CITATION: R. v. Hobeika, 2017 ONSC 6475
COURT FILE NO.: CR-16-90000067-0000
DATE: 20171109
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
HER MAJESTY THE QUEEN
– and –
MICHEL HOBEIKA and NELSON SANCHEZ
Kerry Benzakein and Kelvin Ramchand, for the Crown
Gregory Lafontaine, for Applicant Hobeika
Anthony DeMarco, for Applicant Sanchez
HEARD at Toronto: October 3 to 6 and October 11 to 12
S.F. Dunphy, J.
[1] On September 15, 2013 at approximately 9:50 p.m., police made an exigent entry to a condominium in the Etobicoke area of Toronto, secured the premises and awaited the arrival of a search warrant. There were narcotics lying about in plain sight. A significant quantity of psilocybin (“magic mushrooms”) in a clear jar lay on the dining room table while lumps and residue of what appeared to be cocaine were visible on the kitchen counter. The accused Mr. Sanchez was found inside the unit when it was entered and was placed under arrest. The accused Mr. Hobeika was arrested inside his car parked just outside of the Etobicoke Condominium building immediately prior to the exigent entry. After the warrant arrived, a search of the three bedroom condominium revealed a very substantial quantity of narcotics in addition to those seen in plain sight.
[2] Also on September 15, 2013, police executed a search warrant that had been issued earlier that day upon another condominium in Toronto located in the Liberty Village area. The Liberty Village Condominium is alleged to be connected to Mr. Hobeika. Substantial quantities of narcotics were found during this search in addition to a large quantity of cash.
[3] Both accused deny that they possessed any of the narcotics found in either of the two searches. However, given the large quantities of narcotics found in each location, they admit that, if found to be in possession of the narcotics discovered during the two searches in either or both locations, the conclusion that such possession would also be found to be for the purposes of trafficking would be inescapable[^1]. Both stand charged with four counts of possession for purposes of trafficking contrary to s. 5(2) of the Controlled Drugs and Substances Act, S.C. 1996, c. 19 for each of cocaine, oxycodone, psilocybin and cannabis. In addition to these charges, Mr. Hobeika faces four further charges:
(a) Three charges of possession of proceeds of crime of a value over $5,000 (on the dates of the various searches of premises and the bank safety deposit box detailed below) contrary to s. 355(a) of the Criminal Code, R.S.C., 1985, c. C-46;
(b) Use property or proceeds of property of a value exceeding $5,000 with intent to conceal or convert knowing it was obtained as a result of the commission of a crime punishable by indictment contrary to s. 462.31(1) of the Criminal Code.
Overview of facts
[4] I shall review the background facts briefly at this juncture, referring to the evidence in more detail when discussing the issues as they relate to each count and accused.
Issues to be decided
[5] This case requires me to determine whether the evidence enables me to answer affirmatively and beyond a reasonable doubt the following questions:
(a) Was Mr. Hobeika in possession or some or all of the narcotics found at the Etobicoke Condominium or the Liberty Village Condominium?
(b) Was Mr. Sanchez in possession of some or all of the narcotics found at the Etobicoke Condominium?
(c) Did Mr. Hobeika possess any of the seized currency knowing it to be obtained or derived as a result of the commission of an indictable offence?
(d) Did Mr. Hobeika use property or proceeds of property with intent to conceal or convert it knowing it was proceeds of the commission of an indictable offence?
(a) Was Mr. Hobeika in possession or some or all of the narcotics found at the Etobicoke Condominium or the Liberty Village Condominium?
[6] The case for Mr. Hobeika’s possession of the narcotics found inside Unit 1112 is necessarily circumstantial. He was arrested inside his own car (a Lincoln Aviator) in the parking lot of the Etobicoke Condominium.
[7] Circumstantial evidence is evidence capable of supporting a verdict. Nevertheless, the potential frailties of such evidence requires careful instruction to a jury and no less careful self-instruction by a trial judge sitting without a jury. In this context, the decision of the Supreme Court of Canada in R. v. Villaroman, 2016 SCC 33 provides useful direction:
(a) Inferences of guilt drawn from circumstantial evidence should be the only reasonable inference that can be drawn from the evidence (Villaroman, para. 30);
(b) The Crown’s burden of proof extends to disproving reasonable theories inconsistent with guilt consistent with the evidence but the Crown is not held to disprove every possible conjecture, no matter how fanciful (Villaroman, para. 37);
(c) Reasonable inferences from circumstantial evidence inconsistent with guilt may be drawn both from the proven facts and from the lack of evidence of a particular matter (Villaroman, para. 35-36).
[8] As summarized by Cromwell J. in Villaroman at para. 38, “the basic question is whether the circumstantial evidence, viewed logically and in light of human experience, is reasonably capable of supporting an inference other than that the accused is guilty”.
[9] In the present case, possession of the mentioned narcotics is the only essential element of the charges pursuant to s. 5(2) of the CDSA that is in dispute. It has been agreed that possession of the quantities of narcotics seized would lead to the inescapable inference that such possession was for purposes of trafficking.
[10] For the purposes of s. 5(2) of the CDSA, proof of possession requires proof both that Mr. Hobeika had control over the relevant narcotic and knowledge of its nature (or was reckless or wilfully blind as to its nature).
