Secret police study finds crime networks could have laundered over $1B through Vancouver homes in 2016
November 26th, 2018
The stately $17-million mansion owned by a suspected fentanyl importer is at the end of a gated driveway on one of the priciest streets in Shaughnessy, Vancouver’s most exclusive neighbourhood.
A block away is a $22-million gabled manor that police have linked to a high-stakes gambler and property developer with suspected ties to the Chinese police services.
Both mansions appear on a list of more than $1-billion worth of Vancouver-area property transactions in 2016 that a confidential police intelligence study has linked to Chinese organized crime.
The study of more than 1,200 luxury real estate purchases in B.C.’s Lower Mainland in 2016 found that more than 10 per cent were tied to buyers with criminal records. And 95 per cent of those transactions were believed by police intelligence to be linked to Chinese crime networks.
The study findings, obtained by Global News, are a startling look at what police believe to be the massive money laundering occurring in the Vancouver-area real estate market.
WATCH: How organized crime groups launder suspected drug money in B.C. real estate
They are also an indication of how — according to police intelligence sources — Canada’s narcos are hiding the huge amounts of cash they are amassing from the fentanyl crisis, which resulted in the deaths of thousands of Canadians last year.
“You know that Netflix show Ozark, about laundering drug cartel money?” said an expert, who could not be identified because of ongoing investigations in B.C. “I always think that if those characters came up to Vancouver, they could launder all their cash in just one day.”
While the study only looked at property purchases in 2016, an analysis by Global News suggests the same extended crime network may have laundered about $5-billion in Vancouver-area homes since 2012.
At the centre of the money laundering ring is a powerful China-based gang called the Big Circle Boys. Its top level “kingpins” are the international drug traffickers who are profiting most from Canada’s deadly fentanyl crisis.
The crime network, according to police intelligence sources, is a fluid coalition of hundreds of wealthy criminals in Metro Vancouver, including gangsters, industrialists, financial fugitives and corrupt officials from China.
WATCH: Police investigation links dirty cash to luxury real estate. John Hua reports.
They are involved in drug import and production schemes, casino money laundering, real estate money laundering, prostitution, and financial crimes, the sources said.
The common link among them is an underground banking scheme in which Chinese VIP gamblers and gangster associates secretly transfer money between China and Richmond, B.C., in order to fund fentanyl imports and trafficking in Canada.
B.C. Lottery casinos are an important conduit in the underground transactions. But the money laundered through gambling is miniscule compared to the sums flowing through real estate.
WATCH: How does fentanyl get into Canada? Global News reveals the nefarious route the opioid takes.
One expert said Canadians would be stunned to learn how many of Vancouver’s homes have been built on drug money since the 1990s, when heroin from Hong Kong and China started flooding into Vancouver and Toronto.
The police intelligence study, completed this year, examined real estate purchases valued between $3 million and $35 million. The researchers suspected significant money laundering in the $1- to $3-million range — including suspicious condo flipping transactions — but didn’t have the time or resources to study the over 20,000 transactions.
Against the sample of about 1,200 high-end sales in 2016, researchers cross-referenced property documents with databases of criminal records and confidential police intelligence regarding ongoing investigations and networks of suspected criminals.
Many of the suspected criminal homes in the sample cost more than $10 million. And in an indication of how drug cash can move land prices dramatically higher in some Vancouver neighbourhoods, property records show some of the suspected fentanyl kingpins paid well above recent sale prices for homes in the study.
A $22-million home in Shaughnessy was connected by police intelligence in the study to a Macau gambler who took out tens of millions in real estate loans from suspected organized crime lenders operating out of Metro Vancouver casinos, according to allegations in Lottery Corp. documents and legal filings.
WATCH: Minister won’t commit to laws, funding for police forces to combat money laundering in connection to fentanyl
Property documents indicate the alleged VIP bought the Shaughnessy home for just $7.5 million in 2011. But when a ring of private lenders attempted to enforce real estate loans, documents show, the home was sold in 2016 for an astounding $14-million price gain, at $22-million.
Since 2012, the alleged VIP has sold a number of Metro Vancouver homes worth about $50 million in total, property documents show. And the gambler has made 28 suspicious transactions in B.C. Lottery casinos, according to Lottery Corp. investigation documents.
