In a first for Canada's Competition Bureau
that illustrates the high degree of co-operation between
Canadian and U.S. law enforcers, it announced yesterday that
two Canadians who had been extradited to the United States in
2007 to face U.S. charges of conspiracy, mail fraud, and wire
fraud had received lengthy prison terms in U.S. federal
The Bureau's release indicated that the defendants
operated an entity called First Capital Consumers Group of
Toronto that targeted some 40,000 American consumers with poor
credit histories through telemarketing "boiler
rooms". The operation was reported to have generated
approximately $8 million (U.S.). Interestingly, the defendants
were originally arrested in 2002 and were subject to charges
under Canada's Competition Act and
Criminal Code, including conspiracy, fraud, deceptive
telemarketing and possession of proceeds of crime. However,
those charges were superceded by an extradition request made by
the U.S. Department of Justice on July 15, 2003. The Canadian
proceedings were stayed shortly after.
The defendants appealed their extradition proceedings to the
Ontario Court of Appeal and the Supreme Court of Canada, where
their applications were ultimately dismissed. Key to this case
was the requirement under Canadian law that, before extradition
could be ordered, the government must consider whether there
was a realistic option for prosecution in Canada. The
defendants' position was that prosecution in Canada
would have been a more viable or realistic option, particularly
bearing in mind the Canadian charges that had been brought
prior to the U.S. request for extradition. However, the
government's view was that an American prosecution
would be "more effective and reliable" than the
Canadian prosecution. The Appeal Court (and ultimately the
Supreme Court of Canada) agreed that the government had applied
the right test in determining that surrender to the United
States should be made.
The Ontario Court of Appeal noted that the impact of the
fraud was felt entirely in the United States, where all the
victims were located, and that these individuals would have
been necessary for the prosecution of the offences. These,
together with other factors, provided ample grounds to support
the surrender of the defendants to U.S. authorities. Appeals to
the Supreme Court of Canada were dismissed on August 30,
A particularly interesting aspect to this case is the
substantial differential in sentencing between Canada and the
U.S. In a serious telemarketing case decided in 2004, the
Competition Bureau obtained sentences of three years'
incarceration for two perpetrators of a fraudulent
telemarketing scheme involving the sending of false invoices
for payment. That case resulted in sales of approximately $1
million. While the criminal proceeds obtained in the more
recent case were several times greater, the difference in
prison sentences is dramatic (the two defendants sentenced so
far received terms of 19 years and 7 months, and 23 years and 4
months and are required to make $5 million in restitution). One
defendant is to be sentenced later.
While the Competition Bureau has not to date extradited any
individual (nor requested the extradition of any individual) in
an international cartel case, this case illustrates the high
degree of co-operation between Canadian and U.S. law enforcers
and will likely serve as a precedent for potential cases where
U.S. antitrust authorities could request the return of
individuals for participation in a U.S.-centered antitrust
conspiracy. Whether Canada would decline to prosecute in
circumstances analogous to this case will make an interesting
challenge for law enforcement. These developments are worth
Graham Reynolds Q.C. is a partner in the
firm's highly regarded Competition/Antitrust Law
The content of this article is intended to provide a
general guide to the subject matter. Specialist advice should
be sought about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The Commissioner of Competition addressed innovation, enforcement and policy initiatives at the Competition Bureau in his keynote speech, "Strengthening Competition: Innovation, Collaboration and Transparency."
Used car listing website operator CarGurus Inc.'s attempt to force rival Trader Corporation to supply it with vehicle listing data has encountered a dead end as the Competition Tribunal denied it leave to commence a private application under several provisions of the Competition Act.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).