State v Maharaj [2011] FJHC 573; HAC099.2011 (20 September 2011)

IN THE HIGH COURT OF FIJI
AT SUVA
CRIMINAL JURISDICTION

Criminal Case No: HAC099 of 2011
Misc. Case No: HAM133 of 2011

STATE

v.

ANEAL MAHARAJ

Hearing: 16 September 2011
Decision: 20 September 2011

Counsel: Ms N. Tikoisuva for State
Mr. A. Singh for Accused

DECISION

[1] Mr. Aneal Maharaj has been held in custody for surrender to the United States by an order made by the Magistrates' Court pursuant to section 15 of the Extradition Act of 2003 (the Act). He appealed against the custody order, and on 5 September 2011, that appeal was dismissed. In the appeal judgment, this Court held that Fiji has a valid extradition treaty with the United States.

[2] Mr. Maharaj has also applied for a stay of the extradition proceeding. At the outset of the hearing, I relayed to both counsel that I was going to consider the grounds for stay as part of my decision to surrender Mr. Maharaj to the United States.

[3] Section 18(1) of the Act provides that the final decision to surrender lies with a judge of the High Court. In making that decision, the judge must consider the various matters specified in section 18(2), although, the list is not exhaustive.

[4] Section 4 of the Act sets out the grounds upon which Mr. Maharaj can object to his surrender to the United States. Although Mr. Maharaj has not expressly relied upon any of those grounds listed in section 4, in his application for stay, he contends that the charges against him are politically motivated and that he will not receive a fair trial in the United States.

[5] Mr. Maharaj is a citizen of Fiji. His identity is not an issue. At the time he allegedly committed the offences, he was a legitimate resident of the United States. The offences for which the extradition is being sought are contained in the Second Superseding Indictment filed on 15 October 2008 in the United States District Court, Nevada. The offences are:

Count 1, Mail Fraud, in violation of Title 18, United States Code (USC), Sections 1341 and 2;

Counts 2-4, Wire Fraud, in violation of Title 18, USC, Sections 1343, 1349 and 2;

Count 5, Structuring Transactions to Avoid Reporting Requirements, in violation of Title 31, USC, Section 5324(a)(3) and Title 31, Code of Federal Regulations, Section 103.22, and Title 18, USC, Section 2;

Counts 6-10, Money Laundering, in violation of Title 18, USC, Sections 1956(a)(1)(B)(i) and 2;

Count 11, Tax Evasion, in violation of Title 26, USC, Section 7201;

Counts 12-17, Bank Fraud, in violation of Title 18, USC, Sections 1344 and 2;

Count 18, False Declaration in Relation to a Bankruptcy Petition, in violation of Title 18, USC, Sections 152(3) and 2.

[6] Counts 8 and 10, which were first charged in the Second Superseding Indictment more than five years after they had occurred, are barred by the statute of limitations and the United States is not seeking extradition on those counts.

[7] The elements of the offence of Mail Fraud under the United States Code are:

First, the defendant made up a scheme or plan obtaining money or property by making false promises or statements;

Second, the defendant knew that the promises or statements were false;

Third, the statements were material, that is they would reasonably influence a person to part with money or property;

Fourth, the defendant acted with the intent to defraud; and

Fifth, the defendant used, or caused to be used, the mails to carry out or attempt to carry out an essential part of the scheme.

[8] The maximum penalty for Mail Fraud is a term of twenty years imprisonment, a fine of not more than $250,000, or both.

[9] The elements of the offence of Wire Fraud under the United States Code are:

First, the defendant made up a scheme or plan for obtaining money or property by making false promises or statements; and, at least one false promise or statement was made;

Second, the defendant knew that the promises or statements were false;

Third, the promises or statements were material, that is they would reasonably influence a person to part with money or property;

Fourth, the defendant acted with intent to defraud;

Fifth, the defendant used, or caused to be used, interstate wire communications facilities to carry out or attempt to carry out an essential part of the scheme.

