Hermanowski v United States of America

Hermanowski v United States of America - [2006] FCAFC 8 - FCAFC 1976 case summary — Zoe

[5]

Count 67: Conspiracy to defraud the Internal Revenue Service of the United States Department of the Treasury, in violation of Title 18, United States Code, Section 371.' 15 On 7 May 2004 the second respondent recorded in writing the extradition offences in relation to which she had determined that the appellant was eligible for surrender and made a copy of that record available to the appellant and the Attorney-General in accordance with s 19(9)(c) of the Act. That determination was an administrative decision (per Gleeson CJ, Gaudron, McHugh and Gummow JJ in Pasini v United Mexican States (Pasini) (2002) 209 CLR 246 at [16]). 16 At the same time as she made her determination her Honour ordered that the appellant be committed to the Parklea Correctional Centre to await surrender under a surrender warrant or temporary surrender warrant or release pursuant to an order under s 22(5) of the Act (see s 19(9)(a) of the Act). 17 By a Summons filed 19 May 2004 the appellant applied to the Supreme Court of New South Wales for a review of the second respondent's said order in accordance with s 21(1) of the Act. Thereafter, on 12 July 2004 the appellant filed an Amended Summons. By that Summons the appellant sought an order quashing the said order made by the second respondent in accordance with s 19(9) of the Act and an order directing the second respondent to order his release. 18 In such a proceeding the court was required to determine whether the administrative decision made by the Magistrate was right or wrong and, if wrong, what decision should have been made by her Honour, thereby determining the rights and liabilities of the parties to the review proceedings. At the very least, the court was required to determine whether or not the Magistrate's administrative decision was erroneous in some respect that rendered the rights or liabilities of the appellant other than as set out in the decision (per Gleeson CJ, Gaudron, McHugh and Gummow JJ in Pasini at 255 [16] and [18]). 19 On 18 April 2005 the primary judge, Bell J of the Supreme Court of New South Wales, dismissed the appellant's Amended Summons, and confirmed the order of the second respondent of 7 May 2004. 20 The primary judge included in her judgment on the review a statement to the effect that the appellant was eligible for surrender within the meaning of s 19(2) of the Act in relation to the extradition offences identified in paragraph 14 of Her Honour's reasons for judgment of 13 April 2005, being the extradition offences in respect of which the second respondent determined that the appellant was eligible for surrender on 7 May 2004. 21 On 26 April 2005 the appellant appealed to this Court from the orders of the Supreme Court of New South Wales, in accordance with s 21(3) of the Act. 22 In relation to the appeal s 21(6) of the Act relevantly provides: '21(6) Where the person …: …

[77]

Putting it another way, he submitted that there had to be an assignment of significance to the facts the subject of the description. 40 It was submitted that the affidavits of Special Agent Mary Dino, upon which the United States relied, did not state or disclose the United States' case. He contended that what Special Agent Dino asserted to be the facts did not take the matter any further. His submission was that it was no more than 'a very glorified description of the conduct'. 41 It was submitted for the appellant that in a case such as this, with numerous fraud allegations arising from complex commercial transactions and relationships, and difficult issues of knowledge and intent, Article XI(3)(c) required the United States to provide affidavits, statements or declarations from the central witnesses setting out the evidence that they would be expected to give at trial supported, as appropriate, by relevant documentation and exhibits. Alternatively, it was submitted that where the United States elects to rely entirely upon hearsay material collected in an affidavit from one investigator, the source and quality of that hearsay must be explained in some detail. Moreover, there must be a basis for understanding how the hearsay material would be available to the United States in proving the alleged offences. For example, the United States should, at least, identify the key witnesses and provide a summary of the evidence which is expected to be given by each of them to prove the elements of the alleged offences. 42 The appellant's case was that the United States elected to rely upon largely unsourced hearsay material and assertions of alleged conduct as set out in the affidavits of Special Agent Dino. In the absence of, at least, a meaningful summary of the evidence which was available from each of the central witnesses, there was, the appellant submitted, no sound basis to independently assess the source and probative value of the hearsay and assertions which comprised Special Agent Dino's affidavits. 43 The appellant submitted that the second respondent erred in: (i) stating that 'a description of the facts' did not necessarily require the United States to reveal the 'exact manner' in which it was intended to prove the allegations; (ii) being satisfied that there were reasonable grounds to believe in the existence of unnamed witnesses because in the affidavits of Special Agent Dino and Assistant United States Attorney Davis various 'principal witnesses', including two external auditors, employees of the appellant's companies and an employee of a purported subcontractor of the companies, were mentioned; (iii) not accepting that Article XI(3)(c) of the Treaty required the production of affidavits from the principal witnesses; and (iv) finding that the affidavits of Special Agent Dino described, in summary form, the factual material that may be given by these 'principal witnesses'.

