House of Commons Hansard #118 of the 40th Parliament, 3rd Session. (The original version is on Parliament's site.) The word of the day was autism.

Topics

Statements by Minister and Parliamentary Secretary regarding KAIROS
Privilege
Royal Assent

5:05 p.m.

Liberal

John McKay Scarborough—Guildwood, ON

Madam Speaker, I rise on a point of order. I want to clarify that this is without prejudice to the ability of members on this side to return to this issue. I assume that was what your ruling meant, Madam Speaker, rather than taking it under advisement. Generally when Speakers take something under advisement, they have heard all of the debate that they will here.

I want to clarify the point that we may return to this, possibly as soon as tomorrow.

Statements by Minister and Parliamentary Secretary regarding KAIROS
Privilege
Royal Assent

5:05 p.m.

NDP

The Acting Speaker Denise Savoie

Yes, absolutely. I apologize if that was not sufficiently clear.

The House resumed from December 14 consideration of the motion that Bill C-21, An Act to amend the Criminal Code (sentencing for fraud), be read the third time and passed.

Standing up for Victims of White Collar Crime Act
Government Orders

5:05 p.m.

Liberal

Alan Tonks York South—Weston, ON

Madam Speaker, I am pleased to speak to Bill C-21. While it has been a bit of time since we talked about the bill, perhaps I will give an overview.

Bill C-21 has been put together to address the issues of white-collar crime. It behooves us to reflect a little on how white-collar crime has changed since generations of our constituents and, in fact, generations in Parliament.

The nature of white-collar crimes then were equated with the proverbial jokes associated with the door-to-door vacuum salesmen or whatever. I say that in a manner of juxtaposing, not in levity. The nature of Ponzi schemes are quite different. They involve the manipulation of shares and pyramid type sales. They victimize citizens of all ages, in particular those citizens who are not familiar with up-to-date technologies.

I am reminded of this. In my constituency, even as late as yesterday, calls were coming into my office with respect to seniors being met at the door by people who wanted to look at their water heaters. Then they tried to get them to enter into agreements to replace the heaters. Some people signed on the dotted line only to find the scheme dramatically raised their charges. There are legal implications involved and very serious things happen.

We need to look at our constituencies and ensure we have a legislated regime in place that is understandable. They need to know the kinds of technology and the victimization used. Only a few months ago the government brought forward legislation aimed at looking at the kind of technology used and the type and extent of victimization, where seniors, in particular, were robbed of the ownership to their homes. They had been tracked for months through the interception of their mail. Their accounts were skewed and the banks were unfortunately transferring ownership of their properties. They were duped and victimized in a manner that we could never really understand perhaps 20 or 30 years ago. However, with the kind of technology and the criminal insights used, victims of all age categories are subjected to these kinds of things.

With that background, I am pleased to respond to Bill C-21. I will give an overview of the bill and then I will look at perhaps some of the shortcomings where the bill could have been firmed up even a little more. Perhaps in the future it will be.

The bill includes a mandatory minimum sentence of imprisonment for two years for fraud valued at more than $1 million. It provides additional aggravating factors for sentencing. It requires consideration of restitution for victims, allows sentencing courts to consider community impact statements, to issue prohibition orders, preventing convicted persons from transacting property and money of others.

We are in favour of the bill, but it does not go far enough and I will try to elaborate a little on that.

We believe the amendments put forward by our party, which were not accepted by the combined opposition, the government and the other two parties, would have strengthened the legislation. As illustrations of that, the Liberals proposed that mandatory minimum sentences of two years should apply to practices such as market manipulation of shares and Ponzi schemes.

The bill does not do enough to eliminate accelerated parole review for white-collar criminals. Canadians investors, especially seniors, do not deserve to be victimized by white-collar criminals. They deserve better than what the government has presented through this bill.

