Two men found guilty in Sudbury's largest fraud case were sentenced to 6.5 years, and five years jail time respectively, for defrauding the mining supply company Atlas Copco of more than $22 million over several years.
On Oct. 25, Superior Court Justice John S. Poupore sentenced Paul Armand Caron, 72, to 6.5 years jail time for his role in the fraud scheme, and sentenced Dirk Plate, also 72, to five years jail time for his part in the scheme.
In addition to his jail sentence, Poupore ordered Caron to make a restitution to Atlas Copco in the amount of $10 million, which is the minimum of what he personally received from the fraud.
If he fails to pay the restitution order in full Caron will need to pay a fine in the same amount of $10 million.
Caron will have 10 years to pay the fine after his release from jail.
If he fails to pay it in full after that time he will be required to serve a second jail term of five years.
In his decision Poupore said Plate, who was the general manager of Atlas Copco's CMT division, received more than $1.4 million in annuities during his involvement with the fraud scheme.
While the Crown has claimed Plate received five further sums totalling $175,930, Poupore said he could safely say Plate had received at least $77,930 of those funds, after admitting to it in court.
In addition to his five-year jail term, Poupore ordered Plate to pay a restitution to Atlas Copco in the amount of the annuities he received over time, in addition to the $77,930.
Plate will have one year to pay the full amount owed after his release from jail, and will be required to serve an additional five years if he fails to pay in time.
Assistant Crown attorney Philip Zylberberg had asked for both men to serve eight years and pay $22 million in restitution together, but said the sentence imposed should serve as a strong deterrent for others who would consider major fraud.
The trial that led to the sentencing, which ended on June 29, 2016, lasted 11 weeks, and included 10 witnesses and eight volumes of financial documents.
“This was one of the longest trials I've ever seen,” Zylberberg said.
Beginning in the 1990s Paul Caron and Leo Caron (no relation) started a scheme where Paul would overbill Atlas Copco for its employee benefits, and their would share in the proceeds.
Paul Caron was Atlas Copco's insurance broker at the time, and Leo Caron was the human resources manager for the company's Canadian divisions.
Paul Caron deliberately inflated bills to the company with respect to its Manulife Financial benefit payments.
He also submitted fake invoices, which did not correspond to employee benefits.
A forensic investigation focused on the years 2004 to 2007 determined the scheme had overbilled Atlas Copco by more than $24 million during that time period.
But some of that money included discretionary payments to assist Atlas Copco employees beyond the parameters of the regular benefits, and also included Paul Caron's legitimate fees.
With those payments subtracted, there remained a net overbilling of more $22.3 million.
The Crown has stated that sometime between 1997 and 2000 Dirk Plate became involved in the overbilling/kickback scheme.
While Poupore said in his decision that all participants in the fraud scheme were motivated by greed, Plate also felt he had been short-changed on his pension with the company.
Plate emigrated to Canada from the Netherlands and has his pension tied to Atlas Copco's Dutch branch.
He felt his pension was less generous than what Canadian executives with the company received.
While Poupore called Paul Caron “the mastermind” behind the fraud, he said Plate's involvement represented a serious breach of trust.
He was aware of the scheme overbilling the company for its employee benefits, and directly profited from it.
“It does not get much worse in the Canadian corporate field,” Poupore said in his decision.
Before the case went to trial Leo Caron, Atlas Copco's human resources manager, pled guilty to fraud and was sentenced to a five years in jail, less credit for pre-trial custody. He is still on parole.
David Hillier, financial comptroller for Atlas Copco's CMT division in Sudbury, was also involved in the fraud scheme.
He received around $400,000 for concealing fake invoices, but was granted immunity from criminal prosecution in return for his testimony during the trial.
He later repaid around $408,000. Paul Caron has declared bankruptcy, and nothing has been recovered from him at this time.
He said during Monday's court proceedings he has no money left, has been estranged from his children and grandchildren since the fraud charges came forward, and has a number of health problems, including type 2 diabetes, hypertension, high cholesterol and needs a hip replacement.
Crown attorney Philip Zylberberg said Atlas Copco is likely to recover some more of the money it was defrauded, but could not say with certainty if it will ever recover the full $22 million.
