r v. Sy, 2014 QCCQ 8890

R. c. Chun 2014 QCCQ 8890 COURT OF QUEBEC Criminal and Penal Division CANADA PROVINCE OF QUEBEC DISTRICT OF MONTRÉAL CITY OF MONTRÉAL N o : 500-01-017422-046 DATE: 15 September 2014 _____________________________________________________________________________ BEFORE THE HONOURABLE PATRICK HEALY, J.C.Q. _____________________________________________________________________________ THE QUEEN Prosecutor v. Sy Veng CHUN Leng Ky LECH A & A SERVICES MONÉTAIRES INC. PENG HENG OR GOLD INC.

Accused _____________________________________________________________________________ JUDGMENT _____________________________________________________________________________ Contents [Paragraph] [3] Prosecution case [4] Defence case Introduction [7] Text [8] Record [9] Accused [11] Indictment [17] Admissions [18] Interlocutory rulings

[19] Burden of proof [24] Proving the indictment Part One Proceeds of drug crimes [27] Counts 1 and 2: laundering [29] Daniel Muir [32] The accused [37] Meeting and agreement [42] Supply [43] Drug crimes [48] Uses, sends or transports [60] Intention to convert or conceal [63] Knowledge, wilful blindness or belief Counts 3 – 6: possession of proceeds [74] Count 3 [78] Count 4 [86] Count 5 [88] Count 6 Part Two Offences in relation to taxation [93] Count 7: false or misleading statements Counts 8 – 12: omission of important details [103] Count 8 [105] Count 9 [106] Count 10 [108] Count 11 [109] Count 12 [110] Count 13: aiding tax evasion Conclusion [ 1 ] On 12 October 2002, as he prepared to leave Canada for Cambodia, Mr.

Sy Veng Chun was found in possession of $600,000.00 in American cash. His arrest at Trudeau Airport led to an investigation that extended beyond Canada to other parts of the world, including the United States, the Caribbean, Mexico, Europe, Israel and several parts of Asia. The investigation led to this prosecution. The case is concerned with proceeds of drug offences and offences under the Income Tax Act . [1] [ 2 ] The trial began in January 2010 and continued intermittently over more than eighty days until final submissions were made at the end of 2012. This case is factually dense.

The testimony of many witnesses is voluminous. Over four hundred and fifty (450) exhibits were produced, many of which are complex. The written submissions of the parties are lengthy. The defence called no evidence in chief. Nevertheless everything about the trial, including the preparation of these reasons, was long. Prosecution case

[ 3 ] In broad terms the prosecution alleges that the accused received proceeds of drug crimes from Daniel Muir, and others, and performed various services and transactions in relation to these proceeds. These charges concern laundering (Counts 1 and 2) and possessing proceeds (Counts 3 – 6, inclusive). The prosecution also alleges that the accused derived benefits from this arrangement. Counts 7 – 12 (inclusive) allege offences involving declarations required by the Income Tax Act . Count 13 alleges that the four accused aided Daniel Muir to evade, or attempt to evade, taxation.

In effect, the prosecution submits that the tax offences were committed in the course of the commission of the other offences. Defence case [ 4 ] The defence introduced its written and oral submissions by quoting Lord Sumption of the Supreme Court of the United Kingdom: In most cases, 99 per cent of the facts are irrelevant, either legally or factually or both. The art of advocacy is to strip those away. When you're down to the last 1 per cent , the answer should be obvious.

Not surprisingly, after a trial of three years, this quotation prompts a question: what is the one per cent that counts and is it obvious? [ 5 ] The defence case, in general terms, is that the prosecution has failed to discharge its burden to prove the case beyond reasonable doubt. There are two principal elements advanced by the defence with respect to the charges in Counts 1 – 6 (inclusive). One, concerning the actus reus , is that the prosecution has failed to prove that the accused laundered or possessed proceeds of drug crimes .

The second, concerning the element of fault, is that the prosecution has failed to prove that the accused were aware [2] that any transactions involved proceeds of drug crimes. [3] This submission is repeated many times by the defence. In final oral submissions the defence submitted that "they did not have the necessary connaissance in fact and in law, that when they were dealing with the affairs of Daniel Muir, Muir and the others, that these affairs were related to the milieu de la drogue . And there is your one per cent (1%)." With respect to the charges in Part Two, the defence case is similar.

It is, first, that the prosecution has not proved the actus reus of the alleged offences and, second, that it has not proved the mens rea of those offences. [4] Introduction [ 6 ] These reasons have three parts. The Introduction explains the organisation of these reasons. It also states legal principles of general application. Part One and Part Two address the substance of the case. Part One is concerned with charges involving proceeds of drug offences. [5] Part Two is concerned with fiscal offences. Text [ 7 ] In these reasons the footnotes are an integral part of the text.

Where a footnote refers to testimony, an exhibit, jurisprudence or any other source, this reference is intended to be read as a direction to that source in conjunction with the text of these reasons. Record [ 8 ] In addition to the formal record of hearings and exhibits the parties submitted several volumes of written submissions, notes and authorities. Of course, not all of these volumes were marked as exhibits but they form an important part of the material in this case. Accused [ 9 ] The accused in this case are Mr. Sy Veng Chun, Ms.

Leng Ky Lech, Peng Heng Or Gold Inc. and A & A services monétaires inc. [6] Mr. Chun and Ms. Lech are husband and wife and were so at all material times. Mr. Chun was the sole officer and the directing mind of A & A services monétaires inc. at all material times. Ms. Lech was the sole officer and the directing mind of Peng Heng Or Gold Inc. at all material times. In Montréal the commercial address of the two companies was the same. [ 10 ] The four accused are jointly charged in Counts 1, 2, 3, 4 and 13. Ms. Lech is charged alone in Counts 5 and 6. She is jointly charged with Peng Heng Or Gold Inc. in Count 12.

Mr. Chun is jointly charged with A & A services mon étaires inc. in Counts 7, 8, 9, 10 and 11. Indictment [ 11 ] The Indictment is divided into two thematic clusters to reflect the relevant dates, places and applicable legislation. Part One of these reasons is concerned with the charges relating to proceeds of drug crime in Counts 1 – 6 (inclusive). [7] Part Two is concerned with charges relating to taxation in Counts 7 – 13 (inclusive). Without reproducing the formal texts of the counts, these are the charges in the Indictment.

Part One Count 1 Accused: Peng Heng Or Gold Inc., A & A services monétaires inc., Sy Veng Chun and Leng Ky Lech Dates: between 1 January 2000 and 31 January 2002

Place: Québec and Cambodia Offence: Controlled Drugs and Substances Act , [8] s. 9(1) ( a ), s. 9(2) ( a ) – laundering proceeds Count 2 Accused: Peng Heng Or Gold Inc., A & A services monétaires inc., Sy Veng Chun and Leng Ky Lech Dates: between 1 February 2002 and 31 October 2002 Place: Québec and Cambodia Offence: Criminal Code , [9] s. 462.31(1) ( a ), s. 462.31(2) ( a ) – laundering proceeds Count 3 Accused: Peng Heng Or Gold Inc., A & A services monétaires inc., Sy Veng Chun and Leng Ky Lech Dates: between 1 January 2000 and 31 January 2002 Place: Québec and Cambodia Offence: Controlled Drugs and Substances Act , s. 8(1) ( a ), s. 8(2) ( a ) – possession of proceeds Count 4 Accused: Peng Heng Or Gold Inc., A & A services monétaires inc., Sy Veng Chun and Leng Ky Lech Dates: between 1 February 2002 and 15 November 2004 Place: Québec and Cambodia Offence: Criminal Code , s. 354(1)( a ), s. 355(1) ( a ) – possession of proceeds Count 5 Accused: Leng Ky Lech Dates: between 1 September 2002 and 15 November 2004 Place: Québec and Cambodia Offence: Criminal Code , s. 354(1)( a ), s. 355(1) ( a ) – possession of proceeds Count 6 Accused: Leng Ky Lech Dates: between 1 October 2002 and 15 November 2004 Place: Québec and Cambodia Offence: Criminal Code , s. 354(1)( a ), s. 355(1)( a ) – possession of proceeds

Part Two [ 12 ] The counts in Part Two do not particularise the place in which the offences were allegedly committed. No question was raised by the defence concerning this point and the evidence is to the effect that the offences charged were committed in Québec.

