Under a chilly dawn sky, the Patty M sails through Burrard Inlet into Reed Point Marina in Port Moody. After setting sail from the coast of California, the 62-foot Nordhavn yacht has reached its new home.
Onboard the seven-figure vessel is the captain, a couple of passengers and the boat's new owner, Dale Barron.
It's May 1, 2010 and the crew has just endured a tumultuous 10-day journey through rough seas.
For the most part, the weather has been brutal, producing 20-foot-high gut-wrenching waves. The men onboard are seasick, including Barron, who is taking the motion-sickness drug Transderm to combat the illness.
Nonetheless, they have made it home and it's time for the boat and its crew to check in with customs officials.
It should be the final step in a long-awaited dream, but what follows - according to court transcripts obtained by The NOW of Crown and defence submissions regarding Barron's sentencing and of the judge's sentencing reasons - marks the start of an ordeal for the well-known developer that ultimately leads to a guilty plea in court, a hefty fine and the eventual sale of the Patty M.
It's 8: 45 a.m. that Saturday and Barron is getting an earful from a Victoria customs officer on the other end of the line.
He was supposed to head straight to a Canada Customs office in English Bay to check in, but was mistakenly told by someone from the agency back east it was OK to go to Reed Point Marina instead.
During the 28-minute call, Barron is told to stay on the boat.
"Someone is coming down to see you," the agent tells him. Within an hour, three Canada Border Services Agency (CBSA) officers are at the marina to begin routine questioning.
Barron presents a bill of sale for $615,867 for the Patty M - which he intends to rename the Copper Raven - to an officer.
He also indicates he spent another $27,000 on extra work on the boat and shares the receipts.
But the price doesn't jive with the officer.
Barron is asked if he's applied any other payments, but sticks to his story.
"This is the total cost," he tells the officer.
Barron is questioned further, telling the officer the asking price of the boat was $1.1 million and his broker, James Gerbrandt, negotiated a deal for the sale price.
He then mentions a down payment of $100,000, but it only leads to more questions from the CBSA agents.
He's asked where the down payment is accounted for, but can't say.
Barron then calls his broker, who's in Alberta at the time. He asks the customs officers to speak to the broker, but they won't.
Instead, Gerbrandt, on the other end of the line, responds, "Fine. Just don't worry about it. There's nothing to worry about."
Clearly, there is a problem and the customs agents are suspicious.
By now, a total of 17 minutes has passed.
It's 10: 37 a.m., and the businessman decides to change his story.
"No, I paid $1.1 million for this," Barron admits. He claimed to customs agents: "And Gerbrandt has a second bill of sale, and he - he told me to present one, and so this is what I've done."
The boat is immediately seized and Barron is eventually charged with two offenses - making a false or deceptive statement and attempting to evade the payment of duties under the Canada Customs Act.
He pled guilty in Port Coquitlam Provincial Court in October to making a false or deceptive statement regarding the import of goods. The second charge was stayed.
In court, Crown said it couldn't prove Barron was intending to evade duties and taxes, because, it said, he was relying on a statement by a person he thought was a broker.
Gerbrandt was also charged with making a false or deceptive statement.
His case is still before the courts and his defence has not yet been heard.
Exactly how Barron found himself on the wrong side of the law involves a complicated scheme including a loose and ultimately incorrect interpretation of a major free trade agreement.
According to court transcripts of Crown and defence submissions on sentencing, Barron and his wife had planned for many years to buy a boat when they retired.
Barron founded Morningstar Homes in the late 1990s, eventually growing the business to become one of the largest home-building companies in B.C.
The company's single-family homes can be found right across the Lower Mainland.
The 58-year-old also served as president of the Vancouver Home Builders' Association in 2007. Barron is now semiretired and works in an advisory role for the company he founded.
That's where the Patty M and, allegedly, broker Gerbrandt enter the picture.
Barron says he met the former Vancouver lawyer turned occasional broker at a boat show in Seattle in the fall of 2009. Gerbrandt was allegedly advertising himself as someone who could help import a boat into Canada.
The man seemed knowledgeable about the process.
Barron went so far as to check references, and was given a recommendation by a reputable boat dealer in Seattle.
However, it was noted in court and the judge's sentence report that the CBSA had cautioned Gerbrandt not to hold himself out as a broker.
According to Crown and Barron's lawyer, Gerbrandt had come up with a plan for importing boats into Canada by breaking down the different components to avoid paying duty and had done so previously with some success.
Built in 2001 in Taiwan with some American parts and eventually shipped to the U.S., Rover, which would be rechristened Patty M, was a Nordhavn 62 - billed as the finest oceangoing luxury yacht under 70 feet ever produced.
And it appeared to live up to its billing, circumnavigating the globe under two owners by the middle of the decade.
Jeff Merrill was the listing broker out of California at the time the boat was for sale.
With a range of 3,000 miles on its fuel tanks, he said, the boat is a popular model, describing it as a "long-range ocean crossing trawler."
