House of Commons Hansard #76 of the 40th Parliament, 3rd Session. (The original version is on Parliament's site.) The word of the day was restitution.


Standing Up for Victims of White Collar Crime ActGovernment Orders

3:50 p.m.


Jim Maloway NDP Elmwood—Transcona, MB

Mr. Speaker, while Earl Jones made off with $50 million, Bernie Madoff made off with $65 billion. In fact, it is well documented that as long as 10 years before Madoff was caught, Harry Markopolos was working at the time for Rampart Investment Management in Boston and he was asked by his bosses whether he could duplicate Madoff's strategy, because, of course, they wanted to do the same thing and follow his strategy as to how he could make money consistently.

Markopolos was able to prove within a half hour that this could not be done. There had to be at least one month in a year that a fund would lose money. He just could not make money every year. He reported it to the Securities and Exchange Commission on several occasions over a 10-year period before they took action.

The question here is, where are the regulators? Why do regulators keep hiring people from within the industry who are friendly with people in the industry and are simply regulating their old friends? We have proven that regulation of friends does not work. We need more of an enforcement approach to regulation, a police force type of approach to regulation, as opposed to self-regulation by industry insiders.

I would just ask the member whether he has any comments about that.

Standing Up for Victims of White Collar Crime ActGovernment Orders

3:50 p.m.


Brian Murphy Liberal Moncton—Riverview—Dieppe, NB

Mr. Speaker, I agree that the regulators have primary due diligence control over many of the frauds, but not all fraud comes from the markets.

However, the three biggest incidents recently have been Vincent Lacroix, who got 13 years; Earl Jones, who I think got 11 years; and Stan Grmovsek, who got 39 months. The biggest problem with this bill is that they were treated by the law that exists probably no different from the way they would have been if this bill were law.

This law was delayed because of prorogation. Therefore, for the year or two that it has taken to get the bill this far, and by the end it is going to be three years, we have seen about $10 million more fraud committed per year, while the government did nothing.

When I say they did nothing, they brought a bill forward and then prorogued Parliament so it did not become law. That legislation, which was Bill C-52, or this one we are speaking of, Bill C-21, does not do enough either. It perhaps gives people a false hope, if they watch the six o'clock news in Conservative ridings, that the government is doing something about white collar crime. It is not very much.

They might really be just beating up on judges, taking away discretion and making sure they look at things as though they were schoolchildren, and judges are not, when in the history of the three cases I mentioned, the perpetrators, the fraudsters, were treated very severely under the existing law, more severely than this law indicates. As the old saying goes, where is the proof in the pudding of this legislation?

Hopefully we can get it to committee and we can have a broader discussion of what needs to be done to attack white collar crime and get out and address the issue that all parliamentarians care very much about.

Standing Up for Victims of White Collar Crime ActGovernment Orders

3:50 p.m.


Marc Lemay Bloc Abitibi—Témiscamingue, QC

Mr. Speaker, I am pleased to speak to Bill C-21. I listened carefully to what my colleague from Moncton—Riverview—Dieppe in New Brunswick was saying, and I totally agree with him: Bill C-21, which was previously Bill C-52, is pure improvisation.

Let me try to dissect this bill in the few minutes I have left. In September 2009, roughly a year and a half ago, there were the Norbourg and Earl Jones cases and other similar cases. The government told us that these were separate and specific cases, that the law would take care of them, and that it would not get involved. Finally, the government intervened on October 21, 2009, by introducing Bill C-52, which, following prorogation of the House, became Bill C-21. If the government had not prorogued the House, this bill likely would already have been studied, amended and brought into force, and white collar criminals might have received longer sentences than those provided for in the act.

This bill imposes a minimum two-year sentence for fraud in excess of $1 million. Something does not add up. The Bloc Québécois will vote in favour of referring this bill to the Standing Committee on Justice and Human Rights. I would advise the government not to push us into passing this bill quickly. We will probably change it considerably to have it reflect reality more than it does right now.

We had already started asking the Minister of Justice questions about this, but he was unable to cite case law with sentences of less than two years for fraud to the tune of $1 million. Something truly does not add up.

Let us explain this to those watching. The government wants to crack down on white collar criminals. Who are these people? They are extremely well-informed criminals who know exactly how the system works and how to set up businesses in order to defraud individuals or take money away from them.

It is much easier to talk about armed robbery. Someone walks into a bank, credit union or convenience store with a loaded or unloaded weapon to commit theft. When the time comes to sentence that individual, the crime is more visible and it is much easier to prove that the crime was committed. White collar criminals on the other hand defraud people by making promises and asking for their money. They might guarantee annual returns of 5%, 10%, 15% or even 20% or more. They have a flair for attracting people. They tend to be smooth talkers. They can create a financial system that borrows money from one person to pay back another, and so on. This leads to cases like that of Earl Jones or Norbourg.

This has to stop and the message must be clear. And a minimum sentence for fraud over $1 million will not solve the problem, because clearly, prison sentences are also given in the case of fraud over $1 million.

Despite extensive research, I do not know of any sentences handed down for fraud over $1 million that did not include jail time. That does not exist. What is needed are prison sentences for criminals who defraud people of $100,000, $200,000 or $500,000. Now that would be a start. But do we need to add that in a bill? This is where I have a problem with the Minister of Justice. I do not know who his advisers are, but I am convinced that those around him forgot to tell him about section 718 of the Criminal Code.

I have a few minutes and I do not want to put anyone to sleep, but this is important. When we are preparing bills of this nature, it is important to know where we are coming from in order to know where we are headed. What does section 718 say? It has to do with guidelines for judges:

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:

(a) to denounce unlawful conduct;

(b) to deter the offender and other persons from committing offences;

(c) to separate offenders from society, where necessary;

(d) to assist in rehabilitating offenders;

(e) to provide reparations for harm done to victims or to the community;—I will come back to this in a moment— and

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

After reading this, we see that it is all right there in the Criminal Code. What does the Bloc Québécois want? It does not want mandatory minimum sentencing. That solves nothing, as we know. We have the proof; it has been settled and everyone knows it. We have studies that prove and confirm that mandatory minimum sentences do not reduce crime.

I will repeat it for the interpreters. I am sure that they interpreted all that very well but I would like my friends opposite to get it completely: mandatory minimum sentencing does not solve the problem of crime. This is not coming from us, but from studies by the Department of Justice, Public Safety Canada and especially U.S. studies. We know that our friends opposite like to boast that they are tough on crime, just like the Americans. However, the Americans are beginning to realize that it solves nothing. It solves nothing in Australia, Great Britain or New Zealand. It has been proven in black and white.

Paragraph 718(e) of the Criminal Code provides for this. I will read it again because there is one small thing they have failed to understand:

(e) to provide reparations for harm done to victims or to the community;

There is nothing in this bill. We will tackle it when the bill goes to committee.

In addition, the bill maintains the infamous provision for parole after serving one-sixth of a sentence. We would have expected the government to immediately remove that from a bill like this.

Right now, we have the perfect example of a man who was convicted. His name is Mr. Lacroix, of Norbourg. He defrauded his victims of $130 million. He received a sentence of 13 years in prison. He is eligible for parole after he serves one-sixth of his sentence, so 13 years divided by six. I can announce that he has already been released. Yes, he is out of prison. He defrauded his victims of $130 million, and his victims are either bankrupt or dead. Yes, some of them have died. And the same thing will happen with Earl Jones. Earl Jones defrauded his victims of $55 million. He just pleaded guilty and was sentenced. He is eligible for parole after serving one-sixth of his sentence. We need to get rid of that. It is urgent.

The problem is not to impose minimum sentences. We have always said that, and we will repeat it, because the members opposite do not seem to understand.

The public no longer has faith in the judicial system. They are not shocked by criminals receiving minimum sentences; they are shocked by the fact that the criminals do not serve those sentences. When someone is sentenced to 13 years in prison, the public expects that this individual will at least spend some time in prison. White collar criminals are eligible for parole after serving one-sixth of their sentence, and they generally do not have a criminal record, as we can see from research statistics. These individuals are not highwaymen; they are well-organized fraudsters.

According to our correctional services, this means they are not dangerous and there is little or no risk of them reoffending. Therefore, they are released after they serve one-sixth of their sentence. That is what shocks the public, and that is what is not in this bill. We would have expected the bill to abolish the principle of granting parole after one-sixth of the sentence has been served. We will have to see if it is possible to include this measure.

What is more, this may send the wrong message. The courts already consider the penalties. We need to stop instructing judges to impose minimum prison sentences. These honourable judges, whether presiding over the initial hearing, the Court of Appeal or the Supreme Court, have always said that they do not necessarily need a guide for imposing minimum prison sentences. Everything is already set out in the Criminal Code. They would rather have us tell them if this crime, because of its severity, deserves not a minimum prison sentence, but a longer one.

The government is not using this bill to deal with the issue of tax havens. My colleague, the member for Hochelaga, who is also the Bloc's finance critic, can come back to that in another plea, if I may use that expression.

