A Vancouver company led by former lawyer Fred Sharp created more Canadian-linked offshore companies using Mossack Fonseca than any other Canadian middleman, and stood up for a convicted fraudster, according to a joint CBC News/Toronto Star investigation based on the Panama Papers.
The leak has shone a spotlight on the "enablers" of the offshore banking world.
International protocols expect that those who create offshore companies will screen their clients to weed out tax evaders, fraudsters and terrorists.
Sharp's company, Corporate House, which operates overseas using a company called Bond and Co., is known as the go-to investment firm for wealthy Canadians who want to keep assets private and use offshore tax havens to minimize their tax burden, according to sources in the wealth management industry.
Sharp would later register an offshore company that would be used by the same prolific fraudster who cost him his legal career.
Mossack Fonseca's Canadian rep
Sharp helped register 1,167 offshore entities from his Vancouver office, according to documents in a massive leak from the law firm Mossack Fonseca, obtained by the International Consortium of Investigative Journalists and shared with the CBC and the Toronto Star.
Tax avoidance is not necessarily illegal, and many offshore entities are set up for legitimate businesses. Sharp became Mossack Fonseca's Canadian representative in 1994.
"Referrals of Canadian [clients] must be made to Corporate House" (Sharp's company) say internal instructions for the Panamanian lawyers.
Destroy invoices, don't send mail to Canada
The documents also show that measures were taken to minimize a paper trail to Canada, as staff at Mossack Fonseca were also forbidden from sending certain financial records to Vancouver.
"Do not sent [sic] any annual invoice nor statement of account to the client by email, neither by fax, nor air mail," it instructs.
"Printed invoices or statement of accts should be destroyed," the documents say.
"For me that's a red flag. They do not want any paper trail coming back to them," said Kim Marsh, a former RCMP fraud investigator who now works in risk management.
Server hosted in Panama
The leak also contains a 2006 receipt showing Sharp's company paid Mossack Fonseca $15,000 to buy and host a server in rented office space at their Panama office.
Marsh says that makes executing a warrant difficult.
"By the time you get there, information disappears. It buys time," Marsh said.
Law society suspension linked to fraudster
Mossack Fonseca has repeatedly said it does not do business with criminals, and that it expects the middlemen they deal with to notify the company if any of their clients are convicted or listed by a sanctioning body.
However, details in the Panama Papers lead to the discovery of links between one of the offshore companies Sharp registered, and a prolific fraudster.
Sharp was suspended from practising law in B.C. in 1995 after he admitted to professional misconduct for "knowingly taking instructions" from a director disqualified "because of a criminal record for fraud."
After a one-year suspension, Sharp never rejoined the B.C. Law Society.
Doing business with convicted fraudster
But it seems Sharp's connection to Mitton did not end with his suspension from the law society.
Sharp registered a company called Great Northwest Capital Corporation for two men who say it was Mitton who brought them to Sharp's Vancouver office to sign documents.
"He had us as nominees for him but us not realizing what he was doing or what it was for," says Charles Wiebe.
Vancouver lawyer Barry Holmes recalls the meeting, where Mitton directed Sharp on the creation of the company.
Holmes says it is standard practice for lawyers to have their names on their clients' corporate records.
"What the client does with [the company] once the incorporation part is over, who knows?"
A year after Great Northwest was created, a memo alerted Mossack Fonseca that the RCMP were asking questions, alleging Mitton "used Great Northwest Capital Corporation to perpetrate a $2.1 million fraud" against a brokerage firm in the Isle of Man.
Sharp defends 'professional swindler'
That prompted a call to Sharp. At this point, if Sharp didn't see red flags before, police were now alleging fraud.
Notes in Spanish of the conversation say Sharp advised Mossack Fonseca that "in his mind there is no existence of fraud," and this was a civil matter.
Four years later, Mitton pleaded guilty to six counts of fraud, totalling $2.4 million, involving brokers in Canada, U.S. and the Isle of Man.
The judge declared him a "professional swindler" and sentenced him to four years in prison.
Mitton now has more than 110 convictions and was recently arrested in Quebec.
If someone like Mitton can get an overseas account, more oversight is needed, say experts.
"That sort of activity screams red flag and screams investigation necessary," said Dan Zitting, a former auditor who now works with ACL, a Vancouver tech company that helps banks and governments catch fraud.
"If that's the case, it certainly looks really bad` he said.
Sharp defends 'offshore world'
Reached by phone on April 28, Sharp declined an interview request.
By May 3 the phone number at Corporate House was disconnected.
"This was decided last year when it [Corporate House] stopped maintaining an office, a decision unconnected with your activities," said Sharp in an email to CBC News and the Toronto Star.
"I cannot speak accurately to your various queries as you have provided no evidence regarding events that may or may not have occurred 20 years ago," wrote Sharp.
"Tax planning is a global reality that results from international competition and inefficient governmental regulation … and is legal," said Sharp, who pointed out that stealing a law firm's private files is not.
"When will the thief be revealed?" said Sharp.
A visit to his Melville Street office tower shows the sign on the door now says Lake House Group.
When asked if this was Corporate House, a man said, "Yes, we just changed our name a while ago because Fred would rather be at the lake."
CBC News Investigates
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