Police investigation probes landlord's taxes, casino activities

For more than three years, Edmonton police Det. Dan Behiels investigated notorious Edmonton landlord Abdullah Shah and some of his alleged accomplices. In January 2021, when the investigation concluded and no charges were laid, a frustrated Behiels took the extraordinary step of leaking the confidential investigative documents to CBC News. He is now suspended and facing disciplinary charges. CBC Edmonton's new series Behind the blue line: Investigating Abdullah Shah digs into those documents and why Behiels decided to put his career on the line for them.

PartThree examines the Edmonton Police Service and the Canada Revenue Agency'sjoint investigation into alleged money laundering and tax evasion.

• Read Part One Behind the blue line: Investigating Abdullah Shah
• Read Part Two Project Fisk and the allegations against Abdullah Shah
• Read Part Three Police investigation probes landlord's taxes, casino activities
• Read Part Four How a stolen police badge raised concerns about Abdullah Shah and his connections with Edmonton police
• Read Part FiveLawsuits against Edmonton police and a detective's career in limbo: The aftermath of Project Fisk

For two years, investigators with Project Fisk a joint Edmonton Police Service and Canada Revenue Agency task force probed the empire built by notorious inner-city landlord Abdullah Shah, also known as Carmen Pervez.

But despite the thousands of hours committed to unraveling the inner workings of a suspected criminal organization, no charges were laid against Shah or seven of his associates connected to Home Placement Systems, a company owned and controlled by Shah.

That was a body blow to the man who headed up the investigation, now suspended Edmonton police Det. Dan Behiels.

In a 75-page summary of the case submitted to the Crown in December last year, Behiels wrote that he believed he had the evidence to support 19 criminal charges against Shah and seven of his HPS associates, including participation in a criminal organization, laundering proceeds of crime, fraud, forgery, human trafficking, possession of property obtained by crime and drug trafficking.

After reviewing Behiels' findings that same month, the Crown declined to pursue charges.

Sarah Langley, chief prosecutor with Alberta's Appeals and Specialized Prosecutions Office, told CBC News in July this year that in order to prosecute, there must be enough evidence for a reasonable likelihood of conviction and it must be in the public interest.

"The ACPS [Alberta Crown Prosecution Service] maintains that, to date, this test has not been satisfied with respect to any of the charges contemplated in relation to any of the alleged conduct," Langley wrote in an email.

Behiels disagreed.

Believing the case was in the public interest, shortly after the Crown made its decision to not pursue charges, Behiels leaked the Project Fisk investigative file to CBC News. He confessed to doing so, and is now suspended with pay and facing disciplinary charges.

In a recent email to CBC News, EPS communications director Michael James wrote, "There were several intelligence gaps within the investigation and there was concern that some of the intelligence being relied upon would not stand up in court."

One of the lawyers who represents Shah has accused Behiels of conducting a "witch hunt" against his client.

"This investigation resulted in a colossal waste of resources and was driven by tunnel vision and malice," Paul Moreau wrote in an email to CBC News.

Moreau and Shah declined repeated requests to be interviewed.

Shah has been the subject of a number of EPS investigations and has a criminal record that dates back to 1983.

He has convictions for drug trafficking and mortgage fraud, and is currently on probation after admitting last December that he had paid people to assault a former employee.

Properties, casinos and alleged tax evasion

The Project Fisk investigative documents detailhow Behiels and investigators believed Shah and his HPS associates allegedly evaded paying taxes and laundered money.

A Canada Revenue Agency [CRA] analysis of the possession and sales of property under the control of HPS alleged that between 2013 and 2017 the company had evaded taxes on $3.4 million on sales of property, the report to the Crown states.

"Home Placement Systems operates in a cash business making it easy to comingle legitimate cash with illicit cash," Behiels wrote to the Crown.

"For the purpose of this investigation, the illicit money that will be focused on is the black money money that is derived from the evasion of taxes."

Matthew McGuire, a Toronto-based forensic accountant and a recognized expert on money laundering, has reviewed documents from the investigation, provided to him by CBC News.

"The alleged tax evasion has a lot of merit from the perspective of creating excess cash," McGuire told CBC after reviewing the CRA's analysis.

"Not paying taxes on any of that money leaves them 50 per cent better off than if taxes had been paid," he said.

"It would be hard to invent a set of facts to better showcase prevailing money laundering techniques in Canada."

A spokesperson for the CRA would not say if the agency had laid any charges against Shah or if charges were pending following Project Fisk.

"In order to ensure the integrity of our work and to respect the confidentiality provisions of the Acts we administer, the Canada Revenue Agency does not comment on an investigation that it may or may not be undertaking," spokesperson TJ Madigan wrote in a July 2021 email to CBC News.

Anatomy of a property transaction

In the report to Crown counsel, Behiels details numerous allegations on how Shah and his HPS associates were able to allegedly avoid paying taxes. As of July 2019, HPS owned more than $24 million in residential and commercial real estate in the Edmonton area.

Behiels also alleges in the same document that many of the properties were owned by numbered companies with mortgages obtained from private lenders at high interest rates.

In one example detailed in the report, a numbered company bought a multi-unit building in the Edmonton neighbourhood of Parkdale, just north of Commonwealth Stadium, for $153,750 in January 2014.

A Shah family member signed the transfer and got a $125,000 mortgage from a Vancouver lender. Six months later, in July, the same property was appraised at $500,000.

By May 2016, property taxes were in arrears for $12,714 and in September of that year the building was damaged byfire and later boarded up.

A month later, in October, Alberta Health Services deemed the premises unfit for human habitation.