But in 2018, 51-year-old Paul King Jin — a former Richmond massage parlour owner who, according to Lottery Corp. documents, is targeted by the RCMP in probes of suspected transnational drug trafficking — sued the Macau gambler for $8 million.
Jin claims in 2016 he discharged a mortgage on the $22-million home so the Macau gambler could sell the property and repay creditors. But Jin hasn’t been paid, he claims, because other lenders rank above him.
The home is no longer owned by suspects named in the police intelligence study.
WATCH: A look at exactly how profitable the opioid is for criminals in Canada.
Jin’s filings said the Macau gambler described himself as “a man of great wealth” involved in real estate development in Canada and China. But in a legal response, the gambler’s lawyer said he had already sold three homes and paid $35 million to a group of “private lenders.” And these lenders took advantage of the gambler’s addiction with loans that “may at worst be criminal,” the Macau gambler claimed.
The gambler has returned to Macau, legal filings say, and Global News has not been able to reach him for comment.
Jin has not responded to questions from Global News about police allegations. Some of Jin’s associates have been charged in a drug trafficking and money laundering investigation, but it is not known if Jin has been charged.
LISTEN: The study findings, obtained by Global News, are a startling look at what police believe to be the massive money laundering occurring in the Vancouver-area real estate market. David Eby joins Mike Smyth.
In another 2016 sale, a suspected fentanyl kingpin and casino loan shark bought a $3.6-million home in West Vancouver. And one alleged criminal bought two adjacent Vancouver homes, worth over $3 million each, on the same day.
Another alleged kingpin bought a $15-million Shaughnessy mansion in 2016, as well as a tear-down $3.5-million bungalow on a south Vancouver block that is zoned for condo building.
One of the 2016 study homes, a $17-million mansion in Shaughnessy, is owned by a Chinese industrialist and Vancouver real estate developer, documents show.
But according to police intelligence, the owner is allegedly involved in narcotics imports and exports. Property and lending documents show the owner’s family holds at least nine Vancouver-area homes worth over $60 million, in addition to assembling hundreds of acres of residential land in Metro Vancouver since 2014 and also proposing to develop a Vancouver luxury condo tower.
Global News has not been able to reach the Shaughnessy mansion owner for comment on police suspicions.
The owner is also tied through corporate records to an alleged illegal casino in Richmond that Lottery Corp. investigators believe is run by Big Circle Boys. And the owner’s family holds positions in the Chinese People’s Political Consultative Conference, corporate records from China indicate.
A few hundred metres away in central Shaughnessy, is yet another $17-million abode with alleged links to the Big Circle Boys.
This second mansion made Vancouver headlines in 2007, when its owner — a Big Circle Boys kingpin described as one of Canada’s top priority crime targets — was gunned down outside his front gates.
The mansion is now owned by a Richmond real estate agent, court records show. Police intelligence sources say the realtor is intimately related to a B.C. Lottery Corp. gambler and Metro Vancouver real estate developer who is accused in a $500-million corruption case in China. Global News could not reach the realtor for comment, and the alleged VIP gambler has denied financial corruption allegations reported in China.
Other study findings suggested criminals in China anonymously bought B.C. real estate with Bitcoin, the crypto-currency used by drug traffickers. One Beijing Craigslist advertisement offered an eight-bedroom mansion in the hills of Coquitlam for 1,075 bitcoins, the equivalent of $3.3 million.
The findings come amid Metro Vancouver’s housing affordability crisis, in which middle-class families have been priced out of the city. Many of these properties were left empty, and bought on paper by the spouses and children of suspected criminals. Investigators were surprised that some convicted drug trafficking criminals didn’t even conceal their property purchases.
WATCH: Global News online journalist Sam Cooper shares details about his new investigative series looking at the link between fentanyl and organized crime operating in B.C.
Even so, the RCMP just doesn’t have the resources to tackle so many suspected money laundering transactions in Vancouver, a source said.
Meanwhile, home prices in Vancouver have tripled since 2005.
