The Legislature Raids

           D. Douglas: Mr. Chairman, thank you very much for the opportunity, on behalf of the Organized Crime Agency, to meet with you today to talk about the organized crime situation in British Columbia. What we're going to do over the next hour is talk about the challenge of organized crime in 2003, our strategic response and our performance in that area over the last year, and the accountability processes we've put in place.

           It's safe to say that organized crime is the world's fastest-growing industry — low investment, huge profits, little deterrent and an unquenchable thirst out there in the general public for contraband. It's a force that affects everyone. When you look around, you see it every day — increased health care costs due to drug use, increased home and car insurance rates based on break and enters and a tremendous number of thefts of autos. In fact, on the auto theft side alone it's a $600 million industry — a cost to insurers in this country. Increased credit card rates. Right now the banks are estimating that 1/12 of their revenue goes to counterfeit credit cards. That's why your interest rates are so high on credit cards. Just with grow ops alone, $1 billion is stolen from various hydro companies across this country. Of course, we have the resulting public safety issues.

           Its citizenship is global. We'll see from some of our investigations that go international, on day 2, that

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transnational organized crime is a global problem. Its currency is cash. The International Monetary Fund estimates global money laundering to be somewhere between $1 trillion and $3 trillion a year. Its motive is profit and power. Money equals power, and that's the power to buy violence, to intimidate, to corrupt. I think we've all heard of "Mom" Boucher, who headed up the Hell's Angels in Quebec. His net worth assessment is over $250 million. Its by-product is human misery. We see that every day on our streets in the downtown east side — health issues, violence, victims of fraud.

           It's safe to say that in the past five to ten years, the face of organized crime has changed a great deal, and it has created unprecedented challenges for law enforcement not only in this country but around the world. Globalization — we'll touch on this in a minute — the fusion of criminal groups, multicommodity criminal activity, the use of technology, the geography of organized crime and the convergence of organized crime and terrorism…. As I said, that new face has created some real problems for us and some real challenges. You'll hear about those challenges over the next hour.

           Just with the external challenges of organized crime, when we look at changes in world politics and business technology, who would think that things like the European Union and NAFTA would be an advantage to organized crime? It's huge advantages to organized crime. The European Union has basically created a borderless Europe, customs-free. People and goods travel quite readily right across Europe. That creates all kinds of issues, and it makes that environment vulnerable for organized crime to extort.

           When we look at even our own situation, with the North America Free Trade Agreement, it is now possible to ship goods in bond from Mexico to Toronto without ever going through U.S. customs or Canada customs. Think of the opportunities that creates for organized crime if they set up — and they have — their own bonded customs importing businesses.

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           No borders for organized crime. When we look at the map of the world, we see borders and boundaries and international jurisdictions. When organized crime looks at that same map, they don't see any of those things; they just see a seamless opportunity for criminal activity.

           When we look at how fast advanced communications encryption has gone over the last five to ten years…. Think of something as simple as the cell phone you carried ten years ago compared to the cell phone you carry today and all of the different things that are built into that particular cell phone. Look at encryption. Look at the Internet. Certainly, organized crime has extorted those kinds of areas to their own advantage.

           The rapid movement of goods and people and money. It wasn't long ago that you didn't have on-line banking or ATMs. Again, organized crime has been very quick to jump on those opportunities.

           Diffusion of criminal groups is a very interesting thing, and this is the thing that has happened in the last five to ten years. These groups are now very cellular in structure. They're organized like terrorist cells. They're hard to infiltrate. When one portion of that cell is infiltrated, it doesn't necessarily mean that you're going to be able to apprehend or interdict the other part of the cell, because there's separation in there, and they have very, very strong top-down leadership.

           They're run like corporations, because they see the benefits of cooperation. They share their expertise. They share their contacts. They've created these non-traditional alliances. We've heard about the turf wars of the past. We are now faced with attacking organized crime groups that are made up of Vietnamese, Russian, Indo-Canadian, Chinese, Eastern European, all kinds of different languages and all kinds of different dialects inside those languages. Our main business is wiretap investigation, so we have to find the people who can do the translation services for us. So just that one little area there creates huge problems for us.

           Entrepreneurial multicommodity criminal activity. These organized crime groups will become involved in a myriad of criminal activity. I'll give you an example of one of our projects called Coconut, and you'll hear about it a little later on. Within two weeks of starting the investigation, which went international on day 2 with various U.S.–based law enforcement agencies, we went from the exportation of B.C. bud to the importation of cocaine, huge money laundering, weapons trafficking, human trafficking and conspiracy to commit murder in New York State in two weeks. It crosses over all kinds of law enforcement stovepipes such as customs, immigration, state police, the FBI, the Secret Service. The coordination of that kind of investigation is difficult. They have created this kind of situation because they know we have difficulty dealing interjurisdictionally, both on relationships and the law.

           They're pooling their resources and their expertise, especially in the area of counterfeit credit card fraud, identity theft and the flexibility to meet emerging trends. They're extremely flexible. You've heard about the drug Ecstasy, a rave drug. It's produced primarily in the Netherlands. The Netherlands has a liberal attitude toward drugs. From a Europol intelligence report, there are 120 different organized crime groups in the Netherlands — and that's not a very big country — all vying to export 15 metric tonnes of pure Ecstasy into North America within the next year. They are very flexible to the emerging trends.

           The use of technology. You see the header on that news items there: "Hackers Crack A&B Site — Credit Card Details Revealed." The technology that fuels the legitimate economy also fuels criminal enterprise. We have crimes such as Internet crimes, on-line gambling, pornography encryption, software piracy, money laundering and denial-of-service attacks. We're coming into the world of on-line extortion and cyberterrorism. You just saw what happened when the power failed down in Ontario. Imagine if that was a cyberattack on a public infrastructure like a power grid, and they controlled that environment. They could bring it up, drop it down, bring it up, drop it down. Imagine what the implications of that are.

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           With respect to one particular case here, on-line gambling, where we had an investigation that went on for two years targeted at an organization in Vancouver called StarNet Communications, who had Hell's Angels on their board of directors…. When we took that company down, it had revenue in the amount of $48 million. Its stock was trading over-the-counter on the NASDAQ; its stock was worth $1 billion. On the day of the arrest its stock lost $250 million — the largest one-day loss in the history of the NASDAQ — and that was a Canadian organized crime company. That was on-line gambling.

           As I said before, organized crime has been very quick to jump on these opportunities. Software piracy. We just completed an investigation — and you'll hear about it later — working with Microsoft on what was the largest seizure of pirated software in Canadian history, worth $4.5 million. There is a lot of that going on out there.

           Then we have the geography of organized crime — seaports, airports, extended border and coastline. Just looking at the map, you can see what kinds of opportunities that creates for organized crime ...



There's much more HERE.  http://www.leg.bc.ca/cmt/37thparl/session-4/cc/hansard/C31008a.htm

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