A conspiracy and the proceeds of crime
Going through the trash of alleged criminal Yong Long Ye was just the start
Published: Saturday, August 16, 2008
It must have been an odd sight early one morning in May 2007 in Vancouver's tony Southlands neighbourhood.
Investigators with the Combined Forces Special Enforcement Unit (CFSEU) grabbed the trash from a can on public property outside the house of alleged international drug trafficker Yong Long Ye.
What they found in the garbage that day helped establish that Ye and his common-law wife Jean Shu Zhen Zhang did in fact reside in the $1.4-million house at 3418 Deering Island Place, which was registered only in Zhang's name.
Binning was just one of several techniques police used to track the intricate financial dealings of Ye, Zhang and five of their relatives in a massive proceeds-of-crime investigation, according to court documents obtained by The Vancouver Sun.
Police also pored over the clan's Canada Revenue Agency tax returns. They checked land title records and B.C. Assessments. They monitored large lump sums of cash plunked down on mortgages and tracked from whose bank accounts the withdrawals were made.
They clandestinely listened to phone calls as Ye and others not only allegedly discussed their cross-border cocaine transactions, but how they were going to transport huge sums of money — some of which, police allege, were used to purchase millions of dollars in real estate under several names and in two provinces.
Investigators contacted the Financial Transactions and Reports Analysis Centre of Canada, the government agency charged with tracking money-laundering and terrorism-related transactions through Canada's banking system.
Last November, confident they had untangled the complicated financial web of an international crime syndicate, they secretly went to B.C. Supreme Court and requested an ex parte order to freeze nine properties in B.C. and Ontario believed to have been bought with Ye's drug money.
Details of the extraordinary investigation are contained in a 110-page affidavit by Insp. Mike Ryan, in charge of CFSEU's proceeds-of-crime team.
While the affidavit was sealed in Supreme Court, it was later filed as an exhibit in the Federal Court of Canada as part of the government's defence against allegations by the Hells Angels that police were colluding with the revenue agency to investigate the biker gang.
Ryan said in his Federal Court covering affidavit that the Ye case shows what police can accomplish when they have the ability to review tax records under special circumstances.
“If the tax information is supportive of an accumulation of wealth that is not accounted for through legitimate income sources, it is vital evidence in all proceeds of crime and offence related property investigations,” Ryan said.
“The information obtained through those orders was vital to the restraint of assets believed to be the proceeds of crime of Yong Long Ye and his family resulting from Mr. Ye's involvement in the matters for which he was arrested: namely conspiracy to import cocaine, conspiracy to produce and export methamphetamine and participation in a criminal
Ye and several associates were arrested and charged nine days after Associate Chief Justice Patrick Dohm granted the order freezing the Ye-linked houses and condos in Metro Vancouver and Toronto.
Several law enforcement agencies attended a news conference Dec. 12 to announce they had cracked the biggest drug syndicate in B.C. history after a massive 14-month investigation dubbed Operation E-Paragon.
Ye's arrest as the leader of the gang was like “cutting the head off the snake,” Vancouver police Insp. Dean Robinson said at the time.
Drugs worth $168 million on the street had been seized, including more than 640 kilograms of cocaine, 111 kilograms of methamphetamines, 83 kilograms of ecstasy, 26 units of heroin and 7,832 pounds of marijuana. Several guns had also been found.
Investigators allege Ye, who is due in court Sept. 11 to fix a trial date, arranged cocaine to be transported from Los Angeles to Ontario, with the huge profits sent back to Vancouver from Toronto with couriers traveling on WestJet flights.
SECRETLY EXAMINED BAGS
“Between July 10, 2007, and November 16, 2007, over $4.6 million in Canadian dollars was transported in this way,” Ryan said in his affidavit.
He also explained how police investigated the cash shipments without alerting the criminals involved by secretly examining the couriers' bags before they were picked up in Vancouver.
