Inadvertent Disclosure of Confidential Informant Sank Canadian E-Pirate Money Laundering Prosecution

In November 2018, as Dipping Through Geometries previously reported, the Public Prosecution Service of Canada (PPSC) stayed (i.e., discontinued) a major money laundering case stemming from Operation E-Pirate that had been brought against a British Columbia-based money-transfer business, Silver International Investments Ltd., and two individuals who ran the laundering operation that enabled organized criminals to launder drug money.  At the time, the Royal Canadian Mounted Police (RCMP) did not disclose the specific reasons for the stay, but stated generically that the charges “were stayed for several reasons that materialized during the course of the file.”

On January 9, Global News reported that the case was stayed “because federal prosecutors mistakenly exposed the identity of a police informant who they feared could have been killed if the case proceeded.” The article stated that from review of court filings and interviews of sources with knowledge about the decision to stay E-Pirate charges,

federal prosecutors mistakenly revealed the identity of a secret police informant when they released a large volume of digital files to Silver’s lawyer in a standard evidence disclosure process.

While combing through the evidence to prepare a defence, Silver’s legal team eventually noticed information that could identify a police informant. Silver’s lawyer Matthew Nathanson contacted prosecutors and alerted them to the error, and the two sides worked on a potential solution.

The exact reason why the RCMP and federal prosecutors abruptly decided in November the disclosure error could not be overcome is not clear. But as the scheduled trial date rapidly approached, time pressure to make full disclosure to defence and the sheer amount of evidence handled in the case appears to have been key issues, said sources who could not be identified.

The critical factor in the decision, Global News indicated, was that “the police informant who helped the RCMP to build its case was judged to be at ‘high risk’ for death if the case proceeded.”  Based on Canadian legal guidelines, prosecutors and the RCMP reportedly decided that protecting the informant’s life outweighed the interest in pursuing charges against Silver and the individual defendants, who operated Silver.

This case is hardly the first, in Canada or the United States, to involve reported inadvertent disclosure of an informant’s identity.  Such inadvertent disclosures can come from police, prosecutors, or even third-party agencies that had access to informant information. Moreover, the risks of inadvertent disclosure are compounded in complex cases, where (as in this case) large volumes of documents are being disclosed to defense attorneys.

In its report, Global News asserted that “both the RCMP and federal prosecutors must take responsibility” for the inadvertent disclosure.  Regrettably, while RCMP officers may have been involved in the process of reviewing documents prior to the disclosure, the ultimate responsibility must rest with the prosecutors responsible for providing the evidence containing the informant’s identity to defense counsel.  As the Supreme Court of Canada stated in its 2011 decision in R. v. Barros, the informer privilege is “almost absolute,” and the duty to protect and enforce that privilege “rests on the police, the Crown, and the courts.”  While the article does not indicate whether the stay of the case against Silver and its operators precludes any further progress in Operation E-Pirate, the basis for the stay does not bode well for that operation.

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