B.C.’s money laundering commission hears from those who saw dirty money washing through casinos

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Thousands began streaming in at all hours when British Columbia got its first taste of Vegas-style gambling in June, 2004, in the opening days of the River Rock Casino Resort, located on the industrial outskirts of the Vancouver suburb of Richmond.

Among the crowds, organized criminals were exchanging elastic-wrapped bricks of $20 bills – the lingua franca of the province’s sizable drug trade – for chips and then cashing out for bigger bills that were much easier to spend on legal goods and services. Wealthy tourists from China came in droves, some converting the same bricks of cash packaged the same way. Soon, reports of gamblers getting robbed or kidnapped near the glitzy new casino also began trickling in to the local police.

Two months after the opening, a new provincial RCMP unit to investigate a long list of gambling-related crimes went live. The integrated team, mostly funded by the provincial gambling regulator, was formed “to ensure the integrity of legalized gaming” as B.C. ramped up the licensing and promotion of casinos. This unit was mandated to bust up the casinos’ illegal competition – unlicensed slot machine vendors, underground poker dens and bingo halls – as well as crack down on criminals that were loan sharking and money laundering in and around legal venues.

But the unit was disbanded by 2009, weakening casino oversight in a region that later became infamous for the “Vancouver model” of money laundering – a term created by an Australian professor that refers to a dynamic in which an underground banking system spirits money out of China into Metro Vancouver to be mixed with local and transnational drug money and then filtered through the gambling and real estate sectors.

The death knell of that group, which was overseen by a special board of top Mounties and provincial gambling officials, was seized upon by critics as a major low point in the province’s fight against money laundering. But many other government and police actions from that era have raised questions about why oversight remained weak as money laundering and its constellation of crimes kept growing.

During three recent weeks of testimony, B.C.’s public inquiry into money laundering heard from former RCMP investigators and their superiors, the special constables working at a provincial agency that once partnered with the disbanded unit, B.C.’s gambling regulator and former casino employees. And many lawyers were also given time to cross-examine these witnesses to represent the interests of some of the two dozen parties granted standing, including one of the biggest gambling operators and a former provincial attorney-general who allegedly told one of the commission witnesses that the massive tax revenues prompted his government of the day to turn a blind eye to organized crime.

The group of witnesses illustrated how a patchwork of competing organizations left a decade of enforcement gaps that were big enough to drive millions of dirty dollars through. Their testimony, outlined in transcripts covering 15 days, shows the often earnest pursuit of these criminals by Mounties, provincial gambling investigators and casino staff was hamstrung by a lack of resources and the discord between the half dozen groups tasked with stopping the crimes.

‘The monster is growing’

Tom Robertson commanded the RCMP’s illegal gambling squad for its first year of operation, though neither he nor any of the 10 Mounties he started the unit with had any experience tackling sophisticated money laundering or proceeds of crime investigations. He envisioned his new team would begin tackling smaller, quicker cases involving weekly underground Texas Hold’em tournaments or coffee shops with illegal video gambling terminals. That way, he reasoned, his group would soon develop the skills needed to investigate more complicated cases while proving to his RCMP bosses and the board overseeing his unit that they were making a dent in the province’s illegal gambling problem.

But five months into investigating the underground operators, Mr. Robertson’s new unit was asked by Richmond RCMP to solve a case at the River Rock after a security guard there reported a loan shark operating within the casino. His unit interviewed suspects and eventually got the target of the probe to forfeit a large sum of money, but criminal charges were never secured.

By stepping into the casino, the investigators also raised the hackles of the gambling conglomerate Great Canadian Gaming Corp., as well as the Gaming Policy Enforcement Branch – the provincial agency tasked with cracking down on more minor offences at licensed gambling venues, Mr. Robertson testified.

“My decision appears to have possibly ruffled some feathers with the representative of Great Canadian Casinos and does not have the full agreement” of the director of GPEB, Mr. Robertson wrote Feb. 24, 2005, in an e-mail to his boss about the case.

