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Peter Kroone of Oshawa Found Liable for Construction Fraud

TFC Contracting / The Cement Finisher

May 3, 2018 –   At Canadian Fraud News, we report on decisions issued by Canadian Courts related to fraud, that are not reported in the main stream media, and that contain legal issues the Canadian public and fraud recovery experts should be aware of. The following is one such story.

On April 13, 2018, the Ontario Court of Justice released its decision about frauds committed by cement contractor Peter Kroone of Oshawa, Ontario. The case is of public interest for a number of reasons, including that the Crown gave Mr. Kroone the opportunity to pay back the money during the trial effectively acting as collection agency, and because the Court set out the law as it applies contractor agreements which do not contain formal trust provisions.

The Contractor Agreements

The Court reported that Mr. Kroone is self employed as a contractor. At the material times he operated under the business names of TFC Contracting, or “The Cement Finisher.”

In 2015 and 2016, Mr. Kroone entered agreements to provide goods and services to a number of customers and accepted deposits from these customers in advance.

In May of 2016, after Mr. Kroone failed to fulfill his obligations to these customers, he was charged with defrauding them of the deposits that they paid to him in good faith. Despite being charged with criminal fraud, Mr. Kroone never returned any of the deposit money.

In November 2017, his criminal trial on a summary basis commenced.

An Unusual Criminal Trial – Timeout for Restitution

The Crown called a number of witnesses. The home owners described their business dealings with Mr. Kroone and their subsequent losses as a result of those dealings. The Crown’s case was not significantly contested by Mr. Kroone.

Mr. Kroone testified in his own defence. He admitted to taking deposits from these customers and not providing either the goods or the services that he contractually agreed to provide to them. He disputed that this conduct was fraudulent because, when he initially entered the contracts, he intended to complete them.

Although the trial had commenced, part way through Mr. Kroone’s evidence, the Crown requested an adjournment of the trial in order for Mr. Kroone to make restitution to the complainants to resolve this matter. The trial was adjourned for two months for Mr. Kroone to return with proof of payment of some of the restitution.

Despite his assurances that the restitution would be paid, Mr. Kroone did not pay any of the outstanding debts to any of the complainants. Rather, Mr. Kroone alleged that the Crown could not prove the mental element of the criminal offence of fraud – that he never intended to deprive the complaints of their money.

In March 2018, the trial continued. The Crown alleged that Mr. Kroone’s intention to deprive the complainants of their funds crystalized when they demanded the return of their money, and he refused to return it.

Contractor Constructive Trust

On November 15th, 2015, Mr. Kroone contracted to build a basement entrance for Mr. L’s home. They agreed to a price of $4,500 which included the supplies and labour. Mr. L provided a down payment of $2,000 to Mr. Kroone for the supplies and labour for his job.

During their discussions, Mr. L was led to believe by Mr. Kroone that his job was to commence in the fall of 2015 but, if the weather turned cold, it was to commence in the spring of 2016.

The Court held that there were no issues with the weather that prevented Mr. Kroone from doing Mr. L’s job for over 6 months. Rather, it became apparent that Mr. Kroone took on new customers and chose to complete their contracts instead.

In addition, the deposit money that was provided to Mr. Kroone by Mr. L was to complete his job, to purchase his supplies and no one else’s. Mr. L certainly did not agree to his money being used to bank roll Mr. Kroone’s other contracts, pay his employees for other work or finance his company.

On May 17th, 2016, Mr. L went to the police. Six months had passed and Mr. Kroone never did anything for Mr. L. Mr. L requested his deposit back a number of times from Mr. Kroone and Mr. Kroone did not return the deposit. At trial Mr. Kroone admitted that he used Mr. L.’s money to fund other projects and his business.

Further Misuse of Constructive Trust Funds

In the spring of 2016, Ms. C. retained Mr. Kroone to create a stamped concrete patio in their backyard. Unbeknownst to Ms. C., when she agreed to her contract with him, Mr. Kroone had also contracted to do two other major construction jobs for others that would occupy all of his time that spring. Mr. Kroone quoted Ms. C. $4,500 for their job. Ms. C. provided Mr. Kroone with $3,100.

Mr. Kroone assured Ms. C. that he would start their job within a few weeks of paying their deposit. Ms. C. agreed to this contract and paying these deposits in part because of Mr. Kroone’s guarantees of his availability and commitment to their project.

Similar to the Mr. L. story, Mr. Kroone never dropped off any materials for their job and he never did any work for the C’s. Rather, he took their money and he used it for his own purposes. He did not have their permission or consent to use their deposit money for anything other than their job.