[11] The narcotics in question were found in two locations: the Etobicoke Condominium and the Liberty Village condominium. I shall consider the evidence of Mr. Hobeika’s control and knowledge separately for each location.
(i) Etobicoke Condominium
[12] The narcotics in the Etobicoke Condominium were found stored in such a fashion that any sighted person present in the unit for more than a very brief period of time could not fail to notice some or all of them and be quite aware of their nature. The narcotics and related paraphernalia were in plain sight, spilling out of shelves and drawers, stored in the refrigerator and freezer etc. Scales and money counters were visible or in a common area closet. Ziploc bags – including tiny ones used to fill “dime bags” - were stored here and there in numbers and types that even the most avid home cook or canner would be hard pressed to use in years. In the living room, a monitor was tuned to the closed circuit video images of nine security cameras in the building. This condominium unit was, in a phrase, a dedicated drug den and only the most wilfully blind could have failed to notice it. Noticing narcotics and being in possession of them are, of course, not the same thing.
[13] Was Mr. Hobeika in a position to notice the narcotics found in the unit and, if so, does the evidence establish that he was he in possession of them?
[14] I shall start with the cocaine. More than one kilogram of this narcotic was found in various places inside the unit. Not all of it was tested, but enough of it was and its storage was careless enough that I cannot fail to infer that the (untested) white chunks and powder found on the kitchen counter (with a bright red “dime bag” on the floor below) and the residue found on measuring spoons, latex gloves and a business card elsewhere in the unit in close proximity to the tested amounts of cocaine was also cocaine.
[15] The following tested amounts of cocaine were found inside Unit 1112:
(a) 13.22 g portioned in bright red “dime bags” in a roll-out shelf in a kitchen cupboard;
(b) 26.34 g in a clear plastic bag in the same roll-out shelf with a loose kitchen measuring spoon bearing visible (untested) cocaine residue beside it;
(c) 731.48g in another large bag on the roll-out shelf of the kitchen cupboard;
(d) 5.12 g inside a locked strongbox inside a kitchen drawer;
(e) 31.82 g inside the same locked strongbox in a different bag; and
(f) 271.95 g on a shelf in the TV stand.
[16] The locked “Sentry” brand strongbox referenced above was inside a top kitchen drawer immediately to the left of the sink. It was chained to the cabinet such that it could not be removed without breaking the chain or delving deep inside the cabinet to search for a means of unfastening the chain. The box was locked and the key to open it was found on Mr. Hobeika’s key chain when he was arrested.
[17] With the exception of the two amounts of cocaine found in that strongbox (36.94g in total), the rest of the cocaine – weighing more than one kilogram in the aggregate – was rather crudely stored here and there in the unit with no particular effort to disguise or hide it. None of it was found in apparently private bedrooms. All was found in what might be described as the “common areas” of the unit: the kitchen, dining room, hallway closet, etc.
[18] The marijuana was found in three plastic bags in the kitchen cupboard above and to the left of the sink (210.68g) as well as in the freezer (1198.13 g and 443.76g). The total found was in excess of 1.8 kg. As with the cocaine, this was stored in an obviously common area of the unit (the kitchen) without apparent effort to conceal or hide.
[19] The oxycodone was found in two places. The first stash consisted of 28 pills weighing 9.34g in total, each pill bearing an “80mg” stamp. It was found in the locked “Sentry” strongbox described above. As noted, Mr. Hobeika possessed the key to this strongbox on his keychain. A second stash of oxycodone was found in a bag inside a TV cabinet/shelving unit. The bag contained 112 similar pills (marked 80 mg) weighing 36.66g in total.
[20] The psilocybin was found in two places. A clear plastic jar containing 39.05g of the narcotic was found in a clear jar in plain sight on the dining room table. Immediately beside this jar and on the same table was a nylon “D.I.E.S.E.L.” brand briefcase containing documents addressed to Mr. Hobeika (a trial notice addressed to him was visible on the surface, a recent (September 10, 2013) unsigned mortgage commitment in his name was found inside). More psilocybin was found in a refrigerator in the laundry room (538.54g).
[21] If Mr. Hobeika had “control” over Unit 1112, there can be no question that he had knowledge of the nature of the narcotics within it. The only narcotics not found stored without effort to conceal or hide in common areas of the unit were those found in the locked strongbox and Mr. Hobeika possessed the only identified key for this strongbox on his keychain when arrested.
