December 28 2021 – Canadian Fraud News Inc. This press release is sponsored by Investigation Counsel PC, Fraud Recovery Lawyers
On October 1, 2021, Chun Yu Zhu, aka Ted Zhu, was sentenced to 8 months in jail and 18 months of probation for an identity fraud scheme perpetrated against 317 victims which netted him only $2,600.
The Court found that Mr. Zhu filed 317 fraudulent T1 General Income and Benefit returns and attached fraudulent T4 statements, in the names of taxpayers he had secured from fake internet job postings, in an attempt to obtain fraudulent refunds without the taxpayer’s knowledge.
The affected taxpayers had replied to Mr. Zhu’s fake internet job postings by providing emails and personal information, including Social Insurance numbers, believing that they were receiving legitimate offers of employment.
Each of the 317 fraudulent T1 returns claimed a refund between $1900 and $2900 for a total refund of approximately $760,000. The refunds were to be deposited into one or more of 38 bank accounts set up by Mr. Zhu at five institutions.
Of the $760,000 in T1 returns and T4 refunds claimed, Canada Revenue Agency (”CRA”) refunded $5,283.38 of which Mr. Zhu personally received $2,611.1. The amounts received by Mr. Zhu have been repaid to the CRA.
At the time of sentencing, Mr. Zhu was 27 years old. He was born in China. He came to Canada at age 10, after which time his father left and went back to China. Mr. Zhu did not have a father figure in his life.
Mr. Zhu has a criminal record consisting of 11 prior convictions. He has 2 convictions for theft from mail.
An array of standard psychological assessments were performed on Mr. Zhu. The primary diagnosis was consistent with Autistic Spectrum Disorder. There also appeared to be evidence of a Personality Disorder with Antisocial and Narcissistic Personality Traits and Schizoid Personality Disorder.
A presentence report writer found there was a pervasive pattern of detachment from social relationships and a restricted range of expression of emotions in interpersonal settings. The report writer noted Mr. Zhu almost always chose solitary activities, he lacked close friends or confidence, and showed emotional coldness or flattened affectivity.
Mr. Zhu was able to recognize his behaviour as inappropriate but he lacked insight and remorse into the affect his actions had on the victims. The Court concluded that Mr. Zhu has underlying mental health issues.
The Court found that Zhu’s mental health issues gave some context to his behaviour. This was not a circumstance where an elaborate fraud was perpetrated to fund a materialistic and affluent lifestyle.
The Court further found that although the magnitude of the fraud was high, the loss to the CRA was low. There was no trust relationship between Mr. Zhu and the individuals he gathered information from. The fraud was not sophisticated and cannot be characterized as a major fraud.
The Court found his unfortunate background and the mental illness mitigated, in part, Mr. Zhu’s moral blameworthiness. The Court requested that the probation focus of the probation on assessment, treatment and counselling for Mr. Zhu’s mental health issues and for life skills.
The decision is reported at R v. Zhu, 2021 ABPC 252. For a full copy of the decision, click here. [1]
Alberta Provincial Court
R v. Zhu, 2021 ABPC 252
Her Majesty the Queen and Chun Yu Zhu
G.D.M. Stirling Prov. J.
Judgment: October 1, 2021
Docket: Calgary 200530547P1
Counsel: F. Polak, for Crown
H. Chernos, for Accused
Subject: Contracts; Criminal
G.D.M. Stirling Prov. J.:
Introduction
1 Mr. Zhu pleaded guilty to one count of fraud over $5000 contrary to section 380 of the Criminal Code, and one count of identify theft, contrary to section 402.2(1) of the Criminal Code.
2 The issue before me is to determine a fit sentence.
3 The Crown seeks a sentence of 30 — 36 months incarceration. The Defence proposes a sentence of three to six months.
4 For the reasons that follow I impose a sentence of eight months custody followed by 18 months probation.
Agreed Statement of Facts
5 An Agreed Statement of Facts (”ASF”) was entered as an exhibit at the Sentencing. The ASF can be summarized as follows:
(i) Between January 2019 and July 2019 Mr. Zhu engaged in two interconnected schemes: fraudulently claiming Income Tax returns for the taxation year 2018 and the theft of taxpayer’s personal information through false internet job postings used by Mr. Zhu to claim the refunds.
