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Forfeiture en Lieu: Making Sure Crime Does Not Pay - Brent Tichon

Does crime pay? In the absence of any criminal law enforcement, it most certainly can. Theft is simply a specific mode of economic production that extracts resources from human beings using force or guile. An Attila who is good with a sword and a horse always has an incentive to simply become a highwayman and live off of random acts of banditry. Like any sort of economic activity, groups of thieves can more formally organize to enhance the scale, effectiveness, and specialization of their thieving operations. A lone Attila can only succeed at robbing random highway travellers, but if he was able to organize a mighty Hunnic Horde, he could expand into the much more profitable business of raiding rich Roman towns. This is in principle no different then any other kind of business, and increased organization scale brings the potential of bigger returns.

However, the pursuit of certain economic activities by some imposes negative externalities that damage the economical and societal well-being of everyone else. For example, A society that tolerates Hunnic raids across its countryside cannot expect a thriving farming sector. Therefore, certain industries like organized theft are criminalized and actively suppressed by the state to prevent these nasty side effects. It is an important legal principle that crime doesn’t pay.


However, if the benefits of a criminalized act remain greater then the cost of punishment there remains an incentive to commit crime. Thus, section 462.37 of the Canadian Criminal Code empowers the court to use an order of forfeiture to seize from a convict “any property [that are] proceeds of crime obtained through the commission of [a] designated offence.”[1]

If it is not possible or feasible to seize the property generated from criminal activity, section 462.37(3) allows the court to “order the offender to pay a fine in an amount equal to the value of the property or the part of or interest in the property” known as a fine instead (or “in lieu” ) of forfeiture.[2] This fine isn’t a moral punishment, but is intended to simply remove any financial benefit of crime. Though simple to apply in the case of a small-scale individual thief dealing with relatively small sums of money, it can be more difficult when dealing with larger scale criminal organizations such as the raids of a Hunnic Horde. The Supreme Court of Canada recently dealt with the application of large scale fine in lieu when looking at a comically Canadian organized crime ring that stole and distributed over $18,000,000 dollars worth of maple syrup in R v Vallière.[3]


Facts and History of Vallière

The defendant, Mr. Vallière, was accused of functioning as distributor of black-market maple syrup. His business partner, Mr. Corrin, used his position as a manager for the Fédération des producteurs acéricoles du Quebec to commit grand theft syrup. It is estimated they were able to steal up to $18,000,000 dollars worth of maple syrup. Mr. Vallière admitted to managing and distributing at least $10,000,000 dollars worth of stolen goods and he would personally make a $1,000,000 profit. Mr. Vallière would be arrested by the authorities and a trial would find him “guilty of theft, fraud and trafficking in property obtained by crime.”[4] As punishment, he was sentenced to 8 years in prison and had to pay $828,606.93 dollars in restitution. The legal issue that was the focus in future appeals was that the trial judge would impose a $10,000,000 dollar fine (minus the restitution order) as a fine in lieu of forfeiture. The trial judged reasoned the fine should be equal to the total value of stolen goods Mr. Vallière received which is a self-admitted $10,000,000 dollars worth of syrup.[5]


Mr. Vallière appealed this high number, on the grounds the judge did not have the discretion to impose a fine en lieu on him. Though this argument was dismissed, the Québec Court of Appeal did hold that the judged erred in the imposing of such a high number. Referring to R v Dieckman, the court of appeal held:


“that courts have the discretion to impose a fine that reflects the profit made by an offender from criminal activity, provided that this penalty meets the dual objective of deprivation of proceeds and deterrence.”[6]


The Court of Appeal viewed that the full $10,000,000 fine was “disproportionate to the objectives of the scheme governing this type of fine.”[7] Instead, they imposed a much smaller fine of $1,000,000 which was equal to Mr. Vallière’s admitted net profit from the crime. Furthermore, since fines in lieu were imposed on other convicted members of the criminal ring, there was a concern of a situation of double payment. The crown appealed the fine’s reduction.[8]


Appeal to the Supreme Court of Canada

The Supreme Court of Canada allowed the crown’s appeal. The court stressed that a fine en lieu differs from a normal criminal fine as it is not punitive in nature. The goal is to simply wipe away any or all advantage derived from the criminal act, not to morally punish the offense. The court holds that s. 467.57 is very clear that it is the whole amount of the property. The court admits that this can be harsh if someone is left with the sole responsibility and must pay the whole proceeds, but ultimately concluded this clearly in the legislature’s intention. The amount of the fine may seem large, but if it was possible to simply seize the stolen maple syrup back, there would be no issue nor any question of “profit” and a forfeiture in lieu is attempted to simulate a simple forfeiture in the form of a cash fine.[9]