Computers have made it easy to transfer money electronically these days. A well-organized fraudster can, with the click of a mouse, transfer tens of millions of dollars to places that our federal government has agreed to recognize as tax havens, such as Barbados or the Cayman Islands. We are just starting to discover that many of them are choosing Switzerland, and if it had not been for the HSBC Bank and, more importantly, an individual who left with more than 100,000 names, we never would have known that thousands of Canadians have accounts in Switzerland.

I do not have a problem with someone having an account in Switzerland. However, you need a minimum deposit of $500,000 to have an account with the HSBC Bank in Switzerland. That is a problem. I am not saying that people do not have the right to do it, just that the individuals that have money in accounts in Switzerland or other tax havens should have to declare it. They are supposed to do it under the Income Tax Act, but they do not. Despite our requests, the government has not intervened. And God knows that we have asked the government to get involved with the issue of tax havens a number of times. Mechanisms absolutely have to be put in place to address these tax haven kingdoms.

We have suggested several ways to combat economic crime. I would like to read what we have proposed.

We strongly suggest abolishing parole after one-sixth of a sentence is served. Also, the Criminal Code measures to confiscate the proceeds of crime need to be amended to include provisions covering fraud over $5,000. I am translating, because it must be explained.

Consider the example of someone guilty of fraud worth hundreds of thousands of dollars. What we are suggesting is that under the Criminal Code, if fraud over $5,000 is committed, authorities could confiscate all proceeds of crime from that individual. So if that individual stole hundreds of thousands of dollars from other people by fraud, we must be able to confiscate that individual's home, country home, cottage, chalet in Switzerland, and so on, in order to pay back the victims. Indeed, that is the goal; there is nothing new here. That is already in the Criminal Code. Section 718 states: “(e) to provide reparations for harm done to victims or to the community”. It is clear in the Criminal Code. It would be pointless to add anything to it. We simply need to ensure, with this bill, that such individuals' property is confiscated.

That is important when fraud of this nature takes place. We do not believe in minimum prison sentences for fraud over $1 million. Harsher sentences are needed, but they are also needed for people who commit fraud under $1 million. One way of doing this is by including provisions to confiscate the proceeds of crime for all fraud over $5,000.

We are also recommending that police forces be reorganized to include multi-disciplinary teams that specialize in economic crimes. We currently have multi-disciplinary teams to go after organized crime, to go after child pornography and to go after drug trafficking. It is high time we had this type of multi-disciplinary team to go after economic crimes.

We are recommending that banks be required to report irregularities in trust accounts to the Autorité des marchés financiers, the relevant professional order and the user. Allow me to explain, because I may have lost a few people. Every professional that must and can hold money for individuals—lawyers, notaries or accountants—has to have a trust account. A lawyer who receives a retainer has to deposit that retainer in a trust account and keep a record of that account. Generally speaking, many withdraw money from that trust account and often the banks realize that something fishy is going on. Money goes in and money goes out, and sometimes too much money goes out. We could start doing something about that.

I see that I am running out of time. I would just like to say that we are suggesting that a number of other changes be made to the Income Tax Act. We will be able say more about that in committee.

We absolutely must do two things. We absolutely must abolish parole after serving one-sixth of a sentence. We have to ensure this bill removes that provision because those who commit economic fraud are generally well organized. We also have to find ways to provide restitution to victims in order to fully respect section 718 and subsequent sections in the Criminal Code.

That is why we will look forward to seeing this bill in committee.

Standing Up for Victims of White Collar Crime ActGovernment Orders

4:10 p.m.


Jim Maloway NDP Elmwood—Transcona, MB

Mr. Speaker, regardless of the OECD protocols on sharing financial information, which I do not think have been that successful, the fact is that over the last two years it has been a bank employee of a Liechtenstein bank who has simply taken computer diskettes and sold them to the German government, which has resulted in a lot of taxes being collected by the German government and other European governments and 100 names being submitted to the Canadian government. The Canadian government has chased perhaps 100 people for money.

The government has also given an amnesty that if anyone wants to walk into a Revenue Canada office and avoid any problems they can do it. Evidently people have been doing that.

Just recently we heard of another employee of a Swiss bank who gave out diskettes listing hundreds of people, in this case 1,800 Canadians. This information was just made available now and we hope Revenue Canada is doing something to collect some of the taxes that are owed. As a matter of fact, more Canadians were found in this net than Americans. Even with the population of the United States, only 1,600 Americans were caught in this net.

Why must we rely on disgruntled employees of banks to get this information? Why can the government not do things to get this information that Revenue Canada needs?

Standing Up for Victims of White Collar Crime ActGovernment Orders

4:15 p.m.


Marc Lemay Bloc Abitibi—Témiscamingue, QC

Mr. Speaker, I agree with my colleague, but there is a very important premise: if we want to stop the bleeding, we must first plug the hole where the blood is coming out. In this case, that hole is the tax havens. If we eliminate the tax havens, if we intervene, monitor them, and tell the Canada Revenue Agency that the deductions are over, there will be no more tax havens. If there are no more tax havens, hundreds of millions of dollars will remain in Canada, and will not be transferable.

I agree with my colleague, but this is very important to us. There are banks in Europe, Switzerland, the Cayman Islands and elsewhere. There are tax havens in Monaco and Liechtenstein, and there are many other places like that in the world. Banking secrecy exists. I am not saying that we need to pressure anyone to eliminate it. We can start here, and that is very important. We should start here, clean things up, and prevent people from taking advantage of tax havens. Then we will really be able to hit white collar crime where it hurts.

Standing Up for Victims of White Collar Crime ActGovernment Orders

4:15 p.m.


Shawn Murphy Liberal Charlottetown, PE

Mr. Speaker, I want to address the whole issue of tax evaders. It goes to our basic philosophy of justice and law and what Canadian society should be doing, whether it is socially acceptable or not.

As was disclosed last week, we have 1,800 people who are setting up foreign accounts in Switzerland for the sole purpose of avoiding taxes. In my mind, that is just as heinous as most other crimes but it just seems to be accepted by Canadian society, and especially the government which gives them a general amnesty and life goes on. Tax evaders are not punished, there is no retribution and no sentence. Absolutely nothing goes on.

However, if we hypothetically compare that to two teenagers who were caught last night breaking into a service station and stealing a carton of cigarettes and a small amount of money, what would happen to them? They would go to jail for 18 months or two years. Perhaps they would deserve it but I believe it is a fundamental flaw that the government has in its thinking that these individuals, these very rich billionaires, can get away with what I consider to be a heinous crime with no repercussions at all, no discussion about it and no talk about it.

I would like to get my learned friend's opinion on that whole issue.

Standing Up for Victims of White Collar Crime ActGovernment Orders

4:15 p.m.


Marc Lemay Bloc Abitibi—Témiscamingue, QC

Mr. Speaker, I agree to a certain extent with my colleague; however, he has a big problem. I would say this to my honourable colleague. When the Liberals were in power, they did nothing about it. For 12 years, the Bloc has asked the government to monitor and eliminate tax havens.

I agree that as soon as there are allegations about people who evade taxes and use tax havens, we should receive a list. Then we go to those people and tell them that they will be receiving a letter from HSBC Bank. They may have to pay taxes on money they forgot to declare for the past five, six or eight years. However, the fact remains that people still have access to tax havens. Let us eliminate tax havens. My colleague, the member for Hochelaga, will be much clearer on this in his presentation.

We know that these criminals are brilliant. Let us be honest. Those who commit these crimes, these white-collar criminals, are brilliant, superior beings. They know exactly what the ramifications are. They know exactly how to use tax havens. They know exactly how to transfer funds inconspicuously. They cannot transfer $100 million at once. They might transfer $1 million, then $2 million three months later and so forth. That is how it works. The problem is that we are unable to shut them down. The government can monitor money remaining in Canada, which gives it a certain amount of control over fraudsters. However, as soon as the money leaves Canada, the government no longer has control. Canada is losing tens of billions of dollars. That is unacceptable. We absolutely have to do something about tax havens. We have to stop the hemorrhaging. Then we can come back and deal with those who commit these crimes.

Standing Up for Victims of White Collar Crime ActGovernment Orders

4:20 p.m.


The Acting Speaker Conservative Barry Devolin

It is my duty pursuant to Standing Order 38 to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Yukon, Offshore Drilling; the hon. member for Malpeque, Ethics.

Resuming debate, the hon. member for Windsor—Tecumseh.

Standing Up for Victims of White Collar Crime ActGovernment Orders

4:20 p.m.


Joe Comartin NDP Windsor—Tecumseh, ON

Mr. Speaker, Bill C-21 is a reincarnation of Bill C-52. It is important, in terms of the credibility the government has or maybe, more important, does not have with regard to its so-called “getting tough on crime” agenda, to understand the history of this legislation.

On October 21, 2009, as a result of a number of notorious incidents, the Earl Jones one in Montreal being the more current one at the time, Bill C-52 was introduced into this House. There was a very brief debate on it. There were signals from the opposition parties of a willingness to deal with the issue of white collar crime, which is what it was about.

It went to committee quite rapidly and we had hearings on it in November 2009 and into December 2009. We did not complete it. I would estimate that we heard from 10 to 15 witnesses over that period of time, some giving us a great deal of detail, quite frankly, about the frailty of the legislation but information and evidence that was really necessary for us in our consideration.

