R. v. Lazeo

2000 BCCA 551 Citation: R. v. Lazeo Date: 20001011 2000 BCCA 551 Docket: CA025558 Registry: Vancouver

COURT OF APPEAL FOR BRITISH COLUMBIA

ORAL REASONS FOR JUDGMENT Before: The Honourable Mr. Justice Lambert October 11, 2000 The Honourable Mr. Justice Braidwood The Honourable Madam Justice Saunders Victoria, B.C. BETWEEN:

REGINA

RESPONDENT AND:

GARY LAZEO

APPELLANT Jeffrey Green appearing for the Appellant S. David Frankel, Q.C. appearing for the Federal Crown Respondent [1] BRAIDWOOD, J.A.: This is an appeal against sentence. Based on an agreed statement of facts the appellant was convicted of the 10 counts on which he was charged. Counts 1, 2, 4, 6, 8 and 10 charged the accused with committing offences contrary to the Proceeds of Crime (Money Laundering) Act, S.C. 1991, Ch.

26. That statute and the regulations made thereunder require persons engaged in the business of currency exchanges, as the accused was here, to keep certain records of transactions. The Act provides that upon conviction by indictment the accused is liable to a fine not exceeding $500,000, or to imprisonment for a term not exceeding 5 years, or both. There is no appeal taken from the sentence rendered on these counts. [2] In his reasons, the learned trial judge wrote: The object of that statute ... under Section 1 is as follows: The object of this Act is to establish record keeping requirements in the financial field in order to facilitate the investigation and prosecution of offences under subsection 462.31(1) of the Criminal Code, subsections 44.3(1) and 50.3(1) of the Food and Drugs Act and subsection 19.2(1) of the Narcotic Control Act. [3] With reference to Counts 3, 5, 7 & 9, the trial judge wrote as follows: In this case, the police utilized the investigative tools provided by the Act to determine if, in fact, the accused were - - or at least were prepared to become involved in an offence or offences under that Section 19.2 of the Narcotic Control Act, and that proved to be the case and gave rise to the charges. Counts 3, 5, 7 and 9, charge the accused with committing offences contrary to Section 19.2 of the Narcotic Control Act, which section, in brief, makes it an

offence to deal with property or proceeds of property derived, directly or indirectly from offences, obtained or derived directly or indirectly from certain offences committed under the Act. For contravention of Section 19.2 of the Act provides that an accused is liable to imprisonment for a term not exceeding ten years. (My emphasis.) [4] It is conceded that the learned trial judge fell into error when he indicated that the offences that contravened s. 19.2 of the Narcotic Control Act were liable to imprisonment for a term not exceeding 10 years. The offences were charged as an attempt to commit the crimes set forth in s.19.2 and in such circumstances the maximum penalty is 5 years incarceration. [5] The learned trial judge also wrote as follows: As to specific deterrence, Mr. Lazeo, has one other relevant conviction in my view, a conviction for theft over $5000. He was convicted of that offence and sentenced to six months imprisonment. Defence counsel has advised that that sentence has been served but the conviction is under appeal. However, the facts of the case indicate that it was a similar situation to that here in the sense that Mr. Lazeo was prepared to break the law for the purposes of his own financial gain. However, that conviction was set aside by this court and an acquittal entered on September 13, 2000: see R. v. Lazeo 2000 BCCA 483. [6] Because of this error and

change of circumstance, it is now open to this Court to assess the matter and arrive at the correct sentence, giving full consideration to the learned trial judge's views. Crown counsel argues that the sentence imposed, namely, a sentence of 27 months concurrent on each of the money laundering charges and 6 months concurrent on each of the regulatory charges, being an overall sentence of 27 months, is fit in all the circumstances or, in the alternative, even if the term of 27 months was reduced, it was appropriate that incarceration be ordered. The appellant contends that a sentence of less than 2 years is appropriate, to be served as a conditional sentence. [7] The facts and circumstances are fully set out in the reasons for judgment of the learned trial judge and are found at 1998 B.C.J. No. 3172 (Q.L.). The appeal from conviction was dismissed, see R. v. Lazeo 2000 BCCA 192, 2000 BCJ No. 816 (Q.L.). An application for leave to appeal to the Supreme Court of Canada was dismissed on September 21, 2000 ([2000] S.C.J. No. 222 (QL)). I assume that an interested reader will review the reasons for judgment of the learned trial judge and, accordingly, only the briefest summary of the facts will be mentioned now. Circumstances of the Offences [8] On January 21, 1994, an undercover officer went to the premises of Au Canada Monetary Exchange Inc. and purchased $5,000 (U.S.) for $5,949

