Court File and Parties
Court File No.: CR-12-90000174-00MO Date: 2023-01-03 Ontario Superior Court of Justice
Between: His Majesty The King And: Loukia Georgiou
Counsel: Roy Lee, for the Attorney General of Canada Maurice J. Neirinck, for Lukia Georgiou, Applicant
Heard: December 14, 2022 by Zoom
Before: R.F. Goldstein J.
Endorsement
1George Georgiou is a fraudster. In February 2012 he was convicted in U.S. District Court of conspiracy, securities fraud, and wire fraud. The District Court sentenced him to 300 months in prison (25 years), ordered restitution of over US$55 million, and ordered forfeiture of US$26 million. Like many fraudsters, he has gone to great lengths to portray himself as the real victim. He has tried many times to appeal the verdict and set it aside. According to the U.S. courts in doing so he attempted to suborn perjury by others at least twice and likely committed perjury himself. Like many fraudsters, he continues to try to manipulate the courts. This application is another attempt at manipulation, and a transparent one at that.
2Around the time he was committing the frauds that landed him in jail, George Georgiou (I will refer to him as “George”) was also involved in a commercial transaction involving a company called AP Plasman. On July 5, 2012 a lawyer named George Friedman wired CAD$9,468,374.66 to another lawyer, T.R. Anthony Malcolm, in trust (I will refer to this amount as “the disputed funds”). The remittance information noted that the funds were “compensation” to “GG”. Friedman was acting for the Bock family, who purchased the shares of AP Plasman. Malcolm was George’s lawyer. Malcolm then wired the disputed funds to an RBC account in the name of Brent David Emanuel. George allegedly used Brent David Emanuel as a nominee during the securities fraud.
3Instead of allowing Brent David Emanuel to deal with the disputed funds, RBC filed a suspicious transaction report. American prosecutors applied to the U.S. District Court to restrain the funds. On September 21, 2012 the U.S. District Court did so. The U.S. government then asked the Canadian government, through the Mutual Legal Assistance Treaty (“MLAT”) process, to restrain the disputed funds on its behalf. On September 24, 2012 Forestell J. of this Court did so. In April 2017 George applied to set aside the restraint order. George argued that the disputed funds were not proceeds of crime. Molloy J. dismissed the application. She stated that the application “has no chance of success in fact or in law.” George appealed and lost: Attorney General of Canada v. Georgiou, 2018 ONCA 320. The U.S. District Court ordered forfeiture in 2018. The U.S. government has asked the Canadian authorities to enforce the order. Davies J. ordered that individuals who may have an be given the opportunity to apply to obtain the disputed funds.
4The Applicant Loukia Georgiou is George’s mother (I will refer to her as “Loukia”). She says that the disputed funds were meant for her. She applies for a declaration and order that she is entitled to the disputed funds.
5On December 15, 2022 I dismissed Loukia’s application. I stated at the time:
This is an application by Loukia Georgiou for an order that she is entitled to CA$9.3 million that has been ordered forfeited by a U.S. District Court. The funds are currently subject to a Mutual Legal Assistance In Criminal Matters Act request from the United States. The funds were wired to a lawyer for the benefit for George Georgiou, her son, in 2012. At the time he was in jail, having been convicted of securities fraud.
Loukia says in her affidavit that her son George was not actually entitled to the funds. She says that they are in fact trust funds and that she is the beneficial owner. George has sworn an affidavit to the same effect. Loukia’s claim to the funds (and George’s denial) rests on this court accepting some highly dubious propositions. One of those propositions is that that George was forced to sign a compensation agreement to receive the funds. He says he signed under duress and that he always intended the money to be held in trust for the benefit of his mother. It seems odd that a person would be forced to accept millions of dollars under duress but that is his claim. I find that George’s claim of duress can be rejected not only on its face, but also when stacked up against the totality of the evidence. His claim of duress must also be viewed in light of his history as a fraudster and alleged perjurer.
I note that the application also rests on this court accepting the validity of certain documents that raise significant red flags. I agree with the Attorney General that these documents are highly suspicious. I also agree that there are badges of fraud associated with the payment that suggest that it may have been made in anticipation of possible forfeiture in the United States.
The totality of the evidence suggests that Loukia is simply a straw woman for her son. I find that she has not met her onus of showing that she has a valid interest in the funds. I also find that there is a strong inference that can be drawn that she has asserted an interest for the specific purpose of avoiding forfeiture.
For more fulsome reasons that I will release in due course, the application is dismissed.
6What follows are my reasons for dismissing the application.
