COURT FILE NO.: 86/13

DATE: 20130308

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

HER MAJESTY THE QUEEN

– and –

Franzie Felizandro COLACO

Defendant

F. Alibhai, for the Crown

D. Santoro, for the Defendant

HEARD: March 7, 2013

ENDORSEMENT ON BAIL APPLICATION

Ricchetti, J.

[1] This is a matter where the United States of America seeks the extradition of Mr. Colaco on fraud charges.

THE APPLICATION

[2] Mr. Colaco brings this application seeking to be released from custody pending the extradition hearing upon entering into a recognizance of $50,000. The proposed terms were that Mr. Colaco reside at 7 Stonemount Trail, Brampton with his wife, he surrender his passport and that he remain in Ontario.

THE EVIDENCE AT THE BAIL HEARING

[3] The Application record contains the affidavit of Detective Constable Steven Walker of the Toronto Fugitive Squad, which appends the Authority to Proceed under s. 15 of the Extradition Act and the Certificate of Record of the Case for the Prosecution.

[4] The Application record also contains the affidavit of Mr. Colaco, Renita Colaco (his wife), Amar Singh (a friend), Pushpa Ashanagari (a friend) and Philip Braganza (a friend).

[5] By the conclusion of the hearing, defence counsel advised that Philip Braganza was not to be considered as a surety. As a result, Philip Braganza did not testify. The amount of the proposed security to be pledged by the sureties was reduced to $30,000.

[6] The Defence took an unusual position with respect to the affidavit of Mr. Colaco. Defence refused to call Mr. Colaco to give evidence or be cross examined. The Crown conceded that pursuant to the Criminal Code (see s. 518) Mr. Colaco could not and would not be cross examined on any matters related to the alleged offences. Nevertheless, Defence refused to permit Mr. Colaco to give any evidence. The Crown was content to proceed on the basis provided that the court consider Mr. Colaco’s refusal to testify into account in according any weight to Mr. Colaco’s affidavit. Given this concession, the court proceeded in this fashion.

[7] The remaining sureties gave evidence and pledged the following amounts:

a) Renita Colaco - $10,000

b) Amar Singh - $5,000

c) Philip Braganza - $5,000

THE TAX RETURNS AND SEARCH FOR MR. COLACO

[8] The IRS commenced an investigation into the submission of income tax returns by individuals falsely claiming that they were owed a tax refund. The US Attorney believes that, upon seizing a number of documents, Mr. Colaco, Mr. Ronald Brekker, John Chung and Wonita Chung and Donald Mason had various roles in this fraudulent scheme which spanned March 2009 through fall 2010.

[9] One of the documents seized by the United States was a guide, which falsely stated that individuals, including Canadians, could claim tax refunds from the United States Treasury equal to the value of certain personal debts (even if the Canadian had not paid any U.S. income tax). The guide provided that Ronald Brekker would prepare the tax forms for a fee and would provide a discount to individuals referred to by Mr. Colaco. The guide was clear that the “scheme” was unlawful and suggested to applicants how to quickly obtain and move their tax refund before being seized by the U.S. government. Mr. Colaco appeared to have some involvement, or at a minimum knowledge, of the drafting of the guide. This “scheme” was presented at seminars, including in Canada. Mr. Colaco was involved in dealing with Canadian participants to this “scheme”.

[10] In total there were 961 tax returns filed under this “scheme” seeking approximately three quarters of a billion dollars in fraudulent refunds. Approximately, fifteen million dollars was paid out before the IRS discovered the fraudulent scheme.

[11] The total number of participants with whom Mr. Colaco was involved is not known but there are examples of individuals recruited by Mr. Colaco to participate in this “scheme” and to whom he gave some assistance. There is considerable evidence of electronic communications between Mr. Colaco and the other promoters of this “scheme” and various persons who were participants in applying for tax refunds.

