R v Dixon
[2017] NZHC 210
•21 February 2017
THIS IS A REDACTED VERSION OF THE JUDGMENT. PARTS OF PARAGRAPHS [75] AND [77] HAVE BEEN REMOVED.
ORDER PROHOBITING PUBLICATION OF PARTS OF PARAGRAPHS [75] AND [77] OF THIS JUDGMENT PURSUANT TO S 205 CRIMINAL PROCEDURE ACT 2011
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
CRI-2015-009-5968 [2017] NZHC 210
THE QUEEN
v
LEE DIXON
Hearing: 1, 2 and 3 August 2016 Appearances:
K B Bell for the Crown
M Starling and L M Drummond for the DefendantJudgment:
21 February 2017
JUDGMENT OF NICHOLAS DAVIDSON J
following disputed facts hearing after plea of guilty to charge of importing a Class A controlled drug under Misuse of Drugs Act 1975 section 6(1)(a) and section 2(a), and Crimes Act 1961 section 66
R v DIXON [2017] NZHC 210 [21 February 2017]
Table of Contents
Para No
A. Introduction [1]
B. The disputed facts issue before the Court [5]
Oral evidence [11]
C. The Crown case [13] Currency transactions [14] The FedEx package [16] The guilty pleas [19] The defendant’s explanation [20] Elements of the Summary of Facts (Annexed as Schedule A) [21] Detective Waugh [23] Mr D’Ambrosio [30] Cocaine [37] Price of cocaine at source in Colombia [45] Getting cocaine to the market [47] Sales on consignment [52] Monetary transaction/s [55] A typical transaction [61] Mr D’Ambrosio’s expert opinion of the evidence in this case [62]
The June 2015 communications associated with the FedEx delivery of
a “submersible pump” to Rakaia
[67]
Mr D’Ambrosio’s table (Annexed as Schedule B) [71]
D. Defence submissions [80]
E. Analysis[99] Overview [89] Inferences [94]
Question 1: Did Mr Dixon import cocaine into New Zealand between
24 November 2014 and 2 July 2015?
Question 2: If so, on how many occasions did Mr Dixon import cocaine into New Zealand?
Question 3: Were the monetary transaction/s alleged by the Crown
for the purchase and transport of cocaine from a Colombian source to New Zealand?
Question 4: What is the relevance of the FedEx package delivery to
Rakaia on 30 June 2015?
Question 5: Did the cocaine imported into New Zealand by
Mr Dixon reflect the monetary transaction/s alleged by the Crown, and did the importation occur between 24 November 2014 and
2 July 2015?
Question 6: How much cocaine did Mr Dixon import into
New Zealand between 24 November 2014 and 2 July 2015?
[100] [101] [106]
[120] [128]
[146]
F. Disposition [158] G. Destruction and other orders [159] Schedule A Crown Summary of Facts
Schedule B Mr D’Ambrosio’s Table (as provided to Court on
1 August 2015)
Introduction
[1] The defendant, Mr Dixon, returned from a trip to South America on
29 March 2014. He was searched at Auckland Airport and found in possession of
97.5 grams of cocaine packed in a condom, inside his boxer shorts. He was convicted on a charge of importing cocaine and in April 2015 sentenced to seven months home detention and 150 hours community work.
[2] This judgment concerns Mr Dixon’s further importation of cocaine between late 2014 and mid 2015. Mr Dixon admits that while he was in South America he made contacts with people involved in the cocaine trade in Colombia. He has now pleaded guilty to various charges including importation of cocaine but not the quantity alleged by the Crown. The Court is required to determine the amount of cocaine that he imported into New Zealand.
[3] A striking feature of this case is that apart from the cocaine identified in the supply charges set out below, none of the cocaine alleged to have been imported by Mr Dixon has been located by the police.
[4] He has pleaded guilty to the following charges:
CHARGE 1 CRN: 15009503074 Importing a Class A controlled drug
Misuse of Drugs Act 1975 Section 6(1)(a)
& (2)(a) & Crimes Act 1961 section 66
that LEE DIXON between 24 November
2014 and 2 July 2015 at Christchurch, together with Adrian Nicholas Mason and
others, did import into New Zealand a
Class A controlled drug, namely cocaine
THIS IS A REPRESENTATIVE CHARGE
CHARGE 3 CRN: 15009010706 Supply a Class A controlled drug
Misuse of Drugs Act 1975 Section 6(1)(c)
& (2)(a)
that LEE DIXON between 1 March 2015 and 28 March 2015 at Christchurch did supply a Class A controlled drug, namely cocaine
CHARGE 4 CRN: 15009010705 Supply a Class A controlled drug
Misuse of Drugs Act 1975 Section 6(1)(c)
& (2)(a)
that LEE DIXON on 26 March 2015 at Christchurch did supply a Class A controlled drug, namely cocaine
CHARGE 5
CRN: 15009007931
Supply a Class A controlled drug
Misuse of Drugs Act 1975 Section 6(1)(c)
& (2)(a)
that LEE DIXON on 26 March 2015 at Christchurch did supply a Class A controlled drug, namely cocaine
CHARGE 6
CRN: 15009007933
Supply a Class A controlled drug
Misuse of Drugs Act 1975 Section 6(1)(c)
& (2)(a)
that LEE DIXON on 26 March 2015 at Woolston did supply a Class A controlled drug, namely cocaine
CHARGE 7
CRN: 15009007934
Supply a Class A controlled drug
Misuse of Drugs Act 1975 Section 6(1)(c)
& (2)(a)
that LEE DIXON on 18 April 2015 at Christchurch did offer to supply a Class A controlled drug, namely cocaine
CHARGE 8
CRN: 15009007935
Failure to carry out obligations in relation to a data storage device
Search and Surveillance Act 2012 Section
178
that LEE DIXON on 2 July 2015 at Christchurch failed without reasonable excuse to assist a person, namely Detective Sarah Waugh, exercising a search power when requested to do so under section 130(1) of the Search and Surveillance Act 2012
B. The disputed facts issue before the Court
[5] While Mr Dixon admits importation, through his counsel Mr Starling he says that this was no more than 50 – 100 grams, for personal use. That small amount reflects his pleas of guilty to supply and offer to supply charges. He does not admit the date or dates of importation except within the date range of Charge 1.
[6] The amount of cocaine which the defendant is found to have imported has a significant bearing on banding for sentence. That does not influence the judgment I am required to deliver, which is concerned only with the disputed facts.
[7] Proof of disputed facts is governed by s 24(1) of the Sentencing Act 2002 whereby:
(1) In determining a sentence or other disposition of the case, a court –
(a) may accept as proved any fact that was disclosed by evidence at the trial and any facts agreed on by the prosecutor and the offender; and
(b)must accept as proved all facts, express or implied, that are essential to a plea of guilty or a finding of guilt.
[8] The evidence must be analysed for admissibility, probative value and weight. The Summary of Facts is accepted by the defendant except for the disputed elements which relate in some way to the quantity of cocaine imported into New Zealand by the defendant. The Summary of Facts is attached as Schedule A to this Judgment. The parts not agreed have been highlighted.
[9] The Crown case is thus made up of the undisputed parts of the Summary of Facts, the pleas of guilty, which constitute express or implied admissions of fact, the oral evidence of Detective Sarah Waugh and Mr Louis D’Ambrosio, and records of electronic communications.
[10] At the end of the first hearing day, Mr Starling queried the extent to which reference might be made to witness statements on the court files. Only that evidence adduced under oath, or those matters admitted expressly or by implication, can be brought to account. This means that I have not brought to account witness statements held on the court file unless admitted or otherwise properly adduced in evidence.
Oral evidence
[11] Detective Waugh is an investigator for the Organised Financial Crime Agency New Zealand (“OFCANZ”) which was involved in “Operation Hook”, an investigation into overseas money transactions associated with drug trafficking. She was the officer in charge of exhibits for that operation. Mr Louis D’Ambrosio is a
Supervisory Special Agent with the Drug Enforcement Administration (“DEA”) in Tokyo, and gave expert evidence as to the cocaine trade and the inferences he draws from the evidence of the transactions and communications with which the defendant was involved.
[12] I must address all admissible and relevant evidence to determine whether the Crown has established beyond reasonable doubt that the amount of cocaine imported by the defendant was no less than 6.2756 kilograms, while it advances the case that it may be as much as 34.9068 kilograms, relying in substantial part on the evidence of Mr D’Ambrosio. The proof required finally devolves to the inferences drawn by Mr D’Ambrosio as an expert in law enforcement and investigation. Altogether, the Crown case must establish beyond reasonable doubt: the source of cocaine as Colombia (as that is the basis for Mr D’Ambrosio’s evidence), the amount paid by Mr Dixon for purchase and transportation of cocaine into New Zealand; the fact of importation within the date range in Charge 1, and the amount imported.
C. The Crown case
[13] Mr Starling reminds the Court that the defendant does not have to prove anything. He says the Crown has not proved the importation of cocaine in any of the amounts alleged, beyond that admitted for Mr Dixon’s own consumption and small scale supply, including the offer to supply, reflected in his pleas of guilty.
Currency transactions
[14] The Crown says that the evidence proves beyond reasonable doubt that the defendant sent USD $109,797 out of New Zealand to pay for cocaine purchased in Colombia, which was imported into New Zealand within the Charge 1 date range.
[15] The currency transactions took place between 20 January 2015 and
23 April 2015. Most involved “monetary transaction/s” through Western Union. The defendant also handed over USD $70,000 to a Special Duties (Undercover) Constable (“the undercover officer”) in Hagley Park, Christchurch on
16 March 2015, after the police became aware that he wanted a large amount of cash uplifted and sent to an overseas destination. That USD $70,000 is alleged by the Crown to have been handed to the undercover officer to pay for cocaine in
Colombia. A plank of the Crown case is that those who purchase drugs, as the Crown alleges here, do not usually pay for them until the drugs are on-sold in another market by the purchaser, so the sale to the dealer (here Mr Dixon) is a sale on consignment. However, transportation costs may be paid up front where a relationship has been developed.
The FedEx package
[16] One element of the facts warrants preliminary mention, namely the delivery to New Zealand of a 10 kilogram package labelled as “a submersible pump”, sent by FedEx from Venezuela to New Zealand. The package arrived in New Zealand on
15 June 2015 and was delivered to Rakaia in Canterbury on 30 June 2015. There are various communications associated with that delivery involving Mr Dixon, which the Crown says indicate that it contained cocaine, and Mr D’Ambrosio says the circumstances to him are proof beyond reasonable doubt of that. The package was replicated using the FedEx details and produced as an exhibit by Detective Waugh to indicate its dimensions. The original package was never found. No conclusion can be reached beyond reasonable doubt as to whether it contained cocaine or if so, the amount. It is, however, a highly suspicious transaction which probably involved the importation of cocaine into New Zealand. The Crown says it is relevant as indicating the defendant’s involvement in cocaine importation, his contact with Colombian drug traffickers, and his part in the “pick up” and handling of this package. It has been left before the Court as evidence of cocaine importation and otherwise the explicit involvement of Mr Dixon in drug trafficking, but as the Analysis in this judgment demonstrates, the evidence of contemporaneous communications has another factual and inferential bearing on this judgment.