(ii) Under the first scheme, Zhu filed 317 fraudulent T1 General Income and Benefit returns and attached fraudulent T4 statements, in the names of taxpayers he had secured from fake internet job postings, in an attempt to obtain fraudulent refunds without the taxpayer’s knowledge.
(iii) Each of the 317 fraudulent T1 returns claimed a refund between $1900 and $2900 for a total refund of approximately $760,000. The refunds were to be deposited into one or more of 38 bank accounts set up by Mr. Zhu at five institutions.
(iv) The second scheme, which started in March 2019, involved Mr. Zhu collecting the personal information of taxpayer’s by setting up fake internet job postings.
(v) Once the personal information was collected, Mr. Zhu used that information without the knowledge or permission of the taxpayers to claim the refunds in the amount of approximately $760,000.
(vi) The affected taxpayers had replied to Mr. Zhu’s fake internet job postings by providing emails and personal information, including Social Insurance numbers, believing that they were receiving legitimate offers of employment.
(vii) Of the approximately $760,000 in T1 returns and T4 refunds claimed, Canada Revenue Agency (”CRA”) refunded $5,283.38 of which Mr. Zhu personally received $2,611.18.
(viii) The amounts received by Mr. Zhu have been repaid to the CRA.
Mr. Zhu’s Background
6 A Pre-Sentence Report was marked as an exhibit at the sentencing. Mr. Zhu is 27 years old and was born in China. He is an only child.
7 Mr. Zhu’s family immigrated to Canada when he was 10. His father struggled to find employment in Canada and after 2 months the father returned to China with Mr. Zhu and his mother remaining in Canada. Since then his father has only visited Canada once and Mr. Zhu had no meaningful relationship with his father.
8 Mr. Zhu was an excellent student in high school and excelled in math and sciences.
9 During high school he began having behavioural issues including yelling, not listening to teachers and refusing to do assignments. As a consequence, he was suspended from school several times and eventually he began home schooling.
10 Upon graduating he received a scholarship to attend the University of Calgary Engineering program which he attended for 1 year but then dropped out. He then attended the Northern Alberta Institute of Technology for business administration and completed his diploma majoring in accounting and finance.
11 During his teenage years, Mr. Zhu worked at Superstore and Walmart for short periods of time but he had difficulty working with others and would get angry and quit work because of this. About a year prior to the sentencing he began working as a labourer in the construction industry, and at the current time is working as a roofer for several different companies.
12 The Pre-Sentence Report makes reference to an earlier report prepared in 2019 where Mr. Zhu attended the Forensic Assessment and Outpatient Services (FAOS) for a risk assessment. The FAOS report notes that Mr. Zhu appears to have had life long difficulties with social interactions. Mr. Zhu’s mother describes a childhood where he had no contact with the people around him. He had no expression and did not smile. Mr. Zhu would play by himself, in his own world, and was not social with other children. The FAOS report writer noted that there were behavioural issues starting at approximately age 15 including aggression and verbal and physical abuse, and he threatened his mother’s safety.
13 An array of standard psychological assessments were performed on Mr. Zhu. The primary diagnosis was consistent with Autistic Spectrum Disorder. There also appeared to be evidence of a Personality Disorder with Antisocial and Narcissistic Personality Traits and Schizoid Personality Disorder. The report writer found there was a pervasive pattern of detachment from social relationships and a restricted range of expression of emotions in interpersonal settings. It was observed that Mr. Zhu did not desire or enjoy personal relationships. And the report writer noted he almost always chose solitary activities, he lacked close friends or confidence, and showed emotional coldness or flattened affectivity.
14 Mr. Zhu’s mother was interviewed for the PSR. She has serious concerns for Mr. Zhu’s mental health. She says Mr. Zhu has been diagnosed with autism and that he can be volatile and threatening. This makes her fearful. In the past Mr. Zhu has struggled with personal hygiene and maintaining a daily schedule often staying in bed all day and not showering for several days. She feels Mr. Zhu needs to have a formal mental health assessment and he must follow through with ongoing counselling and treatment to address his underlying health issues.