“On all occasions, when the luggage was opened, large amounts of Canadian cash in vacuum-sealed packages were found. These packages were frequently labelled specifying the amount of cash each package contained. Each occasion the general warrant was executed, the cash bundles were photographed, re-packed in the luggage and claimed at the carousel by the courier identified on the luggage tag,” Ryan's affidavit said. He said the shipments were not seized “as to do so would have compromised the integrity of the drug investigation.”
Police watched as the couriers were picked up by Ye himself, his wife Zhang or, at least once, Zhang's mother Cui Lian Lu.
“Police surveillance confirmed that on all but one occasion they were driven to 3418 Deering Island Place in Vancouver,” the court documents say. “These currency couriers remained at the Deering Island address for a few hours, or just overnight, and were driven back to Vancouver International Airport where they took return flights to Toronto.”
Coded phone conversations allegedly referring to the couriered cash are highlighted in the documents. On July 10, 2007, Ye's Toronto contact told him “dinner would be arriving at 11 o'clock.” Ye then asked “how much rent money did the master return?” and the contact replied “28, two and that it would be tomorrow breakfast.”
Ryan said Ye's contact was telling him “that $280,000 would be arriving twice with one courier at dinner time and one courier at breakfast time.”
He said the time references match up with two couriered deliveries watched on July 10 and 11 by investigators.
Some of the couriers' luggage tags for the suspect bags were found in the trash outside of Ye's house during several unscheduled police garbage pickups, the court documents say.
It was this cash, police allege, that Ye used to purchase seven Lower Mainland homes as well as two Metro Toronto penthouses in the past few years.
Several of the properties were bought in the names of family members of Ye and his wife, forcing a careful analysis by investigators to track the transactions back to Ye.
Ye's origins in Canada were humble.
According to the court documents, the 41-year-old Chinese national arrived at Vancouver Airport for the first time on Oct. 7, 1989, with his mom, Li Juan Ye, to immigrate.
“Neither reported possessing any money upon entry, nor money to be transferred from China to Canada,” Ryan notes. “They were both sponsored by Mon Yee Kuang, Yong Ye's sister who resided in Vancouver.”
Two years later, Ye's spouse-to-be, Jean Zhang, landed at the same airport to immigrate, along with her dad Yim-Fen Cheung.
“Neither reported possessing any money upon entry, nor money to be transferred from China to Canada,” Ryan said again. “However, in a prior immigration application, Yim-Fen Cheung stated that he would have $10,000 Hong Kong dollars and jewelry when he arrived in Canada.”
By November 1993, Ye's would-be mother-in-law, Cui Lian Lu, arrived for immigration.
“A condition of her landing was that she marry her sponsor, Yim-Fen Cheung, within 90 days,” Ryan said.
It was this little group, eventually united by family relationships, that would soon amass a suspicious fortune in real estate and luxury cars, including a Porsche Cayenne often seen picking up the cash couriers at Vancouver airport.
Their extravagant lifestyle, police allege, did not match the modest incomes reported to the CRA.
From 2000 to 2006, Ye, Zhang, their parents, as well as Ye's sister Mon Ye Kuang and her husband She Ho Kuang, reported a total income of $872,947, with a larger disposable income of $960,447, the court documents say.
“Yong Ye has since 2000, and with his common-law wife Jean Shu Zhen Zhang since 2003, acquired substantial assets, the value of which exceeds their combined legitimate ability to purchase those assets,” Ryan said.
“The investigation has demonstrated Yong Ye's use of family members and associates … into whose names, real property and debt have been registered, thereby ensuring that his wealth, derived from the drug business, is not immediately attributable to him personally, reducing the likelihood of detection by authorities.”
But the documents show the authorities made extraordinary efforts to track Ye's fortune and show his connections to these properties:
– 4747 Killarney St. in Vancouver, owned by Ye's mother-in-law, Cui Lian Lu.
– 1505-8831 Lansdowne Road in Richmond, owned by Ye.
– 3306 Parker St. in Vancouver, owned by Ye associate Hui Rong (Cappuccino) Yao.
– 3116 East 18th Ave. in Vancouver, owned by Ye's mother, Li Juan Ye.