[22] What then is the evidence that Mr. Hobeika had control over the unit? The following evidence cumulatively presents on overwhelmingly convincing case that Mr. Hobeika had control of Unit 1112 and full knowledge and control of the narcotics found inside it:
(a) He was the registered owner of Unit 1112;
(b) The Lincoln Aviator automobile in which he was detained and arrested in the parking lot of the Etobicoke Condominium building was registered to him at that address in the records of the Ministry of Transportation for Ontario;
(c) His driver’s license records at the MTO also showed him living at that address;
(d) The building’s electronic directory continued to display his name as an occupant and provided a “buzzer code” for visitors to seek admittance;
(e) Police had been observing the Lincoln Aviator for approx. 1 ¼ hours before observing Mr. Hobeika emerge from the ground floor of the Etobicoke Condominium building and then heading to his car;
(f) He was found in possession of the keys to the building (an electronic fob) and keys to the door of Unit 1112;
(g) Mr. Hobeika was found in possession of the key to the locked metal strongbox found in Unit 1112 in which substantial quantities of narcotics were found;
(h) When arrested, Mr. Hobeika was found in possession of receipts from the Fallsview Casino Spa and a Fallsview Blvd. hotel in Niagara Falls dated only a few days before the search of the Etobicoke Condominium where a Fallsview Casino players card in Mr. Hobeika’s name (but bearing no date) was also found;
(i) A briefcase containing papers connected to Mr. Hobeika including the unsigned mortgage commitment addressed to Mr. Hobeika dated September 10, 2013 was found on the dining room table of Unit 1112 during the search and only inches away from a clear jar containing psilocybin or “magic mushrooms”;
(j) Mr. Hobeika’s given address at TD Canada Trust in respect of the same mortgage commitment was Unit 1112; and
(k) The bank records for Mr. Hobeika’s credit cards and bank accounts at Toronto-Dominion Bank, Royal Bank of Canada and Canadian Imperial Bank of Commerce all recorded his then-current address as Unit 1112.
[23] Issues may be taken with individual elements of this evidence. Mr. Hobeika may have moved – a fact for which there is at least some evidence in the form of the lease to the Liberty Village Condominium. He may have kept keys to Unit 1112 only because he was a landlord of the premises. He might have simply dropped by Unit 1112 for a brief visit. His address might not have been changed with the MTO by oversight. The Fallsview Casino card may have been an old one and the recent visits shown on receipts the result of coincidence only. He may have failed to notify his banks of a change of address. There may have been multiple keys to a strong box left behind when he moved. He may have used his old address when seeking a mortgage only to avoid complicating his mortgage application by reason of his failure to complete timely change of address formalities.
[24] The defence also points to the lack of other evidence tying Mr. Hobeika to Unit 1112 such as letters or documents with his name on them (other than those in the briefcase that may have been inadvertently left behind following a brief visit) and the lack of distinctive clothing or similar items elsewhere in the unit.
[25] Individually, any one of these explanations or theories might appear superficially plausible. Cumulatively, however, they require assumptions for which there is simply no evidence and strain credulity.
[26] Firstly, the evidence of Mr. Hobeika having “moved out” of Unit 1112 is at best equivocal. The lease of the Liberty Village Condominium was a short-term affair: it was for four months (April – July, 2013) with a stipulated over-hold of no more than two months upon written notice. As shall be seen, the evidence of the actual use of that unit strongly suggests that it was used more as a dispensary than a residence. If it is objected that few personal belongings clearly identified as Mr. Hobeika’s were found at Unit 1112, there is no evidence of any having been found in the Liberty Village Condominium. Furthermore, there was a “master bedroom” in Unit 1112 that nobody found inside the unit when the police entered was connected to.
[27] The landlord who “just dropped in” thesis advanced by the defence does not provide a reasonable explanation for a visit of over an hour occurring on a Sunday evening in the middle of the month into a condominium unit with a monitor in the living room tuned to nine building security cameras and with such prominent evidence of narcotics and its paraphernalia in plain sight. It does not explain the presence of a locked strongbox in the kitchen containing cash and narcotics, chained to the cabinet for which he had the only identified key. It does not explain a briefcase left on the dining room table mere inches away from a jar of “magic mushrooms” containing current-dated documents clearly belonging to Mr. Hobeika.
[28] The evidence that Mr. Hobeika was actually then in control of Unit 1112 and the narcotics found within it is overwhelming and cannot, consistent with reason and common sense, be reconciled with an innocent explanation.
[29] There are two other elements of circumstantial evidence that must be added to the scales.
[30] Firstly, the evidence (to be discussed in further detail below in relation to proceeds of crime and money laundering charges) clearly establishes that Mr. Hobeika (i) had no known material source of income for several years; and (ii) made frequent and large “round number” cash deposits into different financial institutions over that same time frame. The pattern of deposits and the large amounts of cash found in Mr. Hobeika’s possession (also discussed below) are consistent with unlawful income sources such as narcotics trafficking and there is no evidence whatsoever of any lawful activity that might provide an innocent explanation of these facts.
[31] Secondly, there is the matter of the so-called debt lists. They were described as such by officers with lengthy experience in the narcotics field and my own examination of the document confirms their opinion.
[32] There is simply no explanation beyond the fantastic or implausible that can account for the presence of these two sequential and clearly related documents found in two geographically separate locations connected only by their links to Mr. Hobeika (the Liberty Village Condominium and Unit 1112). While the two lists are on different paper stock, they are clearly prepared primarily in the same hand and record a continuous and sequential series of transactions.
[33] The format of the two lists is the same. Each is divided into columns which are in turn sub-divided by dates. The list in the Liberty Village Condominium runs from August 10, 2013 until September 5, 2013. The list in the Etobicoke Condominium runs from September 6, 2013 until September 13, 2013. Underneath each date is a list of what appear to be first names or nicknames followed by an amount. Many names appear on several dates and across both lists. These two lists are, for all practical purposes, a single document found partly in one place and partly in another.
