SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Attorney General of Ontario
AND:
$195,110 in Canadian Currency (in rem)
BEFORE: Justice Chalmers
COUNSEL: S. Keenan, for the Applicant
D. Genis, for the Respondent
HEARD: In-writing
ENDORSEMENT
OVERVIEW
1The Attorney General of Ontario brings this motion, for an order pursuant to s. 18.1 of the Civil Remedies Act, 2001, S.O. 2001, c. 28, (the Act) approving the settlement of this Application.
2In March 2018, the Toronto Police Services (TPS) conducted an investigation into suspected drug trafficking by Spiros Tsakopoulos. On March 15, 2018, Justice of the Peace Glover issued search warrants for his motor vehicle and his residence located at 405 Connaught Avenue, Toronto. On March 15, 2018, Spiros Tsakopoulos was observed driving his vehicle a few blocks from his home. During what appeared to be a drug transaction, the TPS conducted a take down. They detained Spiros Tsakopoulos and the potential customer. Inside the vehicle the officers found $260, two digital scale and a black bag that contained heroin drug packaging.
3Later, on March 15, 2018, the police executed the search warrant at Spiros Tsakopoulos’ residence. He lived with his mother, Vasiliki Tsakopoulos and brother, Gregory Tsakopoulos. The police seized the following items, 3 digital scales, a clear plastic bag containing white powder, bottles with labels indicating MSM powder and further bottles with unmarked pills. The police also seized a safe. Inside the safe the police found various items of jewelry as well as Canadian Currency in the amount of $195,110.
4Spiros Tsakopoulos was charged with possession of a schedule I substance, and two counts of possession of proceeds of property obtained by crime.
5On April 4, 2018, the TPS made a Report to Justice with respect to the seized currency and obtained a Detention Order which authorized the police to detain the currency until the completion of the proceedings. On July 31, 2018, the Crown stayed all charges. On August 7, 2018, a s. 490 Return Order was made with respect to the seized property, without prejudice to the commencement of proceedings under the Civil Remedies Act.
6This Application for civil forfeiture was commenced on August 21, 2018. On August 31, 2018, Justice Dow issued an order preserving the subject property until the final disposition of this Application.
7David Genis is counsel for the parties responding to the Application; Spiros Tsakopoulos and Vasilili Tsakopoulos. The Attorney General and Mr. Genis on behalf of his clients, have executed a consent to settlement on the following terms:
a. $39,022 is to be paid to counsel, David Genis in trust for the Respondent, Vasiliki Tsakopoulos;
b. The remining Canadian Currency is to be forfeited to the Crown together with any and all accumulated interest;
c. The agreement is subject to Court approval of the settlement pursuant to s. 18.1 of the Civil Remedies Act; and,
d. Each party shall bear their own costs of the Application for forfeiture.
8For the reasons that follow I approve the settlement.
ANALYSIS
Reasonable Grounds to Believe the Property is the Proceeds and an Instrument of Unlawful Activity
9Before the settlement can be approved, the Attorney General must first prove, on a balance of probabilities, that there is the required link between the property and unlawful activity: R. v. Ontario (Attorney General) v. Norwood Estate, 2021 ONCA 493, at para. 60.
10“Unlawful activity” is given a broad definition and encompasses any act or omission that is in an offence under any Act of Canada, Ontario or another province or territory: Act, s. 2 and 7. “Proceeds of unlawful activity”, is property acquired directly or indirectly, in whole or in part, as a result of unlawful activity: Chatterjee v. Ontario (Attorney General), 2009 SCC 19, at paras. 21, 46 and 47.
11The Attorney General takes the position that the money seized from Spiros Tsakopoulos’ safe is proceeds from unlawful activity, namely drug trafficking. The Attorney General relies on the affidavit evidence of D.C. Saeed sworn May 4, 2022. She deposed to the following:
(a) The primary reason individuals engage in drug trafficking is to accumulate wealth and amass profits.
(b) Unlawful activities such as drug trafficking are almost invariably cash based, usually generating large numbers of relatively small bills such as $20 notes.
(c) The $20 bill is the most common denomination for street-level drug transactions. A high volume of $20 bills amongst currency seized by police is one indicator of the money’s origins in drug trafficking.
(d) By contrast, bulk currency issued by banks is typically issued in larger denominations to minimize the time bank employees spend counting it.
(e) Those involved in drug trafficking and other cash-based crimes often separate currency into bundles of roughly equivalent dollar values, such as $1,000, $2,000, $5,000, or $10,000 amounts, typically in denominations of $20-dollars, held together with elastic bands, to facilitate quick counting and exchange.
(f) This differs from currency issued by a bank which is bound with paper bands in a single denomination, with a set number of bills and stamped to identify the bank it came from.
(g) Banks and other financial institutions are required to generate a record of currency transactions and to report to FINTRAC large currency transactions under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
(h) In an effort to avoid transaction records and ‘suspicious’ transaction reporting requirements, those involved in drug trafficking and other profit generating crime often avoid depositing their proceeds into banking or investment accounts instead holding large amounts of currency.
(i) This allows them to circulate and use illicit funds without raising suspicion as well as to avoid taxation.
(j) By contrast, businesses and individuals have an incentive to place their legitimate income and savings into banking or investment accounts to earn interest and grow their investment, and to avoid security issues that arise in the handling of large sums of cash.
