Van­cou­ver IMET: Seven- year chronol­ogy of polic­ing dis­as­ter

Vancouver Sun - - BUSINESS - DAVID BAINES dbaines@van­cou­ver­ Read David Baines’ blog at van­cou­ver­

FThere are cur­rently 20 peo­ple on staff: 13 RCMP mem­bers, five civil­ian mem­bers and two sup­port staff. The pro­jected bud­get this fis­cal year is $ 3.2 mil­lion. Tax­pay­ers have shelled out more than $ 18 mil­lion over the last seven years to put two peo­ple in jail.

or the RCMP In­te­grated Mar­ket En­force­ment Team in Van­cou­ver, De­cem­ber is the cru­elest month of all. Al­most ev­ery year since the Van­cou­ver IMET made its de­but in De­cem­ber 2003, I have been pro­vid­ing an­nual progress re­ports. They have made for grim read­ing. Here are some ex­cerpts:

• De­cem­ber 2003, the in­au­gu­ra­tion:

There was a lot of red serge, brass but­tons and un­fet­tered op­ti­mism at the of­fi­cial rib­bon­cut­ting cer­e­mony in Van­cou­ver Mon­day for the RCMP’s new­est ini­tia­tive to com­bat stock-mar­ket crime.

Some 13 uni­formed of­fi­cers — in­clud­ing two wear­ing the tra­di­tional red serge tu­nics — were among 50 po­lice, govern­ment and se­cu­ri­ties in­dus­try rep­re­sen­ta­tives who at­tended the of­fi­cial open­ing of the RCMP’s much-her­alded In­te­grated Mar­ket En­force­ment Team at 401 West Ge­or­gia ...

Ear­lier this year, the fed­eral govern­ment an­nounced it would pro­vide up to $ 30 mil­lion per year to fund IMETs in Van­cou­ver, Cal­gary, Toronto and Mon­treal. The plan is to com­bine the re­sources of RCMP, city po­lice, pro­vin­cial se­cu­ri­ties reg­u­la­tors, fed­eral pros­e­cu­tors and pri­vate foren­sic ac­coun­tants for a co­or­di­nated as­sault on se­cu­ri­ties crime.

• De­cem­ber 2004, the first an­niver­sary:

So far, the Van­cou­ver team — which was formed to crim­i­nally pros­e­cute stock mar­ket mis­cre­ants — has not yet se­cured a sin­gle crim­i­nal charge against any­body.

It is much too early to read any­thing into this …. But with a sec­ond team to be added in March or shortly there­after, this is the year that the “ un­fet­tered op­ti­mism” I ob­served at the of­fi­cial open­ing must trans­late into crim­i­nal charges.

• De­cem­ber 2005, the sec­ond an­niver­sary: On Dec. 1, the 15-per­son group, which has an an­nual bud­get of $ 3 mil­lion, cel­e­brated the sec­ond an­niver­sary of its of­fi­cial open­ing. I say cel­e­brated, but “ recorded” would be a bet­ter word to re­flect the mood, be­cause the team has not yet man­aged to ob­tain Crown ap­proval to lay a sin­gle crim­i­nal charge.

“ Ob­vi­ously we haven’t met the ex­pec­ta­tions of the pub­lic,” Insp. Ge­orge Pemberton, who has been in charge of the Van­cou­ver IMET team since July, said in an in­ter­view.

• De­cem­ber 2006, the third an­niver­sary:

Be­lieve me, I would love to re­port that this pro­gram has been a roar­ing suc­cess, that the Van­cou­ver IMET has rounded up dozens of Howe Street crooks, and that those who es­caped the drag­net are now cow­er­ing in fear. But the truth is some­thing quite dif­fer­ent …. To date, only one charge has been laid. Kevin Steele was charged in May this year with bilk­ing 229 in­vestors of more than $ 10 mil­lion in a com­modi­ties trad­ing scam.

This case did not rep­re­sent any sort of in­ves­tiga­tive or pros­e­cu­to­rial chal­lenge. It was orig­i­nally in­ves­ti­gated by the U. S. Com­mod­ity Fu­tures Trad­ing Com­mis­sion, and Steele made it clear from the out­set that he would co­op­er­ate with the RCMP in­ves­ti­ga­tion. He pleaded guilty in June and was sen­tenced to six years in prison.

