Behind Vancouver's Housing Bubble: How Canadian Casinos Are Use To Launder Millions In Chinese Drug Money

Tyler Durden's picture

Nearly two years after we first observed that Vancouver's soaring real estate market is nothing but a bubbling melange of criminal Chinese oligarch "hot money", desperate to get parked offshore in any piece of real estate, but mostly in British Columbia regardless of price, a new multi-year investigation has uncovered extensive links - including money laundering and underground banking - between China's criminal underworld and British Columbia drug and casino cash and VIPs, as well as their connections to China, Macau and the notorious triads.

In retrospect, and as many suspected, it appears that much of the B.C. real estate bubble can be explained as nothing more than the "layering" and "integration" aspect of a giant money laundering scheme involving billions of dollars of Chinese hot money and the criminals behind it.

Here is Postmedia's real estate reporter Sam Cooper reporting on and explaining how British Columbia casinos are used to launder millions in drug cash.

* * *

On Oct. 15, 2015, a Mountie burst through the front door of an office in Richmond, carrying a battering ram and with a rifle slung on his back. The door swung shut behind him, locking him inside. He was in the lobby of Silver International Investment, a high-end money transfer business, surrounded by bulletproof glass. Behind a second glass door, a woman rushed to make a call while hiding several cellphones. Under her desk was a safe stuffed with bundles of cash. The Mountie, a large man, counted seconds anxiously, wondering if the woman would unlock the interior door.

It was one of 10 police raids in Richmond that day — part of a major investigation that has uncovered massive money laundering and underground banking networks with links to Mainland China, Macau and B.C. casinos, allege the RCMP’s federal organized crime unit and China’s national police service.

Postmedia has spent six months looking into the case, involving freedom of information requests for thousands of documents and dozens of interviews with government and law enforcement sources that were not authorized to be identified. Now, the inside story can be told of the investigations that led B.C.’s attorney general last week to order an independent review of casinos overseen by the B.C. Lottery Corp.

In late August, at a Vancouver conference attended by U.S. and Canadian law enforcement officials, RCMP Insp. Bruce Ward outlined the details of E-Pirate, the investigation into Silver International, Asian organized crime groups, and an alleged $500-million-plus international money laundering service run from Richmond. Central to the money laundering probe, allege B.C. government documents, is suspect Paul King Jin, a 50-year-old Richmond spa owner.


Paul King Jin, from a 2011 CTV News Vancouver video

BCLC and B.C. gaming policy enforcement branch documents say that information revealed by the RCMP’s investigation into Jin and Silver led them to suspect the funds are tied to “transnational drug trafficking … (that) could have a potentially devastating impact on the casino industry.” Jin allegedly helped ultra-wealthy Mainland China “whale” gamblers, recruited in Macau, to gamble in B.C., the investigation documents allege.

The Macau whales were able to gamble with suspected drug cash supplied by Jin’s network, especially at River Rock Casino, the investigation documents allege. With those funds borrowed from Jin and “private lenders,” they were not only able to gamble, but to develop real estate in B.C.

Without naming names, a paragraph in the confidential MNP LLP audit of B.C. Lottery Corp. that the attorney general released last week describes underground banking channels that allowed “Chinese nationals” to evade China’s tight capital controls and transfer wealth into B.C.

Investigators learned the Chinese whale gamblers were “provided with a contact in Vancouver, either locally or prior to arriving in Vancouver,” the MNP report says. Next, the gamblers would “contact the person via phone for cash delivery,” which they use to buy chips at a casino. The gamblers would repay these funds “through cash holdings in China.” When the gamblers cash out, they are left with money available for use in Canada.

At the anti-money-laundering conference in late August, the RCMP’s Ward used security videos seized from Silver International’s office, in a multi-storey business complex in the 5800-block of Cooney Road, to explain Silver’s operations. Ward walked conference attendees through a security video that showed the Mountie attempting to enter Silver’s office.

“This lady is the primary target, she returns to her desk, she is hiding her three cellphones and calls someone,” Ward said. “Meanwhile there is a very anxious police officer counting the seconds, waiting to be let in.”

The woman allowed the Mountie and additional officers to enter Silver’s inner sanctum, and what they found could lead to one of the most significant money laundering cases ever in Canada, police say. Ward said Silver was so diligent in recording transactions, and its security system videos are so revealing that Mounties believe they are able to clear a difficult hurdle for Canadian law enforcement: proving that laundered money is directly connected to a “predicate” crime, in this case, drug-trafficking.

