Top B.C. court rejects challenge of U.S. forfeiture order for properties
Authorities seek to seize assets owned by man at centre of money-laundering case
A B.C. Supreme Court judge has rejected a challenge to a U.S. forfeiture order for two properties in this province linked to a $325-million international stock fraud.
The U.S. forfeiture order was recognized in 2019 as enforceable in British Columbia following a request to the Canadian government from the U.S. government.
The American forfeiture order had been agreed to by dual citizen Gregg Mulholland as part of a plea deal in 2016 where he admitted to a money-laundering conspiracy involving the stock fraud.
The two properties — a West Vancouver house and the proceeds of a Whistler property — have a combined value of about $6.6 million.
According to a B.C. Supreme Court ruling that was issued on Dec. 4, Mulholland's wife Delia, two companies that are linked to the properties, as well as the law firm Fasken Martineau DuMoulin LLP, sought to have stayed the recognition of the U.S. forfeiture order as “an abuse of process.”
They also sought wide disclosure of documents between the U.S. and Canadian governments related to the forfeiture order.
The complainants took exception to the fact that the recognition of the U.S. forfeiture order had been decided in an in camera B.C. Supreme Court session, not open to the public, and without notice to them.
However, B.C. Supreme Court Justice James Williams found the decision was in full compliance of the law, noting that Canadian rules for recognizing a foreign forfeiture order were followed.
Williams also noted the basis for the order was Gregg Mulholland's admitted guilt.
He denied the request for document disclosure.
Williams concluded that the complainants still have the ability to challenge the execution of the forfeiture order now recognized here.
“Presumably, they would do so on the basis that they are the actual beneficial owners of the subject properties, and that the forfeiture order ought not to be effective against them,” Williams said in his 27-page decision.
It is unclear whether Delia Mulholland and the other parties have moved forward with a direct challenge of the recognized forfeiture order on the basis laid out by Williams.
An online search of court files turned up no record of such an action.
Delia Mulholland's lawyer, Robert Millar with Fasken Martineau DuMoulin LLP, did not respond to questions from Postmedia. The law firm is part of the court action as a means to secure fees for its legal services.
Delia Mulholland could not be reached for comment.
In a written response, the federal prosecutor handling the case for Canada, John Gibb-Carsley, said the Attorney General of Canada will continue to take steps available under Canadian law in the recovery of assets forfeited by Mulholland as part of his plea agreement in the U.S.
“This accords with Canada's obligations under our international treaties and respect for our treaty partners,” said Gibb-Carsley.
In May 2016, Gregg Mulholland pleaded guilty in the U.S. to money laundering conspiracy for fraudulently manipulating stocks of more than 40 U.S. publicly-traded companies and then laundering more than US$250 million in fraudulent proceeds through at least five offshore law firms.
In February 2017, Mulholland was sentenced to 12 years in prison.
One of the properties Gregg Mulholland agreed to forfeit is 3630 Mathers Ave. in West Vancouver. It was purchased in full without a mortgage in 2014 for $4.85 million, according to B.C. Land Title records. The 6,000-square-foot, five-bedroom, five-bathroom home on a quarter of an acre with a pool is now valued at $5.34 million, according to B.C. Assessment Authority records.
The Whistler property was sold and proceeds of about $1.3 million paid into trust in 2016, according to a B.C. Supreme Court suit launched by the U.S. Securities and Exchange Commission to recover a penalty owed by Mulholland in a different stock fraud scheme.
In 2015, the U.S. SEC filed a certificate of pending litigation on the Mathers Avenue house, which remains in place and which prevents the property from being sold.
The Mulholland properties were among those Postmedia earlier examined in an analysis of money-laundering in real estate.
In the recent court action challenging the recognition of the U.S. forfeiture order, Delia Mulholland and the other parties assert her husband has never claimed any interest in the West Vancouver and Whistler properties.
The judge, Williams, noted that documents he reviewed including the agreement to forfeit assets satisfied him that when the U.S. made its order, it was acting on the basis that Gregg Mulholland had an ownership interest in the properties and was agreeing to relinquish his interest.