15 In the opinion of the PSR report writer Mr. Zhu is able to recognize his behaviour was inappropriate but lacks insight and remorse into the affect his actions had on the victims including Canada Revenue Agency. Mr. Zhu also appears to lack insight into his underlying mental health issues. The report writer opined that Mr. Zhu would benefit from the support of a psychiatric assessment and ongoing counselling to address impulsivity and decision making. However, it was also observed that Mr. Zhu has not abided with earlier probation orders mandating that he attend for counselling and treatment.
Criminal Record
16 Mr. Zhu has a criminal record consisting of 11 prior convictions. He has 2 convictions for theft from mail but no other offences that could be characterized as involving fraud or identity theft.
Crown Position
17 The Canadian tax system is based on self reporting by the taxpayer and it is expected that the taxpayer will honestly and accurately self report their income to CRA. The Crown stated honesty is the touchstone of the tax system, citing R v Wallen1 Denunciation and deterrence should be the primary sentencing principles as a fraud on Canada Revenue Agency reduces public confidence in a tax system that is premised on self reporting. The Crown cites Wallen that the “obligation to pay taxes and participate in the tax system is part of the social fabric as Canadian citizens and a public duty such that to be dishonest in dealing with the tax system represents a breach of this collective trust”.
18 In terms of the conviction under s.402.2(1), identity theft has serious implications for the defrauded victim, both the Government of Canada and the various individuals whose identity was stolen.
19 The Crown says the criminal record for theft of mail is aggravating as it is similar to identity theft.
20 The scheme constructed by Mr. Zhu was “relatively complex, sophisticated, devious and well thought out”. It is aggravating that the refunds claimed were approximately $760,000. Mr. Zhu’s scheme involved a number of innocent people who were unaware of the dishonest nature of the internet job postings. He filed 317 individual fraudulent tax returns resulting in the victimization of many members of the public. Finally, the PSR report indicates that Mr. Zhu minimizes his behaviour and there is a lack of remorse for his actions.
21 The Crown acknowledges that the early guilty plea is a significant mitigating factor.
Position of the Defence
22 The Defence acknowledges Mr. Zhu’s criminal record is aggravating but it is largely unrelated to the offences here. As well the Defence acknowledges that some of the aggravating circumstances identified under s.380.1(1) are present. The Defence concedes the magnitude and duration of the offence was at the higher end of the spectrum and that the offending behaviour occurred over a period of 6 months. The Defence argues however that the complexity and planning is low to moderate and there was no sophisticated scheme to avoid detection.
23 The Defence argues that looking at the comparator cases of the Crown there are aggravating factors in those cases that are not present here. Although the magnitude of the fraud was high, the loss to the CRA was low.
24 Further, there was no trust relationship between Mr. Zhu and the individuals he gathered information from.
25 The mitigating factors include his guilty plea.
26 Although not strictly a mitigating circumstance, the fact Mr. Zhu was unemployed and struggling financially, is a factor the Court should consider with respect to Mr. Zhu’s moral blameworthiness for the offences.
27 Finally, the Court should consider Covid-19 as a factor when imposing a period of incarceration as the consequences of Covid-19 has for inmates will make Mr. Zhu’s sentence harsher than it would be otherwise.
Legal Framework
28 Section 718 of the Criminal Code provides that the fundamental purpose of sentencing is to protect society and to contribute, along with crime prevention initiatives, to respect for the law and maintenance of a just, peaceful and safe society by imposing justice sanctions that have one or more of the objectives of denouncing unlawful conduct and harm done to victims, deterring the offender and others from committing offences, separating offenders from society where necessary, assisting in rehabilitating offenders, to provide reparations from harm done to victims or the community and to promote a sense of responsibility in offenders and acknowledgement of the harm done to victors in the community.
29 Under section 718.1 it is a fundamental principle of sentencing that the sentence be proportionate to the gravity of the offence and the degree of responsibility of the offender. As stated in R v Lacasse, “…the severity of a sentence depends not only on the seriousness of the crime’s consequences, but also on the moral blameworthiness of the offender”.2
30 A sentencing Judge must take into account all of the principles of sentencing articulated in section 718 of the Code including considering any aggravating or mitigating circumstances as mandated by section 781.2.