In the E-Pirate raids, RCMP seized 132 computers and cellphones, yielding 30 terabytes in data. If all that digital evidence were printed on paper, it would fill almost three million thick telephone books. And ledgers suggest that in only one year, Silver laundered $220 million in cash in B.C., and sent over $300 million offshore, according to Ward.

“This is huge,” one police officer, who was not authorized to be identified, said of the case’s expected impact. “This could change money laundering in B.C.”

In the raid on Silver International’s office on Cooney Road, civil forfeiture documents allege, Mounties seized over $2 million in mostly $20 bills, plus ledgers and daily transaction records. The claim also alleges that two people identified entering the Silver office were later stopped by Mounties on Highway 5 in Merritt, driving a car with $1 million in suspected drug cash stuffed into two suitcases in the trunk.

On Wednesday, Zachary Ng, a lawyer for Jin, told Postmedia he would “convey” requests for comment on E-Pirate allegations to Jin. But Ng said he could not immediately comment. Matthew Nathanson, lawyer for Silver International Investments, said: “I don’t have any comment on this matter.”

To understand Silver’s network, law enforcement had to understand the nature of organized crime in Richmond and Mainland China, which operates “parallel” to the Chinese business community, according to Ward.

“Any given gangster, if you want to call them that, businessman, will have many schemes and thus many networks, and this networking is what facilitated the business,” Ward said. “Because they were able to start a profession of money laundering … to all their friends in drug dealing, who needed the service of converting cash into bankable instruments.”

Ward said Silver International and Jin’s alleged network had many facets, but the main business stemmed from funding the “whale” gamblers, who gambled both in B.C. legal casinos, and illegal gaming houses set up in rural Richmond.

“Part of what we found, is they had two ongoing illegal casinos where the same businessmen who are part of the conspiracy were able to provide non-legal gambling for these offshore gamblers,” Ward told conference attendees. Describing the unimaginable wealth of these Chinese gamblers, Ward said that each man typically gambled between $100,000 and $1 million on a weekend visit to the Lower Mainland. The RCMP’s investigation started with surveillance of gambling and cash drops at River Rock Casino, which led to Silver International’s cash house.

“The primary target that led us there, was a person that is involved in generating ‘whales’ … these high-end gamblers,” Ward said. “His expertise is going over and working in Macau, identifying rich Chinese businessmen that would go to Macau, and he was attracting them to Canada, to gamble. He would use Silver International as a bank account.”

Describing a typical delivery, Ward said: “They would put $100,000 into a hockey bag, show up at the casino, and give (the VIP gambler) $100,000 … the loaning out would go to Chinese offshore gamblers coming into Canada.” Ward said Canadian residents were also loaned cash from Silver in “loan sharking” operations. And Lower Mainland wire transfer businesses were also funded with suspected drug money.

“The extra cash they had would end up in money exchanges, to wire money around the world.”

According to B.C. Lottery Corp. documents, anti-money-laundering investigators identified Paul King Jin in 2012, and these investigators collaborated with B.C. law enforcement to identify Jin’s alleged network, and about 36 gamblers believed to have received criminal cash to buy chips in B.C. casinos.

A suspicious-transaction report filed in 2014 by B.C. Lottery Corp. to Fintrac, Canada’s anti-money laundering agency, says Jin “has been identified as one of the main cash facilitators in the Lower Mainland for casino VIP patrons.” From 2012 to 2014 Jin logged 50 large cash transactions and at least $1.24 million in cash buy-ins, the report says. Jin has been banned from all B.C. casinos for five years, according to the Fintrac report, because of an “extensive history of suspicious incidents.”

BCLC investigators found that Jin and “numerous other people” believed to be working for him were discovered delivering “large amounts of bundled $20 bills” to “known VIP players with … considerable wealth with mostly Asian-based businesses.”

When Jin was barred from casino properties, he continued delivering cash to VIPs, but in parking lots outside or nearby casinos, the Fintrac report alleges.

“Jin was also recently brought to the attention of BCLC by law enforcement agencies that are working with BCLC to identify patrons that are involved in known criminal organizations in B.C.,” the 2014 Fintrac report says. “BCLC is actively working with the RCMP gang unit.”

Jin does not have a criminal record, but has been found guilty of a number of city bylaw infractions. In 2011, Richmond cancelled the licence for Jin’s spa, The Water Club, after RCMP visits. Directors of the club were from Mainland China, Mayor Malcolm Brodie’s council was told. Brodie’s council had access to a report from a Richmond RCMP officer, who noted that in police visits to Jin’s club: “Members later confirmed that high level drug traffickers were inside getting ‘foot massages’ … it is suspected that Jin was meeting with members who are associated to drugs and violence.”

