minimum punishment of imprisonment for a term of two years if the total value of the subject-matter of the offences exceeds one million dollars”.

What criteria did you base yourself on to set this benchmark amount at $1 million? Is it because $1 million is a figure that plays in the public's imagination or did you have serious reasons for setting this benchmark?

[Rob Nicholson, Conservative, Niagara Falls, ON]

We always have profound reasons for everything we do, Monsieur Guimond. At the same time, I should indicate to you that it already is part of the Criminal Code, that one of the aggravating factors if a person is convicted of fraud is if the fraud involves over $1 million. I think that is a good starting point. As you know, when you have a look at these either Ponzi schemes or sophisticated fraud operations, they very quickly surpass $1 million.

With respect to the two years, you may be indirectly referring to the fact that, yes, there are about a dozen cases that I'm aware of where individuals who have been convicted of fraud over $1 million did not get the two years we are proposing here, but that's part of the job we have to do. We have to make sure we send out that very clear message that this kind of activity will not be tolerated and that there will be serious consequences for people who get convicted of this serious crime.

The direct response to the $1 million, again, is that it's already part of the aggravating factors within the Criminal Code, so it's a good fit.

[Michel Guimond, Bloc, Montmorency—Charlevoix—Haute-Côte-Nord, QC]

Minister, I'm trying to follow along in English. I understood you to say that you are aware of cases of fraud of over one million dollars that did not result in a sentence of two years' imprisonment. In these particular cases, the judges all imposed sentences of more than two years on the persons convicted of fraud. There are documented cases of sentences of six and seven years of imprisonment. For that reason, we find that this provision in the bill makes no sense.

[Rob Nicholson, Conservative, Niagara Falls, ON]

I actually want to be very clear with you. Thank you for raising it. I didn't say six; there are more than six cases here. My understanding is that there are approximately twelve cases, Monsieur Guimond, where individuals were given sentences of less than two years. Again, we're establishing the two years as a base, and we've added on a number of aggravating factors. So for people who get involved with this activity, you're starting at two years but it can be considerably more. As I indicated to you, and as you're aware, the maximum is fourteen years. I think it sends out the right message. I didn't want you to think I said only six, because it's more than that.

[Michel Guimond, Bloc, Montmorency—Charlevoix—Haute-Côte-Nord, QC]

Will you undertake to provide the committee clerk with details of cases where persons convicted of fraud over one million dollars received a sentence of two years or less?

[Rob Nicholson, Conservative, Niagara Falls, ON]

I'll talk to the department and give you the information we were given to be able to make that statement. I'd be glad to do that.

[Michel Guimond, Bloc, Montmorency—Charlevoix—Haute-Côte-Nord, QC]

Fine then.

What kind of aggravating factors or extenuating circumstances are we talking about? You're implying that judges do not take such factors into account, which is absolutely not true.

[Rob Nicholson, Conservative, Niagara Falls, ON]

I'm not saying they're not taken into account. I'm saying I'm adding factors to the bill, Monsieur Guimond. There are aggravating factors and I agree with them, and I agree that judges can and should take those into consideration. What we're saying in this bill is that we are adding a number of aggravating factors that I think are entirely appropriate—for instance, even concentrating on the effect on the victim. Let's face it: if you've stolen $2 million from somebody who is very rich, that wouldn't have the same impact as on a victim for whom that $2 million represented everything they owned or was their life savings.

Again, specifying the conditions we want to have taken into consideration, I think, is very important. That's what we're trying to do with this bill. We're actually building on what we have in the Criminal Code, going back to your first question about where we came up with the $1 million. Well in a sense, we're building on what's already in the Criminal Code.

[Michel Guimond, Bloc, Montmorency—Charlevoix—Haute-Côte-Nord, QC]

The members of the Bloc Québécois feel that you failed to seize the opportunity to eliminate, when you had the chance, early parole after the offender has served one-sixth of the sentence. You informed us in the House that the Minister of Public Safety would introduce these provisions as part of a more comprehensive reform. We want a status report on the reform plans and some idea as to when we can expect to see these proposals.

Minister, we maintain that you should have taken advantage of that bill to do away with early parole for offenders after they have served one-sixth of their sentence. Had you acted more quickly, the amendment would have meant that white-collar criminals like Vincent Lacroix would not be eligible for release after serving one-sixth of their sentence.

[Rob Nicholson, Conservative, Niagara Falls, ON]

Well, our response is called Bill C-53. The public safety minister has tabled the bill to get rid of accelerated parole, the one-sixth provisions that you're talking about. It goes hand in hand with this particular bill. This is one part of it, and Bill C-53 is the other part.