[17] The evidence regarding this FedEx delivery came to light nearly a year after Mr Dixon was arrested on 2 July 2015. Detective Waugh explained this, as discussed below. Its evidential value is not diminished in any way by the belated discovery.
[18] The delivery to Rakaia was followed shortly afterwards by the execution of a search warrant on the defendant’s home and vehicle on 2 July 2015 where cell phones were seized and a Blackberry phone found at his worksite in a lockable
cabinet. He refused to give the Police the pass code or access code. When stopped in his vehicle, USD $4,000 cash was found in the centre console and at an associate’s address a safe belonging to Mr Dixon was located containing cash of USD $6,000, a set of electronic scales and a money exchange receipt. The scales were found to bear cocaine residue. There were some rather desperately worded messages sent to the defendant at about the time of his arrest which were not answered by him.
The guilty pleas
[19] The charges of supply and attempted supply to which the defendant has pleaded guilty, involve relatively small quantities of cocaine, between 50 and
100 grams. Mr Starling says that is all the Crown can prove. The dates of these charges are said by the Crown to reflect Mr Dixon’s possession of cocaine and associated supply, which in turn reflects his importation of cocaine by that time (March to April 2015).
The defendant’s explanation
[20] The defendant was arrested on 2 July 2015. He said he entered into the currency transactions because he was investing in US currency, and that he sent money via Western Union to South America for friends who were travelling there. He could not remember meeting anyone in Hagley Park (the undercover officer) and handing over USD $70,000 on 16 March 2015. He also said he had nothing to do with cocaine since he was arrested at Auckland Airport in 2014, and he had no knowledge of cocaine-related activity in Christchurch. He later pleaded guilty to the charges, as set out in paragraph [4] above.
Elements of the Summary of Facts (Annexed as Schedule A)
[21] The undisputed elements of the Summary of Facts are discussed further. The isolation of elements which counsel identify as “disputed” and “undisputed” is helpful, but does not detract from the need for the prosecution to prove its case, in all respects, beyond reasonable doubt.
[22] The disputed elements of the Summary of Facts (as identified in Schedule A)
are as follows:
(i)When the defendant travelled to Colombia in 2014 he was able to source cocaine for GBP £1 (Sterling) per gram (USD $1.67).
(ii)The Police became aware in March 2015 that the defendant was looking to have NZD $100,000 uplifted and sent to an overseas destination, and that money was to pay for the purchase of cocaine.
(iii)Money sent through Western Union to Hong Kong and Panama in the (total) sum of NZD $53,944.92 is said by the Crown to be for the purchase and importation of cocaine into New Zealand from Colombia, from persons not identified.
(iv)While the Crown alleges and the defendant accepts that he had access to a source of cocaine during the relevant period, reflected in the supply charges, it is contested that such was “…imported by him on two separate occasions using his South American contacts”.
(v)In June 2015 a shipment of cocaine was sent from South America for delivery to New Zealand. About June 2015 a 10 kilogram package with dimensions of 70x26x19cm labelled as containing a “submersible pump” was sent by FedEx from Venezuela to New Zealand (the package was not located or recovered by the Police).
(vi)Wholesale kilograms of cocaine could, at the relevant time for Charge 1, be sourced from South America at a market rate of USD $2,500, including transportation fees to nearby locations in Colombia or other places in close proximity. Transport costs vary widely to locations further afield.
(vii)The money sent by the defendant (USD $109,797) allows a conservative estimate to be made that at least 6 kilograms of cocaine was imported into New Zealand by the defendant. The amount of money sent by the defendant could have potentially sourced up to
35 kilograms of cocaine. (Court’s emphasis).
Detective Waugh
[23] Detective Waugh provided electronic exhibits to the Police and the Digital Forensics Unit in August 2015. She became aware that there was a second cell phone found in the defendant’s car at the time of his arrest on 2 July 2015, and on
22 June 2016 received extracted data from Exhibit 21013, a Vodafone cell phone.
[24] The cell phone activity was between 18 June 2015 and 30 June 2015. On
18 June 2015 there was a Google search made under “Fedex” and “Tracking”, and a search made through FedEx Track and Trace on 28 June 2015 under “804895513573”. Detective Waugh entered the tracking number and identified a shipment on Wednesday 17 June 2015 delivered on 30 June 2015 to Rakaia, New Zealand.
[25] New Zealand Customs Service provided Detective Waugh with a certified true copy of the tracking data from the FedEx website, and a certified true copy of the Customs Electronic Cargo Information (“ECI”) for the Air Waybill corresponding with the tracking number. The ECI showed the consignment of a “submersible pump” sent from Maria Lopez in Venezuela to “Michel Brown” in Rakaia.
[26] The package delivered to Rakaia had a total weight of 19 kilograms, dimensions 70x26x19cms and a total value of $0. The export was recorded as
15 June 2015. No link could be found between a Michel Brown and the Rakaia address. The property is rented out. Detective Waugh spoke to the occupant, an elderly person. She had not ordered or requested anything from South America, and had not ordered a “submersible pump”. She did not know a Michel Brown.
[27] The Summary of Facts reads:
On 12 June 2015 the defendant received a communication from his South American contact (“SA Contact”) stating “Bro is in transit to the third country waitin to get there and ten go to nz”.
Over 13 and 14 June 2015 the following series of communications took place between the defendant and his SA contact:
Dixon Hey bro hope u and familys well? Anynews bout yourfootball final? Like what date? Or when the other team leaves to play ya bro
Dixon My mate leaves in 3.5 weeks now to travel round the world????:/
SA Contact Yeah bro don’t sweat it plerase
SA Contact Everything been taken care
SA Contact Of bro
SA Contact is on the way SA Contact Please chill rela SA Contact Relax
Dixon Hahaha ok just worried bout my friend going bro? I will leave u alone hahahaha sorry
Dixon I’m sorry bro
Dixon I mean it !!!
SA Contact Bro we all got issues
SA Contact Please do your best to settle everything up
SA Contact For real
SA Contact We are on board now bro
SA Contact And is going well my mate
Dixon Sweet as mate. We basicly shut our football grounddown my end.
Dixon Everythings set for final… Can’t wait to smash them..
I’mgona score a hatrick lol..
Dixon Just let me no when your team leaves to play ya final!!
Iwanna stream it live!! U r gonna kick arse lol
SA Contact :D :D :D \=D/ \=D \=D/ Dixon :) :) *fly* (y)lol
SA Contact Ok bro
SA Contact I will make sure to let you know in time
Dixon Top man have a good weekend
SA Contact You too my friend
Between 16 and 18 June the following communications took place between the defendant and his SA Contact:
Dixon Hey mate what’s happening? U well
SA Contact Yes sir
SA Contact Everything cool
SA Contact I will have the flight number today
SA Contact Light up a candle mate and say your prayers O:) SA Contact :D
Dixon Top man sounds fantastic it will be an awesome final. We will win!b!!
Dixon Lol
Dixon As it goes don’t worry bout tracking just let me no ruffleywhen its here and send trackin day b4???? More safethat way I’d say mate.?? That cool your end ??? Have agreat day gonna smash the final?
SA Contact Sure bro
SA Contact That’s the way it is SA Contact I agree 100 % Dixon Cool
Dixon Still confirm when he has left to play tho please so I canprep up the traning ground. Cheers
SA Contact yesterday bro
SA Contact It has been confirmed
SA Contact Departure was yesterday
SA Contact I am getting the flight number and the airline nametonight
Dixon Cool sweet as
Dixon U added me on diff phone bro
SA Contact Yup
SA Contact Erase this one
[28] The date 15 June 2015 was thus set against Blackberry messages sent to the defendant by the South American contact as follows:
· Yesterday bro – time stamp 16/06/15 20:29:02 hours
· It has been confirmed – time stamp 16/06/15 20:29:13
· Departure was yesterday – time stamp 16/06/15 20:29:18
[29] Delivery in Rakaia was recorded on 30 June 2015 as 8.31am. The following communications occurred between the defendant and his South American contact:
Dixon Sounds good br?? Dropprd of just awaiting confirm lol
SA Contact Nice!!!!
SA Contact So it is confirmed?
Dixon Haha. Next 2 days major but all makes sence. On thetimeing and paper work… Proper happy my end? What’sstory on opening it ???
SA Contact Ok bro fucking good news mate
Dixon :)
SA Contact You are going to let cool down for a couple of days?
SA Contact Thank god bro first step is done my mate!!! O:) *gift* ({}) SA Contact I told you we are up for big ones
SA Contact :D \=D/
Dixon That’s perfect!! Its staying put for a day,then going downsouth for a day then getting opened! Thing is mypartners opening it there then drieving up behind an oldlady carrying back to chch!!! But no phones!!
SA Contact Ok bro SA Contact Listen SA Contact Is hard
SA Contact He has to get sew
SA Contact Or something
SA Contact The good thing is that it comes in hard rock
SA Contact And properly sealed inside aswell
Dixon sweet as
Dixon So is it in a compartment? Or behind electrical box or sank?? Dixon <=-P :D <3<3:*hahaha I love you lol
SA Contact ({}) ({}) ({}) <=-P <=-P <=-P SA Contact Is inside the tank
SA Contact Is sealed like a motherfucker
SA Contact :D
SA Contact Bro they have to cut the metal with a saw
Dixon Cool top man lol I’ll be in touch. Asap update utomorrow!!
Top man this feels so good!!
SA Contact I know it is bro
SA Contact Always be careful O:)
SAContact Also careful to open it!! But the good thing is alsosealed inside
SA Contact :D
Mr Louis D’Ambrosio
[30] Mr Louis D’Ambrosio gave evidence as an expert in international drug trafficking and money laundering. His status as an expert witness derives from his beginnings in law enforcement with the New York City Police in the late 1990s until he became a DEA Special Agent in 1998, first in the New York Field Division Money Laundering Group, until he was transferred to the Philadelphia Field Division. For some 16 years he was responsible for investigating inter-state and international drug trafficking and money laundering organisations, mainly focused on the Colombian and Dominican drug trafficking groups involved in large-scale importation, processing, and distribution of heroin and cocaine.
[31] From 2005 to 2012 he was assigned to the DEA’s Miami Field Division, responsible for investigating inter-state and international drug trafficking and money laundering organisations.
[32] His focus in Miami was mainly on Colombian and other Latin American drug trafficking groups involved with heroin and cocaine, and he worked parallel money laundering investigations in conjunction with drug investigations.