[34] The only common denominator between the locations where the debt lists were found for which there is any evidence at all is (i) the presence of a large quantity of narcotics and other indicia of narcotics trafficking in each; and (ii) Mr. Hobeika.
[35] The lists contain at least one gap in the data that also suggests a close connection to Mr. Hobeika. The list found in Unit 1112 begins on September 6, 2013, but has no entry for September 10, 2013. The absence of entries for September 10, 2013 is a curious one because receipts found on Mr. Hobeika’s person when he was arrested place him in Niagara Falls between 7:31 p.m. and 10:28 p.m. on that day, providing a possible explanation for the lack of transactions recorded for that day.
[36] The presence of these two lists in the proximity of large quantities of narcotics, related paraphernalia and cash found in both locations leads to the inescapable inference that the activity being recorded is in relation to the trafficking in narcotics. Mr. Hobeika’s connection to both units (as owner at the very least of the one, lessee of the other) leads to the inference that he was directly involved in that business at both locations.
[37] The evidence that Mr. Hobeika was in possession of the narcotics (and funds) found in the Etobicoke Condominium and that those narcotics were possessed for the purpose of trafficking is overwhelming. There is no plausible explanation of the facts that is not consistent with his guilt.
[38] I find that Mr. Hobeika was in possession of the narcotics seized from the Etobicoke Condominium for the purpose of trafficking contrary to s. 5(2) of the CDSA.
(ii) Liberty Village Condominium
[39] The evidence in relation to Mr. Hobeika’s possession of the narcotics found in the Liberty Village Condominium can be more swiftly dealt with. Police secured the unit shortly after 11 p.m. on September 15, 2013 and began searching it shortly after midnight. The following items in addition to the debt list described earlier were seized:
(a) 100.89g of psilocybin found in the middle compartment of the freezer in the kitchen;
(b) 321.75g of marijuana found in the freezer in the kitchen;
(c) 426.86g of marijuana found in the freezer in the kitchen; and
(d) $13,385 in Canadian currency found in a “wine rack” bag located in the kitchen cabinet above the refrigerator.
[40] The evidence of Mr. Hobeika’s possession of the narcotics (and funds) found at this location includes:
(a) The presence of the debt list, its clear connection to a sequential list found at the Etobicoke Condominium and the evident connection of both to the narcotics business;
(b) Mr. Hobeika’s name on the lease of the Liberty Village Condominium;
(c) The size of the unit (1 bedroom loft) and the lack of any evidence of any other person living there;
(d) The fact that the narcotics and large quantity of cash seized were stored without effort to hide (kitchen cabinet and freezer) and thus plainly visible to any occupant of the unit; and
(e) The significant number of “round number” (increments of $1,000) cash deposits made by Mr. Hobeika at bank branches in the Liberty Village area in the same time frame and the large quantity of cash found in this location.
[41] As I have noted, the lease in Mr. Hobeika’s name for the Liberty Village Condominium was for a short term (April to July, 2013), but provided for a possible extension up until the end of September. While there is no evidence of a written notice of extension having been given as required by the lease, I have no difficulty in concluding that Mr. Hobeika remained in possession of the condominium unit in September 2013 up to and including September 15, 2013. The dates recorded on the debt list in particular establishes his possession of this apartment unit into early September at least.
[42] There is simply no plausible explanation that explains the presence of narcotics, cash and the debt list in both locations (Etobicoke Condominium and Liberty Village Condominium) other than that Mr. Hobeika had control over both locations and the narcotics located within them as of the time police entered and searched them on the September 15 to 16, 2013 and was in possession of them until that time.
[43] I find that Mr. Hobeika was in possession of the narcotics seized at the Liberty Village Condominium for the purposes of trafficking contrary to s. 5(2) of the CDSA.
(b) Was Mr. Sanchez in possession of some or all of the narcotics found at the Etobicoke Condominium?
[44] The charges against Mr. Sanchez relate solely to the narcotics seized from the Etobicoke Condominium. I shall not repeat here what I have written above in relation to the location of the narcotics and the impossibility of an occupant of Unit 1112 not being aware of the nature of the narcotics that were found and seized by police. With the exception of the narcotics found in the Sentry strongbox, any occupant of Unit 1112 could not have failed to be aware of the presence of the narcotics seized and their nature. Cocaine was literally spilling out of bags.
[45] The following evidence supports the inference that Mr. Sanchez had the necessary level of control over Unit 1112 and the narcotics found within (always excepting the contents of the strongbox) to be found to have had possession of them:
(a) He had a key to Unit 1112 in his possession;
(b) His (recently-expired) El Salvador passport and a current Canadian permanent resident card in his name were found along with some clothes and approximately $500 cash in a drawer in one of the bedrooms of the unit in circumstances strongly suggesting the bedroom was occupied by him;
(c) In the same bedroom, police found boxes of Ziploc bags and a box of black latex gloves (of the same type and colour as the gloves found covered in white powder resembling cocaine in the TV cabinet two shelves above a large bag of cocaine in another room of Unit 1112);
(d) He was found inside the unit at the dining room table when police entered;
(e) When police entered the unit, there was a dedicated television/monitor tuned to the building’s security cameras;
(f) A jar of psilocybin was found on the table at arm’s length of where he was seated in the dining room when police entered; and
(g) He was seen to dump what was identified as a small digital scale and a business card with visible traces of a white powder resembling cocaine into the planter behind the dining room table when police entered.
