Court File and Parties

COURT FILE NO.: CR-20-90000107-00M0 DATE: 20210112 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

THE ATTORNEY GENERAL OF CANADA ON BEHALF OF THE UNITED STATES OF AMERICA

– and –

RIAZ SHAHID

Counsel: Heather Graham, for the Attorney General of Canada Robert Christie, for Riaz Shahid

HEARD: December 9, 2020

REASONS FOR JUDGMENT ON BAIL REVIEW

Garton J.

[1] From 2016 to 2019, the applicant, Riaz Shahid, age 55, allegedly operated a money-laundering scheme in the United States while living in Canada. On September 10, 2020, he was arrested pursuant to a provisional arrest warrant obtained by the Attorney General of Canada, on behalf of the United States, which seeks his extradition to face charges of money laundering and operating an unlicensed money transfer business in the Southern District of New York. He was also detained with respect to immigration violations.

[2] In 2003, Mr. Shahid was convicted in the United States of money laundering and sentenced to 33 months’ imprisonment. In 2008, he was deported to Pakistan, where he is a citizen. In 2016, Mr. Shahid left Pakistan and came to Canada as a permanent resident. When he applied for status here, he apparently failed to disclose his American conviction for money laundering and subsequent deportation to Pakistan. He also provided a false date of birth.

[3] On October 20, 2020, Goldstein J. dismissed Mr. Shahid’s application for judicial interim release pending his extradition hearing: see R. v. Shahid, 2020 ONSC 6308. He found that Mr. Shahid had failed to meet his onus on both the primary and secondary grounds. Mr. Shahid has brought this application to review the order made by Goldstein J. on the basis that there has been a material change in circumstances. The proposed plan of release would require Mr. Shahid to live with his brother and sister-in-law, who are prepared to sign as sureties in the amount of $2,000,000. They are also prepared to deposit up to $100,000 cash bail. A condition of strict house arrest and the wearing of a GPS ankle bracelet monitored by Recovery Science Corporation (“RSC”) are also proposed.

Jurisdiction

[4] Section 18(2) of the Extradition Act, S.C. 1999, c.18 provides:

A decision respecting judicial interim release may be reviewed by a judge of the court of appeal and that judge may:

(a) confirm the decision;

(b) vary the decision; or

(c) substitute any other decision that, in the judge’s opinion, should have been made.

[5] According to the plain wording of this section, any review of a bail decision of a judge of this Court may be considered by a single judge of the Court of Appeal for Ontario. However, as observed by Trotter J., as he then was, in United States of America v. Ugoh, 2011 ONSC 1810, at para. 7, a practice has developed in this province whereby the parties simply return to this Court for a review application. It has been held that there is concurrent jurisdiction to review an extradition bail decision in this Court – see Germany (Federal Republic) v. Schreiber (2000), 147 C.C.C. (3d) 404 (Ont. S.C.J.) – leaving the parties with a choice as to their preferred forum. Although Justice Trotter expressed uncertainty regarding this general proposition, he agreed, at the urging of both parties, to hear the application before him as there was no attack on the conclusion reached by the Justice who heard the initial bail hearing. The application was focused solely on the new release plan. That is the situation in the present case. As there is no allegation that Goldstein J. erred based on the record before him, and the focus is on the new release plan, defence counsel, Mr. Christie, and counsel for the Attorney General of Canada, Ms. Graham, agreed that I had jurisdiction to hear the application on its merits.

[6] There is no dispute that Mr. Shahid bears the onus on this application as a result of the nature of the charges.

The Allegations

[7] The allegations, which were summarized by Goldstein J. at paras. 5-9 in his reasons for judgment, are set out below.

[8] In 2019, a confidential informant (the “CI”), told the Federal Bureau of Investigation (the “FBI”) about a “hawala” system in New York. Hawala is an informal money transfer system. A network of brokers or “hawaladars” use an honour system to credit funds to each other on behalf of customers, for a small fee. Hawala is not necessarily nefarious and is often used for innocent remittance purposes. It can, however, also be used for laundering the proceeds of crime, tax evasion and terrorist financing.

[9] The CI had contact with a cooperating witness, TC. TC worked for a hawaladar named “Riaz,” who lived in Canada. TC collected large sums of cash, usually over $10,000, and deposited the sums in various accounts at Riaz’s instruction. He collected a fee of 20% for himself and Riaz.