De­cem­ber 2007, the fourth an­niver­sary:

Birth­days are not al­ways happy oc­ca­sions. Cer­tainly, the fourth birth­day of the Van­cou­ver RCMP In­te­grated Mar­ket En­force­ment Team is no cause for cel­e­bra­tion.

So far, the team has laid only one charge, against com­modi­ties fraud­ster Kevin Steele. He pleaded guilty and was sen­tenced to six years in jail.

This is a pa­thetic level of pro­duc­tion. Tax­pay­ers should be concerned.

De­cem­ber 2008: The fifth an­niver­sary: No charges. No story.

De­cem­ber 2009, the sixth an­niver­sary:

While an­niver­saries are usu­ally oc­ca­sions for cel­e­bra­tion, this one is an oc­ca­sion to con­tem­plate the sad state of law en­force­ment in this coun­try …. Since in­cep­tion, Van­cou­ver IMET has charged only two peo­ple: Kevin Steele, who pleaded guilty to a com­mod­ity fu­tures scam in 2006 and was sen­tenced to six years in jail, and Ian Thow, a Vic­to­ria stock­bro­ker who was charged ear­lier this year with de­fraud­ing clients of mil­lions of dol­lars and is now await­ing trial.

Two other ma­jor files are in progress: Van­cou­ver ge­ol­o­gist John Pater­son, who al­legedly de­frauded in­vestors in South­west­ern Re­sources by al­ter­ing as­say re­sults, and Sun Wan ( Sean) Kim, who al­legedly

de­frauded in­vestors of mil­lions of dol­lars in a com­mod­ity fu­tures trad­ing scheme ear­lier this year.

• De­cem­ber 2010, the sev­enth an­niver­sary: As of to­day, there have still only been two charges and con­vic­tions to date ( Thow and Steele). Pater­son has not yet been charged. Nei­ther has Kim.

Kim, mean­while, has been charged, tried, con­victed and sen­tenced to five years in jail in South Korea on sim­i­lar charges. Whether he will also be charged here re­mains to be seen. Insp. Ian Law­son, who is lead­ing the Van­cou­ver IMET while Pemberton is on other du­ties, said there are cur­rently 20 peo­ple on staff: 13 RCMP mem­bers, five civil­ian mem­bers and two sup­port staff. There are also two va­can­cies wait­ing to be filled. The pro­jected bud­get this fis­cal year is $ 3.2 mil­lion.

The bot­tom line is that tax­pay­ers have shelled out more than $ 18 mil­lion over the last seven years to put two peo­ple in jail.

Law­son says it’s not fair to as­sess the team’s per­for­mance by the num­ber of charges. IMET staff also as­sist other en­force­ment bod­ies, such as the B. C. Se­cu­ri­ties Com­mis­sion, the U. S. Se­cu­ri­ties and Ex­change Com­mis­sion, the FBI and the In­vest­ment In­dus­try Reg­u­la­tory Or­ga­ni­za­tion of Canada ( the dis­ci­plinary agency for Cana­dian stock­bro­kers).

He also said IMET mem­bers con­duct in­for­mal in­ter­ven­tions on the street, such as call­ing on pro­mot­ers and gen­er­ally mak­ing their pres­ence felt, which de­ters crim­i­nal ac­tiv­ity.

As for the dearth of charges, he pointed to the high ev­i­den­tiary thresh­olds, oner­ous dis­clo­sure re­quire­ments, the dif­fi­culty of con­duct­ing cross­bor­der in­ves­ti­ga­tions, the time it takes to ob­tain and an­a­lyze bank­ing and bro­ker­age records.

My re­sponse to this? I sim­ply re­fer you to my third an­niver­sary re­port, in De­cem­ber 2006:

I can­not bear the thought of an­other year pass­ing, and once again hear­ing the same old ex­pla­na­tions and ex­cuses. The IMET pro­gram has shown it­self to be im­po­tent, and that im­po­tence is mak­ing stock mar­ket mis­cre­ants braver and bolder, the ex­act op­po­site of what it is sup­posed to be do­ing. It’s time to pull the plug on this dis­as­ter-in-progress.

My pre­scrip­tion? That’s easy. I sim­ply re­fer you to my De­cem­ber 2009 re­port:

What we need is a royal com­mis­sion of in­quiry into white-col­lar crime pros­e­cu­tion in Canada. Noth­ing short of a com­plete over­haul can save us from this sys­temic dys­func­tion.

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