The plot thickens.
Stockwatch News Item
B.C. Securities Commission (C-*BCSC) - Street Wire
BCSC-known Purdy called Chambers a #####, jury told
B.C. Securities Commission *BCSC
Thursday February 27 2003 Street Wire
by Stockwatch Miami correspondent
Vancouver penny stock promoter John (Jack) Purdy started getting cold feet about a money laundering deal when he began to suspect that the transaction might be a sting operation, a former business partner testified in Miami federal court Wednesday.
"Jack was now backpedalling, because he suspected a sting," said Kevan Garner on his third day of testimony.
Mr. Garner, along with another co-defendant, Harold Jolliffe, has pled guilty to money laundering charges in Operation Bermuda Short, a sting featuring RCMP and FBI undercover agents posing as Colombian Cali cocaine cartel members.
Mr. Garner made the remark in response to cross examination questions from Mr. Purdy's Miami defence attorney, Neal Sonnett, who suggested that Mr. Purdy did not know all the details of the money laundering transaction executed by Mr. Garner.
"Revenue Canada had been all over me for months and months and months. And now the waters were quite quiet, so I'm worried it's a sting operation," Mr. Garner remembered Mr. Purdy telling him.
Mr. Garner described his unexpected foray into the money laundering world.
"Jack and I had done a lot of business in the past that stepped over the line of fraud, and when I went down to meet these people, I already knew we were stepping over the line," Mr. Garner testified.
"I didn't know these people, and I didn't know until my incarceration that it was a lot more serious to deal with cocaine money than it was in gambling money," the star witness told the jury.
"Prior to this case, you did not launder money?" asked the prosecutor, Assistant United States Attorney Richard Hong.
"No," replied Mr. Garner.
In another courtroom discussion, defence lawyer Mr. Sonnett implied that Mr. Purdy was rattled by the appearance at his Vancouver offices of what Mr. Sonnett called a "goon" sent by the undercover agents in the case to ask for a return of the money sent for laundering.
"Jack's ass was on the line because you took the $500,000 and couldn't give it back?" Mr. Sonnett asked Mr. Garner.
"Correct," he replied.
"So what you're saying, his ass was on the line, and it was your fault?" Mr. Sonnett proposed.
"I think it was both our faults," a defiant Mr. Garner responded.
While Mr. Sonnett tried to show that Mr. Purdy was forced into action because of fear of intimidation, Mr. Garner's testimony in response to prosecutor Mr. Hong's questions portrayed Mr. Purdy as a key behind-the-scenes player throughout the deal.
The man sent to the offices was of Filipino decent, and of slight build, said Mr. Garner, describing him as "more of a beach boy than an enforcer."
After the appearances of the "goon" at their offices, Mr. Purdy became involved in trying to secure financing to pay back the undercover agents. Mr. Purdy tried to get a second mortgage on a property through Barclay Capital Corp., but was turned down.
Mr. Garner even enlisted the help of former Vancouver lawyer Martin Chambers, an associate of Barclay Capital. Mr. Chambers, who is reputed to have connections to organized crime groups like the Hells Angels, faces a later trial in the money laundering arm of the Bermuda Short sting.
(Vancouver-based Barclay, generally a mortgage lender, is headed by Paul Deyong, a Howe Street player, frequent newsmaker, and associate of Mr. Chambers in various deals, including Marlat Resources, a Vancouver Stock Exchange promotion in 1993 with a Russian flavour. In June of 1997, a notable client-associate of Mr. Deyong, former Hells Angels leader Ernie Ozolins, was executed. In a recent bail hearing, a Miami judge was told of RCMP intelligence linking Mr. Chambers with the contract killings of four underworld figures, including Mr. Ozolins. There is no suggestion Mr. Deyong had any knowledge of this, and no allegations have been made against him.)
Mr. Garner had also introduced Mr. Chambers to the undercover agents against the wishes of Mr. Purdy, to help them set up a banking arrangement for their drug money.
Asked to describe the relationship between Mr. Chambers and Mr. Purdy, Mr. Garner said that the two men, who were business partners on various deals, were "always at war."
"I hate dealing with that ##### Martin," Mr. Garner recalled Mr. Purdy saying.
(It should be noted that there is no proven evidence that Mr. Chambers was either a ##### or a "thug," as he was described by Barclay key mortgage broker Brian Larsen in a regulatory hearing into Eron Mortgage, a $150-million (Canadian) scandal. In further testimony at that hearing, Mr. Larsen clarified why he referred to Mr. Chambers as a thug. "Mr. Chambers is a very strong, bright man, and is known throughout the lending community, and as well as being an ex-lawyer of brilliant mind, and able to enforce things. He has a very, very strong personality and will lose his temper in a fairly strong way, and he can intimidate most people," he replied.)
