BCSC Eron figure Chambers linked to Hells Angels: RCMP
B.C. Securities Commission *BCSC
Monday September 30 2002 Street Wire
by Brent Mudry
Controversial former Vancouver lawyer, Eron Mortgage figure and commercial real estate financier Martin Chambers, known to police for more than three decades, now faces his most serious allegations yet.
A senior Miami prosecutor and a veteran Vancouver RCMP officer told a federal court judge Monday that Mr. Chambers, 62, is believed associated with two organizations of entrepreneurial motorcycle enthusiasts: the Hells Angels and former Satan's Angels, he was involved in recent threats against co-defendants, and he may have personal knowledge of several Angels murders in recent years. A surveillance tape of Mr. Chambers bragging about his money-shuffling prowess was even played in court.
The Miami deal hearing marked the first time that such detailed allegations have been made against Mr. Chambers in public court by authorities.
United States officials are vigorously fighting bail for Mr. Chambers, arrested Aug. 14 at the St. Louis, Miss., airport in Operation Bermuda Short, a two-year joint FBI-RCMP undercover sting operation which snared 60 penny stock players, including 20 Canadians, capped by Mr. Chambers and Mark Valentine, who destroyed Bay Street brokerage Thomson Kernaghan. All indictees maintain their innocence and claim, like Mr. Chambers, that they are nothing more than respectable, and perhaps misunderstood, businessmen.
The unprecedented operation featured two ruses: a money-laundering sting in which an undercover FBI agent and an undercover RCMP officer posed as agents of the Colombian Cali cocaine cartel to lure targets to agree to launder millions of dollars of dirty drug money, and a much bigger sting which lured targets to agree to bribe corrupt mutual fund officials in return for multi-million-dollar investments in penny stock promotions.
Three of Bermuda Short's 23 indictments targeted alleged money launderers, all of whom are Howe Street players and all but one of whom are from Vancouver. Mr. Chambers and offshore accountant Michael Hepburn of Barbados were the two biggest fish caught in the net, which also snared stock promoters John K. (Jack) Purdy and Kevan Garner, and Ronaldo (Ron) Horvat and Harold Joliffe, exotic forestry entrepreneurs also involved in Vancouver's penny stock market.
In a 40-minute bail review hearing Monday in United States District Court for the Southern District of Florida, Judge Ursula Ungaro-Benages, the presiding judge on the Chambers indictment, continued to make federal officials jump through hoops to keep Mr. Chambers locked up.
Judge Ungaro-Benages earlier set bail a week ago at $350,000, including a $100,000 corporate surety bond and a $250,000 personal surety bond, but the office of the United States Attorney for the Southern District of Florida promptly appealed. (All figures are in U.S. dollars.) Mr. Chambers, however, need only put up $15,000 cash, or 15 per cent of the corporate bond, with the $250,000 personal bond to be fully secured by property.
Federal officials, including the FBI, are adamantly against Mr. Chambers making bail, especially at such a low amount, as he is deemed by them to be a serious flight risk.
The stakes in the bail review hearing are quite high. If Mr. Chambers is kept in custody and authorities can make their serious money laundering charges against him stick, he may potentially face one of two unappetizing prospects: either spending much of the rest of his life in jail or flipping as a star federal co-operating witness and entering the witness protection program. Both scenarios are quite premature, as Mr. Chambers remains innocent until proven guilty. If he were to flip, cop a plea and become a witness, however, his testimony would likely be highly coveted by both the FBI and the RCMP in a number of jurisdictions.
After hearing the submissions of Assistant U.S. Attorney Richard Hong, the testimony of RCMP Sergeant Michael Arnold, the surveillance tape of Mr. Chambers and brief arguments from his defence lawyer, Gerald Houlihan, Judge Ungaro-Benages ordered federal officials to provide documentary evidence to back up their allegations. The written evidence is expected to be dominated by an extensive affidavit sworn by him.
