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Ontario’s court battle to keep $40 million in assets seized from an alleged gambling ring began on Tuesday with debate about how roughly $270,000 ended up in a Mississauga man’s bedroom.

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The bundles of cash and the man’s connection with an alleged gambling ring means the province should get to keep it, a lawyer for the Ministry of the Attorney General argued.

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“There is overwhelming evidence that there was unlawful activity occurring,” lawyer Susan Keenan said at a Superior Court of Justice hearing.

“The bulk of the money found in his bedroom is directly connected to and was derived from that illegal activity,” she said. “There is nothing else that can explain this amount of money” and “no credible or reasonable explanation.”

But the man’s lawyer, Luci Brace, said there was no evidence linking her client to the alleged ring, and he and his family had reasonable explanations for the cash.

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The cash came from gifts, loan repayments and savings over years of work in a family raised to distrust banks, Brace said.

Her client, Dimitris Kellesis, was born in communist Czechoslovakia and his family had a distrust of authority, including the use of banks to save money, Brace said.

“Forfeiture would clearly not be in the interest of justice,” Brace said. “The proceeds are not proceeds of crime or unlawful activity. He is a legitimate owner.”

Justice Michael Dineen reserved judgement after the two-hour hearing.

The hearing was the first of what will likely be several as the Crown attempts to keep money, silver, gold, jewelry, high-end vehicles and luxury homes seized from what police call the biggest illegal online sports gambling ring in Canada.

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Provincial police held a December 2019 news conference to announce a combined 228 charges against 28 people in Operation Hobart, a two-year probe of an alleged illegal gambling ring police contend was run by Hells Angels bikers and a Toronto crime family.

Police say the sophisticated operation controlled at least 14 sports-betting websites and took in more than $160 million in revenue over a six-year period before police shut it down and seized $40 million in assets.

But the high-profile bust fizzled in the court system, where most charges were withdrawn over the last year, including all counts facing the alleged ringleaders, and the only convictions resulted in fines, peace bonds or probation.

Now the Crown is fighting to keep most of the seized assets under the Civil Remedies Act, Ontario’s forfeiture law.

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“The test to keep the assets is not proof that a particular person committed a particular offence,” the ministry said in its court application. “The proceeds analysis is centred on proving that the property itself is associated with unlawful activity.”

The existence of the alleged gambling ring hasn’t been proven in court, nor have the seized assets been proven to be linked to the proceeds of crime.

According to Crown documents filed earlier to keep the assets, investigators began watching a unit at 680 Silver Creek Blvd. in Mississauga in October 2018. At the Silver Creek plaza, police identified four partners involved in the gaming house, including Kellesis, who showed up almost daily to lock and unlock the doors, the Crown says.

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One partner confirmed to OPP “that the partners were middlemen who collected money, paid it to the owners of the illegal websites, and were given a cut of the profits,” Crown documents say.

At Silver Creek, investigators say they seized gaming and gambling paraphernalia, debt ledgers, gaming terminals, ammunition, $1,900, a gun holster, cash register, money counter, playing cards and dice.

According to the Crown, OPP surveillance in 2019 revealed many in the illegal sportsbook operation’s hierarchy went to Silver Creek, including high-ranking members of the bookmaking operation.

Kellesis transferred profits to organization leaders through another man who showed up at the gaming house to exchange bags, believed to hold the operation’s profits, with other individuals who would later be charged in Operation Hobart, the documents allege.

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Police obtained search warrants for Silver Creek and Kellesis’s Mississauga home, where they arrested him and say they seized $270,000 bundled with elastic bands, electronic devices, and debt lists.

The alleged gambling ring was led by alleged Hells Angels members, Londoner Robert Barletta and Toronto resident Craig McIlquham, according to Crown documents.

The Crown is seeking assets police say they seized from those men and several others, including Londoners Dejan Markovic and Habiba Kajan. All the charges against Kellesis, Barletta, McIlquham, Markovic and Kajan were either stayed or withdrawn.

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