Judge rules that financial statements are admissible in fraud case

Two local men who asked the Supreme Court of B.C. to exclude certain evidence in their fraud trail have had their application denied.

Two local men who asked the Supreme Court of B.C. to exclude certain evidence in their fraud trail have had their application denied.

Justice Heather Holmes ruled Wednesday in New Westminster that evidence seized by the Canada Revenue Agency (CRA) in late 2001 should not be removed from the trial of Manjit Singh Khangura of Abbotsford and Sikander Singh Bath of Mission.

The two men are accused of creating 20 false companies purporting to export shake and shingle products between about 1994 and 1997, and to have fraudulently claimed and received GST funds totaling more than $23 million, according to the voir dire (trial within a trial) ruling.

Each are on trial on 23 counts of fraud and laundering the proceeds of crime.

The voir dire brought into question the admissibility of evidence the CRA obtained in September and December 2001, when it issued “requirement notices” for three financial institutions to produce Khangura’s banking records.

The records included account-opening documents, monthly statements, deposit slips, cheques and debit memos, and contained biographical information, according to court documents.

” … the evidence is significant to the Crown as it is said to link Mr. Khangura to the proceeds of the frauds and to the companies by which the frauds are said to have taken place,” the judge stated in her voir dire ruling.

Defence lawyer Ray Enright argued the evidence should be excluded because the CRA improperly issued the requirement notices and, therefore, breached Khangura’s Charter rights.

Reference was made to a 2002 Supreme Court of Canada decision that said the CRA cannot use its requirement powers when its main purpose is to further a criminal investigation rather than an audit.

Enright argued that CRA officials in 2001 would have been aware of the “growing body of law” leading to that decision and should not have used their requirement powers when this case moved from an audit to an investigation.

Holmes stated that the CRA was acting on a “reasonable interpretation of the law” at the time, although she agreed that the intrustion into Khangura’s prviacy was “real, but not major.”

However, she said the impact on Khangura is outweighed by “society’s strong interest in the adjudication of the case on its merits,” and the evidence should be allowed.

The judge-only trial continues in B.C. Supreme Court in New Westminster.