RUSEV v. BULGARIA

Communicated on 28 February 2019

FIFTH SECTION

Application no. 44845/15
Yuliyan Vasilev RUSEV
against Bulgaria
lodged on 4 September 2015

STATEMENT OF FACTS

The applicant, Mr Yuliyan Vasilev Rusev, is a Bulgarian national who was born in 1974 and lives in Izvorovo.

A. The circumstances of the case

The facts of the case, as submitted by the applicant, may be summarised as follows.

1. The applicant’s conviction

In a judgment of the Omurtag District Court of 13 June 2012 the applicant was convicted for illegal logging, an offence under Article 235 § 1 of the Criminal Code, on the ground that in October 2009 he had had, without the necessary permit, timber valued at 628 Bulgarian levs (BGN, the equivalent of approximately 321 euros – EUR) harvested and transported by other persons. The applicant received a ten-month suspended prison sentence and was fined BGN 1,500 (the equivalent of EUR 767).

2. Forfeiture proceedings

(a) Forfeiture application

Since the offence the applicant had been convicted of fell within the scope of the Forfeiture of Proceeds of Crime Act 2005 (hereinafter “the 2005 Act”, see “Relevant domestic law and practice” below), in November 2012 the Commission for Uncovering Proceeds of Crime (hereinafter “the Commission”) filed an application with the Dobrich Regional Court seeking the forfeiture of his assets.

The forfeiture application was the result of checks and verifications by the Commissions on the applicant’s income and expenses for the period between 16 April 1992 (when he had turned 18) and 28 November 2012.

(b) Judgment of the Targovishte Regional Court

In a judgment of 29 November 2013 the Targovishte Regional Court allowed partially the application, ordering the forfeiture of the following assets: seven plots of land bought by the applicant between 2006 and 2011, one of which with a house built on it; the sum of BGN 17,473 (approximately EUR 9,000) received by the applicant from the sale of thirteen other plots of land, the majority of which initially acquired by him in 2006; a car bought by the applicant in 2011.

In calculating the applicant’s legal income and expenses during the period under examination, the Targovishte Regional Court refused to consider as legal income received by him the following: 1) BGN 22,300 (approximately EUR 11,400) which another person had allegedly loaned the applicant in 2006 and 2007, as this circumstance had not been sufficiently proven; 2) BGN 26,000 (approximately EUR 13,300) which the applicant’s grandmother had allegedly donated to him on an unspecified date after the sale of property of hers; even though it was established that she had received that sum, it remained unproven that she had given the entirety of the money to her grandson; 3) revenue from logging allegedly received between 2005 and 2007; the applicant had presented contracts for the sale of timber, but had not specified what his profit had been; nor had he declared at the time any such profit to the tax authorities; 4) BGN 110,000 (approximately EUR 56,260) which the applicant had declared as revenue received in 2007 from the activities of a company partially owned by him, in a tax declaration submitted at the end of 2012; according to the national court, it was not proven that the applicant had indeed received such revenue, and the tax declaration, submitted after the initiation of the forfeiture proceedings, was evidently aimed at being used as evidence in them.

Thus, the Targovishte Regional Court concluded that the applicant’s expenses during the period under examination exceeded his legal income by BGN 53,382 (approximately EUR 27,300), the equivalent of 337.9 minimum monthly salaries, which warranted the forfeiture of assets equalling the same number of minimum monthly salaries, namely the ones described above.

The Targovishte Regional Court pointed out further that it was not necessary to establish a causal link between the assets to be forfeited and the specific offence the applicant had been convicted of, and that it was permissible to forfeit assets acquired before that offence had been committed. It considered that the applicant had been engaged in “criminal activity”, observing that: until 1998 he had had no legal income; between 2000 and 2005 he had worked at a local forestry authority and in 2006 once again had had no legal income; it was exactly in 2006 and 2007 that he had bought numerous properties, some of which he had subsequently transferred to third parties; he had been convicted of illegal logging and his whole career had been in forestry and logging. It could thus be reasonably assumed that the assets to be forfeited were the proceeds of crime.

(c) Judgment of the Varna Court of Appeal and decision of the Supreme Court of Cassation

Upon appeal by the applicant, on 9 July 2014 the Targovishte Regional Court’s judgment was upheld by the Varna Court of Appeal. Referring to the Supreme Court of Cassation’s Interpretative Decision of 30 June 2014 (see “Relevant domestic law and practice” below), it pointed out that the causal link between the assets to be forfeited and the applicant’s “criminal activity” could be indirect, and considered that such an indirect link had been proven, for the same reasons as the ones put forward by the Targovishte Regional Court. It confirmed the rest of the Regional Court’s conclusions, in particular its refusal to accept that the applicant had had additional legal income as set out above.

The applicant lodged an appeal on points of law, which the Supreme Court of Cassation refused to accept for cassation review, in a final decision of 5 March 2005, considering in particular that the lower courts had correctly applied the standard set in the Interpretative Decision of 30 June 2014.

B. Relevant domestic law and practice

1. The 2005 Act

The Forfeiture of Proceeds of Crime Act 2005 (Закон за отнемане в полза на държавата на имущество придобито от престъпна дейност, “the 2005 Act”) was enacted by Parliament in February 2005. In 2012 it was superseded by other legislation, with the proviso that all pending proceedings would continue to be governed by it.

