PacNet had opposed the release of 521 boxes of seized records found at an office storage facility, arguing it went beyond the scope of what the U.S. had requested.
A B.C. Supreme Court judge has ordered hundreds of boxes of business records from Vancouver-based payment processor PacNet be turned over to U.S. authorities for a criminal fraud case against the company’s senior executives.
Records in Canada can be turned over in the prosecution of U.S. criminal cases under Canadian law.
PacNet Services Ltd. and some of its executives have been accused by U.S. authorities of mail and wire fraud and conspiracy to commit money laundering for their alleged role in worldwide direct-mailing scams, often targeted at seniors.
PacNet had opposed the release of 521 boxes of seized records found at an office storage facility, arguing it went beyond the scope of what the U.S. had requested and it was not appropriate for Canadian officials to approve a further search at the storage facility.
Edelmann said in his written ruling that the U.S. was requesting assistance in searching various business documents, and when Canadian officials became aware that some of those documents were stored off-site, outside of the company’s offices, a further search was approved on behalf of the federal minister of justice.
Edelman ruled the search of the storage facility was not far enough removed from the scope of the initial request to bring the approval of the search into question.
“I am satisfied on the materials before me that the warrant was executed according to its terms and the relevant reports under the Act were filed,” wrote Edelmann, referring to Canada’s Mutual Legal Assistance in Criminal Matters Act.
The charges have yet to be tested in court.
In a 2019 statement, PacNet called the U.S. indictment factually flawed and vowed to fight the charges.
“The allegations are focused on a small portion of PacNet’s business that PacNet voluntarily exited prior to any action by the United States,” the company said.
PacNet added, “the indictment further ignores the fact that the U.S. Justice Department has submitted evidence and has relied upon the effectiveness of PacNet’s compliance program in other cases to prove that certain PacNet clients actively deceived PacNet to evade its compliance program.”
From 1994 until Sept. 22, 2016, PacNet processed hundreds of millions in payments for a variety of clients — including mass-mail clients — some of whom sent fraudulent notifications to consumers in the U.S. and around the world, according to the American indictment.
Several individuals involved in operating mass-mail companies that processed payments through PacNet have been convicted of U.S. fraud charges.
The indictment alleges that the defendants knew that multiple PacNet mass-mail clients obtained payments from victims through fraudulent notifications and nonetheless approved depositing those payments into U.S. bank accounts, allowing the clients to benefit from the fraud.
Day, who was in charge of PacNet’s Vancouver headquarters, and Davis, who oversaw PacNet’s office in Shannon, Ireland, each earned about Cdn$15 million from 2013 through 2015, the last three full years that PacNet was in operation, according to the indictment.
There have been no criminal proceedings against PacNet or its executives in Canada.
The province alleged PacNet, Day and others engaged in activities including money laundering, fraud, using mail to defraud, and failing to report suspicious financial transactions to Canada’s regulators.