THE SECRET WORLD OF CANADA'S MONEY-LAUNDERING KING

Frank Tran Was Given 10 Years In Prison Friday For Laundering $201
Million In A Cross-Border Drug Operation Worthy Of The Movies

Vancouver's Tho Ahn Khuc -- a key figure in the largest money
laundering case in Canadian history -- spent a lot of time on the
phone talking about kids.

He talked about fat kids and white kids, blond kids and kids with
white shirts.

This wasn't a doting father discussing his children. Khuc was a
Vancouver drug dealer and "kids" was the code word for cocaine.

The mastermind of the massive drug-money laundering operation was Dat
Dac Tien (Frank) Tran, who was sentenced Friday to 10 years in prison
after pleading guilty to laundering

$201 million over a three-year period for Asian and Latino gangs that
imported cocaine and exported B.C. bud.

Khuc, 38, ran a dial-a-dope operation, using a married couple in their
50s as couriers to deliver cocaine like pizzas. He was a high-level
wholesaler, one step below the importer, selling up to 12 kilograms at
a time, according to a statement of facts filed in B.C. Supreme Court.

When Khuc ran out of cocaine, he would place an order for more "beer"
from Adalberto Silva Rivas, a Mexican national who was living in fancy
home at 7380 Burris St. in Burnaby.

Silva Rivas came to Canada illegally and managed to smuggle more than
300 kg of cocaine over a three-year period, most of which ended up
being sold on Vancouver streets.

Silva Rivas and his right-hand man, Jose Donaldo Lopez Guzman of
Langley, used drug couriers carrying backpacks to bring shipments
across the Canada-U.S. border through orchards near Osoyoos, which was
described on the phone as "the little town that begins with a zero" or
"the town with a bunch of Os."

Silva Rivas bought his cocaine from a Mexican man known only as
"Chavo" for about $19,000 US a kilogram and sold it to Khuc for
$32,000 a kilogram or more.

Once Khuc had accumulated large sums of cash at his Vancouver home, he
would phone Silva Rivas to drop by the "Superstore" (code name for his
home) to pick up the "mail" (code for money, also called "letters" or
"papers").

Silva Rivas would pick up the money and take it to
Tran.

Tran and his wife, Thi Bac Hoa (Kim) Phan, ran Kim's Currency Exchange
out of their home at 4250 Brant St. in Vancouver.

The currency exchange had an unlisted number and no business licence.
But it did a phenomenal business -- exchanging $300,000 US a day for
the drug gangs.

Tran pleaded guilty to laundering $200 million in drug money and
trafficking five kilograms of cocaine.

At his sentencing Friday, Associate Chief Patrick Justice Dohm of B.C.
Supreme Court ordered $3 million of Tran's assets forfeited to the
Crown. He also sentenced Tran to a 10-year prison term -- the maximum
penalty for money laundering. Tran was also ordered to pay a fine of
$423,462.96.

(Tran's lawyer, Terry LaLiberte, gave the court a certified cheque
Friday to pay the fine.)

As part of Tran's plea agreement, charges were dropped against his
wife Kim Phan so she could look after the couple's five-year-old son
and 15-year-old daughter.

Project Blizzard

Tran first came to the attention of police in June 2001, when the
now-defunct Organized Crime Agency of B.C., acting on a tip, launched
a drug investigation code-named Project Blizzard that would eventually
identify more than 700 targets in the illegal drug trade, including
accused drug dealer Tommy Ho Sing Chan, 30, who was shot earlier this
month on the dance floor at Richard's on Richards nightclub and is
still in hospital in grave condition.

Around the same time, Tran was attracting the attention of the RCMP's
proceeds of crime squad, which was reviewing suspicious transaction
reports.

The reports had been passed on by the Financial Transaction Reporting
and Analysis Centre, set up by the federal government to crack down on
money laundering and terrorist financing. Under federal law, a person
involved in a transaction of $10,000 cash or more must declare the
source of the funds on a form and list their name, address and occupation.

Tran stood out as handling an enormous volume of cash -- more than $50
million a year.

Most legitimate currency exchanges would utilize an armoured car
service to handle such sums. But Tran moved the money in his own
vehicle in shopping bags, knapsacks and duffel bags.

"It was something you would expect to see in a Hollywood gangster
movie," federal prosecutor Ernie Froess said Friday in court,
describing the underground criminal venture as wildly successful. "It
was his very success that led to his downfall."

Between Jan. 1, 2000 and Jan. 23, 2003, Frank Tran laundered $201
million Cdn, earning him the distinction of being one of the largest
money-launderers in the history of B.C., and believed to be the
largest in the country.

"Tran's money-laundering venture was nothing short of extraordinary in
terms of its scope and audacity," Froess told the court.

Tran was "the central figure in a sophisticated cross-border money
laundering operation that provided currency exchange services to the
Silva Rivas organization as well as to other cocaine traffickers and
marijuana exporters in the Lower Mainland," the prosecutor said.

Since the currency of choice in the international drug trade is the
American dollar, Tran supplied a steady supply of U.S. funds in
exchange for Canadian money, Froess added.

"With help from various associates in the Seattle area, Tran
controlled an underground banking system that facilitated high-level
currency transactions between B.C. and Washington state without any
money having to be physically smuggled.

"This greatly reduced the risk of police interdiction and permitted
Tran to run his business with virtual impunity for years."

Tran's U.S. clients, who sold B.C. bud marijuana south of the border,
took their U.S. money to Seattle and handed it to Tran's sister, Thanh
Thi Tuyen Tran, a Vietnamese national who lived in Lynwood, Wash.

One of the people Tran's sister gave converted money to was Silva
Rivas's brother Uriel Silva Rivas, known by the code name "Tony," who
lived in a small town near Spokane.

