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100 Grow-Op Houses Unearthed in Mortgage-Scam Probe
Pubdate: Sat, 25 Sep 2004
Source: Vancouver Sun (CN BC)
Copyright: 2004 The Vancouver Sun
Contact: http://www.canada.com/vancouver/vancouversun/
Details: http://www.mapinc.org/media/477
Author: Kim Bolan, Vancouver Sun
Bookmark: http://www.mapinc.org/mjcn.htm (Cannabis - Canada)
100 GROW-OP HOUSES UNEARTHED IN MORTGAGE-SCAM PROBE
Mortgage Broker, Realtors Alleged to Have Fabricated Records to Obtain
Homes
Up to 100 large-scale marijuana growing operations have been found in
Lower Mainland houses identified by government regulators as part of
an elaborate scheme to get mortgages by using false employment records
and banking documents, The Vancouver Sun has learned.
Police and regulators are concerned the fraudulent securing of
mortgages with the alleged assistance of some realtors is part of a
coordinated effort by organized criminals to purchase grow-op houses
for the thriving B.C. marijuana trade.
The RCMP is now examining the links between a mortgage broker, a pair
of real estate agents currently under investigation and these properties.
The RCMP probe was triggered by an investigation by the Financial
Institutions Commission into more than 900 mortgages brokered by Danh
Van Nguyen, who had been running a company called Express Mortgages
Ltd.
RCMP Inspector Paul Nadeau said Friday about 10 per cent of the houses
in the Nguyen files seized by FICom investigators in March 2003 "were
confirmed as grow-ops."
Nguyen was found by FICom Aug. 30 to have breached mortgage broker
regulations by fabricating employment records, with inflated incomes,
to help some clients qualify for mortgages. His penalty hearing is to
be held Oct. 18.
Nguyen still proclaims his innocence, claiming he was not involved in
a scheme to write bogus letters. Some of the documents found on his
computer when it was seized last year were merely the result of his
wife helping clients writing letters they were to get their employers
to sign, he claimed Friday.
"It's biased. It is a kangaroo court," Nguyen said of the FICom
investigation.
He also claimed he did not know so many of the houses for which he
brokered mortgages were linked to marijuana until FICom investigators
told him.
"I have no fault in that," he said. "I don't know what they use the
house for. I never went to the homes. I did the financing before they
bought the homes."
Asked if he could have been used without his knowledge by an organized
crime ring involve in marijuana growing, Nguyen said: "I don't know
about that. All the people who came to me appeared to be normal people."
He said he has now got out of the mortgage business, but would not
disclose his new enterprise because "it is personal."
Just this week, he changed the name of his company, Express Mortgages,
to Dragon King Investments Inc., according to corporate registry
documents obtained by The Sun.
The new company also shows a slight name change for Nguyen, who has
reversed the order of his first two names.
The Financial Institutions Commission, which regulates credit unions,
mortgage brokers and real estate agents, began its probe into Express
in early 2003 when two banks raised concerns about a series of Nguyen
mortgages, according to Ken Fraser, FICom executive director of
investigations.
Search warrants were executed at an office on Fraser Street being used
by Express, as well as at Nguyen's Surrey residence, which is listed
in the name of his wife, Lisa Tran.
Fraser said his team focused on a sampling of 20 mortgage files and
found fraudulent documentation in every case.
"We did send investigators out to try and confirm ownership of some of
these properties," Fraser said. "In a lot of the residences that we
visited, we either found there was no one living there, the individual
living there was not the individual on title, or the individual living
there did not know they were on title."
Sometimes the registered owner was found at another address entirely
and claimed not to know they owned the house.
Fraser said it is possible that the names being used for the mortgage
applications are being obtained through identity fraud, involving, in
particular, new immigrants from the Vietnamese community.
He said recent arrivals in Canada would not be suspicious if someone
at a business asked for their identification, because they would not
know it was inappropriate.
The FICom investigators, most of whom are ex-police officers, spotted
the tell-tale signs of grow-ops at several of the houses, Fraser said.
"The window coverings were all closed, bars on the windows, there
doesn't appear to be anyone around, there's no furniture in the house."
And then, at some locations, there was the pungent smell of
pot.
"In some instances, investigators believed they could smell marijuana
on the property," he said.
That would result in a call to police. In other cases, the police had
already found a link to the pot industry and identified the address to
FICom, before the regulatory body went in, Fraser said.
FICom has worked closely with the RCMP throughout the investigation.
In fact, the testimony of RCMP Constable Clint Baker was the most
compelling evidence against Nguyen at his FICom hearing last June.
Nguyen had argued that he did not knowingly provide banks with false
letters of employment, but merely passed on information he had been
provided.
But according to the Aug. 30 ruling against him, "the evidence of
Constable Baker was that a number of false letters of employment were
found on the hard drives of computers located in the Express offices
and the Nguyen residence."
Baker refuted the claim by Nguyen and his wife that they had merely
typed sample letters when he testified that he was able to print out
"from the hard drive of the computer located in a bedroom in the
Nguyen residence four of the employment letters and produced them
showing the letterhead of the company including graphics."
Baker was even able to document an Internet search on the Nguyen's
bedroom computer on the evening of Sept. 13, 2002, which was to obtain
graphics used in three employment letters printed minutes after the
search.
