Taylor v United States of America

Indictment 6 Annexed to Mr Taylor's affidavit is a copy of the relevant indictment in the United States District Court for the District of Colorado naming Mr Taylor as defendant. The Introductory Allegations in the indictment are as follows: 1. Between in or about January 2001, and continuing through in or about June 2002, in the State and District of Colorado and elsewhere, the defendant, JAMES S. TAYLOR, knowingly executed and attempted to execute a scheme to defraud issuers of residential home loans, including First Franklin Financial, Long Beach Mortgage Company, Fort Worth Mortgage, First National Bank of Arizona, Accredited Home Loans, Countrywide Home Loans, Express Capital Lending, and Fremont Investment & Loan. 2. It was part of the scheme for TAYLOR to cause to be prepared residential home loan applications in the names of various applicants, including David Jenkins, Ahmed Alazawy, a/k/a Ahmed Al Azawy, Sean Walters, Scott Barber, Hussain Oda Alhachami, Adel Almusafarah, Juana Escobedo, Anthony Mulie, Brandon Kortgard, Santiago Pineda, Robin Osterlund, Alaa Maliky, Paula Jenkins, Tisha McCurdy, Laurie Benson, Curtis Smith, Don Mason, Ali Al Taei, Carolyn Barber, Mohammed Ismail, and Gosham Al Mosawi. These applications contained materially false and fraudulent representations, including representations about the applicants' employment, income, and intent to use the homes secured by the loans as their primary residences. 3. It was a part of the scheme for TAYLOR to cause many of the loan applications described above to be submitted to lenders willing to issue loans without requiring the production of extensive documentation supporting the representations about the applicant's employment and income. In some instances, however, TAYLOR caused the production of false documents which supported the false and fraudulent representations about the applicants' employment. 4. It was a further part of the scheme for TAYLOR to cause many of the loan applications described above to falsely state that the applicants were using their own funds to make down payments on the homes they were purchasing. In most instances, however, TAYLOR or his associates provided the funds used as down payments. TAYLOR caused the true source of these funds to be hidden by obtaining or causing others to obtain bank checks or certified checks which listed the applicants as the remittors and which were presented at the loan closings. The funds supporting these checks were usually obtained from a company TAYLOR owned, Dingo Trading Limited (Dingo), or from companies controlled by his associates. These funds were then returned to Taylor through companies he or his associates controlled, including Dingo, Amerimax Realty, Inc., JJ Real Estate Investments, Inc., and AJG Constructions, through disbursements made at the loan closings. These payments were mis-characterized on documents prepared in connection with the closings. 5. It was part of the scheme for TAYLOR to cause many of the applicants described above to use proceeds of the loans described above to purchase properties owned by his company, JJ Real Estate Investments, Inc. 7 The indictment then lists eleven counts of criminal misconduct against Mr Taylor, in summary alleging execution or attempted execution of the schemes outlined in paragraphs 1-5 of the Introductory Allegations in violation of Title 18 of the United States Code Sections 1344 and 2, Sections 1343 and 2, or Section 1957. The relevant offences for which Mr Taylor stands accused can be further summarised as: bank fraud; wire fraud; and money laundering. 8 The penalties in the United States following conviction of these offences is a maximum of 20 years prison and/or fine for bank fraud, 30 years prison and/or $1 million fine for wire fraud, and 10 years prison and/or fine for money laundering.

