"Purdy: Pay for it, as I told you. I paid Rick Genovese [a Vancouver investor relations specialist] a million dollars and we started right here in Miami, and we're going Barron's, and we're going Investor Daily, we going the New York Times ... Then what you do is you get in an aircraft, and you go and you visit London, Zurich, Geneva and you go sit down with 50 fund managers at a table, you buy them all lunch ... Those guys are all sitting on 50 to 500 million bucks. I only got to make a couple of them believe my story."
Videotaped discussion of money laundering used at Vancouver promoter's Miami trial
David Baines
Vancouver Sun
Saturday, March 08, 2003
Vancouver stock promoter Jack Purdy (far left) is taped by a hidden camera on a boat in Ft. Lauderdale, Fla., on Feb. 21, 2002, when he was talking to an undercover FBI agent and RCMP officer about laundering drug money.
Vancouver stock promoter Jack Purdy (far left) is taped by a hidden camera on a boat in Ft. Lauderdale, Fla., on Feb. 21, 2002, when he was talking to an undercover FBI agent and RCMP officer about laundering drug money.
Vancouver stock promoter Jack Purdy (far left) is taped by a hidden camera on a boat in Ft. Lauderdale, Fla., on Feb. 21, 2002, when he was talking to an undercover FBI agent and RCMP officer about laundering drug money.
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On Feb. 21, 2002, Vancouver stock promoter Jack Purdy met with two undercover cops posing as Miami businessmen with a big problem.
They were generating millions of dollars a day from a business that they revealed to be cocaine trafficking and wanted the 52-year-old promoter to help launder it.
The six-hour meeting was held on a boat docked in a marina in Ft. Lauderdale. One of the undercover officers, an FBI agent who said he was from Colombia, was code-named Ricardo. The other was an RCMP officer who used the name Bill.
Unknown to Purdy, the entire meeting was secretly videotaped and became a key piece of evidence in his trial in U.S. Federal District Court in Miami last month on money-laundering charges.
Purdy's two underlings, Kevan Garner and Harold Jolliffe, were also charged, but pleaded guilty and became witnesses for the prosecution. Despite their testimony and the videotaped evidence, the jury acquitted Purdy on Feb. 28. One juror told reporters that they felt he had been entrapped.
The Vancouver Sun obtained a 341-page transcript of the boat meeting, which shows the two undercover operatives were indeed pressing Purdy hard to launder their money. By the same token, the transcript shows that Purdy was receptive to helping them funnel money through secret offshore accounts into his businesses, including several Vancouver public companies. Here are some excerpts:
Ricardo: I'm looking for another vehicle, 'cause I'm getting a backlog ... As you well know, we're in the cash money. F---ing cash money can give you some big headaches. Family tells me, "Hey, you know, look for some outlets." We can get some money flowing through you.
Purdy: As long as that money has a source, it's got to come from somewhere like a bank ...
Bill: ... It's money that we've got in the system up that we want to basically layer it and get it to the point where we can use it, so we can pay taxes on it, and have that totally legitimate ...
Purdy: Right.
[Layering is the process of transferring money from business to business, or account to account, making it difficult or impossible to trace the money back to its source. This is often accomplished through offshore tax and secrecy havens, where it is a statutory offence to reveal private business dealings.]
- - -
Purdy talks about introducing the undercover operatives to Keith King, a principal of First Nevisian Stockbrokers Ltd., a tax haven in the Caribbean. At the time, King was wanted in South Africa on fraud and forgery charges and had been blackballed by authorities in the Isle of Man, another offshore tax haven:
Purdy: If you're doing money stuff, then, I'll introduce you to Keith ... They're banking in the Caribbean ... They've been there for years, they've got an established office.
Ricardo: How much do you think they can handle?
Purdy: ... I'll find out.
Ricardo: Here's what I'm after. How much cash versus wire can you handle?
["Cash" is actual currency that is physically transferred from place to place, "wire" is money that is electronically transferred.]
Purdy: I can only handle wire ...
Ricardo: Strictly wire?
Purdy: Yeah, I mean I can take money, play money, but I can't handle serious money. If you're making money, untold amounts of money, then where you want to be going is you want to be going to a good banker in a jurisdiction where you can deal with it. Keith's good. Keith is awesome.
Ricardo: So the Dominican Republic.
Purdy: Yeah and his partner is Cliff Wilkins in London.
Ricardo: How much can he handle?
Purdy: Lots.
- - -
Later in the conversation, Bill asks whether the First Nevisian people can fly the cash out of Miami:
Purdy: The guy has a plane ... He flies in and out of Miami all the time, I don't know what he does.