In February 2017, a different numbered company purchased the property for $375,000 despite the extensive fire damage, taxes owed and that it had been found unfit to live in.

A mortgage was obtained through the same Vancouver private lender for $230,000.

In May 2017the new owner applied for vacant dwelling insurance.

A different numbered company run by the same former purchaser bought the property for $415,000 in October 2017 and in December of that same year, a mortgage renewal for $200,000 was issued by the same Vancouver private lender.

The property is no longer under the control of Shah, his HPS associates or any of his numbered companies. The city issued a demolition order for the building in October 2019.

The now-empty lot was transferred to an Edmonton developer in January 2021 for $270,000. The city has assessed its current value at $350,000.

"Investigators struggle to understand the 270 per cent increase in property value, given that there was an arson, the property was deemed unfit for human habitation and there were no renovations completed," Behiels noted in his report to the Crown.

McGuire, the money laundering expert, was asked for his assessment.

"The [alleged] mortgage frauds ostensibly created hundreds of thousands of dollars in excess revenue," McGuire said.

"If they continue that pattern, they can get their money out through foreclosure. The finance company is out the money."

Allegations of suspicious real estate transactions were also included in a July 2019 document Behiels filed with the provincial court, asking a judge to issue search warrants on a number of properties related to Shah. The Information to Obtain (ITO) was a snapshot of the investigation at the time it was filed.

In a recent email to CBC, Shah's lawyer, Erika Norheim wrote, "There was nothing illegal about any of the real estate transactionsreferenced in the ITO and we point out that the Crown expressly declined to prosecute."

Alleged casino money laundering

Another of the key allegations in the report Behiels wrote to the Crown was that Shah was suspected of laundering money through casinos.

The National Parole Board noted in a December 2009 report that while Shah was on statutory release for a conviction on mortgage fraud and possession of property obtained by crime, RCMP spotted him at a casino 18 times between June and August of that year, cashing out large sums of money ranging from $10,000 to $120,000.

A problem with gambling- National Parole Board, 2009

The report also notes that Shah told his parole officer in June 2009 that he had come up with a self-imposed ban at casinos, "as [Shah] had a problem with gambling."

The ITO filed in July 2019 included an opinion from an RCMP expert on money laundering.

"One of the most common problems faced by criminals is the need to deposit, convert or dispose of large amounts of cash into financial institutions or other forms of commerce and trade without drawing undue attention to oneself," wrote Const. William Lewadniuk.

According to investigative documents, in December 2018, Alberta Gaming, Liquor and Cannabis (AGLC) reviewed Shah's casino activity from June through November of that year.

It found he had placed $570,000 into casinos that reported to AGLC over that six-month period. Shah also dropped $238,000 at the River Cree Resort and Casino between April and July 2018.

The review noted that Shah was "to remain risked at EXTREME due to extensive criminality and large volumes."

McGuire said rating Shah as an extreme risk sent a strong signal.

"When we're talking about extreme risk, we're beyond the idea of possibility and we're at the point of probability or likelihood," McGuire said.

"It's not just a theoretical possibility that this person could launder money. We think they probably are."

Whenever casinos have reasonable grounds to suspect a financial transaction is related to money laundering, they must file a Suspicious Transaction Report (STR).

According to court documents, eight casinos completed 82 pages of STRs on Shah's gambling activity between Oct. 14, 2016 and July 7, 2018.

The documents show that in June 2018, Shah went to Casino Edmonton with a female business associate.

According to the STR, while Shah sat at a VLT, his co-worker spoke to another man. Shah approached them and shook the man's hand. When the other man left, she passed Shah an undetermined amount of cash.

Shah sat down at the baccarat table and bought in for $1,000, using $100 bills. In six minutes, he nearly tripled his money. His business associate approached the table and whispered in Shah's ear. Shah passed all of his chips to her to cash out on his behalf.

When she was cashing out the $2,900 in chips, a manager asked her for identification. Shah told the cashier he'd do it himself, asking why they wanted her ID when he was cashing out for less than the reportable $10,000 limit.

Shah got his money and the pair left the casino.

"This individual's actions are suspicious in nature given the totality of his play," the STR states. "Shah is sporadically involved in [a] high volume of play while utilizing funds from an unknown/unverified source."

McGuire reviewed the suspicious transaction reports.

"This is the classic money-laundering technique," he concluded.

"You're passing the chips to somebody else to try to have them be the person identified so that you're not the one that's linked to the source of funds."

McGuire said a typical money launderer's objective is to obscure the original source of the cash spent at a casino.

"The idea is to hopefully get a casino cheque afterwards to have an apparent legitimate source for the funds that you're depositing somewhere else or using somewhere else," McGuire said.

"Not just one casino thought that this looked like money laundering. A number of casinos thought it looked like it was money laundering."

Asked by CBC News about her client's casino activities, particularly the June 2018 events, Shah's lawyer Erika Norheim wrote in an email that "such behaviour is equally consistent with entirely lawful activities."

She told CBC that Shah is a problem gambler who voluntarily enrolled in an AGLC self-exclusion program on July 7, 2018 for a five-year term.

"The evidence you have obtained regarding Mr. Shah's vulnerability to gaming activities may be sensational but, respectfully, it is a private matter and the evidence in the ITO does not in fact establish that gambling was used in any way to launder money," Norheim wrote.

"All of the money used by my clients at the casinos was lawfully obtained," Norheim wrote.

Coming up tomorrow: Part Four: Concerns about the connection between Shah and high-ranking police officials

• Listen to Slumtown, a five-part CBC Edmonton podcast that looks at a battle brewing in Edmonton's inner city