The next 48 hours will be hectic for the FBI and the RCMP, as they scramble to meet an extremely short, but soft, deadline imposed by Judge Ungaro-Benages. The judge told the court she wants to see this evidence before she goes on a two-week holiday in two days. Such meticulous and detailed police affidavits usually take many days, and often weeks, to prepare, review, revise and finalize. In the meantime, the Chambers bail review has been adjourned generally, with no new court date set.
The brief bail hearing began on schedule, soon after Mr. Chambers, sporting a sand-coloured jail jumpsuit, made his appearance, escorted by court officials. Mr. Chambers remained silent, beyond occasional whispers to his lawyer Mr. Houlihan.
Judge Ungaro-Benavides opened the proceeding by saying this was supposed to be a straight bail hearing, but complications have apparently emerged. Prosecutor Mr. Hong told the court that a defence waiver of extradition, in which Mr. Chambers could return to Canadian with a promise to come back to Florida, is not recognized in Canadian courts.
(Although not mentioned in court, Canadian white-collar extradition cases have become a bit of a farce among requesting states eager for quick returns of financial fugitives. In the highest profile case, fugitive Thai financier Rakesh Saxena, a key figure with Saudi associate Adnan Khashoggi in the $2-billion collapse of the Bangkok Bank of Commerce, has been in Vancouver for more than six years, since arrested on an Interpol warrant at Whistler in July, 1996, three weeks after his presence in the Vancouver area was revealed by Stockwatch. Mr. Saxena was ordered extradited in September, 2000, after a four-year extradition battle, Canada's longest ever, which included 92 days in court, but he remains under $400,000-a-year self-financed house arrest in his luxury Vancouver waterfront condo as he appeals.)
Defence lawyer Mr. Houlihan promptly countered Mr. Hong's rejection of an extradition waiver for Mr. Chambers, claiming the U.S. government accepted a similar waiver in the case of Mr. Valentine, with the agreement of both the Canadian and American governments. (Mr. Valentine was released last week on $530,000 bail, given a night-time curfew at his South Florida condo, ordered to remain in the U.S. and denied a return to Canada.)
After this opening repartee, Judge Ungaro-Benages asked whether U.S. officials have any agreement with the RCMP to keep Mr. Chambers under some sort of surveillance.
Mr. Hong replied by saying there is an "ongoing investigation." "Things have come to light that are very disturbing disturbing concerning whether there is a danger to the community and if he is a flight risk."
The judge then asked whether there is a threat involving the Hells Angels or some other violent group. The information is "most recently from an RCMP investigation including interviews in various areas of Vancouver with talk about reprisals. A co-defendant was reached by an outside contact concerned about a threat," replied Mr. Hong.
The prosecutor also told the court there is a specific threat on co-defendants of Mr. Chambers in the Bermuda Short money laundering case. "A third party has information and knowledge that somebody would be bumped if he co-operates with the government. The undercover informant is taking all precautions," said Mr. Hong.
At this point, Judge Ungaro-Benages asked RCMP Sgt. Arnold to be sworn in and take the stand as a government witness. The senior RCMP officer told the court that investigators in Vancouver "picked up a specific threat on a co-defendant coming from Chambers and with links to the Hells Angels."
Sgt. Arnold testified that he has "reviewed many, many documents going back years and years" on Mr. Chambers' direct connections to the Hells Angels motorcycle gang and to the Satans Angels, another biker gang.
In a rare attempt at black humour, Judge Ungaro-Benages asked if that is a "connection to the people in the Hells Angels who simply dress in bad taste or to some who are violent?." "Is all the information connected to Hells Angels involving homicides and is there a Chambers's role in Hells Angels pertaining to homicides?" asked the judge.
"Yes, I have information gathered in the last two to three weeks," replied Sgt. Arnold. The judge asked when and what was involved in specific connection with this serious allegation. It was "involved in the last couple of years," replied the Canadian police officer.