Count 7 Accused: Leng Ky Lech Dates: on or about 2 April 2002 Place: Québec Offence: Income Tax Act , s. 239(1) ( a ), s. 239(2) – false or misleading statement Count 8 Accused: A & A services monétaires inc. and Sy Veng Chun Dates: between 1 October 2000 and 2 April 2002 Place: Québec Offence: Income Tax Act , s. 239(1) ( c ), s. 239(2) – omission of important details Count 9 Accused: A & A services monétaires inc. and Sy Veng Chun Dates: between 1 October 2000 and 2 April 2002 Place: Québec Offence: Income Tax Act , s. 239(1) ( c ), s. 239(2) – omission of important details Count 10 Accused: A & A services monétaires inc. and Sy Veng Chun Dates: between 1 October 2001 and 31 March 2003 Place: Québec Offence: Income Tax Act , s. 239(1) ( c ), s. 239(2) – omission of important details Count 11 Accused: A & A services monétaires inc. and Sy Veng Chun Dates: between 1 October 2001 and 31 March 2003 Place: Québec Offence: Income Tax Act , s. 239(1) ( c ), s. 239(2) – omission of important details Count 12

Accused: Peng Heng Or Gold Inc. and Leng Ky Lech Dates: between 1 October 2001 and 31 March 2003 Place: Québec Offence: Income Tax Act , s. 239(1) ( c ), s. 239(2) – omission of important details Count 13 Accused: Peng Heng Or Gold Inc., A & A services monétaires inc., Sy Veng Chun and Leng Ky Lech Dates: between 1 January and 15 November 2005 Place: Québec Offence: Income Tax Act , s. 239(1) ( d ), s. 239(2) – aiding tax evasion [ 13 ] The design of the Indictment reveals elements of redundancy. This is not a legal defect but it affects the analysis of the case.

Three examples of redundancy will suffice at this juncture to illustrate the point. First, there is redundancy within counts. This is especially evident in relation to Counts 1 – 4 (inclusive). Each of these counts is framed in a manner that would allow evidence of multiple transactions of a single alleged offence undertaken in a variety of ways over the period particularised in the count. In this way the count quite properly allows for internal redundancy with respect to the whole of the evidence on that count. [ 14 ] This point requires amplification, especially as regards Count 4.

If a person is in possession of proceeds of drug crimes supplied by another in 2002 (and the period specified in the count ends in 2002), the acquisition of further proceeds in 2003 from the same source or from his or her own laundering activities in 2003 would allow a new and distinct count of possession because it constitutes a separate transaction. [ 15 ] Second, there is redundancy between counts. The clearest illustration of this may be seen in the relation between Counts 1 and 3. All three refer to the same accused. Counts 1 and 3 specify the same period of time.

If laundering the proceeds of drug crimes includes the possession of those proceeds, there is a redundancy between Counts 1 and 3 and, having regard to the specified dates, a partial redundancy between Counts 2 and 4. [ 16 ] Third, there is a possibility of redundancy between counts in Part One and Part Two. This does not imply that the factual and legal nexus of the offences charged in the two parts is the same.

In the presentation of this case it means the theory of the charges in Part Two is effectively the mirror of the theory of the case in Part One: that in the commission of the offences in Part One the accused also committed the offences in Part Two. Admissions [ 17 ] The parties made many formal admissions and reference to them will be made as necessary. [10] Interlocutory rulings [ 18 ] Several interlocutory rulings were made in the course of the trial and reference will be made to them as necessary.

Burden of proof [ 19 ] I note some basic principles. [ 20 ] The presumption of innocence ensures that no person may be found guilty unless the offence charged is proved beyond reasonable doubt.

Whether a reasonable doubt arises from the prosecution evidence, evidence led by the defence or an assessment of all of the evidence taken together, the accused must be acquitted if there remains a reasonable doubt on the whole of the evidence at the end of the case. [11] In this respect the credibility of a witness is of central importance because if the testimony of a witness raises a reasonable doubt as to its reliability, that weakness might also raise a reasonable doubt with respect to an essential element of the offence or a matter of defence.

If there is a conflict in the evidence, the trier of fact is not obliged to make a choice in favour of one version or another. [12] This might well be the result in a given case if the judge is led to this conclusion by the force of the evidence, but conclusions of fact must always reflect an examination and evaluation of the whole of the evidence. [ 21 ] The Supreme Court has given guidance on these principles in W.(D.) [13] The Court has reiterated that the presumption of innocence and the assessment of evidence, including the credibility of witnesses, are not matters of form but of substance. [14] Whether a judge follows textually and schematically the criteria set out in W.(D.) , or assesses them in some other manner, the presumption of innocence requires that there be a careful evaluation of all the evidence before the court determines whether the charge is proved or whether there remains a reasonable doubt. [ 22 ] W.(D.) does not impose a mechanical formula to be followed in the evaluation of evidence.

The Supreme Court has repeated this caution on several occasions. [15] This jurisprudence reminds us that the presumption of innocence requires the prosecution to prove the guilt of the accused beyond reasonable doubt. It lies with the trier of fact at the end of the trial to examine all of the evidence

presented before the court and to evaluate it so as to determine whether the prosecution has discharged its burden. The accused has nothing to prove and the prosecution is not required to prove guilt beyond all possible doubt but beyond all reasonable doubt. [16] If there remains a reasonable doubt at the end of the trial and after a careful examination of all of the evidence, including questions of credibility, the accused must be acquitted. It does not matter whether a reasonable doubt touches a matter of defence or an element of the offence.

If a reasonable doubt subsists after an assessment of all the evidence, an acquittal is required. [ 23 ] To be sure, there is no reversal of the onus or any other qualification of these general principles in this case. Here the accused have elected not to call evidence. It is their position that the prosecution has failed to prove its case. Once again, if on the whole of the evidence at the end of the case there remains a reasonable doubt with respect to any essential element in each count there must be an acquittal on that count. It does not matter what the source of that doubt might be.

It could be an absence of evidence or the weakness of evidence, including any question of credibility in the testimony of a witness. These principles apply with equal force in a case such as this where the accused called no evidence. Proving the indictment [ 24 ] The burden on the prosecution is to prove the indictment. The scope of this burden is threefold. First, the prosecution must prove the elements of the offence charged as defined in law. Second, it must prove any necessary averments particularised in each count. [17] Third, it must disprove any substantive matter of defence raised by the evidence.

Unless a fact or submission falls within one of these three points, the prosecution is not otherwise bound to prove every fact adduced or every submission advanced. [18] [ 25 ] These rules of pleading have further implications. The prosecution is not obliged to particularise a single transaction in each count. It might choose to do so according to the nature of the case but it may also choose to particularise a continuing transaction in a case involving more than one instance of the same alleged conduct.

In this case the prosecution has elected to prefer some counts that refer to a single transaction, as in Counts 5, 6 and 7. It has also elected to preferred some counts that might involve multiple transactions over an extended period of time, as is seen in Counts 1, 2, 3, 4 and 13.

With respect to these four counts, for example, the prosecution bears the burden to prove beyond reasonable doubt the elements of money-laundering, as particularised in the count, on at least one occasion between the specified dates. [19] It has attempted to prove much more but it does not mean that if the prosecution should fail to prove one alleged instance in a series of continuing transactions it has failed to prove the count. It will fail to prove the count, and an acquittal will follow, if it fails to prove the constituent elements of a single instance of the offence charged as particularised in the count.

With respect to Counts 8, 9, 10, 11 and 12, each count specifies a relevant period of time and particularises the alleged omission. Accordingly, that omission must be proved. [ 26 ] It does not follow, however, that a scrupulous assessment of the whole of the evidence requires a microscopic examination of every item of fact or every submission that is raised in respect of each count. Some of the evidence presented in a case – and this case in particular – might be unnecessary for a determination of the outcome in respect of a count or counts.

I have considered all of the evidence but I will not review all the evidence and submissions presented from the beginning to the end of the trial. [20] I will assess in sequence the evidence relating to the counts in Part One and Part Two. I will identify the evidence that is sufficient to determine the case on each count. [21] I should note that some of the evidence presented in this case, such as the testimony of Gary Clement and Kelly Ross, was not necessary to determine the outcome.

