At Canadian Fraud News, we report on decisions issued by Canadian Courts related to fraud, that are not reported in the mainstream media, and that contain legal issues the Canadian public and fraud recovery experts should be aware of. The following is one such story.

Allegations

Shuo Xu was reported on April 29 2017 as inadmissible to Canada based on paragraph 36 (1) (a) of the Immigration and Refugee Protection Act (IRPA) due to reasonable grounds that this permanent residence of Canada has been involved in serious criminality for having been convicted in Canada of an offence under an Act of Parliament punishable by a maximum prison term of 10 years.

Mr. Xu was also reported on April 29 2017 as inadmissible to Canada based on paragraph 37 (1) (a) of the IRPA in that there are reasonable grounds to believe that he is a permanent resident who is inadmissible based on the grounds that Xu is involved in a criminal organization, and believed to be involved in a pattern of serious criminal activity with said organization, organized by a number of persons acting in the commission of an offence punishable under an Act of Parliament by way of indictment.

Background

Mr. Xu was born on April 17 1992 in China. He is a citizen of that country and became a permanent resident of Canada on June 5 2007. He is not a Canadian citizen.

In 2013, Mr. Xu was convicted of two counts of property obtained by crime under $5,000, one count of fraud under $5,000, and one count of laundering the proceeds of crime in the GTA. He plead guilty with the assistance of legal counsel at his proceedings. He did not appeal those convictions.

During the admissibility hearing, Mr. Xu testified that the statement of facts that he agreed to in his criminal court case were correct.

Mr. Xu found a financially lucrative opportunity online on a popular Chinese/Canadian website. He made arrangements with a person named, “Wilson”, from the internet, to receive gift and or credit cards with purchasing power.

Once received, Mr. Xu realized that this endeavor was through fraudulent and illegal means, so he tried, unsuccessfully, to return the cards and receive his money back. He then decided to go ahead with the illegal activity anyway to retrieve his monetary losses. Once he broke even, he

continued the process, as it was a good way to make money. He acknowledged that he was being greedy at this time.

After advertising online for a “shopper”, the person who responded and met with him to continue this illegal venture was, unknowingly to Mr. Xu, an undercover police officer. Mr. Xu provided the officer with fraudulent credit cards, got the officer’s name, had the cards embossed with the officer’s name through “Wilson”, and asked the officer to sign them. Mr. Xu had the officer use those cards at specific stores, buying certain high end merchandise. This occurred three times. Mr. Xu paid the officer 10% of the value of the merchandise purchased once the officer provided him with the items that were purchased.

Later this same merchandise was sold to a single or several stores in the Pacific Mall at a 30% or 40% discount for their resale. These store owners did not ask, but knew that the items they were purchasing from Mr. Xu were illegally obtained.

Serious Criminality 36 (1) (a)

Mr. Xu’s testimony and documentary evidence confirm that he was convicted in Canada of an offence dated 19 June 2013. Mr. Xu does not dispute the Minister’s allegation of serious criminality. One of the offences was: laundering proceeds of crime, s. 462.31 of the Criminal code of Canada, which is an indictable offence carrying a maximum term of imprisonment of at least 10 years.

The Judge believes there are reasonable grounds to believe that Mr Xu. is inadmissible to Canada under serious criminality.

“I find that the report is well founded and therefore Mr. Shuo Xu is described in paragraph 36 (1) (a) of the IRPA.”

For this the judge served Mr. Xu a deportation order.

Right to Appeal — Under section 63 of IRPA, you may appeal to the Appeal Division. You may wish to get advice from counsel as soon as possible, since there are time limits for this application.

Standard of Proof

The judge looks to paragraph 33 of IRPA which sets the standard of proof for inadmissibility allegations under sections 34-37 to include facts arising from omissions and, unless otherwise provided, include facts for which there are reasonable grounds to believe that they have occurred, are occurring or may occur.

The Supreme Court of Canada defined “reasonable grounds to believe,” in the case of Mugesera v. Canada, as something more than mere suspicion, but less than the balance of probabilities

The case of Sabour v. Canada, reads:

In essence reasonable grounds will exist where there is an objective basis for the belief which is based on compelling and credible information.

Criminal Organization

There is no definition for “organization” within the context of paragraph 37(1)(a) of the IRPA.

The Federal Court (FC) in Saif, in interpreting the Supreme Court of Canada’s (SCC) decision in B010,7 provided that “… The Court’s views about the meaning and range of ‘organized criminality’ apply equally to paragraphs 37(1)(a) and 37(1)(b), including its interpretive importation of the Criminal Code definition of ‘criminal organization’ requiring a group of three or more persons”. The Court went on to note that the Criminal Code’s numerical requirement for a criminal organization of at least three persons is more consistent with the language of paragraph 37(1)(a) which requires “a number of persons”.8

Section 467.1(1) of the Criminal Code of Canada (CCC) defines “criminal organization” as a group, however organized, that (a) is composed of three or more persons in or outside of Canada; and (b) has as one of its main purposes or main activities the facilitation or commission of one or more serious offences that, if committed, would likely result in the direct or indirect receipt of a material benefit including a financial benefit by the group or by any of the persons who constitute the group. It does not include a group of persons that forms randomly for the immediate commission of a single offence.

