Licence Tribunal
Appeal d'appel en Tribunal matière de permis
FILE: 7716/GCA
CASE NAME: 7716 v. Registrar of Alcohol and Gaming
Appeal from a Notice of Proposed Order of the Registrar under the Gaming Control Act, 1992, S.O. 1992 c. 24 - to Revoke Registration
1572704 Ontario Inc. o/a Sandie’s Reading N’ Greetings Applicant
-and-
Registrar of Alcohol and Gaming Respondent
REASONS FOR DECISION AND ORDER
ADJUDICATOR: Elizabeth Sproule, Vice-Chair
APPEARANCES:
For the Applicant: Steve Kim, Counsel
For the Respondent: Rena Khan, Counsel
Heard in Hamilton: February 14, 2013
DECISION AND ORDER
BACKGROUND
The Registrar of Alcohol and Gaming (the “Registrar”) under the Gaming Control Act, 1992, (the “Act”) issued a Notice of Proposed Order dated August 22, 2011, which proposed to revoke the registration of 1572704 Ontario Inc. o/a Sandie’s Reading N’ Greetings (the “Applicant”) as a lottery retailer operator. The Applicant appealed this Notice of Proposed Order to the Licence Appeal Tribunal.
EVIDENCE
The Registrar’s evidence consisted of documentation and the oral evidence of RCMP Officer Nick D’Amico, Frank Ryder, Investigator with the Alcohol and Gaming Commission of Ontario (‘AGCO”), and Frank Cuda, Manager of Gaming Eligibility, AGCO.
The Applicant’s evidence consisted of documentation and the oral evidence of Jae-In Song.
The following facts are not in dispute:
In 2010, the Royal Canadian Mounted Police (RCMP), received information that the Applicant, a general convenience store, might be selling counterfeit goods. Jai-In Song is the director and co-owner of the Applicant.
On November 18, 2010, an officer of the RCMP purchased a New York Yankees jersey for $50.00 from the Applicant. It was determined by the Coalition to Advance the Protection of Sports Logos (CAPS) that the jersey was counterfeit. The estimated retail value of an authentic jersey, which is identical or substantially equivalent, was approximately $179.00 USD as of November 29, 2010.
On January 26, 2011, an undercover officer of the RCMP purchased another sports jersey from the Applicant, this time purchasing a Toronto Blue Jays jersey. It was subsequently determined that this jersey was a counterfeit.
On February 24, 2011, the RCMP Federal Enforcement Section executed a search warrant for the Applicant’s premises and seized 640 counterfeit sports jerseys. In addition, the RCMP seized large sums of cash. In particular: $38,500 CAD and $626 USD was found under the counter inside the store in a black bag, $40,000 CAD was found inside a fanny bag in the purse of Mr. Song’s spouse, and $2150 CAD and $30 USD was found inside the wallet of Mr. Song.
On July 3, 2012, Mr. Jai-In song plead guilty to the charge that he “unlawfully did knowingly offer for sale infringing articles of clothing in which copyright subsists, to wit, sports jerseys bearing the logos of Major League Baseball Properties Incorporated contrary to Section 42(1)(b) of the Copyright Act, RSC 1985 c. c-42 as amended”.
RCMP Officer Nick D’Amico testified that the RCMP believed that the monies seized were proceeds of crime, in particular from the sale of counterfeit items.
Officer D’Amico testified that Mr. Song’s spouse was questioned about the large sum of money found in her purse at the time and she provided a number of explanations, including that the cash was going to be given away or had been a gift(s) to her. She also explained that the store was an agent for Western Union and Canada Post; it did transfers abroad and sold Lotto 649 tickets and therefore had to have cash on hand for these activities.
In cross-examination, Officer D’Amico indicated that he was not aware of any ‘Counterfeit Product Notice’ being provided to the Applicant in this instance. This is a notice which is given as a warning to persons who may be dealing in counterfeit products.
Mr. Song testified as to how it came about that the Applicant was selling the counterfeit sports wear and to the fact that the profit that the Applicant realized on the sale of a jersey was between five and ten dollars per jersey. Although, it was his evidence that overall the Applicant did not make money selling the jerseys as not all the jerseys were in demand. He acknowledged that he failed to exercise due diligence regarding the authenticity of the articles. He expressed remorse over this.