[10] In 2019, the FBI, using the CI, engaged in several undercover operations with TC and Riaz. The CI provided funds to TC, who laundered the money minus a fee. FBI surveillance teams observed TC deposit the funds. Consent wiretaps intercepted conversations between the CI and TC. Banking information verified where the funds were deposited. Riaz controlled these accounts.

[11] In April or May of 2019, TC gave Riaz’s number to the CI. The CI and Riaz then conversed and exchanged messages on WhatsApp. In June and July, the CI arranged for Riaz to launder funds without TC’s involvement. The CI asked Riaz to send a different person to pick up the cash. Riaz complied with that request. The CI provided the new party with U.S. government funds, and then reported to Riaz via WhatsApp that he had given the funds to Riaz’s launderer.

[12] Riaz and the CI also discussed whether the CI could obtain a fraudulent U.S. visa for Riaz. Riaz disclosed to the CI that he had previously been arrested in the United States. He gave the CI his social security number and date of birth. The social security number and date of birth belonged to Riaz Shahid who, in 2003, had been arrested and was later convicted of money laundering in the United States.

[13] American and Canadian law enforcement authorities maintain that “Riaz” is the applicant, Riaz Shahid, based on photographs, fingerprints, Mr. Shahid’s U.S. social security number, and a telephone number associated with Mr. Shahid’s Facebook page. American and Canadian law enforcement authorities coordinated the arrest of Mr. Shahid’s alleged co-conspirators in the United States with the arrest of Mr. Shahid in Canada.

Background of Riaz Shahid

[14] Mr. Shahid is a citizen of Pakistan, as are his wife and three children. The children, who are 13, 19, and 21 years of age, also have American citizenship as they were born in New York. Prior to his arrest on September 10, 2020, Mr. Shahid resided with his family in Mississauga, where they rented a house. Mr. Shahid has siblings and other relatives in both Pakistan and the United States.

[15] In 1998, while Mr. Shahid was living illegally in the United States, he applied for permanent residence in Canada. He provided his real date of birth, which is November 13, 1965. His application was refused by the Canadian authorities.

[16] As stated earlier, Mr. Shahid was convicted of money laundering in the United States in 2003 and was subsequently deported to Pakistan in 2008 after serving his sentence. His wife and children moved to Pakistan when he was deported.

[17] Mr. Shahid and his family resided in Pakistan until 2016, when he applied again for permanent residence status in Canada, but this time under his wife’s application. In the application, Mr. Shahid gave a false date of birth of March 20, 1965 and failed to disclose his criminal conviction for money laundering in the United States. Mr. Shahid’s wife indicated on the application that she would be working as a hairdresser in British Columbia. At the initial bail hearing before Goldstein J., Mr. Shahid acknowledged in cross-examination that his wife has never worked outside the home and they have never resided in British Columbia. When Mr. Shahid arrived in Canada in 2016, he either purchased or started an auto repair business, Dinga Auto Home & Body Repair Inc.

[18] In his reasons for dismissing Mr. Shahid’s bail application, Goldstein J., at para. 23, expressed some doubt about the reliability of Mr. Shahid’s evidence regarding the value of that business. Mr. Shahid had sworn in an affidavit that he was prepared to pledge up to $1 million to secure his release but agreed in cross-examination that he did not have $1 million in assets. Goldstein J. noted that although Mr. Shahid testified that his business was worth about $600,000, his answers in cross-examination were puzzling. He had sworn in his affidavit that he started the business from scratch in 2016, but in cross-examination indicated that he had sold property in Pakistan to order to buy a business. He also testified before Goldstein J. that the business rented space and that most of the assets were tied up in equipment and goodwill. It was not clear to Goldstein J. how much, if any, of Mr. Shahid’s business could be pledged as security:

There is no evidence about whether the equipment is leased or whether there are business loans; and it is also not clear to me how, exactly, the Attorney General could enforce a no-deposit pledge on the goodwill of a business. Moreover, Mr. Shahid has not filed any documents that might give a clue as to the value of the business. He has not filed a tax return, or a bank statement, or even a simple balance sheet. I do not accept his estimate.

[19] At the application before me, Mr. Shahid testified that following the first bail hearing, he sold the business for $55,000, and that most of those funds were used to pay taxes and rent to the landlord.