31 In giving effect to the principle of parity, a sentence should be similar to sentences imposed on similar offenders for similar offences committed in similar circumstances as set out in section 718.2 (b).
32 Where an accused is convicted of fraud under section 380 the sentencing judge is also directed to consider the aggravating circumstances set out in 380.1 of the Code.
33 Section 380.1 of the Code provides as follows:
380.1 (1) Without limiting the generality of section 718.2, where a court imposes a sentence for an offence referred to in section 380, 382, 382.1 or 400, it shall consider the following as aggravating circumstances:
(a) the magnitude, complexity, duration or degree of planning of the fraud committed was significant;
(b) the offence adversely affected, or had the potential to adversely affect, the stability of the Canadian economy or financial system or any financial market in Canada or investor confidence in such a financial market;
(c) the offence involved a large number of victims;
(c.1) the offence had a significant impact on the victims given their personal circumstances including their age, health and financial situation;
(d) in committing the offence, the offender took advantage of the high regard in which the offender was held in the community;
(e) the offender did not comply with a licensing requirement, or professional standard, that is normally applicable to the activity or conduct that forms the subject-matter of the offence; and
(f) the offender concealed or destroyed records related to the fraud or to the disbursement of the proceeds of the fraud.
(1.1) Without limiting the generality of section 718.2, when a court imposes a sentence for an offence referred to in section 382, 382.1 or 400, it shall also consider as an aggravating circumstance the fact that the value of the fraud committed exceeded one million dollars.
(2) When a court imposes a sentence for an offence referred to in section 380, 382, 382.1 or 400, it shall not consider as mitigating circumstances the offender’s employment, employment skills or status or reputation in the community if those circumstances were relevant to, contributed to, or were used in the commission of the offence.
(3) The court shall cause to be stated in the record the aggravating and mitigating circumstances it took into account when determining the sentence.
Comparator Cases
34 The Crown and Defence referred to several comparator cases.
35 In giving effect to parity, the Court is guided by prior decisions. At the same time sentencing is an individualised process. As stated by the Alberta Court of Appeal in R v Moller3 there is sometimes a “limited utility of attempting to identify a fit sentence through reviewing a number of cases for the same offence but with an otherwise wide range of facts and mitigating and aggravating factors”.
Cases Cited by the Crown
36 In Wallen,4 the accused was found guilty after trial of 8 counts of improperly claiming income tax returns under the Income Tax Act. The Crown stayed a number of charges. The accused was sentenced on 2 counts. The first involved a claim for approximately $224,000 in refunds claimed over a period of 5 years. The second count involved a fraudulent refund claim of $633,000. The Court found the fraud was sophisticated and was a large scale tax evasion. The offences were ongoing and persisted for 5 years. The accused’s motive for the crime was greed and the Court found Mr. Wallen’s moral blameworthiness was high. The Court imposed a global gaol sentence of 24 months and a fine just short of $500,000.
37 In R v Cameron,5 the accused was convicted of a “major scheme” of fraud that took place over a period of 5 years. The accused received $8.8 million from the fraud with close to $8 million never being recovered. The accused was also convicted of failing to report approximately $2.6 million in income over a period of 4 years and evading taxes of approximately $1.1 million. The accused did not express genuine remorse or accept responsibility for his conduct. The accused was uncooperative with investigators once the offences were discovered. The Court imposed a sentence of 10 years for the fraud charges and 4 years imprisonment for the income tax evasion reduced to 11 years for totality. A fine of approximately $550,000 was imposed for the income tax offences and in default of payment the accused was to serve a further 4 years of imprisonment. The gaol sentence was upheld on appeal with the fine being adjusted.6
38 The Crown also referred to R v Thobani,7 and R v Bradley,8 cases involving crimes of identity theft. In Bradley the accused was convicted on 15 counts related to the fraudulent use of credit cards and the use of other person’s identities through forged documents including driver’s licences and social insurance cards. The Court of Appeal upheld a sentence of 4 1/2 years gaol.
