Double Jeopardy Argument Fails in Ponzi Fraud

Written By Jim Schmidt and Michael S. Sestito

In R. v. Samji, 2017 BCCA 415 [Samji], the B.C. Court of Appeal decided that a $33-million administrative monetary penalty (AMP) assessed by the province’s Securities Commission against a person who had run a massive Ponzi scheme was not a “true penal consequence”. Therefore, the Court ruled, a parallel criminal prosecution did not expose the person to double jeopardy under the Canadian Charter of Rights and Freedoms.

The person involved is Rashida Samji, a one-time licenced notary public in the Vancouver area. Ms. Samji operated a large-scale Ponzi scheme, involving at least $100 million, from about 2003 to 2012.

After the scheme was uncovered, Ms. Samji was subjected to proceedings before the B.C. Securities Commission. The Commission found she had committed a fraud under the province’s Securities Act. It issued a disgorgement order of just over $10 million and assessed an AMP of $33 million. Its decision was never appealed.

Ms. Samji was also charged with multiple counts of theft and fraud under the Criminal Code.

At her criminal trial, which occurred after the Commission proceedings, Ms. Samji applied for a stay under the Charter.

Ms. Samji contended the AMP assessed by the Commission was a true penal consequence and the criminal proceedings were precluded by the Charter protection against double jeopardy.

The trial judge rejected her argument and convicted her. She was sentenced to six years’ imprisonment.

The B.C. Court of Appeal dismissed her appeal.

The majority found that the AMP imposed was not a true penal consequence and the Charter protection does not apply. While the AMP was substantial, it was not punitive—rather, it was a protective order to deter similar conduct and not to denounce similar moral blameworthiness.

The Court also concluded that the Securities Act did not allow the Commission to make an order with a penal consequence. As there was no appeal of the Commission’s decision, the decision attracted a presumption of validity, i.e., that it had no penal consequence. In other words, the only way for the Commission’s decision to have been challenged as a true penal consequence would have been for Ms. Samji to appeal the decision through the mechanisms set out in the Securities Act.

A concurring judgment took a different analytical approach, suggesting that the question whether Ms. Samji was charged with an offence, through the Commission proceedings, had to be assessed by considering the material provisions of the Securities Act. If those provisions are criminal in nature or allow for true penal consequences, the Charter applies; if not, the Charter does not apply. Under this analysis, the penalty actually imposed is irrelevant.

Alleging Double Jeopardy in the Future

The Samji decision is interesting at several levels, including that the Court was not deterred by the size of the AMP. But an obvious practical takeaway is that if a person wishes to allege that a regulatory or administrative proceeding gives rise to a true penal consequence, the person needs to appeal any adverse determination in such a proceeding. Waiting to raise the issue in a subsequent criminal proceeding will be waiting too long.

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