In the Miami trial, defence attorney Mr. Sonnett took Mr. Garner to task for his plan to launder funds through the purchase of a shell company with the cash from the undercover drug agents.
Mr. Garner purchased American Toy Vending for $260,000, but told undercover agent Bill McDonald, the code name for the RCMP operative, that he had paid $410,000 for the shell company.
The plan was to sell American Toy Vending to German investors for a profit, and then to return the laundered money to the undercover agents. Mr. Garner reiterated that Mr. Purdy knew about the transactions all along, a point disputed by Mr. Purdy's attorney.
"He (Purdy) didn't believe in the Germans from the beginning, and it turned out he was right," Mr. Garner said wistfully. Mr. Garner had agreed to turn the undercover agents' money over in 60 days, but he was having little success in getting his potential investors in Hamburg, Germany, to consummate the deal.
"Every day I was getting representations from the Germans that every day they were going to cross over the stock. In fact they were skilled in putting me off," Mr. Garner testified.
Mr. Sonnett confronted Mr. Garner about an Aug. 7, 2002, E-mail to Mr. McDonald in which he said that the investors had come through. (This was a week before the Bermuda Short arrest operation unfolded on Aug. 14.)
"When you say in your E-mail that they had come through ... that was a lie wasn't it?" asked Mr. Sonnett.
"Wishful thinking, Mr. Sonnett," replied Mr. Garner.
"So there is a difference between wishful thinking and a lie?" Mr. Sonnett asked.
Mr. Sonnett also tried to use Mr. Garner's previous testimony against him.
Mr. Garner had previously testfied that he was told by the undercover agents that the money came from both legitimate and illegitimate sources.
"You say in the this transcript that Jack was worried about the source of some of the money," stated Mr. Sonnett.
"Yes, he only wanted to deal with money that had already been laundered," Mr. Garner replied over Mr. Sonnett's objections.
"Jack said he was hesitant about getting involved in the $13-million (money laundering) fund they wanted to set up?" Mr. Sonnett asked.
"This is the day before he disclosed he thought it was a sting operation," replied Mr. Garner.
"Again, not my question," Mr. Sonnett responded.
"Was he hesitant about getting involved in the fund?" asked the defence lawyer.
"Yes," Mr. Garner replied.
As a final point to his cross-examination, Mr. Sonnett sought to discredit Mr. Garner's testimony against his former partner in order to gain a better sentencing recommendation upon conclusion of the trial.
Mr. Garner acknowledged that his wife had spoken to Mr. Purdy's wife shortly after his arrest to see if the Garners might be loaned some money to hire an attorney. They were turned down.
"You realized that your only hope of getting a break on your sentence was that you make the government happy," Mr. Sonnett said.
"I don't know if happy figures into it," Mr. Garner replied.
(Although not noted in court, Mr. Garner offered a further insight to Mac Parry in The Vancouver Sun society columnist's Feb. 14 column. "There's a 92-per-cent conviction rate for federal indictments in the U.S., so $250,000 (spent to defend) those charges would be a very poor investment -- and hardly a way to realign your ethics," Mr. Garner told Mr. Parry.)
(Mr. Garner also offered some philosophy. "There are four aspects that govern your life: family, livelihood, money and ethics. And if you fail to put ethics into any position but number one, the others don't count," he told Mr. Parry.)
On redirect, prosecutor Mr. Hong picked up on the theme of whether there might have been legitimate funds involved. Mr. Garner acknowledged that he had hoped that the money they took may have been legitimate.
However, when Mr. Hong asked Mr. Garner whether he believed the cash he took came from legitimate sources, he said he did not.
Mr. Hong also questioned Mr. Garner about the plea agreement.
Asked what he was told to do on the stand, Mr. Garner said: "Tell the truth."
"Were you aware of any sentencing reduction that may or may not take place?" Mr. Hong asked, to which Mr. Garner said no.
"Were any other outside agreements made?" Mr. Hong asked.
"Unfortunately, no," Mr. Garner relied.
Asked to elaborate, Mr. Garner said: "Well in the movies you see all sorts of agreements made, but it wasn't the case here."
The trial continues Thursday, with Mr. Hong expected to call a new witness. Mr. Hong would not identify the witness in advance. |
