Commissioner of Police v Rodriguez
[2019] NZHC 3265
•12 December 2019
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE
CIV-2019-419-000150
[2019] NZHC 3265
UNDER The Criminal Proceeds (Recovery) Act 2009 BETWEEN
COMMISSIONER OF POLICE
Applicant
AND
ANDREINA GAMEZ RODRIGUEZ
First Respondent
MAP AND ASSOCIATES TRUSTEE COMPANY LIMITED
Second Respondent
Hearing: 14 October 2019 Appearances:
J Hamilton for the Applicant
R Kirkness and F Biggs for the First Respondent
P Cornege and F Oback for the Second RespondentJudgment:
12 December 2019
JUDGMENT OF MOORE J
This judgment was delivered by me on 12 December 2019 at 9:30 am pursuant to Rule 11.5 of the High Court Rules.
Registrar/ Deputy Registrar Date:
COMMISSIONER OF POLICE v RODRIGUEZ & ANOR [2019] NZHC 3265 [12 December 2019]
Introduction
[1] The first respondent, Andreina Gamez Rodriguez (“Ms Rodriguez”), is married to Louis Carlos De’Leon Perez (“Mr De’Leon”).
[2] On 29 March 2019 US$11,850,000 was transferred into a BNZ account registered to the second respondent, Map and Associates Trustee Company Limited (“the Trustee Company”). The money was wired after the realisation of a portfolio account held with the Lombard Odier and CIE (Bahamas) Limited Bank (“the Lombard Porfolio”). The Lombard Porfolio was in Ms Rodriguez’s name. It was domiciled in the Bahamas.
[3] The Commissioner of Police (“the Commissioner”) claims that the funds are derived from the dishonest and fraudulent conduct of Mr De’Leon and that they were transferred to this country by Ms Rodriguez for the purpose of concealing or disguising their source.
[4] As such, the Commissioner claims Ms Rodriguez has committed the offence of money laundering.1
[5] He seeks an order restraining the property under the Criminal Proceeds (Recovery) Act 2009 (“the Act”).
[6]Ms Rodriguez and the Trustee Company oppose the application.
The application
[7] On 12 June 2019 the Commissioner made a without notice application for restraining orders.2 On 13 June 2019 Woolford J granted the application.
[8] The following day, on 14 June 2019, the Commissioner filed an on notice application.3
1 Crimes Act 1961, s 243(2).
2 Criminal Proceeds (Recovery) Act 2009, s 22.
3 Sections 21 and 25.
[9] The application is supported by the affidavit of Bruce Ronald Russell, a Police investigator attached to the Tauranga-based unit of the Waikato/Bay of Plenty Asset Recovery Unit (“the ARU”).
[10] Both Ms Rodriguez and the Trustee Company have filed notices of opposition to the on notice application.
[11] Ms Rodriguez has not filed evidence in opposition. The Trustee Company, through one of its directors, Martin Quentin Fine, has filed evidence in opposition.
Factual background
[12] The following factual background is drawn from Mr Russell’s affidavit. Except to the extent that is expressly recorded, it is not understood the following is contentious.
[13] Mr De’Leon is a dual Venezuelan/USA citizen. According to Mr Russell he was due to be sentenced in the United States on 7 October 2019 on charges of corruption and money laundering. I was advised from the bar that the sentencing has been adjourned.
[14] The charges arise out of Mr De’Leon’s actions as an attorney for a subsidiary of a Venezuelan stated-owned and state-controlled oil company. The US Department of Homeland Security (“Homeland Security”), which has investigated and continues to investigate the activities of Mr De’Leon and his alleged co-conspirators, claims Mr De’Leon received bribes of not less than US$16,100,000. Mr De’Leon pleaded guilty to the charges on 16 July 2018 under a plea agreement which is sealed.
[15] It is alleged that between 2011 and 2013 Mr De’Leon and others received approximately US$119,000,000 in bribes. The amount of US$16,100,000 went to Mr De’Leon.
[16] The allegation is that he and his associates established a number of Swiss bank accounts into which the bribes were paid. The money was then funnelled into other accounts and disguised in an attempt to legitimise their receipt. This involved various
complex financial transactions. Payments were sent to companies, intermediaries, relatives, friends, creditors and close associates.
