Nova Scotia

RCMP feared the 'reaching tentacles' of alleged lobster fraud scheme

Investigators looking into allegations of a multi-million dollar fraud in Nova Scotia’s lobster industry were concerned about the “reaching tentacles” of the scheme, according to a top RCMP officer in Nova Scotia.

Fisherman raises concerns that man at centre of fraud allegations was allowed to operate

Terry Banks has been charged with four counts of fraud and three counts of theft. (Facebook)

Investigators looking into allegations of a multi-million dollar fraud in Nova Scotia's lobster industry were concerned about the "reaching tentacles" of the scheme, according to a top RCMP officer in Nova Scotia.

The comments come as questions are being raised about how the lobster dealer at the centre of the allegations could continue operating for so long in the industry, despite a criminal record for financial crimes.

Last week, three people were arrested in what the Mounties call a "complex and sophisticated" operation that's alleged to have stolen $3 million in lobster and money from four seafood companies, including one in Taiwan.

The details of the case were first reported by CBC News.

On Tuesday, RCMP Supt. Martin Marin outlined the broader concerns RCMP had as they investigated case.

"Definitely concerned that if it had gone unchecked, or unaccounted for, that it could expand further," he said.

Fishing boats in Shag Harbour, N.S. (Richard Cuthbertson/CBC)

Court documents reveal the RCMP's main suspect early on was Shag Harbour, N.S., lobster dealer Terry Banks, 51. He faces four counts of fraud over $5,000 and three counts of theft over $5,000.

He's also got a criminal record and has served prison time for defrauding CIBC of $8 million. While out on parole, he stole $390,000 worth of lobster.

And that's why one fisherman in southwest Nova Scotia said he wants to know why Banks has been allowed to continue buying and selling lobster.

"My concern is how the regulators can allow repeat offenders to stay in business," said Graeme Gawn, president of Local 9 of the Maritime Fishermen's Union. "If going to prison for fraud isn't enough, what is?"

Lobster buyer's licence

In Nova Scotia, a fish buyer's licence is required to buy commercially from fishermen. It is not required, however, in order to purchase from other licensed buyers, according to the government's website.

Nova Scotia's Department of Fisheries has told CBC News that Banks himself does not have a buyer's licence. However, a company he was accused of operating, 3250385 Nova Scotia Ltd., did have one until March 2015.

The department declined an interview request Tuesday, but said in a statement that the fisheries minister has the authority to amend or terminate a licence where "information about a criminal conviction came to light."

Over the last two decades, Banks has bought and sold tens of millions of dollars worth of lobster. He's also exported extensively.

Due to appear in court Aug. 24

For instance, search warrant records related to the case say between 2013 and 2015, he exported 1.3 million pounds of lobster through 3250385 to China, Hong Kong, Taiwan, France, Spain and Italy. At the time, 3250385 had Canadian Food Inspection Agency permits allowing it to send lobster out of country, according to court records.

RCMP have alleged that Banks used the company, which was registered to a former employee, to do business. It's one of a series of companies he's accused of operating over the years. 

Banks's older brother, Wayne Banks, has also been charged with fraud and theft. A third man, Chris Malone, faces one count each of fraud and theft.

They are due to appear in Shelburne provincial court on Aug. 24.

With files from Information Morning