2010 ONSC 2477, 2010 ONSC 2477

CITATION : CANADA REVENUE AGENCY v. NATHANIEL OKOROAFOR , 2010 ONSC 2477 COURT FILE NO.: 86/10 DATE: 20100430 ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N: ) ) CANADA REVENUE AGENCY ) ) LISA CSELE , for the Applicant ) Applicant ) ) - and - ) ) ) NATHANIEL OKOROAFOR ) ) OSBORNE G. BARNWELL , for the Respondent ) Respondent ) ) ) HEARD: April 13, 2010 DURNO, J. [ 1 ] The Canada Revenue Agency (CRA) commenced an investigation of the respondent to determine whether he included false charitable donation claims in preparing tax returns for his clients. Search warrants were executed and items seized.

On two occasions orders have been made permitting CRA to maintain the items seized. The CRA seeks the retention of the items for a further year. The respondent opposes the order. [ 2 ] For the following reasons the CRA is permitted to retain the items seized [1] until December 20, 2010. Chronology [ 3 ] The investigation involves allegations the respondent, prepared 1,908 false T1 income returns on behalf of individuals between 2005 and 2007. The returns are alleged to have included false charitable donation claims based on false receipts from one or more of four charitable organizations.

The false claims amounted to $11,771.940 with the clients understating their income by $3,353,384. It is alleged the respondent received a fee for his services in addition to 10% of the face value of the false donation claims made on the client’s behalf. Finally, it is alleged the respondent personally claimed charitable donations based on fraudulent receipts in 2005, 2006 and 2007.

During those years it is alleged that he filed false Christ Embassy Christian Centre donation receipts for his returns comprising 64.4%, 81.6% and 27.6% of his net income. [ 4 ] On February 26, 2009, four search warrants were executed at the respondents’ residence, the business premises and all storage facilities occupied and/or controlled by Ledger Brampton, the residence of Kene Don Ifepe and Roselyn Ifepe, the location of the books and records of The Mega Church and all storage facilities controlled or occupied by these parties or the church, and the business premises and all storage facilities occupied and/or controlled by Christ Embassy Christian Centre. [ 5 ] On May 5, 2009, a Report to a Justice was filed.

The justice of the peace ordered the items detained for not more than three months, to May 26, 2009, pursuant to s. 490(2) of the Criminal Code .

[ 6 ] On May 21, 2009, on a further application pursuant to s. 490(2) , the items seized in relation to the Embassy Christian Centre were ordered detained for a further 9 months, to February 26, 2010. In support of the application, the CRA relied upon an affidavit of Seeta Maraj in which she outlined the investigative steps that had been taken from the seizure date and the reasons further detention was warranted. [ 7 ] From February 26 to May 13, the items seized had been transferred to Ms.

Maraj, an inventory was prepared of 52 boxes containing hundreds of documents with the contents of one box returned to its rightful owner.

The investigator prepared a CRA report of the seizure, began a more thorough review of the seized items in order to determine the identity of relevant bank accounts, including those of the Christ Embassy Church, for the purpose of eventually executing production orders to obtain the necessary financial transaction information, identified all the charities that may have been involved, commenced identifying all the witnesses to be interviewed, and undertook an assessment of each document seized in order to determine if it had evidentiary value.

