Ontario casino regulator probing whether B.C. casino staff were connected to money-laundering suspects

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While the RCMP’s massive E-Pirate money-laundering investigation in B.C. has collapsed, Ontario’s gambling regulator is continuing to look into whether employees of Richmond’s River Rock Casino were connected to Chinese VIP gamblers and alleged loan sharks targeted in RCMP anti-gang investigations related to E-Pirate.

As Global News has reported, Crown prosecutors stayed charges in November in E-Pirate, a case against an alleged Richmond underground bank estimated by international anti-money-laundering officials to be laundering over $1 billion per year, when prosecutors mistakenly exposed the identity of a police informant whose life was judged to be at risk if the case proceeded.

However, related RCMP investigations into the alleged Chinese organized crime suspects at the centre of E-Pirate, continue.



Exclusive: Documents allege complicity in money laundering in major investigation of River Rock Casino

And documents obtained by Global News through freedom of information show these suspects are of interest to Alcohol and Gaming Commission of Ontario (AGCO) investigators, who opened the investigation in 2017 after Great Canadian Gaming was awarded a number of lucrative contracts in Ontario, including a major gaming expansion at Toronto’s Woodbine casino.

AGCO investigators wanted to understand whether River Rock casino employees allowed suspect gamblers to launder money with casino chip purchases.

The AGCO regulatory review “remains open,” spokesman Ray Kahnert said.

WATCH: Charges stayed in Canada’s biggest drug-money-laundering investigation






Scope of Ontario regulatory probe

The “initial scope” of the Ontario investigation into Great Canadian Gaming, according to a 2018 memo, focused on two factors: a “share sell-off” of Great Canadian Gaming stock, and reports in the Vancouver Sun about a suspicious $200,000 cash transaction that allegedly involved a “banned patron,” a Chinese VIP gambler, and a River Rock “VIP salon” host.

Great Canadian Gaming executives were not available for interviews.

In a prepared response for this story, the B.C.-based gambling company stated it strictly complies with rules from all regulators, and “we are not aware of any investigation into our gaming registrations in any jurisdiction, outside of the normal registration and audit processes.”

“Great Canadian Gaming mandates strict compliance to prescriptive rules for the sale of shares by company insiders, and we advise that we are not aware of any inappropriate share trading activity in that regard,” the statement said.

The AGCO employed Ontario Provincial Police Det.-Const. Dan MacDonald for the regulatory probe and tasked him with investigating the River Rock VIP host transaction. He was also to liaise with “RCMP concerning the River Rock Casino [and] any other related investigation.”

“As you likely know, Great Canadian Gaming has bought a few casinos here in Ontario … now I am supposed to find out what is going on in B.C.,” MacDonald wrote to Kenneth Ackles of B.C.’s anti-gang and anti-illegal gaming unit. “I know there are massive restrictions on what you can advise me.”

B.C. gaming investigation of VIP program and targets identified by RCMP

One of the concerning factors highlighted in the River Rock VIP case that is under investigation by Ontario regulators is large amounts of high-value Lottery Corp. chips leaving the casino, without being bet — often an indication of money laundering.

Emails show MacDonald, the OPP detective, sought information from RCMP’s Joint Illegal Gaming Unit (JIGIT) and B.C. gaming enforcement special Const. Scott MacGregor, an intelligence expert with access to police files regarding the alleged organized crime networks that RCMP investigators believed were active at River Rock and illegal casinos in Richmond.

The JIGIT investigation was launched in May 2016 and focused on Chinese Triad suspects allegedly laundering drug and loan sharking proceeds through Metro Vancouver casinos, and running underground casinos in Richmond. Nine suspects were arrested and the case is now in the hands of Crown prosecutors. Court files on JIGIT investigation targets have been sealed, and it’s not known whether the nine suspects have been charged.

Emails between the B.C. special Const. MacGregor, and the Ontario Det.-Const. MacDonald, show that they communicated about the case. The details of what MacGregor and MacDonald discussed are not clear, due to redactions.

However, a B.C. gaming intelligence report obtained by Global News sheds light on how MacGregor viewed the River Rock VIP host case, and suspected connections with a network of players identified in the E-Pirate and JIGIT probes.