[78]

44 Mr Game SC submitted that Article XI(3)(c) could not be satisfied by someone as remote from the facts as Special Agent Dino who did not identify the United States' intended witnesses and actually describe what they would say. The appellant contended that the limited references to these 'principal witnesses' in the affidavits of Special Agent Dino failed to provide a sufficient basis to independently assess the source and quality of the hearsay material attributed to those witnesses by Special Agent Dino. Furthermore, the material provided by the United States failed to provide any indication as to whether or not these 'principal witnesses', or any other witnesses, would be available to give evidence. 45 Considerable emphasis was placed upon the approach of Spender J in Todhunter v Attorney-General (Cth) (Todhunter primary)(1994) 52 FCR 228 and Kiefel J in Jacobi v United States of America [1996] FCA 962. It was submitted that reasonable belief requires more than reasonable suspicion. It was also submitted that showing grounds for such belief requires more than a statement of the alleged criminal conduct. Article XI(3)(c) goes beyond Article XI(2)(b). Reference was made to the decision of the Full Court in Todhunter v United States of America (Todhunter appeal)(1995) 57 FCR 70 at 90B. 46 Counsel for the United States submitted that the appellant's arguments were an attempt to put various glosses on the clear words of Article XI(3)(c) of the Treaty which were not supported by the express words of the Article, the purpose or intent of the Act or the authorities. The Article requires a description of facts not a description of a process of reasoning, or inferences said to arise on the evidence by which the facts are to be established. Hearsay may be relied upon - there is no restriction to legally admissible evidence. It was submitted that the facts described here establish more than grounds for suspicion. The arguments for the appellant failed to accommodate the fact that the standard had been changed from a prima facie case test. Counsel for the United States relied upon a chart which cross-referenced the relevant material with the elements of the extradition offences. 47 In considering the competing submissions, it will be necessary to deal with some general issues. It is to be noted first that the case has been conducted before this Court on the footing that the interplay between s 11 and s 19 of the Act and between s 19 of the Act and the Extradition (United States of America) Regulations 1988(as amended) is settled by the decision in Todhunter appeal. We need not reproduce all of the analysis in that judgment. The most critical finding was that compliance with Article XI(3)(c) of the Treaty is an issue at the stage of proceedings before the magistrate by reason of s 19(2)(b), ie, that production of those documents to the magistrate 'is required'. That finding is controversial. It required implication into the language of the Treaty. It also has an important, and somewhat anomalous, result when coupled with the further finding that Article XI(3)(c) is to be read as if the words are 'an offence has been committed against the law of the requesting State' - namely, that an Australian magistrate must determine effectively whether charges have been properly laid according to United States law. The consequence is that the Treaty provides for an additional barrier in s 19 proceedings that makes obtaining a determination of eligibility of surrender to the United States more difficult than extradition to many other countries where there is no such barrier, yet the United States has one of the most highly developed systems of criminal justice in the world. Comparison with, eg, the extradition regulations relating to the United Mexican States, the Republic of Indonesia and the Republic of the Philippines respectively makes the point. The same result would presumably apply to extradition to Australia. 48 Be that as it may, this case must be decided according to the decision in Todhunter appeal. On that basis, the document required by Article XI(3)(c) is clearly directed to establishing, in the case of a person who has been charged, that the charge was properly laid. Whatever difficulties there may be in construing that Article, it bears similarity to some of the elements of reasonable and probable cause for prosecution according to Australian law (see the authorities collected in DA Ipp, 'Must a prosecutor believe that the accused is guilty? Or, was Sir Frederick Jordan being recalcitrant?' (2005) 79 ALJ 233) and 'probable cause' in United States law (M Cherif Bassiouni, International Extradition: United States Law and Practice, 4th edn, Oceana Publications, Inc., Dobbs Ferry, New York, 2002, Ch X, p 826). It also has some similarity to the statutory requirements for the issue of search warrants and like instruments (eg, George v Rockett (1990) 170 CLR 104). There is also an overlap between the provisions of s 19(2)(c) and s 19(3)(c) of the Act, and there is a body of authority as to those provisions. An examination of those analogous situations may illuminate the present issue of construction. 49 Before examining those sources, some aspects of Article XI(3)(c) can be noted. One is that, to an extent, it is elliptical. A description of the facts as such would not normally be regarded as 'setting forth' (or 'giving an account of' or 'expounding') reasonable grounds for belief. Another aspect is that the provision requires a degree of formality in the description of the facts by way of affidavit, statement or declaration. Further, it is also established that 'an offence' is to be read as 'the offence charged' and that the requisite reasonable belief should extend to each charge and each element of each charge (Todhunter primary at 252, affirmed in Todhunter appeal at 89-90). In Todhunter primary, Spender J held that the description of the facts could be by way of hearsay, although at 251 he added: 'The nature of the hearsay, whether it is attributable or non-attributable, the quality of the source, and other factors may all bear on the question of whether the description, be it hearsay or otherwise, is such as to found "reasonable grounds for believing" as the Article requires.' There was no dissent from this in Todhunter appeal. 50 A number of propositions were recently stated by the Full Court in Griffiths v United States of America (2005) 214 ALR 665 at [50]-[55] in relation to a statement of conduct for the purposes of s 19(3)(c)(ii) and s 19(2)(c) which are useful for present purposes provided that the differences in context are borne in mind: '(i) As already noted, it is well accepted that the statement "setting out the conduct constituting the offence" for s 19(3)(c)(ii) purposes may consist of a number of documents: Dutton v O'Shane at [105]. For this reason it is permissible to have resort to all of the "supporting documents" to ascertain what that conduct is.