BACKGROUND
The RBC Reports A Suspicious Transaction; U.S. Prosecutors Seek Forfeiture
7On November 19, 2010 the U.S. District Court ordered forfeiture of US$26 million against George. On June 1, 2012 George signed a power of attorney appointing Malcolm. On June 28, 2012 Malcolm signed the compensation agreement and a release on behalf of George while George was in jail. As noted, on July 5, 2012 George Friedman, a lawyer acting for the Bocks, wired the disputed funds to Malcolm. Malcolm then wired the disputed funds to an RBC account in the name of Brent David Emanuel. Brent David Emanuel’s attempt to deal with the funds generated the Suspicious Transaction Report.
8On August 24, 2012, on an application by U.S. prosecutors, the District Court granted a Preliminary Order of Forfeiture for Substitute Asset. Under American law, if the proceeds of crime cannot be directly traced, then other assets belonging to an offender become subject to forfeiture. These assets can be used to satisfy the forfeiture order. The U.S. government immediately filed MLAT request and the Superior court froze the disputed funds.
9Brent David Emmanuel filed a petition in the U.S. District Court asserting an interest in the disputed funds. He later abandoned the petition. He later told the U.S. Attorney that he had no interest in the funds. He has never suggested that he held the funds in trust for Loukia.
10Interestingly, Loukia did not claim the disputed funds in U.S. District Court, although she had notice.
Loukia Georgiou’s Background
11According to her affidavit, in the 1990’s Loukia earned an enormous $25 million profit on a modest $150,000 she placed with her son. The transaction involved a company called INEX. She subsequently lost the investment in its entirety through the self-dealing and corruption of an unscrupulous wealth advisor. She says that George “vowed to make up the loss for me.” That led her to become involved in other ventures with her son. One of them was an initial public offering for a company called Legacy Pharma. According to Loukia, for unexplained reasons the Ontario Securities Commission declined to approve the IPO on the day it was set to close. Loukia claims that she stood to make a profit of $100 million on an initial investment of $150,000. She says that she lost the $150,000 and that, once again, George promised to make it up to her.
12Loukia says that the relevance of her investment in the Inex and Legacy Pharma ventures is that they were similar to her investment in the Plasman venture, which generated the disputed funds. She says all these transactions were set up by George for her benefit.
George Georgiou Commits Large Scale Fraud
13There is strong evidence that George is a professional white collar criminal. As noted in his U.S. District Court pre-trial detention ruling, Mr. Georgiou had a Canadian licence to deal in securities. His licence was revoked because of improper business practices. According to other U.S. District Court rulings, George has suborned perjury by others and either committed or come perilously close to committing perjury himself.
14Between 2004 and 2008 George and his co-conspirators engaged in a large securities fraud. The U.S. Court of Appeals for the Third Circuit described the scheme:
From 2004 through 2008, Georgiou and his co-conspirators engaged in a stock fraud scheme resulting in more than $55 million in actual losses. The scheme centered on manipulating the markets of four stocks… (collectively, “Target Stocks”). At all relevant times, the Target Stocks were quoted on the OTC Bulletin Board (“OTCBB”)1 or the Pink OTC Markets Inc. (“Pink Sheets”). In order to facilitate their scheme, Georgiou and his co-conspirators opened brokerage accounts in Canada, the Bahamas, and Turks and Caicos. Once opened, the co-conspirators used these accounts to engage in manipulative trading in the Target Stocks. Specifically, by trading stocks between the various accounts they controlled, the co-conspirators artificially inflated the stock prices and created the false impression that there was an active market in each Target Stock.
As a result of this manipulation, Georgiou and his co-conspirators were able to sell their shares at inflated prices. In addition, these artificially inflated shares would be used as collateral to fraudulently borrow funds on margin and obtain millions of dollars in loans from… brokerage firms based in the Bahamas. Eventually, these accounts experienced severe trading losses since the assets purportedly serving as collateral proved to be worthless.
In June 2006, unbeknownst to Georgiou, Kevin Waltzer, one of his co-conspirators, began cooperating in an FBI sting operation. Through Waltzer’s cooperation, the FBI monitored Georgiou’s activities, including many of his emails, phone calls and wire transfers.
Georgiou and his co-conspirators manipulated the prices of the Target Stocks by creating matched trades, wash sales, and misleading email blasts. They used various alias accounts, nominees, and offshore brokerage accounts to conceal both their ownership of the Target Stocks and their involvement in the fraudulent scheme.
15George was arrested on September 17, 2008.
The AP Plasman Deal
16Beginning in 2007, George was involved in negotiations regarding AP Plasman. He says that he was to purchase shares (which would be flipped for a quick profit) and discounted shareholder debt. He was to purchaser $40 million of shareholder indebtedness for $11 million. George states in his affidavit that he discussed the possible purchase with Loukia, his sister, and his sister’s husband, Robert Wilson. He says that he structured the transaction to benefit his family. Funds were to be paid out to Brent Emmanuel, who would hold the funds in trust for his mother. The shares of Plasman were to be transferred to APP Capital. George was the directing mind behind APP Capital. He says that the shares in APP Capital were to be held in trust for his family.