[17] As a result of investigations into Mr De’Leon’s offending, Homeland Security successfully froze US$17,000,000 in an account held by Credit Suisse and registered to Magnolia Products Limited (“the Magnolia account”). Ms Rodriguez is the sole beneficial owner of the Magnolia account.
[18] The Commissioner does not suggest that the funds held in the Magnolia account were then transferred to the BNZ account. But he does say that the receipt of those funds provides a strong basis to infer that Ms Rodriguez received other proceeds from Mr De’Leon’s criminal activity. Investigations into Mr De’Leon continue. According to Mr Russell, Homeland Security officials have advised him it is likely the investigation has identified only a percentage of the funds paid by way of bribes to Mr De’Leon and his co-conspirators. They are confident they have not identified the full extent of the offending. Work continues on attempting to identify the structures established to conceal the proceeds of the offending and the accounts used to process or hold such funds. Thus not all of the proceeds of the offending are likely to have been restrained.
[19] Mr De’Leon was arrested in Madrid on 26 October 2017. He was extradited to the United States.
[20] Ms Rodriguez established the Lombard Porfolio sometime in 2015, approximately two years after Mr De’Leon’s offending. In early 2019 she contacted the Trustee Company with a view to transferring the Lombard Porfolio to a different jurisdiction. After some correspondence, the Lombard Porfolio was realised. On 29 March 2019 the funds so released were transferred to the Trustee Company’s BNZ account. According to Mr Russell, the bulk of the proceeds were to be invested by Mr Fine on behalf of Ms Rodriguez.
[21] On receiving the funds, the BNZ made enquiries of the Trustee Company. This was to comply with its obligations under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009.
[22]Mr Fine responded to BNZ’s enquiries. He claimed:
(a)Ms Rodriguez’s wealth was derived from her work as an architect prior to meeting Mr De’Leon;
(b)she married Mr De’Leon 10 years before but they had been separated for three years and there was no prospect of reconciliation;
(c)Ms Rodriguez lives in Spain where she has the sole custody of the children; and
(d)she was aware of an “issue” with her husband in the United States but considered that was settled. Mr De’Leon’s lawyers had told her that those matters did not affect her and she was not under investigation.
[23] In support of these claims, Mr Fine provided the BNZ with a list of projects and works said to have been completed by Ms Rodriguez between 2008 and 2010 in her occupation as an architect.
[24] The ARU examined the claims made by Mr Fine on Ms Rodriguez’s behalf. Its inquiries have revealed:
(a)Ms Rodriguez and Mr De’Leon were married in 2007 (before the alleged architectural work was undertaken);
(b)the couple were together when Mr De’Leon was arrested in Madrid; and
(c)Ms Rodriguez travelled with her husband to the United States when he was extradited on 11 March 2019. She has been living with him and their children in Texas while Mr De’Leon has been on bail.
[25] Further inquiries by the ARU revealed the funds restrained in Ms Rodriguez’s Magnolia Account and the reason for that. Coupled with the plainly false explanations proffered by Mr Fine to the BNZ and Ms Rodriguez’s attempts to distance herself from
her husband, suspicions were aroused. Further explanation was sought from Ms Rodriguez. None was forthcoming. That is the basis upon which the application for a restraining order was made.
Legal principles
[26] The threshold required for making restraining orders is relatively low, consistent with their purpose as a “holding” measure.4 An obvious purpose for an order is to protect property from dissipation pending the making of either an assets forfeiture order or an instrument forfeiture order.5
[27] The Commissioner made his application under s 25 of the Act. That section relevantly provides:
“25 Making restraining order relating to all or part of respondent’s property
(1) A court hearing an application for a restraining order relating to all or part of a respondent’s property may, if the court is satisfied it has reasonable grounds to believe that the respondent has unlawfully benefited from significant criminal activity, make an order that the property it specifies in the order (restrained property)—
(a) is not to be disposed of, or dealt with, other than is provided for in the restraining order; and
(b) is to be under the Official Assignee’s custody and control.