Part One Proceeds of drug crimes Counts 1 and 2: laundering [ 27 ] Having regard to the elements of the offences and the drafting of the charges, an examination of Counts 1 and 2 requires consideration of the following five questions. Is there proof beyond reasonable doubt that the accused received money or other proceeds? If yes, were those proceeds derived in whole or in part, directly or indirectly, from the commission of drug crimes in Canada? If yes, did the accused use , send or transport those proceeds? If yes, did the accused intend to convert or conceal those proceeds?

If yes, did they do so while knowing, believing or being wilfully blind that those proceeds were derived from the commission in Canada of drug crimes? The first three questions concern the actus reus of the offences alleged in Counts 1 and 2; the last two concern the element of fault or mens rea . [ 28 ] Before turning to the case on Counts 1 and 2 it is essential to refer to the position of the defence in final submissions.

Counsel for the defence, in response to direct questions, acknowledged in effect that the answer to each of the first three questions is yes . [22] More specifically, the answers acknowledge that money received by the accused from Daniel Muir and others, and transferred to Cambodia, were proceeds of drug crimes in Canada. The only qualifications made by the defence on these points were that not all of those monies were proceeds of drug crimes and that they had not been proved to be Muir's monies.

These points will be addressed below but in substance they are immaterial in responding to the five questions posed above. Notwithstanding some inconsistencies and apparent contradictions in the defence submissions, [23] I repeat that the answer to the first three questions is yes. As will be seen below, this is proved beyond reasonable doubt by the evidence. Daniel Muir

[ 29 ] By 2000 Daniel Muir was well established in the drug trade. He had previously been convicted for major crimes of this nature but continued on a large scale. There is direct evidence not only of Mr. Muir’s involvement in these activities but that the scale of these activities could be measured in tens of millions of dollars. Bernard Mondou testified that he was actively involved in drug crimes with Mr. Muir at the relevant times. [24] He served a prison sentence for these activities.

His evidence was in no way contradicted and there is no basis on which to impugn his credibility or the reliability of his testimony when he affirms that Daniel Muir was actively involved in drug crimes. [ 30 ] Mr. Muir did not file income-tax returns between 1999 and 2004 and thus there is no such formal declaration by him of his involvement in drug crimes or the volume of income derived by him from this activity. He had no other known employment or profitable and legitimate activity.

Several witnesses close to him testified that they were not aware of his employment and suspected that he was still involved in drugs. [25] These persons and others, however, were aware that Mr. Muir had large quantities of cash and other valuables, such as gold and precious stones. They were also aware that he lived and shared, especially with them, an extravagant mode of living.

He frequented expensive restaurants and travelled extensively. [26] He bought luxury automobiles, for himself and those close to him, but typically in the names of others and in the guise of a lease. [27] He bought items of movable property that were sumptuous. [28] He purchased several immovable properties. And he provided financial support for several persons, including Nathalie Jean, Suzanne P épin and Karine Descôteaux. [29] Mr. Muir conducted virtually all of his financial transactions in cash rather than through chartered banks, credit unions or credit cards.

Before 2000 he occasionally set up shell companies. [30] By 2000 his transactions were conducted entirely by cash or by means of prête-noms . [31] As for cash, the evidence establishes that despite his extravagant style of life he had massive amounts that he would physically hide in his places of residence. [ 31 ] Daniel Muir was assassinated in Montréal in February 2004. The accused [ 32 ] The identity of the accused has already been noted. [32] Mr. Chun and Ms.

Lech operated their respective companies from the same office [33] and each participated with the other in the daily activities of those companies, which themselves did business with each other. Thus as a practical matter the four accused worked together in an integrated manner. In addition the accused companies retained the same accounting services. [34] The accounting practices conducted by the accused were the same and conducted in a coordinated manner.

As will be seen below in further detail, there is evidence that the accounting practices of the two companies were inaccurate and misleading, not least for two reasons: maintenance of official and “unofficial records,” or no records, and direction by Mr. Chun and Ms. Lech to a passive and uninquiring accountant. [ 33 ] For the tax years 2000 - 2003 (inclusive) Mr. Chun and Ms. Lech declared income of $272,550.00.

As no return was filed for 2004, an estimate of total income for 2000 – 2004 (inclusive) was given at $487,631.00. [35] [ 34 ] The evidence establishes that before the alleged events the accused were experienced in the business of a currency exchange. [36] That evidence makes clear that they were aware of the regulations governing this sort of enterprise, including obligations imposed by law with respect to the recording and reporting of transactions. [37] The evidence also establishes that they had had previous relations with authorities when questions were raised about the rigour with which they observed regulatory obligations.

In particular they were expressly cautioned about dealing with money derived from drug crimes. This evidence in no way constitutes evidence of similar facts but it is evidence of the knowledge, experience and understanding that the accused had of their business. [ 35 ] The exchange of currency was not the sole activity of the accused. It extended to transactions in precious stones, precious metals and jewellery. Among other points, the evidence establishes in this regard that Ms. Lech had extensive experience in the diamond trade. [38] But apart from activities in Montréal the evidence also establishes that Mr.

Chun and Ms. Lech had experience as bankers in Cambodia, [39] and that they wished to resume such activities. And they needed cash to do so. [ 36 ] But the flow and scale of business at the companies of the accused had diminished by 2000. Ms. Lech disclosed that they had previously had many clients but that “the dogs bit them.” [40] This was explained by her to mean that those persons had been arrested by police. Meeting and agreement [ 37 ] Mr. Muir confided to Nathalie Jean that he had found a solution and a partner for dealing with his cash. [41] Ms.

Lech confided to Chen Dara that she had found a rich client. [42] [ 38 ] Early in 2000 Mr. Chun and Ms. Lech met with Daniel Muir at a restaurant in Montréal. Suzanne Pépin was present at this meeting. The evidence establishes not only that this meeting occurred but that an agreement was reached among the accused and Daniel Muir. In its simplest terms it was agreed that Mr. Muir would supply the accused with millions of dollars in Canadian cash in exchange for services by the accused and the payment of interest to Mr. Muir by them in the amount of $80,000.00 each month. Ms. Lech said that she could exchange Mr.

Muir’s Canadian cash for American cash if he needed it. Ms. Lech would take care of business in Montréal and Mr. Chun would transport the cash personally to the bank that the accused intended to open in Phnom Penh, or that it could be transferred otherwise. [43] [ 39 ] The evidence leaves no doubt that this meeting took place and that an agreement in these general terms was concluded. This is established in the testimony of Suzanne Pépin. Her testimony is credible and reliable, not least because much of what she had to say was unflattering (to put it lightly) to Mr. Muir and to herself.

The essential term in the agreement - the supply of millions by Mr. Muir - was confirmed by Mr. Muir himself in statements he made to Nathalie Jean and Suzanne Pépin. [44] Indeed, in a later statement made to Nathalie Jean, Mr. Muir complains that Ms. Lech is no longer paying him interest. [45] As the opening of a new bank by the accused in Phnom Penh was also an element of the agreement, there is clear evidence that is occurred with the opening by them of Peng Heng Bank SME. [46] [ 40 ] Further attention will be given below to some details of the financial services provided by the accused to Mr. Muir and others.

Before entering upon the substance of Counts 1 and 2 it is important to deal with another preliminary point and to set it aside from the

remainder of these reasons. [ 41 ] The accused deny knowing Daniel Muir. [47] Apart from the evidence of the meeting and agreement early in 2000, which I accept, there is abundant evidence of extensive relations between the accused and Mr. Muir. Several witnesses confirm that they dined in restaurants in the company of the accused and Mr. Muir. [48] Mr. Muir was observed by police at the office of the accused. [49] He was observed there alone and in the company of others. [50] Ms. Lech was seen on several occasions at various residences of Mr.

Muir. [51] A daughter of the accused travelled to Europe in the company of Karine Descôteaux (Mr. Muir's conjointe ) on the airline points of Mr. Chun. [52] The accused exchanged movable property with Daniel Muir. [53] Plumbing costs incurred by Mr. Muir were paid by a bank transfer from Cambodia that was ordered by Ms. Lech. [54] Legal costs of Mr. Muir were paid by a numbered company of which Ms. Lech was the administrator. [55] Chen Dara provided services to both Ms. Lech and Daniel Muir and was often together with them. [56] Ms. Lech was presented by Mr.

