Documents explains in money-laundering trial

The first witness in the money-laundering trial this week explained several hundred pages of documents in the case.

The defendant, Raymond Frank Creed, is accused of assisting Kenneth Taves to retain the benefit of criminal conduct and concealing or transferring the proceeds of criminal conduct. The alleged offences occurred between August 1998 and April 1999.

Mr. Brick Kane, a principal of the US firm Robb Evans and Associates, told the court he first heard of Taves in December 1998. He explained that his firm is frequently nominated to become receivers in regulatory matters. Receivers take control and assess the business operations of companies and trace assets, if necessary, that have been diverted from those companies.

The US Federal Trade Commission, which investigates complaints from consumers, contacted his firm and said it was nominating a receiver in early 1999 for a company called JK Publications.

In January 1999 a US court ordered the company’s assets frozen and appointed Mr. Kane’s firm as temporary receiver. That appointment became permanent in March 1999.

Taves owned or controlled JK Publications and other companies, Mr. Kane said. In Grand Cayman, there was Media Buying Services and Phaeton. The documents Mr. Kane said he saw were initially bank records turned over by Euro Bank Corporation for accounts Taves was associated with.

Taves processed credit card charges, Mr. Kane said. In 1998, Taves processed roughly $49 million and roughly 90 per cent were not authorised by consumers. About $25 million was transferred to accounts and banks in the Cayman Islands and elsewhere in the world and some back to the US.

The 10 per cent of credit card charges that were authorised had to do with adult websites, for which the charge was generally $19.95 a month. The other charges were not linked to any website, Mr. Kane said.

The purpose of the receivership was to stop the fraud and to recover funds.

The defendant Creed was the signatory on an account at Euro Bank opened in August 1998 for a company named Chamonix.

In November 1998 Taves instructed Euro Bank to transfer $2.8 million from Chamonix to his account at Barclays. Taves was controlling Chamonix, Mr. Kane commented.

Funds had been transferred from a company in the US to Media Buying Services and Phaeton at Euro Bank, he said. Documents showed transfers to Chamonix from Media Buying Services totalling about $1.3 million. Others showed transfers from Phaeton to Chamonix, totalling $2.5 million. There were three transfers in 1999 from Taves at another bank back to Chamonix; they totalled about $4 million.

A 1999 document retrieved from Euro Bank showed the instructions of Creed to liquidate Chamonix’ holdings and transfer them to an account in Vanuatu.

This was in violation of a US freeze order.

Mr. Kane also discussed two cheques, which he said were used to try and evidence a purchase of Taves’ property in Malibu by a company owned by Creed. The cheques, drawn on a Creed account at Bank of Nova Scotia for $100,000 and $1.9 million, were made payable to Taves’ father.

Questioned by Solicitor General Cheryll Richards, Mr. Kane said the $2 million represented proceeds of Taves’ fraud in the US.

The funds came from Taves’ account at Barclays, he said. This was reflected in a credit for a little over $2 million that the jury had already seen. Taves’ account at Barclays had received $5.1 million from the Media Buying Services account at Euro Bank.

Mr. Kane also confirmed that Taves entered into a criminal plea agreement with the US Attorney General’s office in January 2001, admitting to certain crimes involving fraudulent credit chard charges. Taves was found liable for $37.5 million, which was to be paid in restitution.

Questioned by Defence Attorney Delroy Murray, Mr. Kane confirmed that Creed had no connection with any of the US companies through which the ill-gotten funds had flowed.

The witness also agreed that the order of the court that placed a freeze on Taves’ company, JK Publications, was not served on Creed. He did not remember if the January or March 1999 order was ever served on the defendant or brought to his attention.

Mr. Kane said it was correct that he associated the Chamonix account with Creed because a signature appeared on a certain document, R. F. Creed.

He said he could not recall Mr. Creed indicating he had nothing to do with the account and never formed any company called Chamonix.

His recollection was that, except for one instruction, every other transaction with Chamonix was done by Taves or one of two Euro Bank employees.

Mr. Kane agreed that a man whose US company facilitated Taves was not charged with any offence. He also agreed that Taves’ father subsequently wrote a letter to Euro Bank saying he did not know of his son’s activities and asking that their funds be separated.

Mr. Murray asked about the Malibu property. Mr. Kane agreed the receivers were entitled to recover the property because it was purchased by Taves with proceeds of his fraud. Creed was requested to give a deposition because his company was shown on a document as the property’s registered owner.

Mr. Murray also asked about a promissory note dated 20 February 1997. That was before any involvement by the receivers in investigating Taves. The note said Taves promised to repay $2.4 million to Creed on or about 20 February 1999.

Mr. Kane said he had seen the note. He agreed his investigation showed that at some point Taves did transfer $2.4 million to Creed. He said he had a vague recollection that Creed had said in his deposition that he lent $1.7 million to Taves because Taves had said he wanted to set up an Internet business.

The witness agreed that there was no direct or express evidence that showed the defendant knew Taves was scamming credit card holders.