Casino loophole lets criminals launder cash, RCMP fear
An RCMP probe into a southern Ontario drug trafficking ring has exposed a loophole in the province's casino system that police fear criminals are exploiting in a bid to launder the proceeds of crime.
Called Project Ozzi, the 2004 RCMP investigation broke up a drug trafficking ring involving cocaine and ecstasy in the Toronto and Kitchener areas.
RCMP investigator Cpl. Joe Peel says suspects linked to the ring were frequent players at Casino Rama, outside of Orillia, Ont., and Mohawk Racetrack, west of Toronto. They would play as much as twice a day, often depositing $9,000 into the slot machines each time, said Peel.
"They would go in, under the threshold of $10,000, play various machines and then, at some point, cash out, get the little stubs from the machines … and then ask for a cheque," said Peel, who is with the force's proceeds of crime section.
Peel said the players were careful to make sure most transactions fell below $10,000 — the amount that's supposed to set off alarm bells among casino staff. Under provincial and federal laws, casinos are required to report cash transactions of $10,000 or higher to the federal agency that monitors suspicious movement of money — the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).
Peel said members of the organization would then deposit the official casino cheques into bank accounts.
"They were trying to legitimize … trying to clean or cleanse the money … is the best way to put it," said Peel. "[Take] the dirty money from the drugs, [gamble it] through the casino … get a cheque and then put it in a bank account. That was the process."
"The process of laundering the money doesn't always rely on winning. It can be just playing it and then checking out. Actually getting a cheque from that institution," he said.
Plea deal with ringleader
Peel said he suspected an apparent casino connection after a 2005 bail hearing for Lenard Ro, the man later convicted of leading the Toronto-Kitchener drug ring. At the hearing, Ro's mother told the court much of her family's cash came from casino winnings — more than $100,000 for one month alone. She brought along casino receipts as proof, telling the court she was a very successful gambler.
Peel said after learning of that testimony, he was struck by how simple it would be to launder money through slot machines.
"It seemed too easy, to launder money through the casino. Really, it bothered me at that point, how easy it was," said Peel. He said he suspected people linked to Ro's organization had funnelled anywhere from $3 million to $5 million through casinos to get the official cheques.
In an e-mail to CBC News, Ontario Lottery and Gaming Corporation (OLG) said their transaction records show the amount of money issued by casino cheque to people linked to Ro's organization is "far lower" than the RCMP estimation of $3 million to $5 million. The e-mail arrived late Friday, even though the organization has been aware of the story for several weeks.
RCMP later charged Ro's mother, brother and father with money laundering, but the charges were dropped against the three family members when Ro struck a plea bargain and pleaded guilty to masterminding a drug and money laundering operation.
The CBC tried to reach Ro but his lawyer did not return phone calls. Messages left for his mother were not returned.
OLG told the CBC that Ro's mother appeared to be a good customer and didn't fit the profile of money launderer.
RCMP warned to back off
Peel said when he approached OLG about possible money laundering at casinos, the organization's vice-president of security, Mike Sharland, told him to back off. Peel said he was shocked by Sharland's response.
In 2007, Sharland was the subject of a separate Toronto police investigation into allegations of obstruction into a criminal investigation at OLG concerning an Ontario man who was duped out of his winning lottery ticket. Police found no evidence to indicate Sharland interfered with the criminal probe, but did conclude the secondment of a senior OPP officer to OLG "did create a conflict of interest." Shortly after the report was issued, the OPP decided to stop seconding its officers to head security at OLG. Sharland retired from the OPP last March, and from OLG four months later.
"I didn't record our conversation, but basically, [I] was told to look somewhere else and get off his turf, that sort of thing," said Peel. "I didn't get very good vibes from him. Let's put it that way."
Sharland, who was also pulling double duty as a serving OPP chief superintendent during the time he worked as the head of OLG's security, told CBC News he couldn't recall the conversation.
"All the time that I was either at the AGCO [Alcohol and Gaming Commission of Ontario] or OLG, we always co-operated fully with any outside police agencies," he said.
Peel says he doesn't know the extent of money laundering in the province's casinos, but says the loophole shows the potential for greater problems.
"I would hope it was an isolated incident. I doubt it. I'm sure many other criminals out there know as much as Lenard Ro and are doing the same thing," said Peel.
With files from Dave Seglins