POLICE MADE DEAL WITH 'BANK' FIGURE

Money Laundering Charges Dropped In Exchange For Testimony About Alleged
Drug Trafficker, Sun Reporter David Baines Finds

Doug Montaldi Ran Numbered Firm.

Police made a deal with one of two key figures in an unregulated bank in
Burns Lake that they would not pursue money-laundering charges against him
if he testified against the alleged drug trafficker who provided the funds,
The Vancouver Sun has learned.

Information sworn by the RCMP to obtain a search warrant in May 2000 states
that Donald Briere, who ran a massive marijuana growing operation in Surrey
during the 1990s, transferred hundreds of thousands of dollars in U.S.
currency to Doug Montaldi, a director and shareholder of 439288 B.C. Ltd.,
from 1995 to 1998.

The document states that Montaldi, who is married to Briere's sister,
cycled more than $850,000 Cdn -- most of it in U.S. currency -- through the
numbered company, which took deposits and made loans to Burns Lake residents.

Revenue Canada files obtained by the RCMP state that, at the same time
Montaldi was receiving large chunks of cash from Briere, he was filing tax
returns on Briere's behalf reporting relatively modest levels of income --
from $30,000 to $60,000 per year.

"No legitimate sources of income have been located to explain how Briere
was able to deposit this money into the investment account [at the numbered
company]," RCMP Constable John Ibbotson, who co-ordinated the proceeds of
crime investigation, stated in the search warrant document.

Ibbotson also stated that Montaldi acknowledged he had an agreement with
Briere that he would receive a 15-per-cent commission on all the money he
handled. Montaldi denied, however, that he knew the money was coming from
criminal activities. He said he thought Briere had a construction business
that operated on a cash basis.

In fact, Briere was running a multi-location marijuana-growing operation,
the largest that Surrey RCMP had ever seen, employing some 80 people. He
also owned an arsenal of deadly weapons, including an Intra Teck 9-mm
machine gun and 260,000 rounds of ammunition.

In March 1999, after a series of police raids, Briere was charged with
various drug offences and in July 2000 he was charged with laundering $2.3
million.

According to documents obtained by The Sun, the RCMP viewed Montaldi as a
co-conspirator and planned to recommend to Crown prosecutors that he also
be charged with money-laundering.

However, Montaldi obtained a lawyer and negotiated a deal in which RCMP
agreed not to pursue charges if he agreed to testify against Briere.

"He was told that we would not charge him if he provided testimony at any
criminal proceeding with respect to Mr. Briere," Ibbotson testified in an
unrelated disciplinary hearing held by the Certified General Accountants
Association of B.C. last September.

As events unfolded, Montaldi did not have to testify. Last September,
Briere pleaded guilty to cultivating marijuana, possession of the proceeds
of crime and money-laundering. He is now serving four years in jail.

In April, the B.C. Financial Institutions Commission learned that Montaldi
and his long-time partner, Glenn Anderson -- through 439288 B.C. Ltd. --
were operating a kind of unregulated bank, paying a 12-per-cent return on
deposits and lending out that money at 17 per cent.

The commission sent a team of four investigators to Burns Lake and on May 3
issued a cease-and-desist order against the numbered company, Montaldi and
Anderson on grounds they were taking deposits when they were not authorized
to do so.

The commission revealed that by the end of last year, 418 individuals and
companies had deposited a total of $36 million and 1,400 others had
borrowed $24 million for everything from weekend spending money to real
estate acquisitions.

After the order was filed, lawyers for the numbered company filed notice of
its intention to make a proposal to its creditors under the Bankruptcy and
Insolvency Act, a tacit admission that it is insolvent.

Trustee and interim receiver PricewaterhouseCoopers Inc. has 30 days to
file a proposal, but is likely to seek an extension.

"With the volume of files we will have to go through and with the issues
surrounding the company's authority to operate, it would be almost
impossible to file a proposal within 30 days," said senior vice-president
Michael Vermette.

Meanwhile, depositors have been unable to access their money and borrowers
have had their credit lines cut off.

This has caused upset in the Burns Lake area, 1,000 kilometres north of
Vancouver, where conventional financial institutions are viewed with as
much disdain as the numbered company was viewed with affection.

However, an RCMP search warrant information sworn by Ibbotson in May 2000
suggests a more insidious side to the numbered company's operations.

In the document, Ibbotson states that he is trying to find out what
happened to the money Briere made from his illicit drug operation.

He says he interviewed Montaldi who told him he first met Briere in
September 1992 through Briere's sister, Sharol.

