The rise of the White Collar Mobster

Part 9 - Canada now a haven for money-laundering activities

Once upon a time in Canada there was the Mafia enterprise. Many organizations were managed on a mom-and-pop basis. There was a boss giving orders and a swarm of picciotti ready to carry them out. Activities were linked to well-delineated areas: drug trafficking, extortion, gambling.
Money-laundering was done using crude methods: revenues were reinvested in restoration, trade or the construction industry. There were few if any external contacts.
"Nowadays things have changed. Many organizations are now drug trading, rather than peddling, but more than that they tend to establish ventures with other groups," explains Sergeant Pietro Poletti, of the Criminal Intelligence Service of Canada. "This implies less of a territorial and more of a financial dimension. Language is no longer a barrier, and more and more often investigators find situations that once were unthinkable, like a criminal partnership in illicit activities, strategic alliances, not organic connections, that rise and dissolve in a brief span of time."
The spearheads of this new trend are the Sicilian and the Calabrian Mafias, in addition to the Russian Mob, Colombian cartels, Chinese Triads and Biker gangs. Often Native gangs get involved in operations, especially when located on reserves straddling the U.S.-Canada border, ideal buffers in eluding customs controls.
The most important cities in the Mafia geography remain Toronto, Montreal and Vancouver.
Toronto, which until a short time ago was described as a "New York on Valium", is today a metropolis where at least 18 different criminal organizations can be counted. Luckily, there are no mob wars among them. The only exception was a feud in the early Nineties between Vietnamese and Chinese gangs over control of certain areas.
The stronger organizations are those of the 'ndrangheta and La Cosa Nostra, but also those based on the Republics of the former Soviet Union, the Chinese Triads, the Big Circle Boys, the Colombian cartels and the Mexican cartels, with a recent strong increase in the latter.
Toronto is also a big market for drug trafficking, but most of all it is an important centre of Mafia investments and money-laundering. "Many invest on the Stock Market, many use frontmen to manage commercial enterprises, especially restaurants," says a police informer. "There is also someone who would like to build another casino in Ontario and is looking for important connections in the towns surrounding Toronto."
Vancouver is no less immune. Its Stock Exchange collects the capitals of the Triads and in its territory "clerks" of the main criminal organizations go about with confidence.
In Vancouver, where one in every five people is of Chinese origin, it’s easier to find a karaoke bar where Mah-Jongg is played than a McDonald's hamburger restaurant.
The same holds true for Montreal, which is not as simple a transit area for drugs as it was believed. In 1984 a laboratory refining cocaine was discovered, managed by Ernesto Baretto Morales, a boss connected to Colombian cartels, and having a certain familiarity with stills and test tubes. Alongside the drugs, a stream of dirty money was also flowing.
Peter Ryan, of Irish descent, was one of those very knowledgeable of the complex mechanism of financial alchemies. "He kept 10 percent of the money laundered," says Donald Lavoie, a police informer. Ryan, the chief of the famous West End gang, in a meeting with a Mafia representative once described the situation like this: "You are the Mafia, we are the IRA." He wasn't joking.
Through the Boston branch office, he had been contributing to the Irish Republican Army for years. He was killed in the U.S. in November of 1984. Things have not changed since then. Banks keep defending their right to privacy, and accounts are open in branch offices in small Caribbean countries where fishermen are living and sharks of criminal high finance are cruising.
Investigators have had to give up the fight several times. "In Canada it's more difficult to introduce cheese, due to Ministry of Agriculture restrictions, than bagfulls of dollars," admits Inspector Gilbert Cote of the Montreal police. Infamous boss Meyer Lansky had understood this when, in the Thirties, he chose Canada as a crossroad leading La Cosa Nostra money from the U.S. to the vaults of Swiss banks. A truism that stood the test of time, having been copied by Asian mobs, then by South American cartels, and finally by former USSR groups.
After the arrest in Mexico of Alberto Minelli, the financial mastermind of the Cuntrera-Caruana group, the Venezuelan police seized 400,000 hectares of land in an area rich in forests, containing gold, diamond and nuclear mineral mines, and oil wells. It had been purchased on February 17, 1995, for US$5.8 million, by Ezequiel Jaimes, a strawman for Minelli, acting on behalf of a mysterious Canadian mining company.
It belonged to Agroforestal Minera Rio Carum, a Venezuelan company that, in order to avoid bankruptcy, had asked for more than $400,000 in loans from Minelli. A debt that was never paid back.