(Canadian). The appellant did not, as required by the regulations, ask the officer for identification or, in the alternative, to complete a client application form. During this transaction the appellant stated that he could exchange as much money as the officer wanted. This transaction is the basis for Count 1. [9] On February 4, 1994, the officer met the appellant on two occasions, and purchased a total of $11,000 (U.S.) for $14,960 (Canadian). These transactions are the basis for Count 2. [10] From late February until early April of 1994 the appellant met with undercover officers several times. Over this period they exchanged approximately $290,000 (Canadian) for $204,000 (U.S.). Some of this money in American funds was obtained by the appellant by converting money provided by the officers at currency exchanges in Vancouver. These transactions are the basis for Counts 3 to 10. [11] As a fee the appellant charged approximately 0.05 percent on top of the usual exchange rate (e.g. if the actual rate charged by another exchange was 1.365, the appellant charged the officers 1.415). [12] Based on documents recovered from Au Canada Monetary Exchange Inc. and one of the Vancouver currency exchanges with which the appellant dealt, it appears that the appellant made a profit of $9,295 (Canadian) from his dealings with the undercover officers. [13] Some of the evidence that relates to

the money laundering charges is as follows: ... Constable Majcher told Mr. Lazeo "You know, we have no problem in getting the dope up here or the money down South. Our problem is getting U.S. cash". ... ... Lazeo said, "do you know ecstasy?" Majcher replied, "That's kiddie shit, we are not into chemicals, it just causes problems ... we only deal in coke." ... Lazeo recommended to Majcher, "what you want to do is get your money into something legitimate." ... Mr. Lazeo then said, "I really want your money and your business, but I just wish I didn't know". [14] The learned trial judge wrote as follows concerning the above: The evidence in this case, in my opinion, clearly establishes that Mr. Lazeo was prepared and only too willing to facilitate the efforts of what he - - I find, truly believed to be persons involved in a narcotics trade, to obtain U.S. currency so as to enable them to acquire additional narcotics to continue their illicit drug trade activities. He was prepared to engage in such activities purely for financial gain and partly at least since, as his counsel stated in submissions, he was in dire, if not desperate financial straits and hence was prepared to commit the criminal acts he did to help alleviate his financial distress. Of the principles of sentencing to which the court must have regard in determining an appropriate sentence in this case, I consider that

emphasis must be given to those of specific and general deterrence. [15] The appellant has no Canadian criminal record but on July 9, 1984 he was convicted in England on a charge of possession of a controlled substance with intent to supply and sentenced to 15 months imprisonment. In sentencing, the learned trial judge emphasized the need for general deterrence and in this regard wrote as follows: As to general deterrence, it is important to emphasize that principle so that others engaged in similar currency exchange businesses, should be made to realize that they cannot engage in activities such as those involved in this case without being liable for substantial penal consequences. Defence counsel has submitted that the principles I have emphasized can be achieved by the imposition of a conditional sentence in this case, and cites several cases which I have considered in support of that proposition. With respect the gravity of the offences committed in this case are such, in my opinion, that a conditional sentence would not meet the requirement of general deterrence. I consider that a sentence of less than two years a prerequisite to the imposition of a conditional sentence is inappropriate in the circumstances of this case. [16] There are few cases that have been decided to guide the court as to the appropriate range of sentencing. In R. v. Tejani (1999), 138 C.C.C. (3d) 366

(Ont. C.A.), the offender, a currency exchange dealer, was given $100,000 (Canadian) by a police agent to convert into American funds. He indicated his fee would be $1,000. However, he was arrested before he completed the conversion. At his first trial he was convicted but a new trial was ordered on appeal. Following his conviction at the second trial he was sentenced to 2 years imprisonment and ordered to pay a fine of $20,000 (in default 8 months). At the time of the trial the accused was 50 years old and had no criminal record. [17] Although Laskin J.A. allowed this sentence appeal and imposed a conditional sentence along with the $20,000 fine, His Lordship recognized the need to deter this type of conduct. He wrote: [52] Ordinarily, a money laundering offence will attract a custodial sentence for the very reasons emphasized by the trial judge. In this case, however, I think the interests of justice will be served by substituting a conditional sentence of two years less a day for the two-year jail term. The appellant has been on bail and thus had his liberty restricted for virtually this entire decade; he has not breached any of his bail conditions; he was convicted only of an attempt; his profit on the single transaction would have been only $1,000; and except for this offence, he has no record. (My emphasis.) This case is not as serious as the case before the court. There

