Ontario Tire Stewardship Employee fined $20,000 for Waste Diversion Act Violation
Convicted - Francesco Fragale
Court Location - Toronto
Description of Offence - The conviction relates to failing to deposit money received by Ontario Tire Stewardship into the organization's trust account.
Date of Offence - During the period beginning on or about August 10, 2012 and ending on or about June 3, 2016.
Date of Conviction - October 25, 2018
Penalty Imposed - Francesco Fragale was convicted of one violation under the Waste Diversion Act and was fined $20,000 plus a victim fine surcharge of $5,000, with two years to pay. Two related charges under the Waste Diversion Act against Mr. Fragale's manager were subsequently withdrawn by the Crown on the basis that there was no public interest in proceeding against the manager because the manager had received a significant sentence in a criminal proceeding which arose out of the same events.
- From 2012 until 2015, Francesco Fragale was employed by Ontario Tire Stewardship as the Director of Audit.
- At the time of the offences, the stewardship organization was a not for profit company, incorporated under the Waste Diversion Act. The Act has since been repealed.
- Ontario Tire Stewardship was designated as the industry funding organization for the waste diversion program (the Used Tire Program) and was responsible for developing, implementing and operating the waste diversion programs.
- The programs were funded by brand owners and tire importers, who were required to remit fees to Ontario Tire Stewardship, which were to be held in trust in order to pay program costs.
- In February 2012, Ontario Tire Stewardship owed the Canada Revenue Agency (CRA) $742,087.27 for harmonized sales tax remittances. A payment of $942,087.27 was made to the CRA from the trust fund, which represented an overpayment of $200,000.
- The overpayment was subsequently brought to the attention of the CRA and the CRA issued a refund cheque to Ontario Tire Stewardship in the amount of $200,149.43 ($200,000.00 overpayment plus interest).
- Mr. Fragale's manager, the Chief Financial Officer of Ontario Tire Stewardship, deposited the refund cheque into a personal business account he had recently opened, rather than depositing the cheque back into the Ontario Tire Stewardship trust fund. Mr. Fragale's manager had opened the personal account with the name "Ontario Tire" to make it appear to be an accout held by Ontairo Tire Stewardship so that his bank would deposit the refund cheque made out to Ontario Tire Stewardship into the personal account.
- Mr. Fragale's manager then made a series of transfers, totalling $93,000, from the personal account into a bank account held by Mr. Fragale. Mr. Fragale continued to hold the $93,000 until June 2, 2016. Mr. Fragale paid back the funds in full to Ontario Tire Stewardship on June 2, 2016.
- The ministry's Investigations and Enforcement Branch investigated and laid the charge which resulted in the conviction.