17According to Loukia’s affidavit, she was going to invest $100,000 in the venture but would make something like $49 million in profits. The vehicle for the purchase was to be a Turks & Caicos company called Greenstreet Ventures. Greenstreet in turn would hold all of the benefits in trust for an Antiguan company called C.C.S.E.T. International Inc. C.C.S.E.T. in turn would hold all the benefits in trust for Loukia and her son-in-law, Robert Wilson. Loukia says in her affidavit that George always intended to hold the shares of Plasman in APP Capital Inc. in trust for her and Robert.
18According to Loukia’s affidavit, all the shares of C.C.S.E.T. were owned by Brent David Emanuel. He was strictly a trustee. He had no personal interest in the Plasman deal. There is no trust agreement between C.C.S.E.T. (or Brent David Emanuel) and George or any entity controlled by George.
19In 2007, when the arrangements for this trust were supposedly being set up, Brent David Emanuel was turning 18 years old. According to American prosecutors, there was evidence that in 2007 and 2008 (presumably after he turned 18) Brent David Emanuel was a co-conspirator and nominee used by George in his stock manipulation scheme. George has denied that Brent David Emanuel was a nominee. That, of course, is a self-serving statement from a convicted fraudster.
20According to the affidavits of George and Loukia, George negotiated with a man named Thomas Bock for a loan of $11 million to purchase the Plasman shareholder indebtedness. Loukia, George, and Robert Watson have filed a statement of claim against Thomas Bock, other members of the Bock family, and some of their advisors (I will refer to them collectively as “the Bocks”). They set out their allegations in the statement of claim, which Loukia adopted in her affidavit. She claims that the Bocks were to hold the acquired shares of Plasman as collateral for repayment of the loan. Loukia and George also allege that after the Bocks were repaid that she and Robert Watson (her son-in-law) were to receive the next $9 million from the proceeds from sale or repayment of the shareholder indebtedness. The rest of the estimated $60 million in profits was to be shared between her, Robert, and the Bocks. There is no document backing up the loan to George of the $11 million or this split of profits. That is because these were supposedly oral agreements.
21According to George’s affidavit, there was a share purchase agreement that was set to close on September 30, 2008. His arrest on September 17, 2008 delayed the closing. He was released on bail on October 3, 2008. His friend Thomas Bock bailed him out. George says that he and Thomas Bock made an oral loan arrangement to purchase shareholder debt and an oral agreement for the purchase and subsequent sale of the AP Plasman shares. The oral agreement included terms and conditions designed to give Loukia and Robert Wilson his share of the profits. George arranged for Thomas Bock to become president of APP Capital so that the deal could be completed. He says that he backdated the transfer as demanded by George Friedman, the lawyer for the Bocks – and the same lawyer who sent the disputed funds.
22According to Loukia and George, the Plasman deal did not close as she and George had envisioned. The Bocks suddenly demanded that the entire deal be changed. Instead of paying out as originally envisioned, the Bocks lawyer, George Friedman, demanded that George sign a compensation agreement instead. The agreement was for his work towards completing the Plasman deal. That agreement provided that George would be paid $12,050,000 less deductions. The Bocks simply decided to cut Loukia and George out of the deal and avoid paying her by instead paying disputed funds to George. George signed a release. Loukia, Robert, and George sued the Bocks. It is not clear why it was so important to the Bocks why they should pay George and not Loukia. Loukia and George both say that George never saw the compensation agreement. He was, of course, in jail at the time. Instead, the deal was signed on his behalf by Anthony Malcolm, who had George’s power of attorney. According to George, he agreed to the signing of the compensation under duress.
23Loukia believes, based on what George told her, that she was entitled to the $9 million and then to as much as another $30 million. What Loukia does not explain (and neither does George) is how her $100,000 investment could be parlayed into a profit of almost $40 million.
24There are some documents suggesting that a commercial transaction was taking place in 2008 and 2009. There are also some documents indicating that George would hold funds or shares in trust for others, including Loukia and Robert Watson. It is not clear, however, how these documents could apply to a deal that ultimately closed three or four years later.
25Among the documents produced by George is an email dated June 27, 2012 from George to Tom Bock. The subject line is “you win”. In the email George suggests that he has been forced to do something. It is not clear from the email what that thing is. George says that it is the signing of the compensation agreement, but he does not mention the compensation agreement in the email. Nowhere in the email does he say that the funds are supposed to go to Loukia and Robert Wilson and that he is being forced to take compensation. I suspect that what George was really upset about was that he believed he was cut out of the Plasman deal except for his finder’s fee, but it is not necessary to draw that finding of fact for the purposes of this judgment.
