Law Times

lAw Times • April 26, 2010 NEWS PAGE 3 BY JULIUS MELNITZER For Law Times merican offi cials are proceeding with an ex- tradition matter despite the fact that Canadian authori- ties have withdrawn parallel fraud charges here in a case that threatens to upset the cosy tradition of informal police in- formation exchanges in cross- border criminal cases. Th e case also appears to be A the fi rst extradition matter in which a court has actually or- dered disclosure of information and cross-examination on issues related to an alleged Charter of It doesn't make sense that search warrants executed in respect of Canadian offences, as was the case here, aren't subject to judicial supervision. Rights and Freedoms breach. While the law is fairly clear that such disclosure is available, the requirement that the Charter claim have an "air of reality" appears to have been fatal to the substantive grant of such an order in previous cases. Th e matter dates back to May 2007, when U.S. authori- ties sent a letter to Canadian offi cials requesting assistance in obtaining telephone and In- ternet records to determine the identities of the alleged perpe- trators of an online fraud seek- ing to have several large Ameri- can retailers divert payments to suppliers to phoney bank accounts. In June 2007, acting under the authority of the Mutual Le- gal Assistance in Criminal Mat- ters Act, the Ontario Superior Court issued an order to gather the records requested. Toronto police Det. Carmine Palermo duly collected them. In September 2007, Cana- police charged brothers dian George and Marc Fafalios with fraud over $5,000, possession of property obtained by crime, and theft of telecommunica- tions services. "Th e police threw big num- bers around but so far they've managed to point to only one unsuccessful attempt to redirect a [US]$379,000 receivable," says Richard Shekter of Toron- to's Shekter Dychtenberg LLP, who represents George. At the time of the arrest, po- lice executed search warrants on the Fafalios' homes, cars, and offi ces. Among the items seized were a laptop computer A controversial subject touching on international trade policy, competition law and intellectual property rights This unique and comprehensive tool for identifying and litigating parallel import cases uses an unbiased, multi-disciplinary approach to exploring the tensions, issues and arguments. Use it to negotiate the boundaries of intellectual property, competition and international trade law. Parallel Importation incorporates both practical and theoretical perspectives. Key cases are summarized and discussed with reference to relevant legislation from Canada, the United States and the European Union. Expand your clients' opportunities with the only resource that deals with parallel importation from a Canadian perspective. ORDER your copy today Hardbound • 210 pp • February 2010 • $95 P/C 0177010000 • ISBN 978-0-88804-492-1 This often murky area of law is addressed with reference to law, economics and business to provide a clear, incisive analysis. and a hard drive. Shortly thereafter, U.S. au- thorities identifi ed the Fafalios brothers as the alleged perpetra- tors of the fraud and requested that Toronto police turn the evidence seized over to them. In his affi davit in the extradition proceedings, Palermo said the federal Department of Justice authorized Toronto police to share copies of some of the evi- dence "through an established informal information-sharing process." Palermo forwarded the evi- dence. But after speaking to counsel, he realized he had erred in not obtaining an "order to send" under the provisions of the mutual legal assistance act from the court, according to a recent ruling. He then request- ed that U.S. offi cials return the records but not the items seized under the search warrants. Th ey did send the records back in February 2008, after which the Crown applied for and received a sending order for them. In May, prosecutors with- drew the Canadian charges. Th is did nothing to deter the Americans, who sent a letter requesting supplementary as- sistance in the form of original equipment, digital evidence, and law enforcement records related to charges to be laid south of the border. Th ey also made an extradition request. As a concession for the withdrawal of the Canadian charges, Shekter agreed to al- low Palermo to send the items The search warrants used to investigate the Canadian mat- ter should be subject to judi- cial supervision, says Joseph Kappy. seized from his client under the search warrant. U.S. authorities based their request for extradition on evi- dence obtained both in Canada and their own country. Shek- ter and Joseph Kappy, counsel for Marc, sought to exclude the Canadian evidence on the basis of Charter violations. To that end, they sought the pro- duction of materials relevant to their argument and leave to cross-examine Palermo. Shekter and Kappy submit- ted that the Charter argument had the necessary air of real- ity because the search-warrant items were sent to the United States without proper judicial authorization, resulting in an illegal search and seizure that tainted subsequent orders pur- porting to validate the process. As well, they claimed the com- puter and laptop were illegally taken after authorities with- drew the Canadian charges and that, in any event, the evidence should be quashed because the letter from Shekter on behalf of George allowing Palermo to send the items across the border didn't bind Marc. At the same time, they argued the broth- ers were in jeopardy so grave that it shocked the conscience and breached the Charter, par- ticularly since U.S. counsel had noted they could face impris- onment for up to 212 years for allegedly attempting to commit an approximately US$379,000 fraud. As Ontario Superior Court Justice Nancy Backhouse saw it, the Fafalios were entitled to full disclosure of the surround- ing circumstances of what was sent, when it was sent, and un- der what authority. "Th e [Crown's] failure to particularize raises an infer- ence that full disclosure would have revealed inappropriate actions," Backhouse wrote ear- lier this month. "Accordingly, there is more than an air of reality to the Charter issues raised, other than the issue with respect to sentence." At the same time, as Palermo was central to both the Canadi- an charges and the U.S. request for assistance, granting leave to cross-examine him was "neces- sary for a proper determination to be made of the Charter issues and any appropriate remedy." At press time, the parties couldn't agree on the particu- lars of disclosure. "We're going back to court because we have a four-page list of things that we want," Shek- ter says. "And once we confi rm the list, we will explore the pro- cess under which the informa- tion was transferred, and that's important because the case could well turn on the extent to which Canadian authorities can, without judicial approval, provide their American coun- terparts with domestically gath- ered evidence." However, s. 3(2) of the mu- tual legal assistance act may be a signifi cant obstacle to the suc- cess of the defence argument. Th e section contemplates infor- mal cross-border co-operation, and Justice Canada counsel Richard Kramer of Toronto will possibly argue it obviates the need to slavishly follow the specifi c procedures in the act. But Shekter relies on the of rule interpretation that states that the specifi c over- rides the general. "It doesn't make sense that search warrants executed in re- spect of Canadian off ences, as was the case here, aren't subject to judicial supervision," he says. Kappy, meanwhile, believes quashing the Canadian evi- dence would end the matter. "Not only will the extradition application fail, but the U.S. au- thorities will have no evidence upon which to base a prosecu- tion in the U.S.," he says. Justice Canada wouldn't comment on the case. LT Parallel Importation For a 30-day, no-risk evaluation call: 1.800.565.6967 LT0426 Canada Law Book is a Division of The Cartwright Group Ltd. Prices subject to change without notice, to applicable taxes and shipping & handling. MacGillivray_Parallel Importation (LT 1-3x4).indd 1 www.lawtimesnews.com 4/21/10 8:41:59 AM Rose Ann MacGillivray Extradition case threatens information sharing between Canadian and U .S . law enforcement

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