What the RCMP alleged in these investigations, is that loan sharks in Richmond with ties to China-based gangs, recruited ultra-wealthy Chinese gamblers from Macau, met them in parking lots near River Rock casino, and provided the high-rollers with hockey bags stuffed with cash from drug-trafficking and loan-sharking. The VIPs, including suspected gang bosses, bought chips with these cash “loans” that were later paid back to drug-trafficker bank accounts in China.


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MacGregor’s 11-page gaming intelligence report is entirely redacted to protect police investigations, except for several paragraphs that explain MacGregor’s view that the River Rock VIP case was “highly suspect.”

“There was a large third-party buy-in this month where a brand new patron walked in with $200,000 in $100 bills and waited to receive chips. Once the chips were delivered the patron left the casino without any play,” MacGregor’s report states. “This incident is being investigated for regulatory infractions at the RRCR … This incident is highly suspect and the ongoing Gaming Policy Enforcement Branch investigation into this matter is the first step, in identifying the correlation of connections between service provider staff, local patrons, foreign patrons, and illicit activity.”

The case highlights concerns that unusually high numbers of $5,000 chips had flooded out of River Rock Casino since 2015, according to documents, and that JIGIT was investigating whether these chips that were connected to E-Pirate targets, were also used in Richmond’s illegal casinos.  And B.C. Civil Forfeiture case filings show that RCMP say they seized over $17,000 worth of River Rock casino chips from the alleged Richmond underground bank targeted in E-Pirate.

River Rock’s ultra-lucrative VIP gambler program — which relied on private high-limit betting rooms, large cash transactions, and cultivation of wealthy Chinese patrons — was developed and run by Great Canadian executive Walter Soo. Soo is reportedly no longer working at River Rock, but is in Toronto, working to set up Great Canadian’s new gaming programs at Woodbine Casino.

“We don’t provide details specific to any of our employees, but members of our corporate team have responsibilities that pertain to all 28 Great Canadian Gaming properties located across North America,” a company spokeswoman said, in response to questions about Soo.

Soo has not responded to interview requests from Global News, and his former LinkedIn professional profile appears to have been removed from public view. There has been no allegation that Soo himself has been involved in any unlawful activities or transactions.


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B.C. Lottery Corp. probe of casino employees and illegal casinos

Documents obtained by Global News in a request for information about E-Pirate raids, shed further light on the E-Pirate probe, and how B.C. Lottery Corp. investigators looked at potential connections between River Rock VIPs, casino staff and alleged loan sharks — the same nexus of potential connections that AGCO investigators are seeking information on.

The documents show that in August 2015, a Lottery Corp. casino investigator learned of suspicions that registered casino dealers may have been paid up to $8,000 per week by illegal casino operators in Richmond to work “on the side.”

The information was related to advertisements for casino dealers on a Vancouver-area Chinese-language website.

The investigator wrote, “no current dealers at RRCR have been named that I’m aware of … [but] wanted to forward the link and advise that current casino dealers may be working here on the side.”


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The documents are redacted, but point to suspects and addresses that were later raided by the RCMP.

The redacted documents says investigators also learned of “stories of unnamed players talking openly in River Rock VIP Salon about what a nice job ‘they’ did decorating their ‘high limit room.’ Apparently players are gambling amounts upwards of $500k.”

The intelligence suggested that B.C. Lottery Corp. had information in 2015, that some of River Rock’s highest rollers were running Richmond organized crime casinos on the side.

“Some good stuff here,” another Lottery Corp. investigator responded, in an email. “Somewhat confirms our other intel.”

The AGCO is aware of the “matters” revealed in documents obtained by Global News but is not currently investigating whether River Rock staff were found to be working “on the side” in alleged organized crime underground casinos, an AGCO spokesman said Friday.

Ontario looks for answers from B.C. investigators

The AGCO emails make clear that Ontario Det. MacDonald sought information from the RCMP. But it is not clear if he got any information in return.

In response to questions about whether RCMP is sharing information from E-Pirate and the related JIGIT investigation with the AGCO, Staff-Sgt. Tania Vaughan said, “We do not discuss ongoing police operations.”

