Tag Archives: FINTRAC

FOR IMMEDIATE RELEASE: Vancouver Not Vegas Calls for Reinstatement of Specialized Casino Police Unit

Photo via CBC
The Vancouver Not Vegas coalition calls for Premier Clark to reinstate the Integrated Illegal Gaming Enforcement Team (IIGET), following revelations that suspicious transactions have more than doubled in casinos since 2011.

In 2009 the specialized casino police unit IIGET was disbanded weeks after it warned then Solicitor-General Rich Coleman that organized crime had infiltrated the gambling industry and was actively laundering money and loan sharking in casinos (see Appendix A).

By 2011 cash monitoring had deteriorated so severely that the BC Lottery Corporation was fined almost $700,000 by the federal agency FINTRAC for failure to control suspicious transactions at casinos.

“This is a complete systemic collapse of governance,” says Sandy Garossino, spokesperson for Vancouver Not Vegas. “There’s been no specialized policing presence in casinos for 5 years and organized crime has been brazenly active the whole time. BCLC has completely failed to control casino criminal activity.”

Vancouver Not Vegas renews its calls for former BCLC CEO Michael Graydon to be deemed unsuitable for employment with Paragon Gaming.  “Did Graydon know about this report when he jumped without warning from BCLC?” asks Garossino. “For at least 5 years Graydon knew organized crime was active in BC casinos, and completely failed to rein them in. Now he’s going to head a casino of his own?”

During the casino fight in 2011, 18 senior organized crime policing specialists submitted a letter which warned Vancouver City Council about rampant criminal activity of gangs and organized crime in casinos.
_______

Text media requests to:
Sandy Garossino 778-231-5230

See also:
Former Commander IIGET comments on casino oversight:
http://www.publiceyeonline.com/archives/004373.html
http://www.publiceyeonline.com/archives/004427.html
http://www.publiceyeonline.com/archives/004907.html

Appendix A:

Excerpted quotes from 2009 IIGET report on criminal activity in casinos (p 22):

“Canadian casinos are extremely vulnerable to money-laundering because they deal in cash and handle tens of millions of dollars every day.

Many investigations… have shown that members of organized crime use casinos for criminal purposes (e.g. loan sharking and money laundering) and that some of these criminal elements have successfully infiltrated the industry.

Since 2003 FINTRAC has sent several disclosure reports to the RCMP on suspicious transactions involving casinos… Anecdotally, police managers have suggested… nothing is being done to investigate these situations.”

(emphasis added)

Brazen Conflict of Interest by Former CEO Exposes Feeble Governance at BCLC

Michael Graydon BCLC

FOR IMMEDIATE RELEASE: Vancouver, Feb. 7, 2014

Brazen Conflict of Interest by Former CEO Exposes Feeble Governance at BCLC

The resignation of Michael Graydon as CEO of BC Lottery Corporation (BCLC) to assume the role of president of PV Hospitality ULC in which Paragon Gaming Corporation is a partner raises serious conflict of interest and BCLC governance concerns says Vancouver Not Vegas.

“It’s a grave concern that the BCLC, which oversees an industry requiring the highest standard of integrity and transparency, would permit a departure of this kind from expected ethical standards”, says founding member Ian Pitfield.

“The Federal Government applies post-employment restrictions to public office holders.  Why should the Province not insist on the same restrictions for senior employees of Crown Corporations?” Pitfield asks.

The Vancouver Not Vegas coalition calls for an investigation into the circumstances surrounding this move, and asks the BC government to answer the following questions regarding this and other governance issues within BCLC (BC Lottery Corp):

  • When did Michael Graydon begin employment discussions with Paragon, a company of which he was the regulator?
  • What assurances or commitments did he make to Paragon, his future employer, while he was in discussions with them concerning compensation, terms, etc?
  • What knowledge did the BCLC have of employment discussions between Graydon and Paragon, and did it approve it?
  • Why, after BCLC chair Richard Turner bought shares in Paragon Gaming in 2004, did the BCLC not institute a firewall policy preventing employment or financial relationships between senior executives. board members and regulated corporations?
  • Senior management at BCLC are in possession of significant confidential financial information pertaining to all gambling operators in BC. It’s unthinkable that it has failed to safeguard that trust by preventing conflicting employment agreements for senior executives.

It is unthinkable that BCLC has failed to safeguard the trust by prohibiting key employees from assuming employment with regulated gaming companies for a period of two or three years following retirement or resignation. But today’s news is only one chapter in a history of governance breakdowns.

Documented lapses in governance at BCLC include:

  • Unprecedented $700K FINTRAC fine in 2010
  • Documented loan-sharking, money-laundering in casinos
  • BCLC Chair Richard Turner’s acquisition of shares in Paragon in 2004, and subsequent move to become director.

