Carin Smith and her then husband were just trying to pay off their mortgage a little faster.
But after the investment opportunity they agreed to in 2008 turned out to be a scam, Smith’s marriage ended. She picked up a full-time job working nights to avoid losing her Acton, Ont., home. She also took on a new 25-year mortgage when she would have otherwise paid off her house in 10.
“It changed my life completely,” said Smith. “I don’t trust anyone … I’m not retiring at 65, I have another 15 years left to pay on my house.”
The 54-year-old lost $70,000, which came from the equity in her home and went straight into the pockets of Daniel Reeve — now a convicted fraudster. Reeve used Smith’s funds to pay other investors, according to the reasons for judgment in his criminal case.
In June 2018, Reeve received the maximum 14-year sentence for fraud after being found guilty of defrauding at least 41 victims of nearly $11 million in 2007 and 2008. The judge also ordered him to pay nearly $11 million in restitution to his victims within 10 years, even though the judge believed “there is no likelihood of repayment.”
Credit for pretrial custody whittled Reeve’s sentence down to four years. Eight months after sentencing he was released on day parole in February 2019 because he wasn’t considered a risk to commit a violent crime. But within months, he was back in custody after police said they caught Reeve pushing a new pyramid scheme.
Despite his revoked parole, Reeve’s original sentence was reduced to 10 years on appeal, and by June 2020 he was a free man.
So far, Smith says she hasn’t seen a penny of restitution from Reeve.
Part one of CBC Toronto’s investigative series, The Cost of Fraud, examined how Ontario’s overloaded justice system is failing to tackle and deter the majority of skyrocketing frauds in the province. Part two breaks down how even victims whose fraud cases make it through the system to conviction face an uphill battle recovering the money they’ve lost, despite a longstanding sentencing option meant to help them do just that.
Ontario doesn’t track restitution outcomes
Ontario courts have ordered fraudsters to pay nearly half a billion dollars in restitution to victims like Smith since 2010. But the provincial government doesn’t know how much of that money is ultimately paid to victims because it doesn’t centrally track the outcomes of restitution orders.
Lawyers and victim advocates told CBC Toronto that restitution orders for fraud are routinely ignored. And if fraudsters fail to pay in Ontario, the onus is on victims to try to force them to do so by registering the restitution order as a judgment in civil court.
“Why, as a victim of fraud, do we have to continually be held responsible for something someone did to us?” asked Smith. “It’s not right.”
“That’s not a good use of taxpayer funds,” said Vanessa Iafolla, a financial crime professor at Wilfrid Laurier University and fraud victim consultant.
“It’s not a great accountability mechanism if somebody just gets to skate away, not fulfilling their end of that bargain.”
By digging through sentencing decisions and media reports, CBC Toronto tracked down half a dozen fraud victims who were ordered to be paid restitution by Ontario courts. All of them said they had yet to receive a cent from the people convicted of defrauding them.
Courts usually order convicted fraudsters to repay their victims within a certain time frame, and in nearly half of the cases CBC tracked, that time had already lapsed.
Push for government enforcement
“Having the onus placed on victims and letting them figure it out themselves is just not the way to do it,” said Aline Vlasceanu, executive director of the Canadian Resource Centre for Victims of Crime.
“We’re just re-traumatizing victims.”
Other provinces like Saskatchewan, Alberta and P.E.I. have government-run restitution programs that help track restitution orders and enforce them on behalf of victims — but currently that assistance isn’t a federal requirement.
In December, the federal standing committee on justice and human rights suggested the government take a more active role in enforcement. The committee’s Improving Support for Victims of Crime report recommended the Department of Justice work with provinces and territories to agree on effective means to assist victims in the enforcement of restitution orders.
In an email, a Department of Justice spokesperson said the government will provide a response to the report this April.
Vlasceanu would also like to see Ontario start tracking restitution order outcomes.
“There’s no statistics keeping tabs on what’s actually happening,” she said. “The first step is to actually figure out what we are dealing with. So keeping tabs, having those statistics at hand, would be huge.”
The figures that do exist show that in the last decade restitution was only part of 23 per cent of fraud sentences in Ontario. Even though less than a quarter of fraudsters were ordered to pay their victims, nearly $330 million in restitution was ordered by the Ontario Court of Justice in fraud cases since 2010 and nearly $128 million was ordered in the same period by the Superior Court of Justice.
But that’s where the stats end.
CBC Toronto asked Ontario’s Ministry of the Attorney General why it doesn’t track how much restitution is recovered for victims, and whether it has any plans to create a restitution enforcement program — like some other provinces have — to take the onus off of victims.
In a statement, a spokesperson said the Ministry maintains a restitution trust account where it can track funds, but there are also a number of other ways to pay restitution in Ontario, such as directly to the court, to the victim or through counsel.
“Due to the numerous ways restitution can be disbursed, the total amount collected or disbursed is not centrally tracked,” said spokesperson Maher Abdurahman.
The Ministry’s statement made no mention of a restitution enforcement program, but it did say the province doesn’t charge fees for victims to file restitution orders in civil court.
Civil vs. criminal systems
Even with changes to the restitution system, a Toronto civil fraud recovery lawyer says criminal cases are rarely an effective way to recover fraud losses.
“Most cases, the money is long gone,” said Norman Groot, founder of the law firm Investigation Counsel PC, which only represents fraud victims.
Groot tells clients to try the civil system first because it can move much faster.
“If we can actually start tracing money and try to freeze assets even before the bandit knows that his gig is up, that is the best chance of recovery,” he said.
“If you hit a dead end, you can file a criminal complaint. I call them the lost cause frauds. Once you’re down the criminal system you’re looking for punishment, you’re not so much looking for recovery.”
The catch, Groot acknowledges, is that victims who’ve already lost money to fraud, must still have more of it to hire lawyers like him. For most cases, his firm tells clients the civil route isn’t cost effective unless they’ve lost at least $250,000.
“If you’re a victim of fraud in this country and you want justice you need to have some deep pockets to go after that justice,” said Iafolla.
So for victims like Smith — who couldn’t afford to lose $70,000 — a restitution order through the criminal system that they might have to enforce is likely the only option.
“How am I supposed to try to make him pay the money back?” said Smith.
“The courts, the police, those are the people in charge — the government — if this is the sentence he was given, why isn’t it being followed through with?”
TOMORROW: In part three of The Cost of Fraud, CBC Toronto turns to potential solutions for Ontario’s fraud problem, including the creation of a specialized office that brings police and prosecutors together to tackle large scale frauds.