As revenue generated by “VIP” gamblers and their massive cash transactions soared in B.C. casinos after 2009, a frontline B.C. Lottery Corporation investigator repeatedly warned his bosses that organized crime was likely laundering drug-trafficking cash through the casinos and transferring it to China, a public inquiry has heard.
But managers at the Crown corporation cast doubts on his concerns, a former anti-money laundering investigator with the Lottery Corp. said.
Mike Hiller told the Cullen Comission that he eventually got so upset that he complained about statements made by Lottery Corp. CEO Jim Lightbody and vice-president Brad Desmarais, whom Hiller believed ignored the threats outlined by him and other frontline staff.
“I didn’t believe we as a provincial organization should be taking money from organized crime,” Hiller testified on Monday.
The inquiry, which is mandated to determine whether corruption allowed money laundering to take root in B.C. casinos, has already heard that cash transactions of more than $100,000 per buy-in became common after 2010 in several Vancouver-area casinos. And that while Lottery Corp. investigators wanted to bar VIPs who they believed were getting cash from loan sharks, both casino managers and Lottery Corp. executives asked investigators not to step in.
In testimony Monday, Hiller said that immediately upon taking a job with the Lottery Corp. at Richmond’s River Rock Casino in 2009, he suspected that gangsters and loan sharks were using high rollers, who were predominantly wealthy Chinese nationals, as “vehicles” for money laundering.
Hiller said he believed that the money laundering occurred when VIPs paid back funds that had been borrowed in B.C. through bank accounts in China.
He said he based his suspicions on his 28 years with the RCMP in drug-trafficking probes and with an Asian organized crime intelligence unit that worked with officers in Hong Kong and Beijing.
He said he also recognized organized crime suspects in the Richmond casino, as well as methods used to make suspicious transactions, such as bundles of $20 bills wrapped in elastic bands and stuffed into bags.
After receiving credible information from a confidential informant, Hiller said he filed a report with Lottery Corp. management that said “most Asian VIP players have an agreement to repay in Asia where they can access wealth.”
The gangs in China benefitted by getting rid of massive volumes of drug cash in Vancouver, Hiller reported, while repeat customer VIPs paid low commissions for the cash loans, and repaid them by transferring their wealth in China to organized crime based in that country.
But Lottery Corp. managers seemed to ignore the report, Hiller said.
“A report of this significance — I expected there to be a comment,” he said. “I felt a president or vice-president (should have responded).”
Instead, Hiller said he was stunned, in 2012, to learn that VIP betting limits at the River Rock were going up from $45,000 per hand to $90,000. He said he believed that limit increase only made the money-laundering threat worse.
When Desmarais, the Lottery Corp. vice-president, wrote several internal articles for staff in 2013 and 2014, that suggested that cash from China pouring in to B.C. casinos was not money laundering, but legitimate “underground banking,” Hiller said, he wrote a report to rebut him.
“I was very concerned of the viewpoint (in Desmarais’ article) — that it didn’t contain the most likely concern that the money was coming from organized crime,” Hiller testified.
In cross-examination by Desmarais’ lawyer David Butcher, Hiller said he did ask a manager to forward his rebuttal up the chain of command, but acknowledged he doesn’t know whether Desmarais ever received it.
Hiller also testified that he noticed a large escalation in suspicious cash transactions at the River Rock in 2014, as VIP bet limits were raised again that year.
He told the inquiry he was “notably upset” when Lightbody, the Lottery Corp. CEO, gave an internal speech at head office in March 2015 in which Lightbody “was quite happy” to report increased revenue due to increased volumes of betting from VIP gamblers.
He said he complained to Desmarais the next morning about Lightbody’s speech not acknowledging the related rise in suspicious cash transactions.
Desmarais listened to his concerns, he said, and asked him to forward a report.
Lightbody’s lawyer, Robin McFee, told the inquiry that Lightbody’s March 2015 speech had also noted that Lottery Corp. investigators were helping to ensure that increased casino revenues followed Canada’s anti-money laundering laws.
Hiller also acknowledged under cross-examination that his warnings about gangs based in China using VIPs to launder cash in B.C. casinos were based on his suspicions, rather than “hard evidence.”
The inquiry also heard that Hiller recommended banning a number of VIP players from the River Rock Casino in 2009, but that a manager pushed back and threatened to change surveillance practices if Lottery Corp. investigators continued to intervene.
Hiller said he also complained to River Rock management in 2014 when he discovered the casino did not take action when three VIPs bought $840,000 worth of chips and entered a casino hotel room without playing.
A high number of investigative files in the casino that year raised concerns that loan sharks were using its hotel rooms to supply VIPs with unsourced chips, he said.
Under cross-examination, a lawyer for the Great Canadian Gaming Corporation, which owns the River Rock, asked Hiller if its managers co-operated whenever they met with police to discuss concerns. Hiller replied that they did.
Lawyers for Great Canadian Gaming have argued at the inquiry that the company fulfilled all of its reporting obligations and also helped police identify loan sharks, through surveillance.
Testimony is scheduled to resume Tuesday.
Comments