Bill: What is it going to cost us?
Purdy: That's, he's gonna tell ya, I don't do their business.
Bill: ... Once the money's in the bank, what you're saying is wire to you.
Purdy: ... You can do whatever you want with your money. I'm gonna suggest investments to you. And I, I want to use your money, I can use ... 25 million bucks effectively and efficiently ...
Bill: And you can disguise it so we don't have to worry about ...
Purdy: Don't need to disguise nothing. Your companies are gonna invest in my company ... They're gonna be legitimate f---ing corporations. I'm gonna set 'em up ...
- - -
The transcript makes it clear that by "legitimate" Purdy is not referring to the source of the funds, but how those funds are invested:
Bill: Jack, we're looking to move about 50 million a year.
Purdy: Well ...
Bill: Whether it be cash or wire transfers ...
Purdy: In terms of doing deals with you to use money, I could use 50 million bucks a year. I can use it wisely.
Ricardo: And you can make it look legitimate?
Purdy: Oh, it is legitimate. Absolutely legitimate ... I've got great homes for money ... let me give you a little idea. Castle raised 18 million doing nickel exploration in Voisey Bay. Pure Gold, which is our diamond deal, raised 30.
[Castle Rock Exploration and Pure Gold Minerals are two Vancouver exploration companies that were run by Purdy and his partner, Vancouver promoter Don Sheldon.]
- - -
Purdy, in the fashion of the three monkeys, tells the undercover operatives that he doesn't want to know the source of their funds:
Purdy: The only question, the only way you will kill yourself is ever telling me where you make your money. I don't want to know. I do not want to know. I honest to f--- could care less ... If I know then it hurts.
[Purdy sticks a finger in his ear to emphasize the point. Then he explains how, once the offshore companies are set up, they will be able to invest in his stock deals.]
Purdy: I'll say, "Here's the project, here's the [proposed] use of proceeds. Are you in?" And we got to make sure that you're only in for a percentage so that we don't hit you where you've got other reporting [requirements]. You want to stay under 10 per cent in a stock [at which point an investor becomes an insider and has to report his holdings] ...
Bill: Unless we do multiple companies [where each company buys less than 10 per cent, thereby circumventing the reporting rules].
Purdy: Unless you do multiple companies. We're gonna do three companies, cause there's three jurisdictions I'm familiar with ... We have three people we can trust. We're gonna set up three private trusts that are being administered by your group ... I'm gonna set up three minibanks for you and then I'll make an announcement, for example, I would say, "Pure Gold just announces that it is, it has a financing of $500,000 at 30 cents with Maria Paria Limited."
Bill: That'll work.
Purdy: A Bahamas corporation ... it's just that simple ... we're gonna spend 50 grand on structure, you're gonna be invisible, wherever it comes from. Your money's gonna flow from there down into the company.
- - -
Purdy describes how he'll deal with the authorities if they ask who's behind the offshore companies:
Purdy: They're going to say, "Okay, what is your knowledge?" Well, my knowledge is that these people invested money ... "Was there any Canadians outside of you that were involved in this?" No. "Who are the people involved behind these companies?" I say, "That's not my business and if I knew I wouldn't tell you."
Bill: And we wouldn't tell you either.
Purdy: Well, no, you don't tell me. What we do is you set up the structure and however you do your business, all I deal with is a person who's the president of XYZ [the offshore company].
- - -
Purdy tells the undercover agents that he will parlay their investments into big returns. He describes how he buys stock in his public companies at 25 to 50 cents a share, then gets out a dollar. He says he likes "big rambling markets" where there is a lot of trading volume, allowing him to sell his stock without being noticed.
Bill: How do you get that distribution though, Jack?
Purdy: Pay for it, as I told you. I paid Rick Genovese [a Vancouver investor relations specialist] a million dollars and we started right here in Miami, and we're going Barron's, and we're going Investor Daily, we going the New York Times ... Then what you do is you get in an aircraft, and you go and you visit London, Zurich, Geneva and you go sit down with 50 fund managers at a table, you buy them all lunch ... Those guys are all sitting on 50 to 500 million bucks. I only got to make a couple of them believe my story.
- - -
Purdy is obviously a successful promoter, judging by his problems with Canadian tax authorities:
Purdy: I had three or four different resource stocks ripping where I could take, you know, 10 or 20 grand a day and, like, just pay the bills and keep going. When that all dried up, I'm sitting with these three-quarter built resorts [in Bamfield, B.C., where he owns numerous development properties] ... So what, in essence, happened is they they [tax auditors] took a look and saw 26 million bucks worth of income coming through Vancouver brokerage houses in a four-year period.