[12] Mr. Colaco filed 3 tax returns in accordance with this “scheme” in 2009 and 2010, each of which showed his address as 6-295 Queen Street East, Suite 410, Brampton. Mr. Colaco received over $600,000 in tax refunds from the IRS based on alleged amount which had been withheld on his behalf – despite never having paid any U.S. tax.

[13] Donald Mason and Wonita Chung were arrested in October 2009.

[14] Mr. Brekke, Ms. Chung, Mr. Chung and Mr. Mason have all been found guilty and sentenced.

[15] When the police tried to locate Mr. Colaco at the address shown on his driver’s license and reported on the U.S. Tax returns, 6-295 Queen Street East, Suite 410, the police discovered it was a UPS store.

[16] When Mr. Colaco was stopped in March 2010 he gave an address of 9477 Heritage Road, Brampton. The police could find no such residence at this location.

[17] The police, in June 2012 discovered that Mr. Colaco changed his address to Unit 302, 75 First Street, Brampton (later corrected to Orangeville). Again, the police discovered this was a postal box outlet in a mall.

[18] The police searched and located two vehicles with the Colaco name. Both vehicles used the same postal box address shown on his driver’s license.

[19] Unable to locate Mr. Colaco, the police sought and located his wife. The police followed Renita Colaco to 7 Stonemount Trail, Brampton. Mr. Colaco was seen.

[20] Mr. Colaco was arrested.

THE EVIDENCE

Renita Colaco

[21] Ms. Colaco is prepared to pledge $20,000 as surety. She states that it is a substantial amount of money to her family. She states that she does not have other substantial assets. Ms. Colaco works from about 8 in the morning until about 5 pm each night.

[22] I do not accept Ms. Colaco’s evidence.

[23] She was reluctant to answer questions. For example, when asked if her husband owned property in Washington, she responded “she didn’t know”. When asked if there were other bank accounts, there was no real answer until the court had to repeat the question to her.

[24] She was evasive. She could not recall many details which should have been known to her. At first she didn’t admit that her husband had travelled to the United States. Later, she admitted he had gone to the U.S. but she couldn’t remember how many times or where her husband had gone in the United States. She kept saying it was a long time ago. 2009 and 2010 is not that long ago. Besides, Ms. Colaco would have to take the children to school and pick up the children when Mr. Colaco travelled. Mr. Colaco’s absence would have been something she should have been able to provide more details than she admitted. Ms. Colaco’s answers appeared to be false in an attempt to protect her husband from any involvement in the U.S. fraud by “not remembering” if he had gone to the U.S. or where he had gone in the U.S.

[25] Her answers were not credible. She explained that her driver’s license doesn’t have her “real” address because the family changed homes often. When questioned why the address was a post office box and why the driver’s license didn’t disclose it was a post office box, she said she had been told that she could use a post office box by the Ministry. This is highly unlikely given the provisions in the Highway Traffic Act to keep a current address on a driver’s license. See Regulation 340/94 which provides:

33. (1) The holder of a driver's licence who changes his or her address shall, within six days after the change, send by registered mail or have filed with the Ministry a notice in writing, or electronically in a format designated by the Ministry, of the change giving the former address, the present address and the number of his or her driver's licence. O. Reg. 340/94, s. 33 (1).

[26] Not only was Ms. Colaco’s address on her driver’s license shown as a post office box, all the family mail went to a post office box including bank statements.

[27] The change in the post office box was another very troubling area. Mr. and Ms. Colaco used a post office box in Brampton on Queen St. They lived in Brampton. However, in 2012, they changed their post office box to Orangeville despite still living in Brampton. Ms. Colaco gave no credible answer as to why they would have moved their post office box some almost 40 kilometers away from where they live. The inference is to further distance themselves from their location.

[28] In conclusion, Ms. Colaco is not an acceptable surety. There are a number of reasons:

a) She is prepared to lie, or at a minimum be evasive, to protect her husband;

b) She, if not a participant to hide knowledge of the family’s true whereabouts, certainly was aware of the efforts made to avoid using their “real” address with third parties and did nothing about it; and

c) She is not in a position to undertake any meaningful supervision of Mr. Colaco as she is gone most of the day, 5 days a week.