Muir as his banker for the property on Béique and signed as owner. [57] In short, the accused did know Daniel Muir. Supply [ 42 ] Following the agreement Daniel Muir began to supply the accused with large amounts of cash. Sometimes he would deliver cash to their place of business. Sometimes the accused, typically Ms. Lech, would collect boxes of cash from Mr. Muir’s home. [58] Apart from observations of Mr. Muir’s visits to the office of the accused on St-Laurent, there was direct evidence of witnesses who saw Mr. Muir preparing boxes of cash for delivery and direct evidence of witnesses who saw Ms.

Lech collecting them. The probative value of this evidence is compelling not only by virtue of its variety and volume but its internal consistency. Although the defence questioned the reliability of some of the evidence on this point, in particular the testimony of Suzanne Pépin, I am persuaded that the accused received from Mr. Muir large amounts of cash in furtherance of the agreement reached early in 2000. Although there is no precise amount in evidence, there is evidence that the amounts exceeded $100,000,000.00. [59] Drug crimes [ 43 ] Was this cash supplied to the accused by Mr.

Muir the proceeds of drug crimes in Canada? Before turning to the evidence on this question it should be noted that the jurisprudence makes clear that the prosecution is not bound to prove a specific drug crime; nor a fortiori is it bound to prove the circumstances of any particular drug crime. [60] In this case there is abundant evidence that Mr. Muir, Mr. Mondou and Mr. Beauregard, and others, were engaged in the importation, exportation and trafficking of drugs in Canada. [ 44 ] At the relevant times specified in the indictment, and for some time before, Mr.

Muir had increasingly large quantities of cash in his possession and used it for virtually all expenses. He spent money extravagantly. Those who were close to him knew of no legitimate employment that would explain this wealth or this lifestyle and several witnesses testified that they suspected the source of his cash was in drug offences. [61] As already noted, Mr. Muir had previous convictions for trafficking in drugs, although these facts in no way constitute evidence of similar facts in respect of the accused. Apart from the convictions, there was evidence that Mr.

Muir had acquaintances in the world of drug trafficking before 2000. [ 45 ] Bernard Mondou testified that at the material times in the indictment he was actively involved with Mr. Muir in the drug trade. [62] In Canada and abroad he was engaged with Mr. Muir in arranging for the importation of narcotics. He testified that he went on many occasions to the office of the accused, to exchange money derived by him and Mr. Muir from trafficking in drugs. Mr. Mondou testified that he exchanged $10,000,000.00 for Mr. Muir to finance one transaction. There is no reason to impugn the credibility of Mr.

Mondou as a witness or the reliability of his testimony. He has served a sentence for his involvement with Mr. Muir and he has no interest to manipulate evidence or fabricate testimony, especially testimony that in broad terms is contrary to his interest. The evidence of Mr. Mondou and the other witnesses leads me, without hesitation, to the conclusion that the money supplied to the accused by Mr. Muir was in whole or in part, directly or indirectly, derived from the commission of drug offences. [63] Mr.

Mondou's testimony reinforces other evidence, notably Muir's statement to Suzanne Pépin, that many millions of dollars were produced by Mr. Muir's involvement in drug crimes. [ 46 ] Richard Beauregard testified that he exchanged approximately $10,000,000.00US at the office of the accused. [64] This money was derived from the exportation of marijuana to the United States from Canada. Mr. Beauregard was convicted of this offence and of money-laundering.

He explained in his testimony that he delivered the cash to the accused in bags that smelled strongly of marijuana and that he would receive cash from them in different bags due to the odour of marijuana. He said also Mr. Chun had asked him whether he could procure a firearm but Mr. Beauregard replied that he was involved only with marijuana – " le vert ." Ms. Lech asked him to park his car at some distance from their office and to leave by a rear door because she was apparently concerned that Mr.

Beauregard might have been under surveillance. [ 47 ] Although the evidence proves beyond reasonable doubt innumerable transactions between the accused, and Mr. Muir, Mr. Mondou and Mr. Beauregard, there are virtually no records of the transactions in their accounting documents. [65] Uses, sends or transports [ 48 ] Having concluded that the accused received from Mr. Muir and others cash derived from drug offences in Canada, the next question is whether they did anything with those proceeds that would constitute laundering of them.

In Counts 1 and 2 the prosecution has not particularised all of the forms of laundering that fall within the terms of the legislation. The prosecution alleges that the accused used , sent or transported proceeds of drug crimes in Canada. [ 49 ] In the agreement between the accused and Daniel Muir in 2000 the principal objective was for the accused to secure Mr. Muir's money by transferring it offshore to Cambodia. I will address this issue more generally below. At this point, however, I wish to review briefly some of the services and transactions performed by the accused in the furtherance of this agreement.

Some have already been mentioned, including the payment of plumbing costs and legal fees through entities controlled by the accused. [66] I have also already mentioned that the accused acted as prête-noms for Mr. Muir in relation to various items of movable property and Ms. Lech acted as prête-nom for Mr. Muir in the purchase of the property at 1093 Béique in St-Hilaire. [67]

[ 50 ] Beginning in June 2000 the accused sent bank drafts to Nathalie Jean, then living in Mexico in properties bought by Daniel Muir, for her expenses and those of their children. [68] Approximately $285,000.00US was transferred, of which A & A services monétaires inc. transferred $250,000.00US and Peng Heng Or Gold Inc. transferred $35,000.00. [69] Nathalie Jean in no way knew or did business with any of the accused and thus did not request them to arrange these bank transfers. [70] There is no record of these transactions in the accounting records of the two accused companies but receipts for the transactions were among the documents seized in 2004 at the residence of Mr.

Chun and Ms. Lech. These documents show transactions between the corporate accused and another exchange bureau, Cambridge, from which the funds were transferred by draft to Nathalie Jean in Mexico. [71] [ 51 ] Another example is the seizure of the cash ($600,000.00US) from Mr. Chun on 12 October 2002. [72] Among the terms of the agreement in 2000 it was understood that Mr. Chun would transport Mr. Muir's cash to Cambodia in American funds. The accused claimed that this amount was for reimbursement of a loan from a relative that had been made some years before in the context of an immigrant-investor programme.

There is no documentary record of such a loan or of an immigrant investor as named by the accused. Moreover, according to the accounting records of A & A services monétaires inc., the company did not have the amount found in Mr. Chun's possession in its inventory. [73] These circumstances fully justify the inference that the money seized from Mr. Chun was converted money [74] received by the accused in whole or in part from Mr. Muir and transported by Mr.

Chun in furtherance of the agreement of 2000. [ 52 ] The prosecution submits that in order to transfer proceeds received from Daniel Muir and others to Cambodia in American funds the accused performed a variety of intermediate operations that constitute the use of proceeds but for which there is little trace in their accounting. These operations sometimes required the conversion of Canadian currency into American currency and sometimes the conversion of American currency.

Before turning to this activity it must be remembered that the evidence leaves no doubt that the accused were aware of the regulatory obligations imposed upon them for the proper transaction of currency exchanges. [75] [ 53 ] The accused conducted transactions worth millions of dollars with other exchange bureaux.

In the period covered by Counts 1 and 2 the two accused companies sold $23,063,340.00US to Calforex and received in exchange $35,114,421.00CDN, of which $28,141,159.00CDN was in cash. [76] There is no indication in the accounting records of the accused companies that explains the volume of transactions or the source of funds used to sell Canadian cash to Calforex.

Cheques worth approximately half of the amount of Canadian cash received from Calforex were received from various clothing companies by Peng Heng Or Gold Inc. and these cheques were in turn deposited to the credit of the accused company in its bank account. [77] The evidence discloses that there were many such clothing companies and that none performed any regular function other than the issuance of cheques to Peng Heng Or Gold Inc. [78] The evidence discloses further that between 1 October 1999 and 30 September 2003 $35,391,129.00CDN was withdrawn from the bank accounts of the two accused companies, of which $19,250,517.00 was sold to Cambridge in exchange for $12,238,454.00US.

