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:
"28A Making of unexplained wealth order
(1) The Commission may apply to the Supreme Court for an unexplained wealth order requiring a person to pay to the Treasurer an amount assessed by the Court as the value of the unexplained wealth of the person.
(2) The Supreme Court must make an unexplained wealth order if the Court finds that there is a reasonable suspicion that the person against whom the order is sought has, at any time before the making of the application for the order:
(a) engaged in a serious crime related activity or serious crime related activities, or
(b) acquired serious crime derived property from any serious crime related activity of another person (whether or not the person against whom the order is made knew or suspected that the property was derived from illegal activities).
(3) A finding under this section need not be based on a reasonable suspicion as to the commission of a particular offence and can be based on a reasonable suspicion that some offence or other constituting a serious crime related activity was committed.
(4) The Supreme Court may refuse to make an unexplained wealth order, or may reduce the amount that would otherwise be payable as assessed under section 28B, if it thinks it is in the public interest to do so.
(5) Engagement in a serious crime related activity or the acquisition of serious crime derived property referred to in subsection (2) extends to engagement in an activity or the acquisition of property before the commencement of this section.
22 Making of assets forfeiture order
(1) The Commission may apply to the Supreme Court for an order forfeiting to, and vesting in, the Crown specified interests, a specified class of interests or all the interests, in property of a person (an 'assets forfeiture order').
(1A) The application must specify that the interest in property is an interest in property of any one or more of the following kinds:
(a) an interest in property of a person suspected by an authorised officer, at the time of the application, of having engaged in a serious crime related activity or serious crime related activities…"
The orders sought are to be found at paragraphs 9A and 9B of the second amended summons and are in these terms:
"9A. An order pursuant to s 28A of the Criminal Assets Recovery Act 1990 that Ali Elskaf pay to the Treasurer an amount assessed by the Court as the value of the unexplained wealth of Ali Elskaf.
9B. An order pursuant to s 22 of the Criminal Assets Recovery Act 1990 that the interest in property of Ali Elskaf in the property specified in the Schedule hereto (being an interest in property of a person, namely Ali Elskaf, suspected by an authorised officer, namely Jonathan Lee Spark, of having engaged in serious crime related activity) be forfeited to, and vest in, the Crown."
Unexplained wealth order
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.
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:
"8(3) Based on the investigations and financial analysis conducted by the Commission I suspect that in or around September 2007 Elskaf engaged in a serious crime related activity or serious crime related activities…namely dishonestly obtaining a financial advantage by deception contrary to section 192E(1)(b) of the Crimes Act 1900 - to wit - dishonestly obtaining a loan from ING Direct on the basis of having provided dishonest information in support of a loan application, being an offence involving fraud and punishable by imprisonment for 5 years, and thus falling within the definition of 'serious criminal offence' pursuant to section 6(2) of the Act;"
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.
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:
1. His (then) current employer was JFK Developers Pty Ltd and his occupation was a bricklayer.
2. His gross monthly income was $4,583.33.
3. He had assets to the value of $83,000.
Mr Elskaf gave the following evidence:
"Q. The witness/examinee is being shown a copy of a document which is headed LIXI loan application form and ING Bank. Now do you see the applicant 1 details, that's your name, isn't it, on the front page?
A. Yes.
Q. And the address 4 Church Street that's where you're living now, well it should be 4A but that's where you're living now, correct?
A. Yes.
Q. Do you see there at employment details it says that your current employer as of the date of this loan application which is September 2007, your current employer is JFK Developers Pty Limited and it says your occupation is a bricklayer? That was not correct, was it, based on the evidence you've given today?
A. I never worked.
Q. You never worked as a bricklayer at JFK Developments?
A. No.
Q. Do you see just over halfway down the page there's a heading 'Assets' and it says that your total assets are $83,000 as of September 2007? Do you see where it says that?
A. Yeah, down here?
Q. Yes.
A. Yeah.
Q. Did you have $83,000 worth of assets?
A. No.
Q. And then -
A. Turn the page or?
Q. No, no. Then the bottom is the total loan being requested and that's $229,200?
A. Yeah.
Q. And that's about right, isn't it, that's the loan that you eventually got more or less?
A. I don't remember but yeah.
Q. Then when you turn the page the total income or sorry it says there that your gross monthly income, this is the top of the page, is $4,583.33?
A. Yes.
Q. Was that correct?
A. Yeah.
Q. It was?
A. I never - what do you mean like, that's what I was getting.
Q. Were you earning monthly -
A. I told you I wasn't working so how was I earning? Like I wasn't working for JFK.
…
Q. In September 2007 is when this application form appears to have been completed, at that time -
A. I was at work.
Q. With Ace Action Motors?
A. Yeah, I was on wholesaling.
Q. Yes. Were you earning at that time four and a half thousand dollars a month?
A. No.
Q. Is that your signature at about two-thirds of the way down the page?
A. About that.
Q. Sorry?
A. It looks like it.
Q. It looks like it. Well do you remember signing it?
A. To be honest, like, I remember signing I think paperwork but I don't remember what I was signing."
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.
