Justice Minister Robert Nicholson said on Tuesday the Conservative government plans to introduce a bill to impose tougher penalties for white-collar crime in Ottawa. (Adrian Wyld/Canadian Press)

The federal government plans to introduce mandatory jail sentences for criminals convicted of serious fraud, part of tough legislation aimed at white-collar crime.

Justice Minister Rob Nicholson said Tuesday the new legislation would change the Criminal Code to impose mandatory penalties for fraud, allow courts to consider longer sentences if there are aggravating circumstances, and require the courts to consider restitution orders for victims.

"This bill will acknowledge that those who fall victim to these kinds of fraud have been victimized just as much as the person who has been mugged in an alley," Nicholson said.

"Moreover, the effects in terms of loss of financial security and confidence as well as the sense of humiliation can be every bit as serious and damaging as physical threats and intimidation.

Nicholson said the bill would reintroduce a provision that would end the availability of house arrest as an option for white-collar criminals. Nicholson said that provision was part of a crime bill from 2008.

Currently, people who are convicted of such crimes only have to serve one-sixth of their sentences. The proposed bill comes in the wake of high-profile cases of alleged investor bilking in Canada.

In July, Montreal investment adviser Earl Jones was charged with four counts each of fraud and theft in connection with four former clients.

Quebec's securities regulator alleges Jones swindled at least 50 investors out of at least $30 million in a possible Ponzi scheme.

On Monday, two Alberta men were charged with fraud after allegedly running a Ponzi-type scheme that raised more than $100 million from investors around the world.

Milowe Allen Brost, 55, is charged with fraud over $5,000 and theft over $5,000. Gary Allen Sorensen, 66, faces the same charges but is missing.

The changes are long overdue because Canada has a reputation for being lax on this type of crime, Kevin O'Leary, chair of O'Leary Funds, told CBC.

"For decades now, if you're going to steal money, Canada is the place to do it, because we simply don't throw our fraudsters into prison for any extended periods of time," he said. "Clearly now the pendulum is swinging."

However, tougher penalties are only part of the answer, he added.

"The No. 1 thing we have to do" is have a national regulator rather than allowing each province to regulate itself in this area, O'Leary said.

Be Strong, a national coalition of victims of investor fraud, estimates as many 3,000 Canadians are currently affected.

Victims call for tougher measures

At a press conference in Ottawa ahead of Nicholson's announcement, the coalition called on the government to implement measures to deal with such crimes by enacting stiffer penalties, providing support for victims, providing public education on the issue and establishing a national securities commission as well as a national securities investigation unit.

Joey Davis of Be Strong, a national coalition group of victims of investor fraud, speaks at a news conference Tuesday in Ottawa. (CBC)

"Within Canada, the federal government has to consider the human rights of all Canadians and be strong in its approach to white-collar criminals who are destroying the lives of its citizens," said Joey Davis of Montreal.

"Looking outward to the global financial community, the federal government has to be strong on white-collar crime and eradicate any misperception in the global community that Canada's economic environment might be a risk for foreign investment."

Davis will be among those standing alongside Nicholson during his announcement. Davis's 78-year-old widowed mother was a 25-year client of Jones and lost her life savings, $200,000, in his alleged Ponzi scheme.

"It's a devastating impact. You work all your life and save for retirement years," Davis told CBC.

"You think you're going to be safe and as well to provide an inheritance to children and grandchildren and suddenly overnight that reality is shattered, so she's having a hard time with it day by day, but slowly coming around to a new reality."