How a Canadian businessman-turned-convict set up a secret offshore company as investigators closed in

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As Canadian and US investigators close in on a Montrealer who conspired to launder money and pay millions in taxes owed, the now-imprisoned businessman founded a secret offshore company, a STAR investigation has found. Is.

Feroz Patel, who used to run online money transfer services Payza and Alertpay, is currently serving a three-year prison sentence in the US after he pleaded guilty to processing more than $250 million (US) in “illegal transactions”, Which featured “gambling, drugs”. Violence,” Child Pornography and the Distribution of Ponzi Schemes.

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Meanwhile, a Quebec judge has ruled that Patel owes $18.4 million (Canadian) in unpaid taxes after being “systematically neglected” to report more than $31.5 million in income between 2006 and 2014. is due.

Dozens of newly leaked documents contained in the Pandora Papers, obtained by international association of investigative journalists (ICIJ) and shared with the Toronto Star and CBC, the 47-year-old established a secret corporate presence with a taste for fast cars, just as investigators in Canada and the US were closing in on him.

There is no mention of the offshore company in US or Canadian court records, and neither the US Attorney’s Office nor Revenue Quebec would say whether they were aware of it.

Patel’s founding of an offshore company, however, underscores the challenge officers face when chasing criminals who may be using the tax haven to extort money, if anyone leaves a footprint.

Now that the company’s existence is being made public, investigators may take another look at Patel’s case, said retired FBI agent Gregory Coleman.

“If there weren’t other allegations that involved these people and you had a willing prosecutor and a willing agent, and there’s no double threat, they might be interested,” said Coleman, who was credited with the film. The Wolf of the Wolf”. Wall Street” for his role in the arrest and conviction of Jordan Belfort.

From a Connecticut prison, Firoz Patel told the Star that the offshore firm had nothing to do with Payza or the US investigation.

The leaked documents reveal that Patel is a listed director/shareholder with a firm called Argus Limited.

Argus was established in 2017 in Ras Al Khaimah, one of the United Arab Emirates.

The UAE is considered one of the newest and most opaque tax havens in the world.

“It’s a tough place, because it’s a tough place,” said James Henry, a prominent American economist and lawyer who specializes in tax issues, including the effects of tax havens. “The fact that someone chooses to go there is also a sign of over-secrecy or impunity to be met.”

Responding to questions, Patel sent an email to Star Two, saying in one that the offshore company was meant to be “the last Asian business operation” but was not used.

The same year Argus was quietly made offshore, a Quebec court judge found that Patel had “systematically neglected” to declare his actual income, concluding that “the amount at stake is so high that these The omission may be part of a planned process with only one purpose, that is, to attempt to avoid tax obligations imposed by law.”

While tax officials in Quebec and Ottawa have not been able to collect Patel’s multi-million-dollar tax bill, documents filed in court accuse Patel of having huge amounts of cash.

For a six-year period ending in 2018, Revenu Quebec alleged that Patel transported $45 million in cash via armored vehicle to Quebec.

Patel told the Star that the money loaded into the Garda van was made up of remittances collected from Mexican, Guatemalan and Colombian seasonal workers destined for their families.

According to the US indictment, more than $10 million (US) also passed between Payza and Patel’s personal bank accounts in the United States and Canada.

Unlike many people involved in anonymous shell companies in far-flung tax havens, Patel personally traveled before signing the papers.

A stamp in Patel’s passport, a scan of which was included in the leaked files, shows that he had visited the Gulf Emirates in 2017, 10 days before joining the company.

When Patel boarded that flight, he was being cordoned off.

Public records show that both US investigators and Quebec tax officials had launched investigations into alleged money laundering and tax evasion involving him and his companies.

According to Quebec court documents, in early March 2011, Revenue Quebec slapped Patel’s company Alertpay with a $10.6 million (Canadian) tax bill after hundreds of millions of dollars in undisclosed revenue were transferred from foreign sources to the company’s accounts. Were.