Across the Lower Mainland, prices began to sky rocket in late 2012. Some analysts believe a flood of money from China in recent years forced Metro Vancouver home prices to disconnect from the region’s median household wage of $72,000, which ranks among the lowest for Canadian cities, and 50th in North America.
Urban planning expert Andy Yan, director of the City Program at Simon Fraser University, said the real estate money laundering data “begins to explain what is happening in Vancouver.”
“This is financial fentanyl for our real estate,” Yan said. “You have found $1 billion. But it is probably magnified in the banking system, with all of the black money, gray money, and legitimate money cascading through local institutions, to make a toxic sausage. So this is a national security issue. And also a national financial issue.”
Government documents obtained by Global News show that the government believes that in 2012, loan sharks connected to gangs in China and associated Chinese VIP gamblers ramped up a flood of suspected drug cash transactions in Vancouver-area casinos.
There were $64-million worth of suspicious cash transactions in these casinos in 2012, $119 million in 2016, and $66 million in 2017. But suspicious cash transactions in B.C. Lottery casinos surged to $176 million in 2015 — including $136 million in $20 bills.
Meanwhile, in a mirror image of what is suspected to be a record year for B.C. casino money laundering, Lower Mainland home prices sky rocketed by over 30 per cent in 2015.
A fentanyl-trafficking investigation expert said Chinese crime methods for laundering cash in Vancouver real estate have followed a consistent pattern since the 1990s, when the current kingpins of fentanyl started to dominate Canada’s heroin markets.
“It has always been the same people involved, and unfortunately the longer they do it, the more legitimate they look,” the expert said. “What they do is buy these tear-downs, and they do renovations and build mansions. I know one case, (a Chinese heroin kingpin) laundered eight of these homes in Vancouver himself.”
At the same time, police and confidential sources in Vancouver have believed that for about 20 years the Big Circle Boys and associates used B.C. casinos, mostly in Richmond, for drug dealing.
They “liked to conduct money exchanges in casinos,” according to a record filed in B.C. Supreme Court. “The drug trafficker could then have the casino as an explanation for the money, if stopped by the police.”
Police say that almost every drug seizure they now make in Vancouver turns up some form of synthetic opioid produced at factories in China. Cocaine is still the drug Vancouver police seize most. But one expert predicted that by the end of 2018, fentanyl would become the most common drug on Vancouver streets.
As the drug kingpins of Vancouver have raked in profits and the city’s real estate prices have surged, the fentanyl crisis has spread from its epicentre among addicts in Vancouver’s impoverished Downtown Eastside to communities across the country, leaving behind a devastating body count.
“It’s a neat circle. Welfare-Wednesday spending ultimately enriches those fueling the affordability crisis,” one law enforcement source said. “And that creates the need for Welfare-Wednesday.”
Last year, nearly 4,000 Canadians died from an opioid-related overdose, according to figures from Health Canada, with the vast majority of deaths involving fentanyl.
Government figures released in September showed that more than 1,000 Canadians lost their livesto apparent opioid overdoses in the first three months of 2018 – or more than 11 people per day.
Senator Vernon White, a former police chief who has advocated for measures to block the fentanyl supply from China, called the deaths and the related housing affordability crisis among the greatest threats facing Canada.
“I have been in policing 33 years and I have never seen anything with the profitability that fentanyl has,” White said. “This is a security threat. If terrorists were killing 5-6,000 people per year, we would do something about it.”
A 2017 B.C. Supreme Court sentencing ruling stated that drug traffickers can turn one kilogram of heroin worth $70,000 — blended with $12,500 worth of fentanyl powder — into 100 kilograms of counterfeit heroin, worth about $7 million on the street.
But it is the blending of various drugs with fentanyl, which is 50 to 100 times more toxic than morphine, that has caused fatal overdoses to surge, the ruling says.
And yet, about 10 years before fentanyl started to flood Vancouver, Canadian courts had already found that Big Circle Boys were the dominant Chinese crime syndicate in Canada causing opioid overdose deaths.
One convicted Toronto-based Big Circle Boys kingpin acknowledged that he was likely responsible for causing heroin drug overdose deaths in Vancouver and southern Ontario, a 2003 federal court ruling says. The man also admitted he sent massive drug cash proceeds back to China, to buy businesses, including a coal mine.
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