…”
[28] A significant criminal activity is an activity which, if proceeded against as a criminal offence would amount to offending punishable by a maximum term of imprisonment of five years or more.6 A person has unlawfully benefited from significant criminal activity if they have knowingly, directly or indirectly, derived a benefit from such an activity.7
4 Commissioner of Police v Li [2014] NZHC 479 at [11].
5 Commissioner of Police v Briggs [2012] NZHC 2324 at [13].
6 Section 6(1)(a).
7 Section 7.
[29] As made clear by the Court of Appeal, a Judge need only be satisfied “on reasonable grounds” that the relevant person has unlawfully benefited from significant criminal activity.8 He or she is not required to make a positive finding to this effect. The “lower standard” reflects that a restraining order is a holding measure often obtained in a situation of urgency.9 However, it is not suggested that the s 25 standard may be met by trifling or patchy evidence.10
[30] In terms of the respondent’s relationship to the property, it is sufficient for the respondent to have an “interest” in the property which includes “a right, power or privilege in connection with the property”.11
Submissions
The Commissioner
[31] The Commissioner argues that there are reasonable grounds to believe that Ms Rodriguez has unlawfully benefitted from significant criminal activity, specifically money laundering.
[32] The offence of money laundering requires a person to engage in money laundering transaction in respect of property that is the proceeds of an offence, knowing or being reckless as to whether the property is the proceeds of an offence.12
[33] Property will be the proceeds of an offence if it is derived or realised, directly or indirectly, by any person from any act, wherever committed, that would constitute an offence if committed in New Zealand.13
[34]A person engages in a money laundering transaction if he or she:14
(a)conceals such property; and
8 Vincent v Commissioner of Police [2013] NZCA 412 at [45](b).
9 Commissioner of Police v Matamata [2018] NZHC 3462 at [17].
10 Commissioner of Police v Vincent [2012] NZHC 2581 at [68].
11 Section 5; Commissioner of New Zealand Police v Smith [2017] NZHC 10 at [9].
12 Crimes Act 1961, s 243(2); see also Commissioner of Police v Snook [2018] NZHC 2537 at [45].
13 Section 243(1).
14 Section 243(4).
(b)deals with such property or assists someone else to do so.
[35] Concealing property includes disguising ownership; dealing with property includes bringing it into New Zealand or transferring possession.15
[36] The Commissioner says that Ms Rodriguez has laundered her husband’s money, the product of corruption, and has benefited from doing so. He points to the following as evidence of significant criminal activity:
(a)Ms Rodriguez and Mr De’Leon clearly maintain a close relationship;
(b)the money was transferred from a Swiss bank account; this has been a feature of Mr De’Leon and his associates’ offending, as has the funnelling of funds through family members;
(c)Ms Rodriguez has previously accepted funds proved to be associated with her husband’s offending into a Swiss bank account (the Magnolia account);
(d)the Lombard Portfolio was established after Mr De’Leon’s offending;
(e)Ms Rodriguez, through Mr Fine, made a number of patently false representations to BNZ as to the origin of the money; and
(f)she has since been unable to provide any reliable information in this regard.
[37] As for the benefit to Ms Rodriguez, the Commissioner says this is obvious. Ms Rodriguez has had use of the funds held in the Lombard Portfolio. She subsequently transferred them to New Zealand in an effort to continue their availability.
15 Section 243(1).
Ms Rodriguez
[38]Ms Rodriguez’s opposition to the application is twofold.
[39] First, she says there is no evidence to substantiate the belief that her funds are the proceeds of Mr De’Leon’s offending. Any suggestion to the contrary is speculative and contradicted by the evidence. The funds that were the proceeds of Mr De’Leon’s offending were held in the Magnolia Account and have been frozen since December 2015. They therefore cannot have been transferred to New Zealand.
[40] Ms Rodriguez points to the fact that no other offending by Mr De’Leon has been identified. United States authorities have been investigating Mr De’Leon since 2014 and as at June 2019 confirmed they had no knowledge of further offending by him. The suggestion that the authorities might uncover more offending is baseless and “inherently implausible”.
[41] Secondly, Ms Rodriguez argues that the Commissioner’s application is premised on the assumption that the funds sought to be restrained were the product of Mr De’Leon’s offending in the United States. The activity in question is therefore “significant foreign criminal activity”. Any application should have been brought under subpart 8 of the Act, which deals with foreign restraining orders.
