This paper is for our presentation at the Association of Certified Forensic Investigators of Canada on October 5, 2022. A corresponding power-point will be used at the presentation.
The statements made in this paper are word-for-word as stated in our factum filed with the Court on March 30,2022. Accordingly, the statements are public record. We make this statement because events surrounding the Freedom Convoy political protests are controversial to some.
Overview to our Factum dated March 30, 2022
- A Mareva injunction – meaning an order to preserve funds for a judgment – are common in a fraud action, but for a nuisance action is unprecedented. The class action at issue is a nuisance action – below referred to as the “Horn Honking injunction”.
- We advised the Court that our firm does not act for rogues. Our interest in this case was the use of a Mareva injunction against donors to political causes.
- The Mareva Respondents, being ‘organizers’ associated with the defendant ‘Freedom Corp.’, were either in possession of the donated funds or using them for the purpose that they were donated for. We found no evidence that any of the Mareva Respondents converted any of the donated funds for their own use. There was no evidence of fraud.
- There was scant evidence of dispersal of donor funds to support the Mareva injunction. There were already legal mechanisms in place to preserve the donated funds at issue.
- We view our role in responding to the Mareva injunction as a recovery effort for the donors. This is why we requested that an Escrow Agent be appointed until title to the funds is resolved.
Chronology of the Mareva Injunction in the context of a Class Action
On February 4, 2022, the Plaintiffs commenced a class action on behalf of a proposed class of persons who lived in the Centretown Ottawa area and who alleged that they were adversely affected by a protest in Ottawa that took place in February 2022.
The plaintiff Zexi Li is a resident of Ottawa. The plaintiff Happy Goat Coffee Company Inc. is a business in Ottawa. And Local 613 is a union representing members in Ottawa.
The Mareva Respondent defendants were Tamara Lich, Nick St. Louis aka @nobody caribou, Chris Garrah, and the corporation created for receiving donations ‘Freedom Corp. 2022’.
Patrick King was also a Mareva Respondent but he had no role in the story below and was not represented by anyone.
The protest was dubbed the ‘Freedom Convoy’ by the media and a wide array of participants for and against the protest. Originally, the Plaintiffs’ claim was aimed at four named Defendants and 60 John Doe defendants. It has since been expanded significantly.
The Horn Honking Injunction
On February 7, 2022, the Court granted the Plaintiffs’ motion for an Order for an interlocutory injunction prohibiting the Defendants, or any other participant in the so-called ‘Freedom Convoy’ protest, from honking horns in downtown Ottawa for a period of 10 days (the “Honking Injunction”).
Other forms of injunctions were not sought. No contempt motion was brought against any of the persons subject to the horn honking injunction. There was no evidence of breach of this injunction.
The Honking injunction motion was brought on short notice to the Mareva Respondents / defendants Tamara Lich, Chis Barber and Benjamin Dichter. They nevertheless responded to the motion with responding records and affidavits prepared by counsel Keith Wilson and the Justice Centre for Constitutional Freedoms (“Justice Centre”). Their Responding record contained affidavits from non-parties that questioned the viability of the Plaintiffs’ claim, and alleged a different version of event than alleged by the Plaintiffs.
On February 10, 2022, the Attorney General for Ontario requested and received an ex parte Restraint Order. The Restraint Order applied to:
“any and all monetary donations made through the Freedom Convoy 2022 and Adopt-a-Trucker fundraising campaigns pages hosted by GiveSendGo, including monetary donations which have been transferred by GiveSendGo or its third-party payment processors to the benefit of the campaign recipients, being Chris Garrah and Freedom Corp.”.
These funds and assets appeared to be the same funds and assets sought to be retrained by the Mareva Injunction that was later applied for. Therefore the obvious question is why was a Mareva injunction was needed when a restraint order already applied to the same funds at issue?
To state otherwise, did the Plaintiffs meet the test that there was a risk of dissipation of assets? Risk of dissipation of assets is the second part to the test to obtain a Mareva injunction.
On February 15, 2022, the Government of Canada invoked the Emergencies Act. As a result, “special temporary measures” were introduced to deal with the alleged ‘national emergency’ including an “Emergency Economic Measures Order”. The Emergencies Act was intended to deal with events occurring both inside and outside of Ottawa and involving persons who are not named defendants in this action.