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.
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.
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.
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.
[2]
Forfeiture Order
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.
Mr Elskaf is the registered proprietor of land at 62 North Liverpool Road, Heckenberg.
The Commission contends that in these circumstances it is entitled to the asset forfeiture order sought in the second amended summons.
[3]
Consideration
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:
1. All his or her interests in property.
2. All interests in property that is subject to his or her effective control.
3. All interests in property that he or she has, at any time, expended, consumed or otherwise disposed of (by gift, sale or any other means).
4. Any service, advantage or benefit provided at any time for him or her, or at his or her request, to another person.
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:
"The Defendant's interests in property (s 28B(4)(a))
7. I believe that the defendant has the following current interests in property (meaning current as at 6 July 2015):
(a) the whole of the property described as Lot 749 in Deposited Plan 224229 at Green Valley, local government area of Liverpool, parish of St Luke, County of Cumberland, also known as 62 North Liverpool Road, Heckenberg, New South Wales and registered in the name of Ali Elskaf. ('the Heckenberg property');
(b) funds held in St George Bank account 332011 155661701 ('St George account 1701');
(c) 1990 Harley Davidson FXST AMC motorcycle, VIN number 1HD1BKL15MY015677, engine number BKLM015677, registration number MBS21 and registered in the organisation name of Eli Elskaf ('the Harley Davidson');
(d) 2000 Ferrari 360 coupe, VIN number ZFFYR51C000119677, engine number F131B57043, registration number BNF15T and registered in the organisation name of Ali Elskaf ('the Ferrari');
(e) 2001 BMW 3-Series-E46 sedan, VIN number WBSBL920X0JR01252, engine number 60302639326S4, registration number NXS46Z and registered the organisation name of Ali Elskaf ('the first BMW');
(f) 2002 Mercedes Benz MB100 panel van, VIN number KPA6612701P134308, engine number 16197110008099, registration number ALV06X and registered in the organisation name of Ali Elskaf ('the first Mercedes Benz');
(g) 2002 Toyota Corolla 120 Series sedan VIN number JTDKR23E500080588, engine number 1ZZ1009868, registration number AYO70E and registered in the organisation name of Ali Elskaf ('the Corolla');
(h) 2004 Mercedes Benz 211 sedan, VIN number WDB2110652A471327, engine number 11294231046675, registration number BKU95D and registered in the organisation name of Ali Elskaf ('the second Mercedes Benz');
(i) 2004 Mercedes Benz 211 sedan, VIN number WDB2110652A494124, engine number 11294931736043, registration number AQB04Q and registered in the organisation name of Ali Elskaf ('the third Mercedes Benz');
(j) 2004 Mitsubishi Sedan Evolution VIII sedan, VIN number JMASNCT9A4U000919, engine number 4G63KH4243k, registration number BIZERK and registered in the organisation name of Ali Elskaf ('the Mitsubishi');
(k) 2006 BMW M3 convertible, VIN number WBSBR92010PM98080, engine number 6145381032654, registration number BWT12H and registered in the organisation name of Ali Elskaf ('the second BMW');
(l) 2006 Subaru Forester panel van, VIN number JF2SG9KR57G083846N, engine number C876159, registration number HB51AI and registered in the name of Ali Elskaf ('the Subaru');
(m) 2009 Nissan GT-R coupe, VIN number JN1GANR35A0400069, engine number VR38011581A, registration number BWI30E and registered in the name of Ali Elskaf ('the Nissan').
8. The belief referred to in paragraph 7 above is held by me on the following grounds:
(a) I have had regard to the affidavit of Jonathan Lee Spark sworn 21 June 2011 and filed herein which describe the defendant's interests in the Heckenberg property, St George account 1701 and the motor vehicles and watercraft described at paragraphs 7(c) to 7(m);
(b) I have had regard to a Valuation Report provided to the Commission by Robert Randall, Director of McLennan Steege Smith and Associates - Valuation and Property Consultants received on 14 April 2016 which provided a valuation of the Heckenberg property at $450,000 as at July 2015. A copy of the Valuation Report is under Tab 1 of Exhibit KEB-2;
(c) I have had regard to information provided to me on 13 April 2016 by email from St George Bank pursuant to section 51 of the Act showing that as at 6 July 2015 the St George account 1701 had a credit balance of $23,919.89. A copy of the email is under Tab 2 of Exhibit KEB-2.