39 In R v Judge,9 the accused, while working at a car dealership, submitted false credit applications for financing the purchase of 2 vehicles. The fraud involved using the identity of 2 individuals whose credit rating was ultimately affected as a result of the theft of their identities. The accused had a prior record including convictions for 3 robberies. The Court of Appeal set aside the trial judge’s sentence of 2 days plus 2 years probation and found an appropriate sentence to be 9 months, but after taking into account that the accused had been on probation for several months, the Court of Appeal imposed a sentence of 6 months custody.
Cases Cited by Defence
40 The Defence referred to a number of cases all of which I have considered. The following are most apt to the circumstances here.
41 In R v Mohenu,10 the accused was convicted after trial of defrauding her employer of about $30,000 by falsifying returns over the course of 3 1/2 months. The accused was sentenced to 9 months gaol and 2 years of probation. On appeal the sentence was reduced to 90 days intermittent. The Court found while the accused had committed a serious crime she had taken numerous steps since the fraud, including successfully completing university, and showed great promise on rehabilitation.
42 In R v Cook,11 the accused pleaded guilty to fraud over $5,000. The accused had lied about having a cancerous tumour and received charitable donations totalling $7,500. The accused was 28 years old with no prior criminal record and had mental health issues. It was aggravating that the offence involved the creation of a fraudulent charity and there was significant planning and deliberation over a period of about 10 months. The mitigating circumstances were the guilty plea, the relative youth of the accused and the absence of a criminal record. As well the accused was severly beaten while in pre-trial custody. The Court characterized the offence as “particularly reprehensible” and stated denunciation and deterrence were the primary considerations in sentencing. The Court imposed a sentence of 6 months noting that the accused had lasting physical and emotional trauma as a consequence of the assault at the remand centre.
43 In R v Otan,12 the accused was convicted of defrauding the federal government by filing 26 tax returns with false donation claims over a 3 year period. Six of the cases involved the misappropriation of another person’s identity for the accused’s benefit. The other 20 cases resulted in unlawful refunds for the accused clients. The total fraud was $129,000 with approximately $31,500 going to the benefit of the accused. The Court found that this was a relatively sophisticated fraud, 6 cases involved identity theft and involved several offences over several years. The accused was 73 years old and had no prior criminal record. The Court found the primary sentencing objective was denunciation and deterrence. The accused was sentenced to 6 months custody followed by 1 year of probation.
44 In R v Goett,13 the accused was found guilty after trial of failing to report corporate and personal income over a period of 3 years. The tax evaded was approximately $91,000. It was aggravating that the offences spanned 3 years, were planned and deliberate and involved others. It was mitigating the accused cooperated with the audit process. The accused was 71 years of age and did not have a criminal record. The Court imposed a 12 months Conditional Sentence Order and a fine of $91,000 being the amount of the tax evaded.
45 In R v Kueviakoe,14 the accused pleaded guilty to numerous counts of claiming false refunds and making false statements on tax returns. The guilty pleas came during the third day of trial. The accused obtained tax refunds for his clients by providing them with fraudulent receipts for charitable donations and by claiming fraudulent employment expenses. The accused acknowledged filing 45 false income tax returns on behalf of more than 20 clients over a period of over 5 years. The false claims cost the CRA approximately $70,000 in taxes. The Court found the offence constituted a significant fraud that was committed on a continuous basis over a prolonged period of time. The Court imposed a 12 month Conditional Sentence Order and a fine of approximately $70,000.
46 In R v Jiang,15 the accused pleaded guilty to offences under the Immigration and Refugee Protection Act, forgery under the Criminal Code and tax evasion under the Income Tax Act. The Income Tax Act offence was part of a complex immigration scheme. The accused was involved in the scheme for 4 years and fraudulently assisted 174 clients for which the accused received just over $1 million in fees and evaded approximately $60,000 in income taxes. The Court found that the scheme was a large scale, multifaceted enterprise that continued for many years. The accused was motivated by greed. Significant state resources were required to investigate and prosecute the accused. The Accused was sentenced to 12 months for the immigration and fraud offences and 6 months consecutive for the tax offences.
Covid-19
47 The Defence argues that the sentence imposed should be adjusted to reflect the ongoing Covid-19 pandemic and the consequences of the pandemic for inmates.
