B.C. Appeal Court turns sticky-fingered bookkeeper's house arrest into jail time

Prosecutors didn't explicitly link the bankruptcy of the Errington mill to the fraud perpetrated by the company's former bookkeeper.

But when Renee Patricia Merkel was sentenced, her former boss — the daughter of one of the company's owners — told the court that "the forest industry is a really hard industry to be in" and that while "$100,000 might not seem like a lot of money … to a company that's struggling, it was a lot of money."

Despite those words, and the fact that Merkel had a long history of fraud — and of getting house arrest — the judge who sentenced the 43-year-old last spring decided she deserved one more shot at doing her time at home.

On Monday, B.C.'s top court said that decision was "demonstrably unfit," sending Merkel to jail for two years instead.

"Errington is the fourth employer the respondent has defrauded or stolen money from while in a position of trust," Justice Gregory Fitch wrote in a three-person unanimous decision.

"Her history of offending, her evident failure to benefit from previously imposed [conditional sentence orders], her high moral culpability, the harm she inflicted on her victims, and her ongoing risk to the community are such that, but for the position taken by the Crown on sentencing, a significant penitentiary term could well have been imposed."

The three judges overturned the previous sentence after the Crown appealed on a number of grounds. As part of the decision, the judges substituted the two-year custodial sentence.

According to the ruling, Merkel worked as a bookkeeper at the mill 40 kilometres north of Nanaimo from 2010 to 2018, overseeing timekeeping and payroll systems for the tiny operation, which employed around 50 people.

Merkel was fired in 2018, but the fraud had not yet come to light.

Things started to unravel when an employee complained that their T4 tax form showed earnings that were significantly more than what they had actually made. It turned out Merkel had been entering false time and payroll information for existing employees as well as reactivating payroll entries for employees who were fired or on leave.

Merkel funnelled $70,000 in total to her personal account. She also cost the company another $38,700 in overpayments to various pension, employment and worker compensation agencies.

"The company was not the only victim," Fitch wrote.

Merkel's actions also caused headaches for mill employees who faced increased taxes and the loss of child and other tax credits as a result of phony information given the Canada Revenue Agency.

"The extent of the harm inflicted ... on her co-workers could not be determined," the appeal court justices wrote.