Law Times

Law TiMes • May 12, 2014 Page 3 www.lawtimesnews.com Stay granted after government ordered to pay $4M to former Molson plant owner By shannon Kari For Law Times he government has ob- tained a temporary stay of an order requiring it to pay more than $4 mil- lion to the former owner of a now- infamous property in Barrie, Ont., that once housed one of the largest marijuana grow-ops ever discov- ered in Canada. e stay, issued earlier this month, follows notice filed by the Ministry of the Attorney General that it's seeking leave to appeal a decision issued April 24 by Supe- rior Court Justice Mary Vallee. e judge dismissed a motion brought by the province for a pres- ervation order on the property that once housed a Molson plant. She also ordered the federal seized property management directorate to turn over $4,067,685 to Fercan Developments Inc. and its owner, Vince DeRosa. "To date, no credible evidence of wrongdoing on Mr. DeRosa's part has been provided in a Ca- nadian court," wrote Vallee. "An order to preserve the prop- erty would offend the commu- nity's sense of fairness," she stated. In seeking the interim stay it obtained on May 2, the Crown argued in its materials filed with the court that this was an issue of "public importance" and that Val- lee had made a number of errors in her interpretation of the Civil Remedies Act. "e motion judge did not consider the definition of unlawful activity in its entirety," the Crown stated in written argu- ments seeking the stay. e stay and potential appeal of the Superior Court decision are the latest chapters in lengthy legal proceedings where both the fed- eral and provincial governments have been trying to prevent DeR- osa from receiving the proceeds from the sale of the property. Brian Greenspan, who repre- sents Fercan, describes the mul- tiple proceedings as a "shocking exercise" of the use of government resources against his client. DeRosa purchased the prop- erty at the heart of the case in 2001 for $8 million. A few years later, police discovered a well-con- cealed grow-op within the prop- erty. Seven people were arrested and later convicted in the high- profile criminal prosecution, in- cluding one of DeRosa's brothers. Authorities never charged DeRosa or Fercan criminally. But the federal Crown brought an ap- plication under the Controlled Drugs and Substances Act to for- feit the funds from the sale of the property. Ontario Court Justice Peter West, following a seven- week hearing, ruled last fall there was no evidence DeRosa had knowledge of the illegal activities in the building and dismissed the forfeiture application. e federal Crown didn't appeal. Instead, the Ontario Ministry of the Attorney General initiated a motion under the pro- vincial Civil Remedies Act seek- ing a preservation order pending its own forfeiture application. Greenspan and William Fried- man, also a lawyer for DeRosa, argued the province's motion was barred by issue estoppel and was an abuse of process. "Both levels of government made use of the same Ontario Provincial Police investigation. ey filed the same affidavit as a basis for the proceed- ing," says Friedman of Friedman & Associates in Toronto. "It was incestuous," he adds. Crown attorneys James McK- eachie and Lisa Will noted the province hadn't participated in the application before West. As well, they argued the province shouldn't be deprived of its rights under the Civil Remedies Act simply because the federal Crown was unsuccessful. Vallee concluded the federal and provincial Crowns "are sepa- rate entities and not privies," and so the condition for issue estop- pel wasn't met. Since the provin- cial Crown was also alleging an ethanol company publicly traded in the United States had used the property for illegal activity, there was no abuse of process. Following the police grow-op raid in 2004, Northern Ethanol Inc. began leasing space in the building. e company's head of- fice in Toronto was listed at the same address as Fercan's. As well, companies linked to DeRosa owned shares in Northern Etha- nol, the court heard. In 2010, Canadian stockbroker George Georgiou was convicted in the United States and sentenced to 25 years in prison for manipu- lating the stocks of four compa- nies, including Northern Ethanol. e provincial Crowns argued DeRosa had benefited from the stock manipulation, a suggestion Vallee rejected. "To say that this occurred is speculation at best," she concluded. U.S. prosecutors never charged DeRosa and while he was implicated by Georgiou in his tes- timony, the trial judge in that case said he was "awestruck" by the per- jury of the stockbroker. Greenspan argued in the Supe- rior Court hearing that Northern Ethanol wasn't a sham company and noted its board of directors had previously included Ontario MPP Frank Klees. "e facts they [the Crown] advanced were un- supportable," Greenspan tells Law Times. He adds that the allegation the property was used as the basis for a stock fraud was first brought forward "on the eve" of the preser- vation order hearing. A hearing before a single judge of the Divisional Court has been set for June 13 to determine whether the province will get leave to appeal Vallee's ruling. If it obtains leave, the abuse of process and issue estoppel ar- guments "will be revisited," says Greenspan. LT NEWS Monday June 2, 2014 Shaarei Shomayim Synagogue • 470 Glencairn Ave.,Toronto Registration & Breakfast: 7:30 am • Program: 8:00 am – 12:00 noon • Cost $100 To register, please contact Anita Bromberg at: 416-633-6224 x130 • abromberg@bnaibrith.ca …is program can be applied towards the annual continuing professional development hours required by the Law Society of Upper Canada Jordan Atin Atin Professional Corporation Blair Henry Ethicist, Sunnybrook Health Sciences Centre Ian Hull Hull & Hull LLP Gary Hodder Hodder Barristers Harry Underwood Polley Faith LLP Rabbi Mordechai Torczyner Rosh Kollel, YU Kollel, Toronto Debra Stephens Goddard Gamage Stephens LLP Marshall Swadron Swadron Associates Judith Wahl Advocacy Centre for the Elderly Kimberly A. Whaley Whaley Estate Litigation Albert H. Oosterhoff Western University Faculty of Law Craig Vander Zee, Torkin Manes LLP Charles B. Wagner Wagner Sidlofsky LLP Chair, Trust & Estates Group CLE for Lawyers & Accountants Rasouli - Doctors' Powers & Patients' Rights PRESENTERS Sponsored by: B'nai Brith Canada, Bank of Nova Scotia Trust Company, Hull & Hull LLP, Wagner Sidlofsky LLP, Whaley Estate Litigation, and The Jewish Tribune WagnerSidlofsky LLP WagnerSidlofsky_LT_May5_14.indd 1 14-04-29 1:19 PM Brian Greenspan describes the multiple proceedings as a 'shocking exercise' of the use of government resources against his client. T

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