Forfeiture case an `abuse of process,' alleged stock fraudster says in defence
In response to B.C.'s demand to explain the source of millions sitting in a Vancouver lawyer's trust account, a U.K. citizen has denied any wrongdoing and called the forfeiture action an abuse of process.
The province is attempting to use a so-called unexplained wealth order to help prosecute a civil case in which it wants $4.5 million in the trust account of recently disbarred lawyer Ronald Norman Pelletier forfeited as the proceeds of crime. The province alleges the money is profit from a $78-million pump-and-dump stock fraud and was laundered through the trust account.
The allegations have not been proven in court.
The unexplained wealth orders were part of a package of new laws introduced by the B.C. NDP government in 2023 to combat money laundering and other financial crimes. If successful in court, the orders put reverse onus on the alleged perpetrator to explain where money came from to buy their assets in cases where there is a suspicion of criminal activity or corruption.
This unexplained wealth order case is the second filed by the province.
In a response filed in B.C. Supreme Court this month, Kevin Patrick Miller, 54, whose last known location was Malta, denies he took part in the alleged fraud, profited from it or transferred any profits to the Vancouver lawyer's
trust fund. He added there is no direct connection between the funds in Pelletier's trust account and the alleged unlawful activity.
In 2017, Miller reached a settlement with the U.S. Securities and Exchange Commission and agreed to pay back US$900,000 that includes interest without denying or admitting allegations he participated in and profited from the alleged stock fraud. In his B.C. court filing, Miller said the province cannot circumvent the final judgment of the SEC by trying him in a different court for the same allegations that were already settled.
“(It) constitutes a collateral attack and/or an abuse of process on the final judgment of the SEC, and therefore should be dismissed,” stated Miller's response.
Under the B.C. law, the unexplained wealth orders must be applied for in each case through the courts and meet certain tests. If successful, the information from the orders can be used to pursue civil forfeiture cases where the province aims to seize assets or money. The orders have met criticism, including from the B.C. Civil Liberties Association, which argued these types of measures undermine constitutional rights, have not been adequately tested, and would be expensive to implement.
In this unexplained wealth order case involving Miller, the director of civil forfeiture noted that multiple individuals had been successfully prosecuted by the SEC in the pump-and-dump fraud case involving the stock of Jammin' Java, a company that operates as Marley Coffee and uses trademarks of late reggae artist Bob Marley to sell coffee products.
In pump-and-dump schemes, the perpetrators conceal their control of shares in low-priced stocks — sometimes called penny stocks — and artificially inflate the price with promotions, unload the shares on unsuspecting retail investors and pocket the profits.
The SEC determined that Miller participated in the stock fraud as a beneficial owner of at least two shell companies, one incorporated in the Marshall Islands and another in Panama, according to B.C.'s forfeiture suit.
B.C.'s civil forfeiture office has argued that Miller should not get the money in the trust account because the funds are, on a balance of probabilities, proceeds of the securities fraud alleged by the SEC.