48 The Defence referred to R v EF,16 where, in the context of sentencing for sexual interference and luring, the Court noted “the current and ongoing Covid-19 pandemic and the consequences for inmates both at the ECR and in federal penitentiaries make EF’s sentence harsher than it would otherwise be. I agree that this should be reflected in the sentence I impose.”
49 I have also considered other decisions which have addressed the effect of Covid-19 on sentencing. In R v Gaudrault17 the court considered the decisions in R v Deacon,18 R v Kandhai,19 and R v Hearns,20 which address Covid-19 and sentencing. In Gaudrault the Court gave an extra half day credit for each day of pre-trial custody in recognition of the harsh conditions the accused faced in remand during Covid. However, no credit was given in respect of the 8 1/2 year sentence imposed by the Court.
50 The impact of the pandemic on sentencing principles is discussed in Hearns, a decision which has been widely cited. In paragraph 15, Pomerance J. stated:
How does all of this [Covid-19] impact the fitness of sentence? Clearly, the pandemic does not do away with the well-established statutory and common law principles. However, the pandemic may impact on the application of those principles. It may soften the requirement of parity with precedent. The current circumstances are with president. Until recently, Courts were not concerned with the potential spread of a deadly pathogen in custodial institutions.
51 The Court found that the consideration of Covid-19 may justify a departure from the usual range of sentence (paragraph 17) and that it is an important part of the sentencing equation (paragraph 21).
52 The Court provided 2 caveats. First, the offender should not receive more than the statutory credit for pre-sentence custody (paragraph 22) and second, the pandemic has not generated a “get out of gaol free card” as stated at paragraph 23:
The consequences of a penalty — be they direct or collateral — cannot justify a sentence that is disproportionately lenient, or drastically outside of the sentencing range. It cannot turn an inappropriate sentence into an appropriate one or justify dispositions that would place the public at risk.
53 Pomerance, J. also referred to the decision of A.J. Goodman, J. in R v TK:21
”In summary, even in these very challenging times, the Court must fully recognize the potential harmful health impact on detained persons in the various institutions, while at the same time exercising the balancing required to sustain its fundamental role in the administration of justice and protection of the public “.
54 Hearns was considered in R v Dawson; R v Ross.22 There, the Nova Scotia Court of Appeal found that it was “within the permissible scope of judicial notice to recognize the reality and impact of the pandemic” (paragraph 101). Having said this, the Court of Appeal stated it joined other Canadian appellate courts that have declined to reduce otherwise fit sentences due to the pandemic. See R v Lariviere,23 R v D.B.,24 R v S.C.,25 and R v El-Kaaki26
55 In brief, Covid-19 is a factor that can be considered in determining a fit sentence provided the sentence is otherwise proportionate.
Analysis
Gravity of the offence
56 Tax fraud and identity theft are serious offences. The total refund claimed of approximately $760,000 is significant. 317 innocent individuals were duped into providing their personal information. The offence however was of a relatively short duration. The fraudulent returns were filed during the period February and March 2019. The fake internet job postings used to obtain personal information were posted between March 2018 and July 2019. The Agreed Statement of Facts indicates that the fraudulent returns did not contain an assigned business number for the employers or the purported employers address. The scheme seems to have been detected at an early stage and the CRA processed refunds for only 2 of the 317 fraudulent returns.
57 The scope and sophistication of the fraud here can be contrasted with the cases cited by the Crown.
58 In Wallen, the offence took place over a 5 year period and involved the creation of sham corporations and foreign trusts. The accused also assisted others in defrauding the CRA. In Cameron, the fraud occured over 5 years and involved a gain to the accused of 8.8 million dollars of which 8 million was never recovered. Cameron also evaded taxes in excess of 1 million dollars.
59 Here, Mr. Zhu personally received $2,600 which has been repaid. The fraud was not sophisticated and cannot be characterized as a major fraud.
Moral culpability
60 The fraud involved planning and deceit. Mr. Zhu’s conduct exhibited an indifference to the 317 individuals that he duped into applying for non-existent jobs. In this respect, Mr. Zhu has a high degree of moral responsibility.