The Bocks Tell A Different Story
26In their statement of defence the Bocks state:
The Plaintiffs claims are based on an alleged oral agreement called the Bock Loan that was never discussed or agreed to. It is a fiction. It is created for the purpose of
a. Attempting to avoid a Restitution Order…
b. Attempting to avoid the Forfeiture Judgment…
Georgiou’s objective was to keep the money instead of paying it to the benefit of his investors, the U.S.A., and Georgiou’s other creditors (including his former wife to whom he has failed to pay child support). The Compensation Agreement and related Release were the agreements entered into with Georgiou and corporations involving these Defendants, while Georgiou was in prison.
27According to the Bocks’ statement of defence, Plasman was a company with a great deal of debt. In 2009 George was attempting to purchase the shares and debt of Plasman. After George’s arrest, the banks financing Plasman had concerns about George. George approached Thomas Back to assist with financing the purchase of Plasman debt. In April 2009 Greenstreet – one of George’s corporate vehicles – transferred its interest in the debt purchase agreement to APP Finance Inc., a corporation controlled by the Bocks. According to the statement of defence, Loukia, George, and Robert never had any interest in APP Finance:
These Defendants state the fact is that the only agreements entered into are those pleaded herein. All of the other alleged agreements referred to in the Further Fresh As Amended Statement Of Claim are a fabrication.
28The Bocks further state that George was unable to raise the funds to complete the debt purchase – unsurprisingly, after his arrest on securities fraud charge. Instead, the Bocks, through APP Finance, financed the debt purchase. It was agreed in June 2012 that George would receive 25% of the net profit. The compensation agreement was the papering of that agreement. George provided a power of attorney to T.R. Anthony Malcolm, a lawyer. Malcolm, the Bocks say, signed on George’s behalf because George was in jail. The compensation agreement provided for a finder’s fee to George of $12.05 million for his services in connection with the AP Plasman deal, less deductions.
29On July 5, 2012 Friedman wired the disputed funds to Malcolm’s trust account at RBC. George the arranged for the disputed funds to be transferred to Brent David Emmanuel. The Bocks further state in their statement of defence that George’s purpose was simply to avoid the restitution order:
After Georgiou learned that Emanuel could not extract the Finder’s Fee from RBC, Georgiou began to leverage and exert pressure on the Bocks and tried to coerce the Bocks to amend the Compensation Agreement so as not to identify Georgiou as the recipient and beneficiary of the Finder’s Fee. In September 2012, Georgiou wanted to amend the Compensation Agreement so that he could claim that the CYPCO Trust was entitled to the Finder’s Fee and that Emanuel was a beneficiary of that trust. The Bocks refused.
The new fabricated claim that Loukia and Watson brought on June 2, 2014, with Georgiou’s assistance, alleges that they are entitled to the Finder’s Fee. Now the allegation of Georgiou is that Emanuel is not entitled to the Finder’s Fee, the CYPCO Trust is not entitled to the Finder’s Fee and Georgiou is not entitled to the Finder’s Fee. The many changes in the Statement of Claim reflect the many changes to the Plaintiffs’ fraudulent claim. This was Georgiou’s further attempt to try and avoid the Restitution Order and the Forfeiture Judgment issued by the U.S.A.
30Obviously the Bocks’ statement of defence is hearsay, and not evidence. It represents the position of the Bocks in relation to their dispute with Loukia, George, and Robert Watson. It is relevant, however, to show that they dispute three things: first, that Loukia is owed anything arising from the AP Plasman transaction; second, that George signed the compensation agreement under duress; and third, that there were any oral agreements as George and Loukia claim.
ISSUES AND ANALYSIS
31The request from the United States is governed by s. 9.4(9) of the Mutual Legal Assistance In Criminal Matters Act:
(9) Subsection 462.41(3) and section 462.42 of the Criminal Code apply, with any modifications that the circumstances require, to a person who claims an interest in proceeds of crime…
32As a result of the Ontario Court of Appeal’s decision in Georgiou, the disputed funds are proceeds of crime for the purpose of this application. The parties agree that s. 462.42(1) and (4) of the Criminal Code governs:
462.42 (1) Any person who claims an interest in property that is forfeited… may, within thirty days after the forfeiture, apply by notice in writing to a judge for an order under subsection (4) unless the person is
(a) a person who is charged with, or was convicted of, a designated offence that resulted in the forfeiture; or
(b) a person who acquired title to or a right of possession of the property from a person referred to in paragraph (a) under circumstances that give rise to a reasonable inference that the title or right was transferred from that person for the purpose of avoiding the forfeiture of the property.