Background 9 Mr Taylor is aged 51 years and is a real estate consultant on the Gold Coast in Queensland. He is a US citizen, and a permanent resident in Australia. His wife, Mrs Maria Lila Taylor, is an Australian citizen. He has two adult children, both of whom are also Australian citizens. His evidence in his affidavit affirmed 4 April 2012 is that he and his family have travelled regularly between Australia and the United States since 1982, but they decided to settle in Australia in the early 2000s. 10 Mr Taylor deposes that he spent some time in the US navy, but that otherwise he has spent his life working in the financial planning and property industry. He also deposes that he has substantial business, commercial and property interests in Australia. In his affidavit Mr Taylor explains in detail the numerous residential and commercial development projects in which, through 3JL Pty Ltd of which he is the sole director, he has significant involvement. He also gives evidence in relation to the property developments in which he is involved as consultant to a property development firm on the Gold Coast. 11 Mr Taylor deposes that he first became aware of the possibility that charges might be brought against him in or about January 2007 after he had resettled in Australia. He states that while he was still living in the United States he had assisted the US Internal Revenue Service in 2004 in its investigation of the activities of a third party, Mr Gerald Small, however he was not informed nor was he otherwise aware of any investigation into his own conduct until January 2007. Mr Taylor instructed solicitors in Australia to represent him in relation to the resolution of charges he was facing after 7 February 2007 as well as the issue of extradition. In about November 2007 Mr and Mrs Taylor formally gave their consent to the forfeiture to the US of their residence in Colorado with the proceeds of sale being held in escrow pending resolution of the charges. 12 Mr Taylor deposes that after November 2007 his solicitors received no further information or communications from the US authorities, and that in March 2010 he instructed his solicitors to close the file. He claims that he next heard in relation to the matter on 6 October 2011 when he was arrested at his workplace and taken into custody in relation to the current extradition proceedings. 13 On 11 October 2011 Mr Taylor was granted bail in the Southport Magistrates Court pursuant to s 15(6) of the Extradition Act, resulting in his release from custody on or about 13 October 2011 on conditions which included: 1. a cash deposit/surety in the sum of $100,000. 2. that he reside at his current address of 146B Hedges Avenue, Mermaid Beach. 3. that he report to police twice a week; and 4. that he surrender his passport and not attend upon or enter a point of international departure. 14 On 23 January 2012 a hearing took place before Magistrate Duroux in the Southport Magistrates Court to determine Mr Taylor's eligibility for surrender to the United States under s 19 of the Extradition Act. Mr Taylor's bail was extended by the Magistrate until delivery of the Magistrate's decision last week, which was that Mr Taylor was eligible for surrender to the United States. The Magistrate by warrant in statutory form ordered that Mr Taylor be committed to prison to await surrender to the United States as required by s 19(9)(a) of the Extradition Act.

Submissions of Mr Taylor 15 Mr Taylor submits that if granted bail he would be willing to comply with any conditions considered appropriate by the Court, including the conditions previously required by the Magistrate. Also before the Court is an affidavit affirmed by Mr Mark Rogers, who deposes that he is a friend of Mr Taylor, that he previously deposited $100,000 by way of bank draft as surety for the bail granted to Mr Taylor by the Magistrate, and that he would be prepared again to deposit a substantial cash deposit for Mr Taylor if required by this Court. 16 In submissions filed in Court this morning by his solicitors, Mr Taylor claims that "special circumstances" justifying his release on bail are: 1. he came to Australia as a legitimate migrant before he received any notice of the charges 2. he has made consistent efforts to assist in the administration of justice in their investigation prior to any charges being laid against him 3. after he was charged he remained in contact with the US authorities and extensively cooperated with them in relation to the charges 4. there was a four year unexplained delay between when he was indicted for the offences in 2007 and when steps were taken to extradite him in 2011 5. there will be a further delay before there is final determination of the application for extradition 6. Mr Taylor poses no risk or danger to any individual or to the community 7. he has strong family and business ties to the Gold Coast 8. his significant business and financial interests are contingent on his being in the community to conduct and preserve those interests and will be decimated in the event of an extended inexplicable absence from them 9. he has previously been granted bail pending the extradition proceedings and complied in full with the conditions of that bail 10. a substantial surety is available. 17 Mr Taylor also claims that he has strong prospects of succeeding on a review of the decision of the Magistrate because the Magistrate erred in reaching the decision that Mr Taylor is eligible for surrender to the United States. In summary, Mr Taylor claims that: the Magistrate gave no real consideration to the principles explained by the Full Court in Hermanowski v United States of America (2006) 149 FCR 93. it is clear from paragraphs [17]-[20] of the Magistrate's decision that he did not conduct the process of reasoning as to whether each of the charges against Mr Taylor had been "properly laid" in the United States or that the description of facts, purportedly relied on by the first respondent, set forth reasonable grounds for believing that each offence alleged had been committed by Mr Taylor in the United States. there was not sufficient consideration of the matter by the Magistrate for the Magistrate to have found Mr Taylor eligible for surrender. the material provided by the United States in support of its request for Mr Taylor's extradition before the Magistrate did not set forth "reasonable grounds" for believing that an offence had been committed in the United States and that Mr Taylor had committed it. Rather, such material contained a very vague, "broad brush" discussion of the case against Mr Taylor, and included material which was unattributed, dated and all hearsay. 18 Finally, Mr Taylor claims that he has demonstrated that he is not a flight risk by reference to his strong family ties and responsibilities, his substantial business interests on the Gold Coast, his previous compliance with bail conditions and the substantial surety which is available.