In his E-Pirate presentation in late August, Ward said RCMP surveillance identified 40 different organizations linked to Asian organized groups dealing cocaine, heroin and methamphetamine. Gangsters or their couriers were delivering “suitcases laden with cash” to Silver International’s cash house, allegedly at an average rate of $1.5 million a day.

At Silver, dealers could drop off $100,000 in cash in a suitcase, Ward said, and within minutes a credit for $95,000 would appear in a Chinese bank, after a five per cent fee taken for the laundering and transfer service. Using an alleged transaction from Silver’s security tapes as an example, Ward explained.

“This is a typical event, of a drug dealer bringing in cash. She receives a call, and she goes out to receive a trusted customer … the vast majority is $20s,” Ward said. “The relationship is such, and trusted, that the phone call is made, ‘I’m coming in with $1.4 million,’ and the staff will wire transfer the credit for that in China, before the cash even comes in the door.”

Ward alleged Silver got so sophisticated that it evolved into an operation that could wire funds to Mexico and Peru, allowing drug dealers to buy narcotics without carrying cash outside Canada, and cover up the international money transfers with fake trade invoices from China.

“They facilitated drug trafficking and moved money from it around the world,” Ward said, pointing to slides of transaction records captured in the E-Pirate raids. “This is a typical request, a direction from Silver International to move money from their own account to a drug dealer’s account. We saw evidence of over 600 (bank) accounts in China that were controlled or fed by Silver International. Chinese police have followed up, and they have labelled this a massive underground banking system.” RCMP seized over $9 million, including millions in cash during E-Pirate, and are trying to seize about $4 million in assets, Ward said.

Mountie lab technicians considered themselves lucky the cash seizures in 2015 took place before B.C.’s deadly fentanyl crisis hit, Ward said, since drug cash handled in Vancouver now is often dangerous, covered in traces of fentanyl dust.

Sources in B.C. government and federal law enforcement say it is believed Jin’s network and the Chinese VIP gamblers allegedly funded by Silver International own many luxury properties in the Lower Mainland. But it’s difficult for Canadian governments to seize assets believed to be directly connected to crime.

“It is very difficult nowadays to say, ‘OK, that house that is being used as a casino is an illegal residence, so let’s seize it,” Ward said. “But who owns it? We are finding now, not only one layer of nominees, but two, three and four. And some of those nominees live in China. And they are either related to you, or they don’t even know they are owners. So for many of the properties, we just had to walk away.”

CIVIL ACTION LAUNCHED

A civil forfeiture action against Silver International Investment and two men, Andy Kai Wai Cheung and Yong Li Chen, was launched in August 2015. The action states the men were witnessed by RCMP surveillance among a number of the people entering Silver’s office with suitcases.

RCMP later stopped a rented Chevrolet Malibu with Alberta plates on Highway 5 in Merritt. In the car were Cheung, who has a criminal record in the United States for conspiring to import ecstasy, and Chen. In the trunk, the claim alleges, was a black suitcase holding $349,950 split into 35 bundles of $10,000. And in a hard shell suitcase was $649,560 in vacuum-sealed bags. The cash indicated ‘positive’ for drug residue, the claim states, and was “bundled in elastic bands and shrink-wrapped in a manner consistent with drug trafficking.”

Silver International has stated it has no connection to the cash, and Cheung and Chen deny any wrongdoing. The action continues.

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ebworthen's picture

"...Used..." in the title Tylers.  ;-)

Champagne when housing bubble 2.0 collapses in the West.

Deathrips's picture

These fucks print money.

 

RIPS

Iconoclast421's picture

People have been laundering money at casinos for 100+ years.

Justin Case's picture

HSBC provides laundering services, but doesn't advertise.

HSBC admitted to laundering billions of dollars for Colombian and Mexican drug cartels (among others) and violating a host of important banking laws (from the Bank Secrecy Act to the Trading With the Enemy Act), Breuer and his Justice Department elected not to pursue criminal prosecutions of the bank, opting instead for a "record" financial settlement of $1.9 billion, which as one analyst noted is about five weeks of income for the bank.

Take responsibility, apologize, pay a fine for your drug crimes and then call it a day. Go home to family who will forgive you for doing business with so-called “narco-terrorists.” Prison time? Felony record? Asset forfeiture? No. Not for drug trafficking executives of laundromat/banks that are “too big to fail” or jail.

