At a time of rapidly escalating property values, the Court of Appeal emphasised proceeds of crime legislation allows any capital gain to also be confiscated when criminal profits are laundered through real estate.
Paul Andrew Snowden was sentenced to six years three months following conviction on methamphetamine supply charges. He is fighting civil action taken by police under the Criminal Proceeds (Recovery) Act to seize a lifestyle property on Karaka Road in south Auckland owned by a family trust he controls. Following a High Court trial, the property was ordered to be sold with $743,300 forfeited as proceeds of crime. After clearing a mortgage over Karaka Road, a surplus of some $90,000 would remain if sold as at January 2018 values. The property was originally purchased in 2001 for $460,000.
On appeal, Snowden claimed the forfeiture figure of $743,300 was a gross overestimate of cash generated from methamphetamine dealing. In challenging police estimates, proceeds of crime legislation required Snowden to prove what is the correct figure, the Court of Appeal said. He provided no convincing evidence. It is uncommon for drug dealers to keep precise accounting records.
Any capital gain derived from ‘tainted’ property is also potentially available for forfeiture as proceeds of crime, the court said. At the High Court trial, it was determined cash from drug dealing was used in part to pay down the mortgage on Karaka Road; the property was ‘tainted.’
Karaka Road is owned by a family trust. Snowden and close relatives are named beneficiaries. Police said on appeal that while the trial judge did order sale of Karaka Road to free up cash for a criminal proceeds forfeiture order, it was a mistake for the judge to then rule the property itself was not forfeit on grounds of ‘undue hardship;’ doing so meant Snowden as a Trust beneficiary could access the surplus following sale.
The cash surplus on sale is also forfeit, the Court of Appeal ruled. Relief from forfeiture on ‘undue hardship’ grounds required proof Snowden as a beneficiary of the Trust would be prejudiced. No such evidence was given at the High Court hearing.
Snowden v. Commissioner of Police – Court of Appeal (26.07.21)
21.128