Wednesday, 29 January 2014

Be  wary  of  fraudsters  (Part 1)                                                                   

I was once defrauded by a fraudster who not only ripped me off; he ripped of hundreds of other people. His fraudulent scam was to entice us into giving him money and our rewards would be that we could rent condos in vacation spots around the world for as little as $100 a night.  He wanted $40,000 from each of us and we would be able to rent condo at those rates for fifty years and if we died before our plan expired,  our children could use the service for the remaining years.  I was able to convince one of his salesmen that I could only give them $2,000. They put me on the plan for a five-year period. Six months later when I tried to rent a condo through the plan, I learned to my horror that the company was out of business. My mistake was that I believe the salesman when he said that the company was licenced when in fact it was not. If I had known that, I never would have parted with my money. If the company was licenced, I would have got my money back from the licencing body. I was the first to bring this scam to the attention of the licencing body and they charged the main operator of the scam. He had fleeced at least a million dollars from us all told and was subsequently sentenced to prison for only one year and was eligible to be released from prison after serving only two-thirds of his sentence in prison. Now I will tell you of two other Canadian fraudsters.                               


Terry James Minnie and Raymond Patrick Shaw                                        
They were charged as co-accused with eleven counts of fraud and two counts of theft.  Each was individually charged with one count of attempted fraud.             

In order to carry out the fraud, Minnie invented an individual he called Andrew Fuller.  There is some suggestion in the evidence on sentencing that Minnie had met an individual named Andrew Fuller in 1990 or 1991.  That fact is disputed by the Crown, but if it is indeed the case, there is no evidence that the Andrew Fuller who was known to Minnie, or may have been known to Minnie in 1990 or 1991, had any knowledge of the crime that was attributed to the Andrew Fuller who was portrayed to investors in the course of this fraud.           

Over the course of the fraud, the fake Fuller was portrayed as the beneficiary of an estate valued at between $12 and $15 million, which was being administered by his aunt.  She was another invented personality named Sheila Houston, who resided in California.  Throughout the period of fraudulent activity, Minnie represented that Fuller's legacy would be paid when debts he owed to various individuals or entities, none of which had a legal existence, were paid in full.                                                                                                                                         
Minnie persuaded a number of individuals in the Victoria, British Columbia  area to advance cash to assist in the discharge of Fuller’s debts.  In exchange, each of the so-called investors or lenders was promised a substantial interest or bonus return, to be paid variously within 7, 15, 30, 60 or 90 days, or on some other term. The promised rates of return exceeded 60% per annum and were therefore illegal by virtue of provisions of the Criminal Code.                                  
In order to give confidence to the scheme, Minnie recruited a young man named Richard Dhillon to impersonate Andrew Fuller.  Dhillon had worked for Minnie at a point in Minnie's real estate career.  Dhillon left Minnie's employment before Minnie embarked on the fraudulent scheme.  At the time of his departure, Dhillon was owed approximately $2,000 in unpaid wages and another $3,000 representing charges for a rental car and damages to it, incurred by Minnie using Dhillon's credit card.  The evidence at trial did not establish whether Dhillon was paid the amounts owed to him by Minnie before Dhillon began impersonating Fuller, or in the course of rendering such services for which he was paid approximately $200 cash on each occasion that he assisted Minnie in the fraud.  In any event, the amounts Minnie owed to Dhillon were paid and Dhillon was paid for his services as an impersonator.      

One of Minnie's first uses of Dhillon impersonating Fuller involved a visit to a lawyer in Victoria, one Donald Bohun, to explain the inheritance and Fuller's wish to establish a hospice in Vancouver at which Fuller would be allowed to die of stomach cancer.  Bohun agreed to act for Fuller and to prepare documentation for the purpose of incorporating the hospice.                                  