(This public revelation information on murder links was apparently quite sensitive, and presumably could jeopardize, compromise or influence any outstanding investigations or pending prosecutions.) Prosecutor Mr. Hong promptly asked Judge Ungaro-Benages whether he could approach the bench on sidebar and tell her specifics, without making these comments public in open court. The judge refused.
Judge Ungaro-Benages then invited Mr. Houlihan to question Sgt. Arnold, and the defence lawyer began probing the Canadian officer in cross-examination. Mr. Houlihan asked Sgt. Arnold if he has personal knowledge connecting Chambers with the Hells Angels, and the RCMP officer said he does not.
Mr. Houlihan then told the court that Mr. Chambers's connections with the Satan's Angels goes back 30 years when he got the motorcycle enthusiasts incorporated. Sgt. Arnold replied, saying he only reviewed documents and records dating 10 years. The judge then asked Sgt. Arnold whether the Satan's Angels are active in Canada, and the officer, who is not a veteran biker specialist, said he did not know.
Mr. Houlihan then asked Sgt. Arnold if he knows of "any connection of Chambers to the Hells Angels that represents a threat to the community or a danger to life?" The officer replied that he only knows what he hears from "human Sources" and what he reads in documents.
"It's hard to make heads or tails of all this without the documents and the reports on the threat," Judge Ungaro-Benages responded.
Prosecutor Mr. Hong told the court that the information on Mr. Chambers is based on conversations with a source and not just from documents.
Mr. Hong then referred to an interview with Mr. Garner, a Bermuda Short money laundering co-accused, but the relevance of this is not clear. The court was told that Mr. Garner has not been co-operative with U.S. officials, and RCMP Sgt. Arnold has not interviewed him.
Mr. Houlihan then stressed that Mr. Chambers should be granted bail, as he was out on bail for 10 years during his Canadian cocaine conspiracy saga which started in 1981, and he observed his bond conditions. (While Mr. Chambers was out on bail for much of this period, he did spend a total of about two months in jail as he fought the cocaine case.)
While Mr. Houlihan told the court there was never any mention of any danger to the community, Judge Ungaro-Benages said the documents she has seen "didn't make that clear." "The waiver of extradition gives me a problem. It creates an issue for me."
Although Mr. Houlihan told the court he asked a Canadian lawyer who told him that extradition warrants from the U.S. are accepted, the judge said the issue still concerns her. Judge Ungaro-Benages said she was considering setting a $500,000 forfeiture bond, "but the issues raised by Mr. Hong concern me."
Prosecutor Mr. Hong then mentioned a threat to Barbados-based accountant Mr. Hepburn, another Bermuda Short money laundering co-accused, "which is believed to be a threat from Martin Chambers."
Mr. Hong referred to an FBI investigation, but said he has not talked specifically with the FBI on this point. The prosecutor pointed out that two FBI agents sitting in the courtroom were shaking their heads, presumably concerned about what was being said in open court.
Judge Ungaro-Benages told Mr. Hong she wants to see the documents referred to by RCMP Sgt. Arnold and any other documentation available. The judge told the court she is willing to see these sensitive documents ex-parte, which would presumably assuage the concerns of the FBI and the RCMP.
Noting that she is going on vacation in two days. Mr. Hong assured the judge that authorities will do their best to submit the documentation to her.
Mr. Hong then turned on a tape player and played a surveillance recording, dated June 18, of Mr. Chambers boasting about his financial prowess. Although the tape was not clear, Mr. Chambers spoke of how wealthy and powerful he is, and that people who have worked with him and checked him out know how he does business. On this recording, Mr. Chambers appears to talk about moving $500,000 or $200,000, and of moving money quickly.
The brief hearing was winding up at this point, and Judge Ungaro-Benages told the court she hopes to resolve the bail situation as soon as possible. Mr. Hong told the judge he hoped to advise her by the close of business on Monday whether he will be able to assemble, prepare and submit the requested documents before her vacation.