The principles behind the stricter sentencing rules are important, but they are not enough to prevent frauds from happening. Sentencing is important, but prevention, as has been said many times with respect to the criminal justice system, is equally as important in white-collar crime. We would like the government to consider why it has not used this opportunity, as it has in the past, to do more with respect to prevention.

Finally, although we are glad to see the legislation, we also call on the government to act on white-collar crime, as it has been overdue for years.

I will go through a few of the shortcomings of the bill.

While we support the bill on stricter sentencing guidelines, we are concerned it is too narrow in scope to truly be effective in the full spectrum of fraud with which it attempts to deal. The bill does not limit early parole for those crimes and it does not address the lack of police resources currently allocated for white-collar fraud. As I said before, we put forward amendments that were aimed at strengthening the bill by extending the two-year minimum sentence provisions to practices such as market manipulation of shares and Ponzi schemes. The amendments were rejected by the other parties.

The legislation was introduced in response to high profile white-collar crimes, including Norbourg Financial Group and the Earl Jones issue in Quebec. In the wake of the Madoff Ponzi scheme's revelations in the United States, many Canadian investors have grown increasingly concerned about this type of white-collar fraud.

Other than the title, the bill is the same as Bill C-52, which was introduced during the previous session, but died at prorogation.

What are the major components of the bill?

The bill introduces mandatory minimum sentences of two years for fraud involving over $1 million, regardless of the number of victims. It specifies aggravating factors to be considered at sentencing, including the psychological and financial impacts of victims, the age and health of victims, as well as the magnitude and duration of the fraud. It requires the court to indicate what mitigating and aggravating factors were considered relating to the sentence.

It allows the court to prohibit an offender from assuming any other position, volunteer or paid, that involves handling other people's money. It goes without saying that is highly desirable. It requires the judge to consider the whole manner of restitution, which is the repayment to victims where possible, and it requires judges to consider community impact statements.

Generally speaking, it is interesting to juxtapose a cross-section of stakeholder reaction with respect to this bill. It has been mixed. Victim groups have been lobbying the government to strengthen white collar criminal provisions. Some have expressed the view that the bill falls short because it fails to address the accelerated parole review rule.

The Canadian Bar Association has expressed its opposition to the bill, citing that it would increase pressures on an already taxed criminal justice system and does not improve on what is already available in the Criminal Code. It also opposes the mandatory minimum sentences in favour of judicial discretion at sentencing.

From a policing perspective, however, the RCMP has expressed its support for the bill, indicating a mandatory sentence for such crimes has the potential to be used as a deterrent. In spite of what I said earlier, the RCMP takes that position.

In terms of amendments, as I mentioned rather obliquely before, the Liberal justice critic introduced an amendment in committee that would add market manipulation of stock prices, shares, merchandise, or anything that is offered for sale to the public to the definition of what could be punishable by a two-year minimum sentence. The amendment failed in committee as the government, Bloc and NDP voted against it.

The Liberal justice critic also recommended that an amendment be introduced to modify the Corrections and Conditional Release Act in order to eliminate the one-sixth accelerated parole review rule for white collar criminals. This amendment was ruled out of order by the committee chair and was subsequently upheld on a challenge with the support of the Bloc.

A technical amendment, however, was adopted with support by all the parties. The amendment would require the court to issue an explanation of a restitution order only when a victim seeks restitution and the court decides not to make such an order. The amendment addresses concerns by the Canadian Bar Association to relieve some pressures on an already taxed system.

In my overview of the legislation, I indicated the type of victimization that occurs. I also talked about enforcement and what the government has in place in response to the issue that was raised. In terms of integrated market enforcement teams, these IMETs under the program have been put in place, funded through the RCMP. They are operational in four of Canada's major financial centres and their mandate is to investigate and lay charges for serious Criminal Code offences involving capital markets.

While the legislation does not, in the Liberal Party's view, go far enough with respect to that kind of victimization that takes place under the Criminal Code with respect to shares and Ponzi schemes, there actually is an enforcement regime in place called the IMET program. According to the 2007-08 IMET annual report, the program's total budget increased from $13 million in fiscal 2005 to $18 million in fiscal 2008 and is approximately $30 million today.

