Décision

R. c. Weinberg						2016 QCCS 3137
JL4189    SUPERIOR COURT (Criminal division)
CANADA
PROVINCE OF QUEBEC
DISTRICT OF			MONTREAL
No:		500-01-051050-117
DATE:	JULY 6, 2016
______________________________________________________________________
IN THE PRESENCE OF:				THE HONOURABLE	PIERRE LABRIE, S.C.J.
______________________________________________________________________
HER MAJESTY THE QUEEN
Prosecutrix
v.
RONALD ANDREW WEINBERG
Offender
______________________________________________________________________
REASONS FOR JUDGMENT ON SENTENCING PRONOUNCED ON JUNE 22nd, 2016[1]
______________________________________________________________________

INTRODUCTION

[1]         On June 2, 2016 a jury found Mr. Ronald Andrew Weinberg guilty of three counts of fraud, one count of forgery, four counts of uttering forged documents and one count of making, circulating or publishing a false prospectus.

[2]         Mr. Weinberg was on trial with two co-accused, Mr. John Xanthoudakis and Mr. Lino Pasquale Matteo, who were also found guilty of several offences by the jury.

The verdicts AND THE FACTS

1)          Fraud against Cinar (count number 12.1)

[3]         Between October 27, 1998 and November 3, 1999, US$123 million was transferred from Cinar to the company Globe-X Management in Nassau, Bahamas.

[4]         Mr. Weinberg personally signed six of the wire transfers for a total of US$109 million.

[5]         A sum of US$108 million was used to purchase bonds in accounts that were in the name of Globe-X Management at Royal Bank of Canada Dominion Securities in Nassau.

[6]         The Board of Directors of Cinar was unaware of this investment.

[7]         The bonds in the Globe-X Management accounts were then margined and lower grade securities were purchased in order to receive a higher return on investment. This implied a higher risk for Cinar.

[8]         The margin pledged on the bond accounts did not appear in the account statements issued to Cinar.

[9]         There was no written agreement for the money sent by Cinar.

[10]        The money deposited in the Bahamas represented approximately 80% of Cinar’s liquid assets.

[11]        From the US$108 million invested in the Bahamas, Cinar received reimbursements from Globe-X Management for a total of US$73 102 103.

[12]        On November 19, 1999, Globe-X Management transferred US$12 million from Cinar’s money in the Bahamas to the entity Comprehensive Investor Services.

[13]        On the same day, Comprehensive Investor Services transferred US$12 million to Cinar but for the benefit of Mr. Weinberg’s holding company 153114 Canada Inc. and his late wife Ms. Micheline Charest’s holding company 2950995 Canada Inc.

[14]        From the US$12 million, US$7.2 million was used to cancel guarantees for investments made by both the holding companies and Mr. Weinberg with Pro-Genesis.

[15]        From the remaining balance, US$850 000 and US$3.5 million were sent back to Comprehensive Investor Services.

2)            Fraud against the public (count number 11)

[16]        The margin pledge against the bond accounts opened with Cinar’s money was deliberately omitted from Cinar’s 1998 financial statements.

[17]        The financial statements also did not show that Cinar’s accounts opened at Pro-Genesis were used as a guarantee for the personal accounts at Pro-Genesis of Mr. Weinberg, the holding companies of Mr. Weinberg and his late wife Ms. Micheline Charest, the personal accounts of Mr. Hasanain Panju, who was CFO at Cinar, and his wife and the personal accounts of Mr. Mario Ricci and Mr. Andrew Porporino who were both working at Cinar.

[18]        Also, there were transactions in the Director’s loan account at Cinar that were not mentioned in the financial statements and that should have been identified as related party transactions.

[19]        The decision to leave these items out of the financial statements was a group decision. The group was composed of Mr. Weinberg, Mr. Panju, Mr. Ricci and Mr. Porporino.

[20]        Cinar’s 1998 financial statements were an integral part of the March 1999 prospectus that was prepared for a public offering.

[21]        The public offering made by Cinar in March 1999 raised US$153 million.

[22]        The money was not used in accordance with the use of proceeds described in the prospectus.

[23]        For example, from the money raised through the public offering, US$50 million was sent to the Bahamas as an additional investment.

3)            The false prospectus (count number 10)

[24]        The evidence referred to in relation to the fraud against the public also applies to the false prospectus.

[25]        In short, the 1999 prospectus was false in a material particular because of the fact that items were omitted from Cinar’s 1998 financial statements, the latter being an integral part of the prospectus.

 

4)            The making of the false financial statements for the year 1998

            (count number 8)

[26]        Again, the evidence referred to in relation to the fraud against the public applies to this verdict of forgery.

[27]        Mr. Weinberg was part of the group who decided not to show certain items in Cinar’s 1998 financial statements.

5)            The use of Cinar’s 1998 forged financial statements (count number 9)

[28]        The evidence referred to in relation to the fraud against the public also applies to this verdict of uttering forged documents.

[29]        To summarize, the forged financial statements for the year 1998 were used for the March 1999 prospectus. They were an integral part of the prospectus.

6)            The fraud against Cinar through investments made with Pro-Genesis

            (count number 1)

[30]        Mr. Panju and Mr. Weinberg opened personal accounts for investments with Pro-Genesis. Accounts were also opened for Mr. Weinberg’s and Ms. Charest’s holding companies. At some point, accounts were opened in the name of Cinar.