Soon thereafter, in February 1998, Fuller advised Bohun that he wished to make a will and to include a bequest to Minnie in the amount of $1,000,000, along with a bequest to Bohun in the amount of $500,000.  Notwithstanding the obvious conflict, Bohun prepared the will containing both bequests.  He sent Fuller to another lawyer's office where the will was executed. (signed)         

In the course of his evidence, Bohun testified that he thought he had “died and gone to heaven” when Fuller told him of the bequest.  There is little doubt that the prospect of the bequest ensured that Bohun would speak favourably of Fuller to anyone who made inquiries about the circumstances.  In fact, that is what Bohun did.  In addition, he permitted the use of his trust account to receive and disburse funds derived from investor-lenders, albeit over a fairly short period of time.                                                                                                          

Minnie directed all of Dhillon's actions as those of Fuller.  Minnie used Dhillon to make phone calls to investor-lenders in order to allay concerns that they had about missed repayments, and on many occasions to write letters to investor-lenders explaining the reasons for non-payment.                                                       
In every case, Minnie provided Dhillon with the instructions about what he was to say in the course of the telephone conversations and what he was to write in the letters which were prepared and provided to investors from time to time.  Minnie also had Dhillon practise a fictitious signature for use by the non-existent Andrew Fuller.  Dhillon used that signature to sign countless promissory notes and other documents relating to the so-called Fuller legacy.    
The modus opperandi (method of operation) employed by Minnie to commit the fraud was straightforward, but elaborately planned and executed.  He approached potential investors, many of whom were introduced by Shaw, and told them, or had Shaw tell them, the story of the investment plan.  Many of those approached by Minnie or Shaw advanced money by cheques or bank draft.  Some advanced cash.  Shaw converted the cheques or bank drafts to cash, often with the assistance of the investor-lenders.  In most instances, the cash was given to directly to Minnie.                                                                             
A repayment of the initial advances made by various individuals was to be made within a relatively short time.  When the repayment dates came and passed, Minnie, and/or Dhillon impersonating Fuller, would conjure up explanations for the delay and then tell the investor-lenders that one more advance would see the deal through, and encourage them to make that additional advance.  Some investors did.  Ultimately most, if not all, of the investors were forced to turn to friends and acquaintances to encourage additional investment.  With the limited exceptions, no investor was repaid any part of their advances. In fact, with limited exceptions, none of the money obtained from any of the investors or lenders was ever repaid.  The exceptions arose in respect of one or two investor-lenders whose participation in the scheme caused them extreme short-term financial difficulty, which prompted Minnie or Shaw, acting on his behalf, to return small portions of their invested capital to help them meet their short-term needs.                                                      

The victims in counts 1, 2, 4, 6, 10 and 11, on which Minnie was found guilty of fraud, advanced the sums of $60,000, $38,000, $15,000, $30,000, $148,000 and $380,000 respectively.  The victim of the single theft of which Minnie was convicted lost $115,000 to that theft.                                                                              

The victims in counts 3, 5, 7 and 15, on which the jury found Minnie not guilty, advanced the sums of $35,000, $22,000, $12,000 and $17,000.  While Minnie was not convicted of fraud in relation to count 13, which was fraud against the Calvaneses, he was convicted of theft of $115,000 from another victim.                                                                                                                                                                 
Many of the investors induced their friends to invest.  An example was the complainant in count 11, one Terry Brown, who invested his own funds to the extent of $380,000 and persuaded clients of his financial services business to invest approximately $900,000.  Some of the persons introduced to the scheme by other investors were named as complainants in the indictment; still others were not.                                                                                                                                                                                                                                                                   
The total of the funds advanced by the victims named in the indictment, (whether or not Minnie was found guilty) approximated $925,000.  The total of the funds advanced by persons who were not named as victims was a minimum of $900,000, and likely considerably more. The total that was advanced by investors and lost, whether or not Minnie was convicted, was not less than $1,825,000.                                                                                                         

It is obvious from the evidence that to a certain point in time, Minnie did not tell Shaw what was happening.  Indeed, Minnie set about deceiving Shaw by means of more than 50 letters and more than 50 phone calls from the Fuller impersonator, Richard Dhillon.  The jury must have concluded that at a point in time, namely October 1998, Shaw became reckless or wilfully blind to the Minnie scheme.  In addition, the transactions to the charge of fraud in count 15 occurred at a time when Shaw knew that the police were investigating the transactions involving Minnie and a person allegedly named Andrew Fuller.  Despite that knowledge, Shaw solicited funds from friends.                                    
 The effect of this fraud on the victims was significant.  One of the complainants, Derek Shaw, who is Raymond Shaw's brother, was required to declare bankruptcy.  So, too, was Terry Brown, who invested $380,000 of his own money and induced clients to advance sums substantially in excess of that.  Other complainants liquidated registered retirement savings plans and their children's registered education savings plans in order to invest, or in order to find funds with which to repay debts they had incurred for the purpose of raising funds to participate.  Some lost their houses.  The economic fortunes of most, if not all, have been adversely affected, and the victim impact statements are replete with accounts of the financial havoc that was wreaked upon the complainants, as well as the severe emotional distress that was caused by the losses they sustained.                                                                                