(4) Where, on the hearing of an application made under subsection (1), the judge is satisfied that the applicant is not a person referred to in paragraph (1) (a) or (b) and appears innocent of any complicity in any designated offence that resulted in the forfeiture or of any collusion in relation to any such offence, the judge may make an order declaring that the interest of the applicant is not affected by the forfeiture and declaring the nature and extent of the interest.”
33An applicant under s. 462.42 of the Criminal Code must show an interest that goes beyond being a mere creditor: 1431633 Ontario Inc. v. Attorney General of Canada, 2010 ONSC 266. At para. 24 of that case Molloy J. noted that the purpose of the forfeiture scheme is to “prevent criminals from profiting from their crimes. That purpose would be defeated if the ordinary debts of the criminal could be discharged from the forfeited property.” See also: Attorney General of Canada v. Lumen Inc. (1997), 119 C.C.C. (3d) 91 (Que.C.A.).
34The parties agree that there are five components that Loukia must satisfy. The onus is on her to show that:
- She was not charged with or convicted of an offence that resulted in forefeiture;
- She is innocent of any complicity or collusion with respect to the offences of which George was convicted;
- She has a valid interest in the disputed funds;
- Her interest was not transferred to her under circumstances that give rise to a reasonable inference that the transfer was for the purpose of avoiding forfeiture of the disputed funds;
- Whether, even if all the preconditions are met, I should exercise my discretion to decline relief from forfeiture.
35The Attorney General agrees that Loukia was not charged or convicted of any offence that resulted in a forfeiture. However, the Attorney General disputes that Loukia has satisfied her onus on the other four components. I agree that Loukia has not filed any evidence denying that she had anything to do with the offence of which George was convicted. On the other hand, there is no evidence in the record that she was a subject of investigation or prosecution by the American authorities. I am satisfied that just on a bare reading of the material she has satisfied her onus in that regard.
36Mr. Neirinck, for Loukia, also raises what I call a threshold issue. He argues that since Loukia (as well has Robert Watson, her son-in-law) have not been cross-examined, the Rule in Browne v. Dunn requires that the Court accept their evidence.
37In my view, there are four issues to be determined:
- Should I accept the uncontradicted evidence of Loukia and George?
- Does Loukia have a valid interest in the disputed funds?
- Was Loukia’s interest transferred to her under circumstances that give rise to a reasonable inference that the transfer was for the purpose of avoiding forfeiture?
- If Loukia has satsifed her onus, should I exercise my discretion and still deny her application?
Should I accept the uncontradicted evidence of Loukia and George?
38Mr. Neirinck argues that there is no evidence to contradict the evidence in the affidavits of Loukia, George, or Robert Watson. They have not been cross-examined. Their evidence is, therefore, unchallenged. Because there has been no challenge, the rule in Browne v. Dunn should be applied and their evidence accepted.
39With respect, this interpretation misconstrues the rule in Browne v. Dunn. The rule in Browne v. Dunn requires that if a party intends to impeach a witness by calling the opposite party, the witness must be given the opportunity to provide an explanation for any contradictory evidence. If the party does not cross-examine on the specific issue, it can support an inference that the party accepts the opposing evidence in its entirety, or at least on that point. The rule is not, however, fixed: R. v. Quansah, 2015 ONCA 237 at paras. 75-80.
40As Watt J.A. stated at paras. 81 and 82 of Quansah:
Compliance with the rule in Browne v. Dunn does not require that every scrap of evidence on which a party desires to contradict the witness for the opposite party be put to that witness in cross-examination…
In some cases, it may be apparent from the tenor of counsel's cross-examination of a witness that the cross-examining party does not accept the witness's version of events. Where the confrontation is general, known to the witness and the witness's view on the contradictory matter is apparent, there is no need for confrontation and no unfairness to the witness in any failure to do so.
41As the Alberta Court of Appeal stated in R. v. Neilson, 2019 ABCA 403, the rule in Browne v. Dunn simply does not operate as counsel suggests:
Choosing not to cross-examine a witness, but instead asking the trier of fact to disbelieve a witness based on other evidence adduced in the trial, is a valid exercise and does not invoke the rule from Browne v. Dunn. It is illogical for a trier of fact to be expected to accept evidence which they disbelieve just because it has not been subject to cross-examination.
42There is nothing in the rule in Browne v. Dunn that compels me to simply accept the evidence of Loukia, George, and Robert Watson because it has not been subject to cross-examination. Undoubtedly all that would happen is that counsel for the Attorney General would suggest to the witnesses that Loukia and Robert Watson have no legitimate interest in the disputed funds. Undoubtedly all three would deny it. The exercise would be pointless.
Does Loukia have a valid interest in the disputed funds?
