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U.S. ‘Losing Faith’ in Canada’s Ability to Combat Industrial-Scale Fentanyl

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Sam Cooper

BC Mayor Warns of Asian Organized Crime’s Surprising Access to Canada’s Political Class, Echoing US Agency Concerns

In a high-level meeting in 2023—one participant representing the head of state of the world’s most powerful nation, the other a popular small-town mayor in British Columbia—candid warnings emerged about Canada’s capacity to confront the industrial-scale production of fentanyl. Mayor Brad West, a longstanding critic of transnational drug networks in his province, recalls Secretary of State Antony Blinken stressing that Washington believes Beijing is effectively weaponizing fentanyl against North Americans—and that Canada stands out as a worrisome weak link in the global supply chain.

On Tuesday, Prime Minister Justin Trudeau’s government moved to address growing U.S. alarm by appointing former RCMP deputy commissioner Kevin Brosseau as Canada’s new “fentanyl czar.” Announced as part of an agreement to forestall potential American tariffs in a tense trade dispute, the position mandates “accelerating Canada’s ongoing work to detect, disrupt, and dismantle the fentanyl trade,” according to the Prime Minister’s Office. Brosseau, who most recently served as deputy national security and intelligence adviser to Trudeau, will work closely with U.S. agencies to tackle a crisis that has claimed tens of thousands of lives across North America. Still, questions remain about whether he has the standing in Washington—and the authority in Ottawa—to enact meaningful reforms.

West, reflecting on his encounter with Blinken, doubts that incremental measures will suffice. He argues that only bold legislative change, coupled with a willingness to challenge entrenched legal barriers, can dispel the U.S. government’s unease over Canada’s approach. “Secretary Blinken specifically noted the lack of a RICO-style law in Canada,” West said. “He talked about how, in the United States, that law had been used to take down large portions of the mafia. Then he looked at us—one of America’s closest allies—and saw a very concerning weak link.”

According to West, Blinken pointed to China’s role in funneling precursor chemicals into fentanyl labs. He warned that China’s government, if inclined, could stem the flow but has little interest in doing so. “He was incredibly candid and very serious about the threat fentanyl poses to North America,” West recalled. “He confirmed the connection between the Chinese Communist Party, the triads, and the Mexican cartels, telling me these groups are working together—and it’s Canada where they’re finding a safe operating base.”

West says American frustration revolves around high-profile law enforcement stumbles in Canada, notably the E-Pirate investigation into Silver International, an alleged underground bank in Richmond, B.C., believed to have laundered more than a billion dollars a year for global syndicates. Touted as a signal that Canadian authorities could clamp down on transnational money laundering, the case nevertheless collapsed with no convictions. “He expressed genuine dismay that we haven’t secured meaningful convictions,” West said, paraphrasing Blinken. “When our most prominent laundering case ends with zero prison time, you can see why the Americans are alarmed.”

Blinken also conveyed to West that U.S. agencies have grown hesitant to share certain intelligence with their Canadian counterparts.
“He told me that U.S. intelligence and law enforcement are withholding some evidence because they don’t believe we’ll act on it,” West explained. “They’ve lost confidence.”

West added that in ongoing communications, he has learned American officials are shocked that major figures in Asian organized crime “seem to have so much access to our political class. They’re basically saying, ‘What’s going on in Canada?’”

A major concern, according to West, is how known criminals manage to appear at political events or fundraisers with little oversight.
“It’s not necessarily that politicians are complicit, but our political structures have weak guardrails,” West said. “The Americans see pictures of transnational criminals mingling at official gatherings and find it baffling.”

West insists that Canada must enact a legal framework akin to the U.S. Racketeer Influenced and Corrupt Organizations (RICO) Act to truly “detect, disrupt, and dismantle” the fentanyl trade. “We don’t have anything like it, and until we do, I worry the new czar’s hands could be tied by the legal status quo,” West said. “Ottawa might resist, but we need it. We should have enacted it yesterday.”

He also decries what he calls “egregious rulings” that free major traffickers or launderers on technicalities. West cites a prominent British Columbia case in which a suspect found with more than 27,000 fentanyl pills was released because a police dog had not fully performed its required sitting motion before searching a vehicle. “When a decision like that happens, we’re letting criminals exploit minutiae while countless people die,” he said. “We need a government that has the courage to challenge those judicial outcomes.”

In pursuit of that goal, West is willing to suggest the targeted use of the notwithstanding clause, a rare constitutional tool allowing governments to override parts of the Charter of Rights and Freedoms for up to five years. Typically employed in language or education disputes, it has scarcely been used in criminal proceedings. “When the Charter is being weaponized by sophisticated organizations, the government should consider all tools,” he insisted. “The right of Canadians not to be killed by a drug of this scale ought to supersede a procedural glitch.”