[33] He became a Supervisory Special Agent in 2012, and oversees staff responsible for investigating international drug trafficking and money laundering
organisations. His work in Japan is focused on Mexican cartels responsible for large-scale smuggling of methamphetamine and money laundering activities to repatriate drug proceeds.
[34] His experience in investigation and surveillance is extensive, including infiltration of drug suppliers in Medellin, Colombia and undercover work, which led in one instance to the seizure of 10 kilograms of cocaine and one kilogram of heroin in Philadelphia, with the arrest of defendants in New York, Philadelphia and Colombia, and extradition of a Colombian drug supplier.
[35] He was involved in a South American operation involving cocaine, in which multiple undercover bank accounts were used to transfer funds into trafficker controlled bank accounts in Hong Kong, leading to seizure of large quantities of cocaine, US dollars, and the prosecution of the former Director of Bolivia’s anti-narcotics police.
[36] With this background, his presentation in evidence before me, and operations described by him, he leaves me in no doubt that he is well able and qualified to give expert evidence of the manner in which drug traffickers operate, in conjunction with money laundering operations and at the times relevant to the prosecution case. Further, he is well able and qualified to give evidence as an expert as to the nature of the communications in evidence. From his evidence the following picture of drug dealing and money laundering sets the scene for the inferences which he draws and which are central to the Crown case. In the end the inferences are for the Court.
Cocaine
[37] Cocaine is a Class A controlled drug which is generally found in powdered (salt) or crystalline (crack) form, usually produced in South American jungle laboratories using coca leaves and other chemicals and solvents, and known by many names including Coke and White Lady. Crack cocaine is called, for example, Rock, Nuggets, Gravel, Hard Rock, Jelly Beans, Cookies, Stones, Roxanne and Casper. The most common use of cocaine is nasal inhalation of the salt or powder form. Crystalline or crack cocaine is smoked.
[38] Two species of coca plant have high cocaine alkaloid levels. Production in Latin America may derive from multiple harvests each year. Low altitude plots allow for better harvest than at higher elevations. Leaves, once harvested, are laid out to dry, then processed. The (then) recent average price for coca leaves is about USD $1 – USD $1.50 per kilogram. 100 kilograms of leaf will make about one kilogram of cocaine paste.
[39] The leaves are processed using gasoline and acid solutions to extract the cocaine alkaloids. The average price for paste in recent times (recent relevant to the trial of this matter) is about USD $1,000 per kilogram. The paste is then further processed. Ammonia and other are elements added and at that point the cocaine base has an average value of about USD $1,200 per kilogram. Further processing is required before two kilograms of cocaine paste or base will produce about one kilogram of cocaine hcl.
[40] Mr D’Ambrosio says that cocaine is typically pressed into rectangular shaped bricks of one kilogram, with a logo or design on them, and wrapped in plastic and/or tape then packaged into a bale of some 20 bricks in a canvas or burlap type sack. The retail grade cocaine is often packaged in small “baggies” or vials, in different colours denoting quantity.
[41] More cocaine is produced in Colombia than Peru and Bolivia, but this is not a fixed position. The Colombian drug cartels have been defunct since the mid to late
1990s and those remaining are not operational following the fall of the Medellin and
Cali cartels.
[42] Other criminal organisations have emerged, known in Colombia as BACRIM or Bandidas Criminales Emergentes, emerging criminal organisations. The most significant is Los Urabenos (“LU”). LU controls much of the cocaine leaving Colombia en route to Central America and then the United States, and collects “taxes” on all cocaine departing the area around the Gulf of Urabá. It gives permission for transport vessels to depart. Go Fast Vessels (“GFVs”) are used to transport the cocaine to Honduras, via Panama and Costa Rica and then LU sells the cocaine to Hondurans who transact with the Mexican cartel for transport into Mexico
and on to the United States. This keeps LU out of the United States jurisdiction. LU
also exports cocaine to Europe.
[43] There are many methods of concealment in cargo vessels, and shipments may range from as little as 10 kilograms up to multiple tons of cocaine.
[44] FARC (Revolutionary Armed Forces of Colombia) was originally an anti-government leftist movement, but became a terrorist organisation. It had about
6,000 - 8,000 members and was a large scale criminal organisation involved in terrorist actions, kidnappings, murder, drug trafficking etc. It too taxed drug traffickers and coca farmers, but its power is on the decline because of Colombia’s military operations against the group and there has now been the announcement of a ceasefire with the Government.
Price of cocaine at source in Colombia
[45] The usual purchase price of cocaine in Colombia is (relevant to Charge 1), about USD $2,500 per kilogram, which includes transportation and taxes paid to the appropriate criminal organisation. Transport prices are about $500 per kilogram.
[46] In the United States, wholesale prices vary depending on the location and quantity, and nearer the border with Mexico the cost reduces. The length and nature of the relationship between the buyer and the seller may influence that. Retail prices vary widely as well, but the typical price in the US for retail cocaine is USD $30 - USD $100 per gram, and for crack between USD $25 – USD $150 per gram.
Getting cocaine to the market
[47] The main consumer market for cocaine is outside South America, where disposable income is generally higher. The South American cocaine suppliers often sell their product to Mexican cartels or Central American drug trafficking groups for much reduced prices to try to avoid exposure to US extradition.
[48] Usually a drug organisation’s cell head will determine the quantity of the
drug needed and arrange a shipment from South America. It may be smuggled in
different ways including commercial air flights hidden in a suitcase, or by airline courier where the drugs may be attached to the body, or inside clothing. An “internal courier” is someone who swallows the drugs or inserts them into a body cavity.
[49] The drug trafficking organisation pays for all logistical expenses and a courier fee between USD $3,000 – USD $10,000 per trip. A courier will go to a specified place and wait until contacted to arrange pick up.
[50] Mail parcels are used, using services such as Federal Express, DHL and TNT. Multiple small parcels reduce the net effect of interception. The vulnerable moment for the criminal enterprise comes at the point of delivery. Often the drugs will be delivered to someone who is not associated with the organisation. The place of delivery may be vacant, and the goods often left untouched for several days before being opened.
[51] An infinite range of containers is used to conceal drugs. Cocaine can also be liquefied and smuggled as liquid product.
Sales on consignment
[52] Given the inference which the Crown asks be drawn against the defendant, that he imported a quantity of cocaine between 24 November 2014 and 2 July 2015 calculated from specific ‘‘monetary transaction/s”, the timing of payment by him for any drugs, whether before or after delivery, is critical to the Crown case. This is not a charge of attempted importation but importation and while the dates of the admitted monetary transaction/s themselves fall within the particulars of Charge 1, the importation must do so as well. The monetary transaction/s may in theory have been before or after an importation, or contemporaneous.
[53] All that Mr Dixon admits is that he did import cocaine as evidenced by his supply activity which falls within the date range of Charge 1, as described in the Summary of Facts, but not specifically the dates when he imported cocaine or how much.
[54] Mr D’Ambrosio gave evidence about the methodology of drug trafficking. He says that the cell head receives the drugs and then makes arrangements for
distribution to wholesale and retail drug trafficking organisations. He explains that drugs are usually purchased on consignment, with transport costs paid upfront or when incurred and that payment is typically expected by the source within a few days to a few weeks. Criminal trading relationships are built up in this way. It takes a while for those who do not have a longstanding relationship with the human sources of the drug to develop sufficient trust so that payment is made before delivery. The relationship between the source and the purchaser in a sale by consignment is also one of trust or belief that the purchase price will be paid although there are obvious ways that might be enforced.
Monetary transaction/s
[55] There are many ways in which payment for cocaine may be made, and humans may be used as collateral.
[56] Large shipments typically go from Colombia to Honduras and then on-sold. The money is usually transported to Panama and eventually paid out in Colombia or laundered there via the Black Market Peso Exchange (“BMPE”) or through Trade Based Money Laundering (“TBML”).
[57] When cocaine is sold in the US the proceeds are collected, consolidated and bulk-smuggled out of the country to Mexico or Central and/or South America, or laundered through the banking system and ordinary money remitters such as Western Union, Money Gram, or BMPE or TBML are used. A good part of the proceeds of sale must find its way back to Colombia. The preferred payment is in Colombian Pesos, US Dollars or Euros.
[58] Money remitters are often used to make smaller payments to drug trafficking organisations, for smaller quantities of drugs and/or expenses related to shipping, and it is common in the US for drug traffickers to utilise third parties to make monetary transaction/s on their behalf to disguise the origin of the funds. Often the recipient will direct money or monetary transaction/s to third parties to disguise their true destination.
[59] Money laundering organisations are used to transport and/or launder larger sale proceeds and will engage in black market transactions with money brokers and exchange foreign currencies for preferred currencies. Money brokers often are the owners of money exchange houses.
[60] Shell corporations and bank accounts are employed all over the world, for different layers of transactions. They operate in countries with less stringent banking and corporate regulations, and in free-trade zones, such as Hong Kong and Panama.
A typical transaction
[61] Mr D’Ambrosio gave an example of typical money laundering. A drug trafficker in Colombia will contact a money laundering organisation and request a pick up and laundering of USD $1 million of drug proceeds in New York. The money launderer will do this for a commission, and arrange pick up from the drug trafficking organisation. The money launderer will make hundreds of illicit deposits into bank accounts in New York and wire money in and out of the US, and that money can be used to buy goods in another country such as China, for shipment to Latin America. When the goods are sold in Latin America to commercial businesses the money has been laundered. Sometimes the invoicing is falsely produced to state a higher value than the shipment actually bears. The difference is laundered money.
Mr D’Ambrosio’s expert opinion of the evidence in this case
[62] Mr D’Ambrosio was given what he called “background information” and asked to give his expert opinion. In June 2016, he was given additional information about the FedEx delivery in June 2015. The Court must consider his opinion against the evidence which is admissible and probative to ensure the expert’s view does not supplant the function required of the Court.
[63] The information on which he relies must be proved in one of the ways mentioned earlier in this judgment: admitted, proved on the evidence, express, or implicit in the guilty pleas. His opinion must be based on facts established to the satisfaction of the Court, and for those facts crucial to the inference on which the Crown relies, beyond reasonable doubt, as discussed further.
[64] First, Mr D’Ambrosio says the use of code for drug-related communications is so prevalent it would be highly unusual for someone not to “speak” in code. The use of “code” in the evidence is obvious, although its meaning not always so. It includes language which is highly suspicious, so it is not in my view much of a code, and barely literate in parts.
[65] Because law enforcement can intercept communications, they are often in code. The use of multiple cell phones is designed to insulate different cells of the organisation. Devices and numbers are swapped, and multiple means of communications are used including voice, SMS and Blackberry Messenger (“BBM”). The BBM, or “PIN to PIN”, is popular for Colombian and Mexican drug trafficking groups for anonymity, as communication can begin simply after the assignation of a PIN number. Drug trafficking organisations feel safer when using BBM, and this tends to lead to more sensitive information being shared through BBM.
