Court File and Parties
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ATTORNEY GENERAL OF ONTARIO
Applicant
– and –
$52,820 CDN, $68 USD AND $14,250 IN JAMAICAN CURRENCY (IN REM)
Respondent
COUNSEL:
Kateryna Toderishena and Fariya Walji, Counsel for the Applicant
Benjamin Goldman, Counsel for the Respondent Rodney Warren
HEARD: August 9, 2019
SCHABAS J.
REASONS FOR DECISION
Overview
1This is an application for a forfeiture order, pursuant to the Civil Remedies Act, 2001, S.O. c. 28 “CRA”), of currency seized from Rodney Warren during a drug trafficking investigation.
2The test for forfeiture is set out in sections 3 and 8 of the CRA. In order for the Attorney General to succeed, it must satisfy the Court that the property is either the proceeds of unlawful activity or the instrument of unlawful activity. If so, the Court shall order forfeiture “except where it would clearly not be in the interests of justice.” However, if the Court finds that the property is proceeds or an instrument of unlawful activity, a party to the proceeding may seek protection from forfeiture under s. 3(3) or s. 8(3) as either a “legitimate owner” or a “responsible owner”, and the Court may make an order protecting that owner “except where it would clearly not be in the interests of justice.” At the second stage, the burden of proof is on the respondent: See, e.g. Ontario (Attorney General) v. $104,877 in U.S. Currency (in rem), 2014 ONSC 5688 at paras. 28 – 33.
3The starting point, then, is whether the evidence establishes, on a balance of probabilities, that the cash is the proceeds or instrument of unlawful activity. In this case, for the reasons set out below, I find that the Attorney General has met its burden, and I do not accept that Mr. Warren is a “legitimate owner” or “responsible owner”. Accordingly, the application succeeds, and the cash shall be forfeited under the CRA.
Factual Background
4On August 13, 2016, after receiving a confidential tip, an undercover officer contacted Mr. Warren to purchase cocaine. Warren initially agreed to sell him $220 worth of the drug but backed out after the person the officer said would vouch for him told Warren that she didn’t know him. The police observed Warren frequenting a residence at 886 Westshore Boulevard in Pickering and driving a 2009 grey Jaguar. On August 14, the police obtained a search warrant, and the following day, after watching Warren conduct a “hand-to-hand” exchange of bags with someone from his car, Warren was arrested. The search of the car revealed a “flick knife”, three different drug scales concealed in the vehicle, and 27 unopened liquor bottles. Warren also had a large amount of cash and a cell phone on his person which was the phone that was used to discuss the aborted drug sale to the undercover officer. The cash consisted of $4,820 CDN, almost all of which was in a large fold held by an elastic, and mostly $20 bills, as well as $68 US and $14,250 in Jamaican currency.
5A search of 886 Westshore Boulevard disclosed a number of electronics items in original packaging, more unopened liquor bottles and $48,000 concealed in a wine box inside a laundry hamper. The money was found in even bundles and sub-bundles bound with elastics of $1,000, $3,000, $5,000 and $10,000. One bundle of $5,000 was in a TD Bank envelope, and another $10,000 bundle contained a cheque for $1,167.
6Although Mr. Warren was charged with trafficking cocaine, possession of property obtained by crime and possession of a prohibited weapon, the charges were later withdrawn. Mr. Warren has no criminal record and while he has been charged with offences previously, those incidents were over a decade before this matter arose.
7The Attorney General provided uncontradicted and unchallenged expert evidence that the bundling, manner of storage, and denominations of the funds were consistent with the use of cash by drug traffickers. The scales found in the car were also indicative of trafficking, as was the weapon, the liquor and electronics. Drug dealers often have a weapon for protection, and they may trade in stolen liquor and electronics for drugs. However, no drugs, or even signs of drugs, such as residue or odors, were found or noted in the searches.
8Warren and his friend and business partner, Lev Crooks, filed affidavits in response to the application. Warren’s affidavit asserted that he is the lawful owner of all the currency. He said the money found on him was to be used to buy a used car for Dominique Dickson, who lives in the house at 886 Westshore and was with Warren when he was arrested. The liquor bottles were said to have been purchased to be used at an event associated with his music promotion business.
9Warren claimed the $48,000 in cash found at the house (occupied by his brother and Ms. Dickson) was withdrawn by Ms. Crooks from their (his and Crooks’) joint bank account representing his share of the profits on the 2015 sale of a property they had jointly owned at 1139 Glen Eden Court. Although Warren produced one page of a bank statement showing their joint account with a deposit of $93,237.70, he did not produce any statements showing the withdrawal of those funds. Warren’s affidavit claimed he earns money from a music promotion business and real estate investments he makes with Ms. Crooks.