From this amount millions of dollars were transferred to Cambodia. [79] The accounts of the accused companies reveal no record to explain or justify the transactions with Calforex or Cambridge, either with respect to the origin of the funds sold to Calforex or the destination of the funds bought from Cambridge. [80] [ 54 ] The absence of accounting records for these various transactions and the presence of the agreement between the accused and Daniel Muir lead ineluctably to the conclusion that the various transactions summarised in the preceding paragraphs were arranged and executed in furtherance of the agreement reached in 2000.

It will be noted that these transactions involve multiple instances of using , sending or transporting proceeds of drug crimes in Canada. [ 55 ] To repeat, Richard Beauregard testified that between 1999 and June 2002 he exchanged with the accused approximately $10,000,000.00 dollars in American funds into Canadian funds. The money was obtained in the exportation of marijuana from Canada to the United States. He said that he brought amounts between $200,000.00 and $700,000.00 scattered in sports bags that smelled strongly of marijuana. Ms.

Lech asked him to park his car at some distance from their office and to exit by the rear door as she was fearful that he was under surveillance. Mr. Beauregard testified that Mr. Chun asked him whether he could obtain a firearm and Mr. Beauregard replied that he did not deal in arms but in " le vert " – marijuana. [ 56 ] Mr. Chun and Ms. Lech denied any knowledge of Richard Beauregard, although Ms. Lech eventually acknowledged that she had done business with him. [81] When dealing with Mr. Chun or Ms. Lech Mr. Beauregard was not asked for identification. Once, in dealing with an employee Mr.

Beauregard was asked for identification and later assured that the details would not be kept. [82] With two exceptions there were no receipts confirming transactions with Mr. Beauregard but he said that the two in his name did not correspond to transactions that he had actually made. [ 57 ] I accept the testimony of Mr. Beauregard that he converted American funds into Canadian funds with the accused in the period described. His testimony was fluid and far from self-serving. It was both credible and reliable.

On its own it is sufficient to establish beyond reasonable doubt the offences charged in Counts 1 and 2. [83] [ 58 ] There was extensive evidence concerning operations involving the accused companies purportedly involved in the manufacture of clothing. These companies were shown to be shells managed by persons with little or no experience and the companies themselves appeared to perform little or no work. They issued many cheques to the order of Peng Heng Or Gold Inc.

The theory of the prosecution is that Canadian funds, obtained in whole or in part from Daniel Muir, were deposited to the credit of these companies in exchange for cheques payable to the accused. [84] This conversion into cheques would further obscure the origin and nature of the funds, and thus allow the absorption of the funds into the banking system. With Canadian funds obtained upon the deposit of the cheques from the clothing companies, the accused further converted funds into American funds through Cambridge that were transported or otherwise transferred to Cambodia.

The accounting of the accused companies provides no records of these transactions. [ 59 ] In short, the evidence proves beyond reasonable doubt multiple instances of using, sending and transporting proceeds of drug crimes in Canada. Intention to convert or conceal [ 60 ] Did the accused intend to convert or conceal proceeds of drug crime? These terms are disjunctive. Of course, there might be

no intent to do either and in such a case the case for the prosecution would fail. There might be an intention to convert or to conceal, or the intention might be to convert and to conceal. [85] [ 61 ] The services provided to Mr. Muir by the accused extended over a lengthy period and took many forms. The most obvious are the exchange of currency or the purchase of bank drafts, which are by definition deliberate acts of conversion. It is also apparent in the purchase of immovable and movable property because one form of proceeds is effectively transformed into another, derivative form.

The same can be said of the supply of cash in exchange for commercial cheques or the purchase of precious stones or metals with the proceeds of drug crimes in Canada. As I have concluded that Mr. Muir, Mr. Mondou and Mr. Beauregard supplied the accused with proceeds of this nature, I conclude as well that the evidence of conversion and concealment is abundant. Despite the large amounts of cash supplied to the accused by Mr. Muir (and others), there is little trace of it their accounts of transactions with them, thus giving rise to an inference of an intention to conceal the proceeds.

There are numerous instances in which shell entities or straw names were used to complete transactions by the accused on Mr. Muir’s behalf. The purpose of the agreement between the accused and Mr. Muir was to provide him with various services that would allow him to preserve his wealth by changing its form and disguising its origins. [ 62 ] I repeat that in this case the instances in which the accused are alleged to have used , sent or transported proceeds of drug crime in Canada are, within the periods specified in the counts, not only numerous but incalculable.

The evidence is copious and, once the elements of the actus reus are proved, this element of an intention to convert or conceal could be proved many times. If the prosecution could establish only one instance of such conduct, that evidence would prove the count as surely as sufficient evidence of multiple instances. [86] Knowledge, wilful blindness or belief [ 63 ] The crux of the defence case is that the accused were not aware that the money received from Mr. Muir was derived in whole or in part, directly or indirectly, from the commission of drug offences in Canada.

This element of awareness is, of course, an essential element that can be established by proof beyond reasonable doubt that the accused knew Mr. Muir was supplying them with proceeds of drug crimes in Canada; that they were wilfully blind to the origin of the money in drugs crimes in Canada; or that they believed he was doing so. If the prosecution fails to prove at least one of these elements, there must be an acquittal. [ 64 ] For the purposes of determining guilt on Counts 1 and 2 these three alternative forms of awareness are normatively equivalent. One is necessary but any one will suffice.

This requires a brief parenthesis about a point of substantive law. There is no dispute that all three forms of fault or mens rea require proof of a degree of subjective awareness, as distinct from some form of objective fault such as criminal negligence. But these three are substantively equivalent but not the same. In a trial with a jury the trial judge could invite the jury to consider all three. If the jury finds the accused guilty there is no way to ascertain which form of fault was proved beyond reasonable doubt.

That latitude is not open in a trial without a jury precisely because the three forms of subjective awareness are not the same. [ 65 ] In the context of Counts 1 and 2 knowledge is subjective awareness of a fact that is, objectively, true. [87] Thus the accused could be found guilty on this ground only if they were, in fact, laundering proceeds of drug crimes in Canada and they were subjectively aware of that fact.

Wilful blindness, the normative equivalent of knowledge, [88] is a subjective awareness of circumstances that should alert a person to the truth of a fact that is accompanied by a deliberate refusal to confirm its existence.

Belief in this context is a subjective perception that a fact is true, whether or not it is objectively true. [89] [ 66 ] In the absence of a confession, or direct evidence of a similar nature, proof of any one of the three sufficient elements of awareness involves an inference from surrounding circumstances. [90] This inference in no way changes the requirement for proof of subjective awareness but consideration of the surrounding circumstances provides the basis on which to determine whether the evidence provides a sufficient premise to infer subjective awareness.

The submission of the defence in this case is that the evidence is not sufficient to support an inference, beyond reasonable doubt, that the accused were subjectively aware that they were laundering proceeds of drug crime in Canada. [ 67 ] Before the events alleged in Counts 1 and 2, the accused were experienced in the operation of a currency exchange business. They were knowledgeable about the regulations governing this form of commercial activity and how those regulations have evolved.

In the decade preceding the events charged here the accused were the subject of investigation for non-compliance with the regulations. They were reminded of them and they were specifically cautioned about doing business involving persons connected with drug crime. This evidence is certainly not evidence of similar facts but it is circumstantial evidence that the accused were aware of their obligations under the regulations for the conduct of appropriate transactions and the nature of prohibited transactions.

The evidence to this effect is clear and confirmed by the accused in statements made by them in the course of this investigation. [91] [ 68 ] After the meeting with Mr. Muir early in 2000, and the completion of their agreement, the accused met with relative frequency with Mr. Muir in various locations. Their daughter travelled to Europe with the conjointe of Mr. Muir on the airline points in Mr. Chun’s name. They were plainly aware of the very large amounts of cash that Mr. Muir supplied to them and they were aware of his lifestyle, including cash expenditures in large amounts. They acted as fronts for Mr.

Muir in the acquisition of property by lending their name to purchases actually made by him. They conducted extensive and elaborate transactions on his behalf that were expressly designed to convert and/or conceal the source of his money. These transactions were not recorded, with only a few exceptions, thus reinforcing the inference that the services provided by them were intended to convert or conceal the origins of the proceeds they received from him.

Moreover, apart from failures to comply with the governing regulations, the accused maintained accounting records that did not accurately reflect the transactions they conducted for Mr. Muir. Then, although they could not very easily deny knowledge of the governing regulations, they deny any knowledge of Mr. Muir or their transactions with him. Mr. Chun also denied any transactions with Mr. Beauregard, as did Ms. Lech until she eventually agreed that she had exchanged money for him. [ 69 ] The sheer volume of cash received by the accused from Mr.