[46] The defence submits that there are sufficient gaps in the evidence to raise a reasonable doubt that Mr. Sanchez had control over the condominium or the narcotics located in it. There was no evidence at trial of personal effects of Mr. Sanchez – documents, family pictures, prescriptions bottles bearing his name or similar personal items – being found in Unit 1112. While keys to the unit were found in his possession, there is no evidence that he also had the fob that opens the front door of the building itself. The psilocybin found near him are simply dried mushrooms and might well have been mistaken for more benign, non-narcotic type of mushrooms.
[47] I cannot accept that any of these objections rise to the level of introducing reasonable doubt into the conclusion that the facts inexorably point to: Mr. Sanchez was at least an occupant if not a full-time resident of the premises with full knowledge of and control over the large quantity of narcotics stored in the “common areas” of Unit 1112. The lack of evidence of a matter does not lead to an inference in all cases – the lack of positive evidence of the fob device that opens the front door to the building does not mean that he didn’t have it. It means only that the matter was not remarked upon sufficiently by police to be noted. He did have the key to Unit 1112 and his identification was found in a drawer in a bedroom along with other clothes. Whether socks or underwear had tags identifying them as his or not, the inference that they were and that this was his bedroom is quite inescapable given all of the other evidence. The digital scale and card with white powder residue dumped into the planter upon the arrival of police, the latex gloves and still more baggies found in what I infer to have been his room provide further evidence of his direct connection to the business very obviously conducted from Unit 1112.
[48] I find that Mr. Sanchez was in possession of the narcotics seized from the Etobicoke Condominium (with the exception of those found inside the locked strongbox) for the purpose of trafficking contrary to s. 5(2) of the CDSA.
(c) Did Mr. Hobeika possess any of the seized currency knowing it to be obtained or derived directly or indirectly as a result of the commission of an indictable offence?
[49] The following seizures of cash made by police are alleged to have been in the possession of Mr. Hobeika and were known by him to be proceeds of the commission of an indictable offence:
(a) $1,640 plus US$40 found in the strongbox at the Etobicoke Condominium (Count 5);
(b) $13,385 seized from the Liberty Village Condominium (Count 5);
(c) $169,000 found in a TD Bank safety deposit box rented by him (Count 6);
(d) $92,000 in currency found in a North York Apartment (Count 7); and
(e) $8,636 found inside his vehicle when this was searched again on October 3, 2013 while it was parked at his mother’s house and he had been released on bail conditions requiring him to reside there (Count 7).
[50] The first two were seized on September 16, 2013 and are the object of count 5 in the indictment. The third amount was seized on September 17, 2013 and is the object of count 6 in the indictment. The last two items were seized on October 3, 2013 and are the object of count 7 of the indictment. I will consider the evidence and conclusions in relation to proceeds of crime separately for each of the three relevant counts.
(i) Count 5 – funds seized at Etobicoke Condominium and Liberty Village Condominium
[51] The two cash seizures made early in the morning from the two condominiums secured by police on September 15, 2013 (the Etobicoke Condominium and the Liberty Village Condominium) were both quite clearly proceeds of crime in the possession of Mr. Hobeika for the same reasons provided in respect of his possession of the narcotics found in those locations during the same searches.
[52] The connection of the funds found in the strong box at the Etobicoke Condominium – literally beside a quantity of narcotics - to the business of trafficking of narcotics requires no explanation. The inference that all or part of these funds are the proceeds of prior sales is inescapable. The absence of any evidence of any source of income for Mr. Hobeika and the presence of large volumes of other narcotics, trafficking-related paraphernalia (baggies, cash counter, scales etc.) and the debt list all permit only one reasonable explanation for the funds in question.
[53] In the case of the funds found at the Liberty Village Condominium, the same reasoning and conclusion applies. The debt list, the large quantity of narcotics found in the same unit that I have found to be held for the purpose of trafficking, Mr. Hobeika’s common connection to this unit all lead to a single inference which is that Mr. Hobeika possessed these funds knowing them to be proceeds of an indictable offence whether in whole or in part.
[54] It is not necessary for the Crown to prove that all of the seized funds were proceeds of crime as charged. The amount seized was very significantly in excess of $5,000 and the Crown has proved beyond a reasonable doubt both that the funds were in the possession of Mr. Hobeika and that he knew all or part of such funds to be the proceeds of the commission of an indictable offence in Canada. The facts proved make no other inference possible.
[55] I therefore find Mr. Hobeika guilty as charged in Count 5 of the indictment. The Crown has proved beyond reasonable doubt that he was in possession of Canadian currency of a value exceeding $5,000 knowing that all or part of the property or proceeds was obtained or derived directly or indirectly as a result of the commission in Canada of an offence punishable by indictment contrary to s. 354(1)(a) of the Criminal Code and did thereby commit an offence contrary to s. 355(a) of the Criminal Code.
(ii) Count 6 – $169,000 cash in safety deposit box
[56] On September 17, 2013, police executed a warrant to search box 36 of a safety deposit box at the 689 Evans Avenue branch of TD Canada Trust. The box was found to be crammed with currency separated and bundled. If any more cash would have fit inside the safety deposit box, it would not be much. It was full to the top.