Laowei Gweilo's picture

this is sort of a non story....

 

the real story is that probably 10 to 50x as much of BUSINESS money is laundered through casinos

Justin Case's picture

money is laundered through Reno the gold standard in hiding money

Sector Catalyst's picture

Can't wait to hear Pitz' response to the truly authentic, no collusion, 149% legit Vancouver real estate market. 

The Real Tony's picture

This has only been going on since 2013 when the real estate market peaked. No bubble here!!

Déjà view's picture

Chicom money 'Pitz'...

Complicit Canesestan...along with other 5-Eyes in their respective RE markets...love being hot jizzed by Chicom money...

Classic behavior:
1. Sight unseen
2. Money is like a hot potato...here...just get it off my hands...ASAP!
3. Don't care about ROI...

umdesch4's picture

Right? I came to the comments to see what BS he would spew. Those of us who live here, and have ever set foot in a casino can spot these guys right away. You'd have to be brain damaged to miss it.

pitz's picture

The money laundered through BC casinos is likely from the illicit local marihuana industry, not from China.  Once again, Chinese people are being cast as scapegoats here for activity for which they have nothing to do with. 

 

Why would anyone launder cash through a casino where the payout ratios are only 70-75% or so, security cameras everywhere, tight liasons with law enforcement, etc. 

Cluster_Frak's picture

so this also explains bitcoin's poplarity in China.

Never One Roach's picture

I watched that show a few times, "Love it of leave it" or something like that about people in Vancouver trying to decide whether to remodel their 3,000sf $1.4 million house or buy the new one (also ~ 3,000sf) for $1.8 million. Interestingly, most bought their house pre-2000 for a fraction of this and are stunned what they are "worth" now....at least as long as the loot flows in from China.

afronaut's picture

But I was told that these are canadians. No proof of oriental influence. Oh and a truck ran over some people today. Trucks hurt people. 

tyberious's picture

Look, you government control fucks. 100,000 years of human history have included drugs, you can change morality with laws!

Let go! Let us be free!

venturen's picture

so when the heroin addict OD and their kids starve to death...you are fine. When the drug addict murders people for cash you are fine. When 400,000 die of drug overdoses under Obama you are fine. Why have any laws then....lets just declare law of the JUNGLE! Of course unlimited drugs led to 3rd world poverty are you good with that?  I lived in the Holland...they have strong laws than ours....because drugs were destroying the country. Any site Portugal...THAT IS 3rd world...ever been?

I will be fine with unlimited drugs...if there is no punishment for me shooting people that I choose?

whitedragon's picture

venturen supports theft at gunpoint to fund his social crusade. don't trust him.

No matter how good your intentions, you want to pay for them by stealing from others.

I could do a lot of good with your cash. I have many ideas. Using your logic, i would be justified in robbing you at gunpoint to fund my good ideas.

pachanguero's picture

ON the you menstral cycle again.  Freedom has risk.  You want to imprison people for drugs that leaves their kids with no mother/father.  So want to apply that to booze and cigs?  Hypocrite!

bluskyes's picture

I'll take freedom, and community over "government solutions" any day of the week.

Governments are street gangs with fancy hats

Vigilante's picture

Launder money?

The horror of it.

I'm sure many broke countries around the world would beg to have Canada's 'problems'

Justin Case's picture

Nevada is the gold standard for those who want to stash their cash

The Real Tony's picture

The Chinese also run illegal ponzi schemes using Vancouver's real estate.

any_mouse's picture

The possibility exists that some Chinese buyers have bought the same house in Vancouver.

Rehyopethecated Real estate.

Then the multiple "owners" remit the property tax and insurance to the property management firm.

Does the banana cart guy have any hot stock tips?

pitz's picture

Nope, not "Chinese".  Local East Indians, sure, I totally believe that, the "landlord families".  But not Chinese.  

Yen Cross's picture

   Pretty sneaky, those Chinks are.

HRH Feant2's picture

Dangerous and heady stuff. I have been in some of those BC casinos.

Jessica6's picture

Ontario ones too.

They head to the roulette tables and make a ton of incredibly stupid bets, as if they want to lose money (fewer questions asked then) as fast as possible. They play a handful of losing rounds then onto the next table.

east of eden's picture

Well then. Perhaps what we need to do is get rid of paper and electronic money and return to gold and silver coin.

Porous Horace's picture

Looks like the gig's up and they're going to need somewhere new to launder their money. If you know any Chinese druglords, let them know that I'm available (for the usual percentage, of course).

motoXdude's picture

Pleeeeeeeeze!   The Chinese UNDERSTAND LAUNDRY ALREADY!  They Invented it!!  Ancient Chinese Secret!   Ring Around the Collar?

