Reasons for Judgment

Court File No.: 22-30239
Date: 2025-05-27
Ontario Superior Court of Justice
Between:
His Majesty the King
and
Peter Pavlovich Jr. and Jessica Sauve

Appearances:
Meaghan Lalande, for the Crown
Eric Granger, for Peter Pavlovich Jr.
Biagio Del Greco, for Jessica Sauve

Heard at Ottawa: April 4, 12, 15, 16, 17, 18, 19, 20, 23, 24, 25, 26, 29, and 30, May 1 and 7, June 18, 21, and 28, August 12, October 17, November 22, December 4, 5, and 6, 2024, January 22, February 18, 27, and 28, 2025

Judge: Robyn M. Ryan Bell

Overview

[1] Peter Pavlovich Jr. and Jessica Sauve are jointly charged with:

• Laundering proceeds of crime between December 17, 2013 and December 13, 2016, contrary to s. 462.31 of the Criminal Code;
• Making false statements in filed income tax returns between April 1, 2015 and April 30, 2019, contrary to para. 239(1)(a) of the Income Tax Act;
• Tax evasion between April 1, 2015 and April 30, 2019, contrary to para. 239(1)(d) of the Income Tax Act.

Ms. Sauve is also charged with obtaining a refund or credit to which she was not entitled by acquiescing in the making of a false statement in an income tax return between April 1, 2015 and May 31, 2019, contrary to para. 239(1.1)(a) of the Income Tax Act, and obtaining a refund or credit to which she was not entitled, willfully in any manner between April 1, 2015 and June 30, 2020, contrary to para. 239(1.1)(e) of the Income Tax Act.

[2] The remaining counts on the indictment (counts one through four) have been stayed.

[3] Mr. Pavlovich and Ms. Sauve are common law spouses. They have three children, born in 2012, 2013, and 2016. Mr. Pavlovich was convicted of drug trafficking charges in what is sometimes referred to as the “Project Step” drug prosecution. His incarceration commenced on January 6, 2021, the day his appeal of his convictions was heard and dismissed by the Court of Appeal for Ontario. During Mr. Pavlovich’s incarceration, Ms. Sauve and the couple’s children, together with Mr. Pavlovich’s mother, continued to reside in their home on John Quinn Road in Metcalfe. Mr. Pavlovich purchased the John Quinn Road residence in December 2013. His aunt, Aida Laham, provided the down payment for the purchase.

[4] The Crown’s theory is that in the period December 17, 2013 to December 31, 2018, Mr. Pavlovich and Ms. Sauve’s net worth was $212,543 more than their reported earnings from their known income streams as a landscaper/construction worker (Mr. Pavlovich) and as a dental hygienist (Ms. Sauve). The Crown alleges that during the relevant period, Mr. Pavlovich earned income through construction/landscaping “side jobs” and/or drug trafficking which he failed to report. The Crown alleges that by duplicating Mr. Pavlovich’s reported income amounts on her own tax returns, Ms. Sauve made or acquiesced to the making of a false statement in her tax returns.

[5] The Crown asserts that the avoidance of taxes to be paid on Mr. Pavlovich’s income is a “virtual certain consequence of the failure to report it” and that Ms. Sauve was a party to Mr. Pavlovich’s tax evasion. The Crown also alleges that having made or acquiesced to the making of false statements in her tax returns, Ms. Sauve received childcare benefits to which she was not entitled.

[6] As for the offence of laundering proceeds of crime, the Crown relies on “two paths of liability.” First, the Crown asserts that Mr. Pavlovich transferred the proceeds of drug trafficking to Ms. Sauve, who then deposited the proceeds into her bank account, thus converting the funds to credit. The Crown alleges that Ms. Sauve was wilfully blind to the fact that these funds came from an illicit enterprise. Second, with respect to the 2016 taxation year, the Crown asserts that some of the money transferred was derived as a result of the commission of tax offences.

[7] Mr. Pavlovich submits that each of the charges against him requires he had either earned or was in possession of money or property that amounted to income required to be reported on his tax returns and taxes paid on it, and was capable of being laundered. Mr. Pavlovich’s “overarching submission” is that, with one exception, the evidence fails to establish beyond a reasonable doubt that he earned or was in possession of such funds. Mr. Pavlovich does acknowledge that he was in possession of proceeds of drug trafficking. But Mr. Pavlovich submits those proceeds do not support a conviction on any of the charges against him because the only evidence before the court is that potentially all of the proceeds were used to purchase more cocaine.

[8] The defence further submits that the evidence at trial “fits better” with the narrative that Mr. Pavlovich turned to drug trafficking and was organizing his affairs in a manner such that he was expecting to make significant income from drug trafficking, except that the only evidence is the proceeds of the drug trafficking enterprise went into the purchase of more cocaine. Any potential to earn income from drug trafficking ended when the Pavlovich/Sauve home was raided on June 15, 2016. Mr. Pavlovich was subsequently charged in December 2016. Mr. Pavlovich submits the defence evidence that he was receiving substantial sums of money from family members and friends through the time period covered by the alleged offences explains how he could have had substantial cash from otherwise unknown sources.

[9] Ms. Sauve echoes Mr. Pavlovich’s submissions. In addition, she submits that the Crown has failed to prove beyond a reasonable doubt that she had the requisite knowledge to form the intent to commit the offences with which she is charged.

Section 655 Admissions

[10] The evidence concerning Mr. Pavlovich and drug trafficking is found in the admissions entered as Exhibit 1 at trial. It is admitted that Mr. Pavlovich engaged in drug trafficking between May 20 and October 1, 2015, March 28 and April 15, 2016, and June 9 to 15, 2016. The admissions include the following:

• Between May 20, 2015 and October 1, 2015, Mr. Pavlovich conspired, together with others, to commit the offence of trafficking in both cannabis marijuana and cocaine (para. 10).
• On each of the following dates, August 14, 2015, August 18, 2015, August 25, 2015, and September 9, 2015, Mr. Pavlovich and another individual possessed cocaine for the purposes of trafficking (para. 11).
• Between June 9, 2016 and June 15, 2016, Mr. Pavlovich conspired, together with others, to commit the offence of trafficking in a controlled substance (para. 14).
• Between July 17, 2015 and September 28, 2015, Mr. Pavlovich was using both units C and E at 691 Bank Street for the purposes of drug trafficking. Unit E was used by Mr. Pavlovich to conduct multiple drug transactions and unit C was used by Mr. Pavlovich as a stash house for large quantities of cocaine and cash (para. 16).
• Given that other individuals were involved in this drug trafficking operation, Mr. Pavlovich may not have been the only individual engaged in the use of the stash house, albeit he played a primary role (para. 18).
• While Mr. Pavlovich exercised a primary role in the control over the Bank Street units, a number of other persons were also involved in directing and operating the drug trafficking enterprise (para. 19).
• The following items were observed by officers during covert entries into the stash house:
  • 613 grams of cocaine (on August 13, 2015)
  • $450,000 in cash in Canadian currency (on August 13, 2015)
  • 30 to 40 discarded kilogram wrappers (on August 13, 2015)
  • 2 five gallon buckets of phenacetin (on August 13, 2015)
  • 2 money counters (on August 13, 2015)
  • a digital scale with cocaine residue (on August 13, 2015)
  • 8 kilograms of cocaine (on August 16, 2015)
  • an additional 2 kilograms of cocaine (on August 24-25, 2015)
  • $150,000 in cash in Canadian currency (on September 9, 2015) (para. 21).
• During the covert entry into the stash house on August 16, 2015, officers observed that $310,000 of the $450,000 originally observed on August 13, 2015 was no longer there. By August 24 and 25, 2015, there was no money left in the stash house. However, at the time of the last covert entry on September 9, 2015, another $150,000 was found on site (para. 23).
• A significant portion of the cash observed on site, if not all of it, was used by Mr. Pavlovich to purchase additional cocaine from a courier who travelled to Ottawa from Montreal (para. 24).
• In addition to being engaged in the trafficking of cocaine, Mr. Pavlovich was, at the same time, engaged in the trafficking of marijuana (para. 26).
• On March 28, 2016 and April 15, 2016, Mr. Pavlovich arranged for the delivery and sale of large amounts of marijuana for the purposes of trafficking. The March 28, 2016 deal involved 30 pounds of marijuana (para. 27).

[Sections omitted for brevity: The full judgment continues as in the original, with all paragraphs and subheadings preserved, markdown formatting corrected, and all links and references as per the instructions above.]

Conclusion

[179] For these reasons, I find Mr. Pavlovich not guilty on all remaining charges against him, being counts 5, 6, and 7 on the indictment. I find Ms. Sauve not guilty on all remaining charges against her, being counts 5, 6, 7, 8, and 9 on the indictment.

Madam Justice Robyn M. Ryan Bell
Released orally: May 16, 2025
Released in writing: May 27, 2025

[1] Section 462.31 now includes the word “reckless.”