Mr. Song also testified that the Applicant’s business is located in a low income neighbourhood and that one of the biggest problems faced by it was the high number of break-ins, robberies and shoplifting it has experienced.
Mr. Song did not provide any particulars as to Western Union or Canada Post transactions, or any other events or business of the Applicant, which would explain the large sums of money confiscated the day the search warrant was executed.
THE LAW
- The Registrar shall refuse to register an applicant as a supplier or to renew the registration of an applicant as a supplier if,
(a) there are reasonable grounds to believe that the applicant will not be financially responsible in the conduct of the business, having regard to the financial history of,
(i) the applicant or persons interested in the applicant, or
(ii) the officers, directors or partners of the applicant, or persons interested in those officers, directors or partners, in the case of an applicant that is a corporation or partnership;
(b) there are reasonable grounds to believe that the applicant will not act as a supplier in accordance with law, or with integrity, honesty, or in the public interest, having regard to the past conduct of,
(i) the applicant or persons interested in the applicant,
(ii) the officers, directors or partners of the applicant, or persons interested in those officers, directors or partners, in the case of an applicant that is a corporation or partnership, or
(iii) officers, officials or agents of the applicant, or such other persons as are prescribed by the regulations, in the case of an applicant that is a trade union within the meaning of the Labour Relations Act, 1995; or
(c) the applicant is carrying on activities that are, or will be, if the applicant is registered, in contravention of this Act, the regulations, the standards and requirements established by the Registrar under section 3.8 or the terms of the registration. 1992, c. 24, s. 10; 1993, c. 25, s. 33; 1996, c. 26, s. 4 (11); 2011, c. 9, Sched. 17, s. 9.
ISSUES
Are there reasonable grounds to believe that the Applicant will not act as a supplier in accordance with law, or with integrity, honesty, or in the public interest?
APPLICATION OF LAW TO FACTS
There are two instances of past conduct of Mr. Song, as the director of the Applicant, which are a cause for concern. One is the selling of counterfeit sports wear, for which Mr. Song was convicted under the Copyright Act. The other is the storage/possession of large sums of cash on the Applicant’s business premises.
The evidence of Mr. Song is that the Applicant’s business is a modest one, that it is located in a low income neighbourhood, and that it has been the target of crime numerous times. Given these facts, it would appear to the Tribunal to defy logic that large quantities of cash, tens of thousands of dollars in fact, would routinely be required to be on hand and would simply be kept under the counter or in purses or wallets rather than in a more secure location. This peculiar conduct, combined with the inability of Mr. Song to explain why such amounts of cash were legitimately on hand, is very problematic for the Tribunal.
Mr. Song appeared to be a very intelligent and articulate individual with a sound understanding of the business operated by the Applicant. It was suggested by Mr. Song that he would have come prepared to explain the money if he thought it was going to be an issue. Clearly it was an issue as it was included as one of the particulars upon which the Notice of Proposed Order was based. Given these facts, the Tribunal concludes that if there was a legitimate business explanation, or any other reasonable explanation, as to why 78,000 dollars, in cash, was on the Applicant’s premises, it would have been provided. In the absence of any such explanation, the Tribunal finds that it is more probable than not that the cash found was not connected to any legitimate business of the Applicant.
In order to maintain the confidence of the public in the gaming industry it is important that registrants appear to have the utmost honesty and integrity. Based on the evidence presented by both parties, the Tribunal finds that the conviction of Mr. Song for selling infringing articles under the Copyright Act while a director of the Applicant, together with the inexplicable conduct of storing large sums of money unconnected to the legitimate business of the Applicant at its premises, provides reasonable grounds to believe that the Applicant will not act as a supplier in accordance with law or with integrity, honesty, or in the public interest.
ORDER
Pursuant to the authority vested in it under the provisions of the Act, the Tribunal directs the Registrar to carry out the Proposed Order dated August 22, 2011.
LICENCE APPEAL TRIBUNAL
Elizabeth Sproule, Vice Chair
Released: April 17, 2013