[10] The maximum penalty for Wire Fraud is a term of twenty years imprisonment, a fine of not more than $250,000, or both.

[11] The elements of the offence of Structuring Transactions to Avoid Reporting Requirements under the United States Code are:

First, the defendant structured or assisted in structuring transactions with a domestic financial institution; and

Second, the defendant structured the transactions for the purpose of evading the reporting requirements of federal law affecting the transactions.

[12] The maximum penalty for Structuring Transactions to Avoid Reporting Requirements is a term of five years imprisonment, a fine of not more than $250,000, or both.

[13] The elements of the offence of Money Laundering under the United States Code are:

First, the defendant conducted a financial transaction involving property that represented the proceeds of mail and wire fraud;

Second, the defendant knew that the property represented the proceeds of mail and wire fraud; and

Third, the defendant knew that the transaction was designed in whole or in part to conceal or disguise the nature, location, source, ownership, and control of the proceeds of mail and wire fraud.

[14] The maximum penalty for Money Laundering is a term of twenty years imprisonment, a fine of not more than $500,000, or both.

[15] The elements of the offence of Tax Evasion under the United States Code are:

First, the defendant owed more federal income tax for the calendar year 2003 than was declared due on the defendant's income tax return;

Second, the defendant knew that more federal income tax was owed than was declared due on the defendant's income tax return;

Third, the defendant made an affirmative attempt to evade or defeat an income tax; and

Fourth, in attempting to evade or defeat such additional tax, the defendant acted willfully.

[16] The maximum penalty for Tax Evasion is a term of five years imprisonment, a fine of not more than $100,000, or both.

[17] The elements of the offence of Bank Fraud under the United States Code are:

First, the defendant knowingly carried out a scheme or plan to obtain money or property from a financial institution by making false statements or promises, with all of you agreeing on at least one particular false promise or statement that was made;

Second, the defendant knew that the statements or promises were false;

Third, the statements or promises were material, that is they would reasonably influence a bank to part with money or property;

Fourth, the defendant acted with the intent to defraud; and

Fifth, the financial institution was federally insured.

[18] The maximum penalty for Bank Fraud is a term of thirty years imprisonment, a fine of not more than $1,000,000, or both.

[19] The elements of the offence of False Declaration in Relation to a Bankruptcy Petition under the United States Code are:

First, a proceeding in bankruptcy existed under Title 11;

Second, the defendant made an oath; account; declaration; certification; verification; or statement under penalty of perjury in relation to the bankruptcy proceeding;

Third, the oath; account, declaration; certification; verification; or statement under penalty of perjury related to some material matter;

Fourth, the oath; account; declaration; certification; verification; statement under penalty of perjury was false; and

Fifth, the defendant made such oath; account; declaration; certification; verification; statement under penalty of perjury knowingly and fraudulently.

[20] The maximum penalty for False Declaration in Relation to a Bankruptcy Petition is a term of five years imprisonment, a fine of not more than $250,000, or both.

[21] The facts upon which these charges are brought are contained in the affidavit of Brian Pugh, Assistant United States Attorney, District of Nevada. I adopt those facts in my decision.

[22] In approximately 1995, Mr. Maharaj began promoting a business in California wherein he represented that people could reduce the time it took to pay off their home mortgages. He called his program the Smart plan and his business Smart Financial. In approximately 1998, Mr. Maharaj moved to Las Vegas, Nevada, where he continued to promote his mortgage reduction program, changing the name of his business to Power Net.

[23] He also promoted the purchase of Power Net Centers which gave center owners the right to earn income from the fees paid by people who joined Power Net that lived within the geographic areas assigned to their Power Net Centers. Mr. Maharaj made multiple misrepresentations to induce people to join Power Net as clients or to purchase centers, including the following:

a. There was a list of people waiting to purchase centers.

b. The distribution of clients' and center owners' compensation was controlled by a federally insured independent financial institution, First Nevada Bancorp (FNB), and if Power Net went out of business, FNB would continue to distribute their benefits. In fact, FNB was merely a corporation that Mr. Maharaj controlled with a bank account that he used to pay for his own personal purchases and expenses.

c. The center owners' investments would be passive investments, that is, center owners would not need to sell the Smart plan to receive compensation, and Mr. Maharaj would provide all assistance necessary for center owners to receive their compensation.