[31]        The opening of these accounts for Cinar was made using false corporate resolutions from Cinar.

[32]        US$12 million of Cinar’s money was deposited at Pro-Genesis.

[33]        Cinar’s accounts were intended for low risk investments. They were then used to guarantee the accounts of the holding companies and personal accounts, including those of Mr. Weinberg and Mr. Panju.

[34]        These personal accounts were used to trade options which were considered as high risk investments. The potential return was consequently much higher.

[35]        As a result of Cinar’s accounts guaranteeing these high risk accounts, Cinar’s money was put at risk.

7)            The use of forged corporate resolutions for the opening of accounts at              Pro-Genesis (count number 5)

[36]        The evidence referred to in relation to the fraud against Cinar through investments with Pro-Genesis also applies to this verdict.

[37]        This verdict relates to the use of two false corporate resolutions dated March 30, 1999 that were used to open accounts for Cinar at Pro-Genesis.

8)            The use of a forged revenue recognized schedule by contract

            (count number 7)

[38]        Fictitious sales were entered into Cinar’s book close to year end. The sales increased Cinar’s revenues by US$17 million for the year 1999.

[39]        The sales were purported to be with an entity named Global Star Entertainment Ltd. The sales represented a large portion of Cinar’s catalogue of productions.

[40]        Unsigned contracts between Cinar and Global Star were found at Cinar.

[41]        At some point, after the fictitious sales were discovered, the entries in Cinar’s books were reversed.

9)            The use of a forged Discretionary Investment Management Agreement, of a      forged Special Terms Addendum and of a forged reset letter

            (count number 22)

[42]        Following the discovery of Cinar’s money in the Bahamas, Cinar’s Board of Directors requested the immediate return of the money to Canada.

[43]        The money was in accounts at Royal Bank of Canada Dominion Securities in Nassau under the name of Globe-X Management. The investment was presented to Cinar as an investment with Norshield International.

[44]        When Cinar asked for the return of its money, Norshield did not have the necessary funds to repay Cinar.

[45]        Most of Cinar’s money had been used to repay other investors, to pay for operation expenses, for cash flow obligations and for other purposes.

[46]        Therefore, a strategy was put in place by Norshield to have Cinar’s representatives believe that Cinar’s money was invested in valid financial instruments and, also, to create delays in order to be able to repay Cinar.

[47]        This strategy involved the making of false documents.

[48]        Amongst these documents were the Discretionary Investment Management Agreement, the Special Terms Addendum, which formed part of the agreement, and a reset letter.

[49]        To summarize, these documents purported to show that Cinar’s money was invested in commercial papers issued by Globe-X Canadiana and that the investments had not yet come to maturity, and therefore, could not be redeemed all at once.

THE EVIDENCE AT THE HEARING ON SENTENCING

1)         The evidence presented by Mr. Weinberg

[50]        Mr. Weinberg presented six witnesses: his two sons Eric and Alexandre Weinberg, his sister Robin Weinberg and two friends, Mr. Louis Laverdière and Ms. Janet Schinderman. Mr. Weinberg also had Dr. Louis Morissette testify as his treating physician.

a)        Mr. Eric Weinberg

[51]        He said that both his parents were very present throughout his entire life.

[52]        As a child, due to severe dyslexia, he was sent to a special school in Vermont, the Greenwood School.

[53]        At some point his father was asked to join the Board of Directors of the school. He did so and according to his son, Mr. Weinberg’s support was instrumental in preserving the school.

[54]        Mr. Weinberg’s son said that after his father left Cinar, their family was ostracized. People distanced themselves, and it changed their family forever.

[55]        Mr. Weinberg’s son said that he intends to support his father.

[56]        He also said that he believes his father would still contribute to society the way he did before and that his father would go out of his way rather than get things for himself.

b)           Mr. Alexandre Weinberg

[57]        He said that his parents wanted to make children’s lives better.

[58]        He also said that after his mother passed away, he and his brother tried to help Mr. Weinberg.

[59]        Mr. Weinberg’s son said that his father has a fantastic personality, that he is a caring, wonderful human being.

[60]        He said that his father was always there for them.

[61]        He said that Mr. Weinberg can contribute to society and that for the coming years, he will support his father.

c)            Ms. Robin Weinberg

[62]        She is the sister of Mr. Weinberg.

[63]        She said Mr. Weinberg is the best brother.

[64]        She said that they learned from their parents that the purpose in life is to make the lives of others better.

[65]        She said that her brother was devastated about Cinar and the passing of Ms. Charest.

d)            Mr. Louis Laverdière

[66]        Mr. Laverdière met Mr. Weinberg through Ms. Charest.

[67]        Mr. Laverdière was a friend of Ms. Charest since he was 15 years old.

[68]        He said that his relationship with Mr. Weinberg became more important after Ms. Charest passed away.

[69]        He said that Mr. Weinberg is a true friend.

[70]        When Mr. Laverdière thought about adopting a child, Mr. Weinberg helped and supported him in the process.

[71]        He said that he will do anything to support Mr. Weinberg and that he is convinced that Mr. Weinberg can still contribute to society.

e)            Ms. Janet Schinderman

[72]        She has been a friend of Mr. Weinberg since 1969. They met at the University of Louisiana.