In addition, the investigator corresponded with and responded to requests from the respondent’s counsel, corresponded with the computer analyst regarding the analysis to be performed on the computer media seized, and prepared the material for the various court applications. [ 8 ] The CRA sought a further 9 months to complete a detailed review of the documents already identified as having evidentiary value including bank statements, donation receipts, and tax returns, for the CRA computer forensic lab to complete their analysis of the hardware and electronic media seized including 9 hard drives and 1 jump drive and to analyze the information received and conduct further inquiries, if necessary, to analyze seized banking information including executing production orders at the 10 banks that had been identified and to permit 60 days for compliance and examination of the documents obtained, to identify, interview and obtain written statements and/or videotaped statements from approximately 20 to 30 witnesses consisting of the respondent’s tax clients and third parties from whom documents were seized, to trace and reconcile the alleged charitable donations the respondent made to his church, a registered charitable organization, and to execute production orders on the church’s two bank accounts, to analyze and reconcile the respondent’s true tax payable, to address inquiries from the respondent’s tax clients, to determine to what extent the charitable organizations from which receipts were filed were involved, to advise those who participated in any offence and permit them at least 30 days in which to make representations to CRA, to complete the case brief to be provided to the Public Prosecution Service of Canada who require 45 days in which to determine if charges should be laid, and to retain possession until the completion of the prosecution if charges are laid. [ 9 ] On June 17, 2009, the respondent applied for the return of certain items seized.

The justice of the peace detained some items until February 26, 2010 and others until August 4, 2009. The latter items are not included in this application. [ 10 ] In support of this application, CRA submits the investigation is of such complexity that a further detention for one year is required.

The following factors have contributed to the complexity of the investigation: there are 51 boxes of evidence and 9 computers containing hundreds of documents that have to be reviewed, analyzed and assessed for evidentiary value, the documents had to be inventoried twice, once for the Report to a Justice and once for the CRA’s Imaging Centre. The investigator could not accomplish the review and analyses while the 51 boxes were at the Imaging Centre from July 7, 2009 to September 24, 2009. Five CD’s containing the imaged documents was received from the Imaging Centre on October 13, 2009.

Of the 1908 returns, three clients had been interviewed and given signed statements. Potentially hundreds of clients would have to be interviewed. The investigation involved 4 charitable organizations that assisted the respondent and another that issued donation receipts.

Finally, the investigation also included Kene Don Ifepe who assisted the respondent. [ 11 ] Thirty-three other investigators had assisted in the execution of the search warrants as well as the Imaging Centre and the forensic report regarding the computers seized. [ 12 ] The further 12 months is required “to complete” the investigation, to prepare and serve 19 production orders on 4 separate financial institutions and to review and analyze the information and documents obtained, after which several spreadsheets will have to be prepared. It is anticipated that this analysis will take several months.

The extension is also sought to review and analyze the hundreds of documents and 9 gigabytes of information found on the 9 computers seized, to interview third parties, potentially in the hundreds, including possible KGB statements being obtained from many of the respondent’s clients who it is anticipated will be reluctant witnesses, to identify and investigate the nature, extent and details of the alleged fraudulent scheme and to maintain the documents etc. throughout any prosecution. [ 13 ] As of March 10, 2010, production orders had been served in relation to 23 bank accounts, 15 relating to the respondent personally.

Once received, that information will have to be analyzed and documented to ensure the income analysis is as accurate as possible. The CRA submits that the majority of the items seized from the respondent’s business are documents that rightfully belong to the clients so that the respondent does not have a privacy interest in the documents. Part of the allegations is that some of the T4 slips, RRSP slips, donation receipts, Notices of Assessment and copies of tax returns were falsified by the respondent.

The legitimacy and ownership of the documents will be further investigated during the interviews with the clients. A further 11 interviews have been scheduled. The results of those interviews and of at least a further 35 which are being scheduled, will have to be verified by reviewing the documents and computer contents seized. The Law [ 14 ] The relevant portions of s. 490 of the Criminal Code in relation to this application read: 490.

