Bill C-52 (Historical)

Retribution on Behalf of Victims of White Collar Crime Act

An Act to amend the Criminal Code (sentencing for fraud)

This enactment amends the Criminal Code to
(a) provide a mandatory minimum sentence of imprisonment for a term of two years for fraud with a value that exceeds one million dollars;
(b) provide additional aggravating factors for sentencing;
(c) create a discretionary prohibition order for offenders convicted of fraud to prevent them from having authority over the money or real property of others;
(d) require consideration of restitution for victims of fraud; and
(e) clarify that the sentencing court may consider community impact statements from a community that has been harmed by the fraud.

Retribution on Behalf of Victims of White Collar Crime Act

[Jim Maloway, NDP, Elmwood—Transcona, MB]

Mr. Speaker, earlier today, one or more of the members from the Bloc made reference to Vincent Lacroix who received an eight year sentence but only served sixteen months and was back on the streets in two and a half years. Their argument was that people should not be serving only one-sixth of their sentence and that it does not make sense.

I wonder what the member of the government has to say about that in response to the Bloc member's comments and what the government plans to do about it.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Mr. Speaker, I appreciate that from the member and I appreciate the NDP's new-found help in relation to the criminal justice system. We appreciate their help in this and we would appreciate them to continue to not just talk about it in the House but to vote for it as well when it comes time.

I am especially talking here about the Bloc members. When they talk about this, they talk and talk about all the justice issues that they want to stand up for but when it comes to voting and standing up for victims and Canadian families, they are not there.

I would have to take what the Bloc says with a grain of salt when it comes to justice issues. Quite frankly, I would encourage my friend from the NDP to ask his party to come forward with better ideas to help us move forward with a tough on crime agenda, which we are doing.

[Roger Pomerleau, Bloc, Drummond, QC]

Mr. Speaker, I was listening to the member, and I heard him conclude with a sentence that really surprised me. There are some English phrases that sound really good, that really express what people are trying to say. He said “If people do the crime, they will do the time”. That is easy enough to say, but in reality, that is not what happens.

We know that criminals who get caught—and this is what happened to Vincent Lacroix, as the NDP member said—get the sentences they deserve, but once they have served one-sixth of the sentence, they are automatically released, often getting out after a few months even if they have been convicted of serious crimes.

I would like to know why the member said that the Bloc Québécois talks and talks but never does anything. Not long ago, we suggested that the government take a day to eliminate conditional release after serving one-sixth of a sentence before Mr. Lacroix was sentenced to ensure that he and those like him serve their sentences in full. But the government refused to do it. Why?

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Madam Speaker, unfortunately, it is just like the Bloc members to politicize things that they can have no control over. They really can do nothing for Quebeckers because it is only the Conservative MPs from the Quebec region who can do anything for Quebeckers, and we know that.

We do look at the proposals the Bloc members bring forward. However, I would, as would all members on the Conservative side, appreciate the Bloc members actually voting for this justice legislation when it comes time to vote. It is one thing to talk about it, one thing to work on it together in committee and come up with proposals but it is another thing to stand up for Canadians and actually apply the law as necessary. That is what it takes for the Bloc to come on board with us and we would appreciate the Bloc members doing so.

Will the Bloc members be supporting this particular bill? Will they be supporting minimum mandatory sentences? What I have seen in this place in the past is that they simply do not stand and vote with what Canadian priorities are.

I would ask the member to stand now and tell us if his party will be supporting this bill and supporting minimum mandatory sentences.

[Paul Calandra, Conservative, Oak Ridges—Markham, ON]

Madam Speaker, one of the things I am so excited about, not only about this legislation but about some of the other legislation that we have been bringing forward, is that we are finally putting the rights of victims ahead of criminals.