We, of course, then had the notorious prorogation. We wonder about the level of integrity at the time that decision was made. The government knew the horror stories and the suffering of individuals and groups in the country. It knew about the need to get serious about dealing with white collar crime.

Without knowing what was going on in the Prime Minister's mind at the time, I would have to say that he probably gave absolutely no consideration to this bill or to that suffering when he made the decision to protect his government from the Afghan detainee issue being continuously raised in this House. He put off the House for an extended period of time beyond what was originally scheduled.

As I think most Canadians now know, when prorogation occurs, the parliamentary agenda is wiped clean. Any bill that is outstanding at that time from the government side is regulated to the dustbin and we have to start all over again, which we did when we finally came back in February 2010.

However, we did not see the bill right away. The new bill, Bill C-21, which we are debating this afternoon, was not presented to this House until May 3 for first reading. It was not put on the order paper for debate at second reading until today. So we lost all of that time through the spring and summer.

It is quite possible that the justice committee may have dealt with it fairly quickly, because of the amount of work we had already done, and had it back to the House for third reading, amended, I can assure members. All opposition parties are quite concerned about how weak the bill is. It is almost useless as it is now. However, we have some real hope, because of what we heard from a number of witnesses and some of our ideas, that it could be strengthened to the degree that it would be worthwhile to pass into law. However, we never got the opportunity to do that until today.

I am certainly signalling, on behalf of my party, as the other opposition parties have, that we will support this going to committee so that we can do something serious about this as opposed to what is contained in Bill C-21.

I have another point to make before I go to the actual particulars of the bill. We have heard that a series of amendments to the legislation are necessary if we are to have any meaningful impact on white collar crime. The government has had all that evidence since December 2009 when it decided to prorogue and knew the bill would go down into the dustbin. It had the better part of 10 months to implement those corrections in Bill C-21 but it did not do anything. Bill C-21 is exactly word for word the same as Bill C-52. There are no changes at all.

We had some very good evidence. I mean that in the sense of people who knew what they were talking about, as opposed to the government on this issue, and who came forward with very specific changes that needed to be made. Some of it was just cleaning up wording. In other cases, it was implementing meaningful amendments that would have a meaningful impact on fighting this type of crime. Did we get any of it? Absolutely nothing, not one change. Bill C-21 is word for word of what we already had in Bill C-52, which was showing, because of that evidence, to be so wanting.

It is important for those who have maybe not followed this issue, and I do not think there is a lot of Canadians who have not, to set the scene. I want to credit this information from a forensic accountant by the name of Mr. Al Rosen, who came before us with a brief presentation in writing and then expanded on it before the committee, both in his verbal presentation and in response to a number of questions from the members of Parliament, who sit on the Standing Committee on Justice and Human Rights.

He set out by saying that we had to understand where we are at, so he went through a series of the events that we had in the early part of the 20th century. He went back a bit into the latter part of the 19th century, but mostly he dealt with the 20th century. He told us to look at what we had done: Bre-X Minerals, that scandal; Nortel Networks, overstated assets, financial statements, he pointed out, restated four times and then watched the stock price collapse; dozens of business income trusts that in effect were pyramid schemes, Ponzi schemes; and the non-bank asset-backed commercial paper and all of the misrepresentations that went on with that.

At the core, if we look at the financial collapse that has occurred around the globe, that collapse is very much as a result of that asset-backed commercial paper that did not have any assets behind it. I have already made reference to the Ponzi schemes such as the one in Quebec with Earl Jones and the major one in Alberta.

He went on to point out at the same period of time the lack of response, both at the provincial and federal levels, around regulatory changes that would have gone some distance to avoid these losses. He was quite critical of governments in that regard.

He also then went on to point out that there had been Supreme Court of Canada decisions that in effect needed to be corrected. It was the permission that was granted. He made reference in particular to the Hercules management case in 1997. In effect, the court said that it was okay if a person misstated on audited statements, even though they were misleading to the public, would lead shareholders to perhaps buy in when in fact if the real truth were there, they would not have done so. He referenced the weakness in our civil courts when people would go for restitution, the length of time it would take and the long trials when it was large sums of money like this. He also mentioned the lack of prosecution in Canada and pointed out the number that went on in the U.S.

I took that with a bit of a grain of salt when we already had reference to the Madoff situation and any number of other collapses in the United States of major corporations. Although the U.S. has a more rigid and forceful approach to prosecuting, it certainly has not had the effect of deterring major crimes there.

We need to look at that. This is the context that we were dealing with when we first dealt with Bill C-52 and now Bill C-21.

The information in the brief from Mr. Rosen is not secret. It is in the public domain. The Justice Department certainly knows about it. I assume at least some members of the government are aware. One would have, and I certainly know I did, the expectation that Bill C-52 and now Bill C-21 would actually address these problems in a meaningful way. It does not. It is as simple as that.

If I can do a quick summary, this is what it would do. It would introduce a mandatory minimum. The be all end all of all solutions of all crime problems in the world, according to the government, is to slap a mandatory minimum at it, punish somebody. Maybe it would be better if we tried to prevent the crime from happening, in the first place. Anyway it would slap a mandatory minimum of two years for any fraud that is committed over $1 million.

When we heard the evidence, we heard about the huge number of Ponzi schemes, other fraud schemes, some of these schemes being mail solicitation, phone solicitation, email over the Internet type of solicitor, all of it completely fraudulent. However, more than half of those are under $1 million. Therefore, that section would not apply. The panacea for everything else will not be applicable for a large number of the white collar crimes that are committed in Canada on a yearly basis.

The Conservatives also have imposed additional burdens on our courts as to how to deal with this. It was quite interesting to see the brief from the Canadian Bar Association. I am sure the Bar Association would be upset if I used the term viciously, but it was a pretty vicious attack on the bill.

I will use this as one of the two or three examples of where the association attacked the bill. It introduced the concept in the sentencing process that if someone were convicted of a crime under this law, there would be a community impact statement. Anyone who practises law in the criminal courts, the first question that will pop out is, what is a community impact statement? We have never had that in the Criminal Code or any other sentencing provisions under provincial legislation. It is a totally new concept.

Maybe the government is being creative here. Unfortunately, it is just about useless because we have no idea what the community is going to be. It does not define that in any way. It does not put any parameters on it, any limits on it. It is not clear if it talks about it in the singular. Could more than one community impact statement be done? We may have different groups that have been impacted by it. It is extremely poorly drafted with regard to this area and a number of others.

I go back to my opening comments about the length of time. The government has had now 10 months when it could have corrected a number of these points, and this is one of them.

I am intrigued with the concept of the community impact statement. I think it is possible that in fact we may be able to develop one that is useful to victims of these types of crimes so the court has a full picture of the impact, not just on individuals but the kind of impact it may have on a community as a whole.

We have seen this a number of times when we have so-called a financial adviser consultant trustee type of person who will swindle money from a significant proportion of small communities, a community that trusts the person, who almost always is a male. It gives him its money on the basis that he will handle it properly. It then has a major impact on that small town or small village because a great deal of money has been taken out of circulation.

We can see where it would make sense to do that. The bill does not make any sense in that regard because it is probably going to end up being fairly useless.

Unless we define more clearly what community groups would be entitled to bring forth that statement, it has the real potential to clog up our courts by making the sentencing process much longer than it might be otherwise if the bill were drafted properly.

One of the other provisions in here, and again it is typical of the government's overreach when dealing with both making up crimes and dealing with them by way of punishment, is for a prohibition order. I have no argument with that, and I think any lawyer who has practised law in the criminal courts would say that, yes, people who commit these kinds of crimes should be prohibited from being able to do that either indefinitely, depending on the size and nature of it, or at least for specified periods of time once they have served time in jail or other punishment.

However, the government did not stop at that. What did was made it impossible. For instance, if I am Bernie Madoff living in Canada and I have stolen $65 billion, I could be prohibited from ever being a financial consultant adviser again. However, under this bill I would be prohibited, given how broad the prohibition order is, even from being a sales clerk in a grocery store or retail outlet because I would be handling somebody else's money. Even though the extent of the money I would be handling may be $50 for a shirt, under this prohibition order I would not be able to take that job.

This is typical of the overreach. The Bar Association, I think without being it, were very effectively sarcastic about how badly drafted this was and how much of an overreach it was.

Another provision in the bill is with regard to restitution orders. Here is where we get into the courts perhaps getting backlogged by additional responsibilities. The bill mandates that it is an absolute must if the judge does not make a restitution order, to give a written reason for not doing so.

There are times when it is obvious why a restitution order will not be made. I will use the example again of Mr. Madoff and the $65 billion. The guy is completely bankrupt. He is ill, or I understand there is some concern with his health. He is quite elderly and he has no opportunity to ever make restitution.

If one is gong to make a restitution order in our courts, there must be some basis for doing it. A judge cannot just say that Mr. Madoff has stolen $65 billion and he has to pay it back. There has to be a basis upon which to show that the judge has looked at the financial circumstances and the ability to earn income in the future and order an amount in a restitution order.