43Mr. Neirinck argues that Loukia has an interest in the disputed funds as a beneficial owner. He argues that arrangements were made in 2008 and 2009 for Loukia to acquire an interest in the first $9 million of profit from the Plasman resale plus 50% of the remaining profit. As he puts it in his factum:
Loukia and Georgiou have produced a particularized and documented record from 2008 to 2009 of the negotiations, arrangements and agreement for the acquisition of Loukia’s ultimate right and entitlement to the first $9 million of profit and 50% of remaining profit from a Plasman resale. The details, corroborated/proven by accompanying documents, undeniably prove Loukia was to get those shares of profit from a Plasman resale. Loukia was to get the profit from the resale through the Debt Purchase Agreement before that arrangement was modified just before closing at the insistence of the Bocks instead providing her with the $9 million and the 50% of profit. Loukia’s entitlement to the first $9 million and to at least 25% of the remaining profit is also confirmed in transcripts of recordings of calls between Georgiou and the Bocks in late 2009.
44I do not agree. Although the record is particularized to some degree, it is hardly documented. It means accepting that there were oral agreements in place with the Bocks. It also means accepting that highly suspicious documents are genuine. Accepting their claim means accepting that George signed the compensation agreement under duress. I accept none of these things.
45In any event, the legal basis of Loukia’s claim is unclear. Was she simply the beneficiary of a trust set up by George? Or was she to receive funds pursuant to a commercial arrangement related to the Plasman transaction? At the end of the day it does not actually matter, because the answer to both questions must be “no”, as I will explain.
46I will deal first with the question of whether the disputed funds were held in trust.
47For a trust to be valid, there must be two elements: a declaration of trust, and the constitution of the trust. The declaration of trust requires that there be certainty of intention, certainty of subject-matter, and certainty of objects: White v. Gicas, 2014 ONCA 490 at paras. 1, 37; Century Services Inc. v. Attorney General of Canada, 2010 SCC 60 at para. 83. Certainty of intention means that the settlor clearly intends that the trustee hold the property for the beneficiary, and the trustee is obliged to deal with the property on behalf of the beneficiary. Certainty of subject matter means that the property subject to the trust is identifiable, and that there is sufficient certainty as to the quantum of the trust. Certainty of objects means that the beneficiaries of the trust must be sufficiently described: Ruben v. Bistricer, 2019 ONCA 733 at paras. 52, 57, 59.
48George has stated in his affidavit that he intended to create a trust. There is a 2008 document where he states an intention to hold the shares of APP Capital in trust for Loukia (and Robert Watson). There is no evidence (other than in his affidavit) that he still intended to create a trust in 2012, when the disputed funds were paid to him. A better example is George’s intentions comes from what he actually did: in 2008 he transferred the shares in APP Capital to Thomas Bock. Through his legal representative, in 2012 he signed a compensation agreement with the Bocks. APP Capital was the source of the disputed funds. There is no evidence that the the Bocks generally intended to settle a trust in favour of Loukia. They strongly deny it in their statement of defence. Moreover, there is no evidence that Brent David Emanual was to hold the disputed funds in trust for Loukia. The funds were directed into the account of Brent David Emanuel at RBC, where they were ultimately frozen. There are no documents at all creating a trust with George (or the Bocks) as settlor, Brent David Emanuel as a trustee, and Loukia as beneficiary. Brent David Emanuel has both claimed and withdrawn a claim that he was the beneficial owner of the money. He has made other claims. One thing he has never claimed is that he held the money in trust for Loukia – other than in the suspicious documents. I will deal with those suspicious documents later in these reasons.
49I therefore find that Loukia does not have an interest in the disputed funds as the beneficiary of a trust.
50I turn to the question of whether Loukia is entitled to the disputed funds as part of a commercial contract in relation to the AP Plasman deal.
51Loukia summarizes the elements of the agreement that she says entitles her to the disputed funds in para. 81 of her statement of claim against the Bocks. She states that she was “advised by George” regarding the terms of the Plasman purchase. These were the oral agreements I have already referred to. The only evidence for these agreements comes from George. As I have noted, George is a convicted fraudster. According to the U.S. courts, he has allegedly committed perjury and suborned perjury by others. In the absence of corroborating documents, I find that George’s evidence is not to be relied upon in the face of strong denials from the other party, as well as in the face of documents to the contrary. Since Loukia’s evidence on this point is dependent upon George, I do not accept it either.
52Moreover, it is simply quite implausible that commercial agreements involving tens of millions of dollars would be negotiated without generating even a scrap of paper. Complicated agreements usually generate multiple boxes of paper, and/or gigabytes of files – including draft agreements of all kinds, term sheets from banks, letters of intent, opinion letters, and so forth. Even if the original agreement was based on a handshake, there should be many pages of documents that George and Loukia can produce or subpoena from law firm, accounting firm, or corporate files to show that negotiations took place along the lines that they suggest. Instead, there are only transcripts of recordings that George clandestinely made, and he says, self-servingly, verify his claims. I do not agree. Without getting into the details, “transcripts” are filed without any of the recordings themselves. George says he no longer has the originals. I find his claims dubious, to say the least.