The “Emergency Economic Measures Orders” directed all financial services providers in Canada to immediately cease dealing in any property, including facilitating transfers, making property or currency available, and providing any financial services to “designated persons”.
The Government of Canada described the “designated persons” as any person engaged in blockades. In essence, and as described in the public comments of Parliamentarians involved in the invocation of the Emergencies Act, their purpose was to cut off and freeze the property (including virtual currencies) of those involved in the ‘Freedom Convoy’ political protests.
By the time that the Attorney General for Ontario’s Restraint Order and the federal Emergencies Act were in place, TD Canada Trust (“TD Bank”) had already taken steps on its own volition to freeze the accounts controlled by the Mareva Respondent Tamara Lich and commenced an application to pay the balance in the TD Bank accounts into court. The TD Bank accounts held and froze a combination of $1 million raised through the GoFundMe crowdfunding campaign, as well as direct e-Transfer donations to Tamara Lich.
Its worth mentioning here that there is no evidence that the Canadian Freedom protests were a form of political insurrection as occurred in American on January 6, 2021. The Canadian freedom protests were against COVID mandates. The American insurrection had to do with Donald Trump.
On February 17, 2022, notwithstanding the fact that there was already the Restraint Order, the Emergencies Act, and TD Bank’s freeze/interpleader application already in place, the Plaintiffs brought an ex parte motion as against the Mareva Respondents. The Plaintiffs knew of the aforementioned restraints, yet the Plaintiffs advised the Court that there was a bona fide risk of dissipation of donor funds controlled by the Mareva Respondents.
We ordered the transcript of the ex parte (without notice) motion to obtain the Mareva injunction.
Based on the Plaintiffs’ representations to the Court, the Mareva injunction was issued. The Mareva injunction pertained to the same cash and cryptocurrencies donated to causes associated with the protest via various crowdfunding and other means.
Never before has a Court issued a Mareva injunction aimed at donations.
Never before has a Court issued a Mareva injunction based on allegations of the tort of nuisance.
Never before has a Court issued a Mareva injunction aimed at assets that were already the subject of restraint orders.
At the same time, and also on an ex parte basis, the Plaintiff brought a motion to amend the Statement of Claim for the proposed class proceeding. The Court granted the order to amend the Plaintiff’s claim. The Court granted the Mareva injunction notwithstanding that the Plaintiffs had not plead for a Mareva injunction in their original claim or in their amended claim.
The Plaintiff’s amended claim named 14 additional defendants, in addition to the 60+ unnamed defendants, and included a significantly expanded claim on behalf the “resident’s sub-class”, and entirely new groups of Plaintiffs, namely, the “business sub-class” and the “employee sub-class”.
Through the amendment to the Statement of Claim, the damages claimed by the Plaintiffs increased from under $10 million to over $300 million.
On an ex parte motion, a central question is whether the Plaintiffs provided the Court with evidence that the funds subject to the Restraint Order were at risk of dissipation. Of relevance was that Ontario had not alleged any breach of the Restraint Order by any of the Respondents.
Ontario obtained the Restraint Order on the basis that the funds were “offence related property”, effectively that the funds were being used to fund an underlying crime – the offence was mischief – the related property was donations”. Whether a criminal Court will recognize that a crime has been committed remains unanswered. The civil Court found a prima facie case of ‘nuisance’.
There was no evidence of dissipation of funds subject to the Restraint Order. The Restraint Order was publicized and notice was given the financial service providers involved who took steps to restrain the accounts in question.
The Plaintiffs did not provide the Court with evidence that the funds subject to TD Bank Interpleader Application were at risk of dissipation. The TD Bank freeze and application were for the same funds the Plaintiffs sought to have the Mareva Injunction apply to re Tamara Lich. TD Bank had stated in their court filing that the funds were frozen.
The Plaintiffs did not provide the Court with evidence that the funds subject to the federal Emergencies Act, including the Emergency Economic Measures Orders, were at risk of dissipation. In effect, the Emergencies Act, directed financial institutions to immediately freeze all funds, including funds raised via crowdfunding platforms, direct donations, and virtual currencies. The Emergencies Act applied to some of the same funds and cryptocurrencies that the Plaintiffs sought to have the Mareva Injunction apply to.
The question remained, what was the risk of dissipation sufficient to issue a Mareva injunction?