That takes time. It takes the time of police officers because they have to investigate. It takes the time of the prosecutors because they have to present that case. It takes court time as the judge is considering the evidence being put before him or her when it is obvious that a restitution order is meaningless and should not be wasting court time and the time of those professional people in doing it.

Again, this is very badly drafted legislation. There are other parts of the restitution order provisions that simply do not make sense in terms of any quality of legislation that the House or the government should pass, but they have in fact done that.

It is quite clear, mostly because of the Earl Jones case and the pressure for which I will give credit to my colleagues from the Bloc Québécois, my colleague from Outremont, parliamentarians from that province and from the legislature in Quebec City, that something has to be done. Earl Jones was just the epitome of it and we could not just sit on our hands any more.

Rather than deal with it at that point, what did the government do? We could understand that because it was under political pressure, it could come forward with a lousy bill, which we could clean up at the committee. When it got to the committee and we had the evidence and solutions for a number of the issues, what did the government do? Absolutely nothing. It came back to the House and presented the same bill again.

I want to make one more point around the regulatory functions that need to be cleaned up both at the provincial level and at the federal level. There is a lot of preventative work that could be done in this area if the government got at it.

The other thing is with regards to enforcement of our laws. We need much more effective teams of specialists that can fight white collar crime, identify it and prosecute it effectively. We do not have those teams in place at this point. The government should be moving on that.

Standing Up for Victims of White Collar Crime ActGovernment Orders

4:40 p.m.


Alan Tonks Liberal York South—Weston, ON

Mr. Speaker, I am sure the House would agree that the member has a very intimate knowledge of how the Criminal Code works, as a lawyer. I have always taken his experience and have attempted to ask questions that would perhaps allow a layperson to understand better how the Criminal Code works. My question is related to that.

I think the member can appreciate how frustrating it must be to those who are victimized by these white collar bandits who are so skilful in defrauding very innocent people. What compounds that even more is that they get away with it, that they have assets that are hidden, and the fact that in this bill, restitution where possible is required and a judge has to say why he or she is not making a motion for restitution. I am sure the member can feel the frustration on the part of those who have been defrauded.

Is there any way this bill could be strengthened with respect to the proceeds of that type of crime for those who have been successfully prosecuted, so that through a judge's order, the resources are there to exact that money back and repay it to the people who have been defrauded?

Standing Up for Victims of White Collar Crime ActGovernment Orders

4:40 p.m.


Joe Comartin NDP Windsor—Tecumseh, ON

Mr. Speaker, in fact we were discussing this right at the point when the House adjourned in December of 2009. I do not think we actually got any of this on the record of the justice committee. We were discussing it, the opposition parties in particular, and there was a strong feeling that in looking at the proceeds of crime sections that deal with organized crime, we should expand the definition of organized crime to cover this, because a number of these schemes in fact are organized and should fit into the definition of organized crime. We have not been using those sections, perhaps because the prosecutors are worried that the definition is not broad enough to catch them.

Therefore we should either expand the definition of organized crime to cover white collar crime of this nature or simply allow the proceeds of crime sections to be used in these circumstances, both at the federal level and the provincial level. Quite frankly, the provincial level has been more effective in gathering proceeds of crimes for victims than the federal government has been.

There is one of two ways of doing it, or maybe both, and that is something that needs to be considered. It obviously was not addressed at all when the bill was drafted. There had been some suggestions from some of the witnesses. The government did not pick up on them at all.

Standing Up for Victims of White Collar Crime ActGovernment Orders

4:40 p.m.


Pat Martin NDP Winnipeg Centre, MB

Mr. Speaker, I wanted to take a moment to join in this debate. I appreciate the comments from my colleague from Windsor. I too learned a great deal about not only the process through which this bill found its way back again to us but also some of the issues they have been wrestling with at committee, which would in fact perhaps have benefited this bill had the conclusions they came to found their way into the bill.

The point I would like to ask him to expand upon is one that has come to my attention as a labour leader, and that is that more and more often, we have to admit that white collar crime is in fact a blue collar issue. Over 60% of all the trading on the New York Stock Exchange, the TSE and the NASDAQ is actually employee benefit plans, investing and reinvesting workers' money on the stock exchange.

In a funny kind of way, unions' pension plans and benefits plans are the most powerful stock of venture capital or capital or investment in the world. An odd kind of thing has happened. It is like Marxism realized. We have taken over the means of production without a single shot fired. We have bought and paid for it with our own benefit plans. It is a beautiful thing, when we think about, but the vulnerability is there. What I want my colleague to talk about is that perhaps it is going to take a great deal more training for the trustees of these multibillion dollar benefit plans.

My own union is a small union, the carpenters' union. It has a $40 billion pension plan, and the trustees have to be aware of the vagaries of the marketplace, above and beyond, in a way like never before. First of all, there are the fiduciary responsibilities and obligations associated with being a trustee. One cannot just take a guy off the shop floor and put him in charge of a $40 billion pension plan. There is also the vulnerability of it to the new generation of white collar criminal who could eat it away.

That is what I mean by the blue collar side of white collar crime, on which I would like my colleague to expand.

Standing Up for Victims of White Collar Crime ActGovernment Orders

4:45 p.m.


Joe Comartin NDP Windsor—Tecumseh, ON

Mr. Speaker, it is certainly a very valid point. I want to point out to my colleague from Winnipeg Centre that he should not forget about the Canada pension plan, which is actually the biggest fund in the country currently.

Standing Up for Victims of White Collar Crime ActGovernment Orders

4:45 p.m.


Pat Martin NDP Winnipeg Centre, MB

It's $140 billion.

Standing Up for Victims of White Collar Crime ActGovernment Orders

4:45 p.m.


Joe Comartin NDP Windsor—Tecumseh, ON

Mr. Speaker, it is $140 billion. My friend knows the amount.

There is no question. I would hate to think of the labour movement and workers generally as being raving capitalists. They are not. They would be much more prudent if they were doing the advising.

I will take issue with him about the need for bringing people off the floor and letting them make decisions, when we look at some of the fiascos that came out of the most recent financial collapse. These so-called experts got taken in by the asset-backed paper that did not have any assets behind it, by using regulatory assessments of these assets and valuing them, clearly not understanding them.

I sometimes think it might be better if we simply had the honesty and integrity of the average worker making those decisions, maybe having people explain to them how the system works. The common sense we would get from the average worker might go a long way to preventing the kind of abuse we have seen in the last round as stock markets collapsed.

I want to make one more point. There is no question that this hurts people badly. We have seen Nortel workers showing up constantly both here and at Queen's park in Toronto. When one actually talks to them, one hears their pain. It is a two-parter. It is not only the financial loss they have suffered but all of the negative consequences that is going to have, including the loss of health benefits and the impact on their personal health.

I argue with them not to think this way, but I know it happens. I know from having clients over the years who have suffered as victims of these schemes. There is guilt that goes with it. It is unfortunate that is the case, but it is one of the side products of these types of crimes and one that really should push the House even more to make sure preventive and punitive programs are put in place that will put an end to it.

Standing Up for Victims of White Collar Crime ActGovernment Orders

4:45 p.m.


Jim Maloway NDP Elmwood—Transcona, MB

Mr. Speaker, the member knows that in the United States the Americans put away more than 100 embezzlers from WorldCom and Enron and Conrad Black. On the other side, the Canadian experience is that we have put away almost nobody in this country. Yet the Americans still had the experience with Bernie Madoff getting away with $65 billion.

At least the U.S. has moved to re-regulate, to reverse the period of deregulation under the Republicans for the last 8 to 10 years. They are at least taking the issue seriously in the United States now and attempting to re-regulate. Even though it had a better system than Canada and was more effective in putting people in jail, it still allowed a lot of abuses. It is time Canada caught up, rather than falling further behind the United States.

Standing Up for Victims of White Collar Crime ActGovernment Orders

4:45 p.m.


Joe Comartin NDP Windsor—Tecumseh, ON

Mr. Speaker, I certainly agree with his analysis of what happened in the United States both in terms of the U.S. prosecuting much more forcefully than Canada has and, at the same time, allowing the regulatory function, which is really about prevention, to be diminished. They are putting it back in place and we need to be doing the same here in Canada.

We need to get more aggressive. We need to put the units in place that can do the investigation and guarantee that we are going to get convictions in both cases. We heard from the United States and they know how to do it. They just do not have the staffing and resources to carry it out.

Standing Up for Victims of White Collar Crime ActGovernment Orders

4:50 p.m.


Derek Lee Liberal Scarborough—Rouge River, ON

Mr. Speaker, I am pleased to intervene on debate on Bill C-21. I don't think I had the opportunity in the previous session.

What I first thought about the bill, I will be honest, was that the government was approaching the Criminal Code and its need for occasional reform as a kind of a smorgasbord. One time it would take a section over here and fix it up and then take another over there, and by the time we are finished.... I think our order paper shows a number of Criminal Code amendment bills at this time.

I thought it is taking a lot of parliamentary time and it is a lot of procedure. Why did the government, if it wanted to make some Criminal Code amendments, not put them all in one bill? We could have debated it and dealt with it that way.