[98]

(5) The information possessed by the prosecutor and reasonably believed by him to be true, must be such as would justify a man of ordinary prudence and caution in believing that the accused is probably guilty.' 54 The test was put by Diplock LJ in Dallison v Caffery [1965] 1 QB 348 (at 370) as follows: 'Where a felony has been committed, a person, whether or not he is a police officer, acts reasonably in making an arrest without a warrant if the facts which he himself knows or of which he has been credibly informed at the time of the arrest make it probable that the person arrested committed the felony. This is what constitutes in law reasonable and probable cause for arrest.' 55 One must, in addressing the question of eligibility for surrender to the United States of America remember that the requirement of Article XI(3)(c) is that the request for extradition be supported by a description of the facts setting forth reasonable grounds for believing that an offence has been committed and that the person whose extradition is sought, committed it. The word 'believing' begs the question - belief by whom? Each of the appellant and the United States has submitted that the expression should be construed as 'reasonable grounds for the magistrate, ie, the second respondent, believing'. That is to be understood as calling for the requisite belief to be that of a reasonable person in the position of the magistrate, ie the question should be viewed objectively and not subjectively. 56 The critical aspect of the matter calling for consideration is the meaning of the expression 'a description of the facts … setting forth reasonable grounds for believing …'. 57 As we see it, the expression 'by way of affidavit, statement or declaration' does not bear upon this issue. It is intended to define the method whereby the description of the facts setting forth reasonable grounds for believing that an offence has been committed and that the person whose extradition is sought committed it, may be provided. It simply indicates the vehicles that may be employed. The punctuation (commas which precede and follow the expression) indicates a measure of intended discontinuity. As an aside, we would also observe that the alternatives of affidavit, statement and declaration indicate that the requirement imposed by Article XI(3)(c) may be met with some, but not strict, solemnity. In this regard it should be noted that the Explanatory Statement (Extradition (United States of America) Regulations (Amendment) 1992 No 394, Explanatory Statement) issued by the authority of the Attorney-General in respect of the Protocol whereby Article XI in its present form was adopted, stated that one of the principal effects of the Protocol was to modify 'the evidentiary standard so as to simplify the documentation required to accompany an extradition request' (emphasis added). 58 Article XI(2)(b) requires that a request for extradition be supported, in respect of each alleged offence, by a description of the conduct constituting the offence. In that context Article XI(3)(c) requires that such a request also be supported by a description of the facts setting forth reasonable grounds for believing that an offence has been committed and that the person whose extradition has been sought committed it. Plainly, Article XI(3)(c) requires something different from that required by Article XI(2)(b). In our opinion, the key to the difference lies in the nature of the 'facts' to be described. The 'facts' referred to in Article XI(3)(c) are not necessarily restricted to the 'facts' constituting the alleged criminal conduct, but may include facts from which the reasonableness of the relevant belief can be established. Those facts may include the state of the investigations conducted to that time. This reflects the circumstance that a reasonable belief that an offence has been committed and that the person sought committed it might be based upon material falling well short of that required to be tendered to prove a prima facie case (as had formerly been required by the Treaty). When a wider view of the relevant facts is taken, the apparent ellipsis in the provision disappears. The 'facts', as so understood, would (and should) set forth facts disclosing the reasonable grounds for belief. 59 In our opinion 'a description of the facts' requires no more than a verbal portrait of the facts. The sufficiency of that portrait will be determined by questioning whether it sets forth reasonable grounds for believing that an offence has been committed and that the person whose extradition has been sought committed it. In this regard, we consider that 'setting forth' should be treated as equivalent to 'that would, if correct, provide'. 60 A clear distinction is to be drawn between a description of the facts that would, if correct, establish a prima facie case, provide reasonable grounds for believing or reasonable grounds for suspecting that an offence has been committed. Remembering that eligibility for surrender is to be determined without determining the guilt or innocence of the person whose extradition is sought, we do not accept the appellant's submission that the description of the facts must descend to the detail of how the facts will be proven. 