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B.C. disbanded RCMP unit after report warned possible crime figure bought stake in casino

B.C. government disbanded RCMP unit after damning report on organized crime in casinos
WATCH: An exclusive Global News investigation reveals the RCMP's former Integrated Illegal Gambling Enforcement Team uncovered evidence of illegal activity, such as sexual slavery, child abuse, and corruption, within British Columbia's casinos.

A businessman “connected to Asian organized crime” was allowed by a British Columbia government employee to buy part of a B.C. Lottery Corp. casino, according to a confidential RCMP report obtained by Global News.

And the government employee was later hired in a B.C. casino.

The explosive accusation is just one example of organized crime’s alleged infiltration and corruption of B.C. government casinos, according to a January 2009 RCMP anti-illegal gaming unit report.

Shocking new allegations about gambling in B.C.
Shocking new allegations about gambling in B.C.

The report also contained jarring allegations of victimization, including that women with gambling debts in Asia were being trafficked to B.C. and forced into sex work, and that children in B.C. had been thrown in the trunk of a car and warned at gun-point that their father owed $300,000.

The report argued the RCMP anti-illegal gaming unit (IIGET) should target the drug cartels using B.C. Lottery Corp. casinos in combination with illegal casinos, to launder money.

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At the time the IIGET was funded by B.C. Lottery Corp., and was only permitted to target illegal casinos.

But three months later, instead of following the report’s recommendations, B.C.’s government defunded and disbanded the illegal gaming unit.

B.C. government announces public inquiry into money laundering
B.C. government announces public inquiry into money laundering

Critics of B.C.’s casino industry have long questioned the decision to kill the RCMP unit.

In an interview, former Crown prosecutor Sandy Garossino said the confidential RCMP report — obtained through extensive freedom of information requests by Global News — “is shocking to the conscience” and points to “the appearance of corruption in the regulatory system.”

“I always believed in this report we would finally find this kind of detail, and it is so important it is finally coming to light,” Garossino said.

“I can’t imagine why there should not be an investigation into what were the circumstances of disbanding the IIGET unit.”

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B.C. government documents claim the decision was based on funding pressures in the B.C. Lottery Corp. and that IIGET was ineffective.

B.C. disbands RCMP unit after report warns possible crime figure bought stake in casino
B.C. disbands RCMP unit after report warns possible crime figure bought stake in casino

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“Illegal and legal gaming have been interlinked”

The January 2009 RCMP report stressed that money laundering between legal and illegal casinos was an integrity concern for B.C.’s government.

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It said that organized crime could make big money in underground casinos, and “through the infiltration of legitimate gaming venues” easily launder and transfer the criminal proceeds.

And B.C. government and criminal casinos had become intertwined in a dirty economic loop, the report said, even sometimes sharing the same card dealers and loan-shark networks.

“Illegal and legal gaming share the same issues, such as loan-sharking, extortions, assaults, kidnappings and murders,” the report says. “And illegal and legal gaming have been interlinked when, in some cases, casino staff have directed patrons to loan sharks or to common gaming houses.”

READ MORE: B.C. casino ‘knowingly accepted’ millions from banned loan shark, audit alleges

These links between government facilities and underground casinos suggested that “corruption undermines the integrity of gaming in British Columbia,” the report said.

But in the case of one B.C. casino that is not identified in the report obtained by Global News, the organized crime connection was more fundamental and damaging to the integrity of gaming.

“More specific connections to Asian Organized Crime is/was through a subject, connected to Asian organized crime, who was allowed to buy into a casino,” the report said, pointing to an unidentified investor whose “casino business associates also have Asian Organized Crime connections.”

“The regulatory investigator, involved in the share transfer process, is alleged to have known about these connections when this subject originally bought into a casino,” the report said. “The regulatory investigator is now retired from the provincial government. However, he still appears to be involved in the legitimate gaming industry.”

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In an interview, Denis Meunier, former deputy director of Canada’s anti-money laundering watchdog Fintrac, said the allegations of criminal connections and ownership in B.C. Lottery casinos are “explosive.”

“For licensing, casinos are expected to conduct due diligence on the owners, the employees and any associates, to ensure criminals and their associates are nowhere near casino ownership or operations,” Meunier said. “In my view, if (the criminal casino ownership allegations) were reported to anyone (in B.C. government and RCMP) and they were not further investigated, there is a breach. Because there is a fiduciary or legal responsibility to the public. This is shocking.”