In November 2013, the US government seized over $4 million (US) in deposits from his other company, Payza, following an alleged money laundering investigation.

Then, in October 2015, US officials announced a criminal investigation into Peza, which would later expand into the personal finances of Patel and his brother.

“Is this (the offshore company) something they would like to know about so they can investigate it? Yes, the answer is absolutely yes,” said retired FBI agent Coleman.

“His activities would obviously put you in a position where you would want to know what was going on on his account.”

The leaked corporate documents do not explain the intended purpose of Argus or its money flow.

Revenue Quebec would not confirm or deny whether it was investigating Argus.

Following the publication of the Pandora Papers stories earlier on Sunday, Quebec’s finance minister vowed to act on tax haven secrecy and Revenu Québec said it wanted to “carefully” analyze the details from the leaks and “act diligently”. Is.

In March 2018, 11 months after the secret offshore company was founded, Firoz’s brother Farhan was arrested while changing planes in Detroit. Two days later, the US Department of Homeland Security opened the indictment against both Patel brothers, leaving Firoz on the run.

After a two-month hiatus, Firoz checked in on Facebook, cheekily posting that “I’d like to take a moment and quote Mark Twain loosely… It has been offered up.'”

The fugitive eventually surrendered and, along with his brother, pleaded guilty to conspiracy to launder money and operating an unlicensed money service business.

Brothers Firoz (left) and Farhan Patel, seen here with NHL player PK Subban, pleaded guilty to conspiracy to commit money laundering and operating an unlicensed money service business in the US.

Sentencing the brothers in November 2020, US District Judge Ketanji Brown Jackson described the Patels’ claims of unintentional convictions for the crime as “astonishing”.

“I don’t know whether you realized the gravity of the harm that was actually being done to those whose lives have been effectively destroyed,” the judge said during a hearing on Patel’s sentencing. How many drug addicts will be made from your service as a store of money for an illegal steroid operation or how many older people will lose their life savings and have to skip retirement because you helped planners who intended to defraud them Were. “

Patel’s written response to Star’s questions denied the “illegal transaction”, saying “the foundation of the allegation of money laundering is false … there was no money laundering under the laws of Canada or the regulations of many other countries (sic)”. “

In the plea agreement signed by Patel, he admitted that he was “aware that Alertpay was circulating illegal proceeds” and “was aware of this illegal money laundering.”

In his email to Star, Patel said he and his brother pleaded guilty after a careful risk/benefit analysis.

Patel wrote, “(We) thought this would be a difficult lesson, but it would make us wiser and more diligent in the future, however complex and costly it may be to do so.” “We shouldn’t have allowed ourselves to be exposed like this when only by filling a few forms we could have avoided all these issues.”

The crimes he admitted in the US “ruined our reputation, even though the businesses we were involved in were not inherently illegal, but because of the plea deal that we had to sign.” It seems like everything we touched was bad business, which it certainly isn’t.”

Farhan was sentenced to 18 months and Firoz to three years in federal prison. Collectively, the brothers and their companies were ordered to forfeit the $13.6 million that US authorities had already confiscated.

The Patels’ Canadian tax bill, however, has not been paid.

Patel’s cars and furniture have been confiscated and a lien has been placed on his $2 million (Canadian) Montreal home. But the bulk of the $18.4 million is owed.

“It was all part of a launch by Ravenu Quebec, which is currently disputed in court,” Patel told the Star. “We have ongoing tax appeals, so I cannot comment further. I can say that this amount has no factual basis or merit.”

Henry said the Patel case raises serious questions about how officials can penetrate tax haven secrecy and ward off potential illegality.

“Our current enforcement efforts seem to be … lagging. The problem is not the need for stricter laws, but a lack of enforcement.

When Sardar was inside Patel’s home, he found more than $80,000 in US, Canadian and European cash (a judge later ruled that most of the cash belonged to a friend of Patel’s). It was during the same period that Revenu Québec alleged that he carried tens of millions of cash in armored cars.

Patel’s wife Nazlin is also a target of Ravenu Quebec.

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