Vancouver company alleged to be laundering millions in illicit funds worldwide

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WATCH ABOVE: A financial expert weighs in on the money laundering accusations made against a Vancouver payment processing firm. Kristen Robinson has more – Sep 23, 2016

The U.S. Department of Treasury has named a a relatively unknown Vancouver company with offices downtown as a “significant transnational criminal organization,” which has helped to defraud Americans of hundreds of millions of dollars.

The allegations against PacNet Services Ltd., which have not be proven in court, came during a press conference with U.S. Attorney General Loretta Lynch.

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) said PacNet is an “international payments processor and money services business” with a long history of money laundering by “knowingly processing payments on behalf of a wide range of mail fraud schemes” that targets victims across North America and the world.

The investigation names 12 individuals and 24 entities tied to PacNet, across 18 countries.

John E. Smith, OFAC acting director, said in a statement: “PacNet has knowingly facilitated the fraudulent activities of its customers for many years, and today’s designations are aimed at shielding Americans and the nation’s financial system from the large-scale, illicit money flows that are generated by these scams against vulnerable individuals. Treasury will continue to use its authorities to respond to the evolving nature of transnational organized crime.”

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READ MORE: Vancouver-based lawyer wants inquiry into real estate money laundering

The U.S. Department of Justice will now be executing search warrants in U.S. locations, announcing criminal actions, filing civil injunctions against multiple mail fraud services providers, and seizing a PacNet bank account.

Some of the 12 individuals named by OFAC include Metro Vancouver residents Rosanne Day, Ruth Ferlow, and Mary Ann Driscoll. It also names local software developer DeepCove Labs as the provider of IT support to PacNet.

Day is also the president and a member of the board for Deepcove Labs. Records show she lives in a character home on West 22nd Avenue recently assessed at $3.4 million.

Peter Ferlow, the husband of Ruth Ferlow who is listed as the director, manager, or company secretary of several PacNet-linked companies, told Global News he was not aware of any evidence proving these allegations are true.

“I find it surprising that the authorities haven’t provided any evidence to shut somebody’s company down,” he said.

According to Ferlow, the company has roughly 100 employees in Vancouver who were surprised to find the competition bureau and Vancouver Police at their office after the news broke.

“The company and all the principles and higher managers in the company are now listed on the U.S. Treasury site with personal home addresses and nobody’s guilty here. Like, what is going on? It’s kind of wrong,” he added.

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“Everbody is out of work, and they’re just regular people there. From one week to the next you can’t make your mortgage payment.”

PacNet offices are located at 595 Howe Street, Vancouver.

The Department of Treasury has a public list of seven alleged “transnational criminal organizations,” now including PacNet.

Also on the list is MS-13, individuals associated with Japanese Yakuza criminal network, key members and associates of the Eurasian crime syndicate, the Brothers’ Circle, members of the Camorra, one of Europe’s largest criminal organizations, and Mexico’s Los Zetas.

The crackdown on these organizations came after an executive order was signed by U.S. President Obama in 2011.

In the order, Obama stated these organizations had reached the “scope and gravity that they threaten the stability of international political and economic systems.”

“Such organizations are becoming increasingly sophisticated and dangerous to the United States; they are increasingly entrenched in the operations of foreign governments and the international financial system, thereby weakening democratic institutions, degrading the rule of law, and undermining economic markets.”

Vancouver anti-money laundering lawyer Christine Duhaime says the news is “unfortunate for Canada.”

“We are getting a bit of a reputation for money laundering,” she told Global News.

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Duhaime said OFAC investigates the “most egregious cases” affecting the U.S. economy, and it is unusual for a Canadian entity to be in this position.

“We don’t often get a company in Canada that has sanctions against them,” she added.

NDP MLA David Eby said Vancouver has a “problematic” history with money laundering.

“What’s really embarrassing is learning from another country about what is happening in British Columbia and Metro Vancouver, especially knowing how diplomatic channels work,” Eby said.

“I wish I could say it was a surprise to me that British Columbia is home to an international money laundering firm, as alleged by the U.S. government, but it’s not,” he added.

There is no information available on what might happen to PacNet, but a company employee who picked up a phone call from Global News said it was “business as usual.”

PacNet released a statement Friday afternoon addressing the allegations.

“We absolutely and categorically reject the allegations made against us regarding our processing for direct mail campaigns.”

“We will vigorously defend ourselves against these unproven allegations which we only learned about yesterday through media reports. As a result of this investigation, it is our understanding that several associated companies have been added to the Office of Foreign Assets Control (OFAC) list which we are also working to address.

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“PacNet has a rigorous compliance program in place. We follow all global standards in client due diligence and continually update policies, procedures and training. Central to this entire program is the safety of the general public.

“In an effort to better safeguard the public, the company decided today to immediately stop processing payments for direct mail companies. Affected clients are being notified.”

Vancouver Police would not comment on the case.

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