On February 22, 2022, the Court issued Reasons for Decision published as Li et al v. Barber et al, 2022 ONSC 1176 (the “Reasons”) providing an analysis of the legal basis for the granting of the Mareva injunction. Key points regarding the intended ambit of the Mareva Injunction include:
- at paragraph 15, “Suffice to say that a crowdsourcing fund held by a fundraising platform is probably not the property of the intended beneficiaries until the funds are released. It would be difficult to argue that such a fund would fall within the ambit of a Mareva injunction.”;
- as paragraph 16, “It is fundamental to the granting of a Mareva injunction that the defendants are attempting to dissipate funds to which a judgment might attach.”;
- paragraph 18, “The situation is different if the funds are in the hands of the defendants and no longer controlled by either the original donors or the fundraising platform. In that case, the gift has vested.”;
- paragraph 19, “I am satisfied by the evidence that the funds, whether they are in the form of currency or cryptocurrency, are not legally in the possession, power and control of the defendants who are the target of this motion “ Mareva Defendants”;
- paragraph 24, “The key point for this motion is that certain of the Mareva Defendants have ownership and control of the digital wallets and they are poised to distribute or dissipate those funds”.
The key disputed findings is that the donations were not legally possessed by the defendants, and that attempts were made by ‘@nobody caribou’ to disperse crypto.
Key to this all is that little to none of the donations were even used to continue the protests. The protests were continued based on the protesters’ own assets and assets of community members.
The crypto dissipation was done by way of ‘paper wallets’ – mostly codes on pieces of paper that the recipient truckers had no idea what to do with. Some truckers were savvy enough to use the codes to transfer crypto to their own wallets, but there was no evidence it was used for the protest.
On February 25, 2022, a Friday after the close of business, the Plaintiffs served a motion record seeking an extension of the Mareva injunction. The motion was returnable Monday, February 28, 2022, at 10am – giving the Mareva Respondents little time to respond.
On February 28, 2022, the Mareva Respondents took the position that the Mareva injunction should not have been granted in the first place and reserved the right to challenge it.
The Court granted the Plaintiffs’ motion to extend the Mareva Injunction to March 9, 2022, or until further order of the Court, as there was insufficient time for the Plaintiffs to respond.
The Defence Escrow Agent Concept – The ‘Escrow Order’
The Court did, however, vary the original Mareva injunction to permit Mareva Respondents Benjamin Dichter, Chris Garrah, and Nicholas St. Louis to transfer donated funds within their possession to the Escrow Agent. This is why we refer to this order as the ‘Escrow Order’.
The concept of “Escrow Order” is the focus of this presentation. It turned the Plaintiff’s Mareva injunction into a Defendant’s effort to preserved donations for a political cause.
To state otherwise, it was the Mareva Respondents, not the Plaintiffs, who proposed the appointment of the Escrow Agent to hold funds donated for protest purposes. The Mareva Respondents proposed the use of an Escrow Agent so that there would be no concern about the location of the donated funds while title to the donated funds was determined by the Court.
The ‘Escrow Order’ was designed to recovery the donor funds and keep them out of the possession, power or control of the Plaintiffs.
The ‘Escrow Order’ was designed to have the Mareva Respondents be interviewed by the escrow agaent without plaintiff counsel present. The Plaintiffs agreed to accept the findings of the escrow agent as to whether all donor assets were transferred out of the Defendants’ possession.
The ‘Escrow Order’ was also designed to relieve the Mareva Respondents from being examined on all of their assets. This is highly invasive, especially when fraud is not involved.
Mareva injunctions are essentially to obtain security before judgment, and therefore take the form of judgment debtor examinations – highly unfair to political protesters accused of ‘nuisance’.
The Police Search Warrant designed to Frustrate the Escrow Agent Order
On February 28, 2022, at 10:00 am, counsel for the Attorney General of Ontario attended the motion. The AG counsel advised the Court that Ontario had an ongoing investigation but failed to advise the Court that Ontario had sought for and received a search warrant as against the Mareva Respondent St. Louis aka @nobody caribou’ that would frustrate the Escrow Order if executed.
St. Louis, aka @Nobody Caribou, sought to vary the terms of the Mareva Injunction to allow him to transfer the cryptocurrency he possessed that derived from donations raised from crowdfunding in support of causes associated with the protest to the Escrow Agent.