[Purdy speculates on what prompted the investigation:]
Purdy: Probably some little shithead on the west coast of Vancouver Island said, "You should take a look at Purdy, where does he get all this money?" So when they came in, they looked at, they were looking at two things, either I was in the money-laundering business or I was in the drug business ... They put about 20 guys on my life, well, they find out that there's not a God damn missing nickel. It all came from the sale of stocks, and/or developing and selling real estate ... so the other day it settled, four and a half million bucks, not bad.
[Purdy describes how he negotiated the $4.5 million settlement:]
Purdy: "I was gonna flick them the keys (to his properties in Bamfield) and [tell them to] stick a f---ing lawyer up your ass and spend 200 or 300 grand. If I'm going to give you guys four million dollars, I don't mind, but if it goes much f---ing higher, I'm gonna hire three ravaging dog lawyers and we're gonna challenge you on that four million bucks and we're gonna f--- you guys around for three or four years like you f---ed us and we'll see who wins.
- - -
In addition to investing in his public companies, Purdy also talks to Ricardo and Bill about investing in his two boats, the Quadra and Vancouver, which have been seized in San Francisco, and his Caribbean resort called Mariners, which needs substantial improvements. He tries to impress what great investments they will be, but Ricardo and Bill don't care:
Bill: Listen here, we don't care if you've got, if you've got the idea to sell a f---ing rocket ship to Venus and all we even get is our money out.
[Purdy laughs].
Ricardo: You laugh, but he's talking seriously, that's the truth.
- - -
The discussion turns to Harold Jolliffe, who is associated with Purdy in a B.C.-registered company called Bolivian Hardwood which, as the name suggests, imports hardwood from Bolivia. Months earlier, the undercover operatives had tried to give Jolliffe $50,000 cash to launder:
Ricardo: What did we give Harold the first time? Only $50,000. Harold's f---ing mouth dropped. I just gave him this little backpack with 50,000. He says, well I wasn't expecting 50,000 dollars cash ... I looked at Bill, like, what the f--k did you bring? ...
[Ricardo explains how, at first, Jolliffe didn't want the money, then changed his mind and a another associate, Ron Horvat, who is also awaiting trial on money-laundering charges, picked it up.]
Ricardo: I guess he ran it through Harold's account, right? Is that what he did?
Bill: Yeah, Bolivian ...
Ricardo: Yeah, he ran it through Bolivian ...
- - -
There is more discussion about Jolliffe and whether he has the stomach to launder cash. At this point, Ricardo reveals the source of their funds:
Ricardo: It's a cocaine business. I don't care, my bottom line is, "Harold, if people start asking questions, are you gonna fold like a deck of cards?"
Purdy: Yeah.
Ricardo: Harold, he never answered that f---ing question come to think of it.
Purdy: Well, you said to him, if it's a cocaine business, 'cause of course if it's a cocaine business then it's illegal. If you said it's a gambling business ...
Ricardo: Right.
Purdy: I mean he's just worried about cash. You should have said, Harold, it's not a cocaine business, it's a gambling business.
Ricardo: Okay, I told Harold it is a cocaine business.
Purdy: Well, okay, you've given him the worst-case scenario.
- - -
The undercover operatives express concern that the offshore bankers will learn the true source of the money:
Bill: Now listen Jack, I don't want them knowing what all our business is.
Purdy: You're not gonna.
Bill: You know what our business is. Fine.
Purdy: Look. I don't know, I have no idea except for ... gambling, you have a gambling business.
Bill: Yeah.
Purdy: Gambling with limited risks.
Bill: Yep.
Purdy: No risks [laughs].
- - -
Toward the end of the meeting, the undercover agents produce a bag of cash and have a guessing game as to how much money it contains. Ricardo reveals there is $100,000 US in 100- and 20-dollar bills.
Ricardo: If you're willing to take that ...
Purdy: ... I'd love to, I just can't do it. You know what you can do, if you can get me five grand ...
Ricardo: Take five grand.
Purdy: Five grand ... we're allowed to have 10 grand, right ... [referring to the law restricting the amount of cash travellers can carry across the border to $10,000].
Ricardo: Do you want 10?
Purdy: No, I can only, because I got a couple, three, four grand on me.
[He ultimately takes about $6,000 for "expenses."]
- - -
Although acquitted on these money-laundering charges, Purdy is not yet out of the woods. He is scheduled to appear in court on July 7 to answer to nine more charges that he, Jolliffe and Horvat agreed to launder thousands more dollars represented to be proceeds of cocaine trafficking.
Meanwhile he has been denied bail and remains in a Miami jail.
dbaines@png.canwest.com
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