Seize assets. Prosecute. Pay whistleblowers.
Those are just a few recommendations Marc Cohodes has to save Vancouver’s economy.
Cohodes is a high profile short-seller and fraud-hunter who earned his reputation finding hidden problems and inflated profits on Wall Street.
Lately, though, he’s turned his attention to B.C.
WATCH: How Chinese gangs are laundering drug money through Vancouver real estate
Cohodes admits he’s friends with B.C. Attorney General David Eby, who last September hired former deputy commissioner of the RCMP Peter German to conduct an investigation into the province’s money laundering problem.
Reports of criminal activity started surfacing a decade ago.
While this week’s report by the B.C. government – bluntly titled Dirty Money — links money laundering to B.C.’s opioid overdose and real estate crises, it doesn’t explain why the previous government, under BC Liberal leader Christy Clark, wasn’t able to stop it.
“The BC Liberals and Christy Clark hid under the guise that it was good for the economy, when in fact unless something happens — and happens soon – it’s going to destroy the economy and may destroy the city.”
In an interview with Global National’s Robin Gill, Cohodes says Eby has all kinds of tools at his disposal do to something now, and he shouldn’t be afraid to use them.
But Cohodes goes even further with a proposed fix:
“I think the B.C. government needs to seize assets, sell the assets at an auction, split half the money with the Chinese government, split half the money with B.C. and give the whistleblower or finder, say, 10 per cent.”
It’s a dramatic proposal for a dramatic problem in British Columbia: the blend of organized crime, drug trafficking and a housing affordability crisis.
In his report, German recommended the establishment of an independent regulator for the casino industry to rein in money laundering.
But that doesn’t go far enough for Cohodes.
“If you weigh 360 pounds, you’re not going to get to a normal weight by drinking Diet Coke,” he said.
“You have to do drastic things and drastic measures need to be taken so asset seizure is one place to really start.”
Cohodes takes issue with the finding in Dirty Money that only $100 million has been illegally funneled through B.C. casinos.
“The numbers in my mind are in the tens of billions of dollars and I think the reasons those numbers don’t come out is because the government doesn’t want to scare the hell out of people,” he said.
He’s recommended to Eby that authorities reward whistleblowers who tip off the government to drug trades or luxury home and car ownership.
German’s report lists China, Mexico and Colombia as key players in a “complex network of criminal alliances” coalescing with underground banks at its centre.
“In addition, ‘high rollers’ from China facilitate the flight of capital from China using Canadian casinos, junket operations and investment in real estate,” it says, which is why Cohodes focuses his arguments squarely on money launderers from there.
Seizing assets would take property out of the hands of criminals, put it back on the market, reset prices and help B.C. coffers for any dislocation, according to Cohodes.
But Canadians’ penchant for politeness means it won’t be easy for Eby to garner support for the revolution he deems necessary, he says.
“The kitten-and-rainbow crowd needs to ask for scalps because these money launderers don’t pay taxes. They need to pay their fair share to help this get better for generations to come,” Cohodes said.
While he says the problem can be fixed, it won’t stop Vancouver’s real estate bubble from bursting. In his view, the market is already essentially frozen.
“The sooner it resets and resets severely, where hard working B.C.-ers who are born here and want to live here, want to own a place, the better everyone is,” Cohodes says.
“Real estate collapsing is a long term plus, but short term it’s gonna be a b****.”
His final recommendation is that people stand behind Eby to brace the blow.
The attorney general, he believes, is a shining example of what needs to be done to crack down on money laundering.