Outside the courtroom, defence lawyer Mr. Houlihan was quite outspoken, suggesting to a reporter that his fine client Mr. Chambers was being unfairly smeared. Mr. Houlihan called the bail proceedings "outrageous."
Mr. Houlihan says that 30 years ago the Canadians would not let Mr. Chambers file incorporation papers for the Satan's Angels in Vancouver and he had to go to court to get it done. "Martin Chambers only represented them as a lawyer."
Mr. Houlihan also pointed that throughout his 10-year cocaine conspiracy proceeding, Mr. Chambers was out on bail, travelled to China, Mexico and the U.S., never missed a court appearance, and eventually was vindicated. "They want to keep him in jail (now) so he can't fight the charges."
Although not mentioned in court, Bermuda Short was an ironic flashback to Mr. Chambers's cocaine saga, which also centred a Miami-to-Vancouver connection. The current sting is especially sweet for police in both Vancouver and Miami.
Mr. Chambers suffered the ignomy of being dragged through the criminal courts for nine years as an alleged key player in a conspiracy to import cocaine from Miami to Vancouver. The former lawyer was charged in 1981, acquitted in 1983 after the trial judge threw out most of the Crown's case, which consisted of extensive intercepted conversations.
Mr. Chambers was then ordered retried by the Supreme Court of Canada, convicted in a second trial in 1987 and sentenced to nine years. The Supreme Court of Canada threw out the second trial in 1990 and ordered a third trial, which never took place as the Crown folded and finally stayed the charges. Mr. Chambers was free on $100,000 (Canadian) bail throughout the ordeal and spent a total of only two months in jail during the saga.
In his second trial, Mr. Chambers's defence was that he had no intention of carrying out the cocaine importation conspiracy, but he merely wanted to recapture the affections of his former mistress Zina Pocius, a co-accused.
In his second trial, Mr. Chambers testified he began an affair with Ms. Pocius in 1980 and he kept an apartment for her in Vancouver. Mr. Chambers also leased office space to a Mr. Dumyn, another co-conspirator.
Through Mr. Dumyn, Mr. Chambers was retained to go to Panama to see if he could arrange for a Mr. Barudin, an associate of Mr. Dumyn's, to be released from jail. Mr. Chambers spent some time in Panama in the early spring of 1981 and succeeded in springing Mr. Barudin and his cellmate Jay Gonzalez.
"Chambers testified that he had to bribe the Panamanian authorities in order to obtain this result, but added that the payment of bribes to government officials in Panama was not unusual. The intercepted communications indicated that the appellant also made some suggestion that his mistress, Zina Pocius, should have sexual relations with the Attorney General of Panama if that became necessary in order to obtain the release of Barudin, although at trial Chambers claimed this was only a joke," noted the Supreme Court of Canada.
After their release, the Panamanian prisoners, Ms. Pocius and Mr. Chambers flew to Miami. "The evidence indicated that the conspiracy among Barudin, Dumyn, Pocius and Gonzalez to import cocaine into Canada started in Panama and was further discussed in Miami. The plan was to bring the cocaine from Miami to Vancouver where Barudin, Dumyn and Thomson resided. The appellant testified that in Miami he pretended to go along with the conspiracy," states the high court.
Mr. Chambers testified that he did this only to maintain some connection with Ms. Pocius who, by this time, had become involved with Mr. Gonzalez, leaving Mr. Chambers to fly home to Vancouver without his mistress.
Mr. Chambers later flew back to Miami and confronted the new lovebirds at a picnic, prompting Mr. Gonzalez to pull his gun out. The spurned lawyer again returned emptyhanded to Vancouver, determined to regain his mistress's affections. Mr. Chambers testified he soon got roped into the cocaine conspiracy, which involved Mr. Gonzalez bringing the white powder to Vancouver.