The investigations indicate how important it is that we deal with this particular issue.

In 2008-09, 17 individuals were charged with almost 1,000 counts and 5 individuals were convicted. Their sentences ranged from 39 months to 13 years.

According to the RCMP's 2009-10 Report on Plans and Priorities, it is anticipated that annual funding of $30 million will be allocated in the fiscal year to support the investigation and prosecution of fraud offences.

I posit that the investigative processes and the teams are in place.

According to the statistics, a compelling case could be made for focusing additional attention, which the bill does not, on this kind of crime involving shares and Ponzi schemes and so on.

An adult criminal court survey, which collects information on appearances, charges laid and so on with respect to this kind of fraud, found that a prison sentence was imposed in almost 4,000 cases in 2008. In the same year a conditional sentence was imposed in nearly 1,000 cases. Probation was given in 6,000 cases. Fines were levied in 1,200 cases. Restitution was granted in nearly 2,000 cases. Other sentences were imposed.

These statistics do not provide details on the monetary value of the fraud or the type of fraud, which can include securities-related fraud, such as Ponzi schemes, insider trading, accounting frauds that overstate the value of securities, as well as mass marketing fraud, mortgage and real estate fraud and many other deceptive practices.

I only include these statistics to indicate that as the bill was going through committee, the statistics were available and the issue with respect to share manipulation was not addressed and is not addressed in the bill. The bill could have been improved had the opposition's amendments been accepted.

Despite the lack of statistics, in the bill, sentences are imposed on fraud over $1 million. Before and after Parliament's introduction of conditional sentences, a case of large scale fraud by persons in a position of trust have typically resulted in substantial jail sentences. The range has been estimated at between 4 to 15 years for large scale fraud although a sentence of less than two years and conditional sentences have been imposed where there have been important mitigating factors.

Clause 3 of the bill adds four aggravating circumstances which we believe improve the situation that I have referred to. Those circumstances are: the magnitude, complexity, duration and degree of the fraud; the offence had a significant impact on the victims; the offender did not comply with licensing requirements or professional standards; and, the offender concealed or destroyed records related to the fraud or the disbursement of the proceeds of the fraud. That will substantially improve the legislation that presently exists.

For that reason we are in favour of the legislation. We do however rest our case on the fact that an expansion of the bill could have dealt better with share and stock manipulation and the kind of Ponzi schemes that have victimized thousands of people.

Standing up for Victims of White Collar Crime Act
Government Orders

5:30 p.m.

NDP

Jim Maloway Elmwood—Transcona, MB

Madam Speaker, I listened intently to the member's explanation of how the IMETs were supposed to be working. The fact of the matter is that since they were set up in 2003, and there are six IMETs in place, their record is not all that good. They have only had five convictions in all that time.

When we look at the United States, in that same period of time the U.S. has had 1,200 convictions, including Conrad Black. He committed all of his white collar crimes in Canada, yet it was the Americans who caught him and put him in jail. He is one of the 1,200 in the United States.

Clearly, we have to look at the whole regulatory scheme. The regulation in this country seems to be very lax.

A recent interview in Canadian Business Online magazine quoted certain people on Bay Street as to whom they are afraid of. They said that it was not the Canadian cops they were afraid of, nor was it the Ontario Securities Commission, which they should be afraid of, but it was the United States Securities and Exchange Commission because it has real teeth. Obviously the Americans have a better system and it has shown results by virtue of the fact that 1,200 convictions have occurred in the United States and we have had 5.

What is wrong with the system in this country?

Standing up for Victims of White Collar Crime Act
Government Orders

5:30 p.m.