[73]        She said Mr. Weinberg helped her with her business and that, over the years, he gave her advice.

[74]        She also said that Mr. Weinberg helped her as regards charities and other programs for battered women and for children.

[75]        She said that Mr. Weinberg is a devoted friend and that she will not change her relationship with him.

f)             Dr. Louis Morrissette

[76]        Dr. Morrissette is a psychiatrist. He testified as the treating physician of Mr. Weinberg.

[77]        He first met Mr. Weinberg in December 2006.

[78]        He said Mr. Weinberg presented signs of depression. He could not get over the death of Ms. Charest.

[79]        Dr. Morrissette treated him and the last time he saw him for this episode was in April 2008.

[80]        Dr. Morrissette said that he again saw Mr. Weinberg in January 2014.

[81]        He said that Mr. Weinberg presented signs of depression that came back in the context of the criminal trial he was facing.

[82]        Dr. Morrissette last saw Mr. Weinberg in March 2016.

g)            Documentary evidence

[83]        Counsel for Mr. Weinberg filed thirty letters[2]. These are from his new wife, family, friends and people who had interactions with Mr. Weinberg.

[84]        They all praise Mr. Weinberg’s personality, his involvement in the community and his devotion to his family. The letters also refer to events that affected Mr. Weinberg over the last sixteen years, such as the passing of his late wife Ms. Charest, various lawsuits and his battle with cancer.

[85]        A document was also filed in relation to the settlement of a class action taken in the United States against Mr. Weinberg, Ms. Charest, Ms. Marie-Josée Corbeil, who was legal counsel for Cinar, Mr. Panju, Cinar and Ernst & Young[3].

[86]        The settlement was for the class action both in the United States and in Canada.

[87]        Mr. Weinberg was excluded from the settlement and did not receive any money from it[4].

[88]        According to the document, Mr. Weinberg contributed US$2.25 million for the settlement.

[89]        The courts in Canada and in the United States approved the settlement on November 25, 2002 and January 21, 2003 respectively[5].

[90]        Documents were also filed in relation to a settlement with the then Quebec Securities Commission[6].

[91]        According to these documents, Ms. Charest and Mr. Weinberg each paid CDN$1 million to the Quebec Securities Commission in settlement of the proceedings against them.

[92]        Another document was filed under seal[7]. It relates to an out-of-court settlement between various parties, including Mr. Weinberg and Cinar.

[93]        Documents were filed for a better understanding of this settlement[8].

[94]        According to the settlement document, Mr. Weinberg transferred to Cinar various investments he had for a total of US$1 127 312.

[95]        Mr. Weinberg also assigned to Cinar his rights in a claim in relation to Mr. Panju’s house, which was evaluated at US$844 266.

[96]        Mr. Weinberg also assigned to Cinar 50% of his rights in a tax claim. As a result, Cinar received CDN$475 000 but costs of CDN$250 000 had to be deducted. The net benefit to Cinar was CDN$225 000.

[97]        Mr. Weinberg also assigned to Cinar his rights in contingent cash entitlements[9]. Cinar received US$476 172.

[98]        Also, Mr. Weinberg transferred to Cinar the proceeds from the sale of houses. Cinar received CDN$4 174 428.

[99]        Evidence was also adduced in relation to additional recoveries made by Cinar.

[100]     Ernst & Young and Ms. Marie-Josée Corbeil contributed US$10.4 million to the settlement of the class action.

[101]     There was also a payment of US$5 million to Cinar as a result of the liquidation of a cash-settled index call option assigned by Mosaic Composite Ltd. to Univest Multi-Strategy II Ltd. Those entities were related to Norshield.

[102]     Cinar received US$1 674 759 from a settlement with Mr. Panju. Mr. Panju’s house was part of the settlement.

[103]     Also, Cinar received US$11 423 735 from a settlement with the Royal Bank of Canada in Ontario.

[104]     As per January 14, 2004, Mr. Weinberg and Ms. Charest had a market value loss of CDN$98 141 229.93 for their Cinar Class A shares[10].

[105]     Finally, a copy of Journal Centraide from the year 2000 was filed[11].

[106]     The document shows that Mr. Weinberg was co-President of the 1999 Centraide Campaign. The sum of CDN$34.7 million was raised.

2)         The evidence presented by the Crown

[107]     The Crown filed two victim impact statements[12].

[108]     One is from Ms. Marie Rousseau. She lost CDN$11 000 from the investment she made with Cinar.

[109]     She explains that she has lost confidence in the stock market.

[110]     She said that she is now suspicious in everything she is doing. She also said that, at the time, she suffered from insomnia.

[111]     She said that she is trying to find solutions for investors.

[112]     The other victim impact statement is from Mr. Louis-Antoine Méthot.

[113]     He was the designated person in the class action against Cinar[13].

[114]     He wrote that he recalls being highly disappointed with the principals of Cinar.

[115]     He said he was furious that they breached the trust of numerous small investors like himself who worked hard to create savings for their retirements.

[116]     His investment with Cinar was entirely in his Retirement Savings Plan. He had 200 shares, and the market value of those shares was CDN$6 800.

[117]     Mr. Méthot wrote that he had to accept the loss of this money and that he had to keep working longer to make up for the loss.