Muir compels the inference, beyond reasonable doubt, that it was proceeds of drug crime. [92] I exclude here any consideration whether the accused were aware of the source of these proceeds in drug crime on the basis of belief. It was drug money and thus the only question on this point is whether they had actual knowledge of this fact or were wilfully blind to it – or neither. The factors in the preceding paragraph, taken with the principle in section 265(4) and the so-

called common-sense inference, persuade me beyond reasonable doubt that the accused knew that Mr. Muir was supplying them with proceeds of drug crime and that the services they provided for him involved laundering such proceeds. [ 70 ] As previously mentioned, Bernard Mondou testified that he went to the office of the accused to launder proceeds of his activities with Daniel Muir. He did so and, with only minor exception, without having to comply with the governing regulations concerning identification. His evidence not only confirms the nature of Mr. Muir’s activities.

It also provides direct evidence that the accused were to receive willing to take proceeds of drug crime from him. [ 71 ] Ms. Lech informed Chen Dara that the “dogs had bitten” most of her previous clients but that she would have a new client who would help her business. [93] That person was Daniel Muir. In the totality of these circumstances the evidence compels me to infer that the accused used, sent or transported with the intention to to take convert or conceal and with the knowledge that it was the proceeds of drug crimes in Canada. [ 72 ] To the same effect is the evidence of Richard Beauregard.

He testified that he delivered quantities of cash in sports bags to the office of the accused and laundered it without compliance with the regulations. He noted that in an exchange with Mr. Chun he (Mr. Beauregard) had said that he was not involved with firearms but with “ le vert ” (cannabis). Counts 3 – 6: possession of proceeds [ 73 ] Counts 3 – 6 (inclusive) charge all four accused with possession of proceeds of drug crimes but they are not framed identically. Counts 3 and 4 charge all of the accused with possession between 1 January 2000 and 15 November 2004 but do not particularise any object or objects.

Thus I must determine whether the evidence proves possession of any proceeds of drug crimes in the relevant period. Counts 5 and 6 charge Ms. Lech with possession of two immovable properties and the prosecution bears the burden to prove the two counts thus particularised. Count 3 [ 74 ] Count 3 refers to the same period of time as Counts 1 and 2. It is axiomatic that a person cannot launder proceeds of drug crimes without having possession of them because such actions presuppose knowledge and control of the proceeds being laundered.

It is also axiomatic that a person can possess proceeds of drug crimes without laundering them. In this case I am satisfied beyond reasonable doubt that the evidence proves laundering by the accused of the proceeds of drug crimes committed by Daniel Muir and others, notably Mondou and Beauregard. I am therefore also satisfied that the accused were in possession of the proceeds they laundered and in accordance with the same principles concerning possession found elsewhere in these reasons.

These conclusions relate to the periods specified in Counts 1, 2 and 3. [ 75 ] On this basis I will enter a finding of guilt on Count 3, subject to further submissions from the parties concerning the application of the rule against multiple convictions. [ 76 ] With respect to Count 3, there remains the question whether there is evidence that proves possession by the accused of proceeds of drug crimes that were not laundered in the relevant period.

In view of the foregoing conclusions it is not useful to pursue this question. [ 77 ] In the foregoing discussion of Counts 1 and 2 I concluded that the proceeds laundered by the accused were derived from drug crimes committed in Canada. It is unnecessary therefore to reconsider the question of their provenance in relation to Count 3. It is also unnecessary to embark on a lengthy consideration of the forms of possession involved because the evidence proves actual, joint and constructive possession.

The four accused effectively operated as a single enterprise and in this context it is plain to see at various stages actual, joint and constructive possession in the furtherance of the agreement with Mr. Muir and in the transactions conducted with Mr. Mondou and Mr. Beauregard. Some of those transactions were personally conducted by Mr. Chun and some by Ms.

Lech but in the entire sequence of events each had knowledge and a measure of control over the proceeds even if they were not each in actual physical possession at all times. [94] Count 4 [ 78 ] As noted in previous comments, Count 4 charges a generalised offence of possession of proceeds of drug crimes, without particularising any object or objects, between 1 February 2002 and 15 November 2004. The prosecution submits that the evidence proves this offence in relation to several items: The $600,000.00 in American cash seized from Mr.

Chun on 12 October 2012 at Trudeau Airport; The Peng Heng SME Bank in Cambodia; Precious stones, gold, diamonds and jewellery seized at the office of the accused on 9 November 2004; Amounts of American cash that correspond to amounts transferred to Cambodia for the period specified in Count 4; Amounts of American cash that correspond to the amounts transferred to various diamond dealers or jewellers for the period specified in Count 4; $10,000,000.00 in American cash that corresponds to the amount exchanged by Richard Beauregard; $10,000,000.00 in American cash that corresponds to the amounts transferred to Bernard Mondou for Daniel Muir;

$10,000.00 in American cash that corresponds to the amount exchanged by Bernard Mondou for personal use; and Amounts in Canadian cash that correspond to transactions found in the accounting of the accused corporations with respect to transactions with Roger Ouellette, Raymond Millette and Moise Talamas. I repeat that to prove Count 4 the prosecution must prove at least one instance of the offence but need not prove all alleged instances. For this reason I do not propose to examine every item of evidence relevant to this count. [ 79 ] In the arrangement between Mr. Chun and Ms.

Lech and Daniel Muir in 2000 it was agreed that Mr. Chun would personally transport Mr. Muir’s cash to Cambodia. And indeed the evidence shows that Mr. Chun made several trips to Cambodia between May 2000 and October 2002. [95] It was also understood that the accused would open a bank in Phnom Penh, at least in good part on the basis of Mr. Muir’s money. As has been seen, in the fulfilment of this arrangement Mr. Muir continued to supply money to the accused. [ 80 ] The evidence proves beyond reasonable doubt that the $600,000.00 in American cash seized from Mr.

Chun was being transported by him in continuing fulfillment of the arrangement with Mr. Muir. Strictly speaking, this means that Mr. Chun was not only in possession of Mr. Muir’s proceeds from drug crimes but that he was in possession of proceeds that the accused had created by laundering Mr. Muir’s money. It does not matter whether every penny in the amount of $600,000.00 was Mr. Muir’s money. There is no reasonable doubt that some, most or all of that amount were proceeds of Mr. Muir’s involvement in drug crimes.

As for the provenance of that cash, to repeat, there is no doubt that the accused took possession of it in the continuation of their arrangement with Mr. Muir. This is confirmed in a statement by Mr. Muir in which he said to Suzanne Pépin that Mr. Chun was arrested with $600,000.00US that he had just given to Ms. Lech. [96] [ 81 ] At the moment of its seizure at Trudeau Airport Mr. Chun had actual possession of the cash and, as the directing officer of A & A services monétaires inc., it too had actual possession of that cash. Possession of the same cash that was seized may be attributed as joint possession to Ms.

Lech and Peng Heng Or Gold Inc. Ms. Lech typically received Mr. Muir’s cash and with her husband and the two companies transferred it or performed other financial transactions with it. All of this was done in compliance with the agreement of 2000. [ 82 ] The accused claimed that the cash seized at the airport was for repayment of a loan contracted in Cambodia with Ms. Keo Kry some years earlier. [97] At the time of his arrest he produced a receipt from A & A services monétaires inc., completed by him, confirming his possession of the cash. [98] Mr.

Chun told investigators that the cash had been withdrawn from a safe in Montréal and not a bank. (The evidence shows that their possession of this amount in American cash in inventory is not supported by the accounts. [99] ) Ms. Lech in a statement [100] also said that the cash seized was to repay a loan from a distant relative. There is no other evidence of a loan amounting to $600,000.00 from Keo Kry. The only evidence to account for the cash in Mr. Chun’s possession was the receipt prepared by the accused themselves. Moreover, despite the statements by Mr. Chun and Ms. Lech, Chen Dara testified that Ms.

