'Stop taking the money,' senior gambling investigator warned before he was fired: Cullen Commission testimony
VANCOUVER -- A flood of $20 bills into provincially regulated casinos convinced a senior investigator at B.C.’s gambling regulator that dirty money was washing through the system as early as 2009, a point of view he pushed until he was fired five years later, the investigator told B.C.’s Cullen Commission.
Larry Vander Graaf said the raise of maximum bets to thousands of dollars invited a criminal element that could be seen via loan sharks on the gaming floors and bags of cash, causing him to raise flags as the former executive director of investigations of the Gaming Policy Enforcement Branch.
“They were pulling up in cars out front. It was like a drive-in,” Vander Graaf told the commission Thursday. “In 2009, I was very concerned about the money laundering problem. I said, ‘Uh oh, we’re getting large amounts of money coming into the casino. That to me smells like drug money… we said if this was suspicious, you’ve got to stop taking the money.”
Vander Graaf said his agency decided to classify any deposit of $3,000 or more in $20 denominations in a 24-hour period “suspicious.” But he said his agency had no power without the support of the provincial ministry at the time, to direct casinos to turn that money away.
“I put this in there in 2009 and I was still preaching this in 2014,” Vander Graaf said. That was the year that he and his colleague, the senior director of investigations, were dismissed without cause and walked out of the building.
The Cullen Commission aims to better understand how money laundering flourished in B.C., including through B.C. casinos. Over days of testimony, the commission has heard about failures to stop business from prominent figures in organized crime, building on a previous report by former RCMP Deputy Commissioner Peter German.
Courts have heard that the amounts of money laundered reached into the hundreds of millions of dollars per year.
Cullen Commission lawyer Alison Latimer read an internal memo outlining how several high rollers were still offered “Patron Gaming Fund” accounts despite being viewed as suspicious.
“And it’s believed that these high-level players are being given extreme latitude violating these procedures, given that they are extremely high volume players,” she said.
“Yes,” Vander Graaf respondend.
“And that latitude was extended because fo the interest in the revenue generated by these players,” she said.
“Potentially, yes,” Vander Graaf said.
In 2009, BCLC raised the online gambling limit from $120 a hand to $9,999, on the grounds it would keep gamblers from going to new online gambling sites.
That created a major change in the industry, where loan sharking had always existed but was a low priority for law enforcement because the bets were so low, Vander Graaf said.
Problems between GPEB and the 12 RCMP officers assigned to work with them on the file meant they had to change tactics and rather than work directly together, they had to become a “co-ordinated approach,” he said.
But Vander Graaf said they weren’t personal problems between Joe Schalk and the RCMP commander at the time, Fred Pinnock.
Vander Graaf's testimony is expected to continue Thursday and Friday.