Photo: Jaime Hogge


Rubberball/Getty


Fraud


DAVID MALAMED


Not as Clean as We Think


agencies, including the Department of Justice, the US Postal Inspection Service and the Federal Trade Commission. “The schemes involve a complicated web of actors located


across the world,” then US Attorney General Loretta Lynch said at a news conference. She announced “criminal charges and a civil injunction action against a Turkish resident whose direct- mail schemes defrauded US victims out of more than US$29 million; a seizure warrant against the bank account of [PacNet] that laundered money for more than 100 mass-mailing fraud campaigns; and a consent decree that would impose a perma- nent injunction against two so-called ‘caging services’ in the Netherlands, which received and processed victim payments, and also tracked victims’ personal information.” The victims, Lynch added, were “elderly individuals and


I


T WAS A BOMBSHELL ANNOUNCEMENT. In October 2016, the US Department of the Treasury’s Office of Foreign Assets Control designated a little-known Vancouver financial


company — the PacNet Group — as “a significant transna- tional criminal organization,” putting it in the company of infamous and dangerous criminal enterprises such as the Japanese Yakuza, Mexican Los Zetas and Italian Camorra. The stunning financial order “points to Vancouver’s growing repu- tation as a hub for global money laundering,” the Vancouver Sun noted. “The executive notice, which freezes financial transactions,


names 12 people, including several Metro Vancouver resi- dents, and a number of PacNet associated companies with links to a global network of cities and countries including Vancouver, Ottawa, Italy, India, Ireland, Tokyo, Brazil, Chile, and the US,” the Sun said. “The notice also grounds a PacNet airline that the US government alleges was used to deliver bulk shipments of criminal cash in Europe.” According to the Treasury department, PacNet, which is


described as an international payments processor and money services business, had a nearly 20-year history of “money laun- dering by knowingly processing payments on behalf of a wide range of mail fraud schemes that target victims in the United States and throughout the world.” The allegations against PacNet were part of a large-scale investigation that also involved several US government


56 | CPA MAGAZINE | SEPTEMBER 2017


those in vulnerable financial situations and [the perpetrators’] activities have cheated Americans out of hundreds of millions of dollars. The fraud is massive in scale and global in scope, and it can be devastating on an individual level.” According to CNN, the scams typically targeted lonely


seniors suffering from dementia who may have hoped to bolster their meagre retirement savings with promises of lottery prizes. Victims were also sent letters enticing them to contact, and spend money on, so-called psychics. The Treasury department claims PacNet was contacted by


North Dakota’s attorney general in 2009 with regard to process- ing of payments relating to the “Maria Duval” psychic scheme, in which purported psychics sent letters to people claiming to have foreseen good fortune for them based on the purchase of various products and services. “Although PacNet eventually refunded the money to the victims, PacNet continued to process transactions for the Duval scheme for another five years,” the release says. Located in downtown Vancouver, PacNet was founded in


1994 by a young Canadian banker named Rosanne Dronsfield (now Day) who went “from being a low-level bank employee to running an international enterprise now singled out by the US government as one of the world’s most illicit criminal organi- zations,” CNN Money said in an October 2016 report entitled Dirty Secrets of the Mail Fraud Mafia, following a months-long investigation of the company. CNN says Day “stumbled upon a golden opportunity. The


bank she worked for had shut down the accounts of a number of direct marketing clients because of the suspicious ways they were making their money. Rather than staying at her banking


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