THE COMMISSIONER OF POLICE V WEI HC AK CIV-2010-040-5461

THE COMMISSIONER OF POLICE V WEI HC AK CIV-2010-040-5461 [18 February 2013]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2010-040-5461[2013] NZHC 227BETWEEN THE COMMISSIONER OF POLICEApplicantAND JIULIANG WEIFirst RespondenceAND DREAMLAND FINANCE LTDSecond RespondentAND XIANG ZHANGThird RespondentHearing: 11 February 2013Counsel: K E Hogan for ApplicantNo appearance for RespondentsJudgment: 18 February 2013RESERVED JUDGMENT OF MACKENZIE JIn accordance with r 11.5 I direct that the delivery time of this judgment is 11.30am on the 18th day of February 2013.Solicitors:Crown Solicitor, PO Box 2213, Auckland[1] The applicant seeks profit forfeiture orders under s 55 of the Criminal Proceeds (Recovery) Act 2009 (the Act). The respondents had initially taken steps, but were not represented at the hearing before me.[2] The profit forfeiture orders sought are in respect of the following property:(a) The contents of the following bank accounts belong to Jiuliang WEI and Lingli SUO:Account No: 01-0102-850823-48 $15,114.83Account No: 01-0102-850938-00 $658.63Account No: 12-3024-0630406-00 $9,516.00Account No: 12-3024-0630406-50 $99,122.54(Wei and Suo bank accounts)(b) The contents of the following bank account belonging to Min WEI and Li ZHAO:Account No: 12-3209-0321140-51 $339,184.92(Mr Wei's parents' bank account)(c) The contents of the following bank accounts belong to Dreamland Finance Limited:Account No: 12-3233-0175841-51 $52.96Account No: 12-3233-0175841-00 $28,502.90(Dreamland Finance Limited bank accounts)(d) The contents of the following bank account belonging to Dreamland Limited:Account No: 12-3209-0332931-00 $508.86(Dreamland Limited bank account)(e) The cash located at the offices of Dreamland Finance Limited, namely $61,431.90 (Dreamland Finance Limited cash)(f) 2009 Toyota Highlander motor vehicle, registration number BOSSV6 (Toyota Highlander)[3] This property has been the subject of a restraining order since September 2010. Some other property the subject of that order has been dealt with and no order is now sought for that remaining property. In particular, a settlement has been reached with Mr Zhang for forfeiture of a bank account in his name, being item (d) in paragraph 1(a)(i)(E) of the application dated 17 August 2010.[4] Section 55(1) of the Act provides:The High Court must make a profit forfeiture order if it is satisfied on the balance of probabilities that—(a) the respondent has unlawfully benefited from significant criminal activity within the relevant period of criminal activity; and(b) the respondent has interests in property.[5] The interpretation of that subsection is assisted by the definitions in s 6 of"significant criminal activity", in s 7 of "unlawfully benefited from significant criminal activity", and in s 5 of "interest" and "relevant period of criminal activity".[6] The significant criminal activity relied upon by the applicant was the subject of a trial in this Court before Toogood J in 2012.1 The investigation had been codenamed "Operation Acacia". It involved the importation of pseudoephedrine and methamphetamine, the manufacture and sale of methamphetamine and the laundering of drug proceeds. In sentencing the offenders, Toogood J gave the following overview of the offending.2Feng Chih Hsu, Henry Anthony Mika, Ka Kit Poon, Tavita Mareko, Phokham Bouavong, Aenoy Keophila and Thi Hong Lan Nguyen: you appear for sentence for offending arising from your involvement, in varying degrees, in what the Crown accurately describes as a well-organised crime syndicate dealing in the large scale distribution of pseudoephedrine and methamphetamine in New Zealand. Your apprehension resulted from an extensive Police investigation, involving both the interception of private communications by cellphone calls and text messages, and covert visual surveillance. The evidence which I heard during the six-week trial of those1 R v Hsu [2012] NZHC 931.2 At [1]-[4].of you who did not plead guilty established that the Police operation consumed extensive resources over a period of some nine to ten months.Some indication of the scale of the operation in which each of you was involved, albeit to varying degrees, can be obtained from the finding, at the time the surveillance was terminated, of a total of 5.2 kilograms of methamphetamine and 2.3 kilograms of pseudoephedrine. The drugs were estimated to have a total value, if sold as methamphetamine on the streets as was no doubt intended, of between $6 million and $7 million. The actual dealing offences of which you were convicted involved an estimated total of 1.76 kilograms of methamphetamine, having a street value of well over $1.5 million, and what is estimated to be several kilograms of pseudoephedrine.The money laundering transactions about which evidence was given at trial involved the transfer overseas of approximately $1 million.This was by any reference point a sophisticated, structured and large scale operation, involving the distribution of both pseudoephedrine (undoubtedly for the purpose of manufacturing methamphetamine) and methamphetamine itself, and the laundering of large sums of money derived from the dealing. The sophistication was apparent from the earnest but ultimately unsuccessful attempts to conceal the true nature of your communications with each other; the attempts to avoid observation by the Police when meeting; the use of several cellphones or SIM cards by one person; and the laundering of money.[7] It is not necessary for me to detail the charges faced by the offenders, or the sentences imposed. That brief description is sufficient to demonstrate that the offending constituted significant criminal activity in terms of s 6.