Today’s revelation, combined with a repeated pattern of inept governance points to a rudderless corporation unable to exercise basic control over its key operations.

- 30 -

Media contacts:

Sandy Garossino
Please TEXT queries to:
778-231-5230

Ian Pitfield
604-828-5494

http://vancouvernotvegas.ca

See also this original story.

Summary of issues surrounding the Edgwater Casino expansion plan

UPDATE: here is a fuller summary of issues with the Edgewater Casino expansion (PDF with hyperlinks).

This post is for those interested in some of the more technical details surrounding the Edgewater Casino application. To read the full application, visit the City of Vancouver site.

Procedural Issues

1. No Adequate Notice to Public

The application before Council is described as a re-zoning application by PavCo (crown corporation BC Pavilion Co). Included, but not detailed in the public notice, is a second application by Edgewater Casino for a by-law amendment licensing approximately 1000 new slot machines and 75 new slot machines; Notices mailed only to residents within a 2 block radius of the project, etc.

No notice to public of scale of expansion: gaming floor equivalent to two NFL football fields (114k sq. ft)

2. Due Diligence gaps

a) Calculation of expected revenues only, no calculation of expected costs–policing, counseling, housing homeless;
b) No report on mental health and addiction issues/social ills;
c) Policing report is one paragraph long. Only one sentence respecting organized crime, money laundering. No estimate of impact or cost to manage. No weapons policy or enforcement provisions in a casino/hotel/sports complex. No reference to the RCMP report cautioning about extreme vulnerability to organized crime and infiltration.
d) Background check of Paragon Gaming–corporate profile misrepresented in public materials. No assessment of suitability to operate a major project of this scale.

3. Key Information Relevant to Public Review

PavCo represents that there is no risk to the taxpayer in the corporate structure of the project; however:

The BC Lottery Corporation Facility Development Commissions (FDC) and Accelerated Facility Development Commissions (AFDC) cover roughly 42% of casino capital development expenses.

Do FDC’s and AFDC’s extend to ancillary buildings such as hotels, restaurants, theatres, and parkades?

Projections indicate the cost of the complex will be approximately $450 million. 42% is almost $190 million in public money. The BC Lottery Corporation has budgeted for capital expenditures of $346 million over the next 3 fiscal years. What percentage of that will go into the Edgewater development?

a) Public disclosure of all financial commitments
b) Public disclosure of the deal structure: Is there an incentive to overbuild? How are expenses calculated and netted out?

4. Irregularities in the BC Lottery Corporation and PavCo Bid Process

a) BC Lottery Corporation board chair Richard Turner purchases shares in Paragon Gaming (operating in Alberta) in 2003. Share purchase violates board code of conduct, and is not disclosed until 2005.
b) In late 2005 Turner resigns from BCLC board. Summer 2006 Paragon Gaming purchases Edgewater Casino out of bankruptcy and installs Turner on the board of Paragon.
c) Fall 2008, City plan for Northeast False Creek is amended to permit major casino at request of PavCo.
d) March 2009, PavCo puts out an RFEI (Expressions of Interest), with an 18 day window. Only two respondents, including Paragon, reply. While the Paragon bid is before PavCo during the RFP phase one month later, Turner issues a $50k cheque to the BC Liberal Party. Paragon Gaming is the successful bidder
e) Autumn 2009 Turner places a phone call to Minister Kevin Krueger advising that Paragon will withdraw if the roof is not built per plans.

What were all the communications between Richard Turner and PavCo in the period 2005-2009?

5. Criminal Concerns

2006: Richmond loan shark Lily Li is murdered. Evidence emerges at trial that loan sharks operate on shifts 24/7 inside River Rock Casino;
2009, January: RCMP special unit IIGET (Integrated Illegal Gaming Enforcement Team) issues a report to government warning of “extreme vulnerability” of casino industry to organized crime–money laundering, infiltration, loan sharking. No resources to investigate suspected money laundering. Concerns expressed about perception of conflict of interest and corruption. Most information redacted from report.
2009. February: IIGET disbanded
2010/ Summer: BC Lottery Corporation fined by FINTRAC for repeated failure to monitor suspicious transactions. First fine of its kind in Canada.
2010/August-October: CBC investigates over $8 million in suspicious transactions at 2 casinos in Metro Vancouver, including $460k in 20’s in plastic bags, and a suitcase with $1.2 million in casino chips.
Insp. Baxter, head of Proceeds of Crime Unit, calls transactions suspicious. Solicitor General Rich Coleman, also responsible for gaming, disagrees that transactions are suspicious and publicly disagrees with Baxter.

