R. v. James, 2016 ONCJ 424

CITATION: R. v. James , 2016 ONCJ 424 ONTARIO COURT OF JUSTICE BETWEEN: HER MAJESTY THE QUEEN — AND — KENNETH JAMES Before Justice D.S. Rose Reasons for Judgment released on July 7, 2016 B. Gluckman.................. counsel for the Public Prosecution Service of Canada S. Bergman and W. Cunningham…….. Counsel for the Respondent Kenneth James ROSE J.: 1 . This is an Application by the Crown under s. 490(9) (

d) of the Criminal Code for forfeiture of $32,279.78 US and $3,060.50 Cdn. (“the moneys”). On January 7 of this year Mr. James was acquitted of all charges against him, which included money laundering. The reasons for judgment are reported at R. v. James 2016 ONCJ 10 . Thereafter Mr. James commenced proceedings to restore various items, including bank accounts seized after his arrest. Mr. Bergman and Mr. Gluckman have managed to resolve on consent all but one lingering item. 2 . What remains is the moneys mentioned above. Both Mr.

James and the Crown agree that both sums are proceeds of crime, because they were amounts received by Mr. James from Mr. Dastani while Mr. Dastani was operating his illegal ephedrine exportation scheme. Both Crown and Defence also agree that the Crown is relieved of the burden of tracing the proceeds of crime and that the proceeds can be recovered from any or all accounts. If it were left there this would be fairly straightforward, but it is in fact complicated because of previous actions taken by the account holder of the moneys, TD Bank. 3 . On December 6, 2011 Mr.

Justice Edwards of the Superior Court issued a Restraint Order under s. 490.8 and a Management Order under s. 490.81 of the Criminal Code , which named TD Bank and the account held there 0320-751292, which was titled “Ken James IT Eveline Holdings” as subject to the Order. I take this to be a trust account for Eveline operated by Mr. James. Eveline Holdings was an accused at Mr. James’ trial but it did not appear, and was never served with initiating process.

Edwards J’s Order was crystal clear that “TD Bank Financial Group shall continue to maintain the property per its obligations as a chartered financial institution. TD Bank Financial Group shall not withdraw or allow any other person…to withdraw any funds from the property”. There is no suggestion that TD Bank was not served with the Order.

4. On March 15, 2012 Citi Bank wrote to TD requesting the return of $35,000. Citi provided some affidavit material whichsuggested that such an amount had been fraudulently deposited to 292 on November 8, 2011. On October 5, 2012 TD withdrew $35,000from account 292 and sent a bank draft in that amount to Citi. This came to light fairly quickly, and on November 12, 2012 Counsel forMr. James sent a letter to in house counsel at TD asking for an explanation. Mr.

Bergman also raised the issue promptly with Counselfor PPSC, who wrote back on November 28, 2012 that “We will consider the implications of the information that you have provided, andwe will take whatever steps we think are appropriate”. On January 15, 2013 private counsel for TD at McCarthy Tetrault replied to Mr.Bergman. McCarthy Tetrault claimed that the delivery of funds to Citi was “…an innocent error”. That said, it was counsel for TD’sposition that Mr. James was not prejudiced by the withdrawal and that the onus was on him to explain why the funds were legitimateand, presumably, should be returned.

In the result, McCarthy Tetrault took the position that “…there is no issue to be addressed…”. 5. Nothing further was ever done by PPSC to pursue the matter. 6. Mr. Bergman argues that I should exercise my discretion to deny the Application because the amounts sought in the Applicationare more or less what TD sent to Citi Bank under the nose of the PPSC. Section 490 (9) of the Criminal Code permits discretion to orderthings seized previously from a person forfeited to Her Majesty if the things are unlawfully in the possession of the person .

Thatdiscretion, he argues should weigh against making the forfeiture order sought. Given the conduct of TD Bank and the relative lack ofinterest by the PPSC in addressing a breach of a Superior Court Order, his argument has some merit. 7. A judicial discretion in this case should be exercised bearing in mind the objective and context of the forfeiture proceedings ofthe Criminal Code. In R. v. Lavigne 2006 SCC 10 , [2006] S.C.J.

No. 10 at par. 16 the Court commented that, “…the objective of forfeiture is …to deprive the offender and the criminal organization of the proceeds of crime and to deter them fromcommitting crimes in the future. The severity of broad scope of the provisions suggest that Parliament is seeking to avert crime byshowing that the proceeds of crime themselves, or the equivalent thereof, may be forfeited”. That comment was made about provisions in

Part XII.2 in the Criminal Code and this Application is made under

Part XV, but I read theCriminal Code as a coherent whole and therefore interpret s. 490(9) as part of the forfeiture provisions. I pause to comment that Mr.James is not an offender and there is no finding of a criminal organization. That said, it is agreed by all before me that the moneys arenonetheless proceeds of crime. 8. I find that TD’s violation of Edwards J’s Order was inexcusable. It is axiomatic that TD is among the largest and mostsophisticated financial institutions in the country. Counsel for TD’s statement that the mistake was innocent but that the matter wasclosed is baffling.

I would have expected TD to promptly return the account to its state before the funds were sent to Citi bank. I am alsosurprised that counsel for PPSC did so little to enforce the Order once it was notified of the breach. This falls short of the standardexpected of PPSC. 9. This is a very close case. However, despite the initial appeal of Mr. Bergman’s argument, I would grant the Crown’s Applicationfor forfeiture for three principal reasons. i. The moneys sought are proceeds of crime. They may be roughly the same amount as the money TD Bank sent to Citi, but thenature of the money sought remains ill-gotten gains.

It is consistent with Parliament’s intention that proceeds of crime be remitted to theCrown, and not individuals or private entities such as Eveline. ii. The violation of Edwards J. Order was in connection with an account for which Mr. James was the account holder, but notbeneficial owner which was Eveline Holdings. Eveline has not appeared before me on this Application. iii. Mr. James was a lawyer, and so not an unsophisticated party to the Order. Once he became aware of TD’s delivery of theMoneys, his actions were to seek an explanation for the Breach from TD, but nothing more.

There is no evidence that Eveline Holdingsdid anything, and it was Eveline that was otherwise entitled to the money. I appreciate that Mr. James was at the time embroiled inconsiderably complex criminal proceedings, but the fact remains that his efforts to recover the moneys were limited to writing to TD. Nolawsuit was ever launched. This factor might have weighed in favour of the Respondent if the Respondent were an unsophisticatedindividual without the benefit of legal advice. 10. I will sign the appropriate Order which can be submitted through the trial coordinator.

July 7, 2016 ____________________ David S. Rose Of the Ontario Court of Justice