(k) Consequently, the presence of large amounts of currency at an individual’s home or on their person is one indicator which, when combined with others, is indicative of drug trafficking or other profit generating crime.
12D.C. Saeed also deposed that based on her training and experience as a police officer, the currency seized from Spiros Tsakopoulos’ safe is the proceeds of unlawful activity, namely drug trafficking. She set out the following factors that support her belief that the money is the proceeds of unlawful activity:
(a) Spiros Tsakopoulos was observed making a hand-to-hand drug transaction on March 7, 2018;
(b) TPS seized heroin drug packaging from a black bag in the Tsakopoulos vehicle;
(c) The seized currency bore the attributes of money used in drug trafficking in that it was in bundles of various denominations bound by an elastic band. There were a high number of $20 bills at total of 2236;
(d) The seized money did not resemble money issued by a financial institution in that it was not bound in groups of a single denomination with a set number of bills and stamped to identify the bank it came from;
(e) It is reasonable to assume that if the money came from a financial institution it would have been deposited in the financial institution where it would be secure and earn interest; and
(f) Spiros Tsakopoulos has a lengthy criminal record including previous convictions for drug trafficking.
13Spiros Tsakopoulos initially took the position that the seized money was the proceeds of a lawful life insurance policy in respect of his father’s death. He also referenced a sale of his father’s plumbing business. He states that the money does not belong to him. The Applicant argues that this explanation is not credible. The money was in a safe belonging to Spiros Tsakopoulos and neither his mother nor brother had access. The Applicant also argues that it does not make sense that insurance proceeds received by Vasiliki and/or Gregory Tsakopoulos would be held in cash in a safe to which they did not have access. Also, the money recovered resembled money from drug trafficking in that it was bundled in small bills of various denominations, and not how the proceeds from an insurance policy would be received from a bank. The Applicant also notes that Spiros Tsakopoulos, and Vasiliki Tsakopoulos have executed consent to the terms of the settlement through their mutual counsel. Gregory Tsakopoulos states that he has no interest in the money.
14I am satisfied that the Applicant has established on a balance of probabilities that the funds that are the subject matter of this Application, are the proceeds or an instrument of unlawful activity, including drug trafficking, possession of the proceeds of crime or money laundering.
Settlement is the Type of Settlement the Court Can Approve
15Having found that the proceeds are from unlawful activity, I will now go on to consider whether the settlement is to be approved.
16The purpose of the Civil Remedies Act is to make unlawful activity unprofitable, to capture resources so tainted to make them unavailable to fund future unlawful activity and to help compensate victims and the Province for unlawful activity: Chatterjee v. Ontario (Attorney General), 2009 SCC 19, at para. 17.
17Section 18.1 of the Act gives broad authority to the Court to approve settlements that provide for full or partial forfeiture of the property. Once the requisite link is made between the property and unlawful activity, the court may approve settlement based on “compromise” between the parties: Ontario (Attorney General) v. Norwood Estate, at para. 80.
18The Applicant argues that the settlement in this case is of benefit to all the parties and is the type of settlement the court can approve under s. 18.1 of the Act. I agree. The settlement represents a reasonable compromise to avoid an all or nothing outcome on a hearing. The settlement allows the parties to avoid the uncertainty and expense of litigation and is consistent with the overriding public interest in encouraging resolution of civil litigation: Attorney General of Ontario v. $80 Canadian, et. al. 2021 ONSC 988, at para. 29.
Settlement Resolves all In Rem Interests in the Property
19The settlement must resolve all in rem interests in the property: Ontario (Attorney General) v. Norwood Estate, at paras. 74-78 and 94.
20Here, the only parties who may have an interest in the property are the responding parties Vasiliki Tsakopoulos and Spiros Tsakopoulos. The other resident, Gregory Tsakopoulos has sworn an affidavit in which he deposes that he has no interest in the property.
21I am satisfied that the proposed settlement resolves all the in rem interests in the property.
The “Clearly Not in the Interests of Justice” Exception
22The “interests of justice” exception to forfeiture applies where the forfeiture would be a “draconian and unjust result”: Ontario (Attorney General) v. 8477 Darlington Crescent, 2011 ONCA 363, at para. 84. Here, the parties consent to forfeiture. No one is taking the position that the forfeiture of the property is not in the interests of justice.
23As noted above, I find there is a close connection between the property and the unlawful activity. Spiros Tsakopoulos was involved in and benefited from the unlawful activity, and it is not reasonable that any money be returned to him. The money that is not forfeited is being returned to his mother, Vasiliki Tsakopoulos on consent. There is no one else with an interest in the property.
24I am satisfied that the settlement serves the purpose of the Act by redirecting property derived from unlawful activity towards victims of crime and to the Province. Based on the signed consent, the settlement is a good faith resolution of the Application. I find that the “clearly not in the interest of justice” exception does not apply in the circumstances of this case.
DISPOSITION
25I conclude that it is in the interests of justice to approve the settlement of the Application, on the following terms:
(a) $39,022 from the preserved funds be paid to counsel, David Genis, in trust, for the Respondent, Vasiliki Tsakopoulos;
(b) The remaining currency, along with all accumulated interest, be forfeited to the Crown in Right of Ontario, under s. 3(1) and 8(1) of the Civil Remedies Act; and
(c) Each party shall bear their own costs of the Application for forfeiture.
26Order to go in accordance with the draft order filed and signed by me.
Date: September 2, 2022