[42] The Commissioner may only apply to register a foreign restraining order if requested by a foreign country and with the authorisation of the Attorney-General.16 Neither of those preconditions has been fulfilled. Ms Rodriguez therefore says that the bringing of an application under s 25 is an attempt to subvert the requirements of the statutory scheme. On a proper construction of the Act, the Commissioner cannot seek a restraining order based on money laundering if the underlying offending occurred in a foreign country.
The Trustee Company
[43] The submissions of the second respondent largely mirror those of Ms Rodriguez. The Trustee Company says that the Commissioner should have
16 Section 132. See also s 54 of the Mutual Assistance in Criminal Matters Act 1992.
brought an application for a foreign restraining order and that in the circumstances resorting to s 25 was impermissible under the Act.
[44] A further argument is advanced. The Trustee Company says that even if the Court was satisfied that there has been significant criminal activity, there is no evidence that Ms Rodriguez has benefited from it.
[45] The second respondent says that Ms Rodriguez’s ability to make use of the funds derives from Mr De’Leon’s underlying offending rather than her own money laundering. She is no materially better off now that the funds have been transferred. All that has happened is that the money has changed jurisdiction. As a consequence of the restraint, Ms Rodriguez is arguably worse off.
Discussion
[46]My inquiry is threefold:
(a)Should the Commissioner have brought a foreign restraining order rather than a restraining order?
(b)Are there reasonable grounds to believe there has been significant criminal activity? and
(c)Has Ms Rodriguez benefited from that activity?
Should the Commissioner have brought a foreign restraining order?
[47] A foreign restraining order means an order that restrains a person from dealing with property specified in the order and relates to property of a person who has, or may have, benefited from significant foreign criminal activity.17 “Significant foreign criminal activity” has the same definition as significant criminal activity, with the obvious difference that it is activity engaged in by a person in a foreign country.18 Importantly for my purposes, the definition of significant criminal activity does not
17 Mutual Assistance in Criminal Matters Act 1992, s 2.
18 Section 2.
specify that the activity must take place wholly within New Zealand.19 Nor is there any suggestion that significant foreign activity and significant criminal activity are mutually exclusive. In cases such as this, involving money laundering which is alleged to have taken place across borders, there is a necessary degree of overlap.
[48] It is apparent that the Commissioner could have applied for a foreign restraining order rather than a restraining order. But there is nothing in the Act which compelled him to do so. The relevant provision, s 132, is as follows:
“132 Who may apply to register a foreign restraining order
The Commissioner may apply to register a foreign restraining order in New Zealand if authorised by the Attorney-General under section 54 of the Mutual Assistance in Criminal Matters Act 1992.”
[49] The language of s 132 is permissive. It specifies that the Commissioner “may” apply for a foreign restraining order if authorised to do so by the Attorney-General. There is nothing in the section which suggests that s 132 is the only mechanism by which property which originates from overseas may be restrained.
[50] Similarly s 25 does not exclude such property. It simply states that the Court may make an order restraining property if it is satisfied it has reasonable grounds to believe that the respondent has unlawfully benefited from significant criminal activity. As will be seen below, I am satisfied that is the case here. It is simply irrelevant that the significant criminal activity in question may also have a foreign aspect to it.
[51] Davison J was faced with a similar application (albeit made on a without notice basis) in Commissioner of Police v Gong.20 The respondent, Mr Gong, was a Chinese national living in Canada. He was investigated by both the Economic Crime Investigation Department of the Chinese Public Security Bureau and the Ontario Securities Commission in Canada. The investigations concerned an alleged large scale fraud, said to involve a pyramid scheme associated with the sale of health supplements, giving rise to unlawful benefits exceeding $200 million. The Commissioner alleged
19 Criminal Proceeds (Recovery) Act 2009, s 6.
20 Commissioner of Police v Gong [2017] NZHC 603.
that Mr Gong remitted some $77 million obtained from the fraud to New Zealand and used money obtained from the fraud to purchase assets.
[52] Davison J was satisfied that there were reasonable grounds to believe Mr Gong unlawfully benefited from significant criminal activity.21 He accordingly made restraining orders over the property. No foreign restraining orders were made. Nor was there mention of significant foreign criminal activity.
