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law Times • July 26, 2010 FOCUS PAGE 9 ganized crime in Canada, On- tario's private and public foren- sic experts are being called on to paint a picture of the shad- owy face of the underworld. In the process, they're bring- ing to light the constraints that are hindering the identifi cation of suspects and their sources of income while decrying the subordinate role policing often assigns to investigative and ac- counting professionals. Ed Fast, MP for Abbotsford, B.C., is chairman of the House of Commons standing committee on justice and human rights that has taken on the mammoth task of studying the state of organized crime in Canada. Th e original motion for the inquiry set aside four committee meetings to deal with the issue, but it's now been going on for about a year and a half. "Once we opened the door, we saw that it would require much more than four meetings," Fast explains. "We have ended up travelling to Vancouver, Ed- monton, Toronto, Montreal, and Halifax, and many witnesses have come to Ottawa or participated by teleconferencing. It is very comprehensive." Fast has concluded that or- ganized crime is a rapidly grow- ing and insidious problem. "Th e biggest concern I have is that the face of organized crime is chang- ing," he says. "It used to be the Mafi a and the biker gangs but now it covers a much broader spectrum. Th ere are still the higher levels but there are lower- level groups as well, which are often very loosely structured gangs at the local level. Th ere is also much more interaction be- tween the two levels than in the past. Th ere is vertical integration Designing a net to catch organized criminals W BY JUDY VAN RHIJN For Law Times ith a parliamentary inquiry underway into the state of or- as the more organized groups use the less organized groups to do their dirty work." Fast also notes street gangs are recruiting very young teenagers who aren't subject to the same penal terms as adults. "Th at makes them more attractive to the higher-up criminals who are insulating themselves from crim- inal liability to some extent." In the meantime, technol- ogy has been playing a key role in the expansion. "Th ere has been clear evidence from law enforcement agencies that they don't have the technological and legal resources to deal with the problem," Fast points out. "Organized crime is always at the cutting edge of technology and uses the newest media to communicate with. Th e police have struggled to keep up." It's for this reason that law enforcement agencies seek the assistance of forensic profes- sionals in trying to understand the information they're collect- ing. According to Ken Froese, senior managing director of Froese Forensic Partners Ltd. in Toronto, those professionals can contribute more than they currently do if they're involved in the process earlier on. He feels that by including investi- gative and forensic accounting professionals in strategy ses- sions at the start of an inves- tigation, police could become more proactive in dealing with organized crime instead of having a "rear-view mirror" ap- proach. "Th e police traditionally hire someone at the end of the line," Froese notes. "Th ey have done their search warrants and now they want to know what's in it. Th ey put out tenders for forensic accounting support for their investigation. Th ey may be investigating a mortgage broker and need to understand how the funds work. Th ey may American giant moves in O BY JUDY VAN RHIJN For Law Times n June 15, global fi nancial giant Duff & Phelps Corp. announced its acquisition of Toronto-based fi nancial advisory fi rm Cole & Partners, a move that marked its fi rst foray into the Canadian market. Th e global expansion aims to provide local expertise to its clients while taking advantage of the benefi ts of global scale and access to more than 1,000 professionals with technical and industry knowledge. Duff & Phelps is a major independent fi nancial advisory and investment banking fi rm. Its principle areas are valuation, transactions, fi nancial restructuring, dispute, and taxation. It was recently involved in the Lehman Brothers Holdings Inc. bankruptcy and was subcontracted by the congressional over- sight committee that ran the Troubled Asset Relief Program in the wake of the fi nancial crisis. Cole & Partners caught the interest of the Duff & Phelps' em- pire builders when they fi rst turned their eyes northward two years ago. Th e Toronto fi rm is known for its expertise in business valu- ation, fi nancial litigation support, corporate fi nancial advice, and forensic investigative accounting. It boasts of a diverse client base that ranges from large publicly traded companies to private busi- nesses but has a particular focus on legal and accounting fi rms. Cole & Partners now becomes the 25th offi ce of Duff & Phelps See Duff, page 13 www.lawtimesnews.com JONES_Administrative Oversight (LT 1-4x3).indd 1 7/21/10 12:32:32 PM LT0726 ORDER your copy today Perfectbound • 460 pp. 2009 • $85 P/C 0966010000 ISBN 978-0-88804-488-4 be investigating the Hells An- gels and need to know their legitimate sources of funds and any unaccounted-for income. In my experience, this is never the upfront strategic work. It is always task-oriented." At the same time, Froese be- lieves organized crime has ex- panded out of its standard areas of drug dealing and smuggling. "Th ese days, there are a lot of mortgage frauds and other types of fraud that are left of standard involving organized crime," he says. "To address these types of crime, you may need a lot of brainstorming. You could use off -site task forces to strategize or even volunteer groups." Froese also proposes greater use of interdisciplinary units with a focus on having strategic teams. In fact, he gave testimo- ny to this eff ect before the com- mittee on April 13 and assisted it with an overview of the ways forensic professionals attempt to catch criminals and some of the measures that could make life easier in that regard. Suspicious cash transactions are high on Froese's list of red fl ags that identify criminals disposing of ill-gotten gains. "We need to fi gure out how to capture that information," he says. "FINTRAC [the Finan- cial Transactions and Reports Analysis Centre of Canada] is the net the government uses to catch suspicious transactions. Every police force accesses that information, so reporting to FINTRAC is a way to get the information into the system." Froese believes existing disclo- sure levels for cash transactions "Compliance reporting By including private experts at the start of an investigation, police could become more pro- active in stopping organized crime, says Ken Froese. are reasonable in the areas al- ready required to report. But he proposes adding other business- es through which criminals may try to launder their cash to the list. For motor and recreational vehicle dealers, for example, he suggests reporting cash transac- tions of $10,000 or more. For companies operating white-la- bel automated teller machines, some of which may be owned by organized crime, he recom- mends the same requirement. Froese also wishes to target con- struction and home renovation companies, horse racetracks, hotels (where a lower threshold of $1,000 might be reasonable), and lawyers. Froese wishes law- yers were accountable in the same way that professional ac- countants are. But once wider reporting re- quirements are in place, there's still the problem of ensuring compliance. is wishful thinking without en- forcement procedures," Froese warns. "I think the police would say that they don't need more teeth in the legislation; they need more teeth in enforcement." Th e other issue he brought to the committee's attention was the diffi culty in identify- ing companies in which orga- nized crime groups hold inter- est because of the limitations in requirements. "Share-ownership information isn't captured anywhere," Froese says. "You have to report the ad- dress and names of offi cers and directors but not the owners." Froese also addressed the use of nominees to hide the real owner's identity, a problem for which he proposed a one- year limit on how long people can take advantage of that op- tion. "All sorts of people are hiding ownership," he says. "It would make searches easier if you could search by name and if ownership was reported." In the meantime, Fast re- ports the committee has now completed the bulk of its work. He expects there may be a draft report for consideration in the spring. "I'm not suggesting the recommendations will be unan- imous but I'm hoping there will be a signifi cant amount of con- sensus," he says. "Everyone on the committee understands the seriousness of the problem. It is not just individuals, families, and victims who are aff ected. Communities and businesses also end up bearing the high cost of crime." 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