[57] Bank records establish that the safety deposit box in question was rented by Mr. Hobeika on July 18, 2011. The log of entries into the safety deposit box signed by Mr. Hobeika evidences Mr. Hobeika accessing the box a total of seven times, the last such entry being August 7, 2012 (just over a year prior to the arrest of Mr. Hobeika on September 15, 2013). The bank records also establish that Mr. Hobeika paid the annual rental of this safety deposit box from another account held at TD (account number ending in 902) most recently on July 16, 2013. All of the bank records produced were admitted both for their authenticity and for the truth of their contents.
[58] Mr. Hobeika’s possession of the funds found in the safety deposit box is clearly established. Can it be said that any part of the funds were proceeds of the commission of an indictable offence directly or indirectly given the last recorded entry into the box by Mr. Hobeika was August 7, 2012? I find that the only reasonable answer to that question that is consistent with the evidence is “yes”.
[59] Mr. Hobeika’s tax records show no material source of income in the relevant time frame (2009-2012 tax years were produced and admitted). There is no foundation in the evidence to suppose that there was or may have been a legitimate explanation for the accumulation of such a large cache of currency. Mr. Hobeika’s TD account forms listed his prior employment (1999-2006) as being in sales at a department store while his RBC mortgage records from 2006 show only very limited income from that source at that time. This prior employment provides no evidence to account for such a level of cash, still less cash stored in specie outside of a bank account.
[60] From 2006 forward, the TD Bank records indicate that Mr. Hobeika styled himself as self-employed by “Mike’s Meats” with the same business address as his residence (i.e. the Etobicoke Condominium). If there was such a business – and there is no evidence that it actually existed – Mr. Hobeika declared only a very small amount of business income in 2009 and 2010 and none whatsoever in 2011 or 2012 according to the income tax records.
[61] There is nothing in Mr. Hobeika’s past employment or business history that can explain the cash found in the safety deposit box.
[62] If there is no evidence from the “legitimate world” that might supply any basis to infer a legitimate foundation for some or all of the funds in the safety deposit box, there is ample evidence from which an illegitimate source of the funds is the only logical inference to be drawn.
[63] The evidence of Mr. Hobeika being involved in trafficking in narcotics in August and September 2013 at least is overwhelming. Large quantities of cash were found in the two condominium units searched along with significant quantities of narcotics and other trafficking-related paraphernalia (scales, large inventory of narcotics, gloves, Ziploc bags, currency counter, latex gloves). Cash and narcotics were found together in the strong box in Unit 1112 or separated by only a few feet in the case of the Liberty Village Condominium (freezer and kitchen cupboard). This evidence, of course, relates only to September 2013 when it was discovered (or the debt lists which extend back into August).
[64] The bank records produced cover the period 2010 through September 15, 2013 and show a steady pattern of regular, large deposits by Mr. Hobeika in round numbers (almost invariably $1,000 at a time, but other round numbers between $500 and $10,000 as well). With the exception of the cash deposits made to the TD account in August and September 2013, all of the deposits of this type were to the CIBC account (ending in 390) and were made via ABM. Indeed, other than some government cheques deposited to the TD account and the cash deposits made in the month prior to Mr. Hobeika’s arrest[^2], the only material deposits evidenced in any of the financial accounts were the ABM deposits to the CIBC account[^3]. The ABM deposits amounted to $317,200 between January 1, 2010 and September 15, 2013.
[65] The average monthly volume of such ABM deposits rises somewhat over the nearly four years of bank records produced, but the pattern is unchanged. These deposits are made almost exclusively in round numbers (generally $1,000, but other round numbers as well) at irregular times and places each month. These deposits are made in a time frame when Mr. Hobeika’s income tax returns disclose no legitimate sources of income of a magnitude that could account for them. There is no evidence of any legitimate business that could begin to explain this pattern. There is a clear continuity of the deposit activity from 2010 forward that makes the inference of illegal activities supplying some or all of the funds so deposited quite inescapable.
[66] I find that the $169,000 in cash seized from the safety deposit box were both possessed by Mr. Hobeika and were (and were known by Mr. Hobeika to be) proceeds in whole or in part of an indictable offence. I therefore find Mr. Hobeika guilty as charged in Count 6 of the indictment.
(iii) Count 7 – October 3 cash seizures
[67] On October 3, 2013, police executed search warrants (i) at Mr. Hobeika’s mother’s home (where he was required to live by the terms of his release); (ii) upon Mr. Hobeika’s Lincoln Aviator (found parked at his mother’s home); and (iii) upon his sister’s apartment in North York. $8,636 in currency was found inside the automobile and $92,000 was found in two boxes in the closet of his sister’s apartment.
[68] During the same search of his sister’s apartment, police also found three bank drafts (totaling $131,083), all recently obtained and each payable to the order of Mr. Hobeika. One of the bank drafts (from TD) had been obtained within hours of his release on a recognizance of bail in the amount of $85,000 (without deposit) for which his sister was a surety.