Mr. Chambers testified that he did not really want to help the conspiracy succeed, and he hired a chap called Santiez Tabbance, also known as Kuko, to intercept Mr. Gonzalez in Miami. The first attempt failed, but on the second try, Kuko had an encounter with Mr. Gonzalez at the Atlanta airport. It did not go well for Mr. Gonzalez, who later claimed he was robbed and injured to the point of having difficulty speaking. Kuko and the cocaine disappeared.
Despite this Atlanta encounter, Mr. Gonzalez appeared at the second trial as a star witness for Mr. Chambers, and he had negotiated immunity from prosecution. Although Mr. Gonzalez denied under cross-examination by the Crown that he had only come to Vancouver to testify in return for money, he had a setback soon after.
"The day following his testimony, the appellant (Chambers) drove Gonzalez to the American border. Gonzalez was searched and nearly $10,000 was found secreted in his clothing. In cross-examination of the appellant, Crown counsel used this fact to again suggest that the appellant had paid for the testimony of Gonzalez. The appellant also denied this suggestion," noted the Supreme Court of Canada. After the 50-day trial ended, the jury took just over a day to render their verdict, finding Mr. Chambers guilty. Mr. Chambers got off a few years later after the Crown gave up.
Although Mr. Chambers maintained his innocence, being a target of a cocaine smuggling prosecution did not help his career as a lawyer. The Law Society of B.C. issued a suspension in 1981, after he was charged, and he voluntarily withdrew as a member in 1984. In 1990, criminal defence lawyer David J. Martin, who recently represented career fraudster Michael Mitton in the Clay-Tech fraud case and negotiated his guilty plea, described his client Mr. Chambers as "an industrious fellow" who was involved in many businesses. "Many businessmen would wish to accomplish as much as he has done in so little time," Mr. Martin told late Vancouver Sun reporter Moira Farrow.
In a feature story that Mr. Chambers denounced as "yellow journalism" which hurt his ability to carry on his business, Ms. Farrow noted that the chief warden of Pacific Rim National Park said a sheltered coastal cove property owned by Mr. Chambers and later his associates featured unusually heavy traffic. "For 10 years, there's been a regular run of small ships back and forth between the cove and a ... ship out in U.S. waters," the warden told the reporter in 1990. More recently, Mr. Chambers appeared as a major behind-the-scenes player in Brian Slobogian's massive Eron Mortgage fraud, which was shut down by regulators in 1997.
In a recent court case, Mr. Chambers complained that he has a tough time making it through the airport in Vancouver after trips abroad without having his briefcase contents inspected and copied by customs officials as he describes himself as a "person of interest" to authorities. In another case two years ago, Mr. Chambers sued a marine dealer who allegedly refused to deliver 10 of 15 Yamaha outboard motors he purchased.
In the Eron case, Mr. Chambers emerged as a hero of sorts, helping bail out Michael Graye. In December of 1996, controversial offshore Vancouver accountant Michael K. Graye, a major Eron borrower, was arrested in Toronto as he stepped off an airplane, on charges related to fraud and income tax evasion. After Mr. Chambers paid a visit to Eron's offices, Eron head Brian Slobogian put up $300,000 (Canadian) of Eron investors' money for Mr. Graye's bail.
Mr. Graye, like Mr. Chambers, also has unhappy airport experiences under his belt. Last October, Mr. Graye was arrested at Buffalo International Airport, snared by an offshore stock manipulation scheme featuring notorious career fraudster Ed Durante as the star federal informer and operative. Mr. Graye is now in jail in New York and is a star witness in another criminal prosecution, targeting co-defendant Thomas Baker, a Toronto lawyer, in the Seven-Up Canada offshore fraud and money laundering case.
Judge Ungaro-Benages heard only the highlights of Mr. Chambers's cocaine conspiracy case, mainly that he eventually skated off, and few other details of Mr. Chambers's history, both in past years and more recently.
That may be about to change.
(c) Copyright 2002 Canjex Publishing Ltd. stockwatch.com
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