Lech told him she had prepared a false document to account for the cash that was seized. [101] [ 83 ] Also in accordance with the agreement in 2000 the Peng Heng SME Bank opened in Phnom Penh in 2001 with Mr. Chun and Ms. Lech among the shareholders and administrators. The accused were in joint possession of the bank. This bank was thus the proceeds of drug crimes because it was derived in whole or in part, directly or indirectly, from the proceeds of drug crimes in Canada. [ 84 ] The seizure at the office of the accused on 9 November 2004 included precious stones, diamonds, gold and jewellery.

There can be no doubt that the accused were in actual and joint possession of these items. The accounting of the corporate accused provides no evidence that the companies had the means to acquire these items. Moreover, the accounting discloses no record for precious stones and metals seized. The evidence discloses that as part of the agreement of 2000 the accused could obtain diamonds, gold and other precious commodities with the use of Mr. Muir’s money. It also discloses that Mr. Muir was seen in the possession of diamonds. Whether the items seized on 9 November 2004 can all be traced to Mr.

Muir’s money is immaterial because it is clear that these items were derived in whole or part, directly or indirectly, from the commission of drug crimes in Canada. [ 85 ] The same must be said for amounts of American cash transferred to Cambodia and sent to diamond dealer and jewellers. The corporate accused did not have the means to conduct these transactions and there is no accounting for them in their books. Count 5 [ 86 ] Although Ms.

Lech claimed that she did not know Daniel Muir, the evidence proves beyond reasonable doubt not only that she did but that she was the nominal owner in his stead for the property on Béique. The evidence proves that Daniel Muir was the purchaser and occupier of this property and that she agreed to act as the nominal owner at his request, having been introduced in the negotiation and closing of the transaction as his "banker." [102] The evidence further establishes that the purchase was facilitated in part by the transfer of funds from Cambodia and in part by a hypothec registered in Ms. Lech's name.

She was the registered owner of that property and purported to rent it to the conjointe of Daniel Muir after a fortuitous and chance meeting near the property. [ 87 ] The theory of the prosecution concerning this count is that the money transferred from Cambodia was Daniel Muir's money that had been previously transferred to that country by the accused. If the accused claimed not to know Daniel Muir, and yet all of the evidence conclusively contradicts this claim, it is inconceivable why a stranger to Daniel Muir would act as the nominal owner of a property of which he was the true purchaser.

The only reasonable inference is that in the furtherance of their continuing arrangement, first concluded in 2000, Ms. Lech agreed to provide these various services to secure ownership of the property on Béique for the benefit of Mr. Muir. Not only she acted as a prête-nom in these transactions but it can only be reasonably inferred that the persons in Cambodia who purportedly transferred the funds to Montréal were themselves acting for Ms. Lech to facilitate the purchase of the property with proceeds of drug crime attributable, in whole or in part, directly or indirectly, to Daniel Muir.

It might also be noted that this conclusion compels a corollary, which is that in taking possession of Béique Ms. Lech also took possession of property that was itself the proceeds of her previous earlier activity in laundering the money supplied to her by Mr. Muir. Count 6

[ 88 ] A similar conclusion is compelled by the evidence in relation to the property at 4335, Claude-Henri Grignon in Ville St- Laurent. Ms. Lech took possession of the land for this property in 2002 and financed construction of a house in the amount of approximately $514,000.00.

The theory of the prosecution with respect to this count is that the purchase of this property and the construction costs were facilitated in whole or in part, directly or indirectly, by proceeds of drug crime originally received from Daniel Muir and received as benefits for services provided by her in furtherance of the agreement with Mr. Muir in 2000. Indeed, the prosecution submits that the transfer from Cambodia that allowed the acquisition of the property in St-Hilaire was the same as for the property in St-Laurent.

Thus the prosecution submits that the property in St-Laurent and the construction were facilitated not only by proceeds of drug crime attributable to Daniel Muir but to Ms. Lech herself as a function of her laundering the proceeds of Mr. Muir's participation in drug crimes. The prosecution further submits that, as with the property on Béique, Ms. Lech accomplished this in part by enlisting prête-noms to supply funds transferred from Cambodia. [ 89 ] None of the accused had the means to finance the acquisition of the property in St-Laurent. Between 20 August and 11 September 2002 Ms.

Lech received from Huon Kim San $400,000.00US that was transferred from Cambodia and then converted through Cambridge in exchange for $628,340.00CDN. Ms. Lech claimed that this money was part of a cash loan of $800,000.00US from an aunt, [103] Vuoch Eng Neang, and was made to Ms. Lech as part of an immigrant-investor programme. [104] The transfer was supposedly made for the aunt by Huon Kim San because the aunt had no bank account in Cambodia. From this money the land for the property in St-Laurent was purchased by Ms. Lech in October 2002. [105] On 26 November 2002, some six weeks after the arrest of Mr.

Chun at Trudeau Airport, Ms. Lech executed in Longueuil a notarised instrument in which she acknowledged a debt of $800,000.00 to Vuoch Eng Neang with neither interest nor a fixed term. [106] In Cambodia she executed in 2003 an instrument that gave her the right to occupy the properties in St-Hilaire and St-Laurent as the delegate of Vuoch Eng Neang. [107] [ 90 ] The prosecution submits that the documents executed in November 2002 and November 2003 were screens to conceal the origin of the money used to acquire the property in St-Laurent.

There is no reliable evidence that a loan from Vuong Eng Neang existed and no evidence that a sum of money from Vuong Eng Neang was transferred from her in Cambodia to the accused. [108] The inference proposed by the prosecution, given all of the circumstances, is that the property in St-Laurent was acquired by the accused with money originally supplied by Daniel Muir and laundered by the accused before its return to Canada. In this regard, to repeat, possession of this money and of the property in St-Laurent this money can be viewed both as proceeds of drug crime attributable to Mr.

Muir and to the accused themselves. Further, once the property was acquired the evidence discloses an amount of $514,426.00 that was used for construction costs on this property. It discloses further that cheques were issued for this work on the personal account of Ms. Lech following her deposit of cheques to her order from Peng Heng Or Gold Inc. Yet the evidence also makes clear that neither Ms.

Lech nor Peng Heng Or Gold Inc. had the means to finance these activities. [109] As with the purchase of the property in St-Hilaire and St- Laurent, the evidence compels the inference - beyond reasonable doubt - that for the property in St-Laurent the construction costs in 2003 were paid in whole or in part, directly or indirectly, with proceeds of drug crimes in Canada. Thus the prosecution has proved the actus reus and mens rea of possession of the property in St-Laurent.

Part Two Offences in relation to taxation [ 91 ] Counts 7 – 13 charge three different kinds of offences in relation to taxation: false or misleading statements; five counts of omitting important details; and one count of aiding tax evasion by Daniel Muir. As with any count, the prosecution is bound to prove each count as particularised in the Indictment. Count 7 charges Mr. Chun and A & A services monétaires inc. with violating section 239(1)(

a) of the Act ( i.e. , making false or misleading statements). Counts 8 – 11 (inclusive) charge A & A services monétaires inc. and Mr. Chun with violations of section 239(1)( c ) ( i.e. , omission to declare). Count 12 charges Peng Heng Or Gold Inc. and Leng Ky Lech with violations of section 239(1)( c ) ( i.e. , omission to declare). Count 13 charges all four accused with a violation of section 239(1)(

d) of the Act by wilfully aiding Daniel Muir to evade compliance with the Income Tax Act . I will examine the evidence with respect to each count in sequence but in three sub-groups: Count 7, Counts 8 – 12 (inclusive) and Count 13. [ 92 ] The counts in Part Two allege criminal offences. [110] All counts allege indictable offences that require proof beyond reasonable doubt of the actus reus and the requisite element of mens rea . I do not accept that any of these counts refer to offences of strict liability. Count 7: false or misleading statements [ 93 ] Count 7 charges that A & A services monétaires inc. and Mr.

Chun [111] with making a false or misleading statement by filing a tax return (T2) for the taxation year of 2001 that failed to report sales of currency in the amount of more than $6,000,000.00. An examination of this count requires consideration of three questions: Did the accused make undeclared sales of currency of approximately $6,000,000.00 in the taxation year 2001? If yes, did the accused file a return (T2) that did not declare approximately $6,000,000.00 in sales?

If yes, did the accused intentionally or knowingly make this return with the intention to mislead the tax authorities? [ 94 ] The accused declared sales in the amount of $19,669,999.00 but a forensic examination of all the documentation concerning these transactions revealed that there were sales of approximately $25,000,000.00.