[118]     He wrote that investors trusted Cinar.

[119]     The Crown also filed a letter from Mr. Claude Robinson[14].

[120]     The Crown readily pointed out that Mr. Robinson is not a victim in the present file. The letter was filed in response to the various letters filed by Mr. Weinberg to show his good character and his contribution to society.

[121]     Mr. Robinson quotes various judgments from his eighteen-year judicial saga with Mr. Weinberg.

[122]     The Crown filed two judgments to provide context about the civil litigation with which Mr. Weinberg was involved[15].

[123]     The Crown also filed a document showing that since December 31, 2011 and until May 15, 2016, Mr. Weinberg made seventeen trips to Panama, for a total of 512 days[16].

[124]     Finally, the Crown filed a schedule[17] prepared by Mr. Rejean Deveault, who testified as an expert in accounting for the Crown during the trial.

[125]     According to the document, the total market value loss for Cinar’s Class B shares as at January 14, 2004 was CDN$699 074 815.32.

POSITION OF THE PARTIES

1)         The Crown’s position

[126]     The Crown is asking for the following sentences:

-        Count number 10 (false prospectus): ten years;

-        Count number 11 (fraud against the public in general): ten years;

-        Count number 12.1 (fraud against Cinar): ten years;

-        Count number 1 (fraud against Cinar): six to seven years;

-        Count number 5 (uttering a forged document): six years;

-        Count number 7 (uttering a forged document): six years;

-        Count number 8 (forgery): seven years;

-        Count number 9 (uttering forged documents): seven years;

-        Count number 22 (uttering forged documents): six years.

[127]     The Court understands from the Crown’s position that, although some of the offences are distinct and could justify consecutive sentences, the Crown is not seeking more than a ten-year imprisonment, and therefore, the sentences should be served concurrently.

[128]     All of the offences of fraud stated in counts number 1, 11 and 12.1 took place before the amendment to the Criminal Code in 2004 which raised the maximum imprisonment for the offence of fraud to 14 years.

[129]     Therefore, the maximum imprisonment for the offences of fraud in this case is ten years.

[130]     The Crown submits that in the case of major frauds, the sentences vary from six to ten years.

[131]     The Crown submits that the objectives of general deterrence and denunciation should prevail in this case.

[132]     The Crown considers the following as aggravating circumstances:

-        The level of sophistication and the planning of the fraud;

-        The fact that it was a large-scale fraud;

-        The fact that the fraud was difficult to detect;

-        The fact that Mr. Weinberg was the co-founder of Cinar and that, at the time of the offences, he was co-CEO and a major shareholder of the company;

-        The breach of trust towards Cinar and its shareholders;

-        The fact that the fraud was for a value of over one million dollars;

-        The fact that Cinar was a public company;

-        The fact that the offences were motivated by pure greed and for personal gain;

-        The fact that the money transferred to the Bahamas represented 80% of the liquid assets of Cinar.

2)         Mr. Weinberg’s position

[133]     Counsel for Mr. Weinberg is asking for the following sentences:

-        Count number 12.1 (fraud against Cinar): five years;

-        Count number 11 (fraud against the public in general): five years;

-        Count number 10 (false prospectus): five years;

-        Count number 8 (forgery): five years;

-        Count number 9 (uttering forged documents): five years;

-        Count number 1 (fraud against Cinar): one year;

-        Count number 5 (uttering a forged document): six months;

-        Count number 7 (uttering a forged document): one year;

-        Count number 22 (uttering forged documents): one year.

[134]     In support of a five-year total sentence, counsel for Mr. Weinberg relies on the fact that Mr. Panju, after his plea of guilt, received a sentence of four years.

[135]     She argues that Mr. Weinberg’s role was not more significant than Mr. Panju’s and that therefore, the sentences should be similar or close.

[136]     Counsel for Mr. Weinberg considers the following as mitigating circumstances:

-        The age of Mr. Weinberg (64 years old);

-        The fact that the risk that he commits new offences is reduced because of his age and also because of the support of his family and friends;

-        The length of the proceedings;

-        The media coverage;

-        The very limited evidence of personal profit;

-        The evidence of good character of Mr. Weinberg, for instance, his involvement in the community;

-        The fact that Mr. Weinberg has no prior criminal conviction;

-        The fact that he complied with his bail conditions;

-        The fact that Mr. Weinberg and Ms. Charest paid CDN$2 million to the then Quebec Securities Commission;

-        The fact that Mr. Weinberg contributed US$2.25 million to the settlement of the class action in Canada and the United States and that he waived his rights, as a shareholder, to any proceeds resulting from the settlement;

-        The fact that Mr. Weinberg paid back approximately US$15 million to Cinar and its shareholders.

[137]     Counsel for Mr. Weinberg is also asking the Court that the preventive custody served from June 2 to June 8, 2016 be calculated in double due to the conditions of detention. During that period, Mr. Weinberg did not have access to his personal belongings and could not receive visitors.

[138]     For the remainder of the preventive custody, she is asking for a ratio of 1.5 days for each day served.

[139]     Counsel for Mr. Weinberg is also asking the Court to rule that the period of parole eligibility for Mr. Weinberg be determined by the law in force at the time of the commission of the offences.