Bail in extradition proceedings 19 In summary, s 21(6)(f)(iv) of the Extradition Act permits the Court to order the release on bail of a person who has been found eligible for surrender to extradition on such terms and conditions as the Court thinks fit providing that there are special circumstances justifying such a course, pending review of the decision determining eligibility for surrender. 20 The leading Australian case in which principles relevant to the grant of bail in such circumstances were considered is the decision of the High Court in United Mexican States v Cabal (2001) 209 CLR 165. In that case the Court examined the policy underlying the legislative requirement that bail only be granted pursuant to s 21(6)(f)(iv) of the Extradition Act in "special circumstances". At 189-190 Gleeson CJ, McHugh and Gummow JJ noted that where a person is found in Australia and an extraditable offence is alleged against him or her, as a general proposition this country is obliged to return that person to the country seeking extradition. Accordingly, it follows that Australia has a very substantial interest in surrendering the person in accordance with its treaty obligations. At 190-191 their Honours observed that: Because the typical extraditee is a person who has fled from another country after committing a serious crime, granting bail to that person provides a further opportunity for him or her to flee from the reach of the extraditing country. The ever present risk of flight in extradition situations was the rationale for the "special circumstances" requirement… 21 Their Honours continued at 191: Given this background and the rationale for the "special circumstances" condition, bail in extradition cases should be granted only when two conditions are fulfilled. First, the circumstances of the individual case are special in the sense that they are different from the circumstances that persons facing extradition would ordinarily endure when regard is had to the nature and extent of the extradition charges. This means that the circumstances relied on must be different in kind from the disadvantages that all extradition defendants have to endure. To constitute "special circumstances", the matters relied on "need to be extraordinary and not factors applicable to all defendants facing extradition". Secondly, there must be no real risk of flight. Absence of a real risk of flight is ordinarily a necessary but not a sufficient condition of bail. When there is a real risk of flight, ordinarily bail should be refused. Further, the risk of flight should be considered independently of the effect of the proposed bail conditions. In this area of law, the history and character of the defendant and the potential punishment facing the defendant are likely to be surer guides to the risk of flight than bail conditions - even rigorous conditions. A person, fearing punishment and inclined to flee, is unlikely to be diverted from that course by the prospect that his or her sureties may forfeit their securities or by stringent reporting conditions. Even if the defendant has to report twice daily to the police, he or she will have a period of twelve to fourteen hours in which to leave Australia. 22 Notwithstanding these principles, any real risk of flight should be decisive against the grant of bail (at 194). 23 Finally - and importantly - in Cabal at 191 the plurality also observed: Even when special circumstances are proved and there is no real risk of flight, it does not follow that bail must be granted. For example, the defendant may pose a risk to the community or a particular individual. In addition, bail must become harder to obtain as the case proceeds through the judicial system. Once the Magistrate has found that the defendant is eligible for surrender, public interest factors similar to those that require a convicted defendant to be imprisoned also require that a defendant in extradition proceedings be kept in custody. Before a Federal Court judge grants bail, the defendant ordinarily will need to show that the application for review has strong prospects of success as well as special circumstances and an absence of risk of flight. (Emphasis added.) 24 Clearly in each case the existence or otherwise of "special circumstances" depends on the particular facts of that case and the entirety of the circumstances of the applicant must be considered. 25 The cases have demonstrated that certain factors in combination with others may constitute "special circumstances" in a particular case. So, for example: in Moloney v New Zealand [2005] FCA 245 Madgwick J ordered that bail be allowed in circumstances where: the Magistrate had acknowledged that the case for extradition was finely balanced and there were above average prospects of a successful review; the applicants were people of outstanding character apart from the present allegations; practically, there were no prospects of flight; and the applicants had previously been on bail and scrupulously complied with bail conditions. In Zentai v Republic of Hungary [2009] FCA 511 and Kalejs v Republic of Latvia [2001] FCA 676 the trial judges considered that the advanced age and medical condition of the respective applicants constituted "special circumstances". In United States of America v Green (2009) 257 ALR 252 Perram J considered that the following combination of circumstances were not ordinarily possessed by extraditees generally or by extraditees sought on rape and reckless endangerment charges: having a close family unit who would seek to ensure the applicant's presence at the eventual hearing; being needed on the family farm; having no passport; being confronted with domestic offences which might take some time to come to trial; and being subject to proceedings which might not result in a custodial sentence. 