"The gardening images, as seen in the letterhead, were saved to the
computer at 8:44 p.m. The corresponding three letters regarding Island
Evergreen were printed on the computer at 9:04 p.m., 9:36 p.m. and
9:37 p.m.," according to the ruling against Nguyen.
Alan Clark, registrar of mortgage brokers, relied on Baker's testimony
in finding Nguyen at fault.
Nguyen testified he had received false letters from real estate
agents, including two now also under investigation, Houston Ngo, of
Surrey, and his daughter Linh Ngo.
Clark found that Nguyen knew the letters were false and in some
instances was involved in suggesting what should be included in the
letters. He noted that on Sept. 13, 2002, Express ran a credit inquiry
on a client and then faxed the realtor involved in the sale a letter
stating: "Require job letter with income of $3,950 per month for fouryears."
"The next day a false employment letter is faxed to Express stating
exactly that," Clark said in his decision.
In some cases, the contact numbers on the bogus employment letters
were the home numbers of the borrowers, or of the real estate agent
involved.
"All this leads me to believe Express and Nguyen knowingly used
contact numbers that would respond favourably to inquiries," Clark
said.
"I can draw no other conclusion except that Express and Nguyen were
manipulating data to qualify clients who might not otherwise be
qualified to borrow. This results in false information being conveyed
to the lenders."
Clark also raised concerns that in some of the transactions,
investigators were unable to verify the source of large down payments,
sometimes of more than $100,000.
FICom is now investigating two of the real estate agents -- Houston
and Linh Ngo -- who worked frequently with Nguyen. On Sept. 2nd, a
search warrant was executed at their Surrey home.
Search warrant documents obtained by The Sun allege the pair, "did by
deceit, falsehood or other fraudulent means, defraud Maple Trust
Company, Bank of Montreal, HSBC Bank Canada, Vancouver City Savings
Credit Union and Canadian Imperial Bank of Commerce, of money or other
valuable security by preparing and transmitting false employment
information regarding for the purposes of obtaining mortgage financing
for their clients."
The documents point to the testimony of Nguyen and his wife Lisa at
last June's hearing, in which both claimed "they had unknowingly
received the false documents regarding (Ngo's) clients."
Houston Ngo said Friday he is not concerned about the investigation
because he has done nothing wrong.
"Those are just not right. Those are not true information about us,"
Ngo said of the allegations contained in the search warrant.
"One investigator came to our office and took some papers, but so far
they have not found anything."
One of the bogus employment letters uncovered in the FICom
investigation was for a non-existent company named TCM Contracting,
which is vouching for the income of one of the purchasers. The contact
number on the letter is for Ngo's daughter Linh, who has recently
moved to Toronto.
Asked about the use of his daughter's telephone number on a false
employment letter, Ngo said: "I don't know. We don't know about that
either."
"We have not done anything wrong," he reiterated several times, before
ending the call.
"I'm sorry I cannot talk to you further."
Fraser said the Nguyen and spin-off Ngo investigation are just two of
many FICom files of similar scope.
"We have other investigations involving mortgage brokers where we
suspect they are involved in grow ops," Fraser said.
Detective Jim Fisher of the Vancouver police criminal intelligence
unit has seen similar operations during his time as coordinator of
Asian organized crime.
"Investigating Asian organized crime, I've been involved in an
investigation where a 22-year-old Asian male involved in credit card
fraud had purchased a $240,000 home in an upscale Coquitlam
neighbourhood and he was able to negotiate with the foreclosure
proceedings -- the trust company -- before we could institute any kind
of seizure on the house," Fisher said.
The interconnectiveness of the different crimes, and the
sophistication of the participants, is surprising, he said.
"At 22, he had the wherewithal to purchase a house. Then he takes his
profit from it. During the seven months he had it, he had two grows
interrupted by the police . . . You can not only make money on the
dope, you can make money flipping the house too."
Nadeau said his task force is looking at all the relationships between
criminal organizations, those running the grow ops and anyone who is
facilitating them, knowingly or unknowingly.
Because 70 per cent of Lower Mainland grow-ops are believed to be run
by the Vietnamese, they turn to real estate agents and brokers in
their own community when purchasing properties, Nadeau said.
"A lot of people are much better at exercising willful blindness than
they are at exercising due diligence. If I don't know, it is all
right. They just turn a blind eye to it and off they go," Nadeau said.
"I think you are dealing with a number of cooperatives within the
Vietnamese community."
As for the Nguyen and Ngo investigation, it is too soon to say where
it is headed, Nadeau said.
"My unit, we are looking at the results of the search from two weeks
ago that FICom conducted on Mr. Ngo's business there and we are doing
some analysis of the addresses to see if we can surface more
information. I can't get into the details, obviously, because we are
doing the investigation," he said. "It is a very complex case, a lot
of issues there. It is not the kind of investigation that gets wrapped
up in two weeks.
In the meantime, with a booming housing market, those involved in
marijuana grow-ops will continue to purchase property, Nadeau predicted.
"It is a win-win for these people. They get their hands on a
residence. They can now grow their marijuana and when they turn around
and sell it, they can make money off the residence also. They can't go
wrong," he said.
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MAP posted-by: Richard Lake