A common traffic stop for suspected impaired driving proved to be the start police needed to unravel a GTA-led plot that yielded $11.5 million in fraudulently obtained leases, with the proceeds allegedly stashed away in banks all around the world.
Toronto police financial crimes Insp. Peter Callaghan said that on Sept. 14 an investigation began into a group of suspects who would approach leasing companies posing as companies seeking to lease equipment for their growing businesses.
The suspects also allegedly posed as equipment providers, providing quotes for very expensive equipment.
Callaghan said that if the leasing company involved got suspicious, the suspects would taking the leasing agent to a factory in North York to show them an example of the equipment they needed.
But in reality, the machine they were shown was “very old, barely functioning and worth a small fraction of the amount of money asked,” Callaghan said.
Believing the equipment to be expensive, the leasing companies involved would provide a lump-sum payment to acquire it to fulfill the lease. But the suspects allegedly provided cheap equipment or no equipment at all in return, pocketing the lump-sum payment.
A total of 16 leases for equipment was allegedly obtained this way between 2014 and 2017, representing $11.5 million combined in Canadian and U.S. dollars.
Callaghan said that police got their break in the case when a suspect identified as Giuseppe Gatti of Ajax was pulled over by police for impaired driving.
A search of his vehicle allegedly netted more than $10,000 cash and seven credit cards, three of them bearing a name other than his own.
With help from the RCMP and FINTRAC – the federal agency that monitors bank transactions — Callaghan said police located numerous suspicious transactions in Gatti’s name and the other names on the cards.
With help from police in the U.S. and agencies around the world, Callaghan said police found proceeds of the alleged fraud in banks in Brazil, Seychelles, Australia and Hong Kong.
Once the web of transactions traced back to individuals in the GTA, investigators searched six properties in the GTA, taking 12 people into custody, including Gatti.
They are facing a total of 96 charges including fraud over $5,000, participation in a criminal organization and possession of the proceeds of crime.
Police say there are efforts to return money seized to the leasing companies that were defrauded.
All 12 accused are scheduled to appear in court at Old City Hall on Oct. 26.
