It’s the second time B.C. is using so-called unexplained wealth orders to prosecute a civil forfeiture case
The province is seeking a court order to compel a United Kingdom citizen who was last known to be living in Malta to explain where he got millions of dollars sitting in a Vancouver lawyer’s trust account.
The unexplained wealth orders were part of a package of new laws introduced by the B.C. NDP government earlier this year to combat money laundering and other financial crimes.
According to the province’s claim filed in court this month, the money in the trust account of recently-disbarred lawyer Ronald Norman Pelletier is estimated at as much as $4.5 million in Canadian currency.
B.C.’s director of civil forfeiture says the money comes from a US$78 million pump-and-dump stock fraud prosecuted by the U.S. Securities and Exchange Commission.
The accused U.K. citizen, Kevin Patrick Miller, 54, has not responded to the suit.
In the first unexplained wealth order case, B.C. is seeking a court order to compel property owners to explain where $1 million came from to buy a Salt Spring Island house in 2017.
The B.C. government has said it plans to file more unexplained wealth orders.
“The public can be assured that British Columbia will continue to take decisive action against suspected unlawful activity. This UWO filing sends a clear message that we will seek out ill-gotten gains and redirect them to community safety initiatives,” B.C. Public Safety Minister Mike Farnworth said in a written statement.
The unexplained wealth orders must be applied for in each case through the courts. If approved by a judge, the orders put a reverse onus on the alleged perpetrator to explain where money came from to buy their assets in cases where there is a suspicion of criminal activity or corruption.
Unexplained wealth orders were among more than 100 recommendations from the Cullen inquiry into money laundering delivered in 2022 and another B.C.-government commissioned report into money laundering in real estate completed in 2019.
There are critics of unexplained wealth orders, including the B.C. Civil Liberties Association, which has argued that these type of measures undermine constitutional rights, have not been adequately tested and would be expensive to implement.
Jeffrey Simser, a lawyer and leading experts on asset forfeiture and anti-money-laundering law, said nearly 100 countries use some form of unexplained wealth order, many of those developing countries who use the orders to combat corruption. Western nations with the measures include the U.K., Ireland, Australia and New Zealand. Manitoba has a similar law.
Unexplained wealth orders are not always the answer to prosecuting money laundering but they are an important tool, said Simser, a former legal director with the Ontario Ministry of the Attorney General and the author of books on civil forfeiture and anti-money-laundering law.
That’s particularly true when elaborate measures, including shell companies, have been used to hide the source of wealth, he said.
B.C. appears to have been thoughtful in its case selection for the first unexplained wealth orders, added Simser, who testified at the Cullen commission.
If you could criminally prosecute individuals resulting in jail time that would be a great result, but pursuing the money through unexplained wealth orders and forfeiture is also valuable, noted Simser.
“It’s all about the money, so at least you get that monetary aspect,” he said.
Civil forfeiture is tested at a lower threshold than criminal prosecutions, a balance of probabilities rather than beyond a reasonable doubt.
In this second unexplained wealth order case, the director of civil forfeiture noted that multiple individuals had been successfully prosecuted by the SEC in the pump-and-dump fraud case involving the stock of Jammin’ Java, a company that operates as Marley Coffee and uses trademarks of late reggae artist Bob Marley to sell coffee products.
The SEC determined that Miller participated in the stock fraud as a beneficial owner of at least two shell companies, one incorporated in the Marshall Islands and another in Panama, according to B.C.’s forfeiture suit.
In 2017, Miller reached a settlement with the SEC and agreed to pay back US$900,000 that includes interest without denying or admitting the allegations.
In a separate B.C. Supreme Court action, Miller argues that because the SEC case was settled, he is entitled to the money in the Vancouver lawyer’s trust account. B.C.’s civil forfeiture office has responded that Miller should not get the money because the funds are, on a balance of probabilities, proceeds of the securities fraud alleged by the SEC.
The trust account of the lawyer, Pelletier, was frozen as part of the law society tribunal proceedings. Pelletier was disbarred for helping his clients, including Miller, launder their illicit proceeds. It was the first time a lawyer has been disciplined in B.C. for knowingly assisting in money laundering.
The other man Pelletier was accused of helping launder money was Wayne S. P. Weaver, 56, a dual Canada-U. K. resident, who was given a penalty of US$58 million by a U.S. court for his role in the stock fraud.
Money laundering has been in the spotlight in British Columbia since at least 2017 when multiple Postmedia investigations found that Lower Mainland casinos were being used to facilitate the practice. Postmedia also found that money laundering prosecutions were rare and difficult and that shell companies and nominee directors were used to hide assets.
Another Postmedia investigation found at least $43 million in properties were tied to B.C.’s largest money laundering case, which failed to lead to a successful criminal prosecution. A 2019 Postmedia analysis of 12 money laundering cases dating back nearly three decades, found money is laundered in real estate using a number of mechanisms, often with the help of shell companies and involving multiple countries and banks.
This article was originally sourced from www.TheProvince.com