Lucky Jack ?..... maybe...
BCSC-known promoter Purdy scores historic court win
B.C. Securities Commission *BCSC
Tue 13 May 2003
Street Wire
by Brent Mudry
Vancouver financier John (Jack) Purdy, who made his name on Howe Street
promoting speculative penny stock ventures, has now made his name in legal
circles, in a precedent-setting court decision expected to significantly
change how cross-border criminal cases are investigated, prosecuted and
defended. While the decision effectively imposes Canadian disclosure
standards on joint prosecutions with American authorities, it will likely
also apply to international co-operation with other countries.
In an 11-page decision released Friday by the Supreme Court of British
Columbia, Madam Justice Deborah Satanove ordered the RCMP to give full
disclosure to Mr. Purdy, a Canadian national, of its leading role in the
drug money laundering portion of Operation Bermuda Short, a three-year
joint FBI-RCMP sting operation based in Miami.
The historic decision, issued four weeks after a three-hour hearing on
April 8, marks a win for veteran Vancouver criminal defence lawyers Richard
Peck and David Martin, and a loss for the Attorney General of Canada,
represented by civil litigator George Carruthers.
Amid a trend of increasing investigatory co-operation between authorities
in various countries, the Purdy decision radically shifts the playing
field. "It changes the way in which the defence of cross-border cases will
be conducted. It changes the game," Vancouver defence lawyer Greg DelBigio
told Stockwatch. While authorities are sometimes accused of playing
jurisdictional arbitrage, laying charges in favourable venues, Mr. Purdy's
defence lawyers have won a hardball game of disclosure arbitrage, taking
advantage of broader Canadian disclosure rules.
Lawyers with Canada's Department of Justice are closely reviewing the Purdy
ruling, but no decision has yet been made on whether an appeal is
anticipated. Assistant United States Attorney Richard Hong of Miami, the
lead prosecutor on the Purdy case, was unable to provide immediate comment.
Mr. Purdy was arrested Aug. 14 at John F. Kennedy International Airport in
New York, after he was lured onto U.S. soil for the Bermuda Short arrest
operation. Associate Martin Chambers, a controversial former Vancouver
lawyer, was arrested at the airport in St. Louis, Miss., en route to Fort
Lauderdale, Fla., when he apparently got wind of the broad FBI arrest
operation during a brief stopover.
The two-pronged Bermuda Short Operation -- one for bribing fictitious
mutual fund officials, the other for drug money laundering -- was unveiled
Aug. 15, with the unsealing of 23 indictments and arrests of 58 targets,
including 20 Canadians. All parties remain presumed innocent until and
unless proven otherwise. A number of the targets have pled guilty, some
have been acquitted at trial, a few have had their charges dropped or
stayed, and most, including Mr. Purdy and Mr. Chambers, maintain their
innocence to the charges.
Mr. Purdy, Mr. Chambers and several associates were snared in a 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.
Co-defendants Kevan Garner, Mr. Purdy's Vancouver partner, and Harold
Jolliffe, pled guilty and agreed to co-operate by testifying as star
witnesses. The other two co-defendants, Ronaldo (Ron) Horvat and offshore
banker Michael Hepburn of the Bahamas, maintain their innocence. Mr. Purdy,
the only target named in two indictments, was acquitted in his first
two-week jury trial on Feb. 28 and faces a second trial, along with Mr.
Horvat, on July 7. Any appeal of the current Vancouver court decision is
expected to delay the Miami trial date. The separate trial of Mr. Chambers
and Mr. Hepburn is slated for later this year.
In her decision, Judge Satanove notes Mr. Purdy is a Canadian citizen and
resident of Vancouver, facing criminal prosecution in Florida regarding
allegations of laundering proceeds of crime and conspiracy to launder
proceeds of crime, arising from a joint sting operation of Canadian and
American law enforcement agencies.
A defence affidavit confirms Mr. Purdy was a key early target in Bermuda
Short, as he was first contacted in March, 1999, by an undercover RCMP
officer with the Integrated Proceeds of Crime Unit in Vancouver. The
officer, using the alias Bill McDonald, posed as an agent assisting a
Colombian drug cartel, and he remained the principal undercover contact
with Mr. Purdy and the other Canadian money laundering targets.
While the grand jury indictment was handed down in United States District
Court for the Southern District of Florida, Mr. Purdy made the disclosure
challenge in the Supreme Court of B.C. In the application, defence counsel
sought access, as soon as possible, to the investigative materials of the
RCMP, relating to Mr. Purdy's involvement in the sting operation.
In their submissions, lawyers Mr. Peck and Mr. Martin argued that the
refusal of the RCMP to disclose materials in its possession, gathered by
the RCMP in the course of the sting operation, infringes on Mr. Purdy's
right to make full answer and defence as protected by Section 7 of Canada's
Charter of Rights and Freedoms. Specifically, defence counsel argue that
without full RCMP disclosure, Mr. Purdy cannot fully advance his key
defences of innocent intent and entrapment. The defence lawyers sought a
court order of disclosure, compelling the RCMP to provide copies of all
records relating to the investigation, subject to the certain exceptions.
