Millions sought from Vancouver company accused of processing mail fraud payments
Civil forfeiture suit comes after U.S. lifted PacNet's 'transnational criminal organization' label
Months after the U.S. Treasury lifted a label placing Vancouver's PacNet Services alongside some of the world's most violent criminal organizations, the payments processor is facing a lawsuit from B.C.'s Director of Civil Forfeiture.
The B.C. Supreme Court notice of civil claim alleges PacNet deals with companies "it knows are engaged in unlawful predatory mail-fraud schemes, primarily targeting the elderly and vulnerable."
The documents specifically cite an international scheme which saw victims send money to psychic 'Maria Duval' in exchange for promises of good fortune.
"PacNet has processed payments relating to millions of fraudulent and deceptive multi-page solicitations sent to hundreds of thousands of victims and potential victims throughout Canada, the United States and the world," the claim reads.
"The amounts collectively paid by the victims is estimated to be in the hundreds of millions of dollars."
The lawsuit against PacNet, founder Rosanne Day and five other people is the latest twist in a situation that made international headlines in September 2016.
At that time, the U.S. Treasury Department designated PacNet and 12 individuals a "significant transnational criminal organization."
The label referred to a 2011 presidential executive order concerning threats to American national security, foreign policy and economic interests. Other designees included the Japanese Yakuza, Mexico's Los Zetas and the Italian Camorra.
But last October, the Treasury Department lifted the designation.
In subsequent media interviews, company officials said the announcement "obliterated" PacNet.
Paul Davis, the company's general counsel, told an Isle of Man radio station that the business was "utterly destroyed."
"All of us have lost financial relationships, all of us have suffered income-wise," Davis told Manxradio. "But some people have also taken mental damage and there were suicide attempts."
'Cover' for unlawful operations
In U.S. district court documents filed in New York, lawyers for the company described the criminal organization designation as "ill-considered, incorrect and contrary to law."
The documents claim PacNet boasted a roster of 700 clients, including Bloomberg Business Week and the Special Olympics British Columbia Society.
"A minority of PacNet's business pertained to merchants that distributed direct-mail promotions involving sweepstakes or astrological information," the company claimed.
The U.S. documents insist PacNet maintained a strict compliance program and regularly reported suspicious companies and transactions to FINTRAC, Canada's watchdog against terror financing and money laundering.
In the B.C. Supreme Court lawsuit, the director of civil forfeiture claims otherwise.
"PacNet has attempted to create an appearance that it has engaged in a broad-based spectrum of legitimate business activity, of which only a small portion is illegitimate," the civil claim reads.
"In fact, (the director of civil forfeiture) says that all or substantially all of PacNet's proceeds come from the unlawful activity ... and that any 'legitimate' sources of revenue have been deliberately established as a cover for its otherwise unlawful operations."
CBC story raised red flag
On Wednesday, the director of civil forfeiture was granted an order to freeze numerous bank accounts associated with the company and its directors.
The application for the order says Vancouver police have been investigating PacNet and its alleged involvement with direct mail schemes targeting Canadian citizens since October 2016.
The court documents include a letter from FINTRAC from last February warning PacNet that its level of non-compliance with the requirements of anti-money laundering laws was "very significant."
The letter cites a situation involving a PacNet client which arose as the result of a CBC Go Public story about seniors who noticed that they had been charged $19.90 a month for four years by a 1-800 number company.
"FINTRAC'S review of the article and of your client's transactions demonstrated that the entity in the negative news article is in fact a 'payee' of your client," the letter says.
"Additionally, the transactions conducted contained suspicious activity and reasonable grounds for suspicion; however your organization did not report these transactions to FINTRAC."
The director of civil forfeiture claims Day and the others have used unlawfully gained money to purchase properties in Vancouver, Gibsons, West Vancouver, Keats Island and Delta.
Day did not respond to a call for comment.
None of the allegations have been proven in court.