Amar Singh

[29] Mr. Singh is a friend of Mr. Colaco. He has known Mr. Colaco for 7 years. During the past year he sees Mr. Colaco on a weekly basis. Surprisingly, Mr. Singh knew none of the details regarding Mr. Colaco’s current employment, his past employment, his assets or means to live, whether or not he travelled to the U.S or where to. He said they never talked about personal matters.

[30] Mr. Singh lives in Richmond Hill, a considerable distance from Brampton. He is hardly in a position to meaningfully supervise Mr. Colaco.

[31] While Mr. Singh may have some $300,000 equity in his home, he is only prepared to pledge $5,000 as surety despite him testifying that he had no concerns Mr. Colaco would not attend court.

[32] I am not persuaded Mr. Singh can be a meaningful surety in this case. Besides, if he were to be a surety, I would have required a significantly higher amount to be pledged by him.

Philip Braganza

[33] Mr. Braganza is more of a friend to Renita Colaco. He sees Mr. Colaco perhaps once or twice a year.

[34] Mr. Braganza did confirm that Mr. Colaco has family, including his parents, in India.

[35] Mr. Braganza, like Mr. Singh, testified he was confident that Mr. Colaco will attend court and was prepared to pledge $5,000. However, Mr. Braganza had greater than $500,000 in assets which he was not prepared to risk as a surety.

[36] Like Mr. Singh, I am not persuaded Mr. Braganza’s confidence that Mr. Colaco will attend court is as strong as suggested by them and defence counsel.

THE LAW

[37] S. 18(1)(b) and 19 of the Extradition Act provides:

18. (1) The judge before whom a person is brought following arrest under section 13 or 16 shall:

(b) in any other case, order the release, with or without conditions, or detention in custody of the person.

19. Part XVI of the Criminal Code applies, with any modifications that the circumstances require, in respect of a person arrested under section 13 or 16 or to whom a summons has been issued under section 16.

[38] Part XVI of the Criminal Code includes the provisions for judicial interim release. S. 515 (10) of the Criminal Code provides:

(10) For the purposes of this section, the detention of an accused in custody is justified only on one or more of the following grounds:

(a) where the detention is necessary to ensure his or her attendance in court in order to be dealt with according to law;

(b) where the detention is necessary for the protection or safety of the public, including any victim of or witness to the offence, or any person under the age of 18 years, having regard to all the circumstances including any substantial likelihood that the accused will, if released from custody, commit a criminal offence or interfere with the administration of justice; and

(c) if the detention is necessary to maintain confidence in the administration of justice, having regard to all the circumstances, including

(i) the apparent strength of the prosecution’s case,

(ii) the gravity of the offence,

(iii) the circumstances surrounding the commission of the offence, including whether a firearm was used, and

(iv) the fact that the accused is liable, on conviction, for a potentially lengthy term of imprisonment or, in the case of an offence that involves, or whose subject-matter is, a firearm, a minimum punishment of imprisonment for a term of three years or more.

ANALYSIS

[39] The Defence submits that the presumption of innocence and the fact it is a fraud case would suggest bail should be available to Mr. Colaco. Defence counsel suggests that, if proven, Mr. Colaco’s role in the fraud was a minor role. As such, he suggests his sentence could be in the 1-3 year range.

[40] The Defence also submits that Mr. Colaco’s health problems are a factor which this court should consider in its decision whether to grant bail.

[41] The onus is on the Crown to establish Mr. Colaco should be detained. Each case turns on the circumstances before the court and the release plan being proposed.

[42] In this case, the Crown relies on the primary ground for the continued detention of Mr. Colaco.

[43] I agree with the statement made by J. Forrestell in the United States of America v. David, 2011 ONSC 6360 at paras. 24 and 25:

As observed by Trotter J. in United States of America v. Ugoh,[2]because of Canada’s international treaty obligations, the risk of absconding must be examined even more carefully in extradition cases than it might be in domestic proceedings.