10Crooks’ evidence mirrored Warren’s in her affidavit. She and Warren had, in fact, engaged in at least three real estate ventures by pooling resources over the previous 10 years. Their first property was purchased in 2007 when Crooks was 19 years old. Crooks, who also shares a child with Warren, is currently residing in a house jointly owned by them at 164 Verdun Road, said to have been purchased with profits from the sale of 1139 Glen Eden Court in 2015. In fact, the agreement of purchase and sale for 164 Verdun Road was entered into by Warren and Crooks just two days after the cash in question was seized. Crooks’ affidavit also said she withdrew the $48,000 - $50,000 over multiple transactions from their joint account and gave it to Warren in cash because he had closed his checking account.
11On their cross-examinations, however, Warren and Crooks contradicted themselves and each other on many material points. Warren denied closing his bank account, he said the liquor belonged to his brother, and he could not say when or how Crooks provided him with the cash. He said he put the money in Ms. Dickson’s bedroom to impress her, but “forgot about it.” Warren could give few verifiable details of his music promotion business or of any income earned from it but, at best given his description, he might have earned about $15,000 per year from it. Yet he owns at least two properties in addition to the one jointly owned with Crooks, including 886 Westshore Boulevard, for which he must make mortgage and other payments. He has child care expenses, and other costs, including funding renovations and other costs associated with his real estate investments with Crooks. He does not report his income or pay income tax. He also did not make any money on real estate in 2016.
12Crooks changed her story on where the $48,000 came from, saying in cross-examination that some came from a “cultural deposit system” known as “a pardner” or a “su” where family and friends entrust one another with money “and you receive a large payout”. She asserted that about $20,000 came from the bank and another $35,000 came from the “su” or “communal pot”, even though she said she had only put $5,000 into it. When pressed on this, Crooks refused to give more details, saying it is “something cultural based.” Crooks undertook to provide banking records to show the $20,000 withdrawal, but no such evidence was provided.
13Warren said he received the $48,000 from Crooks in $20 bills but later exchanged them for $100 bills at Money Mart or Western Union. Crooks, however, said she gave the cash to Warren in “largest denominations”, and requested that because the amount was so large, “so usually they were in one hundred-dollar bills.”
14Very few documents were provided to support their alleged transactions. Warren and Crooks both disparaged using banks, citing the need to avoid transaction fees such as the $1.50 bank transfer fees and concerns about “hacking” and “internet fraud”. Yet the evidence is that they do have bank accounts, and they have transferred funds between them (in 2014 and 2016).
15Warren and Crooks contradicted each other over how much they each provided for their real estate investments and who paid for various expenses and fees. As noted, two days after the seizure of the cash, Crooks and Warren were still able to come up with funds to purchase the property at 164 Verdun Avenue. Warren agreed that he contributed to it, but could not, or would not, say how much he actually contributed to that purchase, or explain where the money came from given that over $50,000 had been seized from him just prior to the purchase.
Is the Cash Proceeds of Crime?
16Warren’s and Crooks’ evidence is replete with inconsistencies and it is difficult to give it any weight. The question, however, is whether that matters, as the starting point of the application is whether the Court is satisfied, on a balance of probabilities, that the cash is “proceeds of unlawful activity” or an “instrument of unlawful activity.”
17The Attorney General submits that the seized currency was likely acquired as a result of drug trafficking, and/or is cash that is being laundered as proceeds of crime. In its factum, it also asserts that it stems from Warren’s failure to file tax returns and tax evasion, although this was not pressed in argument.
18Counsel for Warren argues that the Attorney General has failed to meet its burden. While Warren may have discussed, and even agreed, to sell cocaine to an undercover officer, no sale took place, and no drugs were found in the investigation. Other items which are often found in such investigations, such as drug packaging and debt lists, were not found either. Scales in a car, and possession of a flick knife raise suspicion, but the evidence must do more, counsel argues, noting Warren’s lack of a criminal record, or any other recent charges or evidence suggesting that he is in the drug trade.
19As to the evidence of Warren and Crooks, counsel warns that there is no “duty to explain” as that would reverse the burden of proof. Accordingly, it is argued that I should draw no adverse inferences from their shifting stories, and indeed not even consider their evidence in deciding whether the Attorney General has met its burden. In any event, counsel notes that there is some evidence as to a legitimate source of the founds – the house sale – and I should respect the fact that people are entitled to deal with their money in their own way, and that not everyone uses banks or keeps careful records of their transactions.
20In Chatterjee v. Ontario, 2007 ONCA 406, appeal dismissed 2009 SCC 19, the leading case upholding the constitutionality of the CRA, a forfeiture order was granted even though no drugs were found, Mr. Chatterjee had no prior convictions, and was not charged with anything. The evidence was that, incidental to an arrest, in searching his car the police discovered $29,020 in cash, as well as an exhaust fan, a light ballast and a light socket, which are equipment commonly used in marijuana grow operations. According to the police, the car and equipment all smelled of marijuana. The Court also took into account that drug dealing is a cash business and the mix of denominations was consistent with it being proceeds of trafficking.
21The Courts in Chatterjee which considered the evidence, the Superior Court and Court of Appeal, also took into account the respondent’s lack of a credible explanation as to how he acquired the money. The Court of Appeal held, at paragraph 50, that doing so did not improperly shift the burden of proof, as the judge in finding that the cash was proceeds of unlawful activity “necessarily involved rejecting the appellant’s explanation.” In Chatterjee the Court of Appeal concluded at paragraph 46 that “the totality of the evidence in support of the application was overwhelming.”