26 However: in Republic of Poland v Ginter [2009] FCA 262 Gilmour J considered, inter alia, that the delay in making the request for the person's extradition was not a special circumstance warranting the grant of bail. in Snedden v Republic of Croatia [2007] FCA 1902 where Mr Snedden had made no submissions pointing to an error in the decision of the Magistrate, Cowdroy J found that, despite the apparent delay between the date of the alleged offences in 1991 and the investigation, Croatia acted promptly to seek extradition following the investigation. Accordingly no special circumstances had been demonstrated. In Barney v United Kingdom [2012] FCA 51 Robertson J found that the following factors did not constitute "special circumstances": claims of the willingness of the applicant to surrender himself to the authorities and to be held in immigration detention; the applicant's engagement to be married to a person in Australia; being held in held in maximum security and not being allowed visits or telephone contact with his de facto partner; the proposed challenge to the extradition proceedings; and that the applicant did not pose any risk to the community. In Haddad v Lyon [2003] FCA 1623 Emmett J considered that being incarcerated in a maximum security prison, being depressed about such incarceration, and concern about a spouse being unable to speak English (although able to reside with friends) were not "special circumstances". In O'Donoghue v Ireland [2009] FCA 394 Gilmour J held that the following factors did not constitute "special circumstances": the dependency of the applicant's family on his income and the rent of the family home; the applicant's previous compliance with bail conditions; he applicant's ill health; the fact that close family members had either surrendered their passports or had no passports; and the fact that - despite interviewing the applicant prior to his departure from Ireland - the Irish Police had not charged the applicant until after he had been living in Australia for two years. In Habib v The Kingdom of Belgium [2004] FCA 486 RD Nicholson J was not persuaded that facts including that the applicant was charged with fraud (and not a "serious" crime) was a special circumstance, although his ability to pay a surety for bail and the lengthy time already spent in custody awaiting extradition were "special circumstances". However as his Honour did not consider that the applicant's application for review had strong prospects of success the application for bail was refused.

Consideration 27 In summary, Mr Taylor contends that special circumstances attendant upon his case are: he has significant business interests in Australia requiring his attention; he has a close knit family; he has scrupulously adhered to previous bail conditions; he has been co-operative with US authorities; there has been considerable delay between the laying of charges in 2007 and the extradition proceedings in 2011. 28 I am satisfied from the evidence before the Court that Mr Taylor is indeed well-established in Australia with his family and his business interests, that he has sought to co-operate with US authorities in the past in relation to their investigations, and that he has previously adhered to bail conditions. 29 However I am not persuaded that Mr Taylor has demonstrated special circumstances supporting an order for bail pursuant to s 21(6)(f)(iv) of the Extradition Act. I am not persuaded that any of the factors upon which he relies, either individually or in combination, are in any way "different in kind from the disadvantages that all extradition defendants have to endure" (Cabal at 191). I note Mr Taylor's contentions in relation to the prospective damage to his business affairs should he remain in custody until review of the decision of the Magistrate, however such unfortunate consequences are potentially applicable to any person seeking bail pending review of a determination of extradition eligibility. I also note Mr Taylor's close family and friendship bonds in his place of residence, but again these advantages are not unusual in respect of applicants in his position, as is clear from such cases as Barney v United Kingdom, Haddad v Lyon and O'Donoghue v Ireland. The fact that Mr Taylor had co-operated with the US authorities prior to and following the indictment, while potentially testament to his good character, is not unusual or a "special circumstance": O'Donoghue v Ireland. Finally, the fact that there has been some delay between presentation of the indictment and the commencement of extradition proceedings in these proceedings, while unexplained, does not in my view constitute special circumstances supporting an order for bail under s 21(6)(f)(iv). 30 The first respondent also contends that Mr Taylor is a flight risk because, inter alia: he has refused to surrender to the extradition request; the charges are very serious, involving allegations of dishonest and deceitful conduct and personal gain, and potentially heavy penalties; an inference may be drawn that Mr Taylor fled the United States to avoid justice because he was aware of the police investigation into the activities of his co-accused; he has significant financial and property resources. 31 In my view, however, there is also compelling evidence that Mr Taylor co-operated extensively with the US authorities both before he left the United States and since charges were laid. Further, the fact that Mr Taylor has refused to surrender to the extradition request does not, in my view, support a claim that he is a flight risk - rather Mr Taylor is exercising his rights to challenge the decision of the Magistrate. 32 On balance however, the facts that Mr Taylor is relatively young, apparently healthy, facing serious penalties in the United States and apparently possessed of substantial resources support a finding that there is at least a slight risk of flight, whether within Australia or overseas. As Gleeson CJ, McHugh and Gummow JJ observed in Cabal at 189: In a particular situation, the special circumstances may be so cogent that bail should be granted although there is a slight risk of flight. Nevertheless, to grant bail where there is a real risk of flight could only be justified in the most extraordinary circumstances. In the vast majority of cases, the proper exercise of discretion requires the refusal of bail if there is such a risk. To grant bail where a risk of flight exists is to jeopardise Australia's relationship with the country seeking extradition and to jeopardise our standing in the international community. 33 In this case there are no such cogent special circumstances warranting that bail should be granted. 