[66] Mr D’Ambrosio examined the electronic messages in evidence, some of which are set out earlier in this judgment, and gave his expert opinion of what they meant. His opinion is considered under Analysis.
The June 2015 communications associated with the FedEx delivery of a
“submersible pump” to Rakaia
[67] Mr D’Ambrosio analysed the spreadsheet containing BBM messages for the telephone utilising PIN #25F49D88, and the user of that PIN (David) (Mr Dixon), who he calls the recipient, and PIN #2BDC3AC$ (PARACELSO) and PIN #2BDB3508 (BOMVASTUS). He refers to the user as a supplier engaged in drug-related conversations. He says that the supplier uses PINS PARACELSO and BOMVASTUS. He regards the conversations in evidence as typical of those between a drug supplier and drug recipient. The “recipient” is checking on the status of a pending shipment and the supplier explains the cargo is in transit in a third country and en route to New Zealand.
[68] In Mr D’Ambrosio’s opinion the recipient says he expects to receive a third possible shipment of cocaine, when he says to the supplier on 3 June 2015 at
20:07:31 that:
Everythings set for final… Can’t wait to smash them… I’m gonna score a hatrick lol…
[69] A “hat trick” is a term common to certain sports which indicates three successes of the same kind, and Mr D’Ambrosio says that in his opinion it is used in this instance as a code word signifying three shipments of cocaine. He quotes the source communications and expresses his opinion as follows:
146.On 2015/06/16 at 12:48:43, the Supplier indicates that he will have tracking information available later in the day and at 16:47:09 the Recipient responds with “As it goes don’t worry bout tracking just let me no ruffley when its here and send trackin day b4???? More safe that way I’d say,mate.?? That cool your end ??? Have a great day gonna smash the final? Everythings set up… Trust me!! Win a lot of coin!! Lol.” At 17:01:23, the Supplier states, “I agree 100%.” In my opinion, the Recipient and Supplier are aware of the dangers of passing sensitive information like tracking information for an illicit shipment over the phone and doing so too far in advance. Should law enforcement intercept the tracking information and should they have enough time to prepare evidence for search warrants, the shipment could potentially be interdicted.
147.In my opinion, 2015/06/16 at 19:12:05 when the Recipient tells the Supplier, “Still confirm when he has left to play tho please so I can prep up the training ground. Cheers” the Recipient is telling the Supplier that he needs to know when the shipment is en route to New Zealand, because the Recipient must get the location prepared to receive the shipment. In this instance, the term “training ground” is being used as code for the location where the shipment will be delivered.
148.On 2015/06/17 at 19:04:33, the Recipient stated, “U added me on diff phone bro” and the Supplier stated, “Yup” “Erase this one” at
19:05:21 and 19:05:24, respectively. This is a common tactic of drug traffickers. At critical points during a smuggling operation they
will change phones and methods of communication to make detection more difficult for law enforcement.
149. There was no further communication on these devices until
2015/06/30 at 03:14:22 when the Recipient stated, “Sounds good bro?? Dropprd of just awaiting confirm lol.” This message indicates
that the Recipient is informing the Supplier that the shipment has arrived. In a later message at 03:19:32, the Recipient asks, “Haha.
Next 2 days major but all makes sence. On the timeing and paper
work… Proper happy my end? What’s story on opening it ???”indicating that he does not know how the cocaine is packaged in the shipment nor how to retrieve it from within the item where it is hidden.
150.On that same date at 03:20:52, the Supplier asks, “You are going to let cool down for a couple of days?” The Supplier is asking the Recipient if he is going to allow the shipment to sit untouched for a couple of days. This is a common tactic used by drug traffickers
when they receive a shipment of drugs. It is at this point that there is the most risk to the drug trafficker. If law enforcement learned of the shipment they may be either watching it or law enforcement may have actually intercepted the shipment and conducted a delivery of it. In either case the trafficker would have the highest likelihood of arrest if he were to attempt to retrieve the drugs at this time.
151.At 03:37:08, the Recipient explains his plan to the Supplier when he states, “That’s perfect!! Its staying put for a day,then going down south for a day then getting opened! Thing is my partners opening it there then driveing up behind an old lady carrying back to chch!!! But no phones!! Only face to face chat so want to tell him what he’s doing to get it out down south tomorrow.” The Recipient acknowledges that he will let the shipment sit for a day and then move it to another location for another day. Moving a shipment to different locations before the drugs are removed is common and is one way in which drug traffickers can attempt to identify potential law enforcement surveillance. Additionally, if law enforcement does interdict the shipment at the stage before the drugs are removed, proving knowledge of the drugs will be more difficult. The Recipient indicates once the drugs are removed that he and his associates will use an elderly woman to drive the drugs to Christchurch. Using elderly people, women, and children are frequently used tactics in an attempt to minimize potential suspicion by law enforcement. The Recipient states that his partner will be driving behind the elderly woman. The use of a “load” car, the car that contains the drugs, and a “trail” car, the car that follows behind, is a very commonly used method for drug traffickers to make sure that they are not in possession of the drugs but close enough to know if the courier is intercepted by law enforcement. Finally, the Recipient indicates that he and his associates will not be using their telephones on the day the drugs are removed from their hiding place. This indicates a high level of caution being exercised to thwart law enforcements potential capabilities of intercept and/or geo-location tracking.
152.In the subsequent BBMs, the Supplier explains that the cocaine is hidden and sealed within a metal tank when he states, “Is inside the tank,” “Is sealed like a motherfucker,” “Bro they have to cut the metal with a saw” at 04:42:08, 04:42:23, and 04:46:40, respectively. Drug traffickers often hermetically seal their drugs inside items that require they be cut open or destroyed in order to access the drugs. This makes law enforcement detection more difficult.
[70] In relation to the monetary transaction/s involving Mr Dixon, Mr D’Ambrosio says:
153.Drug trafficking organizations routinely use money remitters such as Western Union and MoneyGram to transfer drug proceeds, pay expenses related to drug trafficking, and launder drug proceeds.
154.It is common for drug traffickers to use third party individuals to send and receive money when using money remitters. They do this to create layers between themselves and the drug proceeds. This
technique also makes it more difficult for law enforcement to attribute the true amount of proceeds sent and received.
155.Drug trafficking organizations utilize legitimate commerce to hide the origins of their ill-gotten gains. It is common for drug traffickers to comingle legitimate and illicit funds in an attempt to hide the illicit money and activity amongst legitimate money.
156.For a variety of reasons, Panama and Hong Kong are two very common locations that drug trafficking organizations use to launder drug proceeds. The principal reasons are that both locations are major financial and commercial centers in their respective regions and the world. Both locations are home to the largest free trade zones in the world responsible for tens of billions of dollars (USD) in imports and exports. Goods can be imported and exported with no tariffs or taxes imposed. In both locations, it is relatively easy to set-up shell companies with no assets. By funneling illicit money into such locations, the money can be easily hidden among the billions in legitimate funds, consolidated into accounts with other illicit funds that are generated from other drug trafficking activities, used to purchase legitimate goods for shipment and resale in places like Colombia (Black Market Peso Exchange (BMPE)), and in some cases even the cash can be bulk smuggled across the border into Colombia.
157.BMPE is a frequent money laundering method used by drug trafficking groups. BMPE works when a money broker in Colombia, who is engaged in black market currency exchange, is contracted by a drug trafficker to pick-up and launder drug proceeds in another country. The drug trafficker has dollars in another country and wants pesos in Colombia. The money broker arranges through his network to retrieve the cash (usually in Dollars or Euros) in the other country. Meanwhile, the money broker makes deals with legitimate business owners in Colombia who have a legitimate need to import goods. Those goods usually require payment in dollars or from dollar based bank accounts. The money broker collects the pesos from the Colombian business owners and then uses the dollars in places like Hong Kong and Panama to purchase the commercial goods. The pesos collected from the business owners are used to pay the drug trafficker at a rate below the official exchange rate and below the rate provided to the Colombian business owner. In this technique, the drug trafficker gets his drug money, less commissions, the money broker earns the difference between the exchange rate he provided to the drug trafficker and business owner, and the business owner get his goods.
158.In my opinion, the Western Union transactions are suspect for several reasons. First, the associated transactions that are attributable to the defendant are in several names belonging to third parties being used to send and receive money. Second, the money being sent is structured into small relatively equal amounts and is sent within relatively short periods of time. This indicates the intention of avoiding potential money remitter reporting requirements to law enforcement and avoiding the additional scrutiny that a larger transaction would bring when compared to a smaller transaction. Third, all the money remittances were sent to
Panama and Hong Kong, high-risk locations for money laundering. Finally, all the individuals that retrieved the money were Colombian. This would not ordinarily attract my attention if the money was sent to Colombia, but when the money is being sent to Hong Kong and Panama, it is being picked up by only Colombians, and there are coinciding communications indicating an ongoing smuggling operation in my opinion that indicates Colombian involvement in locations that do not necessarily warrant their involvement for legitimate purposes. (emphasis added)
159. The Western Union remittances (dates/times are Eastern Standard
Time (New York, USA)) on 01/19/2015, 01/20/2015, 01/22/2015,
01/23/2015, 01/25/2016 each in the amount of $4,000 USD, and the remittances on 03/2/2015 in the amount of $3,905.66 USD, on
03/31/2015 in the amount of $3,932.63, on 03/31/2015 in the amount
of $4,016.15, on 04/14/2015 in the amount of $3,887.30, and on
04/22/2015 in the amount of $4,027.41 and the $70,000 USD that
Dixon provided to an undercover officer on 03/16/2015 total
$109,767 USD. In my opinion, based on the way the remittances were structured, the message content and coding, and the large
$70,000 money drop-off to an undercover officer that was a stranger to the Recipient, I believe that this money was being used to finance the purchase of cocaine that was being shipped from Colombia to
New Zealand.
160.On 03/13/2014 at 02:03:47 a.m., in an instant message sent from DIXON to an unknown party, he stated “Yeah a lama lol. 2 pound a beer and 1 pound a a gram lol Im in heaven lol”. In my opinion, DIXON is informing the recipient of this message that he can buy a gram of cocaine for £1.00 (one British Pound) per gram, which is cheaper than a beer. A query of historical exchange rates at indicates that on 03/13/2014 one British Pound was valued at $1.67 USD. This would value one kilogram at $1,670
USD, which is on the low end of the price range for cocaine in Colombia. On 03/20/2014 at 2:53:18 p.m., BRIGHT sent DIXON a message stating “…The guys names Andreas and his numbers
3147044647. He speaks English. He’s the guy we were getting it from for £1.50…” In my opinion, BRIGHT is providing DIXON
with the cocaine supplier’s contact information and informing
DIXON that the price being paid for a kilogram is £1,500, which on
03/20/2014 (£1.00 = $1.65 USD) was equivalent to $2,475 USD. According to internal DEA data, a kilogram of cocaine in Colombia
was valued between $1,550 to $2,550 USD per kilogram.