61 Article XI(3)(c) will be satisfied if the description of the facts provides reasonable grounds for the requisite belief, in this case an inclination of the mind towards the proposition that the relevant offences have been committed and that the appellant committed them. This would be sufficient even if the description of the facts falls short of proof. 62 We are of the opinion that Article XI(3)(c) does not mandate either that there must be an explanation of the facts sufficient to demonstrate reasonable grounds for believing that an offence has been committed and that the person whose extradition has been sought committed it, that the intended witnesses for the prosecution be identified, that their respective availability to give evidence be confirmed and that their respective likely evidence be specified, or that there must be disclosure of material from which an assessment may be made of the quality of the evidence to be called to prove the facts described. Such material may, but need not necessarily, be provided. 63 That understanding of Article XI(3)(c) is consistent with that of Bell J (see particularly [29]). When so understood, the appellant's root and branch attack upon the affidavits of Special Agent Dino is not established. Those affidavits set forth facts relevant to direct implication of the appellant in criminal conduct and facts relevant to the state of investigation from all of which reasonable grounds for the relevant beliefs might follow. The fact that the equivalent of a prosecution brief may not be presented (even by hearsay) is not sufficient to sustain a broad brush conclusion of inadequacy in the description of the facts. In those circumstances, Ground of Appeal 1 fails and it is necessary to consider the remaining particular grounds of appeal.

[99]

Ground 2 64 Ground 2 relates to Counts 2-11 in the Second Superseding Indictment. In short compass the situation was that the Hermanowski group of companies were owned and controlled by the appellant and his wife. The group operated from a small central office in Miami, Florida. Companies within the group provided cable television services to, inter alia, various US military bases in the United States and in Japan. For the purpose of providing those services it was necessary for the relevant Hermanowski companies to incur expenditure on infrastructure such as cabling. 65 Well prior to 10 June 1997 false invoices were brought into existence in respect of certain fictitious infrastructure expenditure on such bases. The appellant was involved in the creation of such false invoices. Thereafter, payments were ostensibly made by the 'debtor' Hermanowski companies to the 'providers' of the fictitious infrastructure, CCU Inc. and Mausina Development Corporation, the former being a Hermanowski company and the latter a non-existent company. The appellant endorsed those cheques for payment into a personal bank account controlled by him. 66 Thereafter, when the United States Department of Defense commenced to close certain of its bases in the United States, it made provision for compensation to be offered to companies servicing such bases that may have incurred what, by virtue of the closures, became wasted expenditure. The relevant procedure was for the service providers to submit Termination Settlement Proposals (TSPs) recording, inter alia, the extent of the infrastructure expenditure thrown away by the closure of the bases. 67 On 10 June 1997 some ten TSPs were lodged with the United States Department of Defense by five of the Hermanowski companies seeking recovery of, inter alia, purported expenditure on fictitious infrastructure work the subject of the sham invoices. 68 The appellant's case is that there was nothing alleged in the description of the facts provided by the United States sufficient to provide reasonable grounds for believing that the appellant had committed the offences which were alleged to have been committed in respect of the submission of the overstated TSPs, either as a principal or as an accessory. 69 In her published reasons the second respondent, after referring to certain matters in paragraphs 14, 15, 20, 21 and 23 of Special Agent Dino's first affidavit said: 'They point to an integrated operation, and some consistency of conduct on the part of the respondent [referring to the appellant] in his playing some role in both the creation and discrete storage of the invoices, his knowledge of their entry into the company's records, and his use of them thereafter through generating, endorsing and depositing cheques made out to CCU Inc. and Mausina into his personal bank account. On these bases, I consider that there are reasonable grounds for believing that the respondent was involved in the creation of the relevant invoices [referring to sham invoices in relation to fictitious infrastructure work said to have been carried out on bases that were closed]' 70 Later in her published reasons the second respondent dealt with the involvement of the appellant in the submission of the false TSPs in the following terms: 'The first ground of aiding and abetting liability