The report does not identify the B.C. government employee that it alleges knowingly allowed a person connected to organized crime to buy into a B.C. casino, before taking a job with an unidentified casino company.

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In an interview, Garossino said that a “revolving door on turbocharge,” involving former government and police employees that have taken jobs in the B.C. casino industry, has created dangers of corruption.

“All of these (report allegations) are of a piece, of a mentality of turning a blind eye to criminality,” Garossino said. “Anyone connected to organized crime, it is a complete collapse of regulatory oversight that such an individual is allowed anywhere near a provincially-licensed gaming site, in terms of ownership or any stake.”

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The minister responsible for reviewing the January 2009 RCMP report and the decision to disband IIGET, former B.C. solicitor general Rich Coleman, has stated the unit was ineffective.

But Garossino said she believes details in the report “shred the credibility” of the B.C. government’s explanation for shutting down IIGET.

“It is stunning to me that any government official would be provided this information, and the Solicitor General’s response was, rather than to grant police the resources they were seeking, to do the reverse, and disband this unit,” she said.

“Children were kidnapped and murders took place in the pursuit of money and the provincial government knew it.”

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“You have every appearance of human trafficking and women forced into prostitution. It’s not just that they did nothing, but they actively disbanded this unit. So it is as if that is an intervention in making the police stop, from looking at the corruption they wanted to probe.”

READ MORE: B.C. Liberal minister intervened to raise betting limits, ignoring money laundering warnings about Chinese VIPs

Coleman, now a member of the B.C. Liberal opposition, was repeatedly asked to respond in an interview to the allegations in this story.

Instead, Coleman provided a statement.

“As you know, Justice Austin Cullen is expected to begin his inquiry into these matters this spring. I have full confidence that Justice Cullen will do his work thoroughly and as I’ve stated previously, I will cooperate with him should I be requested to. I will also say that as Minister, I carried out my fiduciary and legal duties and to insinuate otherwise would be incorrect.”

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Chuck Keeling, chair of the B.C. Gaming Industry Association, said “we have no comment regarding the alleged report you have cited.”

B.C. Attorney General David Eby’s office was asked to identify the casino with possible Asian organized crime ownership, but the office said the RCMP should answer questions about its confidential report.

And the RCMP said it could not answer questions about whether the allegations involving possible Asian organized crime ownership of a Lottery Corp. casino, should have been criminally investigated.

Extended interview: Former head of B.C.’s illegal gambling enforcement team had raised concerns
Extended interview: Former head of B.C.’s illegal gambling enforcement team had raised concerns

Loan sharking, extortion and murders

The report says that “Asian organized crime figures are believed to be involved in operating common gaming houses and bookmaking, along with other gaming-related offences such as loan-sharking, extortion, and money laundering.”

There were at least seven major loan-sharking rings operating around Metro Vancouver casinos — with 47 known loan sharks — causing misery and perpetrating horrific violence at both underground and government casinos.

In one 12-block strip of Vancouver’s Kingsway Avenue there were at least nine underground casinos, the report said, and in one case, a 5-year-old was found wandering outside an underground casino while a parent gambled inside.

And in May 2006, “the eight-year-old daughter and the six-year-old son of a common gaming house operator were abducted at gun-point,” the report says. “The children were told by the kidnapper that their father owed $300,000. A neighbour saw the children climb out of the trunk of a stolen vehicle, and called police. They were recovered safely.”

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Another victim was abducted outside his home and thrown into a car, according to the report. He had a mask thrown over his head, was pistol-whipped and stabbed repeatedly while his abductors demanded a $30,000 debt repayment, before dumping him alive, by the side of a forest road in Coquitlam.

The report also points to the May 2006 case of Richmond loan shark Rong Lilly Li, who was murdered outside Richmond’s River Rock Casino. She was a registered casino employee, and also a low-level loan shark allegedly inside the casino. She was last seen alive on security camera footage, exiting the casino, before she was lured into a van by two gamblers, who believed she would have up to $300,000 in her purse.

The convicted killers, Chu Ming Feng and his accomplice Guo Wei Liang, wrapped a black leather belt around her neck and strangled her.

In another case, a woman borrowed $500,000 to gamble at River Rock Casino.

“She was able to pay $200,000 back by using her house as collateral to borrow money from the bank, but she still owed $300,000,” the report says.

“The loan shark threatened that if she did not come up with the money, her place of business and her house would be burned down, and she would be killed.”

