Warnings ignored: Investigator fired after raising concerns about casino money laundering
Published Tuesday, July 10, 2018 7:35PM PDT
Last Updated Friday, July 13, 2018 10:30AM PDT
Update July 13, 2018: This story has been updated after a response from Gateway Casinos
A pile of $20 bills – some $600,000 -- that was stacked higher than the casino cashier.
It’s the surreal scene that stays with Joe Schalk from his time as the senior director of investigations at B.C.’s gambling regulator, GPEB.
“She disappeared behind these bills to the point where all you could see was her eyes and forehead. It was a huge mountain of cash,” Schalk recalled.
And reports of suspicious cash transactions were mounting too – over seven years ballooning more than 20 times, when Schalk’s team was estimating it would crest over $200 million in a single year.
Schalk and his team were tasked with tracking this likely dirty money. They believed it was an international scheme. The gamblers, they believed, could be dupes, but the source of the money was likely criminal operations with reach around the globe.
“The gambler receives the cash money from loan sharks, who receive the money from what I believe is criminal sources. The gambler loses the cash money gambling at the casino and ultimately repays his debt in the foreign jurisdiction,” wrote Schalk’s colleague in 2013.
That assessment was “precisely correct,” according to the recent report by Dr. Peter German, which examined money laundering in B.C. casinos, exploring its links to the drug trade, criminal gangs and even Lower Mainland real estate.
But at the time, Schalk said no one seemed to be listening, even as the reports of suspicious money piled up.
“Exponentially it kept growing. Huge numbers. It became more frustrating because less and less people were listening. And nobody was doing anything about it,” he said.
In December 2014, he and his colleague were brought into an office, dismissed without cause, and walked out of the building. Schalk says it’s clear a message was being sent.
“I think the noise that was being made needed to be quieted,” he said.
The German report also concluded that the firings were disruptive to GPEB’s attempts to stop money laundering.
“Both had been with GPEB for over a decade, after long and distinguished policing careers.
Three other employees, including the person leading the money laundering strategy, were assigned to other departments,” German wrote.
“Although the stated aims of the organizational review and the subsequent reorganization of GPEB were unrelated to the anti-money laundering strategy, the effect was clear,” German wrote.
Schalk wasn’t the only one who worried that their dismissal was related to the fact they wouldn’t keep quiet about suspicious goings-on at B.C. casinos.
Michaela Wyatt, who says she worked security for two months at Burnaby’s Grand Villa Casino around 2009, said she saw what she believed were eight different money laundering incidents on the casino floor.
“I watched hundreds of thousands of dollars go from a woman’s purse to gamblers. They would come back with these little tickets,” she said, referring to receipts that a slot machine will give a gambler for a payout.
The receipt is significant because the gambler can put cash into a machine, play for a short time, and get a receipt that can be converted into a cheque from the casino. It could have been an example of legitimizing criminal cash, she said.
“I reported money laundering going on, they’re going, ‘Oh it’s nothing, don’t worry about it,” Wyatt told CTV News.
“Anybody carrying that kind of money is not there to do honest business,” she said. “There was nothing ‘unwitting’ about it. If I could see it and I’m not the sharpest tack in the drawer, then anyone could see it.”
She said that she wrote reports about what she saw and told management. But after the two month probationary period, she was let go.
Gateway Casinos, which owns the Grand Villa Casino, told CTV News that its parent company, Catalyst Capital Group, did not own the Gateway casino operation during the time referred to by Wyatt.
On July 12, the Vice-President, Legal Affairs of Gateway Casinos, Michael Snider wrote to CTV News to say their records show Wyatt worked between July 22, 2007 and August 21, 2007, working not at the Grand Villa Casino, but at the Burnaby Casino.
Gateway Casinos maintains that Ms. Wyatt’s statement was false and seriously misleading. “We have no record of any written reports from Ms. Wyatt during her one month of employment at the Burnaby Casino. Ms. Wyatt did not file any written reports in the electronic reporting system; we would expect to see these reports in the system if these activities were in fact viewed and reported on as she alleges,” Snider wrote.
“Further, the clear intended message to the consumer of this piece is that Ms. Wyatt was a “whistleblower” whose employment was terminated as retaliation for her reporting on illegal activity. While we are unaware of the reason for Ms. Wyatt’s termination, this is a serious allegation for which we believe there to be no factual basis,’ he wrote.
Reached after Snider’s letter was received, Wyatt agreed that much time had passed since her employment and that the dates provided by Gateway could be correct. However she stood by her recollection of the events she witnessed.
The Burnaby Casino was run by Gateway Casinos and Entertainment before it was closed in 2008. The company relocated the casino into a renovated hotel across the street, which is now called the Grand Villa Casino.
Representatives from the casino industry have told CTV News they accept the recommendations from the German report.
In the aforementioned letter, Snider indicated that “Gateway has and will continue to support, encourage and promote the work that has been done and that remains to be done to ensure that any illegal activity at casinos in British Columbia is prevented and deterred,” he wrote.
The German report also describes an effort by the then-gaming minister, Rich Coleman, to crack down on an RCMP officer who spoke out against the huge amounts of cash in 2011.
“The Minister responsible for gaming objected to Insp. Baxter’s comments and told the media that… the position expressed by Baxter was wrong,” the report says.
For a number of years, it was the last time any RCMP officer would comment publicly on the issue of casinos, the report says.
Rich Coleman’s staff said he was unavailable for comment, but in interviews with other media, he has insisted he did everything he could to crack down on casino money laundering.
B.C. Attorney General David Eby says he has already accepted some of German’s recommendations, including capping the amount of cash accepted by casinos.
But Eby said that if anyone else has concerns, the government is listening.
“People who feel they have more information to share, more concerns that they have of the failure of the regulation, we’re making sure that they have the venues available,” he said.
Eby said he wasn’t planning on a public inquiry but hasn’t ruled it out. And he said that the government is drafting legislation to bring to life another of German’s recommendations: a
standalone casino regulator, with its own police force.
“The steps that we have taken so far are ensuring that we have policies and laws in place to close the door on money coming into casinos,” Eby said.
Schalk says he believes that the casinos can be regulated. But everyone in the system needs to follow a simple rule.
“Do not take that money, unless you can prove where that money has come from,” he said.