(1) Subject to this or any other Act of Parliament, where, pursuant to paragraph 489.1(1)(

b) or subsection 489.1(2), anything that has been seized is brought before a justice or a report in respect of anything seized is made to a justice, the justice shall, (

a) where the lawful owner or person who is lawfully entitled to possession of the thing seized is known, order it to be returned to that owner or person, unless the prosecutor, or the peace officer or other person having custody of the thing seized, satisfies the justice that

the detention of the thing seized is required for the purposes of any investigation or a preliminary inquiry, trial or other proceeding; or (

b) where the prosecutor, or the peace officer or other person having custody of the thing seized, satisfies the justice that the thing seizedshould be detained for a reason set out in paragraph (a), detain the thing seized or order that it be detained, taking reasonable care toensure that it is preserved until the conclusion of any investigation or until it is required to be produced for the purposes of a preliminaryinquiry, trial or other proceeding. Further detention

(2) Nothing shall be detained under the authority of paragraph (1)(

b) for a period of more than three months after the dayof the seizure, or any longer period that ends when an application made under paragraph (

a) is decided, unless (

a) a justice, on the making of a

summary application to him after three clear days notice thereof to the person from whom the thingdetained was seized, is satisfied that, having regard to the nature of the investigation, its further detention for a specified period iswarranted and the justice so orders; or (

b) proceedings are instituted in which the thing detained may be required. Idem

(3) More than one order for further detention may be made under paragraph (2)(

a) but the cumulative period of detentionshall not exceed one year from the day of the seizure, or any longer period that ends when an application made under paragraph (

a) isdecided, unless (

a) a judge of a superior court of criminal jurisdiction or a judge as defined in

section 552, on the making of a

summary application tohim after three clear days notice thereof to the person from whom the thing detained was seized, is satisfied, having regard to thecomplex nature of the investigation, that the further detention of the thing seized is warranted for a specified period and subject to suchother conditions as the judge considers just, and the judge so orders; or (

b) proceedings are instituted in which the thing detained may be required. [15] The determinative phrase in s. 490(3) applications is whether a further detention period should be permitted “having regard tothe complex nature of the investigation.” While the initial detention periods are governed by whether or not the items are required “forthe purpose of the investigation,” the longer detention can only be permitted having regard to the complexity of the investigation, not thecomplexity of the potential charge(

s) or number of hours required to review the material seized. In determining the appropriatedefinition of “complexity of the investigation” I have been assisted by the applicant’s informative casebook, in particular theconsiderations listed in Moyer, infra and Tran, infra have been most helpful. Both counsel relied on the cases in their submissions. [16] The cases included in the casebook are: Canada (Revenue) v. Welford, [1996] O.J. No. No. 3866 (Gen.Div.); Canada (Ministerof National Revenue – M.N.R.) v. Hunter, [2000] O.J. No. 5424 (S.C.J.); Moyer (Re), (ON SC), [1994] O.J.

No. 2997(Gen.Div.); Bromley et al. v. Her Majesty the Queen in Right of Canada, 2002 BCSC 149; Jahanrakhshan (Re), [2008] B.C.J. No. 2389(S.C.); Alberta (Attorney General) v. Black, 2001 ABQB 216; Tran (Re), [2004] B.C.J. No. 493 (S.C.); and R. v. Raponi, [2004] 2S.C.R. 35. [17] A review of these authorities establishes the following: [18] The onus is on the applicant to establish the complexity of the investigation and the need for further detention: Black, supra atpara 22.

The purposes of s. 490 (1) – (3) are to enable police to effectively carry out criminal investigations while, at the same time,invoking the Court’s supervisory powers to ensure that there is a proper basis for detaining and continuing to detain items seized andprotecting the privacy interests of citizens. However, the court must focus on the issue of how the complexity impacts on the need forcontinued detention: Tran (Re), at para. 24 and 59. The

section does not place time limits on police investigations: Black, supra. [19] In assessing the complexity of the investigation, the Court may consider what work is yet to be done, the estimated time forcompletion and whether the work should reasonably have been done earlier: Tran, para. 36; Bromley, para. 22. Put bluntly, is it acomplex investigation requiring further detention or a non-complex investigation that investigators have had insufficient time tocomplete? The former leads to further detention.

