More Bolivian hardwood issues.....
B.C. Securities Commission - Street Wire
BCSC-known Purdy seeks trial delay, Chambers evidence
B.C. Securities Commission *BCSC
Tuesday January 7 2003 Street Wire
by Brent Mudry
Howe Street penny stock promoter and alleged drug money launderer John (Jack) Purdy, facing a two-week Bermuda Short trial set to start next week, hopes to win a delay, moving his trial date to mid or late February. Meanwhile, as co-accused Kevan Garner rolled over and pled guilty in early December, another alleged Howe Street drug money launderer, Howard Jolliffe, is believed to be planning to plead guilty and rat out his associates soon. In a third recent development, associate Ronaldo (Ron) Horvat faces an uphill battle in his bid to sever his case, and hopefully his fate, from that of Mr. Purdy.
While Mr. Garner was the first rat to jump ship, and Mr. Jolliffe may soon follow, all the money laundering defendants are scrambling to distance themselves from their co-accuseds as the pressure is quickly building in the countdown to looming Miami-area trial dates. The Howe Streeters are especially anxious to distinguish themselves from alleged organized crime associate Martin Chambers, the only Bermuda Short money laundering target to remain in jail without bail.
Messrs. Chambers, Purdy, Garner, Horvat and Jolliffe were among 60 targets, including 20 Canadians, nabbed on Aug. 14 and Aug. 15 in the well-choreographed arrest operation of Bermuda Short, a two-year joint RCMP-FBI undercover sting operation. All targets are presumed innocent until proven guilty or they decide to help save their own bacon by squealing on their comrades.
The unprecedented Bermuda Short sting operation featured two ruses: a money-laundering sting in which an undercover FBI agent and an undercover RCMP officer posed as agents of the Colombian Cali cocaine cartel to lure targets to agree to launder millions of dollars of dirty drug money, and a much bigger sting which lured targets to agree to bribe corrupt mutual fund officials in return for multimillion-dollar investments in penny stock promotions.
Three of Bermuda Short's 23 indictments targeted alleged money launderers, all of whom are Howe Street players and all but two of whom are from Vancouver or elsewhere in British Columbia. Mr. Chambers and offshore accountant Michael Hepburn of Barbados were the two biggest fish caught in the net, which also snared stock promoters Mr. Garner and Mr. Purdy, and Mr. Horvat and Calgary-based Mr. Jolliffe, exotic forestry entrepreneurs also involved in Vancouver's penny stock market.
On Howe Street, Mr. Garner is best known as the close business partner of fellow promoter Jack Purdy, who is a close associate of Don Sheldon, a veteran penny stock promoter who would rather be called a company builder, except that he has promoted more stocks than he has built companies. While Mr. Purdy was also targeted in Bermuda Short, no allegations have been made against Mr. Sheldon, who was not involved, implicated or otherwise mentioned in the criminal case.
THE JOLLIFFE POTENTIAL PLEA
Mr. Jolliffe's potential status as the second Howe Streeter to cut a deal was revealed in a court filing last week by Miami attorney Neal Sonnett, Mr. Purdy's criminal defence lawyer. "It is our understanding that Jolliffe intends to enter into a plea agreement with the government, but we have not yet received any plea agreement or related discovery from the government," states Mr. Sonnett.
In an Aug. 1 grand jury indictment, Mr. Jolliffe, along with Mr. Purdy and Mr. Horvat were charged with nine counts of money laundering and conspiracy, with each facing a potential maximum sentence of 20 years if convicted. The alleged conspiracy ran from as early as October, 1999, through last February. Mr. Jolliffe, a professional forester, and Mr. Horvat, a sales and marketing professional, were the principals of Bolivian Hardwood, a Vancouver-based company which exploited one of Bolivia's legitimate cash crops.
In one count, the indictment claims the Howe Street quartet conspired to accept and launder $130,000 of purported cocaine money from undercover officers. Six of the accounts relate to a series of transactions between July 27 and Oct. 22 of 2001, ranging from $15,000 to $74,997, through wires received at SunTrust Bank in Miami. While the trio face the potential forfeiture of all dirty assets, the only asset named in the indictment is a Citibank account in the name of Mr. Jolliffe.
HORVAT DODGES PURDY
Mr. Horvat hopes to portray himself as a minor, or inconsequential, figure in the conspiracy, and thus sever his case from that of Mr. Purdy, whom the U.S. government describes as a "leader" who has a "money laundering business." According to Mr. Horvat's Miami lawyer, Howard Srebnick, the Bolivian Hardwoods figure was just implicated in "one isolated incident," when he had the misfortune of accepting a bag stuffed with cash in Miami on July 26, 2001.
Mr. Srebnick faces an uphill battle with Assistant U.S. Attorney Richard Hong, who argues in court filings that Mr. Horvat played a "key role" in the conspiracy to launder Cali cartel cocaine money.
"In various, lengthy recorded conversations, defendant Horvat, on behalf of co-defendant Purdy, took the leading role in discussing and negotiating with the undercover agents, who were posing as members of a Colombian drug trafficking organization, a multi-million dollar money laundering deal, where up to $1.5-million of 'cocaine proceeds' would be provided to defendants Horvat, Purdy and Jolliffe per month," states Mr. Hong.
"As will be shown at trial, there is more than ample evidence to show beyond a reasonable doubt that defendant Horvat was fully aware that the undercover agents' funds to be used in the money laundering deal were drug proceeds."
The prosecutor notes that after negotiating the deal, Mr. Horvat also laundered the first batch of funds, about $55,000, which the undercover agents portrayed as drug money. Before depositing this dirty bait money in a Miami bank, Mr. Horvat allegedly provided an undercover agent with false documentation to conceal the true nature of the laundering transaction.