Documents also show MacDonald was given access to some details from the B.C. gaming probe of River Rock casino staff, but there were limits.

A mostly redacted April 2018 message from B.C. investigator Richard Akin to MacDonald says: “I just want you to know that there is no issue at our end re: trust … [But] My police background tends to make me paranoid when it comes to these situations and any possible push back … I would rather have a high level summary as I believe it would address your outfit’s concerns and mine.”

“Ok man. You kind of scared me a bit,” MacDonald replied. “I will go with whatever you give me.”

sam.cooper@globalnews.ca

© 2019 Global News, a division of Corus Entertainment Inc.

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B.C. regulator says fracking caused earthquakes near Fort St. John

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The B.C. Oil and Gas Commission has blamed fracking for three earthquakes in northeastern B.C. last month.

The provincial regulator says the events 20 kilometres south of Fort St. John on Nov. 29 occurred because of fluid injections during hydraulic fracturing at a Canadian Natural Resources wellsite.

The events, which were felt but caused no surface damage, measured 3.4, 4.0 and 4.5 magnitude.

Fracking operations within the lower Montney formation, a major shale oil and gas resource near the B.C.-Alberta border, were suspended after the earthquakes and are to remain suspended at the multi-well pad, pending the results of a detailed technical review.

The commission says seven wells into the upper Montney formation had previously been drilled and completed by the Calgary-based company with no seismic events larger than magnitude 2.5 detected.

The immediate shutdown of operations is required when an induced seismic event in that region reaches or exceeds a 3.0 magnitude.

Hydraulic fracturing involves injecting water, sand and chemicals into a well under pressure to break up tight underground rock and free trapped oil and gas.

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Regulator halts fracking operations in northeastern B.C. while it investigates earthquakes

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The B.C. Oil and Gas Commission is shutting down oilfield fracking operations for at least 30 days in an area of the province’s northeast while it investigates earthquakes that occurred there on Nov. 29.

The regulator says the seismic events measuring between 3.4 and 4.5 magnitude took place near hydraulic fracturing operations being conducted about 20 kilometres southeast of Fort St. John by Calgary-based Canadian Natural Resources Ltd.

It says the company immediately suspended that work and it won’t be allowed to resume without the written consent of the commission.

According to Natural Resources Canada, the 4.5 magnitude earthquake was felt in Fort St. John, Taylor, Chetwynd and Dawson Creek but did no damage. It was followed by two smaller aftershocks.

Hydraulic fracturing involves injecting large amounts of water, sand and chemicals into a well to break up tight rock underground and allow trapped oil and gas to flow.

The technology, along with injecting oilfield liquids into disposal wells, have been linked by the B.C. commission to previous incidents of « induced seismicity, » although it notes on its website none of the events in B.C. have resulted in hazards to safety or the environment or property damage.

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Alberta Energy Regulator executive found billing for travel from B.C. residence

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A second executive with the Alberta Energy Regulator is billing the organization for travel expenses because the person is living in B.C.

The AER tells CBC News its board of directors wasn’t aware of the situation. The AER is the single regulator of energy development in Alberta — from application and exploration, to construction and operation, to decommissioning, closure and reclamation.

Since May, Jennifer Steber has expensed flights, taxi trips and other costs to go to work at the AER from her residence in B.C. Her expense claims also include mileage on her vehicle driving from her B.C. residence to the Penticton airport in B.C’s Okanagan Valley. Steber is part of the executive team at the AER.

A snapshot of Steber’s expense claim shows travel from her residence in B.C. to the AER offices in Edmonton and Calgary. (AER expense claims)

The discovery comes after the Alberta government expressed its disappointment with the regulator for reimbursing CEO Jim Ellis’s travel from B.C. 

Former CEO got expenses to come to meetings

CBC News counted nearly 50 trips, mostly return airfares between Calgary and Penticton, to transport Ellis for the express purpose of attending AER meetings. A tally of those flights shows costs topping $14,600, not including airfare change fees and other travel expenses. Ellis has since retired.