I wonder if the parliamentary secretary might comment on the fact that many of the frauds that are being committed are being committed using technologies that are readily available at home. I am wondering if he might comment on whether sentencing someone to house arrest might just lead to the offender reoffending, and whether he agrees that this is another reason that we should be imposing some minimum mandatory penalties on these heinous crimes, the crimes he mentioned that affected a curling club in his riding. He also might comment on how those curling club members must have felt to know that they had been defrauded by a gentleman of this sort.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Madam Speaker, I can assure the member and all members of this House that it is devastating for non-profit groups that are doing barbecues, car washes and whatever they possibly can to raise funds for organizations to help community members and community events, to have somebody come along, take that money, put it into a slot machine, gamble it away at cards or spend it on holidays.

Oftentimes I have seen clubs that have had to close down as a result of being defrauded and even members of that club actually having to put in money to cover bills, which is atrocious. I do agree with the member that having minimum mandatory sentences is necessary to give guidance to the judges and justices across this country so that not only do we have consistency across the country but we have transparency in the judges' decisions.

It would ensure that people who do these crimes know what will happen to them, know they will spend time in jail. We not only need to deter these criminals from reoffending, as this particular bill addresses, but also others who see what they can get away with, that if they want to steal $2 million and get six months in jail, they see that is not going to happen anymore.

Under this bill, it will not happen. I would welcome the Bloc and the NDP to come on board with this House and work with us to get this legislation passed and to get other tough on crime and criminals legislation passed as well.

It has taken us a long time to move forward from where we were prior to taking government, but we are moving forward and we are picking the best pieces of legislation to do so and getting good results for Canadians.

[Jim Maloway, NDP, Elmwood—Transcona, MB]

Madam Speaker, I am pleased to speak to Bill C-52 today and I am also pleased that the government has introduced the bill. The NDP caucus will be supporting the bill at second reading to get it to committee where we can perhaps make some improvements to the bill as it is written now.

The bill provides a mandatory minimum sentence of imprisonment for a term of two years for fraud with a value that exceeds $1 million. I questioned the government this morning about how it determined the $1 million because it seems to me that fraud is a serious issue no matter how big it is. In law it is certainly something that lawyers thrive on. I am sure that we will find lawyers trying to argue whether or not fraud was $1 million or whether it was under $1 million, and there will be huge arguments about that.

Perhaps the threshold should be a lot lower than $1 million. I am just not sure about that issue. I asked the government that question and I did not really get a good response. I know one of the government members asked that very question as well and I do not recall whether the member received a satisfactory answer either.

The bill provides additional aggravating factors for sentencing. It creates a discretionary prohibition order for offenders convicted of fraud to prevent them from having authority over the money or real property of others. It requires consideration of restitution for victims of fraud and it clarifies that the sentencing court may consider community impact statements from a community that has been harmed by the fraud.

I want to go back to the issue of restitution for victims of fraud. This is a provision of the bill which on the surface sounds good. I certainly hope that victims see some restitution as a result of this particular provision, but I would not want people to get their hopes up very high on this particular issue. Over the years my experience has been that there are probably very little restitution possibilities when dealing with these fraudsters.

The whole argument about schemes, frauds and Ponzi schemes really boils down to issues of people who are less than honest, bilking people of hard-earned savings and monies, and then in fact spiriting the money away into tax havens. While the economy is good, these schemes tend to thrive because if the stock market is going up and as the economy is expanding, it is easy for them to cover their tracks and hide the fact that they are engaging in a fraudulent activity.

It is when the economy goes down as it has right now that we see these schemes start to collapse because they cannot pay out the returns that they have promised people.

I would suspect there are many more of these beneath the surface. If the recession were to deepen, get worse or to last a longer period of time, we would see more of these schemes exposed. At the end of the day, after all the litigation and investigation, there is really going to be nothing there for the victims.

Therefore, why make these promises that victims are going to get their money back when we know that it is not going to happen. Having said that, I still think that it is a good provision in the bill. It is something that we should put in the bill just in case there is some money left over for restitution.

However, there are many difficulties with this whole area and I think the parliamentary secretary alluded to it in the last part of his speech in which he said that bringing in a bill such as this only provides for part of the problem.

This bill deals with the problem after it becomes a problem. What we want to do as a Parliament, as a government, as a society, is to deal with these issues before they become a problem. We want to be able to catch the Bernie Madoffs before they embark on their programs of bilking people out of money.