53The one document that George did sign was a compensation agreement between him and the Bocks. Accepting Loukia’s claim means accepting George’s claim that an agreement paying over $12 million (less expenses) was forced on him and he signed it, as well as a release, under duress. George may have been under duress – he was in prison, after all, and his email to Thomas Bock suggests that he felt he was entitled to more. It is difficult to read that email and conclude that the source of the duress was the fact that the funds were being paid to him, as opposed to being paid in trust to a trustee for Loukia’s benefit. If that were the case, it would have been a simple matter of George signing a direction that the funds were to be paid in trust to a trustee of some kind for the benefit of Loukia. A simple trust declaration and direction could have been prepared by a lawyer – but it was not.
54I find that Loukia does not have an interest in the disputed funds as a result of a payout from the Plasman deal.
Was Loukia’s interest transferred to her under circumstances that give rise to a reasonable inference that the transfer was for the purpose of avoiding forfeiture?
55Mr. Neirinck argues that there could have been no possible concern about forfeiture of the disputed funds in July 2012. The disputed funds were “crime free and not offence related.” The disputed funds were transferred pursuant to a commercial arrangement and were not in and of themselves proceeds of crime. Loukia’s claim to the disputed funds went back to 2008. The only forfeiture order in place in July 2012 was for the actual proceeds of George’s securities fraud. There was no order for substitute forfeiture at that time. As a result, Loukia did not obtain her interest in order to avoid forfeiture.
56I disagree. As I have noted, Loukia’s claim to the disputed funds is transparently false. The circumstances very clearly give rise to a reasonable inference that the proposed transfer to her would have been for the purpose of avoiding forfeiture if it had taken place. Loukia, George, and Robert Watson are simply not credible. Their evidence is not worthy of belief. For reasons I have already mentioned, I do not accept that there were oral agreements in place.
57As I have noted, under American law any assets belonging to an offender can be forfeited to the government as a substitute asset. If the government is unable to trace the actual proceeds of crime, the government can seek forfeiture of other assets owned by the offender. That is the basis upon which the U.S. government ordered forfeiture and asked the Canadian government to freeze and ultimately repatriate the disputed funds.
58The U.S. government obtained the original forfeiture order as part of the sentencing process in 2010. It is true that there was no substitute forfeiture order at the time of the payment of the disputed funds in 2012. That is because it was a Suspicious Transaction Report filed by RBC that triggered U.S. prosecutors to immediately apply for substitute forfeiture (it is unclear whether RBC filed the report with FINTRAC, the Canadian reporting agency, or the U.S. Treasury Department, or both).
59According to a supplemental MLAT request from the American authorities, there was overwhelming evidence at his trial that George
… controlled numerous brokerage accounts with financial institutions in various countries… Significantly, as part of his scheme, Georgiou often used nominees (who had no interest in the accounts) as holders of those accounts in which the stock and funds belonged entirely to Georgiou and his co-conspirators. Among those nominees Georgiou routinely used was Brent Emanuel.
60The supplemental MLAT request noted that at the time of the transfer of the disputed funds Brent David Emanuel was a 23 year-old missionary student in Antigua.
61A pattern emerges in Loukia’s evidence that does not inspire confidence her credibility. Loukia always seems to be on the verge of making fantastic – and inherently implausible – profits based on modest investments, only to be foiled by misplaced trust in or mysterious actions by others. She lost her $25 million profit on the INEX venture because of misplaced trust in an unscrupulous wealth advisor. The Ontario Securities Commission mysteriously refused to approve the Legacy Pharma IPO, where she stood to make $100 million on a $100,000 investment. Loukia and George were victims of misplaced trust in the Bocks. The Bocks took advantage of the fact that the finance agreement was not “papered” due to this misplaced trust. As a result, she lost millions of dollars on yet another tiny investment. George was a victim of misplaced trust in T. Anthony Malcolm, George Friedman, and Brent David Emmanuel.
62It also does not inspire confidence in Loukia’s credibility – and George’s – that they rely on documents that are, at best, suspicious, and at worst forgeries.
63The first document is a Direction & Authorization to the Royal Bank of Canada from Brent David Nathaniel Emanuel. This document is supposedly an irrevocable direction to the Bank to transfer $9,100,000 from his account to Loukia “immediately upon receipt of this direction.” It is dated January 23, 2012. The Direction & Authorization is accompanied by a Witness Statement signed by an unnamed notary public in Antigua. This notary public states that he witnessed the direction on January 23, 2012.
