TORONTO – The Superior Court of Justice in Toronto has fined a company engaged in misleading telemarketing $15 million. Datacom Marketing pleaded guilty to three counts of false and misleading representations contrary to section 52 of the Competition Act and false or misleading representation in the course of telemarketing. The Crown argued for a fine of $20 million while the defense argued for $250,000.
In the agreed statement of facts the defendant acknowledged that they sent false invoices to companies which suggested that the companies had previously bought their directories. Invoices ranged from $298 to $485. In fact the companies had not previously bought the directories and some customers paid for 8 months before realizing the scam. The basis for the fine was the agreed statement of facts that the company generated $ 158 million in revenue between 1994 and 2005 with a profit of almost $13 million. It was also agreed that the company had no ability to pay a fine greater than $250,000. Mr. Justice Nordheimer in awarding the sentence noted that for a corporation a fine was the only possible penalty and the fact that the former president was sentenced to a term of imprisonment for his role in the matter was largely irrelevant. Justice Norheimer noted that a fine must carry the necessary “sting” in order to achieve the objectives of denunciation and deterrence and a fine cannot amount to nothing more than the cost of doing business. He also noted that the company had previously paid a fine of over $400,000 to the Federal Trade Commission’s relating to the same offenses. Noting that the activities are closer to the fraud end of the spectrum he concluded that the fine should be $15 million given that the agreed upon profit from the illegal activity was $12.9 stating that a fine to properly address l denunciation and deterrence must equal the amount improperly gained plus an additional amount to actually penalize the conduct itself.
Source: Lawday
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