During the trial of Fernando Mendes, accused of stealing US$132,807.43 from Finab Ltd., where he had been managing director, his Defence Counsel Ben Tonner made a submission that the Court should stop the prosecution of this case on the grounds that, to allow the trial to continue would be an Abuse of the Court’s Process. Tonner submitted the application was founded on the Crown’s failure to obtain and retain material evidence.

The Indictment, dated the 26th October 2011, originally contained five counts. However, by the date of the trial that commenced on Monday August 4^th the prosecution maintained only the count of Theft.

The theft was alleged to have occurred between June 2009 and January 2011.

On Feb. 10, 2011, the chief executive officer and primary shareholder of Finab, Alfonso Finoccairo (AF) made a complaint to the Financial Crime Unit regarding Mendes involving matters involving Conimbriga Investments Ltd.

Police officers arrested Mendes the following day at the Finab office. At the same time officers seized the laptop on his desk and the hard drive for his personal computer.

On March 8, 2011, Mendes’s attorney wrote to the Financial Crime Unit (FCU) stating that he wished to make a Suspicious Activity Report of suspected financial crimes within FINAB to the FCU. The attorney said the matter was time sensitive, since the view might be taken that evidence might be destroyed if prompt action was not taken.

The following day, Mendes’ attorneys produced a statement alleging that Finab’s CEO and others were committing and encouraging clients to commit actions to evade U.S. income tax. Mendes provided various email addresses of the Directors   and other relevant personnel. He also stated he was very concerned that staff had been instructed to destroy or hide evidence. Mendes then confirmed that this evidence could prove his innocence of the charges laid against him and the criminal activity of AF and others. In this statement Mendes affirmed that emails and other documents relating to these activities were stored on servers in the computer room at FINAB’s office. Hard copies of banking transactions were kept in a storage room in the office near to the emergency exit.

On March 11^th, Finab’s office manager, Euclides Pitta, alleged for the first time that Mendes had misappropriated funds from Finab, and provided cheques and spreadsheets. Much of this material led to the execution of a Restraint Order on March 14^th against Mendes. The Court noted that no amendments have been made to these allegations since the 11^th March 2011.

On March 15^th Mendes’ attorneys wrote to the FCU stating “Time is of the essence if information germane to our client’s case is to be preserved.”

Other letters from Mendes’ attorneys followed in the same vein and enquired after the status of their client’s SAR.

On March 29^th the FCU responded saying it would not be prudent to comment on the case at this stage.

From the time of his arrest until June 5^th 2012 Mendes’ attorneys warned the Royal Cayman Islands Police Service (RCIPS) about the importance of preserving FINAB documents.

Mendes appeared in court for the first time on Oct. 19, 2011, to face charges of theft from both Finab and Conimbriga, together with accusations of false accounting and making a false statement as a company director. He pleaded not guilty to all charges. However, as previously stated, all but the charge of theft from Finab were dropped at the time of the trial.

On some date after March 2, 2012, the Defence received a schedule of unused material confirming that electronic documents had been seized from Finab in February 2011. The Trial Judge Hon. Charles Quin explained that the schedule contained check boxes after each item listed that were to be marked as to whether the item was disclosable or not. However, all of the boxes were blank; boxes for signatures of the reviewing officers were also blank. This inferred that neither the RCIPS nor the Department of Public Prosecutions had addressed “the vital questions of disclosure/discovery and inspection of this unused material.”

On April 1^st 2013 the Defendant (Mendes) applied for inspection of all electronic material received by the RCIPS.

On September 13^th the Crown counsel, Mr. Snape, notified the Defence that no emails since 2006 had been captured by the FCU. Crown counsel informed the Defence that the police had “not captured” the emails from 2006. The FCU in-house expert was of the view that the emails may have been in a cloud server or similar to which the police did not have access. The FCU said “these files are technical and difficult to extract. Furthermore, Crown counsel informed Mr. Tonner that the police have been unable to read the BANIF data file and, further, in relation to the QuickBooks file 2010, the police have been unable to read the file”.

On 15^th September 2013 the Defendant’s attorneys wrote to the Crown stating since Mendes’ arrest and removal from office in February 2011, he has not had any access to hard copy or electronic documents relevant to his employment.

Defence has made the point that the Defendant has been entirely reliant upon the police to seize and retain potentially relevant evidence. The Defence put the Crown on notice that the Defence may be making an abuse of process application as it would be impossible for the Defendant to receive a fair trial since he has been deprived of the very material which can undermine the allegations of FINAB and positively advance his defence.

On September 16^th 2013 the Defence asked for the Crown to provide the Defence with electronic copies of all emails sent from and received by the Defendant’s FINAB work computer and advised that this information would be crucial to Mr. Mendes being able to defend himself in the forthcoming trial.