Proceedings under the 2005 Act could be opened when it was established that a person charged with a relevant criminal offence had acquired assets of “considerable value” in respect of which a reasonable assumption could be made that they were the proceeds of crime (section 3(1)). “Considerable value” was defined as more than BGN 60,000 (approximately EUR 30,700). In practice, for the purpose of cross-time comparisons, that amount was also presented as the equivalent of 400 minimum monthly salaries. According to the Supreme Court of Cassation, that had to be the aggregate value of the assets, determined on the basis of their fair market value at the time of their acquisition (see реш. № 89 от 29 януари 2010 г. по гр. д. № 717/2009 г., ВКС, III г. о.).

The offences that could trigger the opening of proceedings under the 2005 Act were enumerated in section 3(1).

Assets that could be forfeited under the 2005 Act were those that had been acquired by persons convicted of a criminal offence and in respect of which it could reasonably be assumed that they were the proceeds of crime, in as much as no legal source had been established (section 4(1)).

The State’s right to forfeit an asset expired twenty-five years after it had been acquired (section 11).

The authority in charge of initiating and pursuing proceedings under the 2005 Act was the Commission for Uncovering Proceeds of Crime (“the Commission”). The forfeiture itself was to be ordered by the courts.

The remaining relevant provisions of the 2005 Act have been summarised in Nedyalkov and Others v. Bulgaria (dec.), no. 663/11, §§ 33‑61, 10 September 2013).

2. Case law of the domestic courts and Interpretative Decision No. 7 of 30 June 2014

Until 2014 the national courts were taking diverging views on the necessity under the 2005 Act to establish a causal link between the specific criminal activity for which the target had been convicted and the assets to be forfeited. Thus, in some cases the courts held that no causal link had to be proven, in as much as section 4(1) the 2005 Act established a presumption that all assets for which no legal source had been shown represented proceeds of crime (Решение № 671 от 9.11.2010 г. на ВКС по гр. д. № 875/2010 г., IV г. о.; Решение № 156 от 29.05.2013 г. на ВКС по гр. д. № 890/2012 г., IV г. о.). In other cases the courts required the establishment of a causal link, considering that, even where no lawful source of income had been shown to exist, this did not automatically mean that the assets at issue had been proceeds of crime (Решение № 607 от 29.10.2010 г. на ВКС по гр. д. № 1116/2009 г., IV г. о.; Решение № 209 от 26.07.2011 г. на ВКС по гр. д. № 1462/2010 г., III г. о.).

The matter was settled in a binding Interpretative Decision No. 7, given by the Supreme Court of Cassation on 30 June 2014 (Тълкувателно решение № 7/2014 г. на ВКС по т. д. № 7/2013 г., ОСГК), which endorsed the latter view. The Supreme Court of Cassation stated that the acquirement of assets by a person having committed an offence among those enumerated in section 3(1) of the 2005 Act could be directly or indirectly linked to proceeds of crime,

“but in all cases that link has to be established, or its existence must be presumable.”

The presumption at issue had to be “logically justified” and “based on the facts and circumstances”. The Supreme Court of Cassation held further that

“[t]he failure to establish a lawful source for an asset does not replace the justified presumption that it is linked to criminal activity, but merely absolves the Commission from the burden to prove such a link beyond doubt.”

Lastly, the Supreme Court of Cassation was of the view that the forfeiture of assets unlinked to proven criminal activity would amount to the imposition of a “penalty” without a conviction.

Subsequently, relying on this Interpretative Decision, the national courts dismissed forfeiture applications under the 2005 Act lodged by the Commission, holding that no causal link had been established between the assets for which forfeiture had been sought and the target’s criminal activity, notwithstanding the fact that no lawful source had been shown to exist for some of the latter’s revenues (Решение № 256 от 14.10.2014 г. на ОС Ловеч по гр. д. № 603/2011 г.; Решение № 79 от 22.05.2015 г. на АС Варна по в. гр. д. № 154/2015 г.; Решение № 194 от 5.11.2015 г. на АС Пловдив по в. гр. д. № 442/2015 г.).

C. Relevant international and European Union law

The relevant international and European Union law has been summarised in G.I.E.M. S.R.L. and Others v. Italy (merits) ([GC], nos. 1828/06 and 2 others, §§ 139-53, 28 June 2018).

COMPLAINTS

The applicant complains under Article 6 § 1 of the Convention and Article 1 of Protocol No. 1 of the forfeiture of his property and the fairness of the proceedings which resulted in it. He argues in particular that it has not been shown that the forfeited assets were the proceeds of crime, and that the lengthy period over which his income and expenses were examined meant that it was very difficult for him to prove the circumstances he was relying on.

QUESTIONS TO THE PARTIES

1. Was the forfeiture of the applicant’s assets, in proceedings under the Forfeiture of Proceeds of Crime Act 2005, in compliance with the requirements of Article 1 of Protocol No. 1? In particular, has it been sufficiently established that those assets had been the proceeds of crime?

In that regard, the parties are invited to comment on the manners in which the domestic authorities calculated the respective persons’ revenues and expenses, having regard to the lengthy periods of time to be verified and the resulting risk of imprecision and uncertainty (see, for example, Dimitrovi v. Bulgaria, no. 12655/09, §§ 47‑49, 3 March 2015.

2. Could the forfeiture proceedings be considered fair for the purposes of Article 6 § 1 of the Convention?

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