According to the regulator, Ellis authorized Steber to file expense claims from her residence in B.C.

« This travel arrangement was approved by the AER’s previous CEO, Jim Ellis, » said Bob Curran, a spokesperson for the regulator, in an email. « The AER board of directors has just become aware of this issue and has ordered a thorough review of practices inside the AER to determine what corrective action is required. »

There is no indication from her expenses about where in B.C. she lives, however a property registry search shows Steber is listed as one of the registered owners of a house in Osoyoos, located 60 kilometres south of Penticton.

The AER lists Steber’s salary as $373,547 in 2015.

The provincial government sets the budget for the AER, but the oil and gas industry itself funds the regulator through administrative fees.

According to the regulator, Steber is currently on vacation and couldn’t be reached for comment.

Jennifer Steber’s expense claims include ‘personal mileage’ as she drove from her B.C. residence to the Penticton airport in B.C’s Okanagan Valley. (AER expense forms)

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Top court clears path for national securities regulator but political battle looms

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Securities industry experts are applauding a Supreme Court of Canada ruling clearing the path for a national securities regulator.

But they say there’s still a long way to go before it actually happens — and Quebec is already promising to go it alone.

Canada is the only G20 country without a national securities regulator.
Canada is the only G20 country without a national securities regulator.  (Randy Risling / Toronto Star File Photo)

In a unanimous ruling released Friday, the Supreme Court said the federal government and the provinces have the power to set up a national regulator, overturning a Quebec court ruling.

The court also said draft federal legislation for a new regulator is constitutional.

However, the court also said it is up to the provinces and territories whether being a part of a national regulatory system is in their best interests.

Canadian businesses have been pushing for a national regulator for decades, saying it would make financial markets more efficient, and lower the cost of doing business in this country.

But while the legal path might be cleared, the political one is much bumpier, warned Stephen Foerster, professor of finance at the Ivey School of Business at Western University.

“This has really always been about politics,” said Foerster, noting that governments of varying political stripes have been pushing the issue for decades, often half-heartedly.

Even if they might agree with a national regulator in theory, cold, hard political calculations might dictate other actions, Foerster said,

“Do they want to be seen as picking a fight with other provinces and their finance ministers?” Foerster asked. It’s also not an issue that resounds particularly easily with the ordinary person in the street, even though people’s investments — including their RRSPs and Canada Pension Plan — are at stake.

“It might not be a headline grabber, but it’s still important,” said Foerster, a view echoed by Anita Anand, the J.R. Kimber Chair in Investor Protection and Corporate Governance at the U of T faculty of law.

“This is not just something for the world of finance. This is something that matters to every single Canadian who has any kind of investment,” said Anand.

Even though she supports Friday’s ruling as a step toward a national regulator, Anand says she’d prefer to see the draft federal legislation include an investor advisory panel, as currently exists in Ontario.

“An investor advisory panel is a very important part of investor protection,” Anand said.

In provinces and territories that choose to take part in a national regulatory system, companies wouldn’t have to comply with multiple sets of often-similar regulatory paperwork and legal requirements.

“This will create greater market efficiency,” said Anand.

“It can be cumbersome to have different sets of regulations,” said Foerster, pointing out that Canada is the only G20 country without a national securities regulator.

Having to deal with duplicate regulations is expensive, meaning companies should eventually see a reduction in the cost of doing business.

Still, that might not be the case for Quebec-based companies, given provincial finance minister Eric Girard’s vehement opposition to the idea of a national regulator.

“We understand the decision rendered by the Supreme Court of Canada, but we intend to keep our autonomy and our expertise in Quebec. The financial sector is highly strategic, and we will keep all of our autonomy,” said Girard in a written statement.

That kind of tough talk might play well at home, but it could hurt Quebec’s economy in the long run, warned Foerster.

It might not hurt existing companies too much, but would make the province a less appealing place to do business.

“It wouldn’t affect existing companies in Quebec as much as it would affect new companies looking at whether to set up there,” Foerster said.