Additionally, according to the United Nations Office on Drugs and Crime (UNODC) the value of a kilogram of cocaine at that time was approximately $2,269 USD. In my opinion, these messages indicate that DIXON knows the value of cocaine in Colombia and that his associate BRIGHT informed him of how much to pay for it. Additionally, both conversations indicate a price range between
$1,670 USD to $2,475 USD, which falls right in line with the range of $1,550 to $2550 from internal DEA data.
…
Mr D’Ambrosio’s table (Annexed as Schedule B)
[71] Mr D’Ambrosio’s expert opinion is that fundamental inferences can be drawn from the evidence as follows:
·In total the sum of USD $109,797 was sent to Colombia by Mr Dixon (made up of the Western Union monetary transaction/s and the USD $70,000 “money drop” or “pick up” with the undercover officer).
·That sum was to pay for cocaine consignments already received in New Zealand (Court’s emphasis), and may have included transportation costs. (This evidence was tempered in cross-examination as discussed under Analysis).
·The transfer of US Dollars was associated with money laundering for the customary method of payment for trafficked drugs in Colombia.
·There is a market price for cocaine and its transportation, and Mr D’Ambrosio has assessed the sum of USD $109,797 to purchase cocaine and pay for transport on a conservative basis, which leads to the three formulations he sets out in Schedule B to this Judgment. In essence, he says that the sum of USD $109,797 would have purchased and paid for transportation of a minimum 6.2756 kilograms of cocaine, sourced in Colombia. (Court’s emphasis).
·If the drug trafficking transaction was conducted on more favourable terms for the purchaser as to the purchase price of cocaine and transportation, then he makes a “middle range” assessment of
12.9534 kilograms and a “market rate” assessment of
34.9068 kilograms.
[72] There is no proof of specific consignments or importation, other than Mr Dixon’s admission of Charge 1, which is limited to a small amount of cocaine, and his proven involvement with the FedEx package delivered to Rakaia, though it
cannot be proven beyond reasonable doubt whether or not that contained cocaine as
I discuss further.
[73] The Crown in part relies on a passage in a statement made by James Bright dated 2 July 2015, who said that Mr Dixon felt “ripped off” at purchasing cocaine at
$12 a gram when he was in Colombia, confirmed in writing by Mr Dixon to Mr Bright on 11 March 2014. That pre-dates the importation date range in Charge 1. On 13 March 2014 Mr Dixon sent a message to another associate saying “£2 a beer and £1 a gram lol im in heaven”. Mr Bright told Mr Dixon of a contact named Andreas and that he had purchased cocaine from him for £1.50 a gram, by a message dated 20 March 2014 but Mr Dixon responded “Sorry already sorted”.
[74] In closing submissions, Ms Bell for the Crown referred to the Western Union transfers occurring in two clusters, January 2015 and in March/April 2015. In March 2015 the police became aware that Mr Dixon wanted to send a large amount of cash overseas, and the meeting with the undercover officer in Hagley Park was set up, a meeting which Mr Dixon at first denied or could not remember, but now admits in the Summary of Facts. That money was “forwarded on” by the police as part of an international investigation into money laundering. I return to this under Analysis.
[75] Mr D’Ambrosio said that in his view a drug trafficker in South America had asked a money laundering organisation to repatriate funds. The money laundering organisation was to pick up money in New Zealand. Mr D’Ambrosio gave evidence in the first place, rather vaguely, that he asked about the USD $70,000 money drop and he was told that it was a money pick up operation. [XXX]. Mr D’Ambrosio assumed the money was laundered albeit passing through the conduit of law enforcement, and that it reached its destination. This latter assumption requires close analysis.
[76] Mr D’Ambrosio referred to the telephone calls between the undercover officer and Mr Dixon which demonstrated that Mr Dixon mentioned Colombia, and that Mr Dixon understood the money drop related to Colombia. Under cross-examination,1 Mr D’Ambrosio referred to text messages between Mr Dixon
and the undercover officer. He said the text messages were “damning” and showed
1 T53.
that Mr Dixon was in the cocaine market, and the cocaine trafficking was directly linked with the money being sent to Colombia by the money drop (“pick up” as Mr D’Ambrosio describes it). Mr D’Ambrosio said “The two are intertwined. You cannot separate them. They are hand in hand together.”2
[77] I asked Mr D’Ambrosio why he concluded that the USD $70,000 money drop was linked with cocaine importation as opposed to, for example, cannabis or some other illegal transaction. He said that [XXX] all the text messages indicated involvement with cocaine.3 The money pick ups were “extraordinarily typical” of a South American drug trafficking organisation repatriating funds, paying commission to the money laundering organisation to that end. It does not make sense to
Mr D’Ambrosio to consider this money was part of a cannabis transaction, as he assumed someone could buy cannabis in New Zealand, and the money here was going back to South America as the “prime and only real location you can obtain cocaine”. Added to that are Mr Dixon’s admissions that he did import cocaine (at least twice, but the first outside the date range in Charge 1).
[78] The messages referred to indicated conversations about cocaine, the prices were associated with cocaine, and the money drop or pick up took place during the conversation Mr Dixon was having regarding cocaine. Mr D’Ambrosio concludes that the money drop or pick up was to send funds to South America to pay for cocaine. To hand that amount of money to a complete stranger in a parking lot is the sort of thing drug traffickers engage in daily. The lack of any reference to, or discussion about anything other than cocaine supported Mr D’Ambrosio’s inference that that was the basis for handing over the USD $70,000.
[79] Mr D’Ambrosio refers to what he calls a “chunk” of transactions in January, a “chunk” in April, and the “big money drop” in between. By March 2015, Mr Dixon had an ongoing relationship with traffickers in Colombia. Mr D’Ambrosio said it is both more efficient and cost-effective for those people to collect one bulk payment (the USD $70,000) rather than through multiple smaller Western Union transactions. The Court must analyse the evidence of these monetary transactions against the charge of importation as particularised.
D. Defence submissions
[80] Mr Starling with Ms Drummond submits that the Crown has not built a sufficient case, based simply on an allegation. Mr Dixon admits only that he imported a small amount of cocaine, established by the sales of cocaine reflected in Charges 3, 4, 5 and 6, and offering to supply in Charge 7.
[81] Counsel submits that the various communications do not show Mr Dixon making “a lot of deals or reference to a large amount of cocaine”, but that he is just a small scale drug dealer, and that the texts in evidence are to this effect. He submits that there are no acknowledgments of large amounts of cocaine being acquired or brought into New Zealand, and there are no interceptions to that effect.
[82] Mr Starling submits that the Crown has proved only that Mr Dixon sent money overseas via Western Union transfers of some USD $40,000 and that he gave USD $70,000 to an undercover officer for what Detective Waugh said at first was a suspected money laundering operation. Mr D’Ambrosio says this is not a realistic differentiation because sales of drugs on consignment involve the delivery and on sale of the drugs imported prior to the monetary transaction/s which send the agreed purchase price to the overseas drug trafficker. The evidence of communications by Mr Dixon does not suggest his role as a money launderer independent of his role as a dealer and importer, and Mr D’Ambrosio says that that is an unrealistic possibility.
[83] The FedEx package that arrived at the Rakaia address on 30 June 2015 is submitted by the Crown to have contained cocaine, but while Mr Starling recognises it is deeply suspicious, given the associated communications, he submits it cannot be taken any further in terms of the amount of cocaine that might have been contained in the package, nor, more fundamentally, proof of its contents as cocaine. He submits that it cannot constitute proof beyond reasonable doubt of importation, much less quantity.
[84] Other text messages from Mr Dixon relate to cocaine in “gram amounts”, as Mr Starling puts it, and the scale of Mr Dixon’s activity is submitted to be reflected in the text messages he sent to a friend while he was in Colombia in 2014. Mr Dixon referred to the price of cocaine there, and that he could buy a gram of cocaine for
cheaper than a beer, as described above. He brought “100 grams back” (97.5 grams) into New Zealand. Mr D’Ambrosio said that Mr Dixon, so it seemed, was using quite a bit of cocaine given the text messages, but 100 grams of cocaine is “… almost user quantity, it’s so cheap…”. There are no communications from Mr Dixon referring to sales other than gram amounts of cocaine, nor communications that relate to his on-selling, other than in the same small amounts, nor, Mr Starling submits, are there any communications that refer to the amount of cocaine imported. This submission is somewhat offset by the evidence of the “submersible pump” package which, whilst it has inferential shortcomings, indicates that Mr Dixon was involved in what was believed by him to be a significant drug importation. The fact there was no interception of the package does not mean it has no evidential value, but the Crown cannot prove beyond reasonable doubt there was cocaine in the package, although it is highly likely.
[85] Correctly, Mr Starling submits that the Crown case depends entirely on the inferences drawn by Mr D’Ambrosio, based on the facts as he understands them to be. Mr D’Ambrosio’s evidence works backwards from the money transfers totalling USD $109,767. Mr Starling says that the USD $70,000 money drop, can, or can
reasonably be taken to be, part of a money laundering transaction.4 Mr D’Ambrosio
had not been given information regarding the USD $70,000 money drop when he prepared his original brief, and Mr Starling suggests that this was because the Police did not consider that money to be for the purchase of cocaine. The question for the Court is the validity of the Crown case based on Mr D’Ambrosio’s evidence of the USD $70,000 being given to the undercover officer for the purchase of cocaine, and whether the cocaine had been imported by then or was imported within the dates set out in Charge 1.
[86] Counsel submits that Mr D’Ambrosio’s evidence stops at the New Zealand border, as he himself said in evidence.5
[87] Mr Starling also submits that Mr D’Ambrosio changed his evidence in his second report, his first report recording that the “hat trick” mentioned by Mr Dixon in his texts to his South American contact in June 2015 was a reference to
3 kilograms of cocaine, but in his second report he refers to its signification of “three shipments”.
[88] With some further thoughts discussed under Analysis, Mr D’Ambrosio believes that Mr Dixon was purchasing cocaine on a consignment basis, paying for it after it arrived. There is no evidence of any monetary transaction/s offshore by Mr Dixon after the 30 June delivery. The Court must closely address any evidential link between the package delivered to Rakaia and the proven monetary transaction/s. If they were linked then the package was delivered after much earlier monetary transaction/s, which is inconsistent with the primary evidence of Mr D’Ambrosio that these were sales on consignment. Mr D’Ambrosio does not rule out payment in advance in some cases, but there are problems in reaching that conclusion. There is an impact on the Crown case if it depends on that inference, as I will discuss.
