Judge’s decision in credit union fraud hits sour note
On July 3, a Surrey Provincial Court judge handed Angela Keatley a two-year conditional sentence for embezzling $537,267 from her employer, Envision Credit Union, over a 14-month period.
While I appreciate that each case has its own nuances, the sentence handed down by Judge Michael Hicks in this case struck a discordant note with me.
The reason is that I have sat through several cases that were remarkably similar, and they all resulted in threeyear jail terms.
Crown prosecutor Shelly Smith asked for a prison term of three to four years, but Hicks obviously felt a great deal of sympathy for Keatley.
His sentence calls for 12 months of house arrest, with provision to leave her home for work, education programs, church, medical appointments, banking “or similar business purpose.” The following year, she is subject to a daily curfew from 9 p.m. to 6 a.m.
Keatley worked as Envision’s assistant manager of support services. She supervised all aspects of payment systems, including automatic banking, cash delivery and credit cards.
From December 2006 to February 2007, she executed more than 60 fraudulent transactions, reaping $537,267 in the process. When internal audits revealed inconsistencies in automatic banking records, she provided explanations that were accepted. She was, after all, a highly trusted employee.
On March 3, 2008, an audit revealed she had been using an Envision account to pay her own personal credit card and bank account. The next day she sent an e-mail to her supervisor saying she had a gambling addiction. The following day, she admitted the fraud.
Keatley cooperated in the investigation and provided Envision with a civil consent order for the amount of its loss: “This will place significant financial pressure on her and her husband, and will result in their home being mortgaged. She is committed to the repayment of the money that she took,” the judge said.
Let’s compare this case with two similar cases:
• Paulette Thomson was a Bank of Montreal branch manager in 1991 when she made her first fraudulent loan. Over the next 10 years, she created 87 fictitious loans and embezzled a net amount of $1.57 million. The bank recovered only $100,000.
In the spring of 2001, her scheme was discovered. After initial denials, she admitted to the phony loans, cooperated with police and bank officials, and plead guilty.
An independent psychiatrist concluded that Thomson was suffering from a major depressive order, chronic posttraumatic stress disorder and pathological gambling, but Vancouver Provincial Court Judge Catherine Warren said her situation was not unique.
“The majority of the individuals who come before this court have also experienced tragedy, including the loss of loved ones, serious ill health, as well as addiction to alcohol, drugs, gambling and sometimes all of these. ... Regrettably, these hardships seem to be part of the human condition.”
She said there was no need for specific deterrence as Thomson had already lost her job, her assets and her former good reputation. She also said Thomson had largely resolved her underlying problems and posed no risk to the community.
However, she said, it was necessary to denounce her “abhorrent breach of trust” and deter others “who are tempted to steal from their employers to solve their own financial problems.” She sentenced Thomson to three years in jail.
• Wade Chernoff, a certified general accountant, was working as financial controller for Taiga Forest Products in September 2002 when he set up a private company called SPF Lumber Ltd.
During the next three years, he caused this company to submit 45 invoices to Taiga for fictitious deliveries of lumber. In total, he embezzled $981,979.
On several occasions, an accounting clerk raised questions about the SPF account, but Chernoff sloughed her off. It wasn’t until after Chernoff resigned that the fraud was discovered.
Chernoff took full responsibility, plead guilty and repaid all the embezzled funds — plus interest and costs — a total of $1,262,592.
New Westminster Provincial Court Judge Deirdre Pothecary said four years would normally be an appropriate sentence, but in view of Chernoff’s restitution, three years would suffice.
These cases have much in common with the Keatley case. All three defendants worked in positions of financial trust. All breached that trust by perpetrating lengthy, complex and large frauds on their employers. None confessed until they were caught or on the verge of detection. Once caught, all cooperated with authorities and entered early guilty pleas. All appeared genuinely contrite.
So why did Thomson and Chernoff get three years in jail, and Keatley only house detention?
In his decision, Judge Hicks said letters submitted by credit union employees on Keatley’s behalf referred “to spe- cific acts of charity, kindness and generosity. ... Each letter confirms that this generous spirit was at work relentlessly doing positive good in the workplace.”
“These letters ... provide a more complete picture of Ms. Keatley’s character and are relevant in assessing the weight to be given rehabilitation as a relevant sentencing principle in this case.”
Problem is, the Criminal Code specifically states the court “shall not consider as mitigating circumstances the offender’s employment skills or status or reputation in the community if those circumstances were relevant to and contributed to, or were used in the commission of the offence.”
There is no doubt that Keatley used her status and reputation to perpetrate her crime. The judge himself noted that Keatley’s explanations for irregularities that showed up “were accepted, at least in part, because she was a highly trusted employee at Envision.”
Judge Hicks tries to argue he is not using Keatley’s prior reputation as a mitigating factor, but he makes far too fine a distinction for me to comprehend.
I also think the judge overstated his assessment of Keatley’s plans for restitution. He said she had taken “significant steps to begin the process of restitution. ... Whether or not it has occurred yet, it is expected that her home will be mortgaged to assist in the restitution process.”
However, there is no indication how much equity there is in the property, if any. If Keatley was serious, she could have mortgaged her home by now, but she hasn’t paid a cent. Contrast this with Chernoff, who repaid every cent he embezzled, plus interests and costs, before he was sentenced, and he still got three years in jail.
While I appreciate that Judge Hicks is trying to put a human face on this case, his decision creates a bad precedent and flies in the face of Parliament’s attempts to get tough on whitecollar crime.