Mario Possamai on underground economy

Mario Possamai, President of FIA International Research, part of the International FIA Group of investigative companies, is considered to be one of the keenest observers in North America of organized crime and its economic underpinnings. Some years ago he published a book, Money on the Run, that is considered one of the key texts in understanding how the underground economy works.
"In the Sixties and Seventies," he explains, "Michele Sindona used our country precisely for this, and recently other criminal organizations, including Russian organized crime groups, laundered money with long-term investments in the purchase of real estate, shares and the creation of import-export companies."
Why do criminals choose Canada for laundering money?
"Mobsters come to Canada for the same reasons many other investors come. The economy is strong. The banking system is efficient at an international level. The large Canadian banks, in fact, have not only many branch offices nationwide, they also possess branches in some Caribbean fiscal havens."
You spoke of banks and laws; what are the differences with the U.S.?
"In comparison to the U.S., we have been less diligent in implementing laws to combat money-laundering. It was only recently that the government introduced legislation to address two major weaknesses in our laws — weaknesses that critics have pinpointed for more than a decade. The legislation will see the implementation of cross-border currency declaration requirements, as well as mandatory suspicious reporting requirements by our financial institutions and others that handle money. In general, in Canada, money-laundering is less risky than in the U.S."
Is it true that many Canadian "white collar" workers use the Stock Exchange to launder money for mobsters? And what is the impact of this activity on the Canadian economy?
"This problem is big. And it is created by the lack of laws regulating the Canadian securities industry. As was evident in the YBM affair, it is very easy for organized crime to use our stock exchanges to launder dirty money. This is due partly to the lack of a national oversight agency, like the U.S. Security and Exchange Commission. In Canada, we have a checker-board of provincial regulators. The problem is an old one. [U.S. financier] Robert Vasco exploited the situation in the Seventies and organized the biggest white collar fraud ever uncovered."
Which solutions could be adopted in order to cope with this unfortunately deep-rooted situation?
"In my opinion, our laws and law enforcement initiatives should be in concert with those of the United States. If this will not happen, criminals will continue to see Canada as a country where these sort of illicit activities can be carried out with no great problem. Criminals are like water — they seek out the path of least resistance. It is important that Canada is not seen as such a path."

(translated by Emanuele Oriano)

Mario Possamai on underground economy
Mario Possamai, President of FIA International Research, part of the International FIA Group of investigative companies, is considered to be one of the keenest observers in North America of organized crime and its economic underpinnings. Some years ago he published a book, Money on the Run, that is considered one of the key texts in understanding how the underground economy works.
“In the Sixties and Seventies,” he explains, “Michele Sindona used our country precisely for this, and recently other criminal organizations, including Russian organized crime groups, laundered money with long-term investments in the purchase of real estate, shares and the creation of import-export companies.”
Why do criminals choose Canada for laundering money?
“Mobsters come to Canada for the same reasons many other investors come. The economy is strong. The banking system is efficient at an international level. The large Canadian banks, in fact, have not only many branch offices nationwide, they also possess branches in some Caribbean fiscal havens.”
You spoke of banks and laws; what are the differences with the U.S.?
“In comparison to the U.S., we have been less diligent in implementing laws to combat money-laundering. It was only recently that the government introduced legislation to address two major weaknesses in our laws — weaknesses that critics have pinpointed for more than a decade. The legislation will see the implementation of cross-border currency declaration requirements, as well as mandatory suspicious reporting requirements by our financial institutions and others that handle money. In general, in Canada, money-laundering is less risky than in the U.S.”
Is it true that many Canadian “white collar” workers use the Stock Exchange to launder money for mobsters? And what is the impact of this activity on the Canadian economy?
“This problem is big. And it is created by the lack of laws regulating the Canadian securities industry. As was evident in the YBM affair, it is very easy for organized crime to use our stock exchanges to launder dirty money. This is due partly to the lack of a national oversight agency, like the U.S. Security and Exchange Commission. In Canada, we have a checker-board of provincial regulators. The problem is an old one. [U.S. financier] Robert Vasco exploited the situation in the Seventies and organized the biggest white collar fraud ever uncovered.”
Which solutions could be adopted in order to cope with this unfortunately deep-rooted situation?
“In my opinion, our laws and law enforcement initiatives should be in concert with those of the United States. If this will not happen, criminals will continue to see Canada as a country where these sort of illicit activities can be carried out with no great problem. Criminals are like water — they seek out the path of least resistance. It is important that Canada is not seen as such a path.”

Publication Date: 2001-06-24
Story Location: http://tandemnews.com/viewstory.php?storyid=90