‘BCLC could have stopped this’: Former casino investigators question whether officials unwilling to stop criminal activity

Click to play video: 'Whistleblowers demand public inquiry, say BC casinos are not “unwitting”'
Whistleblowers demand public inquiry, say BC casinos are not “unwitting”
WATCH: Whistleblowers demand public inquiry, say BC casinos are not 'unwitting' – Feb 7, 2019

Several former investigators who say they lost jobs in B.C.’s casino industry for whistle-blowing are questioning whether some B.C. officials deliberately allowed government-regulated casinos to be used as hubs for money laundering.

In an exclusive investigation, Global News has conducted extensive interviews with the casino industry sources, and also reviewed documents and court testimony from several of the sources.

The sources pointed to allegations of “willful blindness” of dirty cash transactions in B.C. casinos. And some questioned whether a “conspiracy” or corruption has occurred, that would allow dirty funds estimated by Global News at up to $2 billion, to flow through Lottery Corp. casinos.

All indicated they believe a public inquiry into the scandal should occur, and they would testify.

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Joe Schalk, former senior director of investigations for B.C.’s Gaming Policy Enforcement Branch (GPEB), says he was fired without cause in December 2014.

Schalk said from 2008 until his dismissal, he and colleagues were escalating money-laundering warnings within B.C.’s government and that after crunching GPEB data, he estimated “well over” $1 billion was laundered through B.C. casinos.

He also suspects he was fired for blowing the whistle on massive money laundering.

“BCLC could have stopped this. The service providers could have stopped this. And if an inquiry were called, that is the evidence I would give.”

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Schalk, a former RCMP officer, said his GPEB colleagues “could not believe it” when they read the conclusion in former Mountie Peter German’s independent review of B.C. casino money laundering, that casino operators were “unwitting” victims of money laundering.

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“What I’m saying is, there is no question in my mind. This was not unwitting. So if you look at it with an investigative mind, there is complicity,” he said. “And if it is deliberately allowed, the next question is where does the conspiracy start and end? And what different groups could be involved?”

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“Willful blindness”

An internal report filed in September 2015 by Ross Alderson, the Lottery Corp.’s then-director of anti-money laundering, highlights the heightened distrust and suspicion GPEB and some senior police officers in B.C. held about BCLC.

The report outlined how Lottery Corp. investigators had linked about 40 Chinese VIP gamblers at Richmond’s River Rock Casino to massive cash deliveries from an alleged organized crime network suspected of “transnational” drug trafficking and money laundering.

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In his September 2015 report, Alderson wrote he had “received information that senior police had directed their operational staff to deal with GPEB rather than BCLC. Comments were made that there had been unwillingness by BCLC leadership to address, what was in the police’s eyes, clear acceptance of huge volumes of cash which ‘one could reasonably suspect were likely proceeds of crime.’”

Alderson feared that BCLC and casino managers could also be accused of “willful blindness.”

“There should be concern that BCLC and Service Provider management will be accused of ‘willful blindness.’ Sources have told me that law enforcement and government (GPEB) ‘are distancing themselves from BCLC’ for this reason.”

But BCLC was under suspicion, Alderson wrote, despite the fact they had asked RCMP to investigate.

Alderson also concluded in the September report that investigations had shown loan sharks and Chinese VIP gamblers were likely involved in “transnational money laundering,” and “there are likely people involved in the regulated B.C. Gaming Industry that are involved in facilitating proceeds of crime for players.”

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In response to these and other allegations in this story, Great Canadian, the operator of River Rock, stated: “As we have consistently stated, we take our compliance responsibilities extremely seriously in this heavily regulated gaming industry. Great Canadian operates in strict compliance with all laws and regulations that apply to our industry, and comprehensively follows all policies and procedures that are required of us by BCLC and our regulators.”

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And in a legal letter from Great Canadian regarding Global News reports, the company’s counsel stated: “…the proactive efforts of River Rock Casino staff and their coordination with both law enforcement and regulators to combat crime and exclude nefarious elements from the casino was commended by former RCMP Commissioner Peter German in his report.”

Alderson also noted in the 2015 report it was possible reports of suspicious activity in casinos, for some reason, were not making it up to the senior government officials responsible for BCLC casinos.

“GPEB have been recipients of complete suspicious transaction report (STR) information for a number of years however … (STRs) had not filtered up to the right people in government.”

Alderson did not comment for this story. He left his position in December 2017. In previous statements to Global News, Alderson has questioned German’s findings, saying that German had missed interviewing some key people in the gaming industry.

In a response referring to the September 2015 report filed by Alderson, BCLC stated: “a senior official of the RCMP advised that while BCLC should continue to share information with the RCMP and complete suspicious transaction reports, that official also cautioned BCLC not to take any other action without first discussing it with the RCMP’s Federal Serious and Organized Crime, ‘so as not to impede any ongoing criminal investigation.'”