[112]

In relation to the second element that the respondent acted wilfully and with knowledge of the false and fraudulent nature of the claim, I consider that, for the same reasons as set out in Count 1, Status of the CCU Inc and Mausina invoices and Status of the TSPs and under the first element in Counts 2-11, the description of the facts provides reasonable grounds for believing that this second element is satisfied.' 71 The primary judge dealt with Counts 2-11 in the Second Superseding Indictment in paragraphs 31-56 of her reasons for judgment. The critical findings by the learned Magistrate are summarised at paragraphs 41-44 (inclusive) of those reasons. The matter raised by Ground of Appeal 2 as particularised by (iv)(a) was dealt with by her Honour in paragraph 56. Her Honour said: '56 … I am inclined to consider that it was open to the Magistrate to reason that the submission of the TSPs claiming reimbursement in an amount of US$8 million was not in the nature of a minor administrative matter. Similary I consider that her Honour's finding that the submission of the TSPs dealt with reimbursement for "a key aspect of the respondent's business" to have been open on the description of the facts contained in the Dino affidavit. If I am wrong in these respects, I would still be of the view that the description of the facts that I have referred to at paragraphs [41] and [44] (sic) above satisfies the requirement of Article XI(3)(c), in that it sets forth reasonable grounds for believing both that the offences in counts 2-11 were committed and that it was the plaintiff who committed them.' 72 The appellant's submission was to the effect that the description of the facts did not enable it to be determined whether, in the scheme of things, the amount sought to be recovered under the TSPs for fictitious work, the subject of the sham invoices, was sufficiently significant for it to be likely that the appellant would have been involved, in an accessorial sense, in the submission of the TSPs to the United States Department of Defense. This is an appeal from the judgment of the Supreme Court, not from that of the learned Magistrate. No error is disclosed in the manner that this issue was dealt with by Bell J. Systematic false claims for reimbursement of many millions of US dollars are not routine matters. 73 The substance of the issue is raised by Ground of Appeal 2 as particularised by (iv)(b) and was dealt with by Bell J particularly at: '48 … I am, in any event, of the opinion that the description of the facts contained in the first Dino affidavit with respect to the elements of the offences charged in counts 2-11 (that I have summarised it [41]-[44] above) satisfies the requirements of Article XI(3)(c). … 52 The Magistrate found that the description of facts set forth reasonable grounds for belief that the plaintiff committed the offences in counts 2-11 in that the presentation of the false TSPs to the Department of Defense had been wilfully directed or authorised by him within the meaning of Title 18, USC, s 2. I consider that the Magistrate was correct in coming to this conclusion. … 54 … I consider that it was open to the Magistrate to conclude having regard to the facts set out at paragraphs [41] to [44] above that the description of the facts set forth reasonable grounds to believe that the plaintiff [referring to the appellant] wilfully directed or authorised the submission of the false TSPs.' and the concluding portion of [56] set out above. 74 The appellant's submission in this Court was that his involvement in the preparation of the false invoices did not provide a sufficient basis for implicating him in the submission on 10 June 1997 of the TSPs which sought recovery of monies representing fictitious work, the subject of such invoices. It is common ground there were no facts establishing any direct involvement in making of the false claims by the appellant. Mr Game SC submitted that the magistrate reached a 'must have known' conclusion which could not constitute reasonable grounds for believing that an offence had been committed by the appellant in respect of the submission of the TSPs. 75 The appellant again faces the difficulty that Bell J independently agreed with the conclusion of the second respondent and there is no appealable error disclosed in that decision. This is a good example of the practical difference between the former Treaty test and the present Treaty test. We are inclined to accept that the facts summarised at [41]-[44] of Bell J's judgment would not establish a prima facie case against the appellant on these counts. There are simply too many alternative hypotheses consistent with innocence. A 'must have known' approach would not suffice for the purposes of the criminal law. However, the facts clearly establish reasonable grounds for believing that the offences had been committed. In our opinion, it was open to Bell J to conclude that the facts also establish reasonable grounds for believing that the offences had been directed or authorised by the appellant. We would also so conclude. Without recounting all of the relevant facts, it is most significant that the appellant was effectively the principal of the corporate bodies, and there is no suggestion that any of the employees who were directly involved in submission of the TSPs would profit personally from the fraud. The conduct alleged was systematic and significant. 76 Even though the description of the facts may have left some matters to inference, we are satisfied that it provided reasonable grounds for believing that offences as charged in Counts 2-11 of the Second Superseding Indictment had been committed and that the appellant committed them in the sense found below. We respectfully agree with the conclusions of the primary judge in this regard. 77 For the foregoing reasons, Ground of Appeal 2 fails.

