A Vancouver-based company accused of being a payment processor for hundreds of millions in worldwide direct mailing scams is fighting to have a B.C. civil forfeiture lawsuit sealed from public view.
The application by PacNet Services Ltd. is among several applications, including on document disclosure, that will be decided by B.C. Supreme Court Justice Shelley Fitzpatrick before the actual civil forfeiture case is heard.
Following a week of arguments beginning this month on the various matters, Fitzpatrick has reserved judgment and will be making her findings known at a later date.
The province’s civil forfeiture office is suing to confiscate properties and bank accounts in British Columbia of PacNet and its principals, including president Rosanne Day and company officer Ruth Ferlow, totalling about $15.5 million as proceeds of crime, according to information heard in court this week.
Properties in Vancouver, West Vancouver and Keats Island are valued at about $10 million, while multiple bank accounts contain just under $5.5 million, Vancouver lawyer Allan Doolittle, representing the B.C. civil forfeiture office, said in court.
PacNet and its principals have denied all allegations, saying that at no time has PacNet knowingly processed payments for any promotion known or found to be fraudulent, according to responses filed with the court.
PacNet came to international attention suddenly in September 2016 when the U.S. government identified PacNet as a “significant criminal organization” that allegedly worked for 20 years with “direct mailer” scammers to launder millions of dollars defrauded from numerous vulnerable victims.
The designation landed PacNet on a list that included drug cartels and mobsters — and almost immediately shut down PacNet’s worldwide business, including operations in Ireland, the United Kingdom and subsidiaries or affiliates in 15 other countries, because its reputation was “shattered,” the company has said in court documents.
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By late 2017, the significant criminal organization designation had been removed by the U.S. Treasury Department for the company and the 12 people who had been listed, including Day and Ferlow.
In its request to seal the court file from public access, PacNet lawyer Michael Bolton argued the sealing was necessary to protect against adverse publicity and consequences to witnesses, protect confidential information from public disclosure and protect against the dissemination of compelled testimony and compelled production of documents.
“These proceedings commenced by the director (of civil forfeiture) arise in the wake of an ill-considered, unsupportable and unlawful effort by the United States Department of Treasury … to brand PacNet as a Transnational Criminal Organization without notice or hearing, without any charge or opportunity to respond, in part to attempt to coerce the cooperation of the criminal mail fraud against other parties, including some former PacNet clients,” Bolton writes in the sealing application.
In response, Howard Mickelson, a lawyer for the B.C. civil forfeiture office, wrote the office was not opposed to a limited sealing order — for example, one that sealed the affidavits of witnesses who were not the subject of the case — but was opposed to sealing the entire file.
In its suit, the B.C. civil forfeiture office says that all or substantially all of PacNet’s revenues come from the unlawful direct-mail scams and any legitimate sources of revenue have been deliberately established as a cover for its otherwise unlawful operations.
“Despite PacNet’s knowledge of these criminal investigations and enforcement proceedings against certain of the PacNet clients, in many instances PacNet continued to process payments from victims of the unlawful solicitations,” says the claim.
In its response, PacNet said on several occasions the company has been approached by law enforcement agencies to assist in the investigation of a client who was alleged to have been involved in fraudulent promotions. “On each occasion that this occurred PacNet cooperated with law enforcement agencies,” PacNet says.
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