Is the Bolivian hardwood deal on again ? "heh heh"
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B.C. Securities Commission (C-*BCSC) - Street Wire
BCSC-known Purdy, Horvat set for reduced guilty pleas
B.C. Securities Commission *BCSC
Tuesday September 30 2003 Street Wire
by Brent Mudry
The 13-month Bermuda Short ordeal of Howe Street promoter John (Jack) Purdy and associate Ronaldo (Ron) Horvat, a timber entrepreneur, is about to end with a whimper, not a bang. In a surprise development, both Vancouver-area men have agreed to plead guilty to a single count of structuring, a much less serious offence than the money laundering charges they faced since their arrests in August of last year.
"The government made us an offer we couldn't refuse," Miami criminal defence lawyer Neal Sonnett, representing Mr. Purdy, told Stockwatch. Mr. Sonnett notes the structuring charge, stemming from Mr. Horvat's reporting of a $55,000 deposit in a Miami bank, is not a money laundering count, not in the criminal code and is a fairly minor felony offence. (All figures are in U.S. dollars.)
Mr. Horvat's defence lawyer, Howard Srebnick, had similar comments. "In exchange for Mr. Horvat accepting responsibility for a currency transaction reporting violation, the government is dropping all pending charges against him and is seeking no punishment at all," he told Stockwatch. "Given the practicalities of the criminal justice system, it was an offer we could not refuse."
Classic structuring offences usually relate to a series of modest deposits structured to go under money laundering reporting thresholds. In this case the offence relates to Mr. Horvat reporting himself as the true depositor, not acting as the agent of an undercover officer posing as a member of the Colombian Cali cocaine cartel.
In the plea agreements, signed Tuesday, the government will drop the Bermuda Short money laundering indictment, file a new information on the lesser substituted charge, seek no sentence beyond time served and seek no fine. Matt Dates, special counsel for public affairs, the designated spokesman for the United States Attorney's Office in Miami, declined any comment until after sentencing.
The case will be finalized in a sentencing hearing next Thursday, Oct. 9, before Judge Cecilia Altonaga of United States District Court for the Southern District of Florida, who is not bound to accept the agreement between defence counsel and the United States Attorney's Office.
Plea agreement talks were launched last week by the U.S. Attorney's Office soon after a new prosecutor, Stephen Stallings, was appointed to the case, replacing Richard Hong, the lead prosecutor on the case. "There is a new prosecutor on the case, and he took a fair and balanced look at the evidence and some of the legal issues involved," says Mr. Sonnett.
The money laundering trial had been set to start Oct. 16, but a one-month delay application was pending. This would have been the first and only trial for Mr. Horvat. Mr. Purdy faced two indictments for separate periods during the Bermuda Short sting operation. In his first trial in February, he was acquitted after brief jury deliberations.
THE PLEA AGREEMENTS
In the plea agreements, which were finalized and signed on Tuesday but not yet presented to the judge, Mr. Purdy and Mr. Horvat agreed to plead guilty to a single structuring count relating to a $55,000 transaction made on July 26, 2001. Unlike many plea agreements, these include no term or other language of co-operation, requiring the defendants to co-operate with investigations or prosecutions of other individuals.
THE AGREED STATEMENT OF FACTS
As part of the plea negotiation arrangement, an agreed fact document was prepared and will be presented to Judge Altonaga. The document, entitled Agreed Factual Basis for Plea, is reproduced verbatim below.
"In 1999 through early 2001, Jack Purdy had a series of conversations with an undercover officer of the RCMP posing as a representative of wealthy South American investors, who was involved in a variety of businesses, including wood products. The undercover RCMP officer proposed to have the South American investors invest in Bolivian Hardwood Corp., a wood business in which Mr. Purdy was a principal. Toward that end, Mr. Purdy referred the undercover officer to Ronaldo Horvat, who was employed as the sales manager of BHC."