E. Analysis
Overview
[89] The Crown has an obligation to prove beyond reasonable doubt any aggravating factor of the offending, in this case the amount of cocaine imported by Mr Dixon in the date range of Charge 1.6
[90] Without the physical seizure of cocaine to prove that it was present in New Zealand, the Crown can only work from some admitted and proven facts and more than one inference to prove the importation it alleges.
[91] It starts with the admission of very limited importation and associated supply charges, which reflect small amounts of cocaine. The Crown then has to establish some fundamental factual planks on which to found inferences as to the amount of cocaine imported by Mr Dixon.
[92] The defendant’s participation in the currency transactions referred to in
Mr D’Ambrosio’s table, Schedule B to this judgment, is admitted. However, the extent to which those monetary transaction/s, including the handover of
6 Sentencing Act 2002, s 24(2)(c); R v Haarhaus HC Auckland CRI-2007-004-18646, 4 June 2009 at [9].
USD $70,000 to an undercover officer, represent payment for cocaine and transportation costs associated with cocaine which was imported within the date range for Charge 1 is disputed. The Crown case depends on inferences to be drawn from all the evidence and include whether the monetary transaction/s were to pay for cocaine and its importation, if so whether it resulted in importation within the Charge 1 date range, and if so how much cocaine was imported.
[93] Whether Mr Dixon paid for the cocaine after importation, (ie on consignment), contemporaneously, or in advance, is a testing consideration for the Court’s determination whether importation took place within the date range in Charge 1. If, as a front, the monetary transaction/s took place to pay for cocaine after importation into New Zealand or contemporaneously, then importation within the relevant period is proven. If paid for in advance then importation must still be proved within the date range of Charge 1. With no direct evidence of these elements the Crown case necessarily depends on inferences.
Inferences
[94] The Crown case depends, if all other elements of the Crown case are proved by admission or otherwise, on a final inference that Mr Dixon imported into New Zealand cocaine in the minimum amount of 6.2756 kilograms, up to
34.9068 kilograms.
[95] In New Zealand, while the Crown does not need to prove beyond reasonable doubt each factual circumstance on which it relies before the jury can take into account that evidence, an inference must be drawn from facts that are sufficiently proven.7
[96] There is authority in the High Court of Australia, that where the prosecution asserts a fact, described as “primary or intermediate”, as a basis to draw an inference of guilt, then such fact must be proved beyond reasonable doubt,8 although the case is not authority that a jury must be directed to that effect. That standard of proof is likely to be the case where the incriminating facts are few in number. The more facts
available to found an inference, the less may be the need for proof beyond reasonable doubt of each, as the assembly of multiple facts strengthens the available inference.
[97] Logic dictates that to be sure of a conclusion reached by inference on all the available evidence, the facts on which the inference is based must be sound in the sense that they are clearly established. The notion of factual findings reached on a balance of probabilities then combining to produce an inference beyond reasonable doubt is, to my mind, problematical. I think that is what is meant by the authorities when they say that the factual premises on which an inference is to be drawn must be clearly established, but in some cases, and this is one, I consider that the fundamental factual premises which found the primary inferences asserted, and the inferences themselves must all be proved beyond reasonable doubt.
[98] If another inference than that asserted by the Crown is available, or reasonably possible, the Court should act upon the version of events which is most favourable to the defendant, provided it is not manifestly false or wholly implausible.9 The Court must bring to account all circumstances which favour the defendant.10
[99] Identifying and analysing the key factual premises relied on by the Crown, and the several inferences relied on, is central to this analysis and I do so in the form of the questions articulated as follows:
Question 1: Did Mr Dixon import cocaine into New Zealand between
24 November 2014 and 2 July 2015?
[100] This is admitted, but not the specific date or dates of importation(s) nor the amounts alleged by the Crown. The defendant had cocaine in his possession in March/April 2015, given the supply and offer to supply charges admitted, and Mr Starling says this reflects the only importation the Crown can prove.
Question 2: If so, on how many occasions did Mr Dixon import cocaine into
New Zealand?
[101] This is not proven. The evidence is speculative. There was at least one (admitted) importation, but the Crown submits the evidence proves up to three occasions.
[102] I accept there are inferences which might be drawn, to a lesser standard of proof than required, that Mr Dixon was involved with importation on more than one occasion. There is a strong inference that the “submersible pump” package delivered by FedEx to Rakaia on 30 June 2015 contained illicit drugs and if so almost certainly cocaine. However, it is not proved beyond reasonable doubt that the FedEx package did contain cocaine and no inference can properly be drawn as to the amount if it did.
[103] At first, Mr D’Ambrosio thought the reference to a “hat trick” in the text messages associated with the FedEx package was a reference by Mr Dixon to three kilograms of cocaine, but later he thought it meant three shipments. The evidence is too uncertain for me to draw any inference beyond reasonable doubt. The “scoring” of three importations might look forward to a pending importation, and back to two others, or forward to three.
[104] Mr D’Ambrosio said that a purchase of 35 kilograms of cocaine would have been imported in three shipments. He said, and relevant to sale on consignments, “That would have been between January and the time of the last payment, so any time from the initial payment to sometime after the last payment …”. He added that an import “could have been during or shortly after the money is moving about”.11 He could not say that the last of the “three imports” was in the package delivered to Rakaia. Mr D’Ambrosio said under cross-examination that the three shipments would have occurred between 20 January 2015 and 30 June 2015.12
[105] I am left unsure how many shipments took place but in the end the number is not a necessary element for proof beyond reasonable doubt of importation of a particular quantity.
Question 3: Were the monetary transaction/s alleged by the Crown for the purchase and transport of cocaine from a Colombian source to New Zealand?
[106] Other drugs were discovered during “Operation Hook”,13 but there is no suggestion in any of the evidence that the defendant had a connection to such. I consider that an implausible proposition as the evidence is replete with reference to cocaine.
[107] In 2014, the defendant admits he travelled to South America and while there he made contacts with people involved in the cocaine trade in Colombia. The defendant has pleaded guilty to importing cocaine under Charge 1, and he previously imported cocaine into New Zealand, for which offence he was convicted and sentenced.
[108] The monetary transaction/s were undertaken through January 2015 to April 2015 as reflected in Schedule B. They are admitted. Mr Dixon sent two Western Union money transfers and arranged through other persons for further Western Union money transfers to Hong Kong and Panama. The money sent was uplifted by persons with Colombian passports. Those Western Union transfers occurred in two clusters, in January 2015 and March/April 2015. The money transferred was in US dollars and, although it is not a certain fact, the amounts paid out “potentially stay[ed] beneath the obligations to report transactions through the
banking system”.14
[109] Colombia, Peru and Bolivia are responsible for most of the world’s cocaine production. The Western Union money transfers and the money pick up have a proven connection with Colombia, on the evidence.
[110] It is not disputed that an undercover officer made contact with the defendant, and they met in Hagley Park where the defendant handed over USD $70,000. The undercover officer was involved when the police became aware the defendant wanted to send NZ $100,000 (USD $70,000) overseas. The intended destination of the USD $70,000 as Colombia is referred to in the evidence of Mr D’Ambrosio. He calls it a “pick up”. The phone call between the undercover officer and the
defendant shows that Mr Dixon mentioned Colombia and his understanding that the money related to Colombia in some way.15 Therefore, USD $70,000 was handed to a stranger, for transmission to Colombia or South America. That “stranger” happened to be involved in an investigation into an international money laundering operation.
[111] The Crown says the money given to the undercover officer was to be sent to Colombia and the evidence is that it was “forwarded on”, which I infer was to preserve the integrity of the broader investigation.
[112] The Crown says that the inevitable inference, of which the Court can be sure, is that the Western Union transfers and the money drop or pick up in Hagley Park were for illicit activity, which on all the evidence was beyond reasonable doubt for the importation of cocaine, which was imported into New Zealand.
[113] Mr D’Ambrosio says that drug trafficking organisations in Colombia would not break down kilograms of cocaine into smaller amounts for export.16 The defendant’s proven experience with South America, and established contacts, indicate he can source cocaine at a wholesale and market rate, which shows that he has a connection close to the source.17
[114] The evidence of the Western Union monetary transaction/s is that they were very much “run of the mill” for sending money off shore for purchase and importation, and the Court accepts Mr D’Ambrosio’s evidence of a typical transaction involving the purchase of drugs. There is no evidence that Mr Dixon had involvement with cocaine importation prior to his trip to South America and arrest in
2014. I have considered alternative explanations to the money transfers and this is set out below. I conclude that the Western Union transactions were to pay for cocaine. I conclude this based on Mr D’Ambrosio’s evidence which I accept reflects the customary nature of such monetary transaction/s.
[115] Mr Starling suggested that the money was sent possibly to fund cocaine sent somewhere other than New Zealand, but that was rejected by Mr D’Ambrosio as
15 T68, line 13; T69, line 2.
implausible.18 There is no evidence or even suggestion which raises a reasonable doubt in this respect. I am sure that the evidence proves cocaine importation by Mr Dixon was only into New Zealand and that there is no reasonable alternative explanation for the money transactions.19 I therefore agree with the Crown case that:
…that there is only one legitimate inference that can be drawn in respect of the money transactions. Any other inferences would fall into the realm of speculation and would not be legitimate inferences to draw.
[116] The USD $70,000 money drop requires further consideration at several levels. Mr Dixon wanted money delivered out of New Zealand, and he was prepared to engage with someone to do so in circumstances which, in my opinion, prove that he was engaged in an illicit transaction associated with the importation of cocaine.
[117] I have considered what possible alternative explanations may exist for the money transfers. Alternative explanations were put by Mr Starling in cross-examination, first that the USD $70,000 was or may have been money laundering only. That was rejected by Mr D’Ambrosio in cross-examination, where he said:20
Q. So what’s the basis for, I already put to you that the 70,000, the police seem to accept that it wasn’t about cocaine it was about money laundering.
A. Well the underlying, in order to launder the money generally money laundering goes hand in hand with under the line criminal activity so for example DEA does not conduct a simple drug trafficking case without a simultaneous parallel money laundering case because those two criminal activities are intertwined hand in hand. When you generate illicit proceeds from criminal activity such as drug trafficking that money has to be effectively laundered and in the case of cocaine trafficking has to be repatriated through some time [sic] of laundering mechanism back to the source country which is, in this case, Colombia.
Q. But that’s assuming that it’s not the laundering per se which is taking place. Because on your scenario the $70,000 is being used for the purchase of cocaine.