[53] The Judge’s approach reflects the reality of the statutory scheme. Ms Rodriguez is attempting to read in a restriction which simply is not there. Bringing an application for a restraining order was a wholly appropriate use of the statute’s provisions. The Commissioner’s application cannot be impeached in that way.
Are there reasonable grounds to believe there has been significant criminal activity?
[54] I am also satisfied that there are reasonable grounds to believe that Ms Rodriguez has undertaken significant criminal activity, specifically money laundering.
[55] First, there are reasonable grounds to believe that the money transferred to the Trustee Company was the proceeds of criminal activity carried out by Mr De’Leon. It is clear that Ms Rodriguez and her husband maintain a close relationship. She has received funds which were the product of corruption from him in the past. These were also held in a Swiss bank account. Although Mr De’Leon has pleaded guilty to the charges he faced, he remains under a cloud of suspicion in respect of unidentified assets sourced from significant criminal activity. In the circumstances, I consider it unrealistic to suggest that there are not reasonable grounds to believe such a vast amount of money was obtained from criminal activity. That is particularly so given:
(a)Ms Rodriguez initially made patently false representations as to how she came by the money; and
21 At [36]-[37].
(b)having been confronted with evidence contradicting her misrepresentation, she now offers no plausible explanation, or any explanation at all, as to its origin.
[56] The central role Ms Rodriguez has played in the transfer of the money to the Trustee Company, her close relationship with her husband and his well-publicised legal troubles serve to satisfy me that Ms Rodriguez must have been at least reckless to, if not entirely cognisant of, the possibility that the funds she transferred were the proceeds of unlawful activity.
[57] Further, there is no dispute that she herself dealt with the money by transferring it to the Trustee Company in New Zealand. Doing so under the pretext of the money being her own investments also shows that this was in an effort to disguise it.
[58] In summary, I am satisfied on reasonable grounds that Ms Rodriguez has committed the offence of money laundering, thereby constituting significant criminal activity.
Did Ms Rodriguez benefit?
[59] The Act defines benefit as including proceeds and property.22 In R v Pedersen the Court of Appeal described the meaning as “comprehensive” and “wide and residual”.23 Further, Toogood J discussed the term in relation to money laundering in Solicitor-General v Beckham:24
“[61] …When an offender launders the proceeds of his or her crime, he or she receives a benefit through the concealment of the source of the proceeds in order to make it seem that those proceeds were derived from a legitimate source. Such a benefit accrues each time that money is laundered, even if the same sum is processed a number of times. That benefit can be quantified as the value of the proceeds laundered at each stage; the laundering enables the offender to use those proceeds freely without arousing suspicion, which would not otherwise have been possible…”
[60] The Judge’s reasoning is compelling. The benefit to be gained by money laundering is obvious, even if no material increase in wealth occurs.
22 Section 5.
23 R v Pedersen [1995] 2 NZLR 386 (CA) at 390.
24 Solicitor-General v Beckham [2015] NZHC 2816.
[61] The Trustee Company objected to the harshness of the approach adopted by Toogood J in terms of how the benefit is quantified when the same money is laundered a number of times. Those concerns are inapt in this case for two reasons:
(a)First, the money was “laundered” but once. There is therefore no need to multiply the benefit accrued by doing so.
(b)Secondly, this matter comes before me as an application for restraint rather than forfeiture. It is unnecessary to calculate to a nicety the value of the benefit gained from the unlawful activity. It is simply enough to show that Ms Rodriguez has benefited.
[62] I am satisfied that she has. The nature of that benefit is inherent in the offence of money laundering: the “disguising” of property which is the proceeds of unlawful activity. It is not necessary or helpful to dissect the nature or value of that benefit further.
Result
[63] I am satisfied that the order sought by the Commissioner should be granted. I hereby order that pursuant to s 25 of the Act the following property is not to be disposed of, or dealt with, other than is provided in this restraining order and is to be in the Official Assignee’s custody and control:
(a)The balance of the funds attributable to the first respondent, Andreina Gamez Rodriguez, in the Bank of New Zealand account that is in the name of MAP and Associates Trustee Company Ltd.
Moore J
Solicitors:
Crown Solicitor, Hamilton Mr Kirkness, Wellington Tompkins Wake, Hamilton Mr Cornegé, Hamilton
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