SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Attorney General of Ontario, Applicant
AND:
$25,610 in Canadian Currency and $80.00 in US Currency (In Rem)
BEFORE: Penny J.
COUNSEL: Amy C. Then and Fariya Walji for the Attorney General of Ontario
Godwin Diogu on his own behalf
HEARD: January 26, 2017
reasons for decision
Overview
1This is an application by the Attorney General of Ontario for a forfeiture order under ss. 3 and 8 of the Civil Remedies Act, 2001 SO 2001 c 28.
2The application involves $25,610 in Canadian currency and $80 in United States currency which was seized on July 10, 2013 by the Toronto police. The property was seized while the police were executing a Controlled Drugs and Substances Act search warrant at the residence of Tonny Ezah.
3The Attorney General submits that this money is a proceed and/or an instrument of unlawful activity within the meaning of the Act and should therefore be forfeited to the Crown in right of Ontario.
4On March 10, 2015, Godwin Diogu wrote to counsel for the Attorney General asserting that “I am the true owner of the funds seized from Tonny Ezeh’s residence on July 10, 2013.” Diogu later filed evidence deposing that Chidi Chinagorom, a resident of Nigeria, is the owner of the funds.
5The issues on this application are whether:
(1) the funds are an instrument and/or a proceed of unlawful activity;
(2) an interested party, Diogu, has established that he or Chinagorom is a responsible or a legitimate owner of the funds; and
(3) it would clearly not be in the interests of justice to order forfeiture.
Background
6This application arises out of a police investigation into heroin trafficking. In July 2013, the police were conducting surveillance of a man named Ally Songambele. During the surveillance, Songambele was seen getting into a car driven by Ezeh. Police subsequently obtained and executed a search warrant of Songambele’s residence. This resulted in the seizure of a large quantity of heroin, $338,550 in Canadian currency, a debt list, a money counter and six cell phones.
7A search of the cell phones revealed many telephone calls and text messages between Songambele and Ezah. One of the text messages states: “so u have paper 2 or 3” which, the police evidence says, means “so you have the money for 2 or 3 kilos” of drugs.
8The police then obtained a search warrant for Ezeh’s residence. During the execution of that search warrant on July 10, 2013, the police found a large quantity of cash, divided into six bundles and a small amount of loose cash, in a dresser drawer in one of the bedrooms. At the time, Ezeh claimed that the money was his. He told the police that he was unemployed (or on paternal leave) but provided no explanation for this large quantity of cash being in his dresser drawer.
9The currency totalled $25,610 Canadian and $80 US. Most of the money was in six bundles, bound with elastic bands (four bundles totaled $4,300, one was $4,250 and one was $4,090). The remaining cash was in loose bills.
10The police charged Ezeh with possession of proceeds of crime and seized the cash on July 10, 2013. The police obtained a detention order permitting them to detain the money until the completion of all criminal proceedings.
11In March 2014, the charge of possession of proceeds of crime against Ezah was withdrawn. On April 23, 2014 the police obtained a return order. That order provided that the cash was to be returned to Ezeh, but no earlier than 30 days hence.
12These proceedings were commenced on May 23, 2014, when an ex parte preservation order was made. That order was continued, on notice, by further order of the Court on June 19, 2014. Ezeh did not attend although served. The further order was served on Ezeh nevertheless. The money was paid into Court in July 2014.
13The forfeiture hearing was scheduled for April 21, 2015. On March 10, 2015, Diogu wrote a letter to counsel for the Ministry of the Attorney General. In that letter Diogu stated: “I am the true owner of the funds seized from Tonny Ezeh’s residence on July 10, 2013.” Diogu’s letter went on to say that he had given $25,200 to Ezeh “in three separate occasions … for him to help me buy some vehicles which I intended to send to Nigeria.”
14On April 16, 2015, Diogu filed a notice of appearance. Neither Diogu nor Ezeh appeared on April 21 but the matter was adjourned to December 14, 2015. Ezeh has never filed a notice of appearance. His affidavit in support of Diogu makes it clear Ezeh no longer makes any claim to the funds.
15Several additional consent adjournments resulted in the hearing eventually taking place on January 26, 2017.
The Legal Framework
16The Civil Remedies Act allows the Attorney General of Ontario to initiate civil proceedings in the Superior Court of Justice to forfeit the proceeds and instruments of unlawful activity. The purpose of the Act is to provide civil remedies that will assist in:
(i) compensating persons who suffer pecuniary or non-pecuniary losses as a result of unlawful activities;
(ii) preventing persons who engage in unlawful activities and others from keeping property that was acquired as a result of unlawful activities;
(iii) preventing property from being used to engage in certain unlawful activities;
(iv) preventing injury to the public that may result from conspiracies to engage in unlawful activities.