Tran would then supply the corresponding amount in Canadian funds to
the Vancouver-based pot exporters.

Some of the people who received Canadian currency from Tran included
Cong Chinh Dinh, Leung Heng, Piotr Sperka, Viet Hoang, and persons
known only as "Tho," "Luc" and "Vu."

Police seized almost $800,000 from the trunk of a Porsche Boxster
driven by Sperka in Vancouver on Dec. 13, 2002.

Sperka allegedly gave $500,000 U.S. to Tran, who exchanged it for the
$793,510 Cdn that police found in the Porsche. Sperka was never
charged but the seized cash will be the subject of a forfeiture
hearing in September.

Tran accumulated more than $3 million in assets over a three-year
period. In 2002, he bought himself a $58,000 Mercury Grand Marquis and
a $2.15-million office building at 504 Cottonwood Drive in Coquitlam,
where one of the tenants was the provincial government.

He bought his $585,000 home in 1999 and paid off the mortgage on May
2, 2001, slightly before the time period of the police probe, so the
Crown couldn't ask for the entire house to be forfeited as proceeds of
crime. The Crown exempted $166,586 for the down payment and mortgage
payments made before Jan, 1, 2000.

In February 2002, Tran and his wife paid $40,000 to buy another
currency exchange, Alberni Gift & Currency Exchange, then at 103-1166
Alberni in Vancouver, which served as a front to their underground
business.

The previous owner had reported exchanges of $5,000 to $20,000 US a
week. Within three days, Tran was reporting up to $300,000 US a day.
Yet company records showed Tran did an average of $2,000 a day in
legitimate business.

Police later secretly listened to Tran's phone conversations, hearing
him openly brag about his illegal activities and the measures he took
to evade taxes and elude police.

Police Surveil Tran

Police began surveillance on Tran in September 2001, taking down
licence plate numbers of people visiting his house and following him
as he made daily trips to currency exchanges in Vancouver and Surrey,
where Tran would hand over bags of cash often reeking of marijuana.

Police began tapping the phone of suspects as they were identified.
During calls, Tran admitted he was making about $20,000 some months
and was sending a substantial amount to Vietnam, where he had invested
$500,000 in a hotel. "Sometimes there are certain months I earn up to
100 [thousand], you never know," he told a man named "Dung" on Dec.
30, 2002.

Nine days later, Tran told someone identified as "Phuong" that he paid
his sister $35,000 a year to do currency exchanges in Seattle on
behalf of clients in Canada.

Just as police began their surveillance operation, Tran bought an
apartment in Yaletown for $266,000. With a judge's authorization,
police secretly entered the apartment, at 1305-289 Drake, and
installed a tiny video camera above a large safe.

Police Would Watch as Tran Opened the Safe, Removed Bundles of Cash
From Backpacks and Counted Bills Into Stacks. He Would Then Put the
Money Into the Safe, Making Notes on a Pad He Kept in the Safe.

Police made a dozen covert entries into the cash stash house and
opened the safe, where the U.S. money often smelled of marijuana.
Police also photocopied Tran's notes, which were found to match the
amount of U.S. and Canadian cash inside the safe.

One covert check of the safe on Dec. 16, 2002, for example, found 21
bundles of U.S. currency totalling $515,000 and 10 bundles of Canadian
currency totalling $340,000. Another time, police found $600,000 US.,
which reeked of pot, in the safe. There was also a receipt from a
Calforex outlet in White Rock, dated Oct. 23, 2001, showing Tran had
converted $292,00 US into $464,153 in Canadian funds.

Police learned that Tran had a network of legitimate currency
exchanges that he used. He did 920 transactions at Calforex outlets
totalling $189 million. He also did about $5 million worth of
transactions at J&M Coin & Stamp Exchange, $3 million at Vancouver
Bullion & Currency Exchange and $4.1 million during 27 transactions at
Custom House Currency Exchange.

None of the exchanges did anything wrong -- they simply exchanged
money for a cash-rich customer.

Police estimated Tran's net worth increased by more than $8 million
between 2001 and 2003, but a forensic audit could only account for
about $3.5 million in assets, which the Crown froze. The remaining $5
million, police believe, Tran probably hid in Vietnam, which can't be
touched by Canada.

Police surveillance observed Tran involved in one cocaine transaction
on Aug. 15, 2002. Silva Rivas delivered a package to Tran's residence
at 4 p.m., just before Tran and his wife pulled up in their car with
another Asian man, later identified as Nguyen Tat Nguyen. An exchange
took place inside the carport and Nguyen drove away with a nylon duffel bag.

Organized crime investigators pulled over Nguyen a short distance away
and seized five kilos of cocaine inside the bag.

Later that night, Tran told Silva Rivas of Nguyen's arrest. Silva
Rivas expressed concern that he had noticed a neighbour watching them
but Tran dismissed it as simply a neighbour watering flowers. (In
fact, it had been an undercover officer.)

Silva Rivas later phoned his Mexican supplier of cocaine, Cahvo,
saying he was worried that the money exchange business could end. "Who
the hell is going to exchange for us?" Chavo asked. "We'd be
struggling again."

The chief investigator of Project Blizzard, Insp. Pat Fogarty of the
Combined Forces Special Enforcement Unit, said Friday that
investigation became international in scope, resulting in dozens of
arrests in Canada and the U.S. and leading to a spin-off
investigation, Project Longhaul, which targeted cross-border smuggling.

Asked to estimate the total amount of drugs and cash seized, he said
that it still being tallied.

"Hundreds of kilos of cocaine, thousands of pounds of marijuana and
millions in assets seized," he said. "Certainly it was a very
successful investigation. One thing led to another. This organization
was only part of it."