New South Wales Crime Commission v Elskaf

1. [1]

   HIS HONOUR: By its second amended summons filed on 2 December 2016 the New South Wales Crime Commission seeks the following relief pursuant to the provisions of the Criminal Assets Recovery Act 1990. First, an unexplained wealth order in accordance with s 28A of the Act. Secondly, an assets forfeiture order in accordance with s 22(1A)(a) of the Act. Those provisions are respectively in the following terms:

2. [2]

   The orders sought are to be found at paragraphs 9A and 9B of the second amended summons and are in these terms:

3. [3]

   Unexplained wealth order

4. [4]

   On 21 June 2011, this Court made a restraining order pursuant to s 10A of the Act in relation to all interests in property of Mr Elskaf. That order was made upon the basis of evidence that included the affidavit of Mr Spark sworn 17 June 2011.

5. [5]

   In a subsequent affidavit sworn on 15 June 2015, Mr Spark deposed to a suspicion that Mr Elskaf had engaged in a serious crime related activity of dishonestly obtaining a financial advantage by deception contrary to s 192E(1)(b) of the Crimes Act 1900. An offence under that section is an offence involving fraud and is punishable by imprisonment for 5 years. Mr Spark’s evidence concerning that offence was as follows:

6. [6]

   In his affidavit sworn on 6 May 2016, Mr Spark referred to s 178BB of the Crimes Act, which was in force at the material time, in order to correct an erroneous reference in his earlier affidavit to s 192E(1)(b), which had not then been in force. Nothing turns on that for present purposes.

7. [7]

   Mr Elskaf was examined before the Registrar on 22 October 2012 concerning his affairs. He was shown an ING Bank loan application form signed by him on 18 September 2009 that indicated at least the following matters:

8. [8]

   Mr Elskaf gave the following evidence:

9. [9]

   In order to establish that ING Direct advanced $229,000 to Mr Elskaf upon the basis of the information provided to it in the loan application, the Commission relied upon affidavits from Stephen Baker, Truong Sanh Ly and David Chi Tran.

10. [10]

    Mr Baker was employed by ING Direct as a Financial Crimes Investigator. His affidavit was sworn on 31 March 2016. He confirmed that the loan application form was signed by Mr Elskaf on 18 September 2007 and that the loan was approved on 25 September 2007. The loan was settled on 5 October 2007. Apart from periodical debits to the loan account and monthly credits for repayments of principal and interest, a payment of $288,800 was made to the credit of the loan account on 28 February 2008. Mr Baker said that if ING Direct had established that declarations made in Mr Elskaf’s loan application were false, or that any documentation supplied with the application was fraudulent, the loan would not have been approved but it would have been rejected.

11. [11]

    Mr Ly worked as a financial planner. His affidavit was affirmed on 15 April 2016. He provided a statement to the Commission, which was annexed to his affidavit. His statement was to the effect that he falsified pay slips and a 2007 PAYG payment summary for Mr Elskaf that were submitted to ING Direct in support of his loan application.

12. [12]

    It is not suggested that ING Direct suffered or sustained any loss as the result of anything done or not done by Mr Elskaf in the circumstances relating to the application for the loan or the grant of the loan itself.

13. [13]

    The Commission submitted that in these circumstances there was at the very least a reasonable suspicion that Mr Elskaf engaged in the serious crime related activity referred to and identified by Mr Spark. The Commission contended that it was therefore entitled to the unexplained wealth order sought in the second amended summons.

14. [14]

    In his fourth affidavit Mr Spark deposed to a suspicion that Mr Elskaf had engaged in the serious crime related activity of assault occasioning actual bodily harm in company, being an offence involving violence punishable by imprisonment for 5 years or more. The material deposed to by Mr Spark establishes that Mr Elskaf was charged with assault, which was alleged to have been committed on 26 April 2013. On 22 September 2016, Mr Elskaf was convicted of the offence and sentenced to a fully suspended sentence of imprisonment. He entered a bond to comply with conditions on the same day.