[24] In March 2000 Mr. Maharaj induced Luis Lizama to buy a Power Net Center by signing over his $100,000 mortgage insurance death benefit to him. He knows Lizama was dying of cancer at the time. Once Mr. Maharaj received Lizama's money, he did nothing to assist in setting up and running a Power Net Center, nor did he ever pay any compensation to Lizama. Upon Lizama's death, the insurance was paid to Mr. Maharaj and Lizama's widow lost her home.

[25] In February 2002, Mr. Maharaj induced Robert Manning to invest $25,000 in a Power Net Center and $100,000 in tax lien certificates. He deposited Manning's $100,000 into his FNB account and did not invest the funds in tax lien certificates, but caused his employees to withdraw $90,000 of Manning's money in $5,000 increments from February 19, 2001, to March 1, 2001, for his own use and benefit.

[26] From November 2002 to January 2003, Mr. Maharaj induced Peggy Charles to investment $200,000 to buy two Power Net Centers. On January 2, 2002, Charles paid $20,000 as a down payment on the purchase of two centers, and on January 6, 2002, she paid the $180,000 balance to complete the purchase of two centers. On January 7, 2003 Mr. Maharaj used a portion of Charles' $180,000 to purchase a 2003 Hummer automobile. Charles later complained to Mr. Maharaj that he did not keep his promises he had made to induce her to purchase the Power Net Centers. On September 14, 2004, Mr. Maharaj sent an e-mail to Charles attempting to explain to her why an investment in a Power Net Center was a good investment to attempt to dissuade or delay Charles from seeking a refund.

[27] From February 2003, to July 2004, Mr. Maharaj attempted to induce Alfred and Rhonda McNair to invest $1,000,000 to buy ten Power Net Centers. The McNairs sent four cheques from February 1 to February 12, 2001 totalling $400,000 to purchase four centers. Mr. Maharaj deposited the McNairs' $400,000 into his FNB bank account and thereafter used the McNairs' and other center owners' money to be used in the following transactions for his own use and benefit:

a. On February 18, 2003, he withdrew $97,500 for a cashier's cheque to purchase a Mercedes CL600 car.

b. On April 16, 2003 he withdrew $25,000 for a cashier's cheque to purchase a boat.

[28] He continued to try to persuade the McNairs to purchase an additional six centers by telling them that the value of a center had increased from $100,000 to $200,000, but if the McNairs purchased their centers before January 31, 2004, they could still purchase the additional six centers for the reduced price of $100,000 per center. He had not increased the price of a center to $200,000 and never charged anyone $200,000 per center. On February 13, 2004, he sent a fax to Rhonda McNair attempting to explain to her why an investment in a Power Net Center was a good investment and why the McNairs should purchase the additional six centers.

[29] On or about June 21, 2004, Mr. Maharaj set up an interstate telephone conference call to multiple center owners. The purpose of the conference call was to encourage center owners to continue their activities with Power Net.

[30] Mr. Maharaj earned substantial income from the sale of Power Net Centers in 2003, but evaded paying income tax for by failing to file a tax return. He concealed his income and personal use of Power Net money by using other individuals to prepare and negotiate cheques and as signors on the business accounts he opened in the names of Power Net and FNB. He also had signature stamps in the signors' names that he used to stamp cheques and did not put his own name on any cheques.