He says Montaldi told him that Briere began giving him money for investment
in the numbered company in 1995, and that he always thought Briere was in
the construction business, although he did not know the name of the business.

He also says Montaldi told him he prepared income tax returns for Briere
for the years 1996, 1997 and 1998. When Montaldi prepared the returns, he
would ask Briere to provide receipts for expenses, but Briere only provided
receipts for a vehicle, telephone and meals. Based on these figures he
would then make up a figure he believed was reasonable.

Ibbotson says in the search warrant information that, according to records
obtained from Revenue Canada through a court order, Briere reported net
income of less than $32,000 for the years 1993 to 1998 inclusive and
$59,179 for 1998.

He notes that, despite this modest income, Briere provided Montaldi with
hundreds of thousands of dollars for investment in the numbered company and
elsewhere. He says Montaldi told him the money was "almost always" in
United States currency.

Citing specific transactions, Ibbotson says Montaldi told him that in 1995,
Briere gave him $30,000 US cash, which he turned over to Anderson.

"Glenn Anderson split the money into smaller quantities for deposit into
the bank accounts of 439288 B.C. Ltd. to Briere's credit," Ibbotson states
in the search warrant information.

"He [Montaldi] doesn't recall specifically how all the money was received
from Briere, however Briere would normally give him the money while he was
in Vancouver.

"Briere occasionally sent money to him through a commercial courier
service. On one occasion, Briere flew up to Burns Lake in a small plane. At
that time they brought a sum of money, but the exact amount is unknown."

Ibbotson says in the search warrant information that, based on Montaldi's
description of the pilot, he believes the pilot was Glen Finch, who was
arrested in November 1999 with about 30 pounds of marijuana.

Ibbotson says Finch told him earlier he had flown a large quantity of
Briere's marijuana to the United States, and he met Briere's accountant
when he flew Briere and some money to Smithers.

The RCMP officer further states in the search warrant document that
Montaldi told him that in 1996, he received the equivalent of $94,500 Cdn
in US currency from Briere. This money was invested in the numbered company
and some of it was later withdrawn to help purchase a plane and some
properties.

Ibbotson says Montaldi also told him he set up up four bank accounts at the
TD Bank and CIBC in White Rock and an unnamed bank in Blaine, Wash., which
were used to deposit money that Briere gave him for investment in the
numbered company.

The accounts were set up in the names of GH Video and WR Import Export.
Montaldi told Ibbotson he made up the names of both companies.

According to accounting records the RCMP seized from the numbered company
and cited in the search warrant document, the flow of money from Briere
through the numbered company escalated dramatically in 1997 and 1998.

In 1997, Briere deposited $510,782 and withdrew $131,165 from the numbered
company. The following year, he deposited $233,758 and withdrew $381,675.
In total, he deposited $851,302 and withdrew $863,332, resulting in a
negative balance of $12,030.

"No legitimate sources of income have been located to explain how Briere
was able to deposit this money into the investment account," Ibbotson
states in the search warrant document.

Among the withdrawals were amounts of $85,000, $14,000 and $127,000 that
were used to buy property in 100 Mile House. Montaldi said Briere told him
he was putting the property in the names of two employees, Trent Bahm and
Dave Munro, because he "didn't want to show the source of the income,"
Ibbotson states.

Meanwhile, the numbered company loaned the same two men $95,000, which was
also used to finance the property. The loan was repaid with money provided
by Briere, Ibbotson reports in the information.

Ibbotson further states that Montaldi also told him he and Sharol borrowed
$200,000 in US currency from Briere and most was deposited in Montaldi's
investment account at the numbered company. Some of the proceeds were used
to buy alpacas in the United States. (Montaldi and his wife own the Omineca
Llama Farm in Burns Lake.)

Also in 1998, Montaldi arranged for Briere to lend $50,000 to Bear Toe
Resorts Ltd., a B.C. registered company of which Montaldi is a director.
"This loan is not documented anywhere," Ibbotson states.

Ibbotson says in the search warrant information that Montaldi also told him
he and Briere acquired an option to purchase the courthouse and jail
property in Golden through another numbered company, 573796 B.C. Ltd.

Montaldi said he wrote cheques totalling $250,000 and removed $125,000 from
Briere's investment account to pay for Briere's portion of the investment.

This investment was later identified by RCMP as one of the many assets that
Briere purchased with the proceeds of his crimes. As part of his settlement
with the Crown, Briere agreed to forfeit his half interest in this property.