The practical and intended effect of the Act is to take the profit out of crime and to deter its present and would be perpetrators, Chatterjee v. Ontario (Attorney General), 2009 SCC 19, [2009] S.C.J. No. 19 (SCC).
17“Proceeds of unlawful activity” is defined in the Act as “property acquired, directly or indirectly, in whole or in part, as a result of unlawful activity.”
18An “instrument of unlawful activity” is defined as “property that is likely to be used to engage in unlawful activity that, in turn, would be likely to or is intended to result in the acquisition of other property or in serious bodily harm to any person, and includes any property that is realized from the sale or other disposition of such property.”
19“Unlawful activity” is “an act or omission that is an offence under an Act of Canada, Ontario or another province or territory of Canada.”
20It is an offence to traffic in any controlled substance, Controlled Drugs and Substances Act. It is an offence to possess property or things obtained by or derived directly from crime or property or things that are proceeds of crime, Criminal Code. It is an offence to launder proceeds of crime, Criminal Code. Finally, it is an offence for anyone to “trade” in or to export vehicles unless the person is registered under the Motor Vehicles Act, 2002, see Attorney General v. $13,900 in Canadian Currency (In Rem), [2015] O.J. No. 1702 (S.C.J.), at para. 16.
21Under the Civil Remedies Act, an offence may be found to have been committed even if no person has been charged with the offence, or a person was charged with the offence but the charge was withdrawn or stayed or the person was acquitted of the charge.
22It is not necessary for the Attorney General to prove what particular unlawful activity the seized property is derived from nor is he required to prove any particular offence against any particular offender. Civil forfeiture proceedings do not seek to establish fault for a person; only that the property is proceeds or an instrument of unlawful activity. The standard of proof in proceedings under the Act is on a balance of probabilities.
23Under the Act, the Superior Court of Justice shall make an order forfeiting property in Ontario to the Crown in right of Ontario if the Court finds that the property is a proceed or an instrument of unlawful activity, subject only to certain exceptions.
24The Act provides protection from forfeiture for “legitimate owners” of property that is found by the Court to be proceeds of unlawful activity and for “responsible owners” of property that is found by the Court to be an instrument of unlawful activity. In both cases, the party relying on the legitimate or responsible owner exception bears the burden of proving that the exception applies. Bald assertions unsupported by evidence are inadequate; suspicious circumstances call for a credible and reasonable answer.
25Where the court finds that there are reasonable grounds to believe that property is proceeds or an instrument of unlawful activity, it shall preserve the property unless it is “clearly not in the interests of justice” to do so. The question of forfeiture is, under this standard, not decided on a mere balancing of the pros and cons. An exception to forfeiture should only be granted where the party seeking relief from forfeiture has demonstrated that forfeiture would be manifestly harsh and inequitable. Relief from forfeiture should be very much the exception and only granted where the party seeking that remedy clearly makes the case that forfeiture would be an inequitable or unjust order in all of the circumstances. Three non-exhaustive factors include:
(i) the conduct of the party whose property is subject to forfeiture, as it relates to the unlawful activity;
(ii) the disparity between the amount of the proceeds in the amount sought to be forfeited; and
(iii) whether forfeiture would be consistent with the purposes of the Act,
Ontario (Attorney general) v. 1140 Aubin Road, 2011 ONCA 363.
Are the Funds an Instrument and/or a Proceed of Unlawful Activity?
26I find on a balance of probabilities that the funds seized from Ezeh were for the purpose of concluding a illegal drug deal. Alternatively, the funds were for the purpose of illegal trading in used cars, contrary to the Motor Vehicles Dealers Act, 2002. I therefore find that the funds were an instrument of, and proceeds of, unlawful activity. I come to this conclusion on the following basis.
27Ezeh was seen in company with Songambele. The following day, a search of Songambele’s residence uncovered a large quantity of heroin. Ezeh and Songambele were in extensive telephone and text communication from July 4 to July 7, 2013. I accept the police evidence that the text “so you have paper 2 or 3” is more likely than not Songambele’s confirmation that Ezeh had the money for the purchase of the agreed quantity of heroin.
28Ezeh’s evidence on cross-examination was that he met with Songambele to discuss whether Songambele would buy his car. Ezeh says that in the text, “paper” is probably a reference to the paperwork for the car transaction and that “2 or 3” meant 2:00 or 3:00 p.m. later that afternoon. Ezeh says that Songambele suddenly changed his mind about buying the car and that was the end of it. There are many reasons to reject this evidence. Ezeh’s explanation, particularly in the context of all the other evidence, is not credible.