[31] Between December 2003 and August 2004, Mr. Maharaj defrauded Countrywide Home Loans, Inc, by making false representations, or directing others to do so, in loan applications to purchase or refinance the purchases of five homes.

a. In December 2003, he directed his girlfriend, Kushmira Prasad, to pose as the buyer of a house at 2817 High Sail Court in Las Vegas. At Mr. Maharaj's instruction, Prasad applied for a mortgage loan from Countrywide by misrepresenting her income and bank account information in the loan application. In reliance upon those misrepresentations, Countrywide financed the purchase.

b. Between December 2003 and February 2004, Mr. Maharaj applied to Countrywide for a loan to finance the purchase of a house at 2801 High Sail Court by misrepresenting his income and bank account information. Countrywide again financed the purchase in reliance on the misrepresentations.

c. In February 2004, he applied to Countrywide for a loan to refinance the purchase of a house at 85 E. Conn Avenue in Las Vegas, misrepresenting his income and bank account information. Countrywide financed the purchase. In June 2004, he successfully applied to Countrywide for another loan to again refinance the purchase of the 85 E. Conn Avenue house by misrepresenting his income information.

d. Between February and March 2004, he applied to Countrywide for a loan to finance the purchase of 3320 Serene Avenue in Henderson, Nevada, again by misrepresenting his income information. Countrywide financed the purchase.

e. Between July and August 2004, he directed Prasad to apply for a loan to refinance the purchase of a house at 81 E. Conn Avenue, misrepresenting her income information. Prasad had previously posed as the buyer of the house when, in fact, Mr. Maharaj exercised control over the property. Countrywide again approved the loan.

[32] On November 8, 2006, Mr. Maharaj made a material false statement, under the penalty of perjury, in his bankruptcy case in the US Bankruptcy Court, District of Nevada, when he failed to list his house at 81 East Conn Avenue on the schedule of his bankruptcy petition, which required him to list any real property he had and the nature of his interest in the real property.

[33] No objection was taken in the Magistrates' Court that the alleged offences were not extradition offences under the Act. In any event, I am satisfied that the unlawful conduct alleged in these offences, if committed in Fiji, would constitute offences under the Penal Code/Crimes Decree, the Income Tax Act and the Proceeds of Crime Act. Furthermore, I am satisfied that there exists sufficient factual foundation to sustain these charges both in Fiji and the United States.

[34] The alleged offences were wholly committed in the United States and the charges are brought under a valid statue. Mr. Maharaj is not facing any other criminal prosecution in Fiji or any other country except in the United States. Like in the United States, these offences, if committed in Fiji, are punishable by fine or imprisonment, and not by death. These matters are not contested.

[35] The court also finds that the requirement of "specialty" is satisfied. The "rule of specialty" means that the court must find that the prosecution is limited to the offence upon which extradition is sought. Article 7 of the Treaty binds the United States to confine the prosecution of Mr. Maharaj to only those charges contained in the Second Superseding Indictment dated 15 October 2008.

[36] Mr. Maharaj advances the following grounds to seek a stay of the extradition proceeding:

(a) There is a real likelihood that I may not have a fair trial to answer and defend the charges as currently preferred against me in the Federal District Court in Las Vegas, Nevada, USA on the grounds that:

(i) There is a history of inordinate delay in the prosecution and the hearing of the charges previously; and which is likely to have a prejudicial effect on my successful defence of the charges; and a denial of my constitutional right to a fair trial;

(ii) There is a real likelihood that I may not have the advantage of an attorney of choice because of limited financial resources for the defence of the charges against me thereby prejudicing my successful defence of the charges; and a further breach of my constitutional right to a fair trial;

(iii) There is a strong likelihood that I may not be able to interview and make available to the Court prospective witnesses that can give testimony that is likely to vindicate me at the trial;

(iv) There is a real risk that my prospective witnesses may not be made available to me or that the witnesses have a failed memory of the events because of the passage of time and the inordinate delay in the proceedings.

