A B.C. Civil Forfeiture Office claim against a convicted drug trafficker is entering its third year, as the two sides spar over the release of police documents prior to a potential challenge on constitutional grounds.
Stephen Hai Peng Chen, also known as Hoy Pang Chan, is accused in the civil forfeiture suit, filed in January 2019, of using proceeds of crime to buy two properties in Vancouver.
Chen is concurrently alleged to have used money service business Silver International Inc., which was central to a federal money laundering investigation that resulted in stayed charges in November 2018 against its two primary operators, one of whom was subsequently murdered last September.
The case against Chen highlights many issues surrounding civil forfeiture recently raised at the Commission of Inquiry into Money Laundering in B.C.
On July 16, 2019, Chen was found guilty in BC Supreme Court of trafficking MDMA between February and August of 2015.
Seven months before his conviction, The Civil Forfeiture Office (CFO) applied to seize Chen’s East 5th Avenue house and West 42nd Street apartment, both in Vancouver, with a combined value of $2.7 million (2019).
Last November, Chen filed an application to gain access to police investigation documents related to Silver International, including the October 15, 2015, search warrant against the Richmond business that was allegedly laundering as much as $220 million a year for its clients, including Chen, at the time.
The CFO points to an analysis of ledgers seized at Silver International by the RCMP that indicates Chen deposited $5.31 million and withdrew $2.27 million between June 1 and Oct. 1, 2015, the day before he was arrested in his Richmond condo on Lansdowne Road, where police also seized $60,010 in cash found in a bag hidden in his clothes dryer.
According to Chen’s March 2019 response to the OCF claim, Chen did not contribute money toward the acquisition of the East 5th property where his elderly parents reside. His parents, stated Chen, moved to Canada in 1980 from Shantou, China, and worked as cooks. Chen stated his parents only put him on the title in 1998 for cultural reasons.
Chen stated he bought a condo in 2015 on West 42nd, where he resides with his son.
Chen now argues, via his Hira Rowan LLP lawyer Bibhas Vaze, that he has a right to inspect certain documents provided by the RCMP to the CFO. Chen says the investigation and subsequent search of Silver International, which resulted in his arrest, was conducted in violation of the Canadian Charter of Rights and Freedoms. Chen also argues he was neither properly informed of the reasons for his arrest nor properly advised of his right to access counsel without delay. Further Charter violations occurred when police forwarded documents about Chen to the CFO, he argues.
In response to Chen’s request for documents, the CFO states, “there is no evidence of what – if any – privacy right Stephen Chen asserts he had with respect to the search warrant executed at Silver International or the Lansdowne Property. Without any evidence to explain the rationale connection between the demand [and] the pleadings it is a ‘fishing expedition.’”
Also, the CFO stated in a filing in February 2020 that Chen and his parents hadn’t yet submitted any documents to the court to “prove or disprove a material fact in this action.”
Specifically, the CFO wants to know the source of income used to acquire the properties. According to the claim, an analysis of Chen’s tax returns, from 2006 to 2012, showed he had an average reported annual income of about $37,000.
Chen’s case includes a number of issues raised at the Cullen Commission into money laundering, where, Phil Tawtel, CFO executive director, provided information to commission counsel and other participants on December 18.
Tawtel spoke to how the CFO exclusively receives voluntary referrals from law enforcement agencies and does not initiate investigations.
Chen argues, based on prior cases involving the CFO, “there is an incongruous power imbalance between defendants and the state authorities – the Director and the police – who act in concert to achieve similar purposes against defendants, such that attempts by the RCMP to undermine a defendant’s ability to know the case against him or her merit an order of costs against the RCMP or its representative.”
And a case against the Hells Angels organized crime group raised questions from a judge about the relationship between the police and the CFO, noted B.C. Civil Liberties Association (BCCLA) lawyer Jessica Magonet.
The judge, noted Magonet, stated that the information sharing between police and CFO, “in some circumstances … may require not only evidentiary oversight by the Court but also engage Charter scrutiny."
But Tawtel noted the judge nevertheless held that the information sharing agreement was valid.
The BCCLA is critical of the CFO since it can take assets away from people who have not been convicted of crimes – the burden of proof is not as thorough.
Chen’s case also raises the point that the CFO can only obtain income data from a discovery process. Tawtel said it would benefit his office to have access to income filings held by the province.
“I think any time we have an understanding of what the reported income is of an individual or corporation, it assists the office with understanding the baseline of what we’re dealing with as to what is the legitimate or so-called declared legitimate income,” said Tawtel.
As it relates to understanding the true owner(s) of Chen’s properties, which is disputed, Tawtel told Transparency International Coalition’s Toby Rauch Davis that a robust identification verification system for B.C.’s planned beneficial ownership registries for properties and corporations is “absolutely” needed.
“No question,” said Tawtel.
Financial asset tracing is also a matter that needs to be improved within the CFO, said Tawtel, suggesting financial investigators and analysts, to find unknown assets, represent a “missing piece.”
A key asset that is practically untraceable at the moment is cryptocurrency, said Tawtel.
“Organized crime is using cryptocurrency, absolutely.”
Should Chen’s case go to trial without any sort of settlement, it would be a rare instance, as Tawtel said only 10 to15 forfeiture claims have done so in the past 15 years.
Most claims, said Tawtel, go unchallenged.
Over past 15 years the CFO has obtained approximately $114 million in forfeited assets. About half the money goes to crime prevention community grants while 35% goes to legal costs and 15% goes to CFO operations, said Tawtel.
With files from Richmond News