When it comes to the issue of double payment, the Supreme Court interpreted R v Dieckman in the light of R v Chung to hold that:


“In principle, an offender’s fine may be reduced only in proportion to the amount of the fines imposed on the offender’s co‑accused who are sentenced in the same proceeding, such that the total value of the property remains recoverable.”[10]


In short, the court has discretion to divide up a fine in lieu of different accused, but the fines must add up to the total value of the stolen goods. Therefore, the crown must pursue forfeiture en lieu in a way where the total of all the fines sought do not exceed the total value of the stolen property. The crown must only prove the accused had possession of stolen property and it’s value and does not concern itself with whether the accused made a financial profit from it. An accused may ask the courts to order a division of fines in lieu among multiple persons standing trial to prevent double recovery. [11]


When applying this to the facts of this case, they found the trial judge was correct. The statute indicates that an accused must pay equal to all the property that Mr. Vallière handled which is the full $10,000,000. The court had no concern of double payments, as the full value stolen was estimated to be $18,000,000 million, thus there was little danger of double recovery. The other people accused were only fined a total of $204,000. Thus, Mr. Vallière was handed a fine of $10,000,000, minus the previous court ordered restitution, and given 10 years to pay it or serve further jail time if he defaults.[12]


Policy Considerations of Vallière

The cases illustrate an important aspect of forfeiture, which is that it focusses on the tangible proceeds of a crime rather then a more ephemeral concept like profit. This is a sensible approach as it is a more direct economic attack on organized crime. In any business, determining an owner’s income is inherently subjective. A simple definition of profit is gross income of proceeds minus costs, but this obscures the fact that the owner has huge influence on setting their business’s costs and may benefit from their enterprises in non-material ways.


An owner always has a choice to cut into his personal income to invest more money back into the business itself by improving the quantity or quality of their services. In fact, newly established businesses often deliberately prioritize making a short-term loss to expand their enterprise more aggressively. There is also a lot of skill involved in effectively managing a business, and its very possible to be unprofitable simply because the appropriate level of costs was mismanaged. It seems absurd that the state would want to set up a system that incentives criminal enterprise to engage in quick and risky expansion or a system where a criminal could avoid forfeiture if they could claim that their stolen goods were foolishly used up as a business expense.


Looking only at material profits ignores other less tangible benefits a manager of a criminal enterprise gains. They command power, respect, and prestige from the ability to manage and direct the flow of the income of criminal enterprises. These benefits remain a powerful incentive to participate in crime, and perversely align with the above mentioned incentive to prioritize constant expansion over stable profits. Historically, a warlord such as Attila the Hun famously;


“showed himself temperate; his cup was of wood… His dress, too, was quite simple, affecting only to be clean. The sword he carried at his side, the latchets of his Scythian shoes, the bridle of his horse were not adorned, like those of the other Scythians, with gold or gems or anything costly.”[13]


Yet it would be foolish to assert he gained nothing from leading his raids, even if he limited his direct material benefits.


Ultimately, a fine in lieu is supposed to approximate the forfeiture of hard property in cases where the retrieval of property is difficult or impossible. Thus, its amount is not based around the principles of punitive fining, but instead about removing all benefits from criminally acquired property. Courts instead attempting to fine a more nebulous concept of profit, cannot properly follow the legal principle of making sure crime doesn’t pay. This is due to the subjective and mutable nature of profits and costs respectively. If a profit based fine in lieu would not remove all benefits of crime for Attila the Hun, then it's hard to believe that it would fully disincentives maple syrup thief like Mr. Vallière

[1] Criminal Code, RSC 1985, c C46 s 462.37 [2] Ibid s 462.37(3) [3] R. v Vallières, 2022 SCC 10 [Vallière] at para 9 [4] Ibid at para 9 [5] Ibid at paras 3-11 [6] Ibid at para 15 [7] Ibid at para 27 [8] Ibid at paras 12-23 [9] Ibid at paras 25-37 [10] Ibid at para 48 [11] Ibid at paras 28-55 [12] Ibid at paras 56-68 [13] Priscus, Priscus at the court of Attila, (Priscus, fr. 8 in Fragmenta Historicorum Graecorum) [translated by JB Bury]

 

The views and opinions expressed in the blogs are the views of their authors, and do not represent the views of the Faculty of Law, or the University of Manitoba. Academic Members of the University of Manitoba are entitled to academic freedom in the context of a respectful working and learning environment.

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