Crown counsel Mr. Carruthers argued that there is no civil or criminal
process before the Canadian court giving it jurisdiction to order
disclosure of the documents sought by Mr. Purdy. The government lawyer
argued that there has been no breach of the Charter and Mr. Purdy failed to
try other means of access under the Access to Information Act, the Privacy
Act and the Canada Evidence Act.
Underlining the precedential nature of the application, Judge Satanove
notes is appears to be a "case of first instance" which requires the review
and application of basic principles of constitutional law. The judge notes
that Section 32 (1) stipulates that the Charter applies to everything
within the authority of the government of Canada and of each province,
including actions of Canadian law enforcement authorities, such as the
RCMP.
Judge Satanove notes that a Supreme Court of Canada decision, Harrer in
1995, found that Canadian nationals have a right to expect protection from
interference with their rights by our government or its agents regardless
of where that interference took place.
The judge also notes that another high court decision, Terry in 1996, found
that Canada's Charter cannot be applied extraterritorially, or outside
Canada, to govern the conduct of criminal proceedings by foreign
authorities in another state since this would violate the principle of
state sovereignty. This case also found that co-operative investigations
between states are governed by the laws of the jurisdiction in which the
actual activity is undertaken.
"Therefore, I conclude that the Charter applies to the actions of the RCMP,
even in the USA, provided that application of Charter principles will not
interfere with the sovereign authority of the U.S.A.," ruled Judge
Satanove, in favour of Mr. Purdy.
The Canadian judge notes that the uncontested affidavit evidence shows that
the Bermuda Short investigation of Mr. Purdy, a Canadian national, took
place mainly in Vancouver, with a Canadian RCMP officer as his principal
contact.
Judge Satanove also notes that there is no doubt that if Mr. Purdy were
facing charges in Canada, he would be entitled to the extensive RCMP
investigation disclosure he seeks. The judge also noted that he would be
entitled to at least some of this disclosure if he had been arrested in
Canada and subject to extradition to the U.S.
In opposing Mr. Purdy's application, Canadian government lawyer Mr.
Carruthers argued that there is no justifiable Charter issue because, in
the absence of criminal charges in Canada, Mr. Purdy has no right to
disclosure and the Crown has no obligation to disclose.
"This is a formidable argument worthy of consideration, but in my view, the
unique circumstances of this case allow me to apply the general principle
of Stinchcombe, that information ought not to be withheld if there is a
reasonable possibility that the withholding of information will impair the
right to make full answer and defence," states Judge Satanove in her
precedent-setting decision.
The judge notes that in Section 7 of the Charter, the right to make full
answer and defence is a common law right and one of the principles of
fundamental justice.
"The right to make full answer and defence is one of the pillars of
criminal justice on which we heavily depend to ensure that the innocent are
not convicted. Recent events have demonstrated that the erosion of this
right due to non-disclosure was an important factor in the conviction and
the incarceration of an innocent person," states Judge Satanove, quoting
from the Stinchcombe case, a landmark Supreme Court of Canada decision on
disclosure.
"The petitioner (Mr. Purdy) is a Canadian national whose life and liberty
has been put in jeopardy because of an investigation which took place in
Canada and in which Canadian authorities played a major part. In a joint
investigation, such as this one, the ultimate forum in which the accused is
tried should not deprive the accused from the observance by Canadian
authorities of Charter rights to which the accused would otherwise have
been entitled," ruled Judge Satanove.
"Furthermore, if the ordinary extradition process had not been circumvented
by the inducement of Mr. Purdy to travel to the U.S.A. under the pretense
of doing a 'clean deal,' I believe he would have been entitled to
disclosure, at least from the Canadian authorities, of information they had
in their possession pertaining to their part in the investigation," states
Judge Satanove.
After finding in favour of Mr. Purdy, the Canadian judge made a specific
order requiring the head of Canada's RCMP portion of Bermuda Short, or an
agent, to retrieve and provide any and all "records, documents, files -
electronic or hardcopy, notes, papers, writings, maps, photographs,
audiotapes or videotapes in the power, custody or control of the RCMP
relating to the investigation of the petitioner in respect of Operation
Bermuda Short."
This senior officer must examine all these records to determine whether any
portion could harm a continuing RCMP investigation, reveal the identity of
a confidential informant source or compromise the safety or security of a
source, reveal privileged solicitor-client communications, or potentially
harm international relations or national defence or security. If so, the
RCMP can redact, or censor, these sensitive portions.
The RCMP is then ordered to make copies of all such records available to
counsel for Mr. Purdy within 30 days of the court order.
While Mr. Purdy must be jubilant with his court win, defence lawyers across
the country are equally jubilant, as it significantly broadens disclosure
requirements in cross-border prosecutions.
"Prior to Purdy, a prosecutor could simply say if the evidence is outside
the jurisdiction (where charges are laid) it is not subject to the usual
rules of disclosure," Mr. DelBigio told Stockwatch.
"The effect of Purdy is to ensure that trials are fair regarding full
disclosure, regardless of which jurisdiction (is involved) and the trial is
based on full disclosure."
"Prior to Purdy, at its worst, the police agencies could decide where a
prosecution could occur and evidence (from other jurisdictions) would not
flow into that jurisdiction," says Mr. DelBigio. Now, Canadian defendants
in other countries will have much broader disclosure of any cross-border
investigations.
(c) Copyright 2003 Canjex Publishing Ltd. stockwatch.com
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