"It's for somebody who wants to have the ability to travel anywhere in the world," Merrill told The NOW.
In its early years, the Patty M ventured to New Zealand and Australia, Indonesia and Thailand, India, Yemen and Egypt, including a trip through the Suez Canal.
The yacht received upgrades in 2006 under then-owner Warren Rosendale.
It crossed the Atlantic and
navigated the Panama Canal, ending up in Newport Beach, Calif.
Incidentally, Rosendale was a California millionaire who now lives in Texas but made headlines in the Golden State for his part in one of the longest divorce cases in Orange County - it lasted more than 12 years. By 2008, the Patty M was up for sale.
At the time, the boat was listed for $1.675 million, according to a Nordhavn brokerage website.
Barron found the boat on the Internet in 2009 with the price significantly slashed.
With the decision to buy the boat underway, according to the Crown's case, Gerbrandt offered Barron a plan to pay less duty on the purchase by presenting customs officials with two bills of sale - one he called the base boat made in Taiwan, and the other for the American parts.
That way the owner could avoid duty on the American parts under the North American Free Trade Agreement (NAFTA).
The Taiwanese portion came to $615,867, while the U.S. side was $484,133, bringing the total to $1.1 million US, or $1.17 million in Canadian funds.
According to documents presented in court obtained through a search warrant as part of the case against Gerbrandt, Barron convinced the sellers to sign two separate bills of sale. The request even piqued suspicion from the sellers, who hired a lawyer on their end in California, paid for by Barron, to make sure the plan was not illegal, which it wasn't.
In fact, court heard that had Barron showed the two bills at the time he was questioned by CBSA officers when he entered Canada, he wouldn't have found himself in legal trouble.
But the Crown suggested, after discussing with NAFTA and CBSA experts, the interpretation allegedly given by Gerbrandt would be incorrect.
Although determining the origin of the boat is complicated, the parts can't be separated in the way proposed in the Patty M plan.
Barron would have likely been forced to pay duty on the entire undervalued amount - $484,133, which worked out to $74,612, plus another $38,195 in provincial sales tax.
But Barron presented just one bill to Customs.
It proved to be an expensive decision.
As a result of the guilty plea, Barron was fined the maximum of $50,000. Along with the duties, he was assessed a civil penalty of $124,577. Altogether, he was ordered to pay $212,994 to get the boat back after it was seized by CBSA.
It was noted in court Barron donated another $25,000 to the SHARE Family & Community Services Society as a voluntary gesture. It's an organization he had made donations to in the past.
Judge Deirdre Pothecary noted in her sentencing reasons that instructions sent to Barron from the co-accused attached only one bill of sale that was to be presented if asked.
"There is the additional factor that in the way that Mr. Barron dealt with the CBSA agent that he had been encouraged in doing so and in fact the script was more or less given to him by the co-accused [Gerbrandt] as part of the arrangement and contract that he had with the co-accused," the judge said.
"To be clear, that was not a script intended to necessarily willfully deceive CBSA so much as to follow through with a plan that had been developed that Mr. Barron had been convinced by the co-accused was one that might succeed and would save him a significant amount of money on the entry. Mr. Barron was prepared then to follow through with the advice and recommendation, notwithstanding that he knew that some of what he was saying to the CBSA officer was not true."
In handing down the sentence, Judge Pothecary wrote, "It is clear that it is fundamental to Canadian society and international commerce that there be appropriate commercial laws, essentially to protect both the home country and carefully regulate what items come and go within a country and what the appropriate costs are for doing so. It is for that reason that the penalties that are provided for in the legislation are substantial."
The judge also wrote the circumstances have been highly embarrassing to Barron, who had never been before the courts or had a criminal record of any kind.
Barron's lawyer Jeffrey Campbell spoke to The NOW on his behalf. He said his client has been "quite impacted" by the whole case.
"He's [Barron] not the kind of guy who's used to being in court proceedings. Otherwise, he's led a pretty exemplary life and it has had a big impact on him," Campbell said.
"That's part of the reason why he entered into an early resolution without going to trial."
However, Campbell was reluctant to speak about specific details of the case because Gerbrandt's case is still before the courts.
It was also noted in court that Barron sold the Patty M at a "great loss" because of the "negative things" associated with the yacht.
In a statement provided to The NOW, CBSA suggested the severity of the penalty is based upon previous case law the judge deemed appropriate, as the judge determined these offences should not be taken lightly.
"The CBSA would like to remind Canadians that all goods acquired while you are out of the country, including gifts, must be declared on your return home," the statement said.
"If you do not declare goods, or if you falsely declare them, border services officers can seize them. Smuggling, undervaluation and other Customs Act infractions may also lead to prosecution in a court of law, which is what happened in this case."
Meanwhile, Gerbrandt is due back in Port Coquitlam Provincial Court on Nov. 26.
He declined to comment for this story.
© Copyright 2013