CALGARY – A former Canmore accountant who was found guilty of defrauding investors more than $2 million will be sentenced this fall.
On Thursday (Aug. 27), Court of Queen’s Bench Justice Kristine Eidsvik spent three hours listening to sentencing submissions from the Crown and defence via WebX for James "Russ" Neilson, who was found guilty last month of defrauding investors approximately $2.5 million with additional charges of laundering the proceeds of a crime.
Crown prosecutor Steven Johnston requested a jail time sentence of nine years, while defence lawyer Meryl Frieland argued three years would be more appropriate.
Justice Eidsvik requested all parties return to court on Sept. 21 to hear the ruling.
“I wish to acknowledge my actions caused distress and financial stress," Neilson said during the submissions.
"I am not the same man I was in 2014. At that time I was too proud to admit defeat, or seek assistance from others.”
During the sentencing submissions, the Crown argued there were no mitigating factors, arguing the court still does not know where the money went and noted the lack of empathy shown by Neilson since the initial charges.
“Fraud is not an offence that happens in the spur of the moment. It is planned, it is schemed [and] multiple steps are taken,” Johnston said.
“He doesn’t talk about how his actions have hurt others. There are very few admissions of empathy.”
Johnston acknowledged Neilson was under a no-contact order with his victim, but the Crown said the former accountant could have requested to send letters of apology.
When Neilson was able to speak at the end, he got emotional as he spoke about finding Jesus Christ and apologized to his victim.
“I discovered how to be empathetic and I’ve learned the importance of helping others [through] Jesus Christ … I am a changed man,” Neilson said.
The former business owner said he was driven to salvage his now-defunct Bow Valley-based business, Abaca Solutions.
“I was blinded by drive to salvage the company I founded with disregard for others … I will not make the same mistakes in the future,” he said.
During the trial, the judge heard from former investors who shared stories of putting thousands and hundreds of thousands of dollars into Neilson’s company.
“I was working with advisors to try to find out what was happening, we were trying to salvage the company [Abaca Solutions] … but we found out more and more that things weren’t happening and we had no option but to go to the police,” one witness testified during the trial.
Witnesses explained how Neilson approached former clients, friends, and acquaintances to invest in his new accounting business where labour and services would be contracted to workers in the Philippines, resulting in a more cost-efficient model.
Former investors who testified said they received little to no dividend payments, and never received share certificates from the company.
The Crown referred to the practice as a “Ponzi scheme."
Representing himself during the trial, Neilson said he had adopted a “hands-off and highly delegated style of management.”
But during the verdict, Justice Eidsvik noted Neilson had admitted to defrauding some investors and that certain financial documents shown to potential investors were “not genuine.”
Originally the verdict was scheduled for March 27, but the court system postponed all out-of-custody criminal matters at the start of the COVID-19 public health crisis. Neilson's verdict hearing was adjourned several times before the judge was able issue the guilty verdict last month.
Now Justice Eidsvik will take less than a month to decide on an appropriate sentence.
“I cannot undo the past, I regret my decision,” Neilson said Thursday morning.
“I sincerely apologize to those I have hurt.”