[20] Mr. Shahid testified before Goldstein J. that the business lost a lot of money during its first three years of operation. However, in 2019, it earned $20,000, which Mr. Shahid used to support his family.

[21] Mr. Shahid testified at this hearing that he pays $2,450 per month in rent for the house where his family resides. He has also contributed five or six thousand dollars toward tuition fees for two of his children, who are attending university. Despite his limited income, Mr. Shahid also made a deposit of $60,000 on the purchase of a house being constructed in a new subdivision in Georgetown. The purchase price was $1,127,000. Counsel for Mr. Shahid explained that the house is currently in the name of the builder. Upon completion and payment of the balance, ownership would be transferred to Mr. Shahid and his wife. Mr. Shahid testified that although the house is almost finished, he has not made any further payments. The builder has been asking him for more money. Mr. Shahid doubted that the deal would close. He testified that the house will most likely be sold, although it has not as yet been listed for sale.

[22] Mr. Shahid suffers from a number of medical conditions. In his affidavit, he states:

I have been diagnosed with chronic Coronary Artery Disease, Class II Angina, hypertension and diabetes mellitus. I have had coronary artery disease since my early 30’s and had a heart attack at 33 years old. I am able to manage my medical conditions with frequent and regular visits to my family physician and cardiologist as well as taking twelve types of prescription medications.

The Proposed Plan of Release

[23] At the initial bail hearing, the proposed plan of release included a condition of house arrest and electronic monitoring through RSC. It was proposed that Mr. Shahid would live either with his wife and children in their rented house or with his brother and sister-in-law, Imtiaz and Zofeen Ahmad, and their four children. Mr. Shahid’s wife was not proposed as a surety, no doubt because of her complicity in misleading the Canadian immigration authorities by including a false date of birth for Mr. Shahid in her application for permanent residence here.

[24] Although there was a house arrest condition proposed at the initial bail hearing, an exception to that condition would have allowed Mr. Shahid to go to and from his auto repair shop and operate the business on a daily basis without supervision by any of the four individuals proposed as sureties at that time. Goldstein J. noted that this arrangement would have given Mr. Shahid unsupervised access to computers, phones, and bank accounts, thereby making it easy for him to commit the offence of money laundering. It would also be easy for him to use a phone or computer belonging to someone else in his home. The lack of a surety to monitor him at work or even at home, if he continued to reside with his wife, would be an invitation to conduct further criminal activity. Goldstein J. went on to note that Mr. Shahid was prepared to enter Canada using a false document and to obtain a false visa to enter the United States. These were serious violations and suggested that Mr. Shahid would not take a court order seriously without a realistic enforcement mechanism.

[25] The current proposed plan of release is that Mr. Shahid live with his brother and sister-in-law, Imtiaz and Zofeen Ahmad, at 1571 Yew Street in Mississauga. In addition to GPS monitoring, there would be a condition that he remain in the home at all times unless he is in the presence of one of his sureties. He would be permitted to attend medical appointments in the presence of one of the sureties and, in the case of a medical emergency, to attend directly at a hospital.

[26] A further term of the proposed bail is that Mr. Shahid refrain from accessing the internet or using a phone except in the direct and continuous supervision of one of his sureties.

Testimony of Imtiaz and Zofeen Ahmad

[27] Imtiaz and Zofeen Ahmad rent the house on Yew Street, where they currently live with their four children, ages 5, 10, 16 and 20. They are in the process of building a new home in Mississauga, which has a market value of approximately $1.85 million, and $1,100,000 of homeowner’s equity. Mr. Ahmad and his sister, Shahneela Umbreen, co-own the property. In an affidavit filed with the court, Ms. Umbreen indicates that her name is on title for mortgage purposes only and that she has no financial interest in the equity. Ms. Umbreen has no objection to Mr. Ahmad using the equity in relation to his signing as a surety for Mr. Shahid. Ms. Umbreen has received independent legal advice in this regard.

[28] Zofeen Ahmad recently sold a house in Toronto for $1,772,000. The net proceeds from that sale were $900,000, which is now in the bank.

[29] Based on their assets, Imtiaz and Zofeen Ahmad are in a position to sign as sureties for Mr. Shahid in the amount of $2,000,000, and also to make a cash deposit of $100,000.

