OT: BCSC-aided SEC target Gilliland arrested, denied bail
B.C. Securities Commission *BCSC
Thursday July 31 2003 Street Wire
Also Securities and Exchange Commission (U-*SEC) Street Wire
by Brent Mudry
Fugitive West Vancouver prime bank promoter Frederick J. (Fred) Gilliland, arrested this week on a Florida extradition warrant, has been denied immediate bail by a senior Canadian judge. Escorted by sherriffs, Mr. Gilliland, the alleged mastermind of a $29-million offshore prime bank scheme, attended the Supreme Court of British Columbia in a bright red jumpsuit, the standard-issue uniform for residents of the exclusive gated community he will call home for the next little while. (All figures are in U.S. dollars.) After a brief initial appearance hearing on Wednesday and Thursday, Associate Chief Justice Patrick Dohm ordered Mr. Gilliland remain in custody at a Vancouver-area pretrial detention centre.
Mr. Gilliland's comfortable lifestyle in West Vancouver, Canada's richest community, abruptly fell apart this week in co-ordinated moves in the wake of expose stories by Vancouver Sun reporter David Baines in recent weeks.
On Monday, the British Columbia Securities Commission put a lien charge on Mr. Gilliland's $1.5-million (Canadian) West Vancouver home at 2373 Constantine Place. On Tuesday, a lawyer trying to close Mr. Gilliland's sale of the property discovered the lien and contacted the BCSC. At 3 o'clock that day, Judge Dohm issued an extradition arrest warrant at the behest of the Canadian Department of Justice, acting on the behalf of the United States Department of Justice.
An hour later, at 4 o'clock, Mr. Gilliland was arrested without incident at his home by members of the Commercial Crime Section of the RCMP, assisted by the West Vancouver Police Department.
The next day, Wednesday, was equally busy. In one courtroom, lawyers began the initial hearing in front of Judge Dohm, with Mr. Gilliland dressed in jailhouse red. In another courtroom in the same courthouse, Toronto lawyers, who flew in on short notice, won ex parte freeze orders on Mr. Gilliland's assets, acting on behalf of Michael J. Quilling of Dallas, Tex., the receiver appointed by U.S. District Court for the Western District of North Carolina at the request of the U.S. Securities and Exchange Commission.
The freeze orders apply to various assets of Mr. Gilliland, 834133 Alberta Inc., 832790 Alberta Inc. and Royal Grand Exchange International Ltd., which holds title to his West Vancouver house. Freeze orders in a parallel action were served on the main downtown Vancouver branch of Royal Bank of Canada and the West Vancouver Ambleside branch of TD Canada Trust, which host accounts of Mr. Gilliland and his companies.
A number of Gilliland cases are before U.S. courts. The extradition arrest was believed made in relation to a grand jury indictment in U.S. District Court for the Northern District of Florida in Pensacola. The fourth superseding indictment, dated Oct. 17, 2001, outlines two fraud related charges against Mr. Gilliland, Winnipeg lawyer Jerrold L. Gunn and Gilliland associates Thomas L. McCrimmon and William Leon Hurst.
All parties, including Mr. Gilliland, remain presumed innocent until proven guilty. At least one related co-defendant, Kenneth Brian Cobb, has alreadly been convicted in Florida. This January, Mr. Cobb's 60-month sentence on one count and 78-month sentence on another count were reduced to 30 months on each count concurrent.
Vancouver defence lawyer Jonas Dubas, who appeared for Mr. Gilliland, claims his client has been unfairly arrested, in a bid to leverage or shore up the weaker criminal case by stronger U.S. civil proceedings. "The U.S. (criminal) case is incredibly weak," Mr. Dubas told The Sun and Stockwatch.
"There has been an unusual sequence of events (in recent days), with your articles, his arrest and civil judgments in July of this year... and all of a sudden we are going to extradition," Mr. Dubas told Mr. Baines.
"My client would like to be out today," the lawyer told reporters.
Mr. Dubas suggests that a full bail hearing may not come for a month or more, as the defence has much to prepare for. "It could be a month, or it could be Monday morning," he stated.
Mr. Dubas confirms the main issue the defence must counter is the Crown assertion of flight risk. "He has not been hiding from anybody. At the end of the day this is a lot of posturing from the U.S." The defence lawyer points out that Mr. Gilliland has been in West Vancouver for the past four years, starting in mid-1999, six months before he bought the home he was about to sell in recent days.
In general for such white-collar Canadian extradition cases, the key flight risk considerations to be considered include the fugitive's ties of community, family, friends and assets to the host jurisdiction, in this case B.C., such ties to other jurisdictions, offshore assets if any, travel histories and the fugitive's record of co-operating with any other court cases or authorities in various jurisdictions.
Mr. Dubas also complains that Mr. Gilliland will likely be unfairly deprived of the liberty which is such a hallmark of Canada's criminal justice system. "Many countries including the U.S. do not have a fundamental respect of liberty that we have," he says.
In the court-filed complaint in its parallel civil case, filed in April, 2002, the SEC claims that Mr. Gilliland was unjustly enriched by $20-million raised through his "fraudulent scheme" from more than 200 investors throughout the U.S., Canada and the United Kingdom through MM ACMC Banque De Commerce Inc., a North Carolina company controlled by an acquaintance. The SEC claims Mr. Gilliland, a Canadian citizen at the time living in Florida, raised the funds from at least mid-1997 until at least November of 1998. The regulator claims he solicited investors to invest in his fraudulent "bank debenture" and "high yield" trading programs. The allegations against Mr. Gilliland have not yet been proven in any trial.
bmudry@stockwatch.com
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