– 7162 Stirling St. in Vancouver, owned by Ye's brother-in-law She Ho Kuang.
– 5088 Calder Court in Richmond, owned by Ye's father-in-law Yim-Fen Cheung.
– 3418 Deering Island Place in Vancouver, owned by Ye's wife Jean Shu Zhen Zhang.
– Penthouse 103, 8 Lee Centre Drive in Scarborough, Ont., owned by Ye and Zhang.
– Upper Penthouse 10, 62 Suncrest Boulevard in Markham, Ont., owned by Ye's sister Mon Yee Kuang.
Police were able to determine that mortgages on these properties were often paid off without explanation, that payments sometimes came from accounts linked to Ye even when the houses were in other names and that Ye would refer to “his” properties in phone conversations, even when the houses officially belonged to relatives.
“Yong Ye's reported income and the reported income of members of his family in whose names the properties are registered, as provided to the Canada Revenue Agency, are insufficient to support the purchase and maintenance of the debt associated to these properties,” Ryan says.
At one point last year, Ye's mom became concerned when he said he wanted to sell the east Vancouver house listed under her name, according to the documents.
In a bugged call on May 9, 2007, Ye and a woman police believe is his mom discussed her concerns about giving him power of attorney so he could borrow against her house or sell it.
“Another unknown female came to the phone and said that Ye's mother was asking what protection she would have after signing the power of attorney and Ye said: 'What is the meaning of this? This house is mine. I don't understand.'”
Ye's aunt later said in another intercepted conversation that “his mother is worried that she won't have a house to live in. Ye said everything belongs to him and that he didn't mean to not take care of her,” the court documents said.
One of the suspicious house purchases took place on June 26, 2007, when Ye's father-in-law bought the property at 5088 Calder Court in Richmond for $960,000 even though his reported income as a “construction worker” would not have supported a million-dollar home, police say.
Ryan pointed to a series of intercepted Ye calls, in which he appeared to be making all the arrangements for the transaction with the real estate agent.
At one point, Ye complained about the price “said he was buying a house at 960,000 when he only offered 950,000,” Ryan's affidavit said.
In another call, Ye's wife appeared to be planning to put $198,000 in her dad's account for the house purchase. A month after the Calder Court house was purchased, Ye's father-in-law plunked down another $200,000 cash on the mortgage.
At one point last September on the police wiretap, Ye's wife allegedly asked an unknown man for false payroll cheques for her husband — each for $4,000.
“We won't cash them,” Zhang said. “We just need them to fax over to the bank. When the bank has a copy of them, then we return the cheques to you. … The cheques have to have the company's name on them. So it is the cheques you use for the payroll.”
Those named in the affidavit clearly seemed concerned about raising suspicions if too much money was deposited in certain accounts in a short period of time.
One caller told Ye's wife that she would split the funds into separate cheques “so the amount is not too large.”
And she said: “If you write these three ones under your mother's name, then the money can be taken right away. I don't want to focus just on your name, since if I need to explain it, I won't be able.”
The documents cited intercepted phone conversations last summer showing that Ye was willing to take property in exchange for drug debts.
In one call, Ye gave instructions to a Toronto contact to “determine if a male person they referred to as 'Tall Guy' would relinquish a 2,000- to 3,000-square-foot residence to settle a $60,000 debt owed to Ye,” Ryan said, adding that the contact said “Tall Guy” had agreed to list the property for $470,000.
“Ye said he would pretend to give “Tall Guy” “$410,000 even,” the documents said, noting Ye later learned “Tall Guy” didn't have enough equity to make the bogus sale worthwhile.
Ryan said in his affidavit that he expected proceeds-of-crime charges would eventually be laid, in addition to the criminal charges Yong and associates already face in the drug-trafficking conspiracy.
“I believe that upon completion of the financial investigation conducted by the CFSEU-B.C. Proceeds of Crime Team, reports will be prepared and will be forwarded to the Public Prosecution Service of Canada recommending charges against Yong Long Ye, his family members and a number of other persons.”