I want to use Bernie Madoff as an example, where Harry Markopolos was able to uncover Bernie Madoff 10 years ago. Ten years ago Harry Markopolos, who was working at the time for Rampart Investment Management in Boston, was asked if he could duplicate Madoff's strategy. It makes sense that if people are competing in a market and can offer 30% returns on 90-day certificates that they will have a lot of customers, but in addition to having a lot of customers, there are going to be a lot of people who want to duplicate their system and compete with them because they are obviously making a lot of money.

When Harry was asked to do that, he immediately became suspicious because Madoff never reported losing money in any month. In a country of 300 million people and a securities commission that is supposedly a watchdog, why was no one questioning the fact that Bernie Madoff had never reported losing money in any month?

He said that he knew it was a fraud in about five minutes. He took his information to the Securities and Exchange Commission. When he went to the Securities and Exchange Commission, he was rebuffed because Bernie Madoff had been a big, known figure at the time, had been involved in the industry, and had a good reputation. In fact, I believe one of Bernie Madoff's sons-in-law was actually working for the securities commission as an investigator. So we can see it is one little happy family down there at the securities commission.

When Harry Markopolos came forward and presented the entire case 10 years ago, 1999, to the securities commission, he was told to get lost, essentially. He went back several times, and in fact at a certain point he was concerned and was checking his car for bombs and so on. I think his comment was that Madoff had something like 65 billion reasons to wish him out of the way.

Once again, that is a great example of the system not working. So what did we learn from that? We learned that we have to have proper regulatory bodies that are not populated by people from the industry, that it should not be taking people from the mutual fund industry, the securities industry, out of a company that they have worked for, for 20, 30 years, and they know all the players, and pop them in, sort of like a retirement package, the securities commission that is watching the same company that they have been working for all these years.

It is just one happy little group that parties together, socializes together and who know each other. How can we possibly expect that they are going to be doing a proper due diligence and investigating one another? We need more police-type forces here. We need investigative forces.

That was the weakness of the securities exchange in the United States. Now some changes have been made. There are some tough people in there, effective in January, and hopefully they are going to right the ship.

It seems that all of these bodies tend to drift over time and until something happens everybody is reasonably happy. Then something blows up and we realize that, well, no, these were the wrong people running the ship.

Let us take a look at our own securities commission in Ontario. One of the big arguments we have had in the House, and I know my Bloc colleague understands it well, is the whole idea of the national securities regulator. Being from Manitoba I know that over the last few years we have been opposed to that. I see the arguments for having a national regulator. The other G7 countries have it and it is probably a good idea, but what the government is missing in its analysis is not what it is called, whether it is a national regulator or 10 provincial regulators, it is who do we have running the regulators? Who is running the national regulation system?

If we had a national securities regulator and filled it with people who worked in the industry, then we would not have any better results than we have right now with the Ontario Securities Commission. It has a very sorry track record, a terrible record of imprisoning almost no one. It may have been lucky to catch three or four people in the last 10 years and this is even when the whole case was given to it. Even when the whole thing was put right in front of it, it still could not somehow take action.

In the United States, however, we see more activity in that area, but it comes from the judicial system in the United States. Let us take Conrad Black as an example. He did his crimes in Canada, as a matter of fact, I believe it had to do with non-competes that he was signing with CanWest when it was buying all those newspapers and there were $40 million worth of non-compete agreements in each one of these deals that he got, and his shareholders went after him when they realized that he was taking the $40 million when it should have belonged to Hollinger.

Conrad was a Canadian. I know he became a British citizen at some point, but he was a Canadian. He operated here his whole life. He had his companies here and yet surprise, he is doing time in a Florida jail. By all accounts I gather he is having a great time down there. It does not seem like a very tough jail he is in and he seems like he is happy enough that he might want to stay there a little longer based on the last transmissions we heard from him. But, my point is that the public must have confidence in its government to protect it. When we see people like Conrad Black and Madoff literally just walking away and when they do get caught, they do not spend much in the way of jail time, it is a problem. It breeds cynicism within the public.

