CALGARY – A former Canmore accountant has been sentenced to five years in prison and ordered to pay his victims back all money owing.
On Monday (Sept. 21), Court of Queen’s Bench Justice Kristine Eidsvik sentenced James "Russ" Neilson to a five-and-a-half year jail term.
The former accountant was also issued a $1.6 million restitution order with three years to pay from the date the order was issued. If Neilson fails to pay back his victims, he faces an additional five-year sentence.
“In my view, the admissions he made at the end of trial did not save any court time and were only made in the face of overwhelming evidence,” Eidsvik said during sentencing.
Neilson was originally charged in Canmore in 2015 with fraud and theft in relation to allegations of defrauding about 40 clients of approximately $5.5 million through his now-defunct Bow Valley-based business Abaca Solutions. Through the criminal investigation, RCMP also laid charged of uttering a forged document and laundering the proceeds of a crime.
A 10-day trial was set for the Court of Queen’s Bench. Several former investors shared testimony of putting hundreds of thousands of dollars into Neilson’s company.
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 testified 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 final arguments the former accountant admitted he defrauded some investors and that some financial documents were “not genuine.”
In July, Neilson was found guilty of defrauding former investors approximately $2.5 million on all charges, except on the theft charges which were stayed.
A month after being found guilty, Neilson apologized during the sentencing submission. He spoke emotionally about finding religion and apologized to his victims.
“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 on Aug. 27.
During the sentencing, Justice Eidsvik said she questioned how genuine his apology was, given he had five years since his initial charges to apologize to his victims.
“Mr. Neilson has made no efforts at all to make any restitution, instead among other things, he has attempted to declare bankruptcy and has a civil suit against [one of the victims] … [while] he did partially pay back one of his victims, he has not paid back any other money lost and no efforts to do so,” the justice said.
During the two-hour sentencing decision, the justice outlined Neilson’s life from the time he started the business to trial.
She noted after the initial RCMP charges, Neilson experienced "vigilante justice" in the Bow Valley, citing one time when Neilson was punched in the face in a grocery market and another time when he had a “meal poured over him” at a local dining establishment.
There were several aggravating factors in the decision, including the abuse of position of trust as Neilson was a former accountant and the sophistication of the fraud.
While discussing the mitigating factors, the Eidsvik said the fact he was a first time offender helped, and mentioned the letters of support he received from his current community, but noted there were no letters of support form the community he harmed the most – Canmore.
The justice also brought up the fact there has been no disclosure from Neilson on what happened to the rest of the money.
“[The] bold assertion, the money is gone, should be given no weight,” Eidsvik said.
During the sentencing submissions last month, Crown prosecutor Steven Johnston asked for a nine-year jail sentence, while defence lawyer Meryl Friedland said three years would be more appropriate.
Justice Eidsvik acknowledged the jail sentence was on the lower end, but pointed to the full $1,671,497 restitution order and a 10-year probation term.
“If [Neilson] wants to avoid further time in prison, he can show where the funds are or how they’ve been spent,” she said.