Breaking Fraud Cases from Canadian Courts
On July 5, 2017, the Ontario Court of Appeal upheld the sentence of the Ontario Superior Court as against Deborah Dieckman for her role in a $5.1M accounting and tax remittance service fraud case where the primary complaint was the CRA. The Court of Appeal also upheld the sentence imposed against her co-accused and father George Salmon.
Deborah Dieckman, 51 years old, is married with three children. She moved to Canada in 1977 from Rhodesia with her father George Salman and her sister Caroline Hartman. After high school Ms. Dieckmann took an office job doing data entry; later she operated a craft sales company, and eventually got into bookkeeping. She studied to become a certified general accountant, and later met Tom Davis in 2002 through her father. It appears she then became ensnared in Mr. Davis’ methods and was ultimately a huge facilitator of the entire fraud.
Deickman and Salmon were originally convicted in 2013. The other two conspirators, Tom Davis and Caroline Hartman, who masterminded the fraud, died before their trial. They created a scheme by which they diverted millions of dollars from CRA for their personal use by contracting with legitimate companies to provide pay-roll related services including the remitting of source deductions such as income tax and CPP. Davis and Hartman directed the funds through a series of corporate shells and bank accounts for their personal use.
At trial friends spoke of Dieckman’s good character and devotion to the Jehovah’s Witness faith. They described her as honest, trustworthy, and a loving wife and mother. She has no criminal record.
Understanding the Purpose of Canada’s Fine-In-Lieu-of-Forfeiture Laws
Deborah Dieckman, who was the bookkeeper for Davis and Hartman, created false documents to facilitate the fraud. Remarkably, although she alleges that she did not received any of the fraudulent obtained funds for her personal use, she was ordered to pay $1.2M or spend an extra 5 years in jail on the basis that she was 25% to blame for the fraud.
The Reasons for Decision of the Ontario Court of Appeal assist the Canadian public understand Canada’s fine-In-lieu-of-forfeiture laws. The Court held that
Forfeiture concerns recovery of proceeds of crime, not culpability…The objectives of the forfeiture provisions are to neutralize criminal organizations by depriving them of the profits of their activities. Consistent with that objective, the provisions encompass a wide range of property including property that was originally in the possession or under the control of any person.
The provisions relating to the proceeds of crime were enacted in an international context. The provisions focus upon the proceeds of crime as opposed to the offender. One of the stated goals [of the law] is to neutralize criminal organizations by depriving them of the profits of their activities and to take away any motivation to pursue those activities. In sum, the purpose was to ensure that crime does not pay.
The objective is to deal with the proceeds of crime separately from, and in addition to, the punishment for committing a crime. In essence, a fine deprives the offender of the proceeds of the crime and deters potential offenders and accomplices.
Was Dieckmann Involved in a Criminal Organization?
The Court also advised that the legislation was passed in coordination with various other countries who have a common interest in combatting funding for terrorist activities and international criminal enterprises. That said, Canadian Courts retain the discretion to make orders that reflect scenarios that cannot be seriously considered in the same light as such offenders. The Court held:
The objective of the provisions must be considered in context and in light of the circumstances on a case by case basis. Here, Ms. Dieckmann and her co-conspirators qualified as being participants in a criminal organization. That said, they were far removed from the international purpose underlying the enactment, namely pursuit of organized crime.
Payment or Face Jail Even Where No Benefit to the Proceeds of Crime
One of the remarkable consequences of this case is that the Court found that most if not all of the proceeds of the crime were enjoyed by Thomas and Hartman, not Deickman and Salmon. Despite this fact, the Court held that Deickman was 25% responsible for making the scheme work, and as such she should serve five years in jail if she does not pay 25% of the proceeds of the fraud, or approximately $1.2M. The Court held:
There is no onus on the Crown to establish that an offender has received a benefit. …That said, if there is evidence before the court that establishes or admits of an allocation of benefit, it is open to the court to exercise its discretion to adjust the quantum of the fine.
Time to Pay – Pay $1.2M or go to Jail for a Further Five Years
The Court held that the general rule for time to pay is that if the offender does not have the means to pay immediately, he or she should be given a reasonable period of time in which to pay. The determination of the time limit is to be based on the offender’s particular circumstances.
Ms. Deickman submitted that no amount of time would be sufficient to repay any fine, unless it is for a nominal amount, as she did not have the funds and could no longer earn it with her criminal record.
The Court held that the general rule for time to pay is that if the offender does not have the means to pay immediately, he or she should be given a reasonable period of time in which to pay. The determination of the time limit is to be based on the offender’s particular circumstances.
Ms. Deickman submitted that no amount of time would be sufficient to repay any fine, unless it is for a nominal amount, as she did not have the funds and could no longer earn it with her criminal record.
Enforcement of Jail-in-Lieu-of-Forfeiture
To date we are not aware of any cases where applications to enforce jail-in-lieu of forfeiture have been reported. Whether Ms. Deickman pays CRA, or serves the extra time for her failure to do so, is a story that we at Canadian Fraud News Inc. intend to report on in the future.
For the full Reasons for Sentence related to this story, see: R.v. Dieckmann and Salmon, 2014 ONSC 717 – CanLII
For the full Reasons of Decision of the Court of Appeal, see: R. v. Dieckmann, 2017 ONCA 575 CanLII
Contact Us
For further information on this case, or any other fraud recovery inquiry, contact Canadian Fraud News Inc. at Kayla@Canadianfraudnews.com or 416-637-3150.