The severity of the fentanyl crisis in British Columbia, which has seen the majority of Canada’s overdose deaths, offers a striking backdrop for West’s urgings. He emphasizes that the torrent of precursor chemicals from China has supercharged local labs, embedding crime syndicates in global narcotics pipelines. Profits from these vast operations, in his words, flow through real estate, casinos, and underground banks with little interference.

Whether Ottawa has the political will to implement measures as sweeping as a RICO-style statute or invoke the notwithstanding clause remains uncertain. Both actions would require confronting powerful interests and explaining why existing laws have failed to secure convictions against top offenders. But West argues that mounting American impatience has changed the equation. “This is no longer just a Canadian domestic issue,” he said. “Secretary Blinken made it clear that the Biden administration sees fentanyl as an existential threat. They’re building a global coalition and need Canada fully on board. If we don’t show real progress, the U.S. will protect itself by any means—tariffs or otherwise.”

“People have been calling for something like RICO in Canada for years,” West added. “Silver International was the textbook illustration of why we need it. We had it all—massive money laundering, triads with direct links to Mexican cartels tied to fentanyl labs—and it collapsed because our system couldn’t handle a case of that complexity. That can’t keep happening, or else we’ll remain the hub of a deadly trade.”

West also revealed he would have accepted the fentanyl czar position himself if asked. “I love being mayor, but this is one of the biggest challenges facing our country,” he said. “I’d pour my heart into it. It demands relentless follow-through: legislation, expanded police powers, educating the public, and yes, taking on the courts if necessary.”

Whether Brosseau wields enough clout remains to be seen. West hopes the appointment signals a turning point from what he calls “a fragmented, complacent approach” to one that confronts the crisis on all fronts. “I’ve seen too many half-measures,” he said. “But maybe this time it’ll be different. The Americans have made their position crystal clear, and we need to demonstrate that we can protect ourselves. Otherwise, we fail both our citizens and our closest ally.”

West still recalls Blinken’s direct plea: “He basically said, ‘We need a partner we can trust, one that can disrupt these networks and secure convictions,’” West noted. “If Canada doesn’t step up, I believe the Americans will respond in ways that damage our relationship—and meanwhile, we’ll continue losing people to a drug that’s tearing families apart. We just can’t let that happen.”

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Banks

Welcome Back, Wells Fargo!

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Racket News Racket News

By Eric Salzman

The heavyweight champion of financial crime gets seemingly its millionth chance to show it’s reformed

The past two decades have been tough ones for Wells Fargo and the many victims of its sprawling crime wave. While the banking industry is full of scammers, Wells took turning time honored street-hustles into multi-billion dollar white-collar hustles to a new level.

The Federal Reserve announced last month that Wells Fargo is no longer subject to the asset growth restriction the Fed finally enforced in 2018 after multiple scandals. This was a major enforcement action that prohibited Wells from growing existing loan portfolios, purchasing other bank branches or entering into any new activities that would result in their asset base growing.

Upon hearing the news that Wells was being released from the Fed’s penalty boxmy mind turned to this pivotal moment in the classic movie “Slapshot.”

Here are some of Wells Fargo’s lowlights both before and after the Fed’s enforcement action:

  • December 2022: Wells Fargo paid more than $2 billion to consumers and $1.7 billion in civil penalties after the Consumer Financial Protection Bureau (CFPB) found mismanagement — including illegal fees and interest charges — in several of its biggest product lines, such as auto loans, mortgages, and deposit accounts.
  • September 2021: Wells Fargo paid $72.6 million to the Justice Department for overcharging foreign exchange customers from 2010-2017.
  • February 2020: Wells Fargo paid $3 billion to settle criminal and civil investigations by the Justice Department and SEC into its aggressive sales practices between 2002 and 2016. About $500 million was eventually distributed to investors.
  • January 2020: The Office of the Comptroller of the Currency (OCC) banned two senior executives, former CEO John Stumpf and ex-Head of Community Bank Carrie Tolstedt, from the banking industry. Stumpf and Tolstedt also incurred civil penalties of $17.5 million and $17 million.
  • August 2018: The Justice Department levied a $2.09 billion fine on Wells Fargo for its actions during the subprime mortgage crisis, particularly its mortgage lending practices between 2005 and 2007.
  • April 2018: Federal regulators at the CFPB and OCC examined Wells’ auto loan insurance and mortgage lending practices and ordered the bank to pay $1 billion in damages.
  • February 2018: The aforementioned Fed enforcement action. In addition to the asset growth restriction, Wells was ordered to replace three directors.
  • October 2017: Wells Fargo admitted wrongdoing after 110,000 clients were fined for missing a mortgage payment deadline — delays for which the bank was ultimately deemed at fault.
  • July 2017: As many as 570,000 Wells Fargo customers were wrongly charged for auto insurance on car loans after the bank failed to verify whether those customers already had existing insurance. As a result, up to 20,000 customers may have defaulted on car loans.
  • September 2016: Wells Fargo acknowledged its employees had created 1.5 million deposit accounts and 565,000 credit card accounts between 2002 and 2016 that “may not have been authorized by consumers,” according to CFPB. As a result, the lender was forced to pay $185 million in damages to the CFPB, OCC, and City and County of Los Angeles.