[69] I have no hesitation in inferring from these circumstances – in conjunction with all of the other evidence concerning Mr. Hobeika’s dealings and his financial records already reviewed – that the currency in the boxes (and the three bank drafts found in proximity) were all held for Mr. Hobeika by his sister and were thus in his possession. I also have no hesitation in concluding for the same reasons that all or part of these funds were proceeds of the commission in Canada of an indictable offence and were known by Mr. Hobeika to be so.
[70] Accordingly, I find that Mr. Hobeika is guilty as charged of Count 7 in the indictment.
(d) Did Mr. Hobeika use property or proceeds of property with intent to conceal or convert it knowing it was proceeds of the commission of an indictable offence?
[71] Count 8 of the indictment charges Mr. Hobeika with what is commonly referred to as “money laundering” between September 19 and September 23, 2013 contrary to s. 462.31(1) of the Criminal Code. Section 462.31 of the Criminal Code provides as follows:
462.31 (1) Every one commits an offence who uses, transfers the possession of, sends or delivers to any person or place, transports, transmits, alters, disposes of or otherwise deals with, in any manner and by any means, any property or any proceeds of any property with intent to conceal or convert that property or those proceeds, knowing or believing that all or a part of that property or of those proceeds was obtained or derived directly or indirectly as a result of
(a) the commission in Canada of a designated offence; …
[72] The conduct of the accused that is required to be proved to make out this offence involves a very broad range of activities concerning property. Almost anything done with property that disposes of it or converts it from one form to another will satisfy the conduct component of this offence: R. v. Trac, 2013 ONCA 246 at para. 83.
[73] The following is the evidence of transactions involving property undertaken by Mr. Hobeika that occurred between September 19 and September 23, 2013:
(a) Mr. Hobeika was released from custody on September 19, 2013. Later that day, Mr. Hobeika attended at TD Bank and undertook the following transactions in his account (account number ending in 902):
Cash withdrawal: $2,500;
Bank Draft payable to Mr. Hobeika: $20,311;
Following the completion of these transactions (and after payment of $7.50 in bank fees), the bank account was left with a balance of $0.20.
(b) On September 19, 2013, Mr. Hobeika transferred $24,144.92 from his “main” account at CIBC (ending in 390) to his CIBC savings account (ending in 300). A withdrawal of $26,045 was also processed in account 390 to honour a cheque.
(c) On September 20, 2013, he made a cash deposit of $1,000 to the CIBC account (ending in 390) and then withdrew the entire balance of $110,732.74 from the savings account (ending in 300) by way of two bank drafts payable to himself.
[74] Each of the transactions identified in the preceding paragraph occurred in the time frame covered by Count 8 of the indictment. Each involved a transmission, alteration, disposition or other dealing with property or its proceeds. The cash withdrawal altered a bank credit into cash; the bank draft converted a bank credit into a bill of exchange (bank draft). The transfer from account 390 to account 300 at CIBC was, self-evidently, a transfer. The cheque presented and honoured converted a bank credit balance to discharge a bill of exchange. The cash deposit to account 390 converted cash to a credit in a bank account and transferred the currency from Mr. Hobeika to the bank. The withdrawal of $110,732.74 was clearly a transfer and converted the existing credit in the savings account into two bills of exchange (the bank drafts).
[75] Each of these transactions had the effect of converting property from one form of property (cash or credits in a bank account as the case may be) into some other type of property – cash, payment of a bill of exchange (i.e. the cheque), credits in a bank account or bills of exchange as the case may be. There can be no question that each of these property transactions satisfies the conduct component of this offence.
[76] I turn now to the intention or mens rea component of the offence which can be broken into two parts. Firstly, it must be demonstrated that the accused undertook the action in relation to the property “with intent to conceal or convert” the property or proceeds. Secondly, when taking the action in relation to the property, the accused must have known or believed that the property was obtained or derived directly or indirectly from the commission of an indictable offence: Trac at para. 83.
[77] The first of these two elements will normally be simple to demonstrate. It is sufficient if the Crown can demonstrate intent to convert the property in question. It is not necessary that Mr. Hobeika also intended to conceal the transactions in question. The offence requires the knowing conversion of proceeds of crime from one form to another whether or not there is an intent to conceal or hide: R. v. Daoust, 2004 SCC 6 at para. 63. The inference that the accused intended the normal and usual consequences of his actions will normally be sufficient as it is in this case. Mr. Hobeika caused the transactions identified to be undertaken. The transactions he caused to take place had the effect of converting the property in the manner described.
[78] The core of this offence is found in the second intention component. Did Mr. Hobeika undertake the described transactions “knowing or believing that all or a part of that property or of those proceeds was obtained or derived directly or indirectly as a result of (a) the commission in Canada of a designated offence”? An indictable offence is a designated offence.
[79] I have previously reviewed the provenance of the funds in the main CIBC account (ending in 390) in a general way. The picture is, however, quite a bit simpler and more direct when examining only the amounts in the account as of September 19, 2013 ($51,189.52). The connection between that deposit balance that Mr. Hobeika used in the transactions described and the evidence of Mr. Hobeika’s trafficking business is tighter still.
