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| John L. Hill |
Denunciation and deterrence are included as sentencing principles in s. 718 of Canada’s Criminal Code. Denunciation expresses society’s moral condemnation. It is a symbolic punishment intended to make an example of the offender rather than to constitute a proportionate response to individual blameworthiness. It focuses on sending a message to the community rather than on what the offender truly deserves. This tension can undermine the principle of proportionality as a fundamental principle in sentencing.
As for deterrence, there’s little solid evidence that harsher sentences actually deter crime. Studies consistently show that the certainty of detection is far more critical than sentence length. Many offenders do not conduct a rational cost-benefit analysis before committing offences, particularly in crimes driven by greed or the belief that they will not be caught.
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Jawad Rathore and Vince Petrozza were convicted after trial of one count of fraud over $5,000 arising from syndicated mortgage loans used to raise funds for two construction projects, Colliers and Sky City, between January 2011 and July 2015. Although the projects were real, investors were misled regarding property values, resulting in mortgages that far exceeded the properties’ actual value and exposing investors to a substantial risk of loss.
The court found that at least $33.1 million was fraudulently raised ($15.4 million for Colliers and $17.7 million for Sky City). After accounting for interest payments and recoveries from civil proceedings, the proven outstanding loss amounted to more than $24.4 million. Nearly 800 investors, primarily unsophisticated “mom and pop” investors, were affected, many suffering severe financial and psychological harm. The reasons for the sentence acknowledge that Rathore and Petrozza were not involved in a Ponzi scheme. They believed they were funding a viable project that failed only because the initial developer and construction manager, Mady, declared bankruptcy. Still, they carried on. Their defence was that they were bad businessmen rather than fraudsters.
Both offenders had no prior criminal records and strong community ties, which were mitigating factors. However, aggravating factors included the scale, complexity and duration of the fraud (approximately 4.5 years), the number of victims, the targeting of vulnerable investors and the offenders’ exploitation of their standing in the community. The court rejected the defence arguments that the offenders did not intend to cause loss or that the risk of loss was low.
Emphasizing denunciation and general deterrence, the court concluded that a penitentiary sentence was required. While acknowledging that the deterrent value of any sentence is a matter of controversy and speculation, the sentencing judge found that if the prospect of a lengthy jail sentence will deter anyone from planning and committing a crime, it would prevent people like Rathore and Petrozza “who are intelligent individuals, well aware of potential consequences, and accustomed to weighing potential future risks against potential benefits before taking action”. The court cited R. v. Gray, 76 O A.C. 387 (C.A.), leave to appeal to S.C.C. refused (R. v. Gray (S.C.C.), [1995] S.C.C.A. No. 116) in justification of a lengthy prison term.
In its relatively short reasons, the court appeared to impose a prison term while acknowledging that no sentence could undo the significant financial and psychological harm caused to the investors. Rather than accede to the Crown’s request of a 10-year prison term for Rathore and Petrozza, the court accepted that recent jurisprudence confirmed that in cases of large-scale fraud, the range of three to five years is appropriate (R. v. Davatgar-Jafarpour, 2019 ONCA 353 (Ont. C.A.)).
Each offender was sentenced to five years’ imprisonment. The court also imposed DNA orders, a 10-year prohibition order under s. 380.2 of the Criminal Code, preventing their dealing with money or real property, and a fine of $12.2 million instead of forfeiture, with a five-year default incarceration period and 10 years to pay following release. Restitution orders will be made following further submissions, with priority given to specific victims.
Was a penitentiary term called for? The criminal trial focused on establishing the harm to the victims and the magnitude of the monetary loss. The concern was with what Rathore and Petrozza had done rather than with why the investment opportunity failed so dramatically. If Rathore and Petrozza intended to make their project succeed rather than defraud investors, would denunciation and deterrence be relevant sentencing factors? Unfortunately, those principles look only to what was done, not to why it was done.
John L. Hill practised and taught prison law until his retirement. He holds a JD from Queen’s and an LLM in constitutional law from Osgoode Hall. His most recent book, Acts of Darkness (Durvile & UpRoute Books), was released July 1. Hill is also the author of Pine Box Parole: Terry Fitzsimmons and the Quest to End Solitary Confinement (Durvile & UpRoute Books) and The Rest of the (True Crime) Story (AOS Publishing). Contact him at johnlornehill@hotmail.com.
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