Tax dirty money

With massive cash transactions flowing in Lottery Corp. casinos, some executives would not agree the cash should be questioned, according to Schalk. He said that one executive with experience in policing maintained the ridiculous belief that Chinese VIP gamblers were flying into Canada carrying hundreds of pounds worth of Canadian dollars.

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According to another whistle-blower source, another executive allegedly repeatedly stated the theory that crime and money laundering would occur anyway in B.C., so government-regulated casinos could be used to recycle the dirty money into productive uses.

In a response to this story, the Lottery Corp. asked for direct evidence such as recordings, in order to respond to allegations.

“Without copies of the statements Global National indicates it is quoting from, or the names of the individuals to whom Global News is attributing these statements, and because Global is accusing individuals of engaging in wrongdoing, it would be irresponsible for BCLC to comment without first receiving the factual basis to the Global story,” a response from the Lottery Corp. stated.

In an interview, Schalk said that at various times, he heard people in B.C.’s casino industry state that dirty money should be taxed, but he never heard a Lottery Corp. executive state that view.

However, as amounts of suspected dirty cash flooding BCLC casinos escalated “exponentially, month to month and year to year” — several high-level GPEB investigators “started to fear that was the mindset,” at BCLC, according to Schalk.

The situation became so ridiculous, Schalk said, that they sarcastically complained to “upper echelons” in B.C.’s government about the perceived BCLC mindset, like this:

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“We are 99 per cent sure this is street drug money. Is it wrong to publicly tax some of that money, and make good use of it for education, hospitals and social welfare? Well if that’s OK, let’s just put a sign up at the Mexico border too, saying, ‘B.C. casinos open for dirty money.’ Because we know the cartels have truckloads of cash they really want to get rid of.”

Schalk acknowledged that GPEB also made mistakes, and police in B.C. did too.

It was long known by the RCMP that organized crime and money laundering had become rooted in B.C. casinos, Schalk and another whistle-blower, former RCMP illegal gaming unit leader Fred Pinnock said. But the RCMP didn’t launch its major investigation of casino money laundering, E-Pirate, until 2015.

“Did this give the aura to some people and groups that, it was OK? The police were not going to step in?” Schalk asked. “It may have.”

The RCMP says that it is conducting a full review to discover reasons why its E-Pirate investigation, which resulted in stayed charges, failed.

In response to questions about whether River Rock casino staff should have rejected cash transactions of over $500,000 per “buy-in” in some instances, allegedly involving Chinese VIPs and the alleged loan sharks targeted in the E-Pirate investigation, Great Canadian has responded with explanations in a legal letter.

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“Great Canadian advises that any individual who buys in with $10,000 cash or more (no matter the denomination of the bank notes) is required to provide his or her identity and other personal information to Great Canadian who in turn files a large cash transaction report with BCLC,” the legal statement says. “Once BCLC reviews these reports and conducts their own independent review, they will ascertain whether the individual has sufficient assets to support their level of play. Based on the outcome of BCLC’s review, Great Canadian has no reason to believe that these individuals are knowing participants in a money laundering scheme.”

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Allegations of corruption

Proka Avramovic is one of the former security managers for Great Canadian Gaming that have alleged staff in the company’s Lower Mainland casinos were advised to turn a blind eye to the loan sharks bringing cash deliveries to gamblers.

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Avramovic and his boss Boki Sikimic made the allegations in a Texas court deposition, in a case that pitted Great Canadian against U.S. investors that had partnered with Great Canadian in a gambling venture in China. The allegations were never proven and the case was settled out of court. Great Canadian has repeatedly denied the allegations of Avramovic and Sikimic.

But Avramovic says that he was “set on fire” by the findings of German’s report, which he believes gave a pass to casino managers and public officials including a “boy’s club” of retired police officers that Avramovic says are responsible for B.C.’s casino money-laundering scandal.

So he wants to come forward with detailed allegations in a public inquiry. And he hopes former and current Great Canadian Gaming employees will be subpoenaed to testify.

“Those people are afraid to come up and talk,” Avramovic said. “I mean, look at me, I’m hiding.”

“Great Canadian’s current focus is supporting the significant work being dedicated by casino service providers, BCLC, GPEB, and the Ministry of the Attorney General, on the implementation of the Recommendations from the German Report to effectively enhance measures to prevent money laundering,” the company said, in response to Avramovic’s allegations.

“In terms of your questions, we would caution you that relying on the comments of former Great Canadian employee(s) or innuendo, significantly risks doing a disservice to your readers/viewers, and potentially defaming our company and/or slandering our staff,” a response from Great Canadian says.

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Great Canadian added that any claims made by its former employees that management had directed staff to ignore the biggest loan sharks are not factual but based on “hearsay, conjecture, or hyperbole.”

But Avramovic repeated his claims, that his whistle-blowing efforts to B.C.’s government in the early 2000s were ignored because B.C.’s casino industry was rapidly expanding.

“BCLC and GPEB knew precisely what was going on, and now they start playing the blame games,” Avramovic said.

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