The latter does not. [20] A complex investigation is one that has many varied interrelated parts, patterns, or elements and consequently is hard tounderstand fully. It is an investigation that involves many parts, aspects, details, and notions necessitating earnest study or examinationto understand or cope with: Alberta (Attorney General) at para. 23. It is “something intricate and composite, something requiringanalysis and reflection before moving forward to results and always considering the implications: R. v. Westmorland Fisheries Ltd.

(1995), (NB KB), 168 N.B.R. 138 (Q.B.). [21] Some factors that have supported a conclusion that the investigation was complex are: • the number of police services and/or government departments involved: Black, at para. 30; • the involvement of foreign government: Black, at para. 30; • that the investigation requires the assistance of lawyers, accountants, computer technicians and/or other professionals to decipherthe documents or for other purposes: Moyer, at para. 20; • that the investigation requires the cooperation of police services other than the applicant and if so, whether those services are inCanada or elsewhere: Re Edmond, 2002 BCSC 524 and Black, supra; • that the investigation requires witnesses to be interviewed outside Canada: Edmonds, supra; • that the investigation covers an extensive timeframe and/or wide geographical area: R. v.

Wilson, [1999] N.S.J. No. 88 (Prov.Ct.); • that there is a confusing paper trail: Wilson, supra; • that the offences were committed in more than one jurisdiction, by more than one person or with nominees: Wilson, supra; • that complicated and time-consuming net worth calculations are required: Westmorland Fisheries, supra; • that it is a paper case, or one where the “tentacles of evidence are wide ranging”: R. v. Superior Pharmacy Ltd, [1997] O.J. No.2270 (Gen.Div.), affirmed [1998] O.J.

No. 1286; • that the investigative agency has no control over the timely responses of third parties: Superior Pharmacy; • that documents or communications must be translated; and • that transcripts of intercepted private communications must be prepared. [22] In assessing whether the complexity of the investigation requires further detention, the absence of evidence of ‘foot dragging,’other delay, procrastination, prejudice and bad faith are relevant considerations as is the training and experience of those involved in theinvestigation, the time dedicated to date by those persons, and the need for further investigation have also been considered: Welford, atpara. 8 and 20.

Whether additional human resources would have sped up the process or likely delayed it has also been considered: Hunter, supra at para. 19. [23] Some factors that have not supported a conclusion that the investigation was complex are: • damages to one’s reputation, financial or emotional hardship: Alberta (Attorney General) at para. 25; • that insufficient resources have been assigned to the investigation: Moyer, supra; • that there is substantial “grunt work” required to complete the investigation: MNR v. Farm World Equipment Ltd.,[1996] S.J.

No.222 (Q.B.); • that voluminous material must be reviewed and/or that the investigators did not have enough time to fully review the documentsseized: Moyer, supra; Hunter, supra; • that there have been difficulties in obtaining information from third parties if procedures that could have required the third party tocooperate more fully, speedily and readily were not employed: R. v. Jackson (1997), 31 O.T.C. 34 (Gen.Div.).

Analysis [24] Parliament has long ago determined that the only basis to detain items seized pursuant to a search warrant beyond one yearwhere no charges have been laid is the complexity of the investigation. However, what the cases also show is the post-Charter reality ofcriminal prosecutions. That reality includes the need for disclosure and concerns for delays in getting cases to trial considering s. 11(

b) ofthe Charter. What some cases include at least by inference, is the prosecution claim of complexity being based at least in part on theneed to be “ready to go” with basic and detailed disclosure on the date of arrest or very shortly thereafter. Otherwise, if the investigationcontinues and voluminous disclosure is provided months or longer after the arrest, the prosecution will be in jeopardy.

While in the realworld those are valid considerations, absent a finding of complexity on some other basis, those considerations do not create a complexinvestigation. [25] The evidentiary basis for this application is the Application Record and the supplementary affidavit.

The affidavits filed insupport of this and prior applications are unchallenged on this application. [26] The appropriate starting point is the factors that have been considered in previous applications and any others that apply ratherthan trying to find a case in which another judge of the same level court did or did not order further detention of the items.