15. [15]

    Mr Elskaf is the registered proprietor of land at 62 North Liverpool Road, Heckenberg.

16. [16]

    The Commission contends that in these circumstances it is entitled to the asset forfeiture order sought in the second amended summons.

Consideration

1. [17]

   In accordance with the terms of s 28B(4) of the Act, the unexplained wealth of a person comprises his or her current or previous wealth, being the sum of the value of:

2. [18]

   However, unexplained wealth does not include any assets that are proved not to have been illegally acquired property or the proceeds of an alleged activity. In this case the Commission contends that Mr Elskaf’s illegally acquired property is valued at $4,467, 941.90. That sum is derived from the affidavit of Katie Bourne sworn 15 April 2016. Ms Bourne is a Certified Practising Accountant and is employed by the Commission as a forensic accountant. Upon the basis of material provided to her, Ms Bourne identified property in which Mr Elskaf had an interest as at 6 July 2015. Paragraphs 7 to 17 inclusive of her affidavit are in the following terms:

3. [19]

   Ms Bourne said that having regard to those paragraphs of her affidavit she calculated that the known (then) current or previous wealth of Mr Elskaf as at 6 July 2015 was $4,467,941.90.

4. [20]

   Mr Elskaf has already forfeited $450,000 in accordance with an order made pursuant to s 28C(1)(a) of the Act. In calculating the value of Mr Elskaf’s unexplained wealth, he must be given credit for that amount.

5. [21]

   It does not matter that Mr Elskaf’s current or previous wealth is unrelated to any actual or suspected serious crime related activity engaged in by him: New South Wales Crime Commission v Ayik [2016] NSWSC 1183 at [7].

6. [22]

   Section 28B of the Act is relevantly as follows:

7. [23]

   By s 28B(3) of the Act, Mr Elskaf carries the burden of proving or establishing that his current or previous wealth is not or was not illegally acquired property or the proceeds of an illegal activity. Despite orders previously made in these proceedings requiring or permitting Mr Elskaf to do so, he has declined or neglected to serve any evidence in response to the Commission’s case against him or indeed any evidence at all. As the transcript will reveal, his solicitor has encountered considerable difficulties in dealing with Mr Elskaf. It was on the basis of those difficulties that his solicitor sought to withdraw from the case at the beginning of the hearing before me. I refused that request for reasons that will be apparent from the transcript. However, Mr Elskaf’s failure to put on evidence explaining his wealth, or dealing with any other relevant issue in these proceedings, antedated his solicitor’s application to withdraw from the proceedings. Even if Mr Elskaf had attended the hearing, it is highly unlikely that his forensic position would have been different. In the events that have occurred, the hearing proceeded without the benefit to either me or Mr Elskaf of any evidence from him at all.

8. [24]

   Section 28A(4) of the Act provides that the Court may refuse to make an unexplained wealth order, or reduce the amount otherwise payable pursuant to s 28B, if it thinks that it is in the public interest to do so. Clearly, however, there must be some proper or reasoned basis for doing so: see, for example, Ayik at [4]-[5]. I have not perceived in this case that there is any basis upon which to refuse to make the order sought in the public interest and none has been suggested.

9. [25]

   Having regard to the whole of the evidence I am satisfied that there are reasonable grounds to suspect that Ali Elskaf has engaged in a serious crime related activity or activities for the purposes of s 28A(2) of the Act. I also find for the purposes of s 22(2) of the Act that it is more probable than not that Ali Elskaf’s suspected serious crime related activity or activities, which have formed the basis of the Commission’s application for the assets forfeiture order, being a serious crime related activity involving an offence punishable by imprisonment for 5 years or more, was engaged in not more than 6 years before the making of the application.

Orders

1. [26]

   In the circumstances I will direct the parties within 7 days to bring in short minutes of order giving effect to my conclusions.