MONEY LAUNDERING

Article 1       Article 2

CRIME

Lawyers said key to money laundering

News from globeandmail.com

Friday, March 18, 2005

TORONTO -- Lawyers have become key players in money laundering operations because they are exempt from a federal requirement to report suspicious financial transactions, a senior RCMP officer said yesterday.

"My experience is that it's a widespread problem," said Inspector Bill Majcher, who is part of an RCMP white-collar crime unit known as the Integrated Market Enforcement Team, or IMET. "In almost every case we are doing, lawyers are central."

Insp. Majcher made the comments during a sentencing hearing for Toronto lawyer Simon Rosenfeld, who was convicted of money laundering last month. Mr. Rosenfeld was one of about 55 Canadian and U.S. citizens arrested in 2002 as part of an RCMP-FBI sting called Bermuda Short, which exposed a raft of stock market manipulation and money laundering scams.

Crown prosecutors are seeking an unprecedented sentence of up to seven years in jail for Mr. Rosenfeld because he used his position as a lawyer to facilitate illegal transfers.

At yesterday's hearing, Insp. Majcher described how he met Mr. Rosenfeld during the undercover operation by posing as a representative of a Colombian drug cartel.

Insp. Majcher said Mr. Rosenfeld was one of three Canadian lawyers who agreed to help him move millions of dollars into investments that would hide their illegal origin.

At one point, Insp. Majcher testified that he gave Mr. Rosenfeld one dollar and asked him: "Do I now have solicitor-client privilege?" Mr. Rosenfeld replied: "Yes, you do."

Insp. Majcher said Mr. Rosenfeld told him it was "twenty times" easier to launder money from Canada than the United States.

He was also told during the investigation that five lawyers in Vancouver regularly laundered $200,000 a month through trust accounts in return for a 7-per-cent commission.

Other lawyers used offshore accounts, stock market scams and foundations to hide illicit cash, Insp. Majcher testified.

In an interview outside the court, Insp. Majcher said police are constantly coming across lawyers at the centre of a variety of investigations. "We are seeing, in almost every case we are doing, there's a willful blindness or negligence on the part of a number of lawyers that have participated with the stock promoters."

He added that RCMP Commissioner Giuliano Zaccardelli wants the force to focus more on commercial crime. "He's been really pushing the RCMP to aggressively start protecting the economy as a national priority."

Insp. Majcher said lawyers should no longer be excluded from rules that require financial institutions, casinos, real estate agents and insurers to report all transactions over $10,000 and any suspicious transactions.

The federal government introduced those rules in 2001 as part of a crackdown on money laundering.

Lawyers were exempted after a successful court challenge found the measure violated solicitor-client privilege.

"The majority of lawyers are honest in this country and they are frustrated by the difficulties [police] have because many of these lawyers are victim investors as well or they represent victims," Insp. Majcher said.

In a report last fall, Auditor-General Sheila Fraser pointed out several weaknesses in Canada's efforts to combat illicit money flows and said excluding lawyers from the reporting rules is "widely recognized as a serious gap in the legislation."

------------------------------------------------------

The article above was written in 2005.

The reporter Paul Waldie interviewed inspector Bill Majcher, who is part of an RCMP white-collar crime unit known as the Integrated Market Enforcement Team, and according to the inspector, if he was quoted right, he claimed that, "five lawyers in Vancouver regularly laundered $200,000 a month through trust accounts in return for a 7-per-cent commission".

Anyone given so much leeway and trust wihtout anyone checking on them, will eventually be involved in proceeds of crime and this includes lawyers, thus 5 lawyers can hardly be accurate considering the amount of solicitors British Columbia have for members and considering how many of them are hungry for money and for fast cars.

Further, 7-percent of commission on a transaction of $100,000 is a nice chunk of money, especially since it requires just a stroke of a pen and the deal is done for the lawyer who facilates the transaction and for his client.

In effect the Canadian Bar Association and provincial Law Societies are itself a criminal organization, who are sound proof from ever being investigated by law enforcement.

A perfect example is with Martin Wirick, a former lawyer, who stole well over $70 million dollars. The Attorney General of B.C. has yet ordered the Crown to lay criminal charges against him, even though Wirick admitted to the crime.

Click on Crooked Lawyers

On Friday, October 20, 2006, another article, on the issue of dirty money was published. The writer reported on the Conservative Government responding to a report from Canada's financial intelligence agency that terrorists funnelled $256 million through the country with a bill to toughen laws against money-laundering and terrorism financing.

Given the role Canada plays regarding criminal organizations, it came to no surprise when the Federal government, with its new legislation, removed a provision that would have forced lawyers to alert authorities to suspicious transactions by their clients. The move or lack thereof made by the Federal Government was another victory for law groups across the country, which won an injunction against the new legislation clause. The Canadian Bar Association sucessfully argued that such clause would threatened solicitor-client privilege.

As the reporter of the Vancouver Sun stated: "This leaves a gaping hole in the terrorist financing regime since lawyers often act as facilitators for money-laundering, setting up shell companies and serving as conduits for transfers to offshore tax havens beyond the reach of regulators. What all this amounts to then is a public relations exercise to demonstrate to the worldwide intelligence community that Canada takes these matters seriously.".

In the matter of Paul H. Cody --the subject featured on this site -- his lawyers can continue doing easy transactions for him while collecting their 7% of commission.

The Fraudster

Unlike Canada, the USA, the rule of Solicitor-client privilege appears to not fit with the crime of fraud. This means that criminals from the USA, like Cody, would have a hard time parking their dirty money in the USA without being eventually caught.

For instance, the crime-fraud exception can render the privilege moot when communications between an attorney and client are themselves used to further a crime or fraud. In Clark v. United States,the US Supreme Court writes that "A client who consults an attorney for advice that will serve him in the commission of a fraud will have no help from the law. He must let the truth be told."

The crime-fraud exception also does not require that the crime or fraud discussed between client and attorney be completed to be triggered. US Courts have not yet conclusively ruled how little knowledge an attorney can have of the underlying crime or fraud before the privilege detaches and the attorney's communications or requisite testimony become admissible.

It begs the question as to why the USA, who has been dictating Canada for numerous years, is not demanding for stronger laws with money laundering? In effect, why would the USA not intervene in matters dealing with terrorists and dirty money and not let lawyers in Canada have their cake and eat it too?

Perhaps dirty money from criminal organizations must be parked somewhere other than the USA and Canada seems like the perfect haven close to home.

Click on Vancouver recent Article Terrorism and dirty money.

Click on the Sucess of Lawyers in Keeping Money Laundering Hidden from Authorities

Click and read the following:

Lawyer Martin Chambers

More on Lawyer Martin Chambers

Some More on Lawyer Martin Chambers