While writtenin another context, with appropriate modifications, the words of former Chief Justice Lamer in regards to sentencing precedents applieswith appropriate modifications: “Sentencing is an inherently individualized process, and the search for a single appropriate sentence for asimilar offender and a similar crime will frequently be a fruitless exercise of academic abstraction”: R. v. M.(C.A.) (1996), (SCC), 105 C.C.C. (3d) 327 at para. 92.

[ 27 ] In applying that individualized approach utilizing factors that had supported and detracted from findings of complexity is not a mathematical formula, the side with the most items automatically prevailing. Rather, assessing those listed above and any case specific factors may require one or more factors for or against the complexity finding having greater weight. [ 28 ] Applying the above noted considerations to this record, I am persuaded the investigation is complex for the following reasons. This is neither a simple tax evasion case nor a straight-forward false charitable claim filed by one taxpayer.

The basis of the allegation being investigated is 1908 returns that rely on fraudulent charitable receipts and the investigation of the respondent’s own returns for three years. In relation to the other taxpayers there remains a “Who done it?” component.

Once it is established that the charitable donation receipts are false, it remains to determine if there are reasonable and probable grounds to believe that the respondent alone created the receipts, whether his assistant alone, with the respondent and/or the taxpayers knew of the deception, and whether the charitable institutions were involved alone or with others. [ 29 ] The allegations involve not only fraudulent charitable donation receipts, but also false T4 slips, RRSP slips, Notices of Assessment and tax returns.

While the number of returns in itself might not necessarily lead to a finding the investigation is complex, collating the documents to the taxpayers and getting their statements has an element of complexity although I am not persuaded that their anticipated lack of cooperation leads to complexity. If they do not cooperate the investigation lacks potential witnesses. That does not necessarily result in the investigation being complex.

However, that it is not just a “paper case” and will require interviews with the taxpayers adds somewhat, perhaps minimally, to the complexity. [ 30 ] The investigator has had to rely on computer experts for input, having received a 9 gigabyte report and now must rely on banks to respond. Both add to the complexity. That the investigator “lost” two to three months of investigation time because of imaging, does not add to the complexity. [ 31 ] I am unable to find any evidence of laches, bad faith or lack of resources.

Were one or more of those items present, it would detract from the argument that the length of the investigation is attributable to complexity alone. [ 32 ] However, I am not persuaded that the record supports a further one year retention from the seizure or today’s date. The record provides some general estimates of time to complete aspects of the investigation.

The affidavit in support of the application seeks twelve additional months “in order to complete my investigation into the tax affairs of Okoroafor.” That affidavit was sworn on February 8, 2010 in relation to a detention order that expired February 26, 2010. [ 33 ] What is required in an assessment of what specific time is required to complete the complex investigation. On this record, I cannot say twelve months are required. It will be several months at least.

While the record supports further retention, I am not persuaded that the record supports an extension beyond the end of this year. [2] In the absence of evidence that one year is required, it should not automatically be granted. [ 34 ] Whether a further extension beyond nine months will be granted will depend on the details of the investigative steps from the date of the supplementary affidavit to the date of the next application, the experience level of the investigator(

s) involved and whether they have had assistance in their efforts, whether in their view additional support staff and/or investigators would have assisted their investigation, the steps that will be required to complete the investigation and the time within which those steps are anticipated to be completed. Conclusion [ 35 ] The application is allowed and the detention period extended to December 20, 2010. ___________________________ DURNO, J. Released: April 30, 2010 CITATION : CANADA REVENUE AGENCY v. NATHANIEL OKOROAFOR , 2010 ONSC 2477 COURT FILE NO.: 86/10 DATE: 20100430

ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N: CANADA REVENUE AGENCY Applicant - and – NATHANIEL OROROAFOR Respondent REASONS FOR JUDGMENT DURNO, J. Released: April 30, 2010