[80] Starting from a balance on June 30, 2013 of under $10,000, Mr. Hobeika deposited $90,000 into this account by way of ATM deposits (of between $1,000 and $3,000, sometimes several times in a single day) in July, August and September of 2013. This compares to deposits more “normally” in the range of about $5,000 per month seen in previous months. There were no other deposits. No matter what accounting assumptions are made regarding inflows and outflows from the account, it is quite clear that all or substantially all of the funds in that main account as of September 19, 2013 were the proceeds of those recent ATM deposits.
[81] It was suggested by the defence that the abnormally high volume of deposits in this time frame was indicative of nothing more than Mr. Hobeika assembling the funds needed to undertake an intended real estate purchase. There is indeed some evidence that this may have been so. Indeed, the cheque paid on September 19, 2013 appears to be the deposit for that real estate purchase. Even granting the assumption, it cannot be said that this provides an innocent explanation for the provenance of the funds in question. The act of “assembling” the necessary funds to make such a purchase is the very essence of money laundering and the precise type of conduct Parliament was aiming at with s. 462.31(1) of the Criminal Code.
[82] The obvious inference to be drawn from the deposit of such a large volume of cash in a short period of time is that Mr. Hobeika possessed a significant volume of cash outside of the banking system that he needed to “launder” or convert from one form (cash) to a more useful form (bank deposits). This in turn is quite consistent with the pools of cash found in Mr. Hobeika’s possession following his arrest that I have already found to be proceeds of crime and his narcotics trafficking business for the reasons given.
[83] There can be no doubt that some or all of the funds in this account as of September 19, 2013 was, in whole or in part, the proceeds of the commission in Canada of an indictable offence and that Mr. Hobeika was fully aware of this fact.
[84] As regards the CIBC savings account (ending in 300), it received a transfer of $11,000 made from the main account (ending in 390) in July contemporary with the ATM deposits made that month discussed above. It received a further transfer from the main account of $24,144.42 on September 20, 2013. That evidence of more than $35,000 in very recent transfers from an account I have found to have contained proceeds of crime at the time of the transfers is sufficient to permit me to conclude that the funds in this account too were proceeds, in whole or in part, directly or indirectly, of the commission of an indictable offence in Canada. The history of this savings account from 2010 forward also confirms this conclusion as to almost all of the funds in it. Apart from the opening balance and a single $2,000 transaction in January 2010, all of the deposits into this account were either small interest payments from the bank or transfers from the main account that in turn was funded exclusively by the periodic and irregular ATM deposits that I have previously found to be connected to Mr. Hobeika’s illicit business activities.
[85] Substantially all of the balance on hand in the TD account from which both the bank draft and the cash withdrawal were made on September 19, 2013 are derived from a flurry of large cash deposits in the last days of August (totaling $10,000) and on September 6, 2013 (a single deposit of $10,000). For the same reasons given, there can be no doubt that the amounts in this account represented proceeds, in whole or in part, directly or indirectly, of the commission of an indictable offence in Canada and Mr. Hobeika was aware of this fact.
[86] The records of the September 6, 2013 deposit of $10,000 provides further confirmation of this conclusion. This cash deposit was in large denomination bills ($50 bills and $100 bills). A concentration of such high value currency is a hallmark of the refining process that is part of money laundering. The deposit was made at the Liberty Village branch of TD at 4:40 p.m. on September 6, 2013. Receipts found in Mr. Hobeika’s possession upon his arrest show that he made a series of separate ATM deposits at CIBC only a few minutes earlier: $1,000 at 4:24 p.m., $2,000 at 4:24 p.m., $2,000 at 4:25 p.m., $2,000 at 4:26 p.m. and $2,000 at 4:26 p.m.
[87] There can also be no doubt that Mr. Hobeika knew full well that the funds deposited by him into the bank accounts described and then used by him on September 19 to 20, 2013 were proceeds in whole or in part of his illegal business of narcotics trafficking. The evidence is overwhelming.
[88] I therefore find Mr. Hobeika to be guilty as charged under Count 8 of laundering proceeds of crime contrary to s. 462.31 of the Criminal Code.
Disposition
[89] For the reasons given, I find Mr. Hobeika to be guilty as charged of the offences charged in Counts 1 through 8 of the indictment.
[90] For the reasons given, I find Mr. Sanchez to be guilty as charged of the offences charged in Counts 1 through 4 of the indictment.
[91] Verdict accordingly. A date for sentencing shall be fixed concurrently with the delivery of these reasons.
___________________________ S.F. Dunphy, J.
Released: November 9, 2017
CITATION: R. v. Hobeika, 2017 ONSC 6475
COURT FILE NO.: CR-16-90000067-0000
DATE: 20171109
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
HER MAJESTY THE QUEEN
– and –
MICHEL HOBEIKA and NELSON SANCHEZ
REASONS FOR JUDGMENT
S.F. Dunphy, J.
Released: November 9, 2017
[^1]: Mr. Sanchez is not alleged to have any connection to the narcotics found in the Liberty Village Condominium.
[^2]: A total of $20,000 in cash was deposited to the TD account in this time frame.
[^3]: This account also received funds from and transferred funds to a CIBC savings account (ending in 300). Apart from the balance on hand at the beginning of the period reported () and a single $2,000 transfer in January 2010 that has not been identified, the only material deposits from this savings account were also from the same CIBC account (ending in 390). However, the only material fresh funds added to the two CIBC accounts from February 2010 until September 2013 were the ABM deposits described.