The sting operation took almost a year and unfolded during meetings in Quebec, California and the Cayman Islands. The goal: to expose an alleged scheme for laundering money and evading taxes.
Now U.S. authorities have arrested two Canadians, Eric St-Cyr and Patrick Poulin, and an American, Joshua Vandyk, in connection with the alleged plot. The three men, based in the Caribbean, are facing criminal charges of money laundering. The arrests took place earlier this month in Miami and were announced on Monday.
Mr. St-Cyr is the founder of Clover Asset Management Ltd., a Cayman Islands investment firm where Mr. Vandyk is an employee. Mr. Poulin is a partner at Bishops Legal, a law firm in the Turks and Caicos Islands.
None of the allegations have been proven in court. Efforts to reach lawyers for the three men were not successful.
According to the indictment, three undercover agents posing as wealthy Americans and a financial planner met with Mr. St-Cyr and Mr. Vandyk in March, 2013. One of the agents indicated that he was looking to move the proceeds of a crime – defrauding a bank – out of the country, the indictment said.
Mr. St-Cyr and Mr. Vandyk arranged a complex manoeuvre to achieve that objective, authorities allege, with Mr. Poulin acting as intermediary. Mr. Poulin set up an offshore foundation to receive the illegal proceeds, which he was told amounted to $2-million (U.S.), prosecutors said. The name of the foundation was Zero Exposure Inc., according to court documents.
An initial instalment of funds was transferred from the United States to the offshore foundation, and from there to the investment firm run by Mr. St-Cyr, which was responsible for managing the money, authorities said.
Mr. St-Cyr and Mr. Vandyk indicated they were amenable to laundering criminal proceeds "so long as the money was not linked to drugs or terrorism," according to the indictment. They allegedly said that their clients appreciated the fact that nothing the firm did "touches the United States" and that clients were charged higher fees to launder dirty money than to avoid taxes.
In September, 2013, two of the undercover agents met with Mr. Poulin in Quebec to discuss the setup of the offshore foundation, prosecutors allege. Mr. Poulin described his clients as mostly Canadians and Americans, the indictment said.
A spokesperson for the U.S. Department of Justice declined to respond to requests for further information, including questions regarding any involvement by Canadian authorities in the investigation.
The case is part of a broader crackdown by U.S. authorities on Americans stashing money overseas, particularly in places such as the Cayman Islands, which are known for their lax regulations.
"These defendants were in the business of creating layers of transactions so their U.S. clients could launder criminal proceeds," Richard Weber, who heads the criminal investigation arm of the Internal Revenue Service, said in a statement. The IRS is committed to "holding those accountable for creating mechanisms to hide assets offshore and dodge the tax system."
According to the website for Clover Asset Management, Mr. St-Cyr is a native of Quebec and founded the firm in 2007. Before that, he worked for an asset management firm based in Trinidad and was formerly a senior vice-president of TAL Global Asset Management, the website said. (Canadian Imperial Bank of Commerce bought a majority stake in the Montreal-based firm in 1994.)
Mr. St-Cyr contributed commentary on markets and investing to MarketWatch, a financial website owned by Dow Jones & Co. His latest piece, entitled "Time to choose between gravity and greed," was posted in June, 2013. It began: "I have the best job in the world; there is no doubt about it." Managing other people's money, he wrote, was "stressful and humbling."