The squabble with GPEB over whether the RCMP unit could send officers into the province’s casinos was never resolved, Mr. Robertson testified in front of the commission last month. His nascent unit never got further guidance on its true purpose from RCMP brass, lawmakers or its special board, which included representatives from the BC Lottery Corp. It was disbanded in 2009, with the provincial minister in charge of gambling at the time saying it had become inefficient and redundant and that existing police agencies could handle the issue.

As Mr. Robertson was trying to train his officers, the Richmond RCMP detachment and its commander, Superintendent Ward Clapham, were blindsided by a crime wave at the River Rock.

Mr. Clapham, the Mountie in charge of the detachment for six years leading up to his retirement from the force in 2008, had previously given city council his support for the casino, though he expected it to bring minor crime. If things got out of control at River Rock, Mr. Clapham figured he could get more funding for more officers from the new gambling revenues.

“Well, by 2005, I don’t think anyone could have predicted what we started to see,” he testified on Oct. 27, noting two kidnapping cases uncovered concerning links to widespread loan sharking at the casino.

Six months after the casino opened, he e-mailed his boss, Al Macintyre, the Mountie in charge of the Lower Mainland district.

“I need 5 mins of your time to talk to you regarding Great Canadian Casino. I am worried – the monster is growing. Their influence will soon control BC Gaming.”

Mr. Clapham told the commission he was worried the company was set to expand with other casinos and he wanted to raise concerns about the rise in gambling-related crime he had seen in Richmond. He tried to scramble foot patrols to the casino to provide a uniformed deterrent to loan sharks and other criminals. Even though staffing shortages meant that only happened about once a week, he soon had an executive from the casino company call him complaining about the RCMP presence.

“I was told that it was bad for business to have uniform police officers walking inside of the casino,” Mr. Clapham testified.

He diplomatically told the casino representative that these foot patrols would continue, and, to lead by example, he and two inspectors started periodically touring the floor and talking to patrons. Before he retired, his superiors did not approve two proposals to form a special unit within his detachment to investigate organized crime groups that were loan sharking, extorting, kidnapping and assaulting gamblers at the casino.

The view from inside

It wasn’t news to staff at the River Rock that there were an increasing number of loan sharks operating within their facility. Security cameras had caught them hanging around, not playing much and quietly passing chips to gamblers. The commission heard that BC Lottery Corp. investigators assigned to the casino banned en masse the most infamous loan sharks after a few months with the help of casino staff, but problems persisted.

Part of the challenge, the commission heard from witnesses, was the loan sharks simply handed off cash to patrons in the parking lot or at the adjoining hotel.

As the province raised the amount of money gamblers could lay down each round of betting at table games, loan sharks upped the amount they would dole out, testified Stone Lee, a former casino surveillance employee who later joined the provincial gambling regulator. In 2012, “it was not out of the ordinary to see two to three cash buy-ins of $300,000 or $400,000 per night,” he wrote in a commission affidavit.

“[For example], someone loses their bankroll, they appear to run out of their money, and they will make a phone call or follow somebody out or leave the casino shortly after and come back with another bag of cash to buy in,” he testified.

Mr. Lee noted that Paul King Jin constantly appeared in the background of many a sketchy transaction.

Mr. Jin, who was recently given partial standing at the commission to rebut allegations about his alleged crimes, was temporarily banned from casinos twice by the BCLC before being handed a five-year ban in 2012. Then Mr. Jin simply moved his sizable operation to the parking lot, said Mr. Lee, who often interviewed heavy gamblers who had no idea they were being lent money by someone with alleged ties to organized crime.

Ken Ackles, an investigator with GPEB, testified that in 2015, his boss at the provincial agency finally understood the scope of the problem when he presented him with a spreadsheet. The data showed suspicious transactions at River Rock that month were “over $20-million in cash, of which I believe there was $14,856,000 roughly in $20 bills.”

“I received a phone call from him that evening after I had given him the spreadsheets, and he conveyed to me at the time that he was shocked. He thought I was joking,” he testified.

The commission has now heard from expert witnesses on how dirty money mingles with the real estate sector, cryptocurrency and the legal profession. More experts from a host of other industries will testify into the new year in advance of a final report being submitted to government in the spring.

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