Pubdate: Tue, 15 Jun 2010
Source: Victoria Times-Colonist (CN BC)
Copyright: 2010 Times Colonist
Contact: http://www2.canada.com/victoriatimescolonist/letters.html
Website: http://www.timescolonist.com/
Details: http://www.mapinc.org/media/481
Author: Cassidy Olivier

BANKS BLASTED FOR MORTGAGES ISSUED TO HOUSE USED AS GROW-OP

VANCOUVER - The B.C. government agency in charge of hunting down the
proceeds of crime is accusing two of Canada's largest banks of being
"wilfully blind" and reckless in granting massive mortgages to a
Vancouver man on a property that allegedly was being used as a
marijuana grow operation.

In a civil case that has the potential to set a legal precedent - and
create a lot of embarrassment for the Bank of Montreal and the Royal
Bank of Canada - the Victoria-based Civil Forfeiture Office is before
the B.C. Supreme Court asking for full or partial forfeiture of the
banks' interest in the mortgages on the million-dollar Vancouver home.

The writ filed by the forfeiture office suggests the banks were either
aware of or "wilfully blind" to the fact that approving the mortgages
would allow Hai Le to launder money through the property and their
respective institutions.

"All or part of Mr. Le's income is derived from unauthorized
production of cannabis marijuana," the writ claims. "BMO and RBC ...
had actual knowledge, were recklessly indifferent towards, or were
wilfully blind to the fact that the approval of funding of the BMO
mortgage and RBC mortgage permitted the .. property to be used as an
instrument to launder the proceeds of crime."

In August 2009, according to the writ, Vancouver police raided Le's
home and uncovered a massive marijuana grow-op. Two days later, Le
sought and received a $70,000 mortgage from the Royal Bank of Canada
on the property.

Ten months before the raid, the Bank of Montreal agreed to refinance
Le's mortgage for $976,000, some 15 months after he'd bought the house
from a Viet Van Truong for $980,000.

In both instances, the writ alleges, Le was allegedly unable to
provide evidence he could make the mortgage payments through
legitimate means. Further, the writ claims, the Royal Bank of Canada
mortgage was given when the house had zero equity.

The case also provides a disturbing look at how crime groups
successfully use large financial institutions to fund their
enterprises and launder their illegally earned cash.

According to the forfeiture office writ, Le was part of a "group" of
at least three other persons, including a "cashier" and "cook," who
have owned the house at different times since 2001 and used it to grow
pot and launder money. This was accomplished through the repeated sale
and transfer of the house to the varying group members and the use of
illegal money to pay for the down payments and monthly mortgage bills.

"Each time legal ownership of [the property] transferred during the
time period from 2002-09, the group has received the proceeds from the
sale of [the property]," the writ claims.

"The Group's involvement in [the property] transfers has allowed for
the group to put monies realized by illegal activities towards the
purchase price of [the property] and the monthly mortgage payments,
thereby allowing the proceeds from the group's unlawful activities to
be laundered through the lending institutions who held mortgages over
the property."

Mortgages for the other purchases before Le took ownership in 2007
were also taken from RBC and BMO, according to the writ. Before the
2009 raid, according to the writ, the property was busted twice for
being a grow-op.

No arrests or charges were ever made in connection to these raids,
according to police, who could provide no further comment, given that
the property in question is the subject of a civil forfeiture action.

None of the forfeiture office's allegations have been proven in
court.

Both banks have filed statements of defence denying all allegations
outlined in writ of summons. They've also filed petitions to the court
asking that their interests be protected and repaid.

The lawyer representing both banks refused to comment, as the case is
before the courts.

A BMO spokesperson said the bank exercises "appropriate due diligence
for each mortgage application." A spokesperson for RBC offered a
similar comment, noting "employees are educated about fraud prevention
and how to spot red flags leading to mortgage fraud." 
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