Drug and money laundering investigation ‘Operation Mad Money’ has links to GTA properties, documents show

A study of drug and money laundering called “Operation Mad Money – which stretched from Toronto to British Columbia to China – has shown links between the illicit sale of marijuana and Toronto’s booming real estate market,” CTV News Toronto has learned.

The investigation, led by the Calgary Police Service, is part of an attempt to seize millions in what authorities claim are drug profits that ended up in money-generating businesses in the Greater Toronto Area that passed them on to people trying to buy homes.

And it could be the tip of the iceberg, says a retired Royal Canadian Mounted Police officer and money laundering expert. In an interview, Garry Clement Ontario should follow in BC’s footsteps and convene a public inquiry to assess the impact of money laundering on the real estate market.

“We know this is going on, we know money is coming into the province. All you do is look at the number of condominiums that are vacant,” Clement said.

“Canada really needs to sit down and realize that we are still a very weak link. This case shows that we have a long way to go. “

The investigation started with a Calgary police officer buying marijuana from sites called BudExpressNow and Cheapweed, says a proposal filed in the Ontario Superior Court.

marijuana, calgary police

Legal documents claim that the sites did not have a license to sell, and an investigation revealed that they had more than $ 3 million in business through multiple feeder accounts, accepting electronic bank transfers with explanatory notes, including “weedguy” and “ed and bills. “

Police saw money being deposited into bank accounts in Edmonton, tracing some of them to three properties outside Vancouver, where they say they were used to pay $ 1.38 million in electricity bills.

The properties had Health Canada licenses to grow about 5,000 marijuana plans, but a police raid in 2020 counted nearly four times as many.

BC’s Office of Civil Forfeiture is applying to seize these properties.

In Ontario, authorities in documents filed with the Superior Court claim that the alleged profits from the operation ended up in the control of money service companies in the Toronto area, which authorities say sent money in Canada to Chinese nationals interested in buying real estate in Toronto.

In return, Chinese citizens repaid the money in China, the documents state, pointing out that this is a way of circumventing currency controls in China that prevents money from being easily withdrawn from the country.

Ontario’s Attorney General is now seeking to seize about $ 3.7 million in bank accounts that it says contain money from the sale of marijuana.

“The pattern of deposits in those accounts, including the frequent, large deposits in round figures, is evidence of illegal activity,” the lawsuit states.

“The contents of the accounts surveyed consist wholly or partly of proceeds from illegal online cannabis sales and / or are money laundering instruments.”

The allegations are in civil courts, which rely on a lower standard of proof than the criminal court. Nothing has been proven and a judge is considering the case now.

A lawyer for the recipients of the money told a recent court hearing that they believed that everything was legal and that they had no idea that the money deposited in their accounts could come from marijuana without a license.

“The respondents were not in any way involved in the alleged illegal acts that were apparently committed by unknown perpetrators,” said attorney William E. Peppall.

“This is not a case of a criminal, a criminal or a criminal culprit. The respondents are innocent bystanders who, for legitimate reasons, bought Canadian currency at fair market value in exchange for their Canadian currency, which was earned through legal means,” he said. said.

Clement, the money laundering expert, says the alleged scheme has much in common with a scheme in BC where drug money was laundered through government-licensed casinos and poured into real estate – so much so that a government report found it responsible for a five per cent increase in prices.

The BC government called a public inquiry known as the Cullen Commission. Clement said a public inquiry may also be needed in Ontario.

“This shows that we have many gaps in our system,” he said.

FINTRAC, the federal agency that tracks money laundering, says it has conducted 276 investigations in the past three years and 700 real estate transactions in the past five years.

The agency says it has issued nine infringement notices of non-compliance, five in the real estate sector for $ 143,219, two in the cash service for $ 143,219, and two in retailers of precious metals and stones for a total of $ 272,910.

The agency said the money service company identified in the lawsuit is registered, but it could not share anything it would have revealed to police about the case.

The Treasury Department told CTV News Toronto in a statement that it had invested $ 98.9 million over five years to improve the RCMP and strengthen its foundation to help combat money laundering and identify the proceeds of crime.

“New Integrated Money Laundering Investigation Teams (IMLITs) will be set up in British Columbia, Alberta, Ontario and Quebec, bringing together expertise from a variety of agencies to deal with high-profile cases and promote money laundering and the benefits of criminal investigations throughout. the country, “said a spokesman.

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