64Of course, on January 23, 2012 the disputed funds had not yet been paid so it is difficult to understand how Brent David Emanuel could have provided a direction to the RBC. It is also difficult to understand how a notary public could have witnessed a direction for funds that had not yet been paid.
65The Direction & Acknowledgement and Witness Statement are appended to the affidavit of Robert Watson. Watson states in his affidavit that the 2012 date is obviously a mistake. As proof, he appends an email dated January 24, 2023. He says these documents were attached to that email. It is an email from Brent David Emanuel to Robert Watson. The subject of that email is “Letter for Loukia”. It is not clear why Brent David Emanuel is referring to a “Letter for Loukia” rather than a direction, or an authorization, or a witness statement.
66The second document is dated Sunday April 8, 2012. It states that it is to:
loukia [sic] Georgiou and whom it may concern. This letter is to confirm my recognition that I [Brent Emanuel] am holding all funds paid to me by Bill Freedman [sic] in trust for Loukia Gerogiou.
67The letter is signed by Brent Emanuel and witnessed by Teresa Emanuel and Boris Emanuel. Each dated the letter April 8, 2012. Again, Brent David Emanuel could not have been holding the disputed funds for Loukia on April 8, 2012. The document itself is noted as “page 2/2” with a date of “2011-04-09”. Robert Watson states in his affidavit that someone obviously forgot to change the date on the fax machine, which is plausible. Of greater concern is the missing first page. Of perhaps even greater concern, why is this document also dated 2012?
68A single mistake about dates is one thing. Multiple mistakes about the same dates is something else. I adopt the sentiment expressed by Flaum C.J. in United States v. York, 933 F.2d 1343 (1991) about the probability of certain types of coincidences:
The man who wins the lottery once is envied. The man who wins it twice is investigated.
69The third document is an “Irrevocable Acknowledgment of Debt And Agreement To Pay”. It is dated June 20, 2013 in Antigua. Brent Boris Emanuel (Brent David’s father and the witness of the April 2012 letter indicating Brent holds funds in trust for Loukia) and Brent David Emanuel agreed that they owe Lukia [sic] Georgiou $9 million and will pay it within 24 hours of a request being made. It is unclear why Brent Boris has signed this document, when it was only Brent David supposedly holding the funds in trust. This document suggests that they are in debt to Loukia, not that Brent David Emanuel holds funds in trust for Loukia. Is this a different $9 million from the $9 million frozen in Brent David Emanuel’s RBC account? This document raises more questions than it answers.
70I draw the inference that these documents are simply too problematic to establish that Loukia has any interest in the disputed funds. I find it very telling that there are no documents evidencing agreements with the Bocks – an arms-length party – that would back up Loukia’s assertion of an interest, and yet there are suspicious documents signed by Brent David Emanuel – a person the U.S. authorities have identified as a nominee used by George in his fraudulent enterprises.
71There are also statements in the affidavits that attempt to explain the problems with the suspicious documents. What those statements really do is emphasize the problems with the suspicious documents. In an affidavit sworn May 16, 2016 Loukia stated that Brent David Emanuel’s witness statement noted that as of April 8, 2012 he “is holding” the disputed funds in trust. However, in her August 2021 affidavit, sworn in support of this application, Loukia stated:
In anticipation, as the plan was for Emanuel to receive the proceeds to which I was entitled and which we were expecting to be paid in trust pending other decision-making, Emanuel signed an Acknowledgment dated April 8, 2012, that the proceeds to be paid to him were in trust for myself.
72As noted, Robert Watson’s explanation differs from Loukia’s – he says the 2012 date is a mistake.
73Quite frankly, there is a reasonable suspicion that these are false documents and constitute an attempted fraud on the court. I agree with counsel for the Attorney General, however, that I do not need to go as far as to make a finding that these are false documents. I only need to find that they are suspicious and raise red flags. They are and they do. Loukia’s claim smacks of deliberate fabrication. This application does not concern a commercial dispute where both sides may have a reasonable argument about the interpretation of a contract, or the characterization of a transaction, or the tax consequences. This application has more red flags than an old-style Soviet May Day military parade. Those red flags include the suspicious documents that back up the claim, the use of nominees, the reliance on “oral” agreements (that the other party denies exist) and several quite fantastic claims (enormous profits based on tiny investments, George signing documents under duress, the misplaced trust in virtually everyone who has a different story).
74I draw the inference that Loukia’s “interest” in the disputed funds arises only for the purpose of avoiding forfeiture.
If Loukia has satsifed her onus, should I exercise my discretion and still deny her application?
75It is not necessary for me to answer this question, as Loukia has failed to meet her onus.
DISPOSITION
76The application is dismissed.
R.F. Goldstein J.
Released: January 3, 2023