The vast majority of the cryptocurrency that St. Louis possessed resulted from donations raised from crowdfunding was held in a “multi-sig” wallet. A multi-sig wallet is a type of digital wallet that holds cryptocurrencies (in this case, specifically the cryptocurrency Bitcoin) that requires multiple persons to submit “keys” in order to complete a transfer.
The multi-sig wallet in question required three (3) “keys” in order to complete a transaction. St. Louis possessed two of the required three “keys” to the multi-sig wallet. Dichter possessed the third “key”. While St. Louis and Dichter were readily, willing and able to transfer the cryptocurrency to the Escrow Agent, their ability to do so – i.e. to comply with the Escrow Order – was frustrated by the intervening actions of the Police as described below.
On February 28, 2022, at approximately 12:30 p.m. (merely an hour after the issuance of the Escrow Order), a task force of RCMP, OPP and Ottawa city law enforcement (the “Police”) descended on the personal residence of St. Louis and executed a search warrant. The Police took St. Louis’ keys at a time when he was literally attempting to comply with this Court’s order.
St. Louis was not arrested or charged with any offence. It appears that the sole purpose of the search warrant execution at that time, immediately after the issuance of the Escrow Order, was to prevent St. Louis from comply with the Escrow Order and to prevent the subject cryptocurrency from being transferred to the Escrow Agent. It appears that Ontario was attempting to obtain custody of the subject cryptocurrency ahead of the Escrow Agent for itself.
Dichter was not the subject of a similar search warrant execution. Instead, the Police asked Dichter to voluntarily transfer his “key” to the multi-sig wallet to their (Police) possession. Dichter immediately retained criminal defence counsel to respond to the Police conduct.
Paragraph 18 of the February 28, 2022, Escrow Order provided that any and all persons with notice of the Escrow Order shall cooperate and provide all reasonable assistance necessary to effect the transfer of Escrow Assets to the Escrow Agent. It is inconceivable the Police were not aware of this order. The Police failed to comply with this order despite their knowledge of it.
The Police refused to turn over St. Louis keys to the Escrow Agent despite repeated requests. Only on the eve of the March 9, 2022, motion that they conceded to comply with this Court’s order.
Following the motion heard on March 9, 2022, the Police transferred St. Louis’ keys to the Escrow Agent. Dichter thereafter turned over his keys to Escrow Agent.
The Escrow Agent successfully transferred the remaining balance of the cryptocurrencies once in the possession of St. Louis and Dichter to the Escrow Fund. These funds cannot be released without notice to the Attorney General of Ontario.
March 30, 2022, Mareva Dissolution Motion
Nick St. Louis and Ben Dichter requested that the Court end the Mareva injunction as it applied to them. It was plain and obvious that they were no longer in possession any property that was the subject of this Mareva injunction. They had been interviewed and cooperated with the Escrow Agent. Nothing would be gained by Plaintiffs’ counsel cross examining them.
Chris Garrah requested that the Court end the Mareva injunction as it applied to him. He had been interviewed and cooperated with the Escrow Agent. Nothing would be gained by Plaintiffs’ counsel cross examining him.
Both the funds donated via the GiveSendGo LLC platform (ultimately transferred to Garrah through GiveSendGo’s payment processor Stripe), and the donations via e-transfer had been deposited into the same RBC bank account of Garrah.
Therefore, at the time that the Mareva Injunction was sought, there was no risk of dissipation of the funds held in Garrah’s RBC Account associated with Adopt-a-Trucker as the funds are already restrained by RBC in connection with the terms of the Attorney General’s Restraint Order and the Emergencies Act.
RBC had transferred the funds in Garrah’s Adopt-A-Trucker account to the Escrow Agent.
In terms of the cryptocurrency donated in connection with the Adopt-a-Trucker campaign, Garrah never had possession, power or control over those funds. Garrah did not create the website that solicited those funds. Regardless of being erroneously accused of controlling the cryptocurrency solicited through the Adopt-a-Trucker campaign, most of the non-party(s) who had possession of cryptocurrency donated in connection with the Adopt-a-Trucker campaign has transferred the vast majority of the cryptocurrencies to Escrow Agent.
Tamara Lich requested that the Court end the Mareva injunction as it applied to her. She had been interviewed and cooperated with the Escrow Agent. Nothing would be gained by Plaintiffs’ counsel cross examining her.