"Contemporaneous to these transactions, in 2002, co-defendant Purdy was also involved in substantially similar money laundering transactions with other defendants not in this case and the undercover agents. The United States intends to present certain evidence of these transactions," states Mr. Hong, referring to other cases involving Mr. Purdy and Mr. Chambers.
Mr. Hong also rejects defence lawyer Mr. Srebnick's argument that his client Mr. Horvat faces "specific and compelling" prejudice as there is more evidence against Mr. Purdy than himself. The prosecutor notes that in other precedents, the U.S. court system's Eleventh Circuit has repeatedly and specifically rejected this as a valid argument for severance.
"In so doing, however, defendant Horvat completely ignores the audio-tape evidence that, in 2001, he was, on behalf of co-defendant Purdy, primarily responsible for negotiating directly with the undercover agents the multi-million dollar money laundering deal. Defendant Horvat also completely ignores the audio-tape evidence that the defendant himself repeatedly mentions and discusses co-defendants Purdy and Jolliffe in connection with the money laundering deal," states prosecutor Mr. Hong.
"To suggest that defendant Horvat was involved in just one isolated incident, on July 26, 2001, as the defendant does, is plainly wrong -- both factually and legally."
In summation, Mr. Hong argues that there is no sound reason to have separate trials for Mr. Horvat and Mr. Purdy. The judge has not yet ruled on the severance motion.
PURDY'S PICKLE
Mr. Purdy, meanwhile, is anxious to postpone the criminal trial, set to start on Jan. 13, to either Feb. 17 or Feb. 24, citing the difficulties in preparing to defend his complex case. Prosecutor Mr. Hong is amenable to a minor delay, as he was booked himself for an unrelated two-week trial, bumped from early December to a scheduled start of Monday, and another complex financial fraud case set to start next week.
In a motion for continuance, defence lawyer Mr. Sonnett says it has become "excruciatingly apparent" that he needs more time due to "discovery problems" with the government's evidence. "Because of the sheer number of tapes, as well as the quality of the recordings, there are still a large number of tapes still to be reviewed and analyzed."
Mr. Sonnett notes he has alreadly received at least 145 audio and 16 video tapes of the undercover operation targeting Mr. Purdy and his alleged co-conspirators. The defence lawyer argues he has four main problems.
The first relates to the tapes generally. "Many of the tapes -- including some of the critical undercover meetings -- are extremely difficult to hear and understand, and have required us to spend an inordinate amount of time listening to some passages over and over again to try to understand what was being said," states Mr. Sonnett. "For example, we have spent hours trying to discern just a few minutes of a multi-hour meeting that was audio and video-taped."
Second, Mr. Sonnet claims he has not yet received transcripts for at least 40 of the tapes provided. "Some of those tapes contain conversations that we believe will be critical to the defence in this case, and transcripts will be essential for purposes of cross-examination."
Third, Mr. Sonnet complains that many of the transcripts have substantial passages noted as "UI" or "unintelligible," in addition to assorted transcription errors which need to be corrected. "Through persistent and repeated review, we have been able to 'fill in the blanks' on some of these 'unintelligible' passages and correct transcription errors, but additional substantial review of the tapes and comparison with the transcripts is absolutely necessary."
Finally, the defence lawyer stresses his need for corrected transcripts so he can properly prepare for cross-examination. Mr. Sonnet argues that it will easier for everyone if the government provides electronic versions of the transcripts to speed up the correction process.
Mr. Sonnet complains that these problems have been compounded as the government has not only not yet specified which tapes it will play at trial, but it also intends to introduce tapes from two other Bermuda Short money laundering cases: a second Purdy case, which includes the rat Mr. Garner, and the Chambers case.
Besides all these tape and transcript troubles, Mr. Purdy's lawyer complains he is having a devil of a time scrambling to get documents and other evidence from Canada. "Mr. Purdy's bail conditions, which require that he remain in the Southern District of Florida, has complicated our efforts to secure evidence and witnesses from Vancouver," states Mr. Sonnett. The lawyer does not note which of Mr. Purdy's Howe Street colleagues or other Vancouver associates are eager to travel to Miami and testify in his support on U.S. soil.
In addition to seeking a trial delay, Mr. Sonnett also seeks three court orders to compel discovery from the government.
First, the criminal lawyer wants a complete index of all the tapes and transcripts relevant to both cases in which Mr. Purdy is a defendant. "Based on our own investigation and review of discovery documents, we believe that there are conversations which took place for which we have found neither tapes nor transcripts, and we are entitled to know whether those conversations were purposefully not recorded," states Mr. Sonnett.
Second, Mr. Purdy's lawyer wants a list of all of the tapes and transcripts the government will present in court as evidence, or at least a list of those upon which prosecutor Mr. Hong will most likely rely.
Third, Mr. Sonnett wants thee specific tapes and conversations from the Chambers case that the prosecution believes are admissible in the Purdy case. The defence lawyer notes that on Dec. 30, he received a 113-page transcript involving Mr. Chambers, but Mr. Hong has not indicated if he will try to introduce this at trial.
"AUSA Hong will state only that it involves all conversations in which Chambers 'mentions' Purdy. We believe the government has an obligation to be more forthcoming and to proffer exactly where those 'mentions' occur -- as opposed to merely pointing us to all the Chambers tapes -- and how they are admissible."
The judge has not yet ruled on Mr. Purdy's continuance and discovery motions. Once the government shows its full hand as to what Chambers evidence it seeks to call, Mr. Purdy's lawyer will have a better idea of the court battle ahead.
bmudry@stockwatch.com
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