Liberal

Alan Tonks York South—Weston, ON

Madam Speaker, as I indicated, I know that the allocation of the resources is not always linked to the results that we would like. There are too many times that they are not related. However, when we look at the IMET budget in 2007-08, which was around $13 million, and relate that to the statistics the member has quite rightly pointed out in terms of the full spectrum of fraud that exists and the number of charges that are laid, the RCMP itself has found that the resources are not enough. The RCMP has asked for over $30 million in the budget.

The other thing that is a factor with respect to the effectiveness of the application of laws is not only the enforcement, but it is the legislative regime itself. I would think that the member's question begs an answer not only with respect to monitoring the implementation of the bill and the additional allocation of resources, but the number of charges that are in fact going to be laid and acted upon. That will be the litmus test of both the enforcement and the changes in the legislation that provide for the Criminal Code and the justice system to deal with the nature of fraud that the member has pointed out.

Standing up for Victims of White Collar Crime Act
Government Orders

5:30 p.m.

Liberal

Rodger Cuzner Cape Breton—Canso, NS

Madam Speaker, it is always a pleasure to sit in on the debates when the member for York South—Weston gives his presentation. I know all in the chamber certainly have a great deal of respect for his interventions, yourself included, Madam Speaker.

The issue of mandatory minimums has been discussed and debated in this House a great number of times. I think we all have reservation, and the impact they have on reducing crime has proven to be minimal. Certainly if time in jail were any indication of a reduction in crime, there would not be any crime in the United States because the United States' answer to pretty much any social problems and to crime is to lock up people. I know that both Texas and California are rethinking their approach to mandatory minimums. California for the most part is bankrupt because of what it has done with its penal system.

That being said, I know there are some concerns about this bill. Some of the victims groups liked where the Liberal Party amendments were going. As well, the Canadian Bar Association is not totally enamoured with this bill. However, the RCMP has come out in support of the bill and believes it should be a deterrent to these types of crime. I am inclined, and some of my colleagues whom I have talked to about this are as well. It is not a crime of passion or revenge; it is not an emotional crime. This is a very pre-determined crime. It is an organized crime.

I would like my colleague's comments on that. Does this stand apart from other crimes with regard to whether or not mandatory minimums might have an impact on this type of crime?

Standing up for Victims of White Collar Crime Act
Government Orders

5:35 p.m.

Liberal

Alan Tonks York South—Weston, ON

Madam Speaker, I appreciate the member's question and his comments with respect to the House listening to the overview that I have given. That is greatly appreciated.

I think the House really appreciates the nature, culture and difference of the scheming that goes on with respect to this type of fraud. It is hard to compare mandatory minimums in other issue areas to this particular type of crime. I would reference that the minimum sentence proposal in this bill will apply when the value of subject matter of a number of fraud offences totals over $1 million, but let us look at the manner in which it would be applied.

For example, if a person is convicted of 10 fraud offences of $125,000, the judge must impose a sentence of at least two years. On the other hand, the minimum sentence applies solely to a person convicted of the general offence of fraud under the subsection.

The bottom line is that, in this case, the mandatory minimum is an attempt through the criminal justice system to give a signal that it does not matter the huge magnitude of the scheming, and so on, but it is the nature with respect to restitution that may be sought and ordered by the judge to pay back the victim, as well as to dispel the idea that one can get away with this. Even if it is a $125,000 fraud, the mandatory minimum will kick in.

So in its attempt to dissuade, to prevent, to put the emphasis on prevention to some extent, I would not suggest that it goes the whole way, but to answer the member's question, with this type of crime, this is the type of amendment to the criminal justice system in terms of the application of mandatory minimums that hopefully will be more effective in prevention.

Standing up for Victims of White Collar Crime Act
Government Orders

5:35 p.m.

NDP

Jim Maloway Elmwood—Transcona, MB

Madam Speaker, even with their 1,200 convictions in the last five years for crimes, versus our five, the Americans are still not satisfied with their system, because under the U.S. Securities and Exchange Commission, which is the regulatory body, they still have had to deal with these issues, such as the Southern Baptist Convention Ponzi scheme, Bernie Madoff and others.