[8] The next requirement is that the Crown must show all or any of the respondents have unlawfully benefited from that significant criminal activity within the relevant period. That is the period from 17 August 2003 to 17 August 2010, thelatter being the date on which the Commissioner's application for the originalrestraining order in this case was made.[9] The Commissioner must prove, on the balance of probabilities, that the respondent has knowingly, directly or indirectly, derived a benefit from that criminal activity, whether or not that respondent undertook or was involved in that activity.[10] Mr Wei is a Chinese national who first came to New Zealand in 2001 on a student visa. His partner is Lingli Suo. Mr Wei is the sole director and shareholder of Dreamland Limited and Dreamland Finance Limited. Mr Wei was not charged inthe Operation Acacia prosecutions. Mr Zhang is also a Chinese national. He faced charges in the investigation, but was acquitted.[11] The Crown case is that the respondents were involved in the money laundering aspect of the operation. The Commissioner relies principally upon the evidence of Detective Corby, in her affidavit sworn on 17 August 2010. Drug money was passed to Mr Zhang and laundered by him through various business and personal accounts related to Dreamland Finance Limited, a company managed by Mr Zhang on behalf of Mr Wei. It is clear from s 7, that it is not a necessary pre-condition of liability that either Mr Wei or Mr Zhang be convicted of any criminal offence in the money laundering activity. As I have said, neither was. The question is whether Mr Wei, either directly or through Dreamland Finance Limited, has knowingly derived a benefit from the criminal activity. Detective Corby's affidavit details the results of the investigation into the moneys through the various accounts. It is not necessary for me to set out that evidence in detail. It is sufficient to record my finding that the evidence satisfies me, on the balance of probabilities, that Mr Wei has unlawfully benefited from the criminal activity.[12] The value of the benefit is to be determined in accordance with s 53 of the Act which provides:(1) If the Commissioner proves, on the balance of probabilities, that the respondent has, in the relevant period of criminal activity, unlawfully benefited from significant criminal activity, the value of that benefit is presumed to be the value stated in—(a) the application under section 52(c); or(b) if the case requires, the amended application.(2) The presumption stated in subsection (1) may be rebutted by the respondent on the balance of probabilities.[13] The amended application dated 4 September 2012 states the sum of $1 million to be the value of the benefit. That amount is derived from the finding of Toogood J in sentencing, in particular at [3] of the sentencing notes set out above. That is accordingly presumed to be the value, unless rebutted by the respondents, on the balance of probabilities. There is no evidence to rebut that value.[14] The Commissioner must also prove, on the balance of probabilities, that Mr Wei has interests in the property. I deal with each item of property listed at [2].[15] For (a), Mr Wei's interest is apparent from the names in which the accounts were kept. Detective Corby's evidence of the operation of those accounts confirmsMr Wei's interest.[16] The accounts in (b) were in the name of Mr Wei's parents. The evidence ofDetective Gray in support of an application for orders for substituted service on Min Wei and Li Zhao confirms that they are the parents of Mr Wei. Inquiries showed that they had been in New Zealand but had left in February 2010. Detective Corby'sevidence establishes that Ms Suo had authority to operate on this account. Her evidence is that an examination of the statements shows nine cash deposits into the account totalling in excess of $381,000 and transfers from the account totalling in excess of $300,000 to an account of Dreamland Finance Limited. I am satisfied, on the balance of probabilities, that those payments constitute a part of the money laundering operation. They indicate a degree of control by Mr Wei and Ms Suo of the operation of the account. I am satisfied that the ability to operate the account constitutes a privilege in connection with the account sufficient to constitute an interest in terms of the definition in s 5 of the Act.[17] Items (c), (d), and (e) are bank accounts in the name of Dreamland Limited and Dreamland Finance Limited, and cash located at the offices of Dreamland Finance Limited. Mr Wei's position as sole director and shareholder of that company satisfies me, on the balance of probabilities, that Mr Wei has an interest in that property.[18] Item (f), the motor vehicle, is registered in the name of Mr Wei. Clearly he has an interest in that.[19] In the light of the evidence, I am satisfied, on the balance of probabilities, that Mr Wei has unlawfully benefited from significant criminal activity within the relevant period and that he has interests in all of the property.[20] The grounds for a profit forfeiture are made out and the Court must accordingly make a profit forfeiture order. There will be a profit forfeiture order as sought in the amended application dated 4 September 2012. The value of the benefit determined in accordance with s 53 is $1 million. The maximum recoverable amount is $1 million, less the value of the property forfeited by the settlement with Mr Zhang as described in [3] above. The property that is to be disposed of in accordance with s 83(1) is all the property described in [2] above."A D MacKenzie J"