The government chose not to. I thought it was for political reasons and I still do. However having viewed the process, I see that it actually gives the House an opportunity look at each of the bills more closely. Sometimes that is scary and sometimes that is helpful. At least it gives us extra time to debate. If the government had a Criminal Code amendment bill with 10 or 20 components, most of us would be unable to address most of the components, if we wanted to.

Looking more closely at each of the bills will probably tilt toward a better product. Perhaps a bill with more scrutiny has fewer problems down the road and is less likely to encounter difficulty in the other place, should the Senate pick it apart, and is more likely to be successful in the real world when the police and the courts deal with the new legislation.

This particular bill deals with sentencing for fraud, and it modifies the Criminal Code provisions related to fraud convictions. My party is supporting this in the context that a bill of this nature was probably inevitable over time.

If we look back over recent history, we wonder why something like this had not come forward sooner, but looking at the evolution of fraud crimes we also have to look at the evolution of financial services. If we look back at it, we can see how complex the evolution has been since the second world war.

I was not here then, happily, but before that we had basically cash and cheques, some kind of a postal money order and bank money orders. That was a simple financial world. However since then, this has proliferated. We do not just have cash, cheques and money orders. We have credit cards, debit cards, ABM cards and cash cards that actually hold a cash value and we can spend the cash value. There is a whole area of financial species that a fraudster could focus on.

We also have a whole new world of online Internet financial transactions. We even have online gaming, charities online, fake charities online and shopping online. In the world of securities we have stocks, bonds, GICs, T-bills, life insurance, pension plans and pension plans that are self-administered. All of these are financial envelopes, many of which did not exist 50 years ago, where the bad guy is still out there trying to get a piece of the action.

Even in our own federal financial envelope we have RRSPs, home ownership savings plans, RESPs, RRIFs, savings accounts, chequing accounts and all manner of other investment accounts. The average person might be forgiven for getting lost in this whole area of financial expansion.

In addition, the world of finance has gone global. It is not just bad guys here but it is bad guys internationally. The financial world has expanded in a huge proliferation.

In addition, something that happened somewhat slowly, which we did not notice, was that since the second world war we have all become a lot more wealthy. We in this country take for granted the wealth that we generated. The GDP per person has gone up, if not exponentially, very favourably. Canadians are much wealthier than they used to be.

These trillions of dollars of wealth, financial transactions by individuals, corporations, government and charities, have increased the opportunity for those who would steal from us to go ahead and do it in many different ways.

Fraud is essentially the criminalization of the old tort of deceit. Fraud is when someone intends to enrich himself or herself by taking money from another individual by deceit. That was the simple concept of fraud. However, with the backdrop of this proliferation in financial services and wealth and globalization and inter-con activity enhanced by the Internet, that basic law of fraud has stayed the same.

Although we are proposing an amendment now dealing with the sentencing for fraud, it would not surprise me at all that we would see a further change in how we approach some of the crime in the area of financial services shopping because It is quite likely that the bad guys who are doing this now will continue to do this and will find ways to disrupt and steal from innocent Canadians.

In the bill, there is reference to a restitution procedure. It has been in the code as a sentencing option for some time now. It is not used frequently but it is used. Bill C-21 contains a restitution procedure and some forms that are contained as a schedule to the bill, by which a victim of this type of fraud can ask the court for restitution. I have some concern about this. I am not suggesting that it will not work but it may have some break in problems.

The first issue that I want to flag for the consideration of members both here in the House and on the justice committee is that the reference to restitution in the courts under this bill does not really say who would be in charge of the process. It does not say that the crown prosecutor would be in charge of this process. It just seems to say that if someone wants restitution, he or she will need to fill out the form and send it in.

Our criminal courts are not used to this. I am not saying that this will happen but I have this vision of a criminal court starting to act like a small claims court. The prosecution is complete, there is a conviction and then the judge turns to the clerk and asks whether there are any requests for restitution. The clerk will say, “Your Honour, we have 728 applications for restitution, totalling $1 million.”

Of course the judge has spent his or her career convicting people, not as an accountant. Judges do not have calculators on their desks. They do not have the time to go through 728 restitution applications. So there is an administrative function here. That was the second point.

Third, there is this restitution function and an application form of sorts. It is a fairly brief application. There is nothing wrong with it. It is kind of short and simple. It does raise the expectation of the victim, who may be one of many, that he or she will get restitution because he or she has been invited by somebody to fill out the form and send it in the judge. The judge has the form, the form is filled out and it says that $7,528 is what this guy stole. It raises an expectation that the court will be able to deal with this.

I do not think that criminal court judges would be ready for that, although some of them have handled restitution orders previously, but it will need a kind of a management system. In fairness, the federal government does not manage these courts. It is done by the provinces. Therefore, the provinces will need to generate some system. They will need to hire somebody who will to understand this and manage all of these forms and requests for restitution that come in.

While it is certainly part of the Criminal Code, it will fall to the provinces, the crown attorneys, the court clerks and the judges. I am pretty sure the judges will resist the criminal court becoming a small claims court or the equivalent of it. They will say that if they want to do small claims court stuff in the criminal court, then they should bring in a small claims court judge.

I do not know if that will happen. We will wait and see. I wanted to flag that and the higher expectation that might be there on the part of the victim that he or she would receive restitution simply because he or she followed the rules, filed the form, put in the amount and are hoping the judge will give them an order.

Last, I will deal with the restitution exercise. I hope the Department of Justice will be able to describe at the committee hearings the impact of a bankruptcy or likely bankruptcy on the whole restitution procedure or on the order. Will a concurrent or subsequent bankruptcy mean that the restitution orders are worthless? If they are worthless, it is probably not worth the time to spend a whole lot of administrative hours, court time and the judge's time sorting out the restitution if, in the end, there is a bankruptcy.

At some point, someone administratively will need to identify some assets or an asset that could produce a recovery for the restitution claimants, that issue of the relationship between the restitution order and a concurrent or related bankruptcy.

Also, and this is really a bankruptcy issue, which is federal, but let us say that the crook has transferred some of these assets or the proceeds of the assets into the name of a relative. What jurisdiction does the court or the judge have in relation to those asset transfers or the hiding of those assets in the face of a restitution order?

One of the members spoke earlier about this getting very close to some of the organized crime sentencing procedures and proceeds of crime legislation that already exist on the books.

I do not know whether these aspects have been sorted out or whether the provinces and the crown attorneys who will need to administer it have been consulted on this. I am not objecting to restitution orders but this legislation seems to be importing a fairly conspicuous wholesale procedure. We know that in some of these cases the frauds can go into many millions of dollars with many people being hurt. While the new sentencing provisions are intended to target the big-time fraudster, the million dollar threshold is described in one part of the new law, I think there may be a learning curve here, if I can put it that way, and possibly there may be further legislation needed if the courts are going to get seriously into the restitution procedure.

Another of our colleagues was good enough to mention crime prevention, as my colleague from Moncton—Riverview—Dieppe did. This legislation deals with the crime and the effects of the crime after it has taken place. It is closing the barn door after the horse has left. While there is a role for that, while it is drawing a line in the sand for our society, there is nothing in the statute that appears to reach out and deal with some kind of prevention of crime in the first place. It does not get out in front.

As a society, I think we will need to invest a bit more in crime prevention. If we can cut some of these massive frauds down by half, one-quarter or one-third, that would be worth it, but we need to invest institutionally in methods, which means looking to our securities regulators, bank regulators, chartered accountants, lawyers, real estate brokers and mortgage brokers. Most of these organizations self-regulate and we need to look to them. I am not too sure about the process but somewhere in that administration and regulation of those professions and institutions we will find some ways to spot a big fraud early.

As members know, many of the big frauds do not actually start out as big frauds. Many of the big ones started as quite small and then, once the mistake was made or the money stolen, however small it was, more money is taken to infill and to hide and it grows. It gets to the point where the crook, who may not have set out to be a crook in that sense, ends up robbing Peter to pay Paul and moving all kinds of money around and harming so many people. If our regulatory mechanisms could spot some of this in the early stages, it would go a long way.

I recall in Ontario a very sad case of a guy who was selling fake franchises. Even though that is provincially regulated, a way has not been found to prevent that kind of fraud. However, at the end of the day the principle of caveat emptor must remain. The buyer must beware. We must ensure our citizens are educated, sensitive and wary of these kinds of things. That type of public education is very valuable.

Standing Up for Victims of White Collar Crime ActGovernment Orders

5:10 p.m.


France Bonsant Bloc Compton—Stanstead, QC

Mr. Speaker, I am pleased to speak today to Bill C-21, An Act to amend the Criminal Code (sentencing for fraud).

Generally speaking, the bill makes five new amendments to the Criminal Code. First, for persons who commit fraud over $1 million, it provides for a minimum sentence of two years. Second, it adds four aggravating factors for various types of offences involving fraud over $1 million. Third, it also creates a new discretionary prohibition against employment. Fourth, it allows judges to order restitution at their discretion. Fifth, it provides for a statement called a “community impact statement” to be considered.

At first glance, all these measures may seem laudable, but that is a mere smokescreen. The content of this bill lacks forethought in spite of the fact that it has been introduced in this House twice. The first time, it died on the order paper when the Conservatives prorogued Parliament at the instigation of the Conservatives. Prorogation, which we roundly criticized, has not produced any improvement in the Conservatives’ bills. If this is the best they can do, it is cause for concern.