I encourage you to have a look at that. I think you'll be quite pleased with the provisions of that bill.

[Michel Guimond, Bloc, Montmorency—Charlevoix—Haute-Côte-Nord, QC]

Again, we deplore the fact that the government and ministers like yourself have not focused on the problem of tax havens. White-collar criminals will spend some time in jail, and a great deal of time as free men. Upon being released from jail, they will return to Barbados, the Cayman Islands or the Turks and Caicos Islands and live off the millions of dollars they embezzled from ordinary citizens.

Why have you not focused your efforts on addressing the problem of tax havens? What good does it do to order the restitution of this money if it is hidden offshore?

[The Chair, Conservative, Ed Fast]

A short answer, Minister.

[Rob Nicholson, Conservative, Niagara Falls, ON]

Thank you, Monsieur Guimond. You're very generous with those areas that you think I should take over. You started with the public safety minister, even the finance minister, and all those....

Again, this is very targeted. It's very specific. It makes sense. I think you will find that people within your constituency and those who you speak with will be very supportive of the measures we are taking here.

One of the things we've done is to make the whole system more user-friendly for victims of crime in terms of the impact it has, requiring the crown to have a look at the requests and making sure these are available.

With respect to the accelerated parole provisions, again, we're moving on those. My other colleagues are having a look at this.

In and of itself, I think, this a positive move. I know that if you're in the opposition, you're always saying that there's some other bill we could be doing. But this is specifically targeted at those individuals who commit white collar crime. I think these are all very reasonable provisions. I'm hoping that the Bloc will have a look at this and say, “Okay, let's do it.”

I have another bill, as you know, to get rid of conditional sentencing. I don't think people who get convicted of fraud should have the ability to go home on house arrest afterwards.

Yes, I want you to pass this bill, but I can also make the pitch that I'd like to see you pass Bill C-42, which gets rid of house arrest for people who commit fraud.

In one sense, I agree with you. Is this the whole show? Is this the whole package? No. It is not the whole package. The bill on getting rid of accelerated parole is an important component of what we have to do, as is getting rid of house arrest for those fraudsters; I have a real problem with that. I know you've heard me before on this, but the idea that you can be convicted of fraud and then get sent home afterwards, or have the ability to get sent home, I have a problem with.

Anyway, that's another bill for another time.

Thank you for your question.

[The Chair, Conservative, Ed Fast]

Thank you.

We'll move to Mr. Comartin for seven minutes.

[Joe Comartin, NDP, Windsor—Tecumseh, ON]

Thank you, Mr. Chair.

Thank you, Mr. Minister, for being here.

I want to start off the same way Mr. Guimond did, in terms of the analysis you've done. I say it from this perspective: I have an open mind on whether the $1-million figure is the appropriate figure or if it should in fact be a smaller figure or a larger figure; I'm open on that.

You mentioned, in response to his questions, that you think there were twelve cases that the department was able to identify of over $1 million. Do you know over what period of time those twelve cases were?

Ms. Kane may be able to answer.

[Catherine Kane, Acting Director General and Senior General Counsel, Criminal Law Policy Section, Department of Justice]

I can undertake to follow up on that. We had a case law review done in the summer of cases that were easy to access. I'm not certain, at the moment, of the timeframe, but they were recent cases.

There were changes to the maximum penalties in the last several years. Some of them were committed before those changes came into force, so they would have been decided under the previous sentencing provisions.

We'll see what we can share with the committee in terms of those cases.

[Joe Comartin, NDP, Windsor—Tecumseh, ON]

Thank you, Ms. Kane.

In that regard, I'd asked at the previous meeting for our analyst to see what Juristat could provide, and they don't have anything on this. So it appears the department may be the only source for information.

I'm seeking other cases where there would be multiple instances of fraud, but the totality of the value would be significant--and I'm going to use half a million dollars and up as significant--whatever information you can provide us in that regard.

Again, Mr. Minister, I am concerned as to whether the $1 million is.... I'm saying this from the perspective that this applies to identity theft crime, that kind of fraud, where people take over or apply mortgages. In my area, they could do that four or five times for the average house, and it would still be under $1 million. I would think in those circumstances a more severe penalty would be appropriate, but it wouldn't qualify under this. That's the perspective I'm coming from, whatever information you can give us.

I want to ask about the community impact statements. Am I correct that this will be the first time this appears in the Criminal Code?