In cases involving allegations that a fugitive is part of a large organization, our courts have expressed concern for the potential for flight with false documents and hidden assets.[3] This concern reflects the observation of Chief Justice Lamer in R. v. Pearson[4]that most accused do not have the means to abscond, but that those who are part of a sophisticated organization and have access to wealth are more likely to abscond. While Chief Justice Lamer’s comments were directed at drug traffickers, they are equally applicable to those accused of being part of a sophisticated fraud.

[44] In this case:

a) It appears that for some time the police have not been able to locate Mr. Colaco’s whereabouts and could only do so by finding his wife, Renita Colaco and employing surveillance back to Mr. Colaco. If there was a next time, the police may not be so fortunate in locating Mr. Colaco;

b) Mr. Colaco does have family, including his parents, outside of Canada in India. Mr. Colaco also had ties to Bahrain for a number of years when he was employed there;

c) None of the money that Mr. Colaco received from the IRS and sent to his post office box, over $600,000, has been recovered or its location discovered. This leaves a concern that there may be funds available to Mr. Colaco to leave the jurisdiction.

d) Ms. Colaco testified the family has little assets in Canada, a small amount of money and a vehicle. There are few financial connections to this jurisdiction making the possibility of leaving this jurisdiction easier;

e) Mr. Colaco has already demonstrated he has provided addresses, which do not represent where he truly resides, so that his accurate whereabouts are not known to third parties. He has also demonstrated that, from time to time, he has changed this post office box address to make his true location undiscoverable and to further distance himself from the post office box location;

[45] Given all of the above, the Crown has established there is considerable risk of flight and detention is necessary to ensure Mr. Colaco’s attendance in court. The Crown has met the onus on the primary ground.

[46] Does the proposed plan of release provide any assurance that Mr. Colaco will attend court as required? I do not accept that it does. The proposed plan lacks any substantial financial incentive for Mr. Colaco to attend court. Given the amount of financial security being proposed, it is a pittance by comparison to the amount received by Mr. Colaco directly for his fraudulent tax returns alone (without regard to other monies he may have made as one of the promoters of this fraudulent scheme). Further, the sureties are not in a position to properly supervise Mr. Colaco. In essence, he would be left to his own devices most of the day. The sureties provide no assurance that Mr. Colaco would in fact attend court. Further, the quality of the primary surety, Renita Colaco, is woefully inadequate as a surety. She is prepared to not be truthful to protect her husband. She would not and could not, in my view, fulfil her role as a surety.

[47] The proposed plan of release does not address this court’s concerns regarding the serious risk Mr. Colaco would not attend court as required.

[48] Let me deal with the Defence submission regarding Mr. Colaco’s health. The Defence candidly admitted there was nothing in the record before me which suggested that the Maplehurst Correctional Facility is not capable of properly dealing with Mr. Colaco’s health issues. Normally, that would end any further discussion on this issue. However, in this case we have a letter from the Maplehurst Corrections Facility confirming their knowledge of and attendance to Mr. Colaco’s medical issues.

[49] As the Crown correctly points out, the most significant medical issue, the heart attack was in 2006. It did not prevent Mr. Colaco from travelling to the United States or to Bahrain with his family (in 2008), do housework or drive the children.

[50] I am satisfied that there is no greater risk to Mr. Colaco’s health by remaining in custody and that his medical issues are properly being addressed in custody. The fact that Mr. Colaco would prefer to be treated by his own doctor is not a factor in granting bail.

CONCLUSION

[51] The Defence application for bail is denied.

Ricchetti, J.

Released: March 8, 2013

COURT FILE NO.: 86/13

DATE: 20130308

ONTARIO

SUPERIOR COURT OF JUSTICE

HER MAJESTY THE QUEEN

– and –

Franzie Felizandro COLACO

REASONS FOR JUDGMENT

Ricchetti J.

Released: March 8, 2013