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There was another murder, and an attempted murder, at two Vancouver underground casinos in 2007, the report says.

Also in 2007, the report said, the owner of a Richmond online gambling company, Po Ho Cheung, was shot dead.

Cheung had been charged in 2001 with laundering hundreds of thousands in drug money. Federal prosecutors dropped the charges because they didn’t consider money laundering to be a priority. But prosecutors knew Cheung was facilitating currency refining through high-rollers, the Vancouver Sun reported, and he was able to deliver stacks of $20s from drug traffickers to his many gambler associates, so that the high-rollers could use casinos to exchange the drug-money $20s for clean $1,000 bills.

The report provided B.C.’s government with a detailed explanation of how drug traffickers use casinos to refine currency, in such cases.

“A lot of criminal organizations have colossal amounts of cash, mostly small bills, in their possession,” the report says. “The purpose of refining is to decrease the bulk of large quantities of cash by exchanging small denominations for larger ones, in order to more easily introduce the illegally-gained funds into the financial system. This initial step also serves to distance the dirty money from its initial source by trading bills that are often filthy, torn and sometimes contaminated, for new ones.”

READ MORE: Nearly $2 billion in dirty money may have flowed through B.C. casinos, far more than official estimates

The social costs of casino money laundering are difficult to calculate, the report says, but believed to be significant. Garossino said she was struck by a section of the report that suggests human trafficking, prostitution, and gambling debts in Asia, are related to crime in B.C.

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“Our research surfaced one prostitution file which was directly related to illegal gaming,” the report says. “Eight Malaysian females were found to be working at a (bawdy house in South Vancouver.) One of the subjects indicated she had a gambling debt to pay off in Malaysia and was working in Canada to satisfy the debt.”

It’s commonly known among lawyers that handle bankruptcy cases “that many gambling addicts are forced into theft, drug-dealing and prostitution, to cover debts to loan sharks,” Garossino said.

Fintrac and FATF warnings ignored

The B.C. government’s decision to kill IIGET looks even more questionable, Meunier and Garossino said, in light of the January 2009 report’s numerous case examples provided by Fintrac of suspected money laundering in B.C. Lottery casinos.

In one case, in just one year a Vancouver bank employee bought chips with cash at four Metro Vancouver casinos, for a total of $4.9 million.

“In June 2007 alone, he purchased casino chips worth $3.287 million,” the report says.

Another man who frequented the River Rock Casino, the Starlight Casino in New Westminster, the Edgewater Casino in Vancouver, and the Gateway Casino in Burnaby, logged 285 large cash transaction reports, for a total of $8.7 million CAD and $62,000 USD.

The report said “many investigations across the country have shown that members of organized crime also use casinos for loan-sharking and money laundering, and that some of these criminal elements have successfully infiltrated the industry.”

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And Fintrac had provided police with evidence of $40-million in suspected casino money laundering transactions, the report said, but “police managers have suggested that because of other priorities and lack of resources at this time, nothing is being done to investigate these situations.”

Meunier, the former Fintrac official, said the 2009 RCMP report should have been given added weight by B.C.’s government, because in 2008 the Financial Action Task Force — an intergovernmental financial watchdog — also pointed to similar money laundering concerns involving bulk currency refining, casino chip laundering, and foreign currency exchange laundering in B.C. casinos.

“You have to ask what actions the regulator, police and politicians were taking,” Meunier said. “And you have to wonder why you would disband a unit, or diminish your enforcement capacity?”

Pat Fogarty, a former deputy chief with B.C.’s Combined Forces anti-gang unit, who targeted the Big Circle Boys and Triad kingpins from Mainland China, Macau and Hong Kong that dominate casino money laundering in B.C., said “nothing in this report comes as a surprise to me.”

Fogarty said he believes that since the early 1990s, the governments of B.C. and Canada have turned a blind eye to massive casino money laundering and real estate money laundering in Vancouver, because the dirty money was boosting Canada’s economy, and many businesses were benefiting.

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“We were laughing at the hockey bags of cash coming in, asking ‘why isn’t the government doing something?’” Fogarty said. “In the grand scheme of things it was the police and the government that should have looked at the collective police information, the IIGET reports, the intelligence, to say this is a mega-ground for organized crime to launder their money, period. And how do we address that? But they just didn’t do that. And the same thing happened in real estate. As long as people were making money, they didn’t report it.”