Donald Maheu, the investigator who conducted the examination of these transactions, relied upon an array of documents from various sources, including the office of the accused company, the residence of the accused, the office of their accountant and the offices of other currency exchanges. His examination led to the conclusion that there were undeclared sales in the amount of $6,506,581.00, comprised of undeclared sales to Calforex and other undeclared sales recorded in handwritten receipts seized at the residence of the accused. [112] On this basis the evidence proves beyond

reasonable doubt that the accused made undeclared sales of currency of approximately $6,000,000.00 in the taxation year 2001. It is equally clear that the accused did not declare these sales in their tax return (T2) for that year. [ 95 ] The third and final question concerning Count 7 is whether the false return was made with the requisite mens rea . It is settled law that proof of this element does not require proof of an intention to evade the payment of tax. It is also settled law that this element requires proof that the false or misleading declaration was made knowingly or intentionally.

A return that is signed and filed in proper form provides circumstantial evidence that the return was filed with an awareness of its content. In this case the inference of this awareness is reinforced by abundant evidence of the deliberate design to conceal the transactions amounting to approximately $6,000,000.00 in sales.

The evidence proves beyond reasonable doubt that the false or misleading statement in the return was made knowingly or intentionally. [ 96 ] The offence charged in Count 7 is a variant of fraud and thus it might be thought that general principles applicable to the offence fraud would be similarly applicable in the proof of Count 7 unless the governing legislation or jurisprudence requires otherwise.

In this regard attention must be given to the conclusions of the Supreme Court in Théroux , where the elements of fraud were identified as "subjective knowledge of the prohibited act; and subjective knowledge that the prohibited act could have as a consequence the deprivation of another (which deprivation may consist in knowledge that the victim's pecuniary interests are put at risk)." [113] [ 97 ] If these elements were applied to the offence charged in Count 7 the mens rea requires proof that the false or misleading declaration was knowingly made and knowledge that this false or misleading declaration could have as a consequence the deprivation of another, including knowledge that the declaration could put at risk the government's entitlement to tax owing.

It will be noted in the

summary of the Supreme Court that this element requires proof of knowledge that the prohibited act ( i.e. , the false or misleading statement) could put the victim's pecuniary interests at risk. [ 98 ] There is authority to the effect that the element of mens rea in Count 7 requires proof of an intention to mislead the tax authorities. [114] This is a more demanding requirement than that set by the Supreme Court in Théroux with respect to the general offence of fraud. Moreover, that authority was established after the decision in Théroux and I therefore take it as binding in this case.

Thus the essential element does not require proof of an intention to evade the payment of tax, although evidence of such a motive can support the inference of an intention to mislead. In this case the clear intention of the accused was to conceal various transactions in order to conceal the sources of funds used to perform them. To this end the accused knowingly made a false or misleading statement with the intent to mislead the tax authorities.

In this respect, and having regard to decisions such as Buzzanga & Durocher , [115] intention can mean either the deliberate desire to mislead the authorities or virtual certainty that this would be the effect of a false or misleading statement. The evidence in this case is sufficient to prove either. [116] Counts 8 – 12: omitting important details [ 99 ] Counts 8 – 12 (inclusive) charge offences of omission in failing to record important transactions. [ 100 ] There can be liability for an omission only if there is a duty to do something.

That positive duty may be explicitly declared or it may be implied in the formulation of liability for a failure to act. With respect to Counts 8 – 12 that duty is expressly imposed in

section 230 of the Act. That is so in paragraph ( c ), which declares that there is liability in not recording important details in a taxpayer's books or registers. The mens rea of this offence consists of a subjective awareness that important details are omitted and an intention to mislead the tax authorities. [ 101 ] Counts 8 – 12 (inclusive) relate chiefly to the accounting practices of the accused and the evidence presented on that theme. It will be noted in these charges that the particulars identify the type of omission alleged and approximate amounts in specified types of transactions.

Each of these counts is premised on the general theory of the prosecution case that in furtherance of the agreement with Mr. Muir the accused failed to disclose, as required by the Income Tax Act , the supply of American currency or the transfer of American currency to Cambodia. An examination of these counts requires attention to evidence, expert and non-expert, concerning accounting by the accused as particularised in each count. [ 102 ] An examination of Counts 8 – 12 requires consideration of the following three questions. Did the accused perform the transactions particularised in the count?

If yes, did the accused file a return (T2) that did not declare approximately $6,000,000.00 in sales? If yes, did the accused intentionally or knowingly make this return with the intention to mislead the tax authorities? Count 8 [ 103 ] The evidence makes clear that in 2001 the accused made sales of $2,900,000.00 that could not be supported by its inventory as reported for the beginning and the end of the year. [117] The accused sold American cash that was not in their inventory and the discrepancy is reflected in the amount specified in Count 8.

There are no receipts that would explain or justify this discrepancy. Thus the evidence proves beyond reasonable doubt that the transactions alleged occurred and that they were not reported in tax returns. The actus reus of the offence charged in Count 8 is thus proved because the omission to report these transactions frustrates the assessment of tax liability in accordance with

section 230 of the Act. [ 104 ] The comments above concerning the mens rea for the offence charged in Count 7 apply equally with respect to Count 8 and indeed with respect to Counts 9, 10, 11 and 12. I am satisfied beyond reasonable doubt not only that the accused knowingly or intentionally omitted to make the required statement of transactions but that they did so with the intent to mislead the tax authorities. Count 9 [ 105 ] Count 9 charges that the accused failed to report for the year 2001 transactions relating to the transfer of approximately

$3,500,000 in American cash to Cambodia. [118] The accounts of the accused disclose transactions conducted with Calforex for the purchase of Canadian funds in exchange for the sale of American funds, although they do not disclose the source of the funds provided by the accused for these transactions. They also disclose transactions with Cambridge for the purchase of American funds in exchange for the sale of Canadian funds. The thrust of Count 9 is that the American cash from Cambridge was not remitted to the accused but transferred to Cambodia at the request of A & A services monétaires inc.

Those transfers were made to Mr.

Chun and another, Nhean Seng Hong, and they were made at the request of A & A services monétaires inc. without any indication of the source of the funds or the identity of the originating client. [119] Transactions of this kind require complete records that establish the origin of the funds, the identity of the client and the details of the person or entity to whom the funds would be transferred. [120] As with Counts 7 and 8, the evidence on Count 9 proves beyond reasonable doubt that the omission to report the details relating to the specified transactions was not only done knowingly but with the intention to mislead the tax authorities.

Count 10 [ 106 ] The prosecution case with respect to Count 10 is similar to that for Count 8. It is that the accused failed to report how they acquired approximately $2,400,000.00 in American cash before selling it, thus frustrating the ability of tax authorities to assess accurately their tax obligations. At the beginning of the financial year 2002 the accused had an inventory of $28,000.00 in American cash and then bought $266,950.00 and sold $1,974,244.00.

Not only did the sales so recorded exceed the cash in inventory; the accused reported in October 2002 inventory of American cash in the amount of $604,862.00. This amount is plainly explicable in the accounts of the accused but it is also the amount seized from Mr. Chun on 12 October 2002. [ 107 ] The evidence relating to this count proves beyond reasonable doubt that the omission to report the acquisition of the sums specifies was not only made knowingly but with the intention to mislead the tax authorities.

Count 11 [ 108 ] Count 11 charges that the accused failed to record material details concerning the transfer to Cambodia of approximately $1,500,000.00 in 2002. [121] The prosecution case in this regard is that Count 11 is essentially a repetition of the theory advanced for Count 9. In short, that theory is that the accused reported intermediate transactions between them and Calforex and Cambridge but failed to report the origin of the funds used in those transactions or the details concerning the ultimate transfer of those funds to Cambodia through Cambridge.

Thus the evidence proves beyond reasonable doubt that the transfers occurred and that the details concerning these transactions were not reported as required by the Act. In addition, however, the evidence demonstrates that the money transferred was not that of the accused. Here again is evidence that it came from an undetermined source, and in the whole of the evidence, that source would be money supplied by Daniel Muir and transferred in furtherance of the agreement between him and the accused. Count 12 [ 109 ] Count 12 charges that the accused failed to record material details relating to the transfer

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