MONEY LAUNDERING WOES
B.C. faces prosecution challenges
On the afternoon of June 26, 2015, suspected drug traffickers Michael Reg Whieldon and David Bjorn Johnson arrived in Whieldon’s pickup truck at a supposed cosmetics manufacturer in southeast Vancouver.
Whieldon got out of his 2010 Dodge Ram pickup and carried a black-and-blue bag to the business on East Kent Avenue South, in a commercial building near the north arm of the Fraser River. According to police surveillance, about 10 minutes later, Whieldon returned to the truck empty-handed and the pair drove away.
That same day, according to a police report, the owner of the supposed cosmetics manufacturer, Maxim Poon Wong, also known as Nelson Wong, delivered more than $280,000 to a suspected underground bank in Richmond, called Silver International.
A months-long Vancouver Police Department investigation in 2015 concluded that the supposed cosmetics manufacturer, called Ritzy Products, was being used as a branch for Silver International, which is alleged to have washed hundreds of millions of drug money through wealthy Asian gamblers, who picked up bags of cash in Vancouver and deposited money in Chinese banks.
Wong delivered nearly $3.9 million to Silver International during a 4½-month period in 2015, according to a police analysis of seized ledgers filed in court.
In 2015, the Vancouver police investigation, called Project Trunkline, and a separate RCMP investigation into Silver International called E-Pirate, led to the arrest of at least 17 people, including Whieldon, Johnson and Wong.
The investigations also led to the seizure of more than $3 million in cash, mostly $20-bill bundles wrapped with rubber bands; vehicles, including a Corvette Stingray; jewelry and other valuables; and drugs, including cocaine, marijuana and precursors that are used in the manufacture of methamphetamine.
None of the lengthy police surveillance work, the arrests or the seizures has resulted in alleged drug traffickers or money launderers standing trial on criminal charges.
Another Vancouver police investigation, Project Tar, that similarly to Project Trunkline overlapped with E-Pirate, “and may have been a bigger case” say police, also did not result in charges.
The laundering of the large amounts of cash generated by drug trafficking is not limited to one organized crime group, and includes Asian gangs, as already reported, but also those with connections to groups such as the Hells Angels, and Mexican and South American cartels.
The findings from a Postmedia investigation — gleaned from hundreds of pages of B.C. Supreme Court civil documents, provincial criminal court transcripts, criminal court record searches and responses from police and Crown prosecutors — comes as increasing attention is put on money laundering in British Columbia and concern raised over the apparent inability to prosecute alleged perpetrators.
Christian Leuprecht, a Royal Military College of Canada professor, identified Canada’s small number of money laundering investigations and prosecutions as a problem to a federal parliamentary committee, saying it is indicative of a lack of real and sustained support by both the political and law enforcement leadership in Canada.
“We are just not getting a handle on financial crime and illicit financial flows in this country,” Leuprecht told The Sun. “The question is how come nobody ever goes to jail for it and should we do better? Can we do better?”
The issue has the attention of B.C. Attorney General David Eby, who, when he responded to criminal charges being stayed in the Silver International case, said the inability to prosecute moneylaundering is a crisis and there is an urgent need to fix it.
That case — where as much as $220 million a year is alleged to have been laundered — is believed by the attorney general’s office to be the largest money-laundering case in B.C.
Unlike in some provinces, police cannot lay criminal charges in B.C. without approval. That is in the hands of either federal or B.C. prosecutors, depending on the case, who base their decision on evidence provided by police.
The Public Prosecution Service of Canada declined an interview on the failed E-Pirate prosecution of alleged-money launderer Silver International, but in a written response said the E-Pirate file was closed and “no other individuals or companies were charged.”
The federal prosecution service did not respond to questions about why other charges did not come forward from the E-Pirate investigation. The service also did not respond to questions from Postmedia on whether there are challenges in these types of investigations and prosecutions such as in gathering evidence, or whether there were other reasons for not pursuing criminal charges.
“There are challenges in most prosecutions. It is impossible to generalize the challenges by prosecution type,” spokeswoman Nathalie Houle said in a brief written response.