Additionally, somehow in 2023 Wells even managed to drop $1 billion in a civil settlement with shareholders for overstating their progress in complying with their 2018 agreement with the Fed to clean themselves up!

I imagine if Wells were in any other business, it wouldn’t be allowed to continue. But Wells is part of the “Too Big to Fail” club. Taking away its federal banking charter would be too disruptive for the financial markets, so instead they got what ended up being a seven-year growth ban. Not exactly rough justice.

While not the biggest settlement, my favorite Wells scam was the 2021 settlement of the seven-year pilfering operation, ripping off corporate customers’ foreign exchange transactions.

Like many banks, Wells Fargo offers its corporate clients with global operations foreign exchange (FX) services. For example, if a company is based in the U.S. but has extensive dealings in Canada, it may receive payments in Canadian dollars (CAD) that need to be exchanged for U.S. dollars (USD) and vice versa. Wells, like many banks, has foreign exchange specialists who do these conversions. Ideally, the banks optimize their clients’ revenue and decrease risk, in return for a markup fee, or “spread.”

There’s a lot of trust involved with this activity as the corporate customers generally have little idea where FX is trading minute by minute, nor do they know what time of day the actual orders for FX transactions — commonly called “BSwifts” — come in. For an unscrupulous bank, it’s a license to steal, which is exactly what Wells did.

According to the complaint, Wells regularly marked up transactions at higher spreads than what was agreed upon. This was just one of the variety of naughty schemes Wells used to clobber their customers. My two favorites were “The Big Figure Trick” and the “BSwift Pinata.”

The Big Figure Trick

Let’s say a client needs to sell USD for CAD, and that the $1 USD is worth $1.32 CAD. In banking parlance, the 32 cents is called the “Big Figure.” Wells would buy the CAD at $1.32 for $1 USD and then transpose the actual exchange rate on the customer statement from $1.32 to $1.23. If the customer didn’t notice, Wells would pocket the difference. On a transaction where the client is buying 5 million CAD with USD, the ill-gotten gain for Wells would be about $277,000 USD!

Conversely, if the customer did notice the difference, Wells would just blame it on the grunts in its operational back office, saying they accidentally transposed the number and “correct” the transaction. From the complaint, here is some give and take between two Wells FX specialists:

“You can play the transposition error game if you get called out.” Another FX sales specialist noted to a colleague about a previous transaction that a customer “didn’t flinch at the big fig the other day. Want to take a bit more?”

The BSwift Piñata

The way this hustle would work is, let’s say the Wells corporate customer was receiving payment from one of their Canadian clients. The Canadian client’s bank would send a BSwift message to Wells. The Wells client was in the dark about the U.S. dollar-Canadian dollar exchange rate because it had no idea what time of day the message arrived. Wells took advantage of that by purchasing U.S. dollars for Canadian dollars first. For simplicity, think of the U.S. dollar-Canadian dollar exchange rate as a widget that Wells bought for $1. If the widget increased in value, say to $1.10 during the day, Wells would sell the widget they purchased for $1 to the client for $1.10 and pocket 10 cents. If the price of the widget Wells bought for $1 fell to 95 cents, Wells would just give up their $1 purchase to the client, plus whatever markup they agreed to.

Heads, Wells wins. Tails, client loses.

The complaint notes that a Wells FX specialist wrote that he:

“Bumped spreads up a pinch,” that “these clients who are in the mode of just processing wires will most likely not notice this slight change in pricing” and that it “could have a very quick positive impact on revenue without a lot of risk.”

Talk about a boiler room operation. Personally, I think calling what you are doing to a client a “piñata” should have easily put Wells in the Fed’s penalty box another 5 years at least!

Wells has been released from the Fed’s 2018 enforcement order. I would like to think they have learned their lesson and are reformed, but I would lay good odds against it. A leopard can’t change its spots.

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Alberta

Pierre Poilievre – Per Capita, Hardisty, Alberta Is the Most Important Little Town In Canada

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From Pierre Poilievre

The tiny town of Hardisty, Alberta (623 people) moves $90 billion in energy a year—that’s more than the GDP of some countries.

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