[30] Imtiaz Ahmad, age 51, has been a Canadian citizen since 2000 and runs his own law practice. He was called to the bar in 2016, and practices in the areas of real estate, immigration, and family law. Prior to becoming a lawyer, Mr. Ahmad was a licenced real estate broker in Ontario.

[31] Mr. Ahmad testified during the first bail hearing that his hours of work are from 11:00 a.m. to 6:30 p.m., Monday to Friday, and that he also sometimes works on Saturdays. His office is on Danforth Avenue in Toronto. He testified at the present hearing that if Mr. Shahid were released on bail, he could maintain direct supervision over him on those occasions when Mr. Shahid accompanied him to his law office by having him remain in his presence at all times.

[32] Zofeen Ahmad, age 32, does not work outside the home. In addition to caring for the children, she runs the house, does the cooking and cleaning, and sometimes assists her husband with paperwork. The two older children, who are her step-children, are at home and attending school “on-line.” At the time of this bail hearing, the two younger children were attending school during the day but that may well not be the case now, given the extended closure of schools as a result of the current COVID-19 pandemic.

[33] Ms. Ahmad testified that there are five bedrooms in the house – three upstairs and two in the basement – and that if Mr. Shahid were released on bail, he would have his own bedroom.

[34] Imtiaz and Zofeen Ahmad testified that they would make sure that Mr. Shahid did not have access to any computers or phones without their direct and continuous supervision. They have familiarized themselves with the GPS monitoring system and the protocol to be followed should Mr. Shahid leave the house in the presence of one or both of them. They would be required to download a live video app and take a video of themselves with Mr. Shahid. RSC also conducts random calls to confirm the location of the surety and the accused.

Whether Mr. Shahid has met his onus on the primary ground

[35] In considering an application for judicial interim release in an extradition proceeding, the court must look at the risk of non-appearance even more cautiously than might be the case in domestic proceedings: R. v. Mordi, 2010 ONSC 6666. The reason for this is based on the fact that our extradition process is founded on the principles of reciprocity, comity and respect for differences in other jurisdictions: M.(M.) v. United States of America, 2015 SCC 62, at para. 15. In the present case, counsel for the Attorney General of Canada has filed a letter from the prosecuting authorities in the United States setting out various reasons as to why Mr. Shahid represents a considerable flight risk. I may take this letter into account, as did Goldstein J. at the initial bail hearing.

[36] Mr. Shahid poses a significant flight risk as there are virtually no incentives for him to stay, other than the risk to his sureties. He is facing a potential 25-year sentence if found guilty of money laundering in the United States. Mr. Christie submits that it is unlikely that Mr. Shahid would receive the maximum sentence. However, even if that is correct, Mr. Shahid would likely receive a substantial sentence and one that is significantly longer than the almost three-year sentence imposed for his first money laundering conviction.

[37] In the event that Mr. Shahid is not extradited to the United States, he will almost certainly be deported from Canada. He has, in essence, no future here. He is currently on an immigration hold. He was clearly criminally inadmissible to Canada in 2016 and knew it because he provided a false date of birth to obtain admission. In addition, as observed by Goldstein J., it is an obvious inference that Mr. Shahid entered Canada using a passport with a false date of birth and, troublingly, there is no indication as to the current location of that document.

[38] Mr. Shahid no longer owns a business here. He has every incentive to flee to another location within Canada or to flee Canada altogether. He has multiple family connections in Pakistan, where he has citizenship and where he lived from 2008 to 2016 after being deported from the United States.

[39] While under investigation for money laundering, Mr. Shahid attempted to obtain a fraudulent visa that would allow him to unlawfully enter the United States. Given Mr. Shahid’s willingness and ability to obtain and travel on false documents, I, like Goldstein J., have little confidence that Mr. Shahid would not attempt to obtain another false document in order to flee the country.

[40] Mr. Christie argues that there is a potential defence of entrapment to the charges which, he submits, reduces the risk that Mr. Shahid would flee. However, any such reduction in risk would, in my view, be minimal when weighed against the factors outlined above and which indicate the very significant flight risk that Mr. Shahid poses.