All the evidence seems to point to the fact that there is a coziness that develops between the regulators and the people they are supposed to regulate. They keep hiring people from the companies that they are regulating. They attend the same Christmas parties and go to the same golf tournaments, and that seems to be part of the problem.

If they could appoint or hire people who have a law enforcement type of approach, I think we would all be better off. We would be able to catch these schemes earlier on.

Standing up for Victims of White Collar Crime Act
Government Orders

5:35 p.m.

Liberal

Alan Tonks York South—Weston, ON

Madam Speaker, I certainly do not put myself forward as an expert with respect to the kind of situation that exists in the United States. However, I do identify with the victims and the nature of victimization to which the member has made reference.

On the proposition that we have a single regulator, the role of the single regulator and the issues with respect to the Bank Act and the responsibility of accessory after the kind of crime that occurs, we can recall that when we had seniors victimized, where they actually lost their property, there was not even any concern with respect to the banks asking the appropriate questions for detail or law firms being brought into the equation with respect to accountability.

To answer the question, I think the review of the regulatory regime should encompass the kind of questions that had been asked, the kind of—

Standing up for Victims of White Collar Crime Act
Government Orders

5:40 p.m.

NDP

The Acting Speaker Denise Savoie

Order. I must interrupt the hon. member. His time has lapsed.

Resuming debate, the hon. member for Newton—North Delta.

Standing up for Victims of White Collar Crime Act
Government Orders

5:40 p.m.

Liberal

Sukh Dhaliwal Newton—North Delta, BC

Madam Speaker, I will be sharing my time with the hon. member for Richmond Hill, who is my good friend and always has very positive contributions to the House. I would also like to thank the member for York South—Weston, who spoke earlier with passion. This legislation is very important to me.

In British Columbia, we go out to the neighbourhoods and crime is one of the key issues we are facing in our communities. I would like to brief Canadians today on Bill C-21. This legislation includes a mandatory minimum sentence of imprisonment for two years for fraud valued at more than $1 million, it provides additional aggravating factors for sentencing that requires the consideration of restitution for victims, it allows sentencing courts to consider community impact statements, and it allows courts to issue prohibition orders preventing convicted persons from contacting the property and money of others.

This past week in Vancouver, there was a terrible incident of gang violence in the heart of a residential neighbourhood. There were 10 people shot and residents were left fearful for their safety. With this type of terrible violence, much like the case of Ephraim Brown, an 11-year-old gunfire victim in Toronto who was caught in the crossfire of gang violence, it is easy to place all of the emphasis on this kind of crime. But we cannot forget about the impact of white collar crime, where families, seniors and the most vulnerable of society can be completely destroyed as a result of criminal acts of fraud.

Just last year we learned about Earl Jones, who took over $50 million from dozens of victims in a 20-year-long Ponzi scheme run out of Montreal. Some of those victims included his own family members. These crimes are often overlooked in terms of the way our justice system responds. These criminals face a slap on the wrist, and more often than not, receive minimal jail time.

Fraud across Canada is reaching epidemic proportions. The latest figures available for 2007 show that there were 88,286 reported incidents of fraud in Canada. What was the conviction rate of these crimes? It was very low, a pathetic 11%. Of that 11%, only 35% received jail sentences, with over 60% receiving probation or a lesser penalty.

This is why it is so frustrating that both the NDP and the Conservatives have voted against a Liberal amendment to Bill C-21 that would have ensured a two-year mandatory minimum prison sentence for criminals who defraud the public through things such as Ponzi schemes.

The amendment would have done two things. Not only would these criminals have faced stiffer mandatory sentencing, but it would have also increased the time served before a white collar criminal could receive parole. There is absolutely no justification for the positions of both the NDP and the Conservatives that were taken in the committee meetings.

Victim groups and those who have had their life savings taken from them testified in front of the justice committee last year to ask for the very measures that this Liberal amendment would have provided. The changes suggested by the Liberal Party came directly as a result of listening to the people.