[127]

85 Counts 52-63 and 65 are also mail fraud counts and involve the same set of transactions as counts 40-51 and 64. The plaintiff relies on the same challenge with respect to them, namely the absence of material to provide reasonable grounds for belief that the property was derived from mail fraud. I am satisfied that the description of facts set forth reasonable grounds for the requisite belief with respect to these counts.' 85 It was submitted for the appellant that the description of the facts 'did not provide any basis to assess whether or not the cheques [purporting to be drawn in favour of the cable television network companies] were drawn from legitimately earned funds'. The appellant argued that there could not be reasonable grounds for believing that the money laundering offences had been committed unless the description of the facts provided reasonable grounds for believing that the cheques represented the proceeds of the mail fraud against the cable television networks (in relation to Counts 40-51 and 64) or were derived from such mail fraud (in relation to Counts 52-63 and 65). Mr Game SC submitted 'the one uncontestable proposition is that the mail fraud must have been committed and that these [payments] are proceeds of the mail fraud or represent the proceeds of the mail fraud' otherwise there could be no offences made out. Mr Game urged that it could never be known, apart from taking Special Agent Dino's word for it, that there was any connection between under-reporting and payments to the appellant's company and that a tracing exercise could be performed. He further submitted that the description of the facts in this respect was simply assertion. 86 In particular, it was submitted that no information was provided in relation to the amount of cash available in the bank accounts from which the cheques were drawn. Nor was any insight given into the source of those funds, even though it was apparent from other information within Special Agent Dino's affidavit that the appellant's companies comprised a significant commercial enterprise which was capable of generating substantial amounts of legitimately earned funds. In outline: (1) From mid 1992 to mid 1995 the withholdings from the cable networks were allowed to gradually accrue on the appellant's companies' books and records as a debt owed to the cable networks but not yet paid.

[139]