Federal RCMP also declined an interview on the E-Pirate investigation and the challenges surrounding money-laundering investigations.
In a written response, RCMP spokeswoman Sgt. Marie Damian did say that money-laundering and financial crime cases undertaken by the RCMP’s federal policing units are increasingly complex, involving multiple domestic and foreign agencies that gather information and evidence from a variety of sources.
“We appreciate how difficult it is not being given the full picture; however, for privacy and operational reasons, there are times it would be inappropriate for the RCMP to release information relating to criminal investigations,” said Damian.
Vancouver police and Alberta police forces did not have a clear explanation of why no criminal charges resulted from the Project Trunkline investigation.
Vancouver police said they were assisting an investigation by the Alberta Law Enforcement Response Team, a multi-force unit created to combat organized and serious crime. But Alberta police said that Trunkline was a Vancouver police investigation.
Mike Tucker, a spokesman for the Alberta team, said the investigation took place mostly in B.C. and all intelligence they gathered was forwarded to Vancouver police.
Vancouver police Supt. Mike Porteous, in command of investigative services, said it was an Alberta decision on who to prosecute — and the B.C. figures were not prosecuted. “I don’t even know why they decided that,” he said.
A Vancouver couple accused of money laundering at Silver International, Jian Jun Zhu and Caixuan Qin, were set for several weeks of preliminary hearings in 2019 in Richmond provincial court, but the federal prosecutors stayed the criminal charges unexpectedly and without explanation in November last year.
Court transcripts show there were concerns early by judges hearing preliminary matters about a delay in getting to trial.
Twice there was inadvertent disclosure of materials not meant to be seen by the defence.
Others arrested in the three major investigations — E-Pirate, Trunkline and Tar — were not even charged.
In August 2015, two suspected money couriers were arrested near Merritt, as part of the RCMP’s E-Pirate investigation, with nearly $1 million in the trunk of their car, but did not face criminal charges.
In October 2015, another alleged customer of Silver International, Stephen Hai Peng Chen, also known as Hoy Pang Chan, accused of depositing $5.31 million in the underground bank Silver International and withdrawing $2.27 million during a 4½-month period, was arrested but also has not faced criminal charges.
Whieldon, arrested as part of the Trunkline investigation, was considered a high-level drug importer, specifically from Mexico, according to court documents.
Police searched his 31st-floor Coal Harbour apartment, seizing more than $16,000 in cash, including U.S. dollars, Mexican pesos and Iraqi dinars, according to court documents. Also seized were 11 cellphones, three money counters and a handgun. In an earlier arrest of Whieldon during the investigation, $40,000 was seized from a backpack that tested positive for cocaine residue, according to court documents.
According to sources, the Trunkline investigation started after police in Alberta documented the movement of drugs between B.C. and Alberta allegedly by people connected to La Familia, a Mexican cartel with close ties to the Sinaloa cartel.
According to court documents, one of those that Whieldon was allegedly doing business with, JohnPaul Tate Teti, met with full-patch Hells Angel member Chad Wilson on the side of a road in Langley in November 2015 just before Teti was arrested. (Wilson was murdered in November of last year).
A police search of Teti’s car found about one kilogram of marijuana in a white boutique bag and a white box given to him by Wilson just before the arrest, according to police surveillance from Project Trunkline filed in court.
Whieldon was considered close to Hells Angel Bob Green, an influential member of the biker gang who died in a Langley shooting in October 2016, say sources.
Wong, the owner of the supposed cosmetic manufacturer Ritzy Products and suspected as acting as a branch of alleged money launderer Silver International, was arrested on Oak Street in September 2015.
Police found more than $225,000 in cash, most of it in $20 bills in a brown box in his pickup, according to court documents.
There was also a Post-it note marked “Mike Whieldon” in Wong ’s pants pocket.
Wong has been recorded in RCMP databases as being linked to the Yellow Triangle Boys gang and a triad associate.
The question is how come nobody ever goestojail for it and should we do better? Can we do better?