As set out in the TD Canada Trust (“TD Bank”) Interpleader Application, TD Bank was holding approximately $1,393,406.98 in funds that were deposited in two bank accounts held in the name of Lich. The funds in the TD Bank accounts included the $1 million deposited from the GoFundMe crowdfunding campaign raised in connection with the protest, as well as various e-Transfer donations from 3,000 donors.
TD Bank took its unilateral action on February 4, 2022, to restrain Lich’s TD Bank accounts due to an alleged breach of the terms of service for personal TD Bank accounts – TD Bank alleged that the personal accounts of Lich held “funds that were the subject of a trust”, and not personal funds. TD Bank placed the hold on the two connected bank accounts on February 4, 2022.
The fact that TD Bank had frozen the accounts was also highly publicized, and their Notice of Application seeking to pay the frozen funds into court was issued on February 14, 2022, and included in the Plaintiffs’ motion materials. Yet the Plaintiffs alleged at their motion for the Mareva injunction that there was a bona fide risk of dissipation associated with these funds.
Freedom Corp. did not hold any bank accounts and was not presently in possession power or control of any assets, including any funds donated through the GiveSendGo LLC crowdfunding campaign or held by Stripe. Freedom Corp. was in possession of a $10,000 bank draft made out to the corporation, which had since been transferred by Garrah to the Escrow Agent.
Donated funds raised through the GiveSendGo LLC platform are ordinarily not possessed or controlled by GiveSendGo LLC but are rather transferred directly to the crowdfunding campaign recipient directly by GiveSendGo’s payment processing partners. In this case, GiveSendGo’s payment processing partner is the entity Stripe Payments Limited.
As part of its payment processing function, Stripe required a bank account or banking facility into which the donated funds may be deposited. Freedom Corp. was unable to obtain banking facilities into which the donated funds might be deposited. As a result, Stripe held possession of approximately $3.4 million USD in donated funds raised through the GiveSendGo platform.
Stripe had notice of and indicated its compliance with the Attorney General’s Restraint Order that prevented the movements of those funds. These funds were not the subject of the Mareva injunction, and were never at risk of dissipation in any event.
The Mareva Respondents requested that Stripe be given the opportunity to provide evidence to the Court if necessary. It is the Mareva Respondents position that the Stripe funds are not covered by the terms of the Mareva Injunction and do not stand as a barrier to the Mareva Injunction be dissolved as against Freedom Corp. The transfer of donations to Stripe were not ‘gifts’ that vested with the Mareva Respondents. But for the Restraint order, the funds held by Stripe would be treated the same as donated funds held by GiveSendGo LLC.
Given Freedom Corp.’s inability to obtain banking facilities, Freedom Corp. entered into an agreement with GiveSendGo LLC, and in particular its CFO and co-founder Jacob Wells, which directed that Mr. Wells would hold the remaining balance of the donated funds in an “interim account” pending the attainment of banking facilities by Freedom Corp. Freedom Corp. was unaware of the details of the “interim account”.
The agreement between Freedom Corp. and Jacob Wells was signed on February 9, 2020 – prior to the issuance of the Attorney General’s Restraint Order on February 10, 2022. In any event, none of the funds raised on the GiveSendGo LLC platform have flowed to Freedom Corp. due to the issues outlined above.
On March 9, 2022, Jacob Wells attended before the Court. Jacob Wells advised the Court that his business was primarily concerned with the rights and interests of donors, and that he would be taking steps to return the funds in the possession of GiveSendGo to the donors, in line with the terms of service of the platform.
It was clear that there was no risk of dissipation as it applies to Freedom Corp. or any other Mareva Respondent. Moreover, as the donations never vested in Freedom Corp.’s possession, power or control, the scope of the Mareva injunction does not pertain to funds held by Stripe.
The Plaintiffs had not proven the test for gifting. The Plaintiffs erroneously submitted to the Court that they had done so. Had Freedom Corp. been given notice of the Mareva injunction motion these issued could have been clarified without this long process.
Motion and Dissolution Order of May 2, 2022
The Escrow order issued February 22, 2022, remains in force until further court order.
Stripe Payments Canada Ltd. shall transfer funds held in its Canadian HSBC account to the Escrow agent – in the amount of $3,777,843.98.
Upon the Stipe funds transferred to the Escrow Agent, the Mareva injunction is dissolved.
The order does not apply to Patrick King – he remains subject to the Mareva injunction.
The Escrow Agent shall transfer $100,000 to Investigation Counsel PC.