That is why I was intrigued by another part of the Bloc's argument today that the sentences should be longer than one-sixth of the sentence. Mr. Vincent Lacroix, who is just one example of many, received an eight year sentence, but because people can get out of jail after serving only one-sixth of their sentence, this man was back on the streets in only two and a half years. So once again the public questioned this. If his sentence was eight years, then what is he doing knocking on my door after only two and a half years? What kind of a system is this that allows that?

Perhaps it is the Bloc's intention to introduce an amendment at committee to rectify this situation or to deal with it in some sense, but if we are going to give Mr. Lacroix two and a half years, then that is what the penalty should be. Do not have a judge say that he is supposed to spend eight years and then after only one-sixth of his sentence, how does he get out of that? I would like to know how the government is planning to deal with that issue because once again, I thought that was a very good argument the Bloc had.

I have to say at the outset that I am so impressed with the lawyers in this Parliament. I have never seen so many lawyers in one place outside of a legal convention. There are some extremely smart lawyers here, and the Bloc caucus is just one example that has several lawyers. The Liberal caucus and the NDP caucus have some, and I am sure there are a few really smart lawyers on the government side too. I have been listening to them very closely. However, their whole approach to the legal side of things has sort of been more along the lines of how it appears from a political point of view. That is the argument, I suppose, and they do not take the view of the legal family represented in the other parties in opposition. They simply go along with the government line that somehow, if they could showcase the bill as being tough on crime as opposed to smart on crime, that will pay off in getting votes back home.

All we have to do is look at the minimum sentence laws in the United States. That is the subject of another bill which we will be getting to fairly soon. In the 1980s California had Ronald Reagan's three strikes and you are out regime. His solution was to build a lot of prisons, and of course his buddies were building private prisons, so he could reward his friends as well. They built wall-to-wall prisons and put people in prison. I do not have the stats handy, but the United States stands alone in terms of the number per hundred thousand people who are incarcerated. The crime rate in the states has not gone down one bit. It is probably even higher than it has ever been. Just recently, because of budgetary problems, Governor Schwarzenegger, who would hardly be soft on crime, and who is a Republican, though hardly a George Bush Republican, has had to release thousands of people from prison because it has been found that the minimum sentence laws do not work.

I am just pointing out to the member of the government that there are all sorts of evidence and examples of crime approaches that work, and there are examples of those that do not work. I gave examples before about car theft in Winnipeg, about how putting immobilizers in cars and having teams of police investigators going after the limited number of car thieves who steal the maximum number of cars has produced results. That is something that works. That is what the government should be doing. The government is mandated by the public to be here to find solutions that work, and not just stuff that knocks an MP's rating up five points in the polls overnight. That is what Conservative members have been doing.

The other argument that the Bloc has made, which I find really important, is with regard to the issue of tax havens. We had a Liberal government for years and years before that had ample opportunity to deal with the whole issue of tax havens. We even had a Prime Minister who had a bunch of his boats registered in some foreign country. It might have been Panama.

[Roger Pomerleau, Bloc, Drummond, QC]

It was Barbados.

[Jim Maloway, NDP, Elmwood—Transcona, MB]

It was Barbados, the member said.

The fact of the matter is that we should be trying to limit tax shelters and tax havens, because it is about time we stopped rich people from taking their money outside the country to avoid taxes. How can we have a good medical system and roads in this country if people are taking their money out of the country to avoid taxes? We have to put an end to these tax havens. What do these fraudsters do? They are not stupid. They get the money out of the country. As soon as they see things going downhill, the money is gone.

Then we get into banking regulations. The Speaker has indicated I am running out of time, and I have a lot more issues to discuss here, but we have to deal with tougher banking regulations to make certain that banks report suspicious activities, more so than they are doing right now. I know they are required to report deposits in cash of over $10,000. We can make further requirements of the banks that will help solve this problem. We should be regulating the industry. We should require more bonding. We should require that the people who are involved in these businesses have proper regulatory authorities so that they can be watched, and so that they have to report.

Real estate brokers and agents have to report every year. They have to keep their funds in trust—

[The Acting Speaker, NDP, Denise Savoie]

Questions and comments. The hon. member for Crowfoot.

