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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.
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.
Underground banking and international gamblers. Photograph By Vancouver Sun
How underground banks launder money Photograph By Vancouver Sun
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