88 The question which arises in relation to these counts is whether there are reasonable grounds for believing that offences have been committed. It is clear from the evidence of Mr Davis that a necessary integer of the prosecution case is to establish that the funds or property involved in the financial transactions did, in fact, represent the proceeds of mail fraud (in one case) and that the property was actually derived from mail fraud activity (in the other). It is also clear that the amounts in question were each drawn by cheque from the bank account of the relevant company. Furthermore, as pointed out on behalf of the appellant, the companies in question were carrying on legitimate business activities over the years that the alleged mail frauds were perpetrated. There is no suggestion in the facts described that the bank accounts were other than mixed funds of the company concerned regardless of source - there is no reference to any segregation such as might take place with trust funds. 89 So far as Australian law is concerned, it is difficult enough when dealing with appropriation and tracing of amounts paid to a mixed fund, even in a civil context, to identify particular funds as proceeds of a particular transaction (for some recent discussion see Isakka v South Australian Asset Management Corp (non registered entity) [2002] QCA 549 at [17]-[19]; Commonwealth v Official Trustee in Bankruptcy [2004] NSWSC 1155 at [8]-[23]). Furthermore, there are particular difficulties in accommodating the dealings by a corporation with its bank with the criminal law. As pointed out by Barwick CJ in Croton v The Queen (1967) 117 CLR 326 (at 330): '… though in a popular sense it may be said that a depositor with a bank has "money in the bank", in law he has but a chose in action, a right to recover from the bank the balance standing to his credit in account with the bank at the date of his demand, or the commencement of action. That recovery will be effected by an action for debt. But the money deposited becomes an asset of the bank which may use it as it pleases: see generally Nussbaum, Money in the Law: s.8, p.103. Neither the balance standing to the credit of the joint account in this case, nor any part of it, as it constituted no more than a chose in action in contradistinction to a chose in possession, was susceptible of larceny, though it might be the subject of misappropriation: see also on this point the judgment of Lord Goddard in Reg. v. Davenport ([1954] 1 W.L.R. 569; [1954] 1 All E.R. 602) with which I respectfully agree.' 90 Mr Davis gave the following evidence: '49.C. The Funds Represented the Proceeds of Mail Fraud:

[146]

91 The findings of the learned Magistrate and Bell J, and the submissions on behalf of the United States, appear to proceed upon the basis that, if the cheques in question can be matched with the amounts shown in the books of the relevant company as owing to the account of the supplier, then the requirements of the sections are satisfied - the funds the subject of the cheques may be taken to be proceeds of the mail fraud or as property derived from the mail fraud, as the case may be. It is submitted for the appellant that this is so only in a loose sense and confuses internal bookkeeping entries, on the one hand, with real transactions, on the other. 92 Under Australian law, all that can be said about any particular cheque which is honoured by a bank is that the bank has paid an amount to the presenter of the cheque at the direction of the drawer. The source of the monies is the arrangement between the drawer and the bank. 93 If the drawer of the subject cheques was in credit with the bank at the time, there could be no assumption that the particular amount paid in each case to honour the cheque was, or was derived from, the proceeds of a mail fraud as compared with other sources of income. The same reasoning would plainly apply in the case of a payment of a cheque by the bank when the drawer was in debit. The funds in that case are provided by way of loan to the drawer. Absent some trust arrangement honoured by the bank in relation to particular accounts, there would be no connection between the internal entries of the drawer of the cheque on the one hand and the source of the monies on the other. Furthermore, it would be unusual to describe an unpresented cheque as proceeds of anything. 94 The evidence of Mr Davis does not elucidate how those issues are dealt with in relation to the relevant United States law. No reference is made to any relevant extended statutory definitions and there is no reference to case law. The law to be applied in Florida is foreign law. The content of foreign law is a question of fact. In the absence of evidence it is assumed to be the same as domestic law. However, the application of the proved (or assumed) foreign law to the facts of the case is, where relevant, a matter for the domestic court (PE Nygh and M Davies, Conflict of Laws in Australia, 7th edn, LexisNexis Butterworths, Australia, 2002 at [17.1]-[17.3] and [17.8]). The limitation upon the adducing of evidence provided by s 19(5) of the Act does not apply to the adducing of evidence as to foreign law. The evidence of Mr Davis, set out above, does not relate to the content of foreign law as such, but, rather, to its application to the facts and is expressed without elucidation by reasons based upon the applicable law - whether substantive or procedural. This is not a proper basis upon which to decide an issue that is not a matter for expert evidence, but is rather a question for the Australian courts. 95 There was apparently a ruling by the learned Magistrate that the appellant could not rely upon a decision of the United States Federal Court of Appeal for the Fifth Circuit (US v Loe, 248 F.3d 449) the tender of which was rejected. After noting the rejection in her reasons for judgment, the learned Magistrate continued: 'Accordingly, I consider that Mr Game's submission that unless it is shown that the account contained insufficient "clean funds" to cover a withdrawal, it cannot be established that the withdrawal was derived from unlawful activities, being dependent upon the application of relevant US law, does not arise for determination.' The attempt to rely on US v Loe was not repeated before Bell J. No particular submission was directed to Ground of Appeal 4 as particularised by paragraph (i).

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