(d) I have inspected the records of the Commission and ascertained that on 23 March 2016 and 12 April 2016 Lydia Lai ('Lai'), a financial analyst employed by the Commission, conducted a search of the records of the RMS database in relation to Elskaf and located records, that I recognise to be RTA records, (copies of which are under Tab 3 of Exhibit KEB-2) showing the buyer declared values for the vehicles at paragraph 7(c) to 7(m) above are as follows:
Vehicle Buyer Declared value
The Harley Davidson $55,000
The Ferrari $185,000
The first BMW $110,000
The first Mercedes Benz $12,000
The Corolla $10,000
The second Mercedes Benz $40,000
The third Mercedes Benz $35,000
The Mitsubishi $15,000
The second BMW $25,000
The Subaru $35,000
The Nissan $80,000
Total $602,000
[4]
The Defendant's expenditure (s 28B(4)(c))
• Defendant's Westpac Banking Corporation ('Westpac') account 032075 205381
9. Having had regard to the documents under Tab 2 of Exhibit BF-1 to the Affidavit of Beverley Fuller of Westpac sworn 1 April 2016 in these proceedings ('the Fuller affidavit'), I calculate that withdrawals of $2,840,670.01 were made from Westpac account number 032075 205381 ('Westpac account 5381') as follows:
Total debits from 18/09/2007 to 21/06/2011) $2,853,557.01
Less: $236,453.12
Repayments to ING account 24691079 $625.00
Reversal of cheque 14/04/10 $12.00
Reversal of bank fee 27/01/11 $2,250.00
Deposit reversed 02/08/11
Total $2,604,216.89
[5]
Having had further regard to the Fuller affidavit, I conclude that $236,453.12 of the withdrawals from Westpac account 8027 was transferred to ING account 24691079 ('ING account 1079').
11. I note that a cheque presented on 13 April 2010 was dishonoured and reversed on 14 April 2010 and a bank fee was refunded on 27 January 2011. I also note that a deposit was reversed on 2 August 2010. These amounts have been deducted from the total debits.
A schedule of total debits from Westpac account 5831 account is behind Tab 4 of Exhibit KEB-2.
• Defendant's St George Account 1701
12. Having had regard to the documents under Tab 4 of Exhibit MJA-1 to the affidavit of Mark Allingham from St George Bank sworn 1 April 2016 in these proceedings, I calculate that withdrawals of $314,895.24 were made from St George account 1701.
A schedule of total debits (including withdrawals) from St George account 1701 is behind Tab 5 of Exhibit KEB-2.
• Defendant's ING account 1079
13. Having had regard to the documents at Annexure B to the affidavit of Stephen Baker from ING Direct sworn 31 March 2016 in these proceedings ('the Baker affidavit') I calculate that withdrawals of $236,456.76 were made from ING Account 1079.
A schedule of total debits (including withdrawals) from ING account 1079 is behind Tab 6 of Exhibit KEB-2.
• Loan Repayments to ING account 1079
14. Having had regard to the documents at Annexure B of the Baker affidavit I calculate that an amount of $236,453.12 has been repaid to the ING account 1079.
A schedule of repayments to the ING account 1079 is summarised behind Tab 6 - of Exhibit KEB-2.
Summary of expenditure to the Defendant
15. Except to the extent stated above, I cannot find any corresponding credits in other accounts in the name of the defendant, and hence I assume that all withdrawals and loan drawdowns were expended, or otherwise disposed of, by the defendant.
16. The defendant's total expenditure known to me during the period from 18 September 2007 to 21 June 2011 is accordingly as follows:
From Westpac account 5381 $2,604,216.89
From St George account 1701 $314,895.24
From ING account 1079 $236,456.76
Loan repayments to ING account 1079 $236,453.12
Total $3,392,022.01
[6]
Calculation of current and previous wealth of the Defendant
17. Having had regard to the foregoing, I calculate the current or previous wealth of the defendant as at 6 July 2015 as follows:
The defendant's interest in the Heckenberg property $450,000.00
St George account 1701 $23,919.89
The defendant's interest in the motor vehicles at paragraph 8(d) $602,000.00
Expenditure by defendant between 18/09/2007 to 21/06/2011 $3,392,022.01
Total $4,467,941.90"
[7]
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.
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.
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].
Section 28B of the Act is relevantly as follows:
"28B Assessment for unexplained wealth order-unexplained wealth
(1) This section applies for the purpose of making an assessment for an unexplained wealth order of the unexplained wealth of a person against whom the order is made.
(2) The 'unexplained wealth' of a person is the whole or any part of the current or previous wealth of the person that the Supreme Court is not satisfied on the balance of probabilities is not or was not illegally acquired property or the proceeds of an illegal activity.
(3) The burden of proof in proceedings against a person for an unexplained wealth order is on the person to prove that the person's current or previous wealth is not or was not illegally acquired property or the proceeds of an illegal activity."
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.
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.
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.
[8]
Orders
In the circumstances I will direct the parties within 7 days to bring in short minutes of order giving effect to my conclusions.
[9]
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 30 May 2017