29The “so u have paper 2 or 3” text was sent at 12:18 p.m. on July 4. Ezeh and Songambele, however, continued to exchange telephone calls and text messages until July 7, three days after the alleged car transaction fell through. July 4, therefore, was not the end of it.
30Ezeh says he got the money from Diogu. Diogu says he got the money from his bank, after receiving wire transfers to his USD account from Chinagorom.
31Ezeh told the police in July, 2013, that the money was his. Ezeh did not surface with his story that he got the money from Diogu to buy used cars until April 2015. The so-called “receipts” Ezeh signed are not dated. They could have been created at any time.
32Most of the money was in bundles of $4,300, wrapped with elastic bands. Ezeh says that is how he received it from Diougu. Neither could explain why the money was bundled that way. I accept the police evidence that the bundling of money in small bills in this way is characteristic of drug deals, which typically involve a large number of smaller denominations, a lack of trust between the parties and the associated need for fast transactions (no laborious counting of the money). I also accept the police evidence that chartered banks, from which Diogu says he received this money, do not package money this way, in mixed denominations wrapped in elastic bands. Diogu had no credible response to this police evidence.
33Diogu’s evidence itself is also impossible to credit. Diogu placed a lot of emphasis on his employment status as an inspection engineer. However, in 2013, his annual income net of tax was only about $40,000. He did not explain how or why he had the ability to deposit well over $300,000 into his Canadian account and make cash withdrawals of approximately the same amount.
34Diogu initially told the Attorney General’s office that he was the true owner of the funds. A month later, his story changed – the funds belong to Chinagorom.
35During his cross-examination, Diogu testified that cash withdrawals from his account in June 2013 had “nothing to do” with the money he later gave to Ezeh. Diogu claimed he switched money back and forth between bank accounts to obtain better interest rates. Diogu did not, however, make full production of his bank records to enable the Attorney General to test this proposition.
36Later in his cross-examination, Diogu testified that he withdrew funds on his credit card ($10,000) and, over the course of the next week or two, used that money to pay back his credit card account. Diogu did not explain why he would engage in such obviously peculiar behavior (particularly when he expressed such sensitivity to interest rates).
37Nevertheless, Diogu stated repeatedly on his cross-examination that none of the June 2013 cash withdrawals had “anything to do” with Ezeh. In oral submissions to the Court, however, Diogu did a complete about-face. These very withdrawals, he said, represented most the cash he gave to Ezeh.
38Diogu also claimed that he received transfers of US dollars from Chinagorom, who is in Nigeria. He has never met Chinagorom. Chinagorom called him one day, Diogu says, out of the blue and asked Diogu to buy him used cars for export to Nigeria. Chinagorom just sent Diogu money whenever he wanted to buy some used cars. Diogu bought whatever used cars he liked and sent them to Chinagorom in Nigeria. Diogu maintains he did this “for a fellow Nigerian” without payment, reward or compensation of any kind.
39Diogu argued in Court that the money he withdrew from his account to give to Ezeh was sourced from US dollar transfers from Chinagorom. However, based on his explanations in Court, most of the cash withdrawals he says he made for Ezeh were made before Diogu received the funds from Chinagorom. For example, the transfers of funds allegedly from Chinagorom in 2013 took place on June 25, July 5 and July 8, 2013. Yet, in submissions before the Court, Diogu maintained that he withdrew well over half the money he gave to Ezeh between June 10 and June 24, 2013.
40Diogu made several cash withdrawals from his account on July 8, 2013 ($4,000, $4,500 and $5,000). On his cross-examination, Diogu testified that these withdrawals were for cash to take to a car auction. He went to the auction, didn’t buy anything, he said, and put the money back into his account. In submissions before the Court, however, Diogu maintained that he had never been to a car auction and never bought cars at auctions. In any event, these funds, apparently, were not given to Ezeh.
41Because Diogu’s explanation involved the allegation that the funds seized from Ezeh actually belonged to Chinagorom, the Attorney General put Chinagorom on notice of these proceedings, sending copies of the full record etc. Other than sending the Attorney General’s office an indignant letter, Chinagorom did not appear, filed no affidavit confirming or supporting the proposition that the funds were his and took no part in these proceedings.
42In order to “trade” (which is very broadly defined) in used cars, or to export use cars in Ontario, one has to be registered under the Motor Vehicle Dealers Act, 2002, SO 2002, c. 30 Sched. B. (MVDA). There is an exception for a person who trades in a car on his or her own account, or on the account of a family member, if the car is primarily for the personal use of the individual or a member of his or her family.