ANALYSIS

1)            The purpose and principles of sentencing

[140]     Section 718 of the Criminal Code reads as follows:

718. The fundamental purpose of sentencing is to protect society and 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 and the harm done to victims or to the           community that is caused by 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; and

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

[141]     Section 718.1 of the Criminal Code states the following fundamental principle:

718.1 A sentence must be proportionate to the gravity of the offence and the degree of responsibility of the offender.

[142]     Section 718.2 a), b), c), d) and e) of the Criminal Code states other sentencing principles.

[143]     Section 718.2 a) (iii) reads as follows:

718.2 A court that imposes a sentence shall also take into consideration the following principles:

(a) a sentence should be increased or reduced to account for any relevant aggravating or mitigating circumstances relating to the offence or the offender, and, without limiting the generality of the foregoing, (…)

(iii) evidence that the offender, in committing the offence, abused a position of trust or authority in relation to the victim,

[144]     Section 380.1(1) of the Criminal Code states other aggravating circumstances that apply to fraud and the making of a false prospectus:

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.

[145]     Section 380.1 of the Criminal Code came into force after the period of the offences in the present file.

[146]     However, the aggravating circumstances described in this section of the Criminal Code were already recognized by the Common Law.

[147]     Therefore, the parties have agreed that those aggravating circumstances could apply to this case.

[148]     In R. v. Ipeelee[18], a decision from the Supreme Court of Canada, we can read the following:

[35] In 1996, Parliament amended the Criminal Code to specifically codify the objectives and principles of sentencing (An Act to amend the Criminal Code (sentencing) and other Acts in consequence thereof, S.C. 1995, c. 22 (Bill C-41)). According to s. 718, the fundamental purpose of sentencing is to contribute to “respect for the law and the maintenance of a just, peaceful and safe society”. This is accomplished by imposing “just sanctions” that reflect one or more of the traditional sentencing objectives: denunciation, general and specific deterrence, separation of offenders, rehabilitation, reparation to victims, and promoting a sense of responsibility in offenders and acknowledgment of the harm done to victims and to the community.

[36] The Criminal Code goes on to list a number of principles to guide sentencing judges. The fundamental principle of sentencing is that the sentence must be proportionate to both the gravity of the offence and the degree of responsibility of the offender. As this Court has previously indicated, this principle was not borne out of the 1996 amendments to the Code but, instead, has long been a central tenet of the sentencing process (see, e.g., R. v. Wilmott (1966), 1966 CanLII 222 (ON CA), 58 D.L.R. (2d) 33 (Ont. C.A.), and, more recently, R. v. Solowan, 2008 SCC 62 (CanLII), [2008] 3 S.C.R. 309, at para. 12, and R. v. Nasogaluak, 2010 SCC 6 (CanLII), [2010] 1 S.C.R. 206, at paras. 40-42). It also has a constitutional dimension, in that s. 12 of the Canadian Charter of Rights and Freedoms forbids the imposition of a grossly disproportionate sentence that would outrage society’s standards of decency. In a similar vein, proportionality in sentencing could aptly be described as a principle of fundamental justice under s. 7 of the Charter.

[37] The fundamental principle of sentencing (i.e., proportionality) is intimately tied to the fundamental purpose of sentencing — the maintenance of a just, peaceful and safe society through the imposition of just sanctions. Whatever weight a judge may wish to accord to the various objectives and other principles listed in the Code, the resulting sentence must respect the fundamental principle of proportionality. Proportionality is the sine qua non of a just sanction. First, the principle ensures that a sentence reflects the gravity of the offence. This is closely tied to the objective of denunciation. It promotes justice for victims and ensures public confidence in the justice system. As Wilson J. expressed in her concurring judgment in Re B.C. Motor Vehicle Act, 1985 CanLII 81 (SCC), [1985] 2 S.C.R. 486, at p. 533:

It is basic to any theory of punishment that the sentence imposed bear some relationship to the offence; it must be a “fit” sentence proportionate to the seriousness of the offence. Only if this is so can the public be satisfied that the offender “deserved” the punishment he received and feel a confidence in the fairness and rationality of the system.

Second, the principle of proportionality ensures that a sentence does not exceed what is appropriate, given the moral blameworthiness of the offender. In this sense, the principle serves a limiting or restraining function and ensures justice for the offender. In the Canadian criminal justice system, a just sanction is one that reflects both perspectives on proportionality and does not elevate one at the expense of the other.

[149]     When there are multiple offences, the Court should determine just and appropriate sentences for each of the offences, decide whether they should be served concurrently or consecutively and, in the case of consecutive sentences, determine whether the length of the sentences infringe the principles of totality and proportionality. If need be, adjustments are possible in order to render an appropriate sentence in a given case[19].

 

 

 

2)         The sentences

a)         The fraud against Cinar (count number 12.1)

·        The role of Mr. Weinberg

[150]     Mr. Weinberg and his late wife, Ms. Micheline Charest, were the co-founders of Cinar. Cinar specialized in the production of animation shows for children.

[151]     Together, they made Cinar a success story. Cinar became a publicly-traded company worth millions of dollars.

[152]     At the time of the offences, Mr. Weinberg and Ms. Charest were co-CEOs of Cinar. They were also members of the Board of Directors and major shareholders of the company.

[153]     Ms. Charest was more involved in the creative side of Cinar. Mr. Weinberg was involved in the financial aspects of the company.