                                                                                                                                                  A jury convicted Minnie on six counts of fraud and one of theft.  Shaw was convicted on two counts of fraud and one of theft.                                                      


                                                                                                                                           Against this factual background, the Crown (prosecutor) argued that the appropriate range of sentence for Minnie would be three to five years incarceration, and for Shaw, two and one-half to three years incarceration.  Counsel for Minnie says the range in relation to him should be anywhere from a conditional sentence (which is to be served at home in the evenings and on the weekends) to five years imprisonment.  Counsel for Shaw sought a conditional sentence.                                                                                                          
The maximum sentence for fraud is 10 years in the time during which these offences were committed.  The maximum was increased to 14 years in 2004.  The principles to be applied in sentencing are enumerated in section 718 of the Criminal Code, and they are: (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 in the community; and (f) to promote a sense of responsibility in offenders and acknowledgement of the harm done to victims and to the community. The fundamental sentencing principle that I must respect is that it must be proportionate to the gravity of the offence and the degree of responsibility of the offender.                                     
                                                                                                                                                  Other provisions of the Criminal Code deal with aggravating circumstances, of which are to be taken into account in determining what a fit is and proper sentence in the circumstances, as well as mitigating factors.  Indeed, the judge had to consider whether or not any alternative to incarceration would promote the principles of sentencing that are relevant in the context of the case before settling upon and imposing a term of incarceration.                                                  
The judge was obliged to consider the aggravating and mitigating circumstances of the case and to ensure that the sentence given to the two men reflected the degree of culpability.  It is well established that the sentencing principles that predominate in the case of fraud are two kinds of deterrence—specific and general—the former applying to the individual who is convicted and the latter to everyone else who might consider doing the same kind of crime.                                                                                                                                                                                                                                                                       
The judge said, In this case, as it pertains to Minnie, there are aggravating circumstances.  The first is the extent of the planning and deliberation involved, systematic planning of an elaborate scheme and the employment of people such as Dhillon and the other individual, Bolen, and also Bohun who is a lawyer, to perpetrate his ruse upon the investors. Another aggravating factor is the duration of the scheme.  It extended for a period of at least five years, from 1996 to 2001. Another factor is the vulnerability of some of the victims, some elderly in this case, some not so old and not so wise but nonetheless vulnerable, perhaps because of the human capacity for greed but also for the human capacity to trust those around them who they believed could be trusted, namely their friends and indeed their advisors.”                                                        
                                                                                                                                                There were other factors that the judge considered. He said, “There is another aggravating factor in this case which I believe is relevant, and that is that this fraud involves a breach of trust.  These monies were procured, allegedly, for the purposes of allowing investor-lenders to invest in a scheme that would help Andrew Fuller.  Andrew Fuller was non-existent; the funds were applied for a purpose of a scheme which was non-existent; and the funds were not applied for the purpose as represented.  Simply stated, there was no such investment, and that amounts to a breach of the trust which had been imposed by the investor-lenders on those to whom they advanced the funds. Another aggravating factor in this case is the large magnitude of the fraud.  The amount lost by the complainants in relation to whom Minnie was found guilty approximates $776,000.  The fact that others were induced by his conduct to advance funds carried the total to a range of $2 million.  While that is not something that directly affects the offences on which he has been convicted, it is nonetheless an aggravating factor in the circumstances of this case.  I regard it as such because of the bound-up, inseparable relationship between those who are named as complainants in respect of whom charges were laid, and others who perpetrated the fraud unwittingly and advanced the fraud in Minnie's interests, in order to procure more funds from persons who are not complainants.  Regardless of how one casts it, the global amount involved is not a factor that can be ignored.  This is a fraud of no small proportion. While there are numerous aggravating factors in the circumstances of the fraud and the theft, I am unable to identify any mitigating factors as they pertain to Minnie.  The absence of a criminal record is not a mitigating factor.  The credibility of a fraudster is heightened by the fact that he is not known for other criminal conduct.  Minnie expresses no regret or remorse for his conduct or the harm done by him and his scheme to others.”                                                             
                                                                                                                                                Having explained why he felt that there were aggravating circumstances in Minnie’s case, the judge then said, “In the circumstances of this case, as grave and blatant as they are, I regard the Crown's suggestion that the appropriate range of sentence for Minnie at three to five years as generous.  I would have thought that five years is at the low end of the range in relation to this elaborate, planned and deliberate scheme, carried on over a protracted period of time. Nonetheless, because the Crown's suggestion happens to fall within the range of what I would consider to be appropriate in the circumstances of this case, having regard for the precedents (former court decisions) binding upon me, I will conclude that the Crown's recommendation that I consider five years is appropriate, and it will be that sentence which I impose on Minnie.”                
                                                                                                                                                 On the matter of restitution, the judge said, “There is no need to consider a restitution order in relation to Minnie.  There is no ability to pay any amount that would represent any reasonable recovery for the victims.  Imposing a restitution order for a minimal amount would detract from the severity of this crime, minimize the enormity of this fraud and, in my opinion, make a mockery of the process.  The victims may be able to pursue recovery of their losses out of the residue of the funds which may be found by way of a civil action.  The obligation arising out of the fraud will likely survive Minnie's bankruptcy.”                                                                                                                        
                                                                                                                                                The judge then dealt with the sentencing of Shaw. He said, “Shaw's involvement in this scheme has impaired his ability to find employment, not unnaturally.  He was duped and defrauded by Minnie at the outset.  So, too, were Shaw's mother and his brother.  While one might say he should have harkened to what was going on around him much earlier than October of 1998, the fact is the jury was persuaded he did not.  Hence the finding of guilty only in relation to two counts of fraud and one of theft, for transactions after October of 1998. Notwithstanding the late-arising knowledge of the real nature of the scheme, there are other aggravating factors.  Shaw worked in the Coach House office throughout the period of the fraud, when no commission was being earned because there were no sales.  He did not have other employment for a period of time.  The logical inference is that he was being paid out of funds Minnie procured by the fraud.  Shaw defrauded his friends, the Melendez-Dukes, in 2001, after he knew of the police concern with the scheme. Shaw's guilt arises because of wilful blindness or recklessness, on the jury's view, rather than practiced deceptionHe is undoubtedly liable to the Melendez-Dukes and Calvaneses for their losses. He has publicly expressed today in this courtroom his remorse, which I believe to be genuine, for the loss and the harm that his conduct has caused those who were victims of this scheme.”                     

