VANCOUVER — B.C. wants a co-founder of the failed cryptocurrency firm QuadrigaCX to explain the source of funds used to obtain cash, gold bars, jewelry and luxury watches.
In its third unexplained-wealth order case, the province is targeting more than $600,000 in assets of Michael Patryn, which were seized by the RCMP in 2021 from a safety deposit box in a CIBC branch in Vancouver.
The province alleges the cash, gold, jewelry and watches, including Rolexes, are linked to fraud involving QuadrigaCX. Thousands of people who held cryptocurrency are estimated to have lost a total of at least $169 million.
A filing by the province adds the unexplained-wealth order to a case submitted in B.C. Supreme Court in June 2023 where it seeks to have all the assets forfeited as proceeds of unlawful activity.
The B.C. NDP government introduced measures last year to combat money laundering that include the unexplained-wealth orders. If successful in court, the orders put a reverse onus on a person to explain where money came from to buy their assets in cases where there is a suspicion of a crime.
“Gold bars may be highly liquid, and flashy luxury goods, such as jewelry and Rolex watches, attract attention, but they are also attracting the attention of police and our government. If they are the proceeds of criminal activity like fraud, drug trafficking or money laundering, we will go after them,” B.C. Public Safety Minister Mike Farnworth said in a statement.
In a response filed last October to the forfeiture case, Patryn (also known as Michael Dhanani, Omar Dhanani and Omar Patryn) said the cash, gold, watches and jewelry are not the proceeds of unlawful activity. Patryn’s last known location was Thailand, according to the forfeiture case.
Previously, only the other QuadrigaCX company co-founder, Gerald Cotten, who died suddenly in India in 2018, was accused of having benefited while clients in Canada and other countries lost millions.
Under B.C.’s new law, the unexplained-wealth orders must be applied for in each case through the courts and meet certain tests. If successful, the information from the orders can then be used to pursue cases where the province aims to seize assets or money.
The orders have met criticism, including from the B.C. Civil Liberties Association, which has argued these type of measures undermine constitutional rights, have not been adequately tested and would be expensive to implement.
A 2020 report from the Ontario Securities Commission, which did not result in charges, concluded that in the QuadrigaCX case, only Cotten carried out fraud.
The Ontario financial markets regulator said evidence indicated Patryn had ceased to be associated with QuadrigaCX after 2016 and that the majority of client funds were deposited after his departure.
But in the civil forfeiture case filed in B.C. court last year, the province alleged an RCMP investigation determined that Patryn and Cotten took possession of customer assets held by QuadrigaCX for their own personal use and financial gain, including, in the case of Patryn, to purchase, acquire, and maintain the safety deposit box and its contents.
Lovie Horner, Patryn’s common-law spouse, was among those who deposited money in the bank account between 2014 and 2020, according to the forfeiture case.
The province has already filed unexplained-wealth orders in two other forfeiture cases, seeking, in one case, to have homeowners explain the source of $1 million used to buy a Salt Spring Island home in 2017. In that case, the homeowners have denied wrongdoing, and one person identified as a homeowner has challenged the constitutionality of the unexplained-wealth order.
In 2005, Patryn was convicted in the United States of conspiracy to transfer identification documents in relation to an online money-laundering service under his former name, Omar Dhanani. After his 18-month jail sentence, he was deported to Canada.
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