[Kevin Sorenson, Conservative, Crowfoot, AB]

Madam Speaker, I spoke on this earlier in the day and the member stood and questioned me, so I would like to return the gesture and favour to him.

One of the things he pointed out in his speech, which I appreciated, was his indignation toward the fact that the courts were giving certain sentences and in just a few short months, in some cases, these individuals were being returned to the streets. I am quite pleased to hear that the member would have that type of indignation towards such a fact.

There is statutory release in this country. In some cases, two-thirds of the way through sentences offenders can be sent back out on the street. His party has for a long time been on record as supporting those types of policies that would allow criminals to be given what we call early or statutory release. My question to him is whether he would support measures to get rid of statutory release. There is ample opportunity in this place to do that.

He also mentioned the Bloc Québécois in his speech and talked about Bloc members bringing certain facts forward. They questioned earlier whether anyone was getting under two years for fraud charges. I will take the member back to the sponsorship scandal in Regina v. Coffin, where the person pleaded guilty to 15 counts of fraud, totalling $1,556,625. There were aggravating circumstances and he received 18 months.

As he suggested, in many of these cases the sentences the offenders receive and what they actually serve are two different things. Would he support measures to have what we call truth in sentencing, whereby if someone is sentenced to six or eight years, that is what they serve?

[Jim Maloway, NDP, Elmwood—Transcona, MB]

Madam Speaker, I was attempting to look up the sentence that Charles Ponzi received for his conviction back in 1920. To me it did not seem like a very strong sentence at that time either.

I am simply pointing out to the member what the Bloc speaker had to say this morning about this particular fraudster in Quebec, who received an eight-year sentence and served only 16 months. To me that indicates there is a problem.

I do not think anybody serving an eight-year sentence should necessarily be released after only 16 months. If the judge really feels that eight years is what a person should serve, then that is what he should serve. I would think that would gain more support from the public.

We, too, look at the victims in these situations and there has been a big improvement over the years in victims' rights compared to what existed even when I was first elected in 1986. I know of cases of break-ins in Manitoba in which the victim could not get any information at all from the police. Now it has totally changed and the Manitoba government, through the Filmon Conservative government and the Gary Doer NDP government over the last 10 years, has gone a long way to giving victims more rights in the process. That is where we should be moving over time.

I realize that sometimes things take a little longer than they should to develop but every member of Parliament and every Party in the House can learn to be a little more flexible when the public demands it.

[Claude Gravelle, NDP, Nickel Belt, ON]

Madam Speaker, I would like to thank my colleague for his presentation today.

Fraud is fraud, whether it involves half a million dollars or $1 million. I would like the hon. member for Elmwood—Transcona to give me his thoughts, if he has any, on where the $1 million number in this bill came from.

[Jim Maloway, NDP, Elmwood—Transcona, MB]

Madam Speaker, I am not sure where they came up with the $1 million. As the member said, fraud is fraud, whether it involves half a million dollars or $1 million. I would think that if one were to lose $20,000 or $30,000 it would be a big deal, so at what point they decided that $1 million was the limit for the bill, I am really not sure, but once again, that is an argument that we can take up at committee.

We have all agreed that we are going to support this bill. We are going to get it into committee and at that point, at that level, we will be coming up with suggested amendments. I am sure the Bloc will have some amendments. The NDP, I am absolutely certain, will have amendments to this bill, and the government may have some as well.

We are on the right track here. The bottom line with fraudsters and legislation dealing with fraudsters is that we are dealing with the problem after the horse is already out of the barn. The government and Parliament should be dealing with preventive measures, and I would hope some members on the government side would look into that and perhaps come up with some legislation of a preventive nature.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Madam Speaker, I appreciate the opportunity to ask a question of my colleague on the other side of the House.

I am glad that he has indicated that he is happy to support this bill now and get it into committee, as am I. He talks about the $1 million limit maybe being a problem, and also about adding some amendments to this bill to improve it, which is what we do in this House and in committee.

I wonder if the hon. member would be kind enough to perhaps outline two or three other things that he sees as potential deficiencies in the bill right now and that could be improved.