The judge then passed the sentence upon Shaw. He said, “In all of the circumstances, I am satisfied that an appropriate sentence in relation to Shaw is imprisonment for a term of two years less a day.  I am also satisfied that he does not represent a threat to the community, except to the extent that a lenient sentence of any kind in relation to his conduct might be construed as an invitation to others to engage in like conduct.  I find that a conditional sentence will serve the principles of specific and general deterrence in relation to Shaw.  In addition to that sentence, I will impose a three-year term of probation.”         
That last paragraph might be confusing. Did Shaw get a sentence of incarceration of two years less one day? No, he didn’t. The judge said that that although sentence would be appropriate, he chose to give Shaw a conditional sentence consisting of two and a half years plus three years probation instead.                                                                                                                                  
                                                                                                                                                  What I find interesting in this particular case is the gullibility of the victims. If they each had consulted with a lawyer before making those investments, they would have learned that when someone dies and has left money in their estate, the executor or executrix who is handling the estates is required by law to pay the creditors from the proceeds of the estate. The scheme presented to the victims by Minnie and Shaw simply didn’t make any sense at all. The scheme was highly suspect right from the beginning.                                                                                                                                                                                                                
I was just as stupid as Shaw’s victims were when I forked over $2,000 to the fraudsters. When the salesman told me that they were licenced to do what they were doing, I should have insisted in being shown their licence. Instead, I trusted the man. I could have checked with the licensing authority after I got home but I didn’t do that either. Instead I stupidly sent the fraudsters $2,000 and got nothing in return.                                                                                                 
There really is truth in that old adage—If it sounds too good to be true, it probably is too good to be true.  My advice to my readers is this. If you have any inkling that a scheme presented to you doesn’t smell right, run as fast as you can away from the fraudster before he reaches into your pocket and grabs your wallet.                                                                                                                                    

No comments: