R. v. Schurm, 2012 NUCJ 25

nunavuumi iqkaqtuijikkut NUNAVUT COURT OF JUSTICE La Cour de justice du Nunavut Citation: R. v. Schurm, 2012 NUCJ 25 Date: 20121212 Docket: 08-10-197 Registry: Iqaluit Crown: Her Majesty the Queen -and- Accused: Peter Stephen Schurm ________________________________________________________________________ Before: The Honourable Madam Justice Cooper Counsel (Crown): D. Garson Counsel (Accused): J. Harbic Location Heard: Iqaluit, Nunavut Date Heard: November 7, 2012 Matters: Criminal Code, s. 354(1) (

a) REASONS FOR JUDGMENT (NOTE: This document may have been edited for publication)

I. INTRODUCTION [ 1 ] The accused is charged with possession of the proceeds of crime, knowing that all or part of the proceeds were obtained or derived, directly or indirectly, from the commission of a criminal offence. II. THE FACTS [ 2 ] The Royal Canadian Mounted Police (RCMP) in Iqaluit received a text message from cargo screeners at the Iqaluit airport advising that a suitcase, which had been screened to a flight to Ottawa, appeared to have a substantial amount of cash in it.

The luggage was tagged to Steve Schurm of 293 Flora [sic] and had an Ontario phone number on it. [ 3 ] RCMP attended at the airport, viewed the suitcase through the screening device, and saw what appeared to be bundles of cash estimated to be approximately $75,000. [ 4 ] The suitcase in question had been checked in by Mr. Schurm, to be transported in the cargo hold of the plane. It was not carry-on luggage which would remain in his physical possession before, during, and after the flight. [ 5 ] The officer made inquiries with the airline and was advised that Mr.

Schurm had purchased the ticket at the last minute and had paid for it with cash. It was later determined that this information was incorrect, as Mr. Schurm had not paid cash for the ticket but had paid for it using his debit card. [ 6 ] Mr. Schurm was arrested for possession of the proceeds of crime and taken to the local RCMP detachment. The suitcase was searched and it was found to contain $115,035 in Canadian currency and three pillows.

While at the RCMP detachment, the accused signed a Relinquishment of Funds, which purports to be an acknowledgement by him that he does not own the money and has no interest in it. [ 7 ] At trial a number of exhibits were entered, including banking records, Canada Revenue Agency records, a flight itinerary, and copies of documents in the possession of the accused at the time of his arrest, including airline receipts. III. PRELIMINARY ISSUES [ 8 ] At the trial, the Crown called an expert witness who was qualified to give expert evidence in relation to the use and

interpretation of the Currency Reading and Trading System (a system used to track money used in undercover drug transactions), packaging and movement of money, contraband smuggling indicators and financial industry standards for packaging currency. [ 9 ] This witness was cross-examined regarding an incident involving a federal cabinet minister in which trace amounts of cocaine were found on bills in the minister's possession.

The trace amounts were insignificant and a press report on the incident cited a border agent who said that such an incident was not unusual. [ 10 ] When this incident and a press report were put to the expert witness, he testified that he was not familiar with the incident. However, he agreed with the proposition that trace amounts of narcotics can be found on the vast majority of bills in circulation and that these trace amounts are not indicative of illegal activity. [ 11 ] The witness was also asked if he was familiar with the work of a particular toxicology expert.

The witness was not familiar with the expert or his work. The curriculum vitae of the toxicology expert and an

article published by him in a scientific journal were not put to the witness.

[ 12 ] Defence counsel sought to have four documents entered as exhibits, those being: 1. What purports to be a press report about the incident involving the federal cabinet minister; 2. What appears to be an

article from an internet site called Canada.com which quotes from the toxicology expert referred to by Defence counsel; 3. What purports to be the curriculum vitae of the toxicology expert referred to in the Canada.com article; and 4. An

article written by the same toxicology expert and published in the Canadian Society of Forensic Sciences Journal. [ 13 ] While all of the documents constitute hearsay evidence, the first three are particularly troubling as there is no indication where they came from and therefore, no way to determine the credibility of the sources let alone the reliability of the information. [ 14 ] The

article published in the scientific journal is highly technical and it would be difficult and dangerous to try to draw conclusions from it without the assistance of expert evidence. The author of the

article has not been acknowledged as an expert in the field. Indeed, he is unknown to the witness. [ 15 ] In any event, I find it unnecessary to deal with the admissibility of the documents as possible exceptions to the hearsay rule. This issue can be disposed of on the basis that the evidence is unnecessary as the proposition it seeks to establish is accepted by the Crown witness. [ 16 ] Together, these proposed exhibits stand for the proposition that trace amounts of narcotics on bills are not indicative of illegal activity and, in particular, of drug trafficking or use.

The expert witness agreed with this proposition. Indeed, he went even further, testifying that tests done in each jurisdiction in Canada indicate that a much higher proportion of bills from the three northern territories will be found to have trace amounts of narcotics on them than bills from the southern provinces, further undermining the strength of any link between trace amounts of narcotics on bills and illegal activity. There is nothing that will be added to the case by the admission of this evidence. IV. ANALYSIS A.

The law and the legal standard [ 17 ] The Crown bears the burden throughout to prove all elements of the offence beyond a reasonable doubt. They must prove that the accused had possession of the money, that the money was the proceeds of crime, and that the accused knew that the money was the proceeds of crime. The evidence in this case is circumstantial. This requires me to come to the conclusion that the guilt of the accused is the only rational inference to be drawn from the evidence. B.

Evidence [ 18 ] The evidence in this matter consisted of evidence found to be admissible from the Preliminary Hearing, documentary evidence that was admitted by agreement, and one Crown witness. [ 19 ] The witness is a member of the Halifax Regional Police Department with twenty years of experience in policing. He has worked as a handler of drug detection dogs and was appointed to the drug unit in 1999. Since that time, he has been involved in interprovincial and

international drug investigations, and has worked with the Jetway Program; which is a program intended to identify drug traffickers and couriers at airports, railway and bus stations. He has experience with wiretap operations. [ 20 ] Since 2006, the witness has been working with the Integrated Proceeds of Crime Unit, which is an RCMP initiative involving the RCMP, provincial and municipal police forces, forensic accountants and personnel handling seized property.

The work of this integrated unit is directed towards proceeds of crime. [ 21 ] Much of the witness' experience relates to the movement of drugs and proceeds of crime. [ 22 ] The opinion of the expert witness was that the money seized from the accused was the proceeds of crime, most likely drug trafficking. His reasons for reaching this conclusion were, as follows. (i).

The manner in which the money was bundled [ 23 ] The witness testified that the manner in which the money was bundled did not comply with standards of the financial industry, indicating that the money was not sourced from a bank or other financial institution. The financial industry requires that money be bundled by denomination, so each bundle will consist of only twenty dollar bills or only fifty dollar bills or some other denomination. A bundle of bills from a recognized financial institution will not have a variety of denominations.

Each bundle will consist of 100 individual bills, meaning that each bundle will contain a different amount of money, depending on the denomination that it contains. Bundles must be secured with paper straps that are of a particular width. Staples, paper clips or elastic bands are not permissible. [ 24 ] Money from drug transactions is bundled so that each bundle contains a certain amount. It is normally bundled in $1,000 increments. Each bundle will contain a variety of denominations.

The reason for this is so that cash can be counted quickly. [ 25 ] The cash which was seized in this matter consisted of twenty three bundles, thirteen of which had bills of varying denominations. Eighteen of the bundles had exactly $5,000 in them, with the remaining five bundles varying from $5,000 by an amount not greater than $120.00. (ii).

The fact that the majority of the bills were of relatively recent production [ 26 ] The age of the bills can be determined by the images that are on them, as different categories of images, or series, were produced in different years. [ 27 ] In this matter, each bundle of cash contained at least one note produced in 2008 or later. This suggests that each bundle was obtained and secured fairly recently and the money was not saved over a period of many years. [ 28 ] Over 5,000 bills were seized and of these, all except for 10, were produced in 2004 or later. (iii).

The sealing of the bundles [ 29 ] The witness testified that drug traffickers heat seal their cash proceeds to ensure that the money is not tampered with by couriers transporting it, to decrease the chances of detection by a drug dog in the event that the bills are contaminated, and to compress them into a smaller volume. [ 30 ] The money seized in this matter was sealed in such a fashion.

(iv). The denominations of the bills [ 31 ] The witness testified that the most common denomination in street level trafficking is the $20 bill. It is also the most common bill in circulation generally. However, the witness considered it significant that the majority of the bills seized (almost 95%) were $20 bills, in light of the fact that only 40-50% of bills in general circulation are $20 bills. (v). Nature of the trip to Iqaluit [ 32 ] The accused had a relatively short trip to Iqaluit, arriving on February 21 and attempting to leave on February 23, at which time he was arrested.

It appears from the documentary evidence filed that the February 21 flight was paid for on the day of the flight.There was also payment made for the February 23 flight on the day of that flight. [ 33 ] In cross-examination, it was put to the witness that the accused had purchased a return ticket for a week after his arrival and that the original return date was brought forward, with the accused simply paying the change fee and difference in fares. The witness appeared to understand this to be the case.

In any event, he considered the short duration of the trip to be relevant as it minimizes the time a courier is handling proceeds and thereby minimizes risk. (vi).

Mode of transporting the money [ 34 ] The witness considered it significant that such a large sum of money was placed with the airline as checked luggage given the inherent risk that such luggage might be lost or tampered with. [ 35 ] The witness was of the opinion that a legitimate business would not transfer money in this way, not only because of the risk involved, but also because a legitimate business requires documentation of the movement of money for auditing and reporting purposes and because it would be less expensive to transfer money through a financial institution than through a courier on an airline. [ 36 ] The witness testified that those with a non-legitimate source of money will avoid using financial institutions because of the paper trail it creates and, in particular and of relevance in this instance, the fact that any cash deposits over $10,000 must be reported to the Financial Reports Analysis Centre of Canada (FINTRAC), for entry to its data base, which is made available to policing agencies. [ 37 ] In cross-examination, the Defence highlighted what they argue are weaknesses in the witness' evidence.

They point out that the accused used a debit card, not cash, to pay for his airline ticket and that he put his name on the luggage tag. They argue that this is contrary to the witness' evidence that those dealing with illegitimate money will try to not leave a paper trail. [ 38 ] In this day and age, when government issued picture identification is required to check in at an airport and to board a plane, it is much more difficult to travel under false names or identification.

While it is true that using a debit card made payment for the airline ticket traceable to the accused, that would have been the case even if he had paid cash. His name would have been on the ticket, the itinerary, and the receipt issued. The same can be said for placing his name on the luggage tag. The suitcase would have been traceable to him in any event through the tags placed on luggage by the airline at check-in. Further, as testified to by the witness, Transport Canada regulations require a passenger’s name be on the luggage.

Paying for the ticket by debit card or placing his name on the luggage did not provide information to the airline that it would not have had in any event simply by virtue of his boarding the plane. [ 39 ] The larger issue with respect to documentation is that the manner in which the money was handled ensured that neither its source nor its destination could be traced. The manners in which the money was handled and the airline ticket purchased ensured that the only individual attached to the money would be the accused.

For those dealing with illegitimate funds, this minimizes the number of individuals at risk at any particular time. [ 40 ] The Defence also argued that if chemical testing had been carried out on the bills it could have been determined with greater accuracy whether or not there were narcotics on the bills. That may well be so, but as I understand the evidence from the expert witness

we should expect the majority of bills from the north to have narcotics on them. The evidence was that 60% of Canadian currency will test positive for narcotics. In the witness' experience that percentage is much higher for currency in the north, so the presence or absence of narcotics is of little probative value. There do not appear to be standards by which to assess if a particular level of detection is significant or not. The witness did indicate in his report that the drug dog indicated on some of the money but in his evidence he said this was not a significant factor in reaching his conclusion.

He did not refer to the fact that the dog detected narcotics on the bills in the portion of his report which details his reasons for having reached the conclusion he did. [ 41 ] The Defence also suggested that there were possible legitimate sources for the money. When it was put to the witness that people who work in restaurants in Iqaluit sometimes travel south with large sums of money the witness agreed that he understood this to be the case. The difficulty with this proposition is that there is nothing in the evidence to suggest the accused ever worked in a restaurant in Iqaluit.

Indeed, the short duration of his stay suggests the contrary. The Defence suggests that the accused may have been transporting money for friends who work in restaurants in Iqaluit. That suggestion is simply an invitation to the Court to speculate. [ 42 ] The witness also acknowledged that the carving market is a cash-based market.

However, the suggestion that the accused had possession of the money so that he could purchase carvings does not address the issue of where the money came from; it only addresses the use to which the money might have been put. [ 43 ] Further, if the accused did come to Iqaluit to purchase carvings, the money is moving in the wrong direction. One would expect the accused to arrive in Iqaluit with money and leave with carvings, not leave with a suitcase of money.

While it seems that the accused did have one carving in his possession when he was arrested, this is hardly sufficient evidence to establish he was here as an art buyer. There is nothing in the evidence to suggest the accused has any connection with a gallery or the art world. Again, the Defence is simply asking the Court to speculate. V. CONCLUSION [ 44 ] I accept the evidence of the expert witness in this matter.

The manner in which the money was secured and transported, the denominations that made up the money, and the circumstances of the accused’s trip to Iqaluit all support the inference that the money was the proceeds of crime. The accused does not claim that the money is his so it is not necessary to determine if the circumstances of the accused could account for his being in possession of such a large sum of money.

There is no other reasonable inference which can be made except that the money is the proceeds of crime and I make such a finding. [ 45 ] The Crown must also prove that the accused knew that the money was proceeds of crime. The accused was clearly in possession and control of the suitcase and its contents. There is nothing about the suitcase to suggest that it did not belong to the accused. The accused dealt with the suitcase as his own. There is nothing to suggest that he did not have control over its contents.

The only reasonable inference is that he knew of the contents of the suitcase and of their illegitimate source. [ 46 ] I acknowledge that the Crown bears the persuasive burden throughout the trial process. However, at some point, the circumstantial evidence becomes so overwhelming that absent some other rational explanation, the only conclusion to be reached can be the guilt of the accused. This is such a case. [ 47 ] I find the accused guilty of possession of the proceeds of crime. Dated at the City of Iqaluit this 12th day of December, 2012

___________________ Justice S. Cooper Nunavut Court of Justice