The Ontario Superior Court building in Toronto on Jan. 29, 2020.Colin Perkel/The Canadian Press
A man from Barrie, Ont., who lured in more than 500 people to invest in a point-of-sale device that he claimed was used in stores across Canada – but did not actually exist – pleaded guilty on Thursday to charges of fraud and money laundering.
Charles Debono appeared virtually before Justice Michelle Fuerst of the Ontario Superior Court and admitted he took in as much as $48-million from investors, mostly Canadians, who were pitched on the idea of earning income from his company, Debit Direct, and its purported proprietary payment devices.
The case is one of the first investigated and prosecuted by Ontario’s new Serious Fraud Office (SFO), an initiative to improve how the authorities probe white-collar crime and secure convictions.
The court heard that Mr. Debono and others claimed the company sold its payment terminals for about $2,500 each, and promised investors 15 cents for every transaction processed by the devices in convenience stores and other shops across Canada. Although some investors initially received regular payouts, the operation was a Ponzi scheme – a type of fraud in which a business pays investors not with legitimate profits, but from funds injected by new, unsuspecting investors.
Ontario Crown counsel Ted Ofiara told the court that Mr. Debono’s business, which operated from 2012 to 2017, was a complete fabrication, explaining that investigators determined no Debit Direct terminals were actually placed anywhere.
Unlike traditional criminal cases, in which prosecutors get involved near the conclusion of a police investigation, in cases involving the Serious Fraud Office, police and prosecutors work collaboratively from the outset. The office, which includes police officers from across the province but is led by the Ontario Provincial Police, was a response to a confidential 2015 report by former Ontario Court of Appeal justice Stephen Goudge.
The province had called on Mr. Goudge to offer new approaches to a justice system that victims of white-collar crime said was unnavigable and unable to handle complex, multijurisdictional offences.
The Debono matter was a case in point. Before the office was created, Debit Direct investors had complained to nine police forces, including the Royal Canadian Mounted Police, and the Toronto and Calgary police.
Mr. Ofiara told the court that Mr. Debono and commissioned salespeople pitched most investors at trade shows and through investor websites. They said Debit Direct had a Bay Street headquarters in First Canadian Place. That address was a virtual office that the company paid a monthly fee to access. All mail sent there was forwarded to a post office box north of Toronto in Barrie, and the actual Debit Direct books and records were held at a Barrie autobody shop.
The scheme unravelled in 2017, when investors stopped receiving payments and started asking questions. That year, Mr. Debono relocated to the Dominican Republic, where he began amassing a large portfolio of real estate, including a hotel.
SFO investigators determined that he sent a total of about $12-million to the Caribbean island, in some cases using multiple $9,000 wire transfers, which is just below the $10,000 threshold at which financial institutions have to file more rigorous reports about the source of funds. He also used a logistics company to ship luxury vehicles, ATVs and Sea-Doos to the Dominican from Canada.
Although Canada does not have an extradition treaty with the Dominican Republic, authorities in both countries co-operated on the basis of an anti-money-laundering and anti-corruption treaty.
On Sept. 12, 2020, Dominican authorities seized Mr. Debono’s assets, arrested him and deported him to Canada on immigration issues.
Although most of the proceeds of Mr. Debono’s crimes are held in the Dominican, investigators were able to freeze accounts and real estate investments worth a total of $1-million and US$300,000. Mr. Ofiara did not detail what has become of Mr. Debono’s Dominican assets, or the likelihood the SFO will be able to seize that property. All in all, the total losses for investors may be as high as $40-million, Mr. Ofiara told the court.
Mr. Debono’s sentencing is scheduled for March 28. Until then, he will remain in custody at the Central North Correctional Centre in Penetanguishene, Ont., which is where he has been held since his deportation a year and a half ago.
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