An undercover police officer posed as a client of the Aulich law firm and secretly recorded conversations that led to two of the firm's partners being accused of conspiring to launder criminal funds.
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The revelation came in the ACT Magistrates Court on Wednesday as a barrister representing Ben Aulich and Bridie Harders said police were "effectively bugging the offices for months" and seemingly trying to "create" a crime.
Mr Aulich and Mrs Harders were arrested in December alongside accountant Michael Papandrea, with police alleging the trio were part of a scheme to buy a business with which to clean "large quantities" of tainted cash.
Both solicitors have pleaded not guilty to a charge of conspiracy to engage in money laundering, while Mr Aulich has also denied an allegation that he recruited Mr Papandrea to assist in criminal activity.
The legal partners appeared in court on Wednesday to seek variations to bail conditions that prevented them contacting each other or a junior Aulich solicitor, Satomi Hamon, other than in emails "for the purposes of providing legal services".
The pair's barrister, Steven Whybrow, told the court that the email-only edict had become "unworkable".
He relied upon an affidavit sworn by Aulich managing partner Peter Woodhouse, who said Mr Aulich and Mrs Harders needed to work together on complex matters as part of their day-to-day business.
Mr Woodhouse also described a number of other "difficulties" with the conditions.
Prosecutor Skye Jerome argued, however, that the affidavit contained only "frivolous complaints about inconvenience", singling out a mention of the impact on lunchtime quizzes at the Aulich offices.
She said the conditions in question were "necessary to achieve the purpose of [preventing the defendants] interfering with evidence, intimidating witnesses, or otherwise obstructing justice".
Ms Jerome named Ms Hamon as one witness at risk, saying the junior solicitor had "refused to be cooperative with police" despite it being "clear that [she] has evidence to provide".
Ms Hamon would inevitably be called to give evidence in court, the prosecutor said, and it was crucial she was not pressured to lie by defendants who represented her source of income.
Ms Jerome also told the court that the alleged offending had involved the use of "secret communication", including handwritten notes that were "immediately destroyed".
In response, Mr Whybrow said the prosecution's concerns were "speculative" and the restrictions on contact were "absurd".
He told the court the "secret meetings" Ms Jerome referred to had been with someone Mr Aulich and Mrs Harders had believed to be a client.
He said that person had turned out to be an undercover police officer who had been "effectively bugging the [Aulich] offices for months" as part of an operation that began in April 2020 and culminated with the December arrests.
It is understood that the officer, using the cover name Alex Torosian, originally approached Aulich pretending he needed legal assistance to recover money that had been unlawfully seized.
There is no evidence of legal conferences involving clients other than the undercover officer being recorded.
Precisely how the police probe led to the charges being laid is yet to be revealed in court, and Mr Whybrow said even the defence still knew relatively little.
He said a 33-page police document outlining the allegations had been provided to Mr Aulich and Mrs Harders, but prosecutors were still unable to properly particularise the charges or say which of them would proceed.
He also said the material handed over so far suggested that as the months went by, police seemed to be thinking: "What crime are we trying to uncover, or perhaps create?"
Special Magistrate Jane Campbell ultimately agreed to vary bail so that Mr Aulich and Mrs Harders could more easily communicate, though they remain banned from discussing this particular case with each other or speaking to Ms Hamon about it.
In making the decision, Ms Campbell said police already seemed to have obtained key evidence in the form of the covert recordings, and it was unclear what was "still out there" for the defendants to potentially interfere with.
The solicitors' matters are due back in court on April 12, while Mr Papandrea is set to return on March 1.
The accountant has previously pleaded not guilty to recruiting a person to engage in criminal activity. He is yet to enter pleas to some related charges.
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