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

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."

Though the scams are often small-scale, they can give Vancouver a bad reputation for all business dealings, he said. "These perpetrators should not feel they can reside in one place, victimize people in other places, and get away with it."

But they do. The gathering of suspect characters in Vancouver is encouraged by Canada's lengthy legal procedures concerning deportation, which can forestall expulsion for years.

Critics of the extradition rules cite the case of Rakesh Saxena. The Indian-born financier was arrested in 1996 in Whistler, a British Columbia ski town, where he was on the lam from authorities in Thailand who accuse him of embezzling $88 million from the Bangkok Bank of Commerce. He has successfully fought extradition for 11 years, most of it while living in luxury accommodations in Vancouver after persuading the courts to let him pay for guards for his own house arrest.

Saxena has acknowledged attempting to arrange a coup in Sierra Leone from his house and carrying on business dealings that could be called "shady."

"There are a lot of question marks" about trading in shell companies, said Saxena, in a telephone interview from his guarded home. "I do a lot of it, European shells and Hong Kong shells, and joint ventures. Basically it's all arbitrage of buying something here and selling it there. You can say it's shady, but it's not illegal."

Canadian authorities thought they finally were going to put him on an airplane last fall, but then a military coup in Thailand restarted his appeals.

Lawyer Gary Botting, author of two textbooks on extradition, said Canada's lengthy process is intended to ensure that people are not sent to sham trials, execution or torture. He defends the system, but acknowledges that wealthy fugitives like Saxena can delay their expulsion for long periods through exhaustive appeals.

"There's a lot of money involved in the high-profile cases," he said. "There's definitely a different system for the rich who can afford counsel to explore every loophole."

Said Saxena: "You can't get a fair trial in Thailand. Canada has no right to send me there." But he insisted, "This isn't a great life. With due respect, this is not the place I would choose to live. From my perspective, it's a backwater."

It is one sought by others. Lai, for example, chose to flee to Vancouver when he heard that Chinese prosecutors were about to swoop down on him and his family in 1999. Chinese authorities say he ran an expansive smuggling operation generating many millions of dollars and bribed local officials in Xiamen, in the southeastern province of Fujian.

A special prosecuting unit in China has obtained 14 convictions and death sentences concerning the alleged scheme, eight of which have been carried out. Lai's brother died in a Chinese prison after Chinese agents had brought him to Vancouver in an unsuccessful bid to lure Lai back to China.

Lai's continued presence has been uncomfortable for the Canadian government, which wants improved trading relations with China. The government there regularly demands his return, along with several other Chinese fugitives, bank officials who also fled to Vancouver. China has pledged not to impose the death penalty on Lai, but his attorney, David Matas, said Canada should not trust promises from a country where legal safeguards are absent.

"The problem here is not the Canadian system. It's the Chinese system. If they were not torturing people and executing people, he'd be back in a shot," Matas said.

Lai, 48, listened through an interpreter. He said he is living off the contributions of friends and has lost all of the riches he once enjoyed. But he acknowledged that the laws here have let him avoid a forced return to China.

In coming to Vancouver, he said, "I think I made the right choice."

Researcher Li Jie in Beijing contributed to this report.

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