was one transaction; it was not completed; and there was considerable delay before the final judicial determination was reached. [18] R. v. Loewen (1999), 134 Man. R. (2d) 234 (C.A.) involved an undercover operation also. The offender assisted one Seman in converting Canadian currency provided by the officers into American funds. There were two transactions; the first involved $25,000 (Canadian), the second $125,000. Seman charged $7,500, while Loewen received $1,500. Loewen was 40 years old, married, with 4 children, and had no criminal record. The trial judge imposed a 2 year sentence, which was upheld by a majority of 2:1 in the appellate court. In affirming this sentence, Helper J.A. stated: [39] Huband J.A. [dissenting], pointed out in his reasons that the trial judge was correct in stating that the main consideration on the sentencing for this offence was general deterrence. I agree with his view that a sentence of two years is within the appropriate range for money laundering offences. The trial judge considered counsel's submission that an intermittent or conditional sentence would be appropriate and rejected that submission. She considered all the mitigating and aggravating factors of the case, the fact that this was an attempt offence, that the sentence should reflect an appropriate reduction from the maximum penalty of five years, and determined that two years was

the appropriate sentence on each count. She ordered those sentences to be served concurrently. [40] In R. v. Shropshire, [1995] 4 S.C.R. 227; 188 N.R. 284; 65 B.C.A.C. 37; 106 W.A.C. 37, the Supreme Court of Canada set out the standard for appellate review on sentences. The sentence in this case was fit for this offence and this offender, both in its length and in the manner in which it is to be served. Appellate intervention is not warranted. I would therefore confirm the sentence imposed. [19] In R. v. Pavao (1995), 102 Man. R. (2d) 210 (C.A.), the offender pleaded guilty to money laundering. His brother was a cocaine dealer who had fled to Portugal. Pavao entered into certain transactions to assist his brother, that is, he took $80,000 in drug money and purchased $39,000 in money orders from several banks. He was not intending to profit from helping his brother. A sentence of 30 months was imposed at trial, which was reduced to 20 months on appeal. Huband J.A. stated: [15] While the circumstances are far different from the present case, the point is forcefully made that the major concern in imposing sentence is to deter others in the community who might be tempted to participate in this less tainted aspect of the drug trade. [20] Although the learned sentencing judge made an error when he stated that the maximum sentence was 10 years rather than 5, nonetheless, as was

explained by counsel for the appellant, the fact that the charges were framed as attempted charges rather than the commission of the actual crime was by reason of the unusual circumstance that the monies in question were not in fact monies from dealing in drugs, rather, the funds belonged to the R.C.M.P. This, we were told, meant that only the crime of attempt could be properly charged and a conviction entered. On this basis, the culpability would be no different than the charge of attempt to the actual commission of the offence and accordingly I would not interfere with the sentence on this ground. [21] However, I cannot be sure that the circumstance involving a consideration of a conviction for theft would not have influenced the learned trial judge and, accordingly, I am of the opinion that an appropriate sentence should be 2 years less 1 day. [22] The next consideration then is whether or not it would be appropriate that such a term be served as a conditional sentence. I am of the opinion that the circumstances of this offence are exceedingly grave and that general deterrence and denunciation are the paramount principles to be considered in rendering the appropriate sentence in the circumstances of this case. Money laundering is an essential feature of dealing with major drugs and the sums involved here clearly indicate this appellant believed that the persons with whom he

dealt were dealing in drugs in a most significant way. [23] In the well known case of R. v. Proulx (2000), 140 C.C.C. (3d) 449 (S.C.C.), under the summary section the following appears at 502: ... Where objectives such as denunciation and deterrence are particularly pressing, incarceration will generally be the preferable sanction. Similar comments were made by my colleague Mr. Justice Lambert in the case of R. v. Su, 2000 BCCA 480. [24] Accordingly, I would grant leave to appeal sentence and direct that a period of incarceration for 2 years less 1 day is appropriate in this case. [25] LAMBERT J.A.: I agree. [26] SAUNDERS J.A.: I agree. [27] LAMBERT J.A.: The application for leave to appeal is granted. The appeal is allowed, with the sentences reduced from 27 months to 24 months less 1 day to be served unconditionally in incarceration. "The Honourable Mr. Justice Braidwood"