A. And I feel very very confident in that based on all of the messages that are coincide [sic] with the movement of that money and all the references within those messages and the fact that at every step along the way with the evidence it coincides almost perfectly with
18 T48, lines 13-18.
everything that we have seen in previous drug trafficking cases, drug trafficking organisations, the modus operandi at every level. Clearly there is a significant bit of cocaine trafficking going on here that is generating the funds that are required to be laundered and repatriated back to Colombia.
Q. But let’s stick to that $70,000 amount which is effectively two-thirds of the amount that you’ve included in your calculations or approximately, that money was given to an undercover police officer as what the police believe was part of a money laundering operation so no evidence that it went for the purchase of cocaine?
A. That money is – these types of operations that you’re referencing, this money pick-up operation, this is a typical undercover operation that we do when targeting a drug trafficking group. The drug traffickers are generating proceeds from the sale of the drugs. Those proceeds need to be repatriated back to Colombia or the source country and often times we have the ability to insert ourselves in an undercover capacity to pick up those drugs and with the direction of the drug trafficker, determine where that money is going to be sent and so I don’t, as from the US system; the two are the same. Those funds are generated from the illicit drug activity and then the funds have to somehow get back to the source country where the money needs to be paid so therein comes the actual laundering of the drug proceeds so from my perspective and my experience you don’t have the laundering activity without the underlying drug trafficking activity. The two are hand in hand. There is no need to launder legitimate funds. You would just put it in a bank and wire transfer it for $40 that the bank charges you for a wire transfer if its legitimate money and you don’t have all of these other circumstances showing you that this individual is involved in an illicit an [sic] cocaine trade. So I think to attempt to separate the two would be an inaccurate assessment to the Court.
[118] On the facts that are admitted, I conclude beyond reasonable doubt Mr Dixon was engaged in making a payment for drugs when he made the money drop. There is a very strong body of evidence that this was the activity in which he was engaged, namely importation and dealing, not money laundering as a separate enterprise. Mr D’Ambrosio’s evidence is that Mr Dixon was paying for drugs and transport. The money drop was made in the timeframe of the Western Union transfers.
[119] I accept that the evidence establishes beyond reasonable doubt that the defendant was involved with cocaine importation and it is a natural and commonsense inference to link the money transactions, all of which have a connection to Colombia, to that importation. Any other conclusion is fanciful. The evidence is, in my view, overwhelming in that regard.
Question 4: What is the relevance of the FedEx package delivery to Rakaia on
30 June 2015?
[120] The FedEx package was sent from Maracaibo in Venezuela, close to Colombia and the nearest Colombian city of Cűcuta, about a five to six hour drive from Maracaibo.
[121] The delivery on 30 June 2015, and the date of export out of Maracaibo (either
15 or 16 June 2015) were well after the last of the monetary transaction/s in April 2015. To infer importation of cocaine paid for earlier in 2015 goes against the Crown’s primary case that these were sales on consignment. There is a very high level of suspicion, indeed I am sure, that the communications and delivery to Rakaia were associated with importation of cocaine, but I cannot conclude beyond reasonable doubt that cocaine was in the package, and I cannot conclusively link that delivery with the monetary transaction/s, if it did contain cocaine.
[122] There is a point of distinction between the Western Union transfers and the money drop with the undercover officer, which is the result of law enforcement intervening in the monetary transaction/s off-shore. That intervention was part of an international investigation. I know that the money was “forwarded on”. The inference I am asked to draw is that the money therefore went to the trafficker, or source.
[123] If I am not sure that it was payment for drugs already imported on consignment (as with the Western Union transfers), then the question is whether I am sure it resulted in actual importation. The fact that the money drop might not have reached Mr Dixon’s intended destination means nothing if the cocaine had already been imported. If it had not been imported on the date of the money drop then the question is whether it reached its destination, to pay for an importation which came later, and whether that was within the Charge 1 date range.
[124] The text communications which are overtly in connection with delivery of drugs to New Zealand and how they would then be dealt with, take the Court to a high level of probability that the FedEx package which was never found contained cocaine. There is nothing other than Mr D’Ambrosio’s inference, of which I cannot be sure, to link it with the monetary transaction/s, the last of which concluded on
23 April 2015, nearly two months before the communications began and more than two months before delivery of the FedEx package to Rakaia.
[125] There are no communications of any kind to indicate concern about a failure to deliver drugs after payment was sent in advance, and the expressive June 2015 communications regarding the FedEx package, indicate a satisfactory course of dealing between Mr Dixon and his supplier or trafficker. That could never have been the case had there been a failure in an earlier transaction resulting in Mr Dixon being “ripped off’, or the cocaine for which he had paid not being delivered. Mr Dixon would have been well on the alert, and he was not. He was excited by the prospect of getting the FedEx package and plainly believed it contained cocaine.
[126] The incautious and barely disguised messages between Mr Dixon and his South American contact in June 2015 disclose no concern whatsoever about earlier monetary transaction/s not having resulted in delivery of cocaine. Had there been default at the South American supplier’s end, the communications would not, in my view, have been so unguarded, and would not have had the character of enthusiasm and excitement exhibited by from Mr Dixon.
[127] The FedEx delivery and associated communications do not prove importation of cocaine beyond reasonable doubt, and even if they did, no amount is proven or could be assumed in the context of a criminal prosecution.
Question 5: Did the cocaine imported into New Zealand by Mr Dixon reflect the monetary transaction/s alleged by the Crown, and did the importation occur between
24 November 2014 and 2 July 2015?
[128] The Crown, relying on the evidence of Mr D’Ambrosio, says the monetary transaction/s followed delivery on consignment, so that the cocaine had been imported by the date of the monetary transaction/s. Mr D’Ambrosio’s evidence allowed for a variation of this conclusion. He says this is the normal method, but it is not invariable. In theory, a credit relationship may develop between the dealer and a purchaser whereby the purchaser pays in advance. There is no evidence here of payments made ahead of importation, but no direct evidence that they were not. I must decide whether Mr D’Ambrosio is right that the money transfers were derived from sales of cocaine made in New Zealand, following sale on consignment. I have
rejected the idea that the FedEx package reflects an actual importation within the
Charge 1 date range as proved beyond reasonable doubt.
[129] The Crown cannot succeed in proof of these monetary transaction/s being associated with importation that had already taken place simply by saying there is no evidence otherwise. Mr D’Ambrosio’s expert evidence is that unless a relationship is built up between the supplier and the purchaser, so that the purchaser comes to trust the supplier, payment is always made after delivery, that is a sale on consignment. His expert evidence is that there are circumstances in which the drugs may not be paid for on consignment. Ultimately, the Crown must exclude the reasonable possibility that Mr Dixon was someone who was required to or prepared to make payment in advance of consignment, or prove that if he did, importation followed within the date range of Charge 1.
[130] The monetary transaction/s were in January – April 2015 and beyond reasonable doubt were for the importation of cocaine. If they were payments for drugs sold on consignment then they were imported before the monetary transaction/s, thus in the period specified in Charge 1.
[131] If they were not, and any of the payments were in advance of delivery
I conclude that they would beyond reasonable doubt have been imported by
2 July 2015. All the evidence is of immediacy and an urgency in the communications, and a leisurely deferral of delivery after these monetary transaction/s is, on the expert evidence, fanciful.
[132] Here, the nature of the guilty pleas and what may be drawn from them also has application. Mr Dixon admits importation and other charges which involve supply or attempt to supply. These charges are all admitted as taking place on specified days. There was a supply of drugs available to Mr Dixon which must have come from somewhere, and which fits with the monetary transaction/s being associated with drugs that were to his hand. I conclude beyond reasonable doubt that these monetary transaction/s were associated with drugs which were imported into New Zealand by Mr Dixon between the dates specified in Charge 1, and before or immediately around the dates of those transactions, contemporaneous or soon after.
[133] I return to the FedEx package in this context. Mr Dixon needed to pay for the cocaine, whatever quantity he imported. Mr D’Ambrosio told the Court that the monetary transaction/s were, in his opinion, associated with drug trafficking in Colombia and are entirely consistent with the modus operandi of drug trafficking organisations. The communications between the defendant and a South American contact in June 2015 are said by Mr D’Ambrosio to do with a shipment of cocaine and the opening of the package delivered to Rakaia (not challenged by the defence on the Crown submission, but which must still be proved). The communications correspond to the 10 kilogram package delivered to Rakaia identified by the Police (evidence of Detective Waugh). That delivery and Mr Dixon’s overt participation in what was probably cocaine importation or attempted importation could not be associated with the monetary transaction/s if cocaine was purchased only on consignment by Mr Dixon.
[134] Mr D’Ambrosio says that, from his perspective, beyond reasonable doubt, there was cocaine in the package delivered to Rakaia, but he could not say how much. He said that the total amount sent by Mr Dixon would have purchased
35 kilograms at market rates, so in that way he was linking all the earlier monetary transaction/s from January through to April 2015 with this delivery, as tenable.
[135] Apart from the difficulty in establishing that the FedEx package did contain cocaine beyond reasonable doubt, linking it with the monetary transaction/s does not fit with sales on consignment or delivery soon after a payment in advance, but Mr D’Ambrosio is dismissive of payment in advance because to remit such large sums of money to criminals engaged in drug trafficking is commercially naive, unless a trusting and long term relationship has been built up.
[136] Mr D’Ambrosio says that drug traffickers do not expect payment ahead of delivery. They are criminals. The idea of remitting a large amount of money to such persons, offshore, makes no sense unless there is an established trading relationship where such trust is engendered, or “enforced”, and the nature of the communications which are before the Court belies any such conclusion.
[137] Mr D’Ambrosio said,21 “It is drilled into” agents that the rule is “never front the money”, which means never provide a drug trafficker money for a product you are not actually at that time receiving or going to receive:
These people are criminals so if they think they can take a good amount of money away from you and not supply you with anything that’s what they will do so in a drug trafficking world and a world of criminal activity you have to assume that you are dealing with somebody that will just as easily steal from you….
[138] He explained that if money is given over before the product is delivered then this is setting up a fraud, therefore he would suggest that Mr Dixon was paying for cocaine that he either received or that he was in the process of receiving, almost a simultaneous payment.
[139] However, there are clear indicators that the monetary transaction/s were for drugs already delivered on consignment. To generate such large sums of money would have required a supply of cocaine in the first instance. The cocaine is sold and part of the proceeds of sale remitted, consistent with a sale on consignment.
[140] Mr D’Ambrosio addressed whether the purchase of cocaine might have been “cash on delivery”. He said that depended on the relationship with the supplier, but in most instances the Colombians work on consignment. Mr D’Ambrosio says the communications indicate Mr Dixon had a very good contact in Colombia. He says that is evident because they were supplying cocaine at the going market rate. He said that the generation of $109,000 (US):
… is indicative of the proceeds from the sale of the underlying drugs so the question then becomes, if this is legitimate money that came from a legitimate source and we discarded all of the relevant facts then where did this $100,000 and almost $10,000 come from and why is he sending it to Colombia.