Josh Rubin is a Toronto-based business reporter. Follow him on Twitter: @starbeer

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Alberta regulator apologizes for spooking public with $260-billion cleanup cost estimate

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The Alberta Energy Regulator is apologizing for a “staggering” presentation, made last February by one of its highest-ranking officials, that warned the province’s oilpatch that it could be sitting on an estimated $260 billion in financial liabilities.

The details of the presentation, made by the regulator’s vice-president of closure and liability Robert Wadsworth, riled up the Alberta and federal legislatures when made public in a report on Thursday by National Observer, Global News, the Toronto Star and StarMetro Calgary.

The estimated liabilities Wadsworth cited in his February presentation are $200 billion greater than the previous calculation made public by the regulator. The AER had previously said the cost was just over $58 billion.

The joint media report, based on speaking notes released through Freedom-of-Information legislation, revealed Wadsworth’s thoughts on the “flawed” nature of Alberta’s oversight. He warned the industry to prepare for tougher rules cracking down on a growing number of inactive sites.

Wadsworth has declined to give an interview about his remarks. The regulator said earlier this week in a statement that the estimates he released were based on a worst-case scenario involving a “complete and immediate” shutdown of the entire industry.

“We want to apologize for the concern and confusion that this information has caused,” the statement reads. “The numbers are staggering: $260 billion in total liability, which is $200 billion more than we have consistently reported. This particular estimate was created for a presentation to try and hammer home the message to industry that the current liability system needs improvement.

“While the message to address liability is important, the numbers were not validated and were based on a hypothetical worst-case scenario. Using these estimates was an error in judgment and one we deeply regret.”

That statement appears to be at odds with Wadsworth’s presentation, which stated multiple times that the $260-billion figure was likely to be a low estimate.

The $58-billion calculation, according to Wadsworth’s presentation notes, is based on self-reported numbers from industry. The $260-billion estimate, meanwhile, was “calculated internally” by AER’s own experts.

The AER said Thursday that its earlier, public figure of $58.65 billion was an “AER-verified” calculation of current liabilities.

When asked whether it disagreed with the presentation, the regulator would only say the higher estimate had “not been validated by the AER.”

Wadsworth also warned that provincial officials needed to act quickly to ensure taxpayers were not left on the hook for the liabilities, since companies had only submitted about $1.6 billion in security deposits to cover the cost.

The liability estimate factors in the costs of shutting down and cleaning up oil-and-gas sites at the end of their usefulness. That includes inactive wells, pipelines and tailings ponds in the oilsands.

Pressed by journalists to respond to the report, Alberta Premier Rachel Notley noted that the problem was significant.

She said the liabilities would be hard to address amid the “biggest oil price drops in generations,” adding that company practices have improved, but after decades of buildup, the existing problem is “not one that we can fix overnight.”

“The issue has always been one that is of concern to us,” Notley said. “It’s actually a matter that I raised with the provincial government well before we were in government — back when I was in opposition.”

United Conservative Party Leader Jason Kenney declined to comment on the investigation’s findings.

However, UCP MLA Jason Nixon said his party will likely have more to say about the issue ahead of Alberta’s upcoming provincial election, scheduled for spring 2019.

“Regulations were behind when our industry started, and there’s going to be some creative ways that governments in the future are going to have to look at tackling,” Nixon said. “I don’t have an answer for that today.”

The issue also came up during Question Period in the House of Commons on Thursday, as federal politicians sparred over the investigation’s findings.

Alexandre Boulerice, NDP MP for Rosemont—La Petite-Patrie, asked what it would take to get the Liberal government to take “real action” on climate change.

“That’s a hefty bill for pollution,” Boulerice said in French, referring to the estimated $260-billion price tag.

“When you have to take the Liberals to court to get them to take real steps on climate change, things must be pretty bad. Is that what the Liberals are waiting for? To be taken to court?”

The federal minister responsible for intergovernmental affairs disagreed.

“On the contrary,” responded Dominic LeBlanc. “We’ve shown that we would take climate change seriously. We have a plan that Canadians understand and that they know will make a real difference in the fight against climate change.”

In its new statement from Thursday, the regulator added that regardless of the estimates, it was still working directly with companies to introduce new requirements that improve oversight.

With files from Kieran Leavitt, StarMetro Edmonton

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