Passive participation in a fraud can still result in criminal sanctions

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One doesn’t have to be the master mind of a fraud in order to face criminal charges and sanctions for it later. In the case of R. v Roberts, 2019 BCSC 338, Mr. Roberts was charged with fraud over $5,000 for participating in a fraud on Scotiabank, wherein Scotiabank lost approximately $6M. Mr. Roberts was the office manager of Aggressive Road Builders (“ARB”) and he knowingly provided documents to Scotiabank that contained false information so that Scotiabank would approve a $7M operating line of credit for ARB that would pay out ARB’s then operating line of credit with the Royal Bank.

Mr. Roberts, while the office manager of ARB, did not manage the bookkeeping or accounting of ARB. He did not make or direct any entries into ARB’s books or have any control or input into the entry of ARB’s payables, deposits, invoices or bookkeeping. The books were directed and managed by Matthew Brooks, the general manager for ARB. Roberts’ role was limited to directing skills related matters for ARB. Despite this, in 2007, Mr. Roberts did, at Mr. Brooks’ direction, provide an aged accounts receivable listing which showed that ARB had accounts receivable under 90 days of more than $15M. These accounts receivable were primarily all from municipalities in the Greater Vancouver area. In reality, ARB actually had $0.83M of accounts receivables.

In reliance on the documents that ARB and Mr. Roberts had provided, Scotiabank agreed to extend $7M in credit to ARB. ARB submitted monthly reporting to Scotiabank for its finances and each month, Mr. Roberts knew that the accounts receivable were actually much lower than what Mr. Brooks reported. Less than nine months later, ARB’s account was transferred to special accounts, as it was always in an overdraft position, and demand was made on the loans shortly thereafter. ARB and Mr. Brooks were later petitioned into bankruptcy by Scotiabank. In 2011 Mr. Roberts started up his own company, Blackrete Paving Ltd. (“Blackrete”) and ran it very successfully until his trial and sentencing.

The Crown proceeded forward with criminal charges against Mr. Roberts and he was found guilty of fraud over $5,000. At sentencing the court reviewed all of the mitigating factors and Mr. Roberts’ personal circumstances, among other things. The court noted that Blackrete’s 18 employees depended upon Blackrete and there was no one else quite as qualified to run Blackrete as Mr. Roberts. In the circumstances, though the Crown was pressing for imprisonment for Mr. Roberts, the court held that it was more appropriate to sentence him to two years less a day of house arrest with some fairly strict conditions. It was the court’s finding that a conditional sentence would adequately achieve the goal of general deterrence and fittingly express society’s condemnation of Mr. Roberts’ actions.

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