On September 27^th 2013 an IT expert was contracted to do a statement and he confirmed that he told the RCIPS how to gain access to the files on the server and that any files on the server at the time of the Defendant’s arrest should still be there as there has never been, to the best of his knowledge, any cause to delete them. The expert confirmed that the FINAB server had ample storage space and he further confirmed that that the FINAB staff had access to files stored on their server. He further confirmed that QuickBooks is still being used and should have all the data from the time when the Defendant was employed at FINAB.

On May 21^st 2014, the day Mr. Tonner was to make his abuse of process application, the Crown was advised that the Finab CEO had found “a lot of old emails between himself and the defendant.” A large number of Finab emails were provided in July 2014.

Grand Court Justice Quin in his analysis and conclusion said, “From an early point in the investigations the Defendant and his attorneys alerted the FCU to the importance and relevance of material held in the offices of FINAB, including emails and other electronic data. There is no evidence that in 2011 or 2012 or 2013 any further material was provided by FINAB to FCU and on to the DPP.

Justice Quin said, “The Court is less than impressed by AF’s delay in assisting the police and the contradicting statements that he has made regarding which emails he has or does not have in his possession.

“AF is an experienced banker who has made the most serious allegations against the Defendant. Therefore AF had a duty to provide the RCIPS with full and frank disclosure of all relevant documents, in order to allow the FCU to have the opportunity to carry out a thorough and independent investigation. As Crown counsel, Ms. Salako, said on the 21” May 2014, ‘The FCU has been trying to locate these emails for a considerable period of time and we have always been told by FINAB, the company and the Director, AF, that these emails don’t exist.”’

The Judge highlighted some of the evidence revealed. Emails in June and July 2010 revealed that the CEO had approved an expense of US$1,863.69, although the Defendant had been accused of stealing it. Another amount he was accused of misappropriating was $4,506.86, but the emails disclosed in July 2014 demonstrated that this sum was in fact dividends to shareholders.

Justice Quin then said:

“The foregoing examples cause the Court great concern and they lead to the inevitable question of what other documents that have not been disclosed by FINAB which can show that, not only is the Defendant not guilty of the charge against him but, that, in fact, he is innocent. Had the Defendant’s trial gone ahead on the 5^th June 2012 he might well have been found guilty of theft ofUS$1,863.69 and US$4,506.86. This would have led to a very serious miscarriage of justice for which FINAB and AF would have had to bear significant responsibility.

“In addition, the defence has been able to illustrate that the late FINAB disclosure in July 2014 is seriously flawed. In the case against the Defendant the Crown was relying on cheques #1361 and #1362 – both dated the 20th September 2010 and related to $5,000.00 and $640.00. However, the Defendant has produced an email, dated the 20th September 2010, which was not disclosed by FINAB to the Crown. The email is from the Defendant to AF. It shows that, as the Defendant could not authorise expenses above US$5,000.00, he did that in two cheques – #1361 and #1362- in the sums of $5,000.00 and $940.00 respectively. The email shows that these sums were approved by AF.”

The Judge went on to say:
“This Court is very disturbed by the extremely late and incomplete disclosure of electronic data from FINAB.

“FINAB has given contradictory accounts regarding the existence or not of emails.

Disclosure provided at the end of July 2014 is incomplete and, therefore, the entire disclosure exercise is inherently flawed.

“ln addition to my criticism of the conduct of FINAB and AF in not providing full disclosure to support their serious allegations against the Defendant, I am also concerned by the apparent lack of support that the RCIPS has given to the DPP in this case. This is a concern that I have expressed on previous occasions. It is imperative that Senior Investigating Officers liaise closely with crown counsel to ensure that discovery/disclosure is carefully examined and to ensure that it is as full and as complete as possible.

“In this case it was the duty of the RCIPS to carry out an open minded and independent investigation to discover whether AF’s allegations against the Defendant were true or untrue.”

He also said it should have been obvious to the FCU that “material was missing and was vital in order to properly investigate the allegations made against the Defendant”.

Justice Quin’s final words were:

“Just as there was a duty on FINAB and AF to provide full disclosure of electronic data from after 2006 and, particularly from the 30^th June 2009 to the 11^th January 2011 there was also a duty on the RCIPS to collect and retain all the FINAB data and documentation in relation to the allegations made by FINAB and AF.

“The RCIPS FCU failed to seize significant and relevant material at the time of the defendant’s arrest. I find that the FCU has failed to pursue all reasonable lines of enquiry and therefore has failed to obtain and retain material which may well serve to undermine the Crown’s case and assist the defence.

“This failure has led to a serious prejudice which, in my view, renders it impossible for the Defendant to have a fair trial, particularly some five years after the time the offences are alleged to have been committed, and, three and a half years after his arrest. Consequently there has been a serious fault so as to render it unfair to try the Defendant for the offence on this Indictment.

“For all the above reasons I find that the Defendant cannot receive a fair trial and, further, it would be unfair for the Defendant to be tried in all the circumstances of this case.

“Accordingly, I accede to the application by the Defence, I stay the prosecution of this case and the Defendant is discharged.”

IMAGE: toronto.ctvnews.ca