In an unprecedented court application, the B.C government is seeking an unexplained wealth order for funds held in the trust account of recently disbarred lawyer Ronald Pelletier.
The B.C. Director of Civil Forfeiture Phil Tawtel filed a notice of claim on Dec. 14 for the forfeiture of over $3 million held in trust by Pelletier in favour of Kevin Miller, a man who neither admitted nor denied his role in a US$78 million pump-and-dump fraud scheme, in a settlement agreement with the SEC, in October 2017.
The dollar amount in question is approximately $3.5 million, depending on exchange rates and the actual amount of American dollars. Miller filed a claim for the funds last year against the Law Society of B.C., which has frozen the account.
Now, the provincial government, by way of the director, wants the money forfeited, claiming there’s reasonable grounds to believe the money is derived from the unlawful activity of stock market manipulation. Those activites occurred in the U.S. but would also be considered illegal under the B.C. Securities Act and the Criminal Code of Canada.
The director has also sought an order to compel Miller to provide, among other things, details on how the the “Miller Funds” were acquired and maintained.
The director asserts the funds are proceeds of crime. According to the order application, Miller sent the money to Pelletier through shell companies in the Marshall Islands and Panama.
As one of the first unexplained wealth order applications in B.C. history, the director asserts they have “reasonable grounds to suspect” Miller gained the funds via unlawful activity — a key matter the judge must agree on in order to grant the application.
The director’s application argues via case law that the standard of proof for “reason to believe” is more than “mere suspicion” but “less than the standard applicable in civil matters of proof on the balance of probabilities.”
Miller’s last known address is in Malta and the director has filed an application to serve Miller via his B.C. lawyers who represent him in his claim against the society.
Miller was found liable in a civil case brought against him by the U.S. Securities and Exchange Commission.
The scheme, according to the SEC, saw a man named Wayne Weaver and other conspirators conceal shares in offshore shell corporations in blocks of less than five per cent, to avoid reporting requirements. False newsletters about Jammin Java and a sham financing arrangement designed to create the false appearance of legitimate third-party interest and investment in the company allowed the group to “pump” the stock value before dumping shares via fraudulent and misleading filings with the SEC.
The society found Pelletier had deposited about $31 million in both Canadian and U.S. dollars into his trust accounts on behalf of his clients. That included Miller, who the society knew was being investigated for fraud.
Last month Pelletier was disbarred by a society panel. The decision found Pelletier had gone to “great lengths to protect his clients and their illegal money.”
Pelletier’s disbarment represents the first time a B.C. lawyer has been disciplined for money laundering, the panel said. In handing down its ruling, the panel stated Pelletier “utterly abandoned any pretense of acting ethically” and “actively enabled his clients to benefit from their crimes.”
In one example of his misconduct, the panel determined he had bought 20 burner phones over 18 months because he feared U.S. authorities might tap his other phone lines.
Pelletier also used anonymous email addresses and nicknames to evade being found out by authorities. In 2016, he directed his office manager to alter invoices to erase a client's name, the panel determined.