On May 10th, Mr. C. demanded the return of their deposit money. Mr. Kroone consistently lied to the C’s about his availability and his commitment to them. Mr. Kroone refused to return their money.

Mr. C. was unable to attend court to testify because he has leukemia and is undergoing chemotherapy treatments. Ms. C. was required to attend court, despite her personal crisis, to speak on behalf of her husband to the best of her ability. Despite their circumstances and the suffering of this family, Mr. Kroone was still not moved enough to show compassion and return their funds that he took for work that he never performed and goods that he never provided to them. At trial, he continued to withhold their deposit money despite repeated requests to return it to them.

Crystallization of the Fraud

The Court summarized nature of the frauds as:

  1. Kroone’s deceitful business practices to secure these contracts and deposits,
  2. the diversion of the deposit money for his own purposes without authority to do so, and
  3. the continued withholding of Mr. L’s and the C’s deposits.

The Court held that the Crown was not required to prove that the fraudulent conduct crystalized by specific dates. The Court held that a transaction alleged may, and often does, include a series of occurrences extending over a length of time. The Court held that the theory of the Crown’s case with respect to how these offences were committed does not offend the single transaction rule and allows for proof of the commission of these offences over time.

Contractor Intention to Commit Fraud

The Court held that, regardless of his intentions to eventually complete these projects, Mr. Kroone engaged in deceitful business practices to secure the contracts and the deposit money. He dishonestly led each of these complainants to believe that their individual contracts were a priority for him and their jobs would be completed promptly. He secured deposits from them based on misleading promises that he had no intention of immediately rendering any time in the immediate future.

The Court found that when Mr. Kroone solicited and accepted each of the deposits, he undertook in written invoices that their money would be used to purchase supplies for their jobs, not someone else’s, to pay for labour for their jobs not funding Mr. Kroone’s company and paying his employees to work elsewhere. Mr. Kroone fraudulently diverted the deposits he accepted from his clients into his business account, or as cash and then he used that money for his own benefit without their permission or authorization. Despite being aware of his obligation to refund his customers, Mr. Kroone withheld their money.

The Court held that it was irrelevant that Mr. Kroone may have hoped that, one day, he would be able to fulfill his obligations or that he did not believe he did anything wrong. He deceived the complainants and then intentionally put their deposits at risk of deprivation by using that money for other purposes without their authority knowing that, because of his multiple commitments, the deprivation could follow as a likely consequence.

The Court noted that it does not matter that Mr. Kroone does not see anything wrong with his fraudulent business practices. The test for fraud is objective – that is, what a reasonable person would consider dishonest in the circumstances.

Who is this Peter Kroone?

The Court held that Mr. Kroone has a criminal record for honesty offences and pled guilty in the middle of the trial to an offence of dishonesty involving uttering fraudulent cheques.

The Court held that it became evident throughout the trial and his correspondence with the various victims that Mr. Kroone is an unabashed liar. As a witness, he presented very poorly with an air of smugness, entitlement and complete apathy with respect to taking deposits from prospective clients, diverting their funds without their authorization for his own purposes, not performing the work, or supplying the goods that the complainant paid for in advance and continuing to withhold their funds.

The Court noted that Mr. Kroone’s answers were often flippant and demonstrated a marked indifference towards the financial losses and personal circumstances of the victims of his crimes. Mr. Kroone didn’t seem to think that there was anything wrong with misrepresenting his availability, or taking money from clients for specific purposes listed clearly in invoices, and then using their money for other clients and other contracts and other purposes without their knowledge or authorization.

The Court concluded by stating that Mr. Kroone is a charlatan who showed absolutely no concern or remorse for his deceitful business practices, the lies he told his customers, the unlawful deprivation of their deposit money and conversion of these funds for his own use without their permission.

The Reported Decision

This Court’s decision on Mr. Kroone is reported as R. v. Kroone, 2018 ONCJ 267. The decision is publically available on-line at:

https://www.canlii.org/en/on/oncj/doc/2018/2018oncj267/2018oncj267.html?searchUrlHash=AAAAAQAMcGV0ZXIga3Jvb25lAAAAAAE&resultIndex=3

It is unknown if this decision is being appealed. We are not aware of the sentencing date.

Peter Raymond has advised our office that Mr. Kroone is appealing the Court’s decision.

Inquiries

At Canadian Fraud News Inc., we welcome information from the public on Mr. Peter Kroone who is the subject of this case.

For further information on this case, or any other fraud recovery inquiry, contact Canadian Fraud News Inc. at deborah@canadianfraudnews.com.