[141] In another passage of evidence, Mr D’Ambrosio said that the last money
transfer was on 23 April 2015, and that by the date of Mr Dixon’s arrest on
2 July 2015, he would have expected the cocaine to have come into New Zealand and been distributed.22
21 T51, lines 15-30.
22 T22, lines 25-32.
[142] He added that on all the evidence:
…its indicative of somebody who has received drugs, distributed those drugs, received the money for those drugs and now needs to repatriate that money to the source country.
[143] The money drop with the undercover officer was at about the same time as the monetary transaction/s on 16 March 2015. I am sure it was for the purchase of cocaine. It is a larger sum than the Western Union transfers but not so much more when they are totalled. It was either payment on consignment or in anticipation of an immediate delivery. The money drop is subject to the same conclusion as the Western Union transfers. I am sure that it was to pay for cocaine either likely to have already been imported into New Zealand, contemporaneously, or shortly thereafter.
[144] Mr Dixon admits importation of cocaine which he says is reflected by the guilty pleas as to the amount with which he was involved. So he acknowledges that at or about the time of the monetary transaction/s, he was engaged in supply of cocaine. That links completely with the Crown evidence of a sale on consignment.
[145] I therefore conclude beyond reasonable doubt, importation took place within the period specified in Charge 1. I do not base this conclusion on the FedEx package delivery.
Question 6: How much cocaine did Mr Dixon import into New Zealand between
24 November 2014 and 2 July 2015?
[146] If the monetary transaction/s were to pay for cocaine and its transportation, then the Crown relies on the amount of money sent through Western Union and the money drop with the undercover officer. The amounts are significant when viewed from a New Zealand perspective but are inconsequential in an international context.23
[147] There are always transportation costs. Mr D’Ambrosio incorporates in his
Schedule B what he considers to be a generous allowance for transportation costs. The mode of transportation used by Mr Dixon was likely to have been by package,
23 T48, lines 19-29; T67, lines 1-7.
one of the cheapest forms of transportation, and Mr Dixon refers to the FedEx package delivered to Rakaia (which, again, may or may not have contained cocaine). He makes his calculations of transport costs at various levels, reflecting various methods of transportation.
[148] Ms Bell for the Crown submits that the evidence points to the defendant “realistically having imported closer to the 35 kilograms than the six kilograms in the most conservative scenario put forward” by Mr D’Ambrosio, and that it is open to the Court to find that considerably more cocaine than six kilograms was imported into New Zealand.
[149] The Crown submits that the evidence is overwhelming and there is only one legitimate and compelling inference that can be drawn on the evidence: the USD $109,797 in total was used for the purpose of and payment for importation of cocaine into New Zealand and that the defendant was involved in on-going cocaine trafficking throughout the relevant period. To that extent, I have agreed with the Crown case.
[150] Mr D’Ambrosio has adopted three approaches reflected in Schedule B. The “most conservative scenario” is to work from a purchase price of USD $7,500 per kilogram of cocaine, triple the USD $2,500 price per kilogram which reflected the market price, and within the range reflected in communications by and to Mr Dixon. Mr D’Ambrosio assumes an overcharge for transport so that Mr Dixon paid USD $10,000 per kilogram, whereas the market rate is between USD $5,000 and USD $10,000 per kilogram for a human courier which is the most expensive transportation method. As Mr D’Ambrosio explained, it is far cheaper to deliver packages by FedEx or another courier.
[151] The product of the assumptions by Mr D’Ambrosio for this “most conservative scenario” is that transportation fees of USD $62,700 were paid for the delivery of 6.2756 kilograms of cocaine. This is the result of starting with a very high purchase price of cocaine. Mr D’Ambrosio has gone so far outside the market price, and of cocaine and its transportation, as to provide the evidential reassurance that this would be the minimum amount of cocaine purchased and imported, and assumes truly excessive non-market purchase price and transport costs.
[152] The “middle range scenario” works on a lesser, but still significant price of USD $5,000 per kilogram, twice the rate potentially available in the market. Here Mr D’Ambrosio has switched his assumptions to assuming transportation fees of USD $15,000 for transport and, based on evidence of intercepts, he says there were three, thus a total of USD $45,000. The number of transportations is, in my view, unclear, but the figures balance under this hypothesis.
[153] The “market rate scenario”, which remains a reasonably probable assumption in my view, is that Mr Dixon paid market rates of USD $2,500 per kilogram, and paid USD $7,500 per transportation event, being the average market rate for using a human courier, the most expensive transportation method. Again, the figures balance with the monetary transaction/s for the purchase of cocaine and transportation.
[154] Mr D’Ambrosio says that the evidence, reviewed in this judgment, is that the prices discussed in his Schedule B were “within the range” for the market. The DEA knows what these prices are, so to take such a conservative view is to remove the uncertainties from what is not a fixed market.
[155] The fact that three possible scenarios are put up to invite the Court to find one of them proved beyond reasonable doubt provides part of the answer. The second and third scenarios put forward by Mr D’Ambrosio are tenable and reasonable possibilities in the context of the market available to Mr Dixon at the time. However, the smallest quantity of cocaine purchased, as estimated by Mr D’Ambrosio is all that the Crown can prove beyond reasonable doubt, if Mr D’Ambrosio’s calculations as to the market costs of cocaine transportation are otherwise held to be established beyond reasonable doubt.
[156] Mr D’Ambrosio was not really tested on his most conservative calculation but the Court must still be sure that 6.2756 kilograms was imported by Mr Dixon, and that it could not reasonably have been a lesser quantity.
[157] I consider Mr D’Ambrosio’s evidence, given as an expert, is to a point near certainty, beyond reasonable doubt, that 6.2756 kilograms (reduced to six kilograms) was the amount of cocaine imported by Mr Dixon. This is far below what I conclude
is the probable market in which the transactions took place, however, that finding is insufficient to take away the benefit of the doubt which otherwise must be in favour of Mr Dixon.24 I think it very probable that Mr Dixon imported much more cocaine into New Zealand, and that the transaction involving the FedEx package delivered to Rakaia was likely to have involved cocaine. However, I do not adopt a “high probability” approach as that is not the test in law. At the end of my reasoning I must be sure the quantity calculated by Mr D’Ambrosio is proven beyond reasonable doubt and I do so only because the assumptions which Mr D’Ambrosio incorporates,
based on his expert knowledge, allows that.
F. Disposition
[158] I find, beyond reasonable doubt, that Mr Dixon imported 6 kilograms of cocaine into New Zealand as alleged in Charge 1.
G. Destruction and other orders
[159] The Crown seeks orders for the destruction of cell phones, scales and containers used to purchase, arrange and sell the Class A controlled drug, cocaine, and the forfeiture of USD $10,000 cash seized from the defendant. Such orders should not be made until final disposition of this prosecution, including sentence and any appeal. The application by the Crown remains for further disposition.
[160] I reserve leave for any further application to be made relevant to disposition.
……………………………………………
Nicholas Davidson J
Solicitors:
(Crown Solicitor’s Office) Raymond Donnelly & Co, Christchurch
Michael Starling Barrister, Christchurch
Betterlaw, Christchurch
24 R v Newton, above n 9.
SCHEDULE A
SCHEDULE B
MR AMBROSIO’S TABLE
(as provided to Court on 1 August 2015)
Date Description From To Destination Amount
| (USD) | |||||
| 20-Jan-15 | Western Union Transaction | DIXON | Shannon SANCHEZ LOPEZ | Hong Kong | 4000 |
| 21-Jan-15 | Western Union Transaction | PAKI | David JARAMITTO | Hong Kong | 4000 |
| 23-Jan-15 | Western Union Transaction | FRIEND | David PRISCO JARAMILO | Hong Kong | 4000 |
| 24-Jan-15 | Western Union Transaction | FRIEND | David PRISCO JARAMILO | Hong Kong | 4000 |
| 26-Jan-15 | Western Union Transaction | TE KOETI | Yelner ALBERTO ISAZA | Hong Kong | 4000 |
| 16-Mar-15 | Hands over money to | DIXON | Undercover agent | NZ | 7000 |
| undercover agent | |||||
| 23-Mar-15 | Western Union Transaction | DIXON | Vanessa GALLEGO | Panama | 3905 |
| 1-Apr-15 | Western Union Transaction | MASON | Juan Camilo HERRERA GONGO | Panama | 4016 |
| 2-Apr-15 | Western Union Transaction | PIRINI | Ronal ALVARADO | Panama | 3932 |
| 14-Apr-15 | Western Union Transaction | NESTOROWITSCH | Luz Elena Salazar BURITICA | Panama | 3887 |
| 23-Apr-15 | Western Union Transaction | FRIEND | Juan Camilo HERRERA GONGO | Panama | 4027 |
Total Money Sent by Western Union or Delivered to UC (USD): $109767
Most Conservative Scenario: Market Rates Assumed
Rate
Cocaine (kgs.) Amount Paid
USD
Colombian supplier significantly overcharged Dixon. Assume Dixon paid $7,500 USD, per kilogram of cocaine, which is triple the market rate of $2,500 USD per kilogram. Additionally, assume Dixon was overcharged for transportation and paid $10,000 USD per kilogram in transportation fees. The market rate is between $5,000 to
$10,000 USD per kilogram in transportation fees for a human courier (the most expensive transportation method)
Cost of Cocaine:
$2,500 USD per kg
Transportation Fees:
$5,000-$10,000 USD per trip (the typical expense for a courier smuggling multiple kilograms)
7500
10,000
6.2756 470067
62,700
Total for Cocaine & Transport 109767
Middle Range Scenario:
Colombian supplier overcharged Dixon. Assume Dixon paid
$5,000 USD per kilogram of cocaine, which is double the Market rate of $2,500 USD per kilogram. Additionally, Assume Dixon paid $15,000 USD for transportation fees per Transport, still overpaying by at least $5000 USD per Transport. Based on intercepts there were three
Cost of Cocaine:
$2,500 USD per kg.
Transportation Fees:
3 Transports at
$15,000 each event
5000
15000
12.9534 64767
45000
Market Rate Scenario:
Total for Cocaine & Transport 109767
Colombian supplier charged Dixon market rates. Assume Dixon paid $2,500 USD per kilogram of cocaine, which is the Market rate. Additionally, Dixon paid $7,500 USD in transportation fees per transportation event, which is
Average market rate for using a human courier, the most
Cost of Cocaine:
$2,500 USD per kg.
Transportation Fees:
3 Transports at $5,000 each event
2500
7500
34.9068 87267
22500
** Although human couriers were not used in this case, I am using transportation costs associated with human couriers because that method is typically the most expensive transportation method. This yields the most conservative estimate of the amount of cocaine smuggled.
Total for Cocaine & Transport 109767
0
0