The British Columbia government has filed the first-ever application to secure an unexplained wealth order in Canada, the province’s solicitor general said, calling the orders a “powerful tool” to clamp down on the proceeds of criminal activity.
Mike Farnworth, who is also the public safety minister, said the application filed in B.C. Supreme Court on Wednesday marks the start of a series of similar claims.
In a statement, he said the applications put those engaging in illegal activity “on notice” that they will have to explain the origins of their wealth.
In its first application, B.C. is seeking a court order to force a couple to explain how they purchased a property on Salt Spring Island in 2017. A civil claim filed last August shows the province also wants them to forfeit the property.
The BC Assessment website lists a property with the same address as the one identified in B.C.’s claim as being worth just over $1.8-million as of July 2022.
A three-bedroom house built in 2004 is located on a 41,277-square-metre lot, about 10 acres, it says.
A company called The Agency, which bills itself as a “global, boutique real estate brokerage” has posted photos online of a property with the same address. They show a cottage-like home with two storeys and wooden siding in a forested area.
A street-view search for the Salt Spring Island property on Google Maps shows a sign reading “Lost & Found” at the end of a tree-lined, gravel driveway.
In a listing of lodgings on the island, the website Tripadvisor includes a property called “Lost & Found Guest House” with the same address identified in B.C.’s claim.
Wednesday’s application for an unexplained wealth order is part of a lawsuit filed on behalf of B.C.’s director of civil forfeiture last August.
The claim says the two named defendants used money obtained though an international scheme involving securities fraud to buy the property.
B.C.’s claims have not been tested in court and the defendants have not filed a response to the lawsuit dated Aug. 25, 2023.
The B.C. government “will not tolerate criminals prospering in our communities,” and it will pursue illegally acquired properties, luxury vehicles, money laundering schemes and businesses operating as fronts, Farnworth said in his statement.
The minister said amendments to the Civil Forfeiture Act earlier this year allow the province to pursue “ill-gotten gains more efficiently” and compel people to explain how they acquired their wealth when there are suspicions about criminal activity.
He said B.C. will take forfeited assets obtained through unexplained wealth orders and redirect them to community safety and crime-prevention initiatives.
That will help “repair the damage done by those who think that they can profit from crimes and illegal enterprises in British Columbia,” Farnworth said.
A hearing is expected on Jan. 11, 2024, the provincial statement said.
The lawsuit filed in August names two defendants, Alicia Davenport, also known as Alicia Lee, and Geordie Lee, also known as Skye Lee, and says they are spouses.
It says they profited from an “unlawful scheme” that generated US$165-million from 2015 to 2018, according to the U.S. Securities and Exchange Commission.
The men at the heart of the scheme have each pleaded guilty in the United States to securities fraud and conspiracy to commit securities fraud, the lawsuit says.
The two men operated a Swiss asset manager referred to as the “Silverton Platform,” using it to assist shareholders of publicly traded companies in “disguising beneficial ownership of those shares and evading securities laws,” it says.
One of those men controlled various “shell corporations” that transferred proceeds to shareholders, including Davenport, the claim says.
And one of those shell corporations transferred $1.15-million to a law firm with an address in West Vancouver, B.C., for a “purported loan” to Geordie Lee, it says.
The wire transfers stemmed from proceeds of the scheme, it says.
On a form transferring ownership of the property to Davenport, the province’s claim says she listed her occupation as “home maker.”
The stated amount of the cash transaction was $1-million, it says.
“Any income lawfully obtained by A. Davenport and G. Lee was insufficient for the purpose of enabling the defendants to acquire or maintain (the property),” it says.
The claim says the defendants have used the property to commit offences contrary to the U.S. Securities Act, the U.S. Exchange Act, and the B.C. Securities Act.
Offences under the Criminal Code of Canada include laundering the proceeds of crime and committing fraud over $5,000, the claim says.
The lawsuit asks the court for an unexplained wealth order that would require the defendants to provide details about their acquisition of the property and orders that they forfeit the property and its proceeds to the B.C. government.
It also seeks an order for the defendants to pay the province’s costs for the lawsuit.