[154]     In fact, he was involved in all major financial decisions, and he participated in the preparation of the financial statements.

[155]     He worked closely with Mr. Hasanain Panju, who was CFO of Cinar.

[156]     Mr. Panju negotiated the investment of Cinar’s money in the Bahamas with Mr. Xanthoudakis from Norshield.

[157]     Mr. Weinberg was aware of this and approved of it.

[158]     As mentioned before, US$123 million was transferred from Cinar to Globe-X Management in Nassau, Bahamas.

[159]     Mr. Weinberg personally signed six wire transfers for a total of US$109 million.

[160]     There is no doubt that Mr. Panju played a major part in this scheme.

[161]     Nonetheless, he was always the subordinate of Mr. Weinberg.

[162]     In other words, given his position at Cinar, had Mr. Weinberg not agreed to and participated in this scheme, none of it would have been possible.

[163]     The Court concludes that Mr. Weinberg played a leading role in the fraud against Cinar.

 

·        The amount of the fraud

[164]     US$123 million of Cinar’s money transferred to the Bahamas was put at risk.

[165]     The money sent to the Bahamas represented approximately 80% of Cinar’s liquid assets.

[166]     There was no written agreement with Norshield, the money was not deposited under Cinar’s name and Cinar’s Board of Directors was not made aware of the money sent to the Bahamas because they would never have approved it.

·        The loss for Cinar

[167]     The exact amount of Cinar’s loss is not easy to determine.

[168]     There is evidence that from the US$108 million invested in the Bahamas, Cinar received reimbursements from Globe-X Management for a total of US$73 102 103.

[169]     There is also evidence that Cinar received an additional US$5 million as a result of the liquidation of a cash-settled index call option with companies related to Norshield.

[170]     Mr. Weinberg made payments to Cinar and contributed to the settlement of the class action in Canada and in the United States.

[171]     Mr. Weinberg also assigned to Cinar his rights in various claims.

[172]     There is also evidence that Cinar received money from other sources.

[173]     But then, the Court must also consider that Cinar incurred costs in recuperating its money.

[174]     The costs of CDN$250 000 incured for the tax claim is an example of that.

[175]     Schedule A of the contingent cash entitlements document[20] refers to other litigation costs.

[176]     Also, the Court must consider that Cinar contributed US$14.6 million to the settlement of the class action in Canada and in the United States[21].

[177]     The Court concludes that it does not have all the necessary information to determine with precision the loss suffered by Cinar.

[178]     It is fair to say however that, according to the evidence, Cinar received at least US$90 million.

[179]     That being said, the Court refers to the following passage of R. v. Waxman[22]:

[56] When prominent business leaders who are directors and officers of public companies engaged in fraudulent activity, the public faith in and the integrity of, the public marketplace no doubt suffers regardless of any actual financial loss suffered. 

[180]     The Court finds that this apply to this case.

·        Benefits received by Mr. Weinberg

[181]     Mr. Weinberg personally benefited from the US$12 million transferred by Comprehensive Investor Services to his holding company and Ms. Charest’s holding company.

[182]     From that US$12 million, US$7.2 million was used to cancel guarantees for investments made by both the holding companies and Mr. Weinberg with Pro-Genesis.

·        Mr. Hasanain Panju’s sentence

[183]     Counsel for Mr. Weinberg submits that Mr. Weinberg’s sentence should be in the same range as Mr. Panju’s sentence.

[184]     The Court finds that it is not the case.

[185]     Mr. Panju pleaded guilty and testified for the Crown for several weeks.

[186]     The Court finds that this is the start of a rehabilitation.

[187]     These were mitigating circumstances for Mr. Panju.

[188]     That being said, the Court wants to make it absolutely clear that Mr. Weinberg will not be punished more severely because he went to trial.

[189]     The Court is only pointing out mitigating circumstances that benefited Mr. Panju for his sentence.

[190]     Also, as mentionned before, the Court finds that Mr. Panju acted as a subordinate of Mr. Weinberg.

[191]     If it had not been for Mr. Weinberg’s agreement to and participation in the scheme, none of it would have happened.

[192]     Although Mr. Panju’s participation was important, the Court finds that Mr. Weinberg bears a higher degree of responsibility for the offences.

·        General deterrence and denunciation

[193]     The Court finds that in a fraud of this magnitude involving a public company, the objectives of general deterrence and denunciation must prevail.

·        Mr. Weinberg’s address to the Court

[194]     Mr. Weinberg was given the opportunity to address the Court pursuant to section 726 of the Criminal Code.

[195]     He said he was responsible for what happened to Cinar.

[196]     He said he has lived with that responsibility for the last sixteen years.

[197]     Mr. Weinberg referred to the employment and money losses at Cinar.

[198]     He said that the passage of time has changed remorse into sadness.

[199]     He said that for the rest of his life, no amount of time will allow him to get over it.

[200]     Mr. Weinberg said that Cinar was his life, for better or for worse.

[201]     He said that, over the last years, he has tried to make the best of the situation and that it has been a struggle.

[202]     He said that now the struggle has come to an end but that it will never be over for him.

