If fraudsters don't pay court ordered restitution in Ontario it's up to victims to try to collect

Carin Smith and her then husband were just trying to pay off their mortgage a little faster.

But after the investment opportunity they agreed to in 2008 turned out to be a scam, Smith's marriage ended. She picked up a full-time job working nights to avoid losing her Acton, Ont., home. She also took on a new 25-year mortgage when she would have otherwise paid off her house in 10. 

"It changed my life completely," said Smith. "I don't trust anyone … I'm not retiring at 65, I have another 15 years left to pay on my house."

The 54-year-old lost $70,000, which came from the equity in her home and went straight into the pockets of Daniel Reeve — now a convicted fraudster. Reeve used Smith's funds to pay other investors, according to the reasons for judgment in his criminal case. 

In June 2018, Reeve received the maximum 14-year sentence for fraud after being found guilty of defrauding at least 41 victims of nearly $11 million in 2007 and 2008. The judge also ordered him to pay nearly $11 million in restitution to his victims within 10 years, even though the judge believed "there is no likelihood of repayment." 

Credit for pretrial custody whittled Reeve's sentence down to four years. Eight months after sentencing he was released on day parole in February 2019 because he wasn't considered a risk to commit a violent crime. But within months, he was back in custody after police said they caught Reeve pushing a new pyramid scheme.

Despite his revoked parole, Reeve's original sentence was reduced to 10 years on appeal, and by June 2020 he was a free man. 

So far, Smith says she hasn't seen a penny of restitution from Reeve.

Part one of CBC Toronto's investigative series, The Cost of Fraud, examined how Ontario's overloaded justice system is failing to tackle and deter the majority of skyrocketing frauds in the province. Part two breaks down how even victims whose fraud cases make it through the system to conviction face an uphill battle recovering the money they've lost, despite a longstanding sentencing option meant to help them do just that. 

Ontario courts have ordered fraudsters to pay nearly half a billion dollars in restitution to victims like Smith since 2010. But the provincial government doesn't know how much of that money is ultimately paid to victims because it doesn't centrally track the outcomes of restitution orders.

Lawyers and victim advocates told CBC Toronto that restitution orders for fraud are routinely ignored. And if fraudsters fail to pay in Ontario, the onus is on victims to try to force them to do so by registering the restitution order as a judgment in civil court.

"Why, as a victim of fraud, do we have to continually be held responsible for something someone did to us?" asked Smith. "It's not right."

"That's not a good use of taxpayer funds," said Vanessa Iafolla, a financial crime professor at Wilfrid Laurier University and fraud victim consultant.

"It's not a great accountability mechanism if somebody just gets to skate away, not fulfilling their end of that bargain."