REAL ESTATE FOR LAUNDERING
Probe reveals casino connections
It’s almost hard to believe the dismaying stories Postmedia investigative reporter Sam Cooper has been producing about the laundering of hundreds of million of dollars of East Asian cash through Metro Vancouver casinos and the funnelling of much of it into the city’s pricey real estate.
Yet Cooper continues to clearly map out, using impeccable high-level sources, the trans-national connections between Chinese drug traffickers, B.C. casinos and the city’s housing market. He has been so effective that NDP Attorney General David Eby ended years of B.C. Liberal inaction on casino fraud to launch an investigation by money-laundering specialist Peter German.
Global intelligence agents have come to call the Asian-Pacific network of corruption, drugs, tax avoidance and real estate that Cooper is exposing “The Vancouver Model.”
Metro’s casinos have become infamous for the way B.C.’s former Liberal government allowed them to be exploited to help make possibly billions of dollars in “dirty” money appear “clean” — particularly by injecting it into residential housing and condo development.
Cooper says his sources “took a lot of risks” to unveil how high-stakes Chinese gamblers, called “whales,” have been funnelling illicit cash into gambling chips, especially at Richmond’s River Rock Casino.
Using freedom of information law, Cooper obtained reports in which an official with the B.C. Lottery Commission noted 97 of its 100 top rollers were East Asian. Cooper also dug up reports suggesting one out of four of China’s major 100 alleged financial fugitives were living in Canada, with many of them believed to be in B.C.
One Metro Vancouver gambler was accused Lai Changxing, alleged mastermind of a billion-dollar drug-smuggling operation in China, who owned property in Richmond.
An audit of 800 “VIP” gamblers at River Rock Casino found their most common profession was “real estate.” Almost half their $53 million worth of transactions in one year were flagged as “suspicious.” The second and third most common professions among the biggest gamblers were “business owner” and “construction.”
Many high-stakes gamblers at River Rock also declared themselves as “housewife” or “student” — with one youth forking over $819,000 in cash to buy casino chips. Investigators believe housewives and offspring are often used as fake “nominees” to hide the true source of wealth in money laundering and real estate schemes.
Staggering volumes of dirty cash, including hundreds of thousands of dollars worth of $20 bills stuffed in hockey bags, have been flowing through Metro casinos and then been shifted into real estate.
Some people in the spotlight include Paul King Jin, whom the RCMP suspect has been making big drug cash loans to “high risk” VIP gamblers from China. Cooper found documents that suggested Jin was making big real estate loans to whale gamblers. One of them, who bought casino chips with $645,000 in suspicious cash, has a $14 million house near the Point Grey Country Club.
Another whale who allegedly took money from Jin is under investigation by the B.C. Lottery Corp. and owns properties in Greater Vancouver valued at $28 million.
Laundered casino money does not only go into luxury properties, though. Land title records suggest it’s also used to “buy up rickety old houses for land assembly to build condo complexes in East Vancouver,” Cooper says.
Cooper’s findings appear to dovetail with the research of veteran property development analyst Richard Wozny, who recently produced a groundbreaking report showing a “large, mysterious, untaxed pool of international capital” is being converted into speculative investment in Metro housing.
Why is real estate, especially in Greater Vancouver and Toronto, so attractive to offshore gamblers, criminals and money launderers?
“First of all, real estate is a big asset. The more money you can put into something, the more you can hide,” Cooper says.
The second reason criminals launder money through B.C. real estate, says Cooper, is the industry has shown almost no “due diligence” in reporting on suspicious transactions.
The gambling business at least covers itself legally by reporting thousands of dubious transactions to Fintrac (a federal regulating body), Cooper says. Even though nothing usually happens with those reports, Cooper says many of B.C’s real estate players don’t even go through the motions of compliance.
“They almost never report to Fintrac.”
A third reason real estate is alluring to criminals, Cooper says, is “it is an asset that’s rising in value. Money launderers have in many ways been able to drive housing prices higher. So real estate not only serves the purpose of laundering money, it also serves the purpose of making money. It’s a perfect crime.”
Gamblers and organized crime figures from China, Cooper says, are not only in Canada to seek a haven from officials in their homeland — they’re trying to make it appear as if their money is legitimate.
“They therefore own multiple properties and sometimes have family members in them, whether they’re wives, children or concubines.”
UBC geographer professor David Ley, author of Millionaire Migrants, adds other general factors that make Metro Vancouver housing highly attractive to people from China: Clean air, temperate climate, trusted universities, relatively short flight times and the existence of a Chinese-speaking community that makes up one fifth of the population.
What are some solutions to the notorious “Vancouver model?”
The real estate and development industries, Cooper says, “have to stop turning a blind eye to trans-national money laundering. People need to be prosecuted and sent to jail and made to pay $500,000 fines.”
Even though former B.C. premier Christy Clark and cabinet minister Mike de Jong often celebrated how casinos brought in almost $1 billion a year in taxes, Cooper believes the province has to overcome its past “torpor” and hand out severe punishments if it hopes to serve the broader interests of British Columbians.
Despite tax spinoffs from government-regulated gambling, Cooper says, for the most part the links between B.C.’s high-stake gamblers and the housing market strongly suggest the situation is “a net loser for those who are working here, paying their fair share to the government and trying to buy a home.”
(Real estate and development industries) have to stop turning a blind eye to trans-national money laundering. People need to be prosecuted and sent to jail and made to pay $500,000 fines.