·        The aggravating circumstances

[203]     The Court considers the following as aggravating circumstances:

-        The position Mr. Weinberg held at Cinar;

-        The level of sophistication and the planning of the fraud;

-        The fact that Cinar was a publicly-traded company;

-        The impact the fraud had on Cinar’s shareholders and on the financial market;

-        The fact that the money transferred to the Bahamas represented 80% of Cinar’s liquid assets;

-        The fact that the fraud was for a value of over one million dollars;

-        The fact that Mr. Weinberg abused a position of trust in relation to Cinar and its shareholders;

-        The fact that the offence was motivated by pure greed and for personal gain.

·        The mitigating circumstances

[204]     The Court considers the following as mitigating circumstances:

-        The age of Mr. Weinberg and the support of his family and friends reduce the risk that he commits new offences;

-        The fact that he complied with his bail conditions;

-        The fact that Mr. Weinberg said he took responsibility for what happened to Cinar[23];

-        The fact that he refunded money to Cinar and that he financially contributed to the settlement of the class action in Canada and in the Unites States.

[205]     On that last point, the Court reiterates that it is not possible to determine the exact amount received by Cinar from various sources.

[206]     However, the Court will consider the following contributions by Mr. Weinberg  as mitigating circumstances:

-        US$2.25 million for the settlement of the class action;

-        US$1 127 312 for the investments he transferred to Cinar;

-        CDN$225 000 for the tax claim assigned to Cinar;

-        US$476 172 for the contingent cash entitlement;

-        CDN$4 174 172 from the sale of his houses.

[207]     The Court is not considering the absence of prior criminal conviction and the involvement of Mr. Weinberg in the community as mitigating circumstances.

[208]     The Court finds that these elements contributed to his success as a businessman and gave him credibility as a leader of a public company and, by extension, credibility to the shareholders.

[209]     For the following reasons, the Court does not find that the length of the proceedings qualify as a mitigating circumstance in this case.

[210]     On this subject, the Court refers to the following passage from R. v. Waxman[24]:

[64] In deciding whether any delay in the completion of the process should mitigate sentence, it is appropriate to consider an offender’s bail terms.  The more stringent these terms the more likely it will be that any delay in completion of the process will have some mitigating effect on sentence.  Here Mr. Waxman was out on bail throughout the trial proceedings.  The terms of bail do not appear to have imposed any significant restraint on his liberty. 

[211]     In the present case, Mr. Weinberg was released on bail after his arrest in 2011. Evidence[25] shows that, from December 31, 2011 until May 15, 2016 he travelled seventeen times to Panama, for a total of 512 days.

[212]     The Court adopts the passage quoted from R. v. Waxman[26] and concludes that the terms of the bail do not appear to have imposed significant restraint on Mr. Weinberg’s liberty.

[213]     The Court also does not find that media coverage qualifies as a mitigating circumstance in this case.

[214]     In R. c. Thibault[27], the Quebec Court of Appeal held that when a public figure is charged for an offence, greater media coverage is inevitable and the person charged must bear the consequences. Therefore, according to the Court of Appeal, it should not be considered as a mitigating circumstance.

[215]     The Court of Appeal wrote that deciding otherwise would have the undesired effect that a public figure would receive a lighter sentence than an unknown person and that justice must be the same for all.

 

·        The quantum

[216]     Considering all the circumstances of this case and for all the reasons stated above, the Court is sentencing Mr. Ronald Weinberg to nine years of imprisonment for count number 12.1.

b)         Fraud against the public in general (count number 11)

[217]     For the reasons mentioned in relation to count number 12.1, the Court finds that Mr. Weinberg played a leading role in the fraud against the public.

[218]     The Court considers the same aggravating and mitigating circumstances as for count number 12.1.

[219]     The Court’s reasons given for count number 12.1 in relation to Mr. Panju’s sentence, the general deterrence and denunciation objectives and Mr. Weinberg’s address to the Court also apply to count number 11.

[220]     For count number 11, the Court is sentencing Mr. Weinberg to nine years of imprisonment.

[221]     This sentence will be served concurrently.

c)         The false prospectus (count number 10)

[222]     This count is related to count number 11.

[223]     As stated above, Cinar’s 1998 financial statements were an integral part of the prospectus. Items were deliberately omitted from the financial statements, making the prospectus false in a material particular. The prospectus was used for a public offering that raised US$153 million.

[224]     For count number 10, the Court is sentencing Mr. Weinberg to nine years of imprisonment.

[225]     This sentence will be served concurrently

d)         The making of false financial statements for the year 1998 (count number 8)

[226]     This count is related to counts number 10 and 11.

[227]     For count number 8, the Court is sentencing Mr. Weinberg to seven years of imprisonment.

[228]     This sentence will be served concurrently

e)         The use of the Cinar’s 1998 financial statements (count number 9)

[229]     This count is also related to counts number 10 and 11.

[230]     For count number 9, the Court is sentencing Mr. Weinberg to seven years of imprisonment.

[231]     This sentence will be served concurrently.

f)          The fraud against Cinar through investments made with Pro-Genesis

            (count number 1)

[232]     Mr. Weinberg had a personal account and an account for his holding company at Pro-Genesis.

[233]     Accounts were opened for Cinar at Pro-Genesis and Cinar’s money was used to guarantee the accounts of Mr. Weinberg and his holding company, which were high risk option accounts.