It is very important for us to go into the communities and listen to the people who have sent us to Ottawa to represent them, instead of listening to the leader of the Conservative Party, the Prime Minister, and take the message back to the communities. That is why my constituents, other Canadians and I would like to know from the members of these two parties, the NDP and the Conservatives, how they can possibly justify their vote to squash such measures.

The government talks a lot about being tough on crime and making criminals take responsibility for their actions. Yet when it comes to white collar crime, as usual, they play politics and vote down amendments that were in the best interest of all Canadians. Similarly, the NDP often plays a champion of victims' rights and protecting average Canadian families and seniors against schemes that take advantage of others. Yet in both cases, their rhetoric does not match up to their actions.

We are talking about people having their entire life savings, their long-term plans for retirement, and their hopes and dreams for the rest of their lives taken away from them. These white collar criminals have no regard for their victims, and just because they are not using a weapon such as a knife or a gun does not mean that they deserve a free ride on the backs of innocent victims of white collar crime.

Lives have been ruined as a result of these individuals. Seniors who have saved their entire lives to enjoy retirement have been forced back to work because they were robbed of their nest egg. Families trying to build a future for their children have been forced to take out loans to fund their children's education. Young couples looking to make an investment to build their future have been destroyed, and many marriages have broken up as a result.

The societal costs of these kinds of crimes are unimaginable. We as members of Parliament, regardless of what party we belong to, have an obligation to protect our constituents. Fraud and Ponzi schemes know no boundaries when it comes to region, race or financial background. Within society, the rate of these crimes has been increasing rapidly because our justice system has done little or nothing to deter those types of crimes. The reward far outweighs the risk at the moment.

The will of the House was to send Bill C-21 to the committee stage to listen to interest groups representing victims and to craft the best piece of legislation possible to really crack down on white collar crime. Yet after hearing from these victims groups, the NDP and the Conservative government chose not to listen to their requests. The scope of this bill in its current form is far too narrow when it comes to defining fraud, and it does little to provide a foundation to fight it.

There is no mention of increasing resources to police departments across the country to properly tackle these criminals. As I mentioned, there are no provisions for longer periods before parole eligibility; and it attaches a dollar figure to mandatory minimum sentencing when the act of Ponzi schemes such as the one in Montreal should not be punishable simply by the threshold of a single figure.

Standing up for Victims of White Collar Crime Act
Government Orders

5:50 p.m.

NDP

The Acting Speaker Denise Savoie

It being 5:53 p.m., the House will now proceed to the consideration of private members' business as listed on today's order paper.

The hon. member will have his period of questions and comments when this comes back on the orders of the day.

Business of the House
Government Orders

December 15th, 2010 / 5:50 p.m.

Carleton—Mississippi Mills
Ontario

Conservative

Gordon O'Connor Minister of State and Chief Government Whip

Madam Speaker, there have been consultations and I believe you will find unanimous consent for the following motion. I move:

That, notwithstanding any Standing Order or usual practice of the House, Bill C-21, An Act to amend the Criminal Code (sentencing for fraud) be deemed read a 3rd time and passed; Bill S-5, An Act to amend the Motor Vehicle Safety Act and the Canadian Environmental Protection Act, 1999, be deemed concurred in at report stage without amendment; a Member from each recognized party may speak for not more than 10 minutes on the third reading motion of S-5, that following each speech, there be a period of 5 minutes for questions and comments, after which Bill S-5 shall be deemed read a third time and passed; at the conclusion of Question Period on Thursday, December 16, 2010, if not already disposed of, Bill S-5 shall be deemed read a third time and passed; and the House shall stand adjourned until Monday, January 31, 2011, provided that, for the purposes of Standing Order 28, it shall be deemed to have sat on Friday December 17, 2010.

Business of the House
Government Orders

5:50 p.m.

NDP

The Acting Speaker Denise Savoie

Does the Chief Government Whip have the unanimous consent of the House to propose this motion?