"In July 2001, the RCMP officer spoke to Mr. Horvat and discussed factor financing for several BHC lumber shipments. On July 26, 2001, the undercover RCMP officer gave Mr. Horvat $55,000 in U.S. currency. Mr. Horvat immediately deposited the cash into a bank account at Citibank (Miami) controlled by Harold Jolliffe, another principal of BHC. At Citibank, Mr. Horvat produced proper identification, and Citibank prepared a currency transaction report correctly identifying Mr. Horvat as the depositor of that currency."
"At the time Mr. Horvat made the cash deposit, Mr. Horvat had reason to know that the South American investor wanted to keep his identity confidential. By structuring the transaction so that Mr. Horvat would make the deposit, Mr. Horvat knew or should have known that the identity of the South American investor would not appear on a currency transaction report."
"Mr. Purdy, as a principal of BHC, assisted the transaction, because Mr. Purdy knew or should have known that the identity of the South American investor would not appear on a currency transaction report."
DEFENCE COMMENTS
Mr. Sonnett notes that while federal sentencing guidelines call for a sentence of zero to six months for the single structuring charge, the government will recommend the low end, namely no time. As such, both Mr. Purdy and Mr. Horvat are expected to be sentenced to time served.
After his arrest Aug. 14, 2002, at John F. Kennedy International Airport in New York, Mr. Purdy served two months in pretrial custody before being released on bail, originally set at $5-million. Mr. Purdy was ordered to remain in South Florida on electronic monitoring after his release on bail.
Mr. Horvat, arrested within the same day, served less than a month in pretrial custody before being released on bail, initially set at $100,000, with an $850,000 bond co-signed by his wife and several family members. He was ordered to remain on U.S. soil under house arrest at the residence of his uncle in Gig Harbour, Wash., near Seattle. Defence lawyer Mr. Srebnick notes his client was only allowed to return to Canada for three or four short visits with his wife and young children during the past year.
Both defence lawyers say their clients have paid a heavy price already.
"I am hopeful that Jack (Purdy) can put this behind him. It has been a long emotional and financial struggle for him," Mr. Sonnett told Stockwatch.
Mr. Srebnick says the Bermuda Short case has been "financially devastating" for his client Mr. Horvat. "Aside from the considerable legal expenses of my office, it has made it virtually impossible for him to earn a living."
Both defence lawyers also say their clients will soon be able to resume their family lives and business affairs as they recover from their legal ordeal.
"Ron (Horvat) has a stellar reputation in the wood industry -- nothing about this case has in any way impugned his character within the professional community," says Mr. Srebnick. "This is a case about law enforcement who set up a sting, a trap, and at the end of the day it came down to a currency reporting violation."
Mr. Sonnett notes that in the new count, his client Mr. Purdy was charged as an aider and abettor for assisting Mr. Horvat's structuring offence.
Mr. Sonnett was particularly outspoken about the case, saying the evidence was very weak and it was a "misguided" indictment from the beginning.
Both defence lawyers suggest the plea decision was a pragmatic one to settle the case without further delays, as any success by Mr. Sonnett on a pretrial double jeopardy dismissal motion could delay the case by as much as another year if the government were to appeal.
Even though the plea settlement is virtually a fait accompli, only requiring the judge's blessing to be official, Mr. Sonnett says he expects to file his dismissal motions in the next few days on a point of principle.
"I think there is a strong case for dismissal on double jeopardy and collateral estoppel grounds in light of Jack Purdy's acquittal in the prior case (in which there was substantial testimony about the charges in this case), but if dismissal was granted, the government could appeal," the defence lawyer told Stockwatch in an E-mail.
Despite his assertion that the case was weak and misguided, Mr. Sonnett offers no public criticism of Mr. Hong, the prosecutor until recently, for pursuing it. "If I had been the prosecutor, I would not have charged him (Mr. Purdy), but every prosecutor looks at it differently."
Both defence lawyers also suggest that the pending criminal conviction for structuring will not hinder their clients' ability to travel to and through the U.S. in future. An appeal court precedent has ruled that as structuring is not a crime of moral turpitude or an aggravated felony, it is neither an excludable or deportable crime for immigration purposes.
(c) Copyright 2003 Canjex Publishing Ltd.
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