[234]     By having these guarantees, more trades were allowed in Mr. Weinberg’s accounts and therefore, the value of his portfolios increased.

[235]     There is no doubt that Mr. Panju also played an important part in this scheme.

[236]     Nonetheless, he was always the subordinate of Mr. Weinberg.

[237]     In other words, given his position at Cinar, had Mr. Weinberg not agreed to and participated in this scheme, none of it would have been possible.

[238]     The Court concludes that Mr. Weinberg played a leading role in the fraud against Cinar.

[239]     There was no loss for Cinar but US$12 million of its money was put at risk.

[240]     Mr. Weinberg personally benefited from the use of Cinar’s money.

·        The aggravating circumstances

[241]     The Court considers the following as aggravating circumstances:

-        The position Mr. Weinberg held at Cinar;

-        The level of sophistication and the planning of the fraud;

-        The fact that Cinar was a publicly-traded company;

-        The fact that the fraud was for a value of over one million dollars;

-        The fact that Mr. Weinberg abused a position of trust in relation to Cinar and its shareholders;

-        The fact that the offence was motivated by pure greed and for personal gain.

·        The mitigating circumstances

[242]     The Court considers the following as mitigating circumstances:

-        The age of Mr. Weinberg and the support of his family and friends reduce the risk that he commits new offences;

-        The fact that he complied with his bail conditions.

[243]     The Court’s reasons already given in relation to Mr. Panju’s sentence, the general deterrence and denunciation objectives and Mr. Weinberg’s address to the Court also apply to count number 1.

[244]     For count number 1, the Court is sentencing Mr. Weinberg to seven years of imprisonment.

[245]     This sentence will be served concurrently.

g)         The use of forged corporate resolutions for the opening of accounts at              Pro-Genesis (count number 5)

[246]     This count is related to count number 1.

[247]     The resolutions were used to open accounts for Cinar at Pro-Genesis.

[248]     For count number 5, the Court is sentencing Mr. Weinberg to five years of imprisonment.

[249]     This sentence will be served concurrently.

h)         The use of a forged revenue recognized schedule by contract

            (count number 7)

[250]     Mr. Weinberg used a forged document presenting sales that were entered into Cinar’s books.

[251]     This had the effect of increasing Cinar’s revenues by US$17 million for the year 1999. Cinar’s share value was intimately related to its success.

[252]     As a major shareholder of Cinar, any increase in Cinar’s share value would translate into an advantage for Mr. Weinberg.

·        The aggravating circumstances

[253]     The Court considers the following as aggravating circumstances:

-        The position Mr. Weinberg held at Cinar;

-        The fact that Cinar was a publicly-traded company;

-        The fact that Mr. Weinberg abused a position of trust in relation to Cinar and its shareholders;

-        The fact that the offence was motivated by pure greed and for personal gain.

·        The mitigating circumstances

[254]     The Court considers the following as mitigating circumstances:

-        The age of Mr. Weinberg and the support of his family and friends reduce the risk that he commits new offences;

-        The fact that he complied with his bail conditions.

[255]     The Court’s reasons already given in relation to Mr. Panju’s sentence, the general deterrence and denunciation objectives and Mr. Weinberg’s address to the Court also apply to count number 7.

[256]     For count number 7, the Court is sentencing Mr. Weinberg to five years of imprisonment.

[257]     This sentence will be served concurrently.

i)          The use of a forged Discretionary Investment Management Agreement, of a      forged Special Terms Addendum and of a forged reset letter

            (count number 22)

[258]     This count is related to count number 12.1.

[259]     These documents were created to deceive Cinar when it requested its money back from the Bahamas.

[260]     Mr. Weinberg was mostly involved with the reset letter.

[261]     But by adhering to the use of the reset letter, he went along with the use of the other documents.

[262]     The use of these documents had the effect of perpetuating the fraud against Cinar.

[263]     For count number 22, the Court is sentencing Mr. Weinberg to six years of imprisonment.

[264]     This sentence will be served concurrently.

CONCLUSION

[265]     The total sentence imposed on Mr. Weinberg is nine years.

[266]     The Court will deduct the preventive custody in the following way.

[267]     The Court does not find that the detention conditions from June 2 to June 8, 2016, justify calculating the time served in double.

[268]     From June 2 to June 21, the Court will apply a ratio of 1.5 per day served.

[269]     The Court will credit 30 days for this period.

[270]     Therefore, Mr. Weinberg will serve a sentence of eight years and eleven months from today.

[271]     Mr. Weinberg will pay the victim surcharge on all counts for which he was found guilty.

[272]     Concerning the request that the parole eligibility be determined by the law in force at the time of the commission of the offences, the Court will not intervene.

[273]     First, no motion pursuant to the Canadian Charter of Rights and Freedom[28] was presented.

[274]     Second, there is no evidence that the Attorney General of Canada was notified of this request.

 

[275]     Therefore, the Court will not grant this request.

		__________________________________ PIERRE LABRIE, S.C.J.
Me Matthew Ferguson
Me Céline Bilodeau
Directeur des poursuites criminelles et pénales
Attorneys for the prosecutrix
Me Jeffrey K. Boro
Me Annie Émond
Boro, Polnicky, Lighter
Attorneys for the offender Mr. Ronald Andrew Weinberg
Dates of hearing:	June 6, 7, 8, 10 and 13, 2016