[37] The jurisdiction to stay criminal proceedings arises from the court's inherent powers to prevent abuse of its own process (Connelly v. DPP (1964) AC 1254). Abuse of process is not a term that sharply defines the matter which it relates. As Lord Philips pointed in a recent judgment of the Privy Council in Fuller v The Attorney General (Belize) [2011] UKPC 23 (9 August 2011) at p.3:

"... it can describe (i) making use of the process of the court in a manner which is improper, such as adducing false evidence or indulging in inordinate delay, or (ii) using the process of the court in circumstances where it is improper to do so, as for instance where a defendant has been brought before the court in circumstances which are an affront to the rule of law, or (iii) using the process of the court for an improper motive or purpose, such as to extradite a defendant for a political motive."

[38] In this case the allegation of abuse of process is founded largely, though not exclusively, on the delay that has occurred in holding a trial in the United States.

[39] Oppressive delay no doubt can justify a stay of the prosecution. However, Lord Lane CJ in AG's Reference (No.1 of 1990) [1992] QB 630 described delay as "the most unusual ground" for stay and said at p.644:

"..... no stay should be imposed unless the defendant shows on the balance of probabilities that owing to the delay he will suffer serious prejudice to the extent that no fair trial can be held: in other words, that the continuance of the prosecution amounts to a misuse of the process of the court."

[40] The basic requirement for a permanent stay is that a fair trial has become impossible, making continuance of the prosecution an abuse of process. It is only in rare cases where the court is prepared to grant a permanent stay even though a fair trial undoubtedly remains possible. The leading authority is the decision of the House of Lords in R v Horseferry Road Magistrate's Court, Ex parte Bennet [1993] UKHL 10; [1994] 1 AC 42, where, although the fairness of the trial was not in question, the court granted a stay because the circumstances involved an abuse of power which so offended the court's sense of justice and propriety that the entire prosecution was tainted as an abuse of process.

[41] The proceeding before this court is an extradition proceeding. The trial will be held in the United States if this court decides to surrender Mr. Maharaj to the United States. Therefore, the court's exercise of discretion to stay is confined to the extradition proceeding (Fuller v The Attorney General (Belize) supra). The court has no jurisdiction to stay the trial that is to be held in the United States.

[42] Mr. Maharaj, in his affidavit, refers to various matters, to support his grounds for a stay. The issues raised in the affidavit are argumentative and relates to his trial in the United States. Of course, Mr. Maharaj, like any other defendant, will be entitled to all the safeguards for a fair trial that are provided in the Constitution of the United States. He has a right to fair trial by an impartial jury. He has a right to a speedy trial. He has a right to an attorney and if he cannot afford one, the court in the United States has the power to appoint an attorney to represent him. He has a right to cross-examine his accusers. He has a right to have compulsory process for obtaining witnesses in his favour. He has a right to the presumption of innocence and to compel the government to prove the charges against him beyond a reasonable doubt. Given all these safeguards that are available to the defendants in the United States, there is no basis to conclude that Mr. Maharaj's trial will be oppressive or unfair.

[43] Furthermore, whether Mr. Maharaj's right to a speedy trial under the Constitution of United States of America has been violated is a matter for the United States District Court to consider. Whether there has been a prosecutorial misconduct by the Office of the United States Attorney or the FBI as contended by Mr. Maharaj in his affidavit, is also a matter for the United States District Court to consider. If these violations of rights are proven, the remedy lies with the courts in the United States.

[44] As far as the extradition proceeding is concerned, there is no evidence of abuse of process by the authorities in Fiji or the United States, to justify a stay. Stay is refused.

[45] Taking all these matters into account and Fiji's obligation towards international cooperation to combat crime, I conclude that Mr. Maharaj be surrendered to the United States for trial on counts 1-7, 9 and 11-18 contained in the Second Superseding Indictment filed on 15 October 2008 in the United States District Court, Nevada. Accordingly, I issue a surrender warrant for Mr. Maharaj pursuant to section 19 of the Extradition Act of 2003.

Daniel Goundar
JUDGE

At Suva
20 September 2011

Solicitors:
Office of the Director of Public Prosecutions for State
Messrs. Kohli & Singh for Accused