For example, take the new two-year minimum sentence to be imposed for general fraud over $1 million. My party and I have spoken at length about this already. Minimum sentences upon minimum sentences are not particularly useful. They have no significant effect on criminals’ behaviour. Moreover, a minimum two-year sentence for fraud over $1 million amounts to reducing the sentences currently being imposed. When we questioned the Minister about this, he was unable to cite a major fraud case where the sentence was for fewer than two years. At this time, sentences are more on the order of six to seven years for major fraud cases. So why would we set a minimum sentence of two years for cases of fraud over $1 million? That is the question.

With respect to the aggravating factors that will supposedly be added once the bill is passed, they are already considered by the courts. The Vincent Lacroix ruling, for example, lists those factors point by point. Sure, putting aggravating factors that already exist down on paper is another way for the Conservatives to look good, but it will not really produce any concrete results. Since the Conservatives came to power, we have got used to this way of doing things.

Like my colleagues, I am going to resign myself to voting for this bill in principle, but only so that the committee can improve it. The Minister has completely missed the mark by tackling economic crime this way. A number of points are not addressed in this bill. For example, release after serving one-sixth of the sentence has not been eliminated. This means that people like Earl Jones and Vincent Lacroix could get out of prison even before serving a reasonable portion of their sentence. Before setting minimum sentences, we need to start by limiting speedy releases for people who deserve harsher sentences.

I would like to take this opportunity to talk about one of my constituents who was the victim of fraud. I will thereby demonstrate the many flaws in Bill C-21. This person sought help from my offices in Compton—Stanstead. They had RRSPs amounting to several tens of thousands of dollars. At a meeting of investors, the person met several financial planners who subsequently advised the person. They had the person withdraw their RRSPs and then invest in various ways. A little while later, the constituent in question could no longer find the money from their RRSPs. The planners had defrauded them. Not only was this person defrauded, but on top of that they owe a significant amount of money in taxes for withdrawing the RRSPs.

This person was retired. And I do mean “was” retired. They now have to go back to work to repay the money owed to the government, while the looters are still at large. The money belonged to this person. It had been saved over several decades of working. How is this bill going to help this person?

This bill would not even apply to their situation. This person has lost several tens of thousands of dollars. That is a long way from the $1 million fraud cases covered by Bill C-21. The kind of situation I have described happens more often than one might think. So why would we limit ourselves to fraud over $1 million? We have to go after the big thieves, but we also have to go after the little ones who have more victims.

To illustrate further, let us say that this person lost $1 million. Will a minimum prison term help this person get their money back? No. However, if the looters can be found someday, then yes, they might get a minimum of two years in prison. But as I said earlier, the sentences currently being imposed are on the order of six or seven years. The same is true for the aggravating factors proposed in the bill: they are already being applied now. This does not change anything at all.

The bill also creates a new discretionary prohibition order against continuing to work. Judges will be able to prohibit fraudsters from seeking or working in a job in which they would have authority over someone else’s money, real property or securities. That does nothing, though, to help people who have been defrauded. In addition, the bill gives judges a great deal of latitude to decide on their own, without any guidelines, how long this employment prohibition should last. Should judges really be given this much discretionary authority? We will have to discuss it in committee.

The bill also does nothing to resolve the restitution issue. Once again, the Conservatives are happy with mere window dressing. The discretionary restitution order is replaced by a requirement that judges “consider making a restitution order”. That is just word play. Once again, the Conservatives are aiming in the right general direction but they are way off the mark because this bill does not really change anything for the victims of economic crime.

Another problem is the bill’s failure to deal with tax havens. Dealing with them would actually be an excellent way to provide restitution to the victims of economic crime. Thanks to tax havens, money belonging to those who were defrauded can disappear without a trace. If we deal with them, we may be able to trace victims' money.

There will always be people, of course, who try to beat the system and take money from small investors. It is up to us to find the best ways to prevent this crime.

I should emphasize that I am entirely in favour of punishing so-called white-collar criminals. But that is not enough. If all we do is put criminals in prison, they will just get out someday and start all over. We need to find better, more far-sighted solutions. We have to prevent these crimes and take measures that will make it much more difficult to defraud Canadian and Quebec taxpayers.

A little more than a year ago, the Bloc Québécois proposed a plan for dealing with economic crimes. It aimed to prevent these crimes and punish fraudsters so that justice could be done. In my opinion, the most important measures are those that help victims because they suffer the worst consequences of fraud.

In addition to eliminating parole for white-collar criminals after one-sixth of the sentence has been served, fraud over $5,000 should be included in the Criminal Code.

As things currently stand, the first paragraph of section 380 of the Criminal Code provides for a maximum sentence of 14 years for fraud over $5,000, but that is all. In contrast to the minister’s bill, which pertains only to economic crimes over $1 million, we need to deal as well with smaller cases of fraud involving small investors. It is all very well to fight cases of fraud exceeding $1 million, but crimes this large are relatively rare. I am sure the minister agrees with me on that.

In fighting economic crime, we should also ensure that banks are required to report irregularities in trust accounts to the competent authorities. People should certainly act responsibly when choosing a financial planner. They should do all that is needed to check things out. It is up to the banks, though, to do their part as well and work together in good faith with the Autorité des marchés financiers.

As I said before, the time has come to deal with tax havens. To do this, why not amend the Income Tax Act to stop the use of them? For far too long, the Conservatives and Liberals have been endorsing practices of this kind. It has to stop, especially as tax havens could be a major source of compensation for the victims of economic crime.

Speaking of victims, it is obvious that the current government does not really care about them at all. Bill C-21 has a short title, the Standing up for Victims of White Collar Crime Act, that is far from a true reflection of what it is really about. Once again, the Conservatives are light-years away from telling the truth. This bill makes a timid effort to deal with fraudsters, but it fails utterly. One thing is sure: it does nothing at all to help the victims of these crimes.

When it comes to economic crimes, we need to focus above all on the victims. It is all very well to put the perpetrators in jail, but that is not enough. We in the Bloc Québécois will put the emphasis on this kind of approach by proposing a provision in the Income Tax Act that would allow victims to deduct the amounts that were stolen instead of treating them as capital losses.

Bill C-21 is clearly inadequate. It contains a few timid, makeshift measures, but it is far wide of the mark. As I said, we will be happy to study it in committee and improve it. We will do our duty by proposing a constructive alternative to the views of the Reform—Conservative government.

In conclusion, I would just like to say that this bill is further proof that the values of the Quebec nation are poles apart from the values of the Conservatives.

Standing Up for Victims of White Collar Crime ActGovernment Orders

5:20 p.m.


Yasmin Ratansi Liberal Don Valley East, ON

Mr. Speaker, I am pleased, as the member of Parliament for Don Valley East, to rise and speak on Bill C-21. This bill is particularly important where I am concerned. As an accountant, as an FCGA, as a fraud investigator, I think it is high time this bill was introduced.

So that people understand what is involved in the bill, we need to give a little background.

The legislation was introduced in response to several high-profile white collar crime cases, including Norbourg Securities and Earl Jones in Quebec, and in the wake of the Bernie Madoff Ponzi scheme and revelations in the U.S., many Canadian investors have grown increasingly concerned about white collar fraud.

Other than the title, this bill is the same as Bill C-52, which was introduced during the previous parliamentary session and died at prorogation while at committee.

Bill C-21 has several components that need to be reviewed and addressed in committee.

It introduces a mandatory minimum sentence of two years for fraud involving more than $1 million, regardless of the number of victims. It specifies aggravating factors to be considered at sentencing, including the psychological and financial impact on victims, the age and health of victims, and the magnitude and duration of the fraud. It requires the court to indicate what mitigating and aggravating factors were considered in relation to the sentence.

It allows the court to prohibit an offender from assuming any position, voluntary or paid, that involves handling other people's money or property. It requires judges to consider restitution where possible and when possible, and it requires judges to consider community impact statements at the time of sentencing.

This bill is very close to home, as I know a number of constituents who were involved or who gave money, their life savings, to this Colgate whitening thief and were told that they would get a 400% return. People think anybody who is involved in a Ponzi scheme or who partakes in it is greedy or does not know what they are doing. I think it is the lack of financial acumen that gets people involved and it is the hype.

It is important that the government realizes that when it prorogued Parliament, Bill C-52 went to bed, and Bill C-21 has been introduced, but in the meantime a lot of people have suffered and this suffering could have been prevented. Vulnerable Canadians, taxpayers, have lost their total savings in this scheme. People have lost their houses. People have lost their jobs. People have become depressed because they lost all their money. It was important when we were studying Bill C-52, which is now Bill C-21, that it should have been there. It should have been in place. It should have been able to help those very vulnerable people.

The impact of white collar crime costs the taxpayers and the treasury a lot of money, because hard-working Canadians have lost their money. The fraudsters are committing fraud against these vulnerable people. Fraud is not victimless. Fraud preys on the weak and the vulnerable in society. We, the Liberals, support sending the bill to committee because we believe it is the right principle.

The principles behind the stricter sentencing rules are very important, but we also know that they are not enough to prevent these frauds from happening. Sentencing is important, but prevention is equally important in white collar crime.

