Canada's Extradition Laws Help Make Vancouver a Grifter's Haven

Lai Changxing, accused by China of bribery and smuggling.
Lai Changxing, accused by China of bribery and smuggling. (Douglas Struck - Twp)
By Doug Struck
Washington Post Foreign Service
Thursday, March 22, 2007

VANCOUVER, B.C. -- The Chinese government has been trying to get Lai Changxing for seven years, repeatedly demanding that Canada hand over the man who tops China's most-wanted list.

Lai does not want to go. The once-rich businessman, alleged by China to have run a vast bribery and smuggling empire, is unsure what would happen if he returned. "I don't know if I will be dragged around and shot, or beaten, or poisoned," he mused in an interview.

So while lawyers argue his case, Lai stays, biding time in a Vancouver apartment. He has company: The city is home to a wide cast of people who are either wanted by the law somewhere on white-collar charges or trying hard to avoid such attention.

Vancouver prefers to revel in politically correct politics, a squeaky-clean environmental image, and a laid-back mood fostered by persistent melancholy rain. But it also is a haven for some of the most wanted fugitives in the world and for con men working scams in the shadow of the law.

"Grifters tend to gravitate to the end of the line. Vancouver is kind of the end of the line," said David Baines, a veteran reporter for the Vancouver Sun who writes about stock schemes and white-collar crooks in this westernmost province.

Eight years ago, Forbes magazine described Vancouver as the "scam capital of the world." Authorities have cleaned up some of that and closed the largely unregulated Vancouver Stock Exchange, which did a Wild West trade in problem stocks. But Baines said the legacy remains.

"There was a cadre of facilitators -- accountants, lawyers, brokers -- that someone has called an 'infrastructure of chicanery.' It remains," Baines said.

Much of this centers on penny stocks, often worthless financial paper traded on the U.S. over-the-counter market. These stocks are sold by salesmen in high-pressure boiler-room telephone or Internet solicitations.

When the U.S. Securities and Exchange Commission announced "Operation Spamalot" this month, stopping trading of 35 companies at the center of spam e-mail promotions, one-third of them had connections to British Columbia, the province where Vancouver is located.

Authorities here estimate that 500 of approximately 4,000 companies traded on the U.S. over-the-counter bulletin board and another penny stock listing service called the "Pink Sheets" can be traced back to Vancouver and British Columbia. The companies variously claim to have huge car inventories, hot mining prospects, technological breakthroughs, medical miracles, valuable real estate and other exciting assets, which often are inflated in value or nonexistent.

Their promoters operate here in part to take advantage of the border, said Martin Eady, director of corporate finance for the British Columbia Securities Commission. Canadian regulators rarely get complaints from victims, because most of them are in the United States. And U.S. regulators are wary of trying to crack down on companies based in Canada.

"It becomes inherently more difficult to investigate and to prosecute when it is cross-border," Eady said. "It lengthens everything by a factor of at least 100 percent."


CONTINUED     1        >

© 2007 The Washington Post Company