According to the above cases, the Board is allowed flexibility in determining whether, in light of the evidence and facts before it, a group may be properly characterized as an organization.

Regular Meeting Location

The judge has noted that geographic location no longer is essential in determining a regular meeting location for a criminal organization. In this case, the judge looks to the internet as the place for persons to communicate. People not need to meet regularly at a common location as cellphones and emails, and internet communications serves the same purpose and is much more convenient in this situation.

In this case, Mr. Xu spoke to ‘Wilson’ via computer and set up a place to meet to transfer items (credit cards). Similarly, it was via the internet that the parties involved managed to recruit

others to be active participants in this fraudulent scheme. According to Mr. Xu, recruits were located from the Chinese/Canadian website, this is where Mr. Xu responded to an ad, and this is where he submitted his ad to recruit others.

Loose Hierarchy and Basic organizational Structure

There seems to be an informal understanding as to how things work. It is ‘Wilson’ who managed to recruit the next level of those involved, Mr. Xu being one of them. At Mr. Xu’s level, they were to obtain the cards from Wilson, then find ‘shoppers’, get their names, return to Wilson to provide the names, which were then embossed onto the cards. Mr. Xu and others at his level would return the cards to the shoppers, and then provide shopping instructions and/or transportation.

Once the shopping was done, Shuo Xu would provide cash payment of 10% of the value of the merchandise to the shopper. He would then go to the Pacific Mall and resell these items (at a reduced rate) to the participating stores for resale, or go back onto the internet and try to sell the items on sale websites. During this whole process everyone was to be making a profit via credit card fraud, except of course the store from which the merchandise was “purchased”.

Main Purpose or Main Activities of the Group

It has been provided, through Mr. Xu’s testimony and his explanations to the police and CBSA, the inner workings of this credit card fraud. It has been explained that false credit cards were provided to Shuo Xu by ‘Wilson’, then it was up to Shuo Xu to find shoppers to use these cards. Once the shoppers were hired, the cards would be returned to Wilson so that ‘shopper’s’ name could be embossed on the card for use. Once the shopping was completed, the items were either sold for cash or returned to the store for further store credit, which could also be sold for profit or reused for material gain.

Other Corroborating Evidence

The Police Service Occurrence Report states that the Asian Organized Crime task force assisted the Toronto Police Financial crimes unit in executing a search warrant in Markham. This is a Credit Card Fraud investigation named project Moonligting. 12 The police who were involved in investigating this group and their activities required the aid of the Asian Organized Crime Task force and treated the case as such.

A police document states that the “accused is part of a criminal organization that commits credit card fraud”.

The Judge in Mr. Xu’s criminal case made statements after hearing and reading the evidence before him that this was a “somewhat sophisticated organized venture”. “It was calculated, it was planned, it was organized”. It was “a planned multi party scheme to defraud a number of retailers”. The judge referred to this as: “organized crime such as this…”

There was a list of persons Shuo Xu was not to communicate with on his bail conditions. These were those persons he had connection with or were somehow related in this credit card scam.

These quotations of findings of the judge in Mr. Xu’s criminal case regarding the same activity support the conclusion I have come to after hearing all of the evidence.

“I find that there is credible evidence before me that forms the reasonable grounds on which I conclude that Mr. Shuo Xu was engaged in the activities of a group of organized individuals who profited by using fraudulent credit cards to purchase merchandise for further sale, and reap profits intended for the original retail stores.”

Conclusion

“I find that there are reasonable grounds to believe that those referred to in the documentary evidence loosely formed a criminal organization that was engaged in activity that is part of a pattern of criminal activity planned and organized by a number of persons acting in concert in furtherance of the commission of an offence punishable under an act of parliament by way of indictment.”

“I also find that there is credible evidence to find that Shuo Xu is a person described under the second part of 37(1)(a) of the IRPA as there are reasonable grounds to believe that he engaged in activity that is part of pattern of criminal activity planned and organized by a number of persons acting in concert in furtherance of the commission of an offence punishable under an Act of Parliament by way of indictment.”

“I find that the Minister has discharged the burden of establishing the inadmissibility under paragraph 37(1)(a) of the IRPA. Under the Immigration and Refugee Protection Regulations paragraph 229(1)(e), and I am required to issue a Deportation Order to Shuo Xu.”

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