I would like to know why the government does not use this opportunity to do more. The opposition and the public have been calling on the government to end the one-sixth accelerated parole provision for these types of offenders and the government has not acted yet. We hope that by sending it to committee we can have some practical changes.

While we support the bill's focus on stricter sentencing guidelines for white collar criminals, we believe the scope is too narrow to be truly effective in the fight against fraud. We would like to see that when it goes to committee there is a wide consultation with the stakeholders, the people who have been marginalized, the people who have been robbed of their hard-earned dollars. We would like to see that the financial industry is also engaged in this discussion, because they are the ones who probably regulate the financial industry, the people who do our investments, et cetera, and it is important that these people are also held to a very high standard and that there is important legislation to ensure that fraud is not committed by professionals or by any other laymen who would bring about a Ponzi scheme.

The stakeholder reaction to the legislation has been mixed. While victim groups have been lobbying the government to strengthen white collar criminal provisions, some have expressed discontent that this bill falls short, as I mentioned, because it fails to address regulation or the one-sixth accelerated parole review rule.

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

The RCMP has expressed its support for the bill, indicating a mandatory sentence for such crimes has the potential to be a useful deterrent against criminal activity.

If we come to what this bill would really do, many times in the House we have heard that there is no greater fraud than a promise not kept. The bill died on the order paper last year, taking with it the life savings of every Canadian who has fallen victim to fraud since then. However, this bill, as I have reiterated, would not be enough. It is important to send it to committee. It would send the right message, but words without deeds ring hollow to Canadian mothers now finding themselves wondering how they will feed their kids, or to grandparents without anything to leave behind, or to families that have lost their savings and have had to give up their houses, their cars, everything, to put food on their table. The financial security of families has been ruined while this bill died at prorogation.

I hope the government will not delay by doing any more photo ops but will put enough meat on the table and will help the opposition parties in their desire to bring justice to those who are seeking justice.

While the government was doing its press conference, Canadians, as I mentioned, have lost their savings. It is important that the bill move forward at a quick pace and be sent to committee for further study.

The bill provides nothing, for example, for the prevention of crime, only punishment after the fact. No jail sentence and no restitution can make up for the sense of betrayal and hurt that follows fraud. No jail sentence and no restitution can restore the confidence or livelihood of a Canadian cleaned out by someone who the victim had grown to trust, a new parent without a nest egg, or a dying grandparent without a bequest. Prevention keeps Canadians safe. Nothing is more important to the livelihood of Canadians, and nothing in this bill provides a hint towards it.

I have heard a lot of stories from people who have been defrauded. They had been approached by people who they considered friends and trusted and they were taken for a ride. Colgate whitening comes to mind. People sometimes do not know the difference between a fraudster and a genuine investor. We have seen it in people trying to sell electronic Canadian stamps, without realizing that it is the purview of Canada Post.

How do we keep Canadians safe? In order to keep Canadians safe, it is important that the bill be sent for study and that there be a high level of consultation but that Canadians be given an opportunity to be engaged or educated in fiscal management. There should be an opportunity to have transparency and clarity as to what one can feel is a good investment or bad investment. Nobody is asking the government to oversee this. We are asking that the bill have provisions for prevention.

The bill fails to keep Canadians safe because it prefers punishment to prevention. I believe this is in line with the Conservative government's perspective on crime. Crimes are complex. Crimes are best considered by judicial experts, men and women of the bench with entire professional lives dedicated to finding fair and balanced judgments.

I am not sitting as a judge and neither is any member of the House, but as an accountant, financial consultant and fraud investigator in my previous life, I think it is important that people realize that there are ways in which prevention can take place. Everyone says that prevention is better than a cure, and nobody knows it better than those who are victims of fraud.

When I talked about the Canadian Bar Association, it is opposing this bill for a very simple reason. It is keenly aware that what might work in Gander likely does not work in Moose Jaw or Toronto and what is appropriate today might not be appropriate tomorrow. Cases are unique and it is both reckless and irresponsible to assume that we in the House could tell a justice presiding over a case that we are more qualified than he or she to determine the appropriate sentence for a particular crime.

The bill provides for a mandatory minimum sentence for the commission of a fraud exceeding $1 million. While this seems to be reasonable, I believe it is not for us in this place to impose such conditions upon the trained, qualified and professional judges presiding over decisions. There should be guidelines, not minimum sentences, and judicial discretion, not rigid mandates from a place far away. When a crime is committed in, say, Don Valley East or Toronto, I want a judge in Toronto to examine the case on its own merits.

Bill C-21 is worthy of further examination. It sets the right tone. It should be sent to committee for further study.

However, the bill does not do enough to reassure those people taken in by the Earl Jones fraud, the Norbourg security fraud, the Bernie Madoff Ponzi scheme, the Colgate scheme, or the many other schemes that we know of or that have not been reported. It does not assure the wounded victims of past fraud or the hesitant investor that we need now more than ever in this period of economic uncertainty a prevention tool. This is an important first step. I hope that the House will send the bill to committee and that we will have a logical and thorough discussion of the bill so that it may help others avoid such problems.

Standing Up for Victims of White Collar Crime ActGovernment Orders

October 4th, 2010 / 5:40 p.m.


Jim Maloway NDP Elmwood—Transcona, MB

Mr. Speaker, I am very pleased to speak to Bill C-21, An Act to amend the Criminal Code (sentencing for fraud).

Bill C-21 was introduced in the House on May 2, 2010 by the Minister of Justice. In fact, it is identical to Bill C-52 which was introduced during the second session of this Parliament, and did not become law because of prorogation, which we are very familiar with around here, on December 30, 2009.

The intent of the bill is to help crack down on white collar crime and increase justice for victims through measures that include a two-year mandatory minimum sentence for fraud over $1 million, additional specified aggravating factors for the court's consideration in sentencing, a new type of prohibition order, new obligations on the judge with respect to restitution orders, and a new type of impact statement to consider in sentencing.

The fraud provisions of the Criminal Code were most recently amended in 2004 in response to global impact of corporate scandals associated with companies such as Enron, Tyco and WorldCom. These amendments created a new offence of improper insider trading, increased the maximum sentence for the offences of fraud and fraud affecting the market from 10 to 14 years, and established a list of aggravating factors to aid the courts in sentencing.

The federal government also announced it would create a number of integrated market enforcement teams composed of RCMP officers, federal lawyers and other investigators, such as forensic accountants, to deal with capital market fraud cases.

Now the question is, with all of this supposed action on the part of the government, why are we not seeing results? Why are these fraud schemes still being uncovered?

We have to go back a number of years. I think most people have heard of Charles Ponzi and Ponzi schemes, but there are still a lot of people who are not familiar with the concept. A very large percentage of fraud schemes that are uncovered are in fact of this type.

Essentially, it is the use of investors' money that is taken in today to pay off previous investors. What happens is that organizations offer high rates of return and they entice people to give them money. Then, rather than invest the money in proper facilities, they simply use the money to give a promised return to their previous investors. We know that in doing that, eventually things are going to fall apart.

These schemes tend to go along. In some ways they are similar to the chain letter concept that people are familiar with. While the market is expanding, as happened in the 1920s and in the 1990s, these schemes can continue unabated for a number of years before they are found out. Eventually they are all found out because when the market drops, the people who are running the scam do not have the funds available to pay out. It essentially becomes a run on the bank. Everyone wants their money back, and they do not have the liquidity to do it. Basically, they run out of people to invest in their scheme.

In the case of Charles Ponzi, he collected approximately $9.5 million from 10,000 investors by selling promissory notes paying a 50% profit in 45 days. As a matter of interest, Charles Ponzi lived in the United States for a number of years, but there is a Montreal connection. In 1907, Ponzi moved to Montreal and became an assistant teller in a newly opened bank basically servicing new immigrants to the city. The man who owned the bank paid 6% interest on bank deposits, double the going rate at the time.

I emphasize the fact that the success of these schemes is based on people's greed, in that they are offering a very high rate of return. That is something the public should be very aware of. On checking the market and the banks, people will see that the average rate is roughly the same among the banks and institutions. When one institution offers double the rate, then people should be suspicious that something is wrong.

Even today, if one financial institution comes out with an offer that is higher than the others, people should not be lining up to buy that investment. People should be questioning why the institution would offer a higher rate of return. Perhaps it is short of money and may not be able to pay investors back.

In this case, Mr. Ponzi eventually rose to be the manager of that Montreal bank. He found out that the bank was in serious trouble because of bad real estate loans. Does this sound familiar? This was in 1907, in the last century, not in 2007. The bank was funding interest payments not through profit on investments, but by using money deposited in newly opened accounts. The bank eventually failed. The owner ran away to Mexico with a large part of the bank's money. This is how Mr. Ponzi got started. At the end of his career, I believe he died penniless and was not able to hide his ill-gotten gains.

However, that is not the case with the modern versions of the Ponzi scheme, in the sense that the schemes we see now are sophisticated and are planned well enough in advance that the money, as one of the members mentioned earlier, is sent off to tax havens. In 1907, Mr. Ponzi probably did not have the wherewithal to take his ill-gotten gains and get them off to Panama, Switzerland, or other tax havens. Perhaps he even believed that his scheme would never end. Maybe he misunderstood what he was doing.