43The unchallenged evidence of Yovanka McBean, an employee of the Ontario Motor Vehicle Industry Council (OMVIC is responsible for administering the MVDA), is that Diogu is not, and has never been, registered under the MVDA. This is admitted.
44Diogu strenuously maintained, however, that he was not caught by this legislation because he was buying these cars “privately” in his personal capacity. However, by his own admission, Diogu was not buying used cars on his own account or for a family member and was not using the cars primarily for his, or a family member’s, personal use.
45Perell J. dealt with a similar case in Ontario (Attorney General) v. $13,900 in Canadian Currency (In Rem), supra. In that case, a person involved in the purchase and export of used cars was apprehended with a large amount of cash. There was also evidence that the seized cash had been in physical contact with illegal drugs. Perell J. found, at para. 16:
Mr. Wilson, however, has not registered his business with the Ontario Motor Vehicle Industry Council, which is responsible for administering the Motor Vehicle Dealers Act 2002, S.O. 20002 c. 30 Sched. B. Registration under the Act is required for a person to act as a dealer or salesperson or to export vehicles for sale outside of Ontario. It is an offence under the statute to not be registered when acting as a dealer.
46Perell J. concluded, at paras. 62 - 63:
I find that the totality of the evidence supports the Attorney General’s application for forfeiture. Moreover, Mr. Wilson has failed to persuade me on a balance of probabilities that he is either a legitimate owner or a reasonable owner. On the basis of the evidence, I am satisfied on a balance of probabilities that the cash is either proceeds of unlawful activity, an instrument of illegal activity or both within the meaning of the Civil Proceedings Act, 2001.
Even if the money was not drug-related and related solely to Mr. Wilson’s automobile business, it is an offence to carry on that business without being registered under the Motor Vehicles Dealers Act, 2002.
47I do not accept Diogu’s evidence that he gave Ezeh the seized money to pay for used cars. Diogu’s evidence shifted with every breeze, was inconsistent and contradictory. It lacks all credibility. Diogu has not been forthright with the Court. I conclude, on a balance of probabilities, that the seized funds were for illegal drug purchases and probably did not come from Diogu at all. Even if the seized funds were provided for the acquisition and export of used cars, however, this activity, on its face and by Diogu’s own admission, was also illegal as it was contrary to the registration requirements of the MVDA.
48I find, therefore, on all the evidence that the seized funds are either proceeds of unlawful activity, or an instrument of illegal activity, or both within the meaning of the Act.
Are Diogu and/or Chinagorom Legitimate or Responsible Owners of the Funds?
49The same analysis of the evidence that results in the conclusion that the funds are either proceeds of unlawful activity, or an instrument of illegal activity, or both, also requires the conclusion, on a balance of probabilities, that neither Diogu nor Chinagorom, is a legitimate nor a responsible owner.
50The onus is on Diogu to establish that, notwithstanding the funds are either proceeds of unlawful activity, or an instrument of illegal activity, he or Chinagorom is either a legitimate or a responsible owner. To qualify as a legitimate owner, a person must show that he or she did not, directly or indirectly, acquire the property as a result of unlawful activity and that they were the rightful owner of the property before the unlawful activity occurred or acquired the property for fair value after the unlawful activity occurred.
51Similarly, to qualify as a responsible owner, a person must show that he or she had an interest in the property and has done all that can reasonably be done to prevent the property from being used to engage in unlawful activity.
52I find, on a balance of probabilities, looking at all the evidence as a whole, that neither Diogu nor Chinagorom meet the definition of a legitimate or responsible owner. As noted above, the evidence of Diogu and Ezeh is inconsistent and contradictory. Neither Ezeh nor Diogu is a credible witness. Chinagorom gave no evidence at all.
53These funds are likely the product of drug trafficking and may not have come from Diogu at all. Alternatively, they are an instrument for the unlicensed sale and export of used cars. It has not been shown that Diogu or Chinagorom have the necessary separation from the illegal transactions or bona fides to fall within one of these exceptions.
Is It Clearly Not In the Interests of Justice to Order Forfeiture?
54Exactly the same conclusions apply to this last component of the test for forfeiture. The evidence supports the conclusion, on a balance of probabilities, that the funds are proceeds or an instrument of unlawful activity. There is no disparity between the amount of the proceeds and the amount sought to be forfeited. Finally, forfeiture is, in the circumstances of this case, entirely consistent with the purposes of the Act.
Conclusion
55For all the foregoing reasons, the application is allowed. There shall, therefore, be an order under the Civil Remedies Act for the forfeiture of $25,610 Canadian and $80 US to the Crown in right of Ontario.
Penny J.
Date: January 31, 2017