34 Finally, I am not persuaded on the material before me that Mr Taylor has strong prospects of success in respect of his application for review of the Magistrate's decision. In Ngo v United States of America (2009) 177 FCR 411 Emmett J observed at [24]: However, it is not necessary for the material before the Magistrate to be evidence sufficient to show a case against the person to be extradited. The description of the facts, by way of affidavit, statement or declaration, need do no more than set forth facts disclosing reasonable grounds for belief. The facts may include facts from which the reasonableness of the relevant belief can be established. 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. A description of the facts requires no more than a verbal portrait of the facts that sets forth reasonable grounds for believing that an offence has been committed and that the person whose extradition has been sought committed it (Hermanowski v United States of America (2006) 149 FCR 93 at [58]-[59]). 35 In the same decision Graham J explained: 51 It will be appreciated that the [Extradition] Act applied in relation to the United States subject to the Treaty and the limitations, conditions, exceptions and qualifications contained therein that required the United States request for extradition of the appellant for prosecution to be supported by a description of the facts, by way of affidavit, statement or declaration, setting forth reasonable grounds for believing that an offence had been committed and that the appellant committed it (see Article XI(3)(c) of the Treaty). 52 By virtue of s 19(2) of the Act the appellant was only eligible for surrender in relation to the extradition offence for which his surrender was sought if the relevant documents satisfying Article XI(3)(c) were produced to the second respondent. 53 The documents required by Article XI(3)(c) of the Treaty are directed to establishing, in the case of a person who has been charged, that the charge was properly laid (see Hermanowski at [48]). 54 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 requisite belief must be that of a reasonable person in the position of the magistrate, i.e. the question should be viewed objectively and not subjectively (see Hermanowski at [55]). 55 The expression 'by way of affidavit, statement or declaration' indicates the vehicles that may be employed to describe 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 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 (see Hermanowski at [57]). 56 Article XI(3)(c) requires something different from that which is required by Article XI(2)(b). 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 the which the reasonableness of the relevant belief can be established. Those facts may include the state of the investigations conducted up to and including 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, include facts disclosing the reasonable grounds for belief (see Hermanowski at [58]). 57 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. 'Setting forth' should be treated as equivalent to 'that would, if correct, provide' (per Hermanowski at [59]). 58 A clear distinction is to be drawn between a description of the facts that would, if correct, establish a prima facie case, that would, if correct, provide reasonable grounds for believing that an offence has been committed and that would, if correct, provide 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, the description of the facts need not descend to the detail of how the facts will be proved (see Hermanowski at [60]). 59 Article XI(3)(c) of the Treaty 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 offence has been committed and that the appellant committed it. This would be sufficient even if the description of the facts fell short of proof. 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 availability to give evidence be confirmed and their 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 (see Hermanowski at [61]-[62]). 36 In his decision of 4 April 2012 (United States of America v James Scott Taylor MAG 173218/11(7) Magistrates Court at Southport) the Magistrate carefully explained the applicable legislative provisions and relevant cases, and considered in great detail the submissions of counsel and the material upon which the first respondent relied for the order of extradition. The Magistrate then concluded: [17] … I have come to the conclusion that the affidavit of Mr Flynn gives a detailed explanation and summary of the involvement of Mr Taylor in relation to each of the Counts on the Indictment. [18] In my view upon reading the affidavits of Kirsch and Flynn there is sufficient evidence linking Mr Taylor to the commission of each of the offences contained in the indictment. I come to this conclusion bearing in mind the caution that needs to be exercised in relation to the nature and quality of any hearsay evidence relied upon by the Applicant. The affidavits have exhaustively set out a very detailed summary of the facts. [19] Mr Chowdhury used the expression that "more than ample evidence has been provided to make the necessary findings" or words to that effect on several occasions during the hearing. The test to apply is less than prima facie. I have an inclination of mind that the offences have been committed and that the Respondent committed them. [20] I am satisfied that the Applicant has discharged its onus to satisfy me to the requisite standard that the supporting documents in relation to the offences have been produced to this Court. I am satisfied that I have before me a description of the conduct constituting the offences and a description of the facts, by way of affidavit, statement or declaration, setting forth reasonable grounds for believing that offences have been committed and that the person sought to be extradited committed them. 37 In light of the careful consideration of the case by the Magistrate and the conclusions reached by his Honour, I am not persuaded for the purposes of this hearing that the Magistrate failed to properly apply principles as articulated in decisions such as Ngo and Hermanowski, as submitted by Mr Taylor.

Conclusion 38 The appropriate order is that the interlocutory application filed 5 April 2012 be dismissed. I certify that the preceding thirty-eight (38) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier.