ILLEGAL MONEY-LAUNDERING STING JEOPARDIZES MASSIVE DRUG BUSTS

Two cocaine cases hinge on information from an RCMP operation that a judge
says aided and abetted the people it targeted.

A massive money-laundering sting hatched by RCMP to nab Vancouver drug
traffickers has been ruled an illegal act by a B.C. Supreme Court justice.

Project Eye Spy, in which police for three years operated the Pacific Rim
International Currency Exchange at 818 Burrard Street, resulted in more
than 60 charges in 1996 against people suspected of laundering the proceeds
of drug sales through the exchange.

More than 40 people have subsequently been convicted or pleaded guilty,
while the rest of the cases are at various stages of court proceedings.

But now the fates of all those charges are in question following the ruling
that the police themselves were complicit in illegal money-laundering by
running the scheme.

And a pair of huge B.C. cocaine busts announced last month -- dubbed
Projects Exigent and Esquire -- which stemmed from information developed
during Project Eye Spy could also be in jeopardy.

``I can't say what the impact will be,'' said RCMP Inspector Kim Clark, who
heads the proceeds-of-crime division in B.C. ``We don't really know yet.''

Clark noted that Parliament passed the Proceeds of Crime (Money Laundering)
Act in 1991 specifically to give police the power to use stings to entrap
criminals and stop them from enriching themselves through crime.

But Justice Mary Humphries found that the RCMP failed to comply with the
federal act because they encouraged, aided and abetted the people who used
the Eye Spy exchange.

Federal legislation forces anyone transferring more than $1,000 through a
currency exchange to produce identification, and people transferring more
than $10,000 must disclose identities, addresses and occupations. Police
running Eye Spy decided that such demands would alienate their underworld
customers, so they waived the requirements.

As well, the judge said, ``they knowingly possessed proceeds of crime and
agreed to operate in such a way that would necessitate handling those
proceeds. Generally, those actions, if done by anyone else, would be
criminal acts.''

Abbotsford lawyer John Conroy, defending alleged marijuana dealer Frederick
Austin Creswell, asked Humphries for the ruling as part of a defence that
argues the case should be stayed as an abuse of process. He said in an
interview Thursday that the decision does not necessarily mean the charges
will be stayed because Canadian courts have admitted illegally gained
evidence in previous cases.

However, the ruling does open the door for Conroy to demand police produce
internal briefing notes and legal opinions that he hopes to use to prove
his defence that the police knew their actions were legally indefensible
from the start but proceeded anyway.

Arguments on that application will be heard in March, he said.