Two Kelowna properties seized as part of international money laundering scheme
Two Kelowna properties seized as part of an international investigation into a multi-million dollar insider trading scheme that involves money laundering, shell companies, a Swiss banker and a known fraudster, will remain in the hands of the province.
In a Dec. 11, 2020 B.C. Supreme Court decision, the defendants in the case failed to get their hands on the $1.3 million the province made after it seized the two properties in 2019 and then sold them.
The properties in question are at 1214 Mission Ridge Road, Kelowna, and 403-5259 Big White Road, and had previously been purchased in cash for a combined total of $2.1 million, as part of an extremely complex US$165 million insider trading scheme.
In the decision, the Justice highlights several times how highly complicated the fraudulent scheme is.
The decision says an international investigation was launched in 2017 into a man called Roger Knox who operated a Swiss asset management firm known as the Silverton Platform. The Silverton Platform allowed shareholders in publicly-traded companies to hide share ownership and illegally sell shares while evading securities laws. It’s estimated the Silverton Platform generated US$165 million between 2015 and 2018.
“The investigation is extremely complicated in light of the many tentacles of the scheme reaching across international boundaries,” Justice Kathleen Ker said in the decision. "Tracing the transfer of proceeds of the alleged unlawful scheme is complicated by the global scope of the enterprise that includes an asset manager based in Switzerland, shell corporations around the world, and virtual financial firms operating like private banks being used to wire funds away from the asset manager to bank accounts held elsewhere.”
In Kelowna, the case involves Benjamin Thomas Kirk, and his spouse Kayley Tyne Johnson, along with Mexican businessman Carlos Gomez Brana.
Brana, who is a Mexican national with no ties to B.C., used a company he registered in Hong Kong to purchase the two properties and then hired Kirk and Johnson to manage them.
Kirk, Johnson, Brana, and his company Cuatro Cienagas Inversiones are all defendants in the case.
The decision says that Kirk, Johnson, and Brana, were beneficiaries of the extremely complicated "pump-and-dump" insider trading scheme.
While an international investigation is underway and multiple people have been charged and some have pleaded guilty, none of the defendants in this case are facing criminal charges in Canada and the three deny any involvement in the scheme.
However, the Justice says the province does not have to prove that the money used to buy the properties was part of the fraudulent scheme only that there is sufficient evidence that could support that claim.
And the Justice called the transactions "highly suspect” and points towards a multitude of other factors.
The decision says Kirk is a "known fraud artist" who was previously fined $100,000 in Alberta and ordered to cease trading. He has also been charged by the United States Securities and Exchange Commission.
The decision says Brana, through his company, transferred money to Kirk and Johnson, who bought the properties paying $1.6 million in cash for the Mission Ridge Road and $524,000 in cash for the home at Big White.
The defendants argue the evidence is purely circumstantial and that the Civil Forfeiture Office is being used as a "substitute" for a police investigation.
The Justice didn't agree.
"To add to the contextual framework, CCIL, a foreign company solely controlled by Mr. Brana, a foreign national, purchased two properties by means of an all-cash purchase in a country they have no prior ties to. The defendants then employed the spouse of an individual who has a charge history in both the United States and Alberta for securities violations. Ms. Johnson managed the properties and controlled the funds for the properties," the Justice said.
The Justice highlights that the RCMP is investigating the case, and much of the evidence against the defendants have come from testimony from a RCMP officer involved in the investigation.
"The point to remember is that there is an ongoing investigation that is complex, relating as it does to international securities trading, internet-based financing, and the complex web of wire transfers of funds from Silverton," she says.
Ultimately, Kirk, Johnson, and Brana do not get their money back.
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