Citing the extent of his misconduct, and the harm inflicted on investors, a judge sentenced former financial advisor, Kevin Douse, to five and a half years in prison, along with a fine and restitution order, for defrauding investors.
Last September, Douse pleaded guilty to one count of fraud over $5,000 in connection with a long-running fraud that allegedly took over $1.8 million from investors between October 2016 and November 2023, resulting in more than $1.38 million in losses.
Now, following a hearing on sanctions in early February, Justice Brannagan of the Ontario Court of Justice in Orillia sentenced Douse to five and a half years in prison, saying that this was consistent with previous cases involving, “comparable breach-of-trust fraud by a financial advisor…”
Along with the prison term, the court ordered $561,430.97 in restitution, and a fine in lieu of forfeiture of $1.38 million, which is payable within 15 years of his release from prison. The restitution order takes priority over the fine, and payments made toward restitution reduce the fine on a dollar-for-dollar basis, “ensuring that victims are paid first and avoiding an unduly crushing cumulative financial burden,” the court said.
If he defaults on the fine, he faces another prison term of five and a half years.
Douse is also banned for 20 years from taking a job or volunteer position that involves having control over money.
In its reasons, the court noted that it received victim impact statements from Douse’s victims that were “thoughtful, sincere, many heartbreaking.”
“Having read the statements, and heard many of them read out in court, I accept the gravity of loss — financial, emotional, personal — suffered by each of the offender’s victims as both devastating and inescapable,” the judge said.
Additionally, the court noted that longer sentences are warranted in cases involving frauds that violate investors’ trust — and, in this case, it said, “… the personal trust element in Mr. Douse’s criminal activities was central and extreme; his victims chose to work with him based on personal and family trust, which he exploited through his role as their trusted financial advisor.”
According to the court, the defence argued for a four-year prison term, and agreed to other sanctions, including restitution, but asked for a shorter prohibition period, a longer payment window, and the minimum term for defaulting on a fine.
In terms of mitigating factors, the judge acknowledged that Douse had no prior record, pleaded guilty, and expressed remorse for his crime, among other things.
However, the court also said that the impact of his remorse on the sentence was, “moderated by his continued suggestion that workplace pressure and his employer somehow contributed to the commission of these crimes.”
Earlier this year, a hearing panel of the Canadian Investment Regulatory Organization (CIRO) also permanently banned Douse from the industry, and ordered him to pay a $530,000 fine and $30,000 in costs. That followed proceedings that alleged regulatory breaches while he was a rep with Quadrus Investment Services Ltd. involving a subset of the victims.
Among other things, that panel found that Douse breached CIRO’s rules by misappropriating money from investors, providing them with falsified account statements and failing to co-operate with CIRO’s investigation.
In its ruling on sanctions, the SRO panel also said that it considered the criminal proceedings “to be an important factor when deciding on an appropriate monetary sanction in this case.”