[41] One of the proposed conditions of release is that Mr. Shahid not have any unsupervised access to computers or phones, thereby limiting his ability to make travel arrangements, obtain false travel documents, or carry on a money laundering business. Although the proposed sureties are responsible individuals who, no doubt, would do their best to monitor Mr. Shahid and enforce this condition, the circumstances are such that there would inevitably be opportunities for Mr. Shahid to access a computer or phone surreptitiously. I note, for example, that although Zofeen Ahmad is usually at home, she has multiple responsibilities in terms of running the household, including cleaning, cooking meals, and attending to the needs of the children, two of whom are only 5 and 10 years old. It is unrealistic to expect that she could provide the continuous and very close supervision of Mr. Shahid that is required in order to ensure that he has no access to a phone or computer and thus no opportunity to make travel arrangements or obtain fraudulent travel documents. No one would be monitoring Mr. Shahid directly during the night when family members would be sleeping and when Mr. Shahid could potentially use a phone or other electronic device within the privacy of his own bedroom.

GPS Monitoring

[42] As stated in United States of America v. Pannell, [2004] O.J. No. 5715 (Sup. Ct.), electronic monitoring cannot prevent someone from absconding; it merely helps notify the authorities when the person has left.

[43] In the present case, GPS monitoring cannot prevent Mr. Shahid from making arrangements to obtain false documents and using them to board an airplane. If Mr. Shahid were to cut off the bracelet and leave the house at night while its occupants were asleep, an alarm would go off and RSC would inform the police of the violation. However, according to RSC and as noted by Goldstein J., an immediate police response is hardly guaranteed, and may be ineffective in any event if Mr. Shahid has already disappeared.

[44] In all of the circumstances, I find that Mr. Shahid has failed to meet his onus on the primary ground.

Whether Mr. Shahid has met his onus on the secondary ground

[45] Detention on the secondary ground is justified where it is necessary for the protection or safety of the public “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.” The words “protection” and “safety” as used in s. 515(10)(b) of the Criminal Code are not limited to the physical protection and safety of the public. If it were otherwise, Parliament would have specifically excluded non-violent offences. In any event, as noted by Goldstein J., money laundering is ancillary to other crimes such as drug trafficking and human trafficking and thus engages issues of protection and safety.

[46] Mr. Shahid has a prior conviction for money laundering, which resulted in his serving a fairly lengthy sentence – 33 months – which was followed by his deportation to Pakistan. He is now charged with committing the same offence.

[47] Counsel for the Attorney General of Canada raised concerns with respect to the apparent gap between Mr. Shahid’s purported income and the amount of money that he admits to having spent over the last year or so. According to Mr. Shahid, his auto repair business lost a lot of money during its first three years of operation. However, in 2019 it earned $20,000, which Mr. Shahid used to support his family. Mr. Shahid is the family’s sole source of income. He testified that he pays $2,450 per month in rent, or $29,400 annually. He also contributed five or six thousand dollars toward his children’s university tuition. In addition, he made a $60,000 deposit toward the purchase of a house that cost over a million dollars. As Ms. Graham put it, the numbers “just don’t add up” and strongly suggest that Mr. Shahid has been relying on some unknown source of cash on an ongoing basis.

[48] GPS monitoring would be of no use in terms of detecting whether Mr. Shahid was carrying on a money laundering business while on bail. The defence relies instead on the two proposed sureties to prevent Mr. Shahid from having unsupervised access to computers or phones, thereby limiting his ability to conduct or participate in such a business. However, as stated earlier, the circumstances are such that there would inevitably be opportunities within the home for Mr. Shahid to access a computer or phone surreptitiously. It is simply not realistic to expect that Ms. Ahmed, for example, could provide the continuous supervision of Mr. Shahid that is necessary in order to ensure that he has no access to phones or computers and thus no opportunity to commit the offence of money laundering.

[49] Having considered all of the circumstances and the submissions of counsel, I am not satisfied that Mr. Shahid has met his onus on the secondary ground.

[50] I note that the Authority to Proceed has been signed by the Minister of Justice and that a date for the extradition hearing can now be set. Ms. Graham advised that dates in late February 2021 are available, subject to defence counsel’s availability and the time that the defence may require to prepare for the hearing.

Disposition

[51] For the reasons given, the application is dismissed.

Garton J.

Released: January 12, 2021

COURT FILE NO.: CR-20-90000107-00MO DATE: 20210112

ONTARIO SUPERIOR COURT OF JUSTICE

THE ATTORNEY GENERAL OF CANADA ON BEHALF OF THE UNITED STATES OF AMERICA

– and –

RIAZ SHAHID

REASONS FOR JUDGMENT on bail review

Garton J.

Released: January 12, 2021