 

whitedragon's picture

"criminal cash"

"illegal casinos"

"killer guns"

come on. am I a child? Nobody buys this shit.

There is no such thing as criminal cash. It is despicable that so many people in 2017 support SS-style raids and grand theft cash from people who provide a non-violent service that people desire and for which they are willing to pay.

JailBanksters's picture

Shsssh, here's a secret

ALL Casino's are used to Launder Money !!

Doesn't mean they are activily part of it, but they are certainly used.

 

FBaggins's picture

The Vancouver seaport is considered to be the largest entry port for heroin in North America. It has been that way for ages. The North American establishment, including “respectable” families, controls the heroin industry. It has been that way for ages. The surrounding docks are for the most part now owned by Chinese interests. The Chinese are buying up all they can but the money is not all dirty.  Chinese businesses in China have oodles of North American cash because of the massive trade imbalance between our nations and the Orient. Not to say that the heroin trade is not a huge problem which should be ended with extreme prejudice, but the fact remains that equally despicable and damaging as the drug trade is free trade, where the rich in North America have made huge profits since the 1980’s by offshoring to China,  American and Canadian jobs, manufacturing companies, machinery, technology and capital, leaving us with nothing but huge trade imbalances, debt, unemployment, dim futures, and China taking over not just labouring jobs but more and more technical and professional jobs in the process. 

pitz's picture

More Canadian dollars are ending up in the hands of central banks offshore, than Canada is paying in goods.  So foreigners are buying CAD$ in excess of what they accumulate in trade.  The exact opposite of money laundering into Canada.  Canadian dollars are becoming increasingly coveted overseas for their stability and likelyhood of capital appreciation.

Déjà view's picture

COUNTRY COMPARISON :: CURRENT ACCOUNT BALANCE
Current account balance compares a country's net trade in goods and services, plus net earnings, and net transfer payments to and from the rest of the world during the period specified. These figures are calculated on an exchange rate basis.

196 AUSTRALIA -$33,200,000,000 2016 EST.
197 CANADA -$51,080,000,000 2016 EST.
198 UNITED KINGDOM -$114,500,000,000 2016 EST.
199 UNITED STATES -$481,200,000,000 2016 EST.

https://www.cia.gov/library/publications/the-world-factbook/rankorder/21...

• $'$ & £ returning as RE inflation!

smallbedbug's picture

They should check all Asian home ownership in California. The ones that paid cash.

pitz's picture

Asian cash transactions for RE in California are rare. 

Apocalypse Wow's picture

In the very early days, the beginning of Vancouver, Chinese survived by doing laundry.  Now all these years have passed and the Chinese are back laundrying again.

As the saying goes "Everything is the same but only different"  Now scrub that money as clean as clean can be.  Very good China man you found a very good place to launder!

Déjà view's picture

Someone is being Taken To The Cleaners...

pitz's picture

The diagram is *very* wrong.  Canadian casinos have fairly stringent reporting requirements for transactions > $10k.  You can't just walk in and do the chip thing and cash out in a Canadian casino without being noticed very quickly unless the amounts truly are trivial. 

jbwilson24's picture

I think I will favor the official police / media version over the hearsay of some anonymous internet person.

If the people running the casino are on the take, all the security in the world will not help. That is why banks do a ton of work to make sure employees can't collaborate to defraud the bank.

Don Watcher's picture

LOL.

 

Chump change compared to what's going on in some ASEAN countries like the Philippines.

 

Does anyone remember the recent Bangladesh ripoff funnelled to a Phillipines Vegas level casino?

 

Look it up fellas.

 

(The beat goes on...for now.)

CRM114's picture

Confiscate all high end Vancouver property where the source of funds can't be proven to be clean. 

Give it to the homeless.

Lock up all the real estate agents.

Only the last one will be tricky, because they are in with the politicians.

bluskyes's picture

Why would incentivize homelessness?

CRM114's picture

Anyone buying chips with cash gets cash back.

End of problem.

Moving and Grooving's picture

Sounds like they're saying we should wear rubber gloves to handle currency. If drug residue on currency is in fact a reality it might explain some mysterious ailments people have briefly.

 

 

bluskyes's picture

This story smells fishy. a canadian dollar bill is .040" thick

100k, is a stack of 1,000x $100 bills - or 4 inches high.

There is no need for a duffel bag. A paper bag will suffice.