Conclusion: Weak BCLC enforcement of rules of conduct and poor compliance and oversight of casinos, leaving the industry vulnerable to uncontrolled criminal conduct and potentially to infiltration.

6. Paragon Gaming: Parent Co of Edgewater

All other projects and operations are on First Nations reserves in the US and Canada. All are small market. No international tourism expertise. No expertise with the Asian market.

BC’s model: Closed door bidding process with a single (geographically pre-selected) casino applicant, and no public input.

By contrast, Missouri recently awarded a casino license in an open, public, competitive bidding process, with multiple applicants and more than one physical location. The successful bidder demonstrated both strong community support via a referendum, and strong local roots in the community. Paragon Gaming was one of the bidders in this process, but was unable to garner a single vote of support from the Missouri Gaming Commission.

US small market casino operations have notoriety, particularly vis-à-vis political corruption. In more than one instance, individuals with some connection to Paragon Gaming or their advisors have been implicated, charged, or convicted on political corruption charges. A detailed background check on Paragon Gaming is recommended, including investigation of the relationship of Paragon principles with Milton McGregor and Robert Sigler (shareholder in Paragon Gaming Missouri) of Alabama.

Comment on Vancouver’s Oak Street Shooting: gangs and money-laundering

The shooting of 10 gang-related people on Vancouver’s westside over the weekend is an astonishing punctuation mark in our history. We all know this horrific escalation of violence is out of any control by police and civil authorities, and no end is in sight.

Most of us associate gangs with violence and street warfare, but these incidents are only ancillary to the massive industry behind them. Money is the lifeblood that feeds it. Controlling the gangs is as simple, and as overwhelmingly difficult, as this: STOP THE MONEY.

It’s impossible to stop the drug business, the prostitution, human trafficking, gun and weapons trade, loan sharking and other commerce that preys on human misery and weakness.

Yet consider this: almost ALL gang-related transactions are cash, and that cash, hundreds and hundreds of millions of it, must be laundered into “legal” currency through conventional business outlets.

FINTRAC (Financial Transactions and Report Analysis Centre of Canada) is the federal government agency tasked with discovering, scrutinizing, disrupting, and shutting down money-laundering activities. It has identified casinos as a high priority focus for money laundering by organized crime and terrorists–which BC has had more than its fair share of: see  FINTRAC – Money Laundering Typologies and Trends in Canadian Casinos – Financial Transactions and Reports Analysis Centre of Canada.

FINTRAC tracking indicates that money laundering in casino venues has increased significantly from 2007-08.

For all their talk about integrity and law and order, the BC Lottery Corporation and the BC government have almost completely abandoned the nexus between legal gambling operations and money-laundering by organized crime.

In late 2008 the Integrated Illegal Gaming Enforcement Team issued a damning report, which said “Canadian casinos are extremely vulnerable to money laundering because they deal in cash and handle tens of millions of dollars every day… members of organized crime also used casinos for criminal purposes and… some of these criminal elements have successfully infiltrated the industry. “ See RCMP on money-laundering.

The report goes on to say that in recent years FINTRAC has alerted the RCMP to suspicious transactions involving casinos, with amounts across Canada totalling over $40 million, but that, “because of other priorities and lack of resources, at this time, nothing is being done to investigate these situations.”

Most of us, faced with such an incendiary report, would immediately beef up policing of casinos, yes?

Obviously we don’t understand how protecting the public interest actually works in the greatest place on earth.

Because the real answer was to call an urgent in-camera meeting of the IIGET Consultative Board with representatives of the Gaming Branch, to review the report. This happened on January 26, 2009, and concluded with a discussion of the “uncertainty of future funding for IIGET.”

Within three weeks, internal emails reveal, the die was cast. IIGET would be disbanded. See the emails concerning the closure of the integrated illegal gaming enforcement team. To this day BC has no dedicated specialized policing of casinos and the money-laundering and loan-sharking that go on inside their premises on a daily basis: The announcement was made April 1, 2009, which probably tickled the funny-bones over at BC Gaming.

And what has been the result?

The BC Lottery Corporation seems to have turned a blind eye to the whole business. In July of this year, FINTRAC, in an unprecedented move, fined the BC Lottery Corporation $670,000 for inadequate reporting of suspicious transactions–the first fine of a gaming regulatory body in Canada. BC Lottery Corporation president Michael Graydon brushed off the offenses as clerical errors.

Mr. Graydon, Solicitor General Rich Coleman: We are seeing the results of your negligence on our city streets. Our children are waking in their beds to the sound of gunfire outside their windows.

Faced with the opportunity to help stop this hellish business, you are doing nothing. Worse than nothing.

Give us real policing in our casinos, and stop pretending that everything that goes on inside them is just fun and games.