61 At the same time I give weight to the very difficult personal circumstances of Mr. Zhu. It is apparent from the Pre-sentence and FAOS reports that he has had a sad and difficult life. His childhood, teen, and young adult years were characterized by isolation, and loneliness. It is likely he never played on a team, sung in a choir, acted in a play or even went with a friend to a movie. He is bereft of friends and social engagement. As a young adult he has had virtually no social support. The only social contact he has is with his mother a person with whom he has a fractious relationship and from whom he is estranged.
62 Further, Mr. Zhu suffers from an array of psychological and personality impairments including Autistic Spectrum Disorder and Personality Disorder with Antisocial and Narcissistic Personality Traits. It is apparent from the Pre-sentence report that these characteristics have made it difficult for him to maintain employment. At the time of the offences, Mr. Zhu was living with his mother and had no employment or income.
63 This gives some context to Mr. Zhu’s behaviour. This is not a circumstance where an elaborate fraud was perpetrated to fund a materialistic and affluent lifestyle. I find this unfortunate background and the mental illness suffered by Mr. Zhu mitigates, in part, Mr. Zhu’s moral blameworthiness.
Aggravating and Mitigating Circumstances
64 I have considered the aggravating and mitigating circumstances as mandated under section 718.2 and 380.1. It is statutorily aggravating under section 380.1(1) if the offence affected or had the potential to adversely affect the stability of the Canadian economy or financial system. Here, the financial system is affected in the sense that Canada’s taxation system is based on self-reporting and an assumption that tax payers will conduct themselves honestly in filing their returns with the Canada Revenue Agency. It is also statutorily aggravating under section 380.1(1)(c) that the offence involved 371 victims. There is however no evidence before me of any significant impact on the victims arising from the identity theft. I find the balance of the statutorily aggravating factors under section 380.1(1) are not applicable.
65 It is somewhat aggravating that Mr. Zhu has a prior criminal record although he has no prior convictions for fraud. He does have two convictions for theft of mail which can give rie to misuse of someone’s identity.
66 In terms of mitigating circumstances, the guilty plea is mitigating particularly as a fraud trial typically requires extensive trial days and state resources to prosecute.
67 There is no direct evidence before me that Mr. Zhu’s mental health issues contributed to or caused him to commit the offence. That being said, as noted by the Court of Appeal, in R v Shevchenko,27 mental health issues and the commission of criminal offences often do not stand entirely apart.
Parity
68 In addressing parity, I find the cases of Cameron and Wallen cited by the Crown are distinguishable in terms of the magnitude of the fraud, the length of the offending conduct and the moral blameworthiness of the accused.
69 The cases I find to be most similar to the circumstances here are Cook, Otan, Goette and Kueviako. In Cook, the accused lied about having a cancerous tumour. The fraud involved significant planning and deliberation over a period of ten months and was motivated purely by greed. It was mitigating that the accused was severely beaten in custody. The accused was given a 6-month sentence. In Otan, the accused was given a 6-month sentence for a 3 year tax fraud with refunds exceeding $100,000. The accused’s age of 73 was mitigating. Goette and Kueviako both involved lengthier and more sophisticated frauds under the Income Tax Act where the losses were approximately $90,000 and the $70,000 respectively. In Kueviako the offences spanned a time period of 5 years. In both cases the accused were given 1-year Conditional Sentence Orders.
Consecutive or concurrent sentences
70 As stated in the Agreed Statement of Facts, the identity theft was interconnected with the tax fraud. I find here, given the clear nexus between the two offences, the sentence imposed for identity theft should be served concurrently with the sentence for fraud.
Sentence
71 Considering all of the factors I have discussed and considering the relative youthful age of Mr. Zhu, and giving effect to principles of restraint, I impose a sentence of 8 months gaol in respect of the conviction under section 380 and 6 months gaol concurrent for the conviction under section 402.2(1).
72 I also impose an 18 month period of probation on the terms set out at the sentencing. The primary focus of the probation order is to provide Mr. Zhu with assessment, treatment and counselling for his mental health issues and for life skills.
[1]https://www.canlii.org/en/ab/abpc/doc/2021/2021abpc252/2021abpc252.html?searchUrlHash=AAAAAQAXUiB2LiBaaHUsIDIwMjEgQUJQQyAyNTIAAAAAAQ&resultIndex=1