The same cannot be said for an investor like Bernard Madoff, who essentially stole $65 billion. We are not talking about millions; we are talking about billions, $65 billion. This is a guy who opened the stock exchange on a routine basis. He knew all the players. He was an insider. He was a guy who was approached for advice.

Ten years before Bernie Madoff was arrested, there were attempts to gain the attention of the Securities and Exchange Commission in the United States with information. It was well documented before the House of Representatives in the United States last year when Harry Markopolos detailed the whole sordid history. Ten years prior to that he had worked for Rampart Investment Management in Boston and his boss asked him whether he could duplicate Madoff's strategy. He said that the funds police each other. In the competitive world of business, competitors watch each other. It was not a surprise to other competitors in his field that he could produce returns because it is to be expected that some funds will out-perform others, but to do it on a consistent basis, month after month, year after year, raised red flags.

Somewhere along the line, Bernie Madoff's fund should have had a loss. At least once over a 10 year period, he should have shown a loss. Even the best of funds that go up on a routine basis do not go up forever. If the sector the funds are invested in does well, it will do well for maybe six months or a year, but it will not do well each and every month, year after year. Bernie Madoff's fund raised a red flag.

Harry Markopolos figured this out very quickly. He gave information to the SEC, but it did not listen to him. The SEC on several occasions checked Bernie out. It investigated his funds annually and stated that his returns were on the level. The SEC, the cop that was supposed to police the fund, did not do its job. It did not do a proper report, and this allowed this ponzi scheme to continue unabated year after year. Meanwhile, more people and organizations bought into the fund. This shows that deregulation has created a big problem in the United States.

Members will know that in the 1920s, after the stock market crashed, the president of the day was looking for somebody who could regulate the financial institutions and the stock market on Wall Street. Many members will know that he recruited none other than Joseph P. Kennedy, who had made large amounts of money in the wild and woolly unregulated markets of the 1920s. Justifying his appointment of Mr. Kennedy, the president said something to the effect that it took a thief to catch a thief. A lot of the rules put in place under Mr. Kennedy stayed in place for many years.

The system operated fairly well under those rules until, during the Bush years, Republicans adopted a philosophy of deregulation. The whole idea was to deregulate world markets. All financial institutions had to go global, and the way to do that was to have super financial institutions.

We saw this happen more or less in Canada when the current Conservative government was in opposition and the Liberals were in power. Canadian banks were trying to get the government to deregulate, which would have allowed them to swallow each other up and get bigger.

To the Liberal government's credit, it did not do go this way. That is why the current Conservative government is not in the mess that it could be in right now. I am sure the Liberals were all for deregulation, but had they had their way we could be in as big a mess as Ireland, Iceland, Portugal, or any of the other countries that opted for a deregulated environment.

A big part of the puzzle is to deal with this deregulated environment and try to pull the whole system back under some kind of control. The United States is doing that. It is starting to re-regulate huge sectors of the investment industry, the banking industry, in an effort to combat this type of activity. In spite of that, the American system over the last 10 years had a much better track record than the Canadian system. All we have to do is look at the number of bad guys that the Americans put in prison over the last few years and compare it to how many the Canadian system put in prison. We would have to look long and hard to find anybody who ever went to jail in Canada for white collar crime and fraud. There may be one or two, but that is about it. We are talking about single digits.

In the United States, several hundred people were put in jail for their white collar crimes, including the people who ran WorldCom and the people who ran Enron. Conrad Black, a Canadian who committed his white collar crimes in Canada, was not touched by Canadian authorities. In fact, he was eventually prosecuted and put in jail by the American system, the same system that spawned Bernie Madoff and the Ponzi scheme and the same system that is now attempting to re-regulate itself.

In Canada, a parallel country, we were not very aggressive on enforcement and the prosecution of these white collar criminals, judging by our record, and we are not looking at re-regulating. So I would say we have a long way to go. The government is bringing in this bill, which we will be supporting to get to committee as we did the last time before the bill died after the House was prorogued, but remember that this is just a small part of the whole puzzle that the government should be dealing with. The government should be looking at setting up some sort of task force to look at re-regulation. No doubt it will, in view of what is happening in the United States.

We also have to look at tax havens. We had a very comical situation here last week. We were debating the implementation of a free trade deal with Panama, which is on the tax haven list of the OECD and a list in France indicating that it is a tax haven; 350,000 private companies are hiding money in Panama and the government is talking about getting a free trade deal in place with Panama when even the Americans will not do it because Panama will not sign on to the OECD protocols about exchange of financial and banking information. On the very day that this was happening, The Globe and Mail carried an article about an employee of a Swiss bank who left the bank and went to France with computer disks containing several thousand accounts. But 1,800 Canadians are on that list. The government was somewhat embarrassed, because there were these 1,800 people who, by the way, had to invest a minimum of $500,000 in the Swiss bank.

They were flat-footed because they do not have the answers. They have not done anything on cutting down tax havens and trying to stop tax evasion. They have a moratorium. Two years ago when a similar bank employee from a Liechtenstein bank walked away with computer disks and went to Germany and sold them to the German government, Canada found that there were 100 people from Vancouver on the list. What happened? They were given amnesty.

The Conservatives say that if anybody wants to come in and admit they have money in Panama or someplace they should not have it, they are free to do a voluntary reporting and the government will not do anything to them. It will not even tap them on the wrist. If they pay the back taxes, they are home free. Is this any kind of message to be giving people out there, telling them that they will have an amnesty if we catch them?

Now we have 1,800 people whom we have uncovered, not because of all this police activity, but because of a bank employee.

Standing Up for Victims of White Collar Crime ActGovernment Orders

6 p.m.


The Deputy Speaker Conservative Andrew Scheer

I will have to stop the hon. member there, as his time has expired, and open the floor for questions and comments. The hon. member for Kitchener Centre.

Standing Up for Victims of White Collar Crime ActGovernment Orders

6 p.m.


Stephen Woodworth Conservative Kitchener Centre, ON

Mr. Speaker, I enjoyed listening to the comments of my colleague across the way. I have some interest in the subject. I am a member of the Standing Committee on Justice and Human Rights, and we have been studying organized crime for quite some time.

Interestingly, we have discovered that white-collar crime, including a whole host of fraudulent schemes, is being carried out by organized crime from within Canada. People have described our existing laws as too lax to deal with this development.

We have also discovered that organized crime, ironically, is committed by organized criminals, sophisticated people who are driven by the profit motive, and who are not just drug-addled unfortunates.

I am wondering if my friend would agree that, when dealing with organized, profit-driven, sophisticated criminals, deterrence is effective, and that we should therefore be increasing the penalties for such crimes.

Standing Up for Victims of White Collar Crime ActGovernment Orders

6 p.m.


Jim Maloway NDP Elmwood—Transcona, MB

Mr. Speaker, the Manitoba government recently cracked down on the Hell's Angels, a criminal gang in Winnipeg, and seized the clubhouse and their assets under the proceeds of crime laws. Certainly, in the last 20, 25 years we have seen marginal steps by provincial and federal governments to start dealing with the proceeds of crime. We have always argued that taking away the money supply from the criminals, from the drug dealers, removes the incentive to commit crimes. That is the way to do it.

It was not until the RICO laws took effect in the United States that the government started to make real progress against organized crime families. Had the United States not taken the initiative to step up the law enforcement and prosecutions and put these gangsters in jail where they belonged, it would still have the problem it had before.

Some big improvements have been made, and I think the government should be looking at that whole area. It is not just one bill today, dealing with this area. There is a whole bunch of other areas, including re-regulating the whole financial services industry, perhaps in cooperation with the Americans.

Standing Up for Victims of White Collar Crime ActGovernment Orders

6 p.m.


Shawn Murphy Liberal Charlottetown, PE

Mr. Speaker, I want to invite my colleague from Winnipeg to talk again about this important issue of the tax evaders, but I want to ask him about a larger subject. It is my premise that we have to change our thinking. The change has to start right in Parliament in the way we deal with these tax evaders. It goes to the underpinnings of our justice system, our rule of law. It goes right to the heart of democracy.

This is the fourth or fifth list of tax evaders we have received. Last week's list named 1,800 tax evaders who had accounts in Switzerland. Basically, they will walk into the nearest CRA office and get amnesty, the same as everyone else did. No one will be charged.

On the other side of the coin, last night a couple of teenagers were caught stealing a carton of cigarettes from a service station, and they will get 18 months in jail. We have to think. What are we doing as a society? The multimillionaires who steal from the taxpayers will be at cocktail parties tonight. There is no sentence. There is nothing at all. Then we get a couple of kids who steal a carton of cigarettes and they each get nine months in jail.

We have to have a discussion about this. I think this crime is just as heinous as most other crimes, but there is no punishment. If they are caught, they report to the CRA office and they get amnesty. Nobody is in jail for setting up these accounts in foreign countries.

I ask my colleague to talk about it from a larger perspective. What does our society think about, and how does it treat these criminals? I will call them criminals as opposed to people who do other things. What is the difference?