22In Ontario (Attorney General) v. $104,877 in U.S. Currency (in rem), 2014 ONSC 5688, appeal dismissed 2016 ONCA 71, the respondent was stopped at airport security on his way to Panama and was found with 22 socks filled with cash. He also had a baggy with a small amount of cocaine in his wallet. There the Court considered the “totality of the evidence” which also included the respondent’s inconsistent explanations and how his very modest standard of living could be reconciled with the cash in his backpack. The application judge’s consideration of the lack of “any cogent explanation” was reasonable and appropriate, the Court of Appeal held (at para. 6) in considering the totality of the evidence.
23Accordingly, while the onus is at all times on the Attorney General, I am entitled to consider all the evidence before me in reaching my conclusion. Specifically, if the respondent chooses, as here, to seek to establish a lawful right to the money, I can consider the lack of credible evidence in support of that assertion in determining whether the evidence supports the conclusion that the funds, on the balance of probabilities, are the proceeds or instrument of unlawful activity. This does not improperly shift the burden of proof, as the Court of Appeal noted in Chatterjee. I also observe that other judges have also considered evidence of respondents that fails to show a legitimate source for the cash in coming to their conclusion on these types of applications: see, e.g., Ontario (Attorney General) v. $43,120 in Canadian Currency (in rem), 2011 ONSC 3076 at para. 12; Ontario (Attorney General) v. Chow, [2003] O.J. 5387 at paras. 38 – 43; Ontario (Attorney General) v. $13,900 in Canadian Currency (in rem), 2015 ONSC 2267; Ontario (Attorney General) v. $25,610 in Canadian Currency (in rem), 2017 ONSC 708, at paras. 47 – 48.
24As this is an in rem proceeding, counsel for Warren argues that the focus must be on “the thing”, and whether there is a link between what is sought to be forfeited and criminal activity. He cites Ontario (Attorney General) v. $8,740 in Canadian Currency (in rem), 2016 ONSC 3773, in which the Court dismissed an application where the individual with the cash happened to be found near where a shooting had taken place, and there was some drug residue on the currency. The respondent in that case, however, provided a credible explanation for the source of the funds and there was nothing that tied him to the incident or any other criminal activity. Counsel also cites Ontario (Attorney General) v. $25,709.63 Canadian Currency (in rem), 2009 CanLII 9434 (ON SC), [2009] O.J. No. 859, where at a roadside stop in northwestern Ontario, cash was found together with a small bag of marijuana. However, there was again a credible explanation for the possession of the cash and nothing to link him to any offence.
25It should also be noted that while “the thing”, to use counsel’s language, must be linked to criminal activity, “a precise tracing and proof” is not required. As the Court of Appeal stated in Ontario (Attorney General) v. 855 Darby Road, Welland, and All Contents (in rem), 2019 ONCA 31, at para. 44, the applicant “need only prove that property was acquired in part as a result of unlawful activity.”[emphasis in original].
26In this case, the evidence has many parallels to the facts in Chatterjee. Warren had equipment associated with the drug trade in the car – scales, a flick knife and unopened liquor bottles. Although there was no odor of marijuana as there was in Chatterjee, Warren had agreed the previous day to sell cocaine, and was also seen engaging in what appeared to be a drug transaction from his car. The denominations, and manner of storage of the funds is consistent with drug trafficking. Warren has pointed to a source for the funds, but his evidence, and the evidence of Crooks, is unsupported by bank records that should be available, and is replete with inconsistencies such that it cannot be given any credence.
27There is much more evidence here than in $8,740 and $25,709.63, the cases cited in which forfeiture was not ordered. The aborted sale is a direct tie to drug trafficking, the scales, liquor, electronics, hiding and bundling of funds, the observation of what appeared to be a hand to hand transaction, and the evidence of Warren and Crooks who have provided inconsistent evidence and cannot credibly explain the source of the funds, are all factors that bring this case closer to the facts in Chatterjee, where the Court of Appeal described the evidence as “overwhelming”.
Conclusion
28Taking into account the totality of the evidence, I conclude that the Attorney General has met its burden, on a balance of probabilities, that the cash in question is the proceeds or instrument of criminal activity and that it is not contrary to the interests of justice for a forfeiture order to be made. I also find that the respondent has not met his burden of establishing that he is either a “legitimate owner” or a “responsible owner” such that I should make any order other than to grant the relief sought.
29Accordingly, the application is granted, and an order shall issue pursuant to sections 3(1) and 8(1) of the CRA to forfeit the currency in question.
Schabas J.
Released: August 13, 2019
COURT FILE NO.: CV-17-578886
DATE: 2019-08-13
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ATTORNEY GENERAL OF ONTARIO
Applicant
– and –
$52,820 CDN, $68 USD AND $14,250 IN JAMAICAN CURRENCY (IN REM)
Respondent
REASONS FOR DECISION
Schabas J.
Released: August 13, 2019