According to court records, some of those arrested, including Qin, Zhu, Whieldon, Johnson and Wong, who now face forfeiture of money and assets in civil cases launched by the B.C. government, deny they were involved in drug trafficking or money laundering and say that the search and seizures were improper and violated their constitutional rights.
Others, such as Chan, have not responded to the civil forfeiture suits, which contain allegations not proven in court.
The threshold for proving a civil claim is lower than for a criminal conviction, a balance of probabilities instead of beyond a reasonable doubt.
According to Porteous, the Vancouver police superintendent, the technical knowledge of the police in conducting these investigations has progressed and is very sophisticated.
Porteous argued that getting charges in complex cases such as money laundering is not a policing issue but a prosecution issue.
As a result of precedent-setting decisions at the Supreme Court of Canada — on full disclosure of evidence and new deadlines for prosecutions — there is additional pressure on the entire criminal justice system in bringing these cases to court, said Porteous.
The volume of material that has to be disclosed has become so huge in major investigations involving dozens of officers that even after a suspect is arrested, said Porteous, “we would still have to maintain up to 20 people for another year just to service the case for secondary disclosure.”
Added Porteous: “Cases now have to be airtight, perfect cases. … There is no accident you keep seeing the big cases not going forward.”
Porteous said it’s these problems that bogged down the Tar investigation and resulted in it not getting to the charge approval stage.
A retired senior RCMP officer, who spoke to The Sun on condition of anonymity, noted that money laundering is a problem countries all over the world are struggling to tackle.
However, the former officer acknowledged that police resources are a factor, troublesome when money-laundering cases are so complex.
According to the retired officer, the RCMP’s federal serious and organized crime unit is falling apart with a 37 to 40 per cent understaffing, which dates to 2011 when, under federal cuts, the RCMP reorganized federal policing units to be accountable to Ottawa instead of provincial RCMP leaders.
“All the horsepower has left federal policing,” said the former cop.
Leuprecht, the Royal Military College professor, said given that money-laundering investigations are complex and require special skills and co-ordination with Crown counsels, Canada must start by revamping federal policing.
Leuprecht, and an expert in policing, security and defence issues, suggests that two separate dedicated federal police forces are needed if financial and cyber crime are to be properly investigated and successfully prosecuted.
The Financial Action Task Force, an international organization that sets anti-money laundering standards, has highlighted Canada’s lack of successful prosecution of money laundering.
A 2016 task force evaluation report of Canada found that law enforcement results “are not commensurate with money-laundering risks.” The report noted there were a high percentage of charges being withdrawn or stayed.
“The fact that Canada only led 35 prosecutions and obtained 12 convictions in single-led (money laundering) cases between 2010 and 2014 is a concern,” stated the report by money-laundering experts from the International Monetary Fund and France, Italy, Ireland, Brazil and Hong Kong.
A review by The Sun of moneylaundering criminal cases prosecuted in B.C. provincial and B.C. Supreme Court dating back 10 years shows the most significant and recent case failed to get a conviction. A provincial court judge ruled in 2014 that in the case of allegations of laundering $24 million through a currency exchange, the evidence had not established the money was from the proceeds of crime, specifically drug trafficking.
The B.C. Prosecution Service said since 2002, 50 money laundering charge reports were forwarded to Crown counsel, resulting in 34 people being charged with at least one count of money laundering and 10 people being found guilty. The federal prosecution service said it did not keep such statistics.
Donald Sorochan, a Vancouver lawyer who helped set up a 2016 conference on money laundering in Vancouver, says an element of complication is added by the fact that a charge of money laundering must prove the underlying crime.
However, Sorochan, who has both defended and prosecuted criminal cases, said he believes there is a tendency for investigations to produce a huge amount of paper and then the prosecutor “opines” on whether it meets the test to go to trial.
“I think that’s crazy,” said Sorochan, who has expertise on managing complex cases.
“I think you can easily discern potential charges and provide guidance so that the police agencies don’t have to write investigative reports that are a book — but rather can focus in on specific charges that are apparent relatively early and what can be done to prove those charges.”