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Discussion in 'Politics' started by taodr, Nov 20, 2002.

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    Toronto man admits to $77-million fraud scam

    CTV News Staff

    It's a remarkably simple fraud. It all started with a tooth-whitening product called 'Instant White'. Salim Damji told investors he owned the rights to it.

    You too might have invested, if you had heard Damji's convincing pitch.

    He claimed he was about to sell the rights of Instant White to the giant Colgate Palmolive Corporation. The sale would go through his company, Strategic Trading Systems. If you invested in STS before the sale, you could make a fortune.

    For every one dollar you put into the company, Damji said you would get $20 back, a 2,000 per cent return.

    The police call this an affinity fraud because Damji's targets were exclusively members of his religious community, the Ismailis. They are a sect of Islam, followers of the Aga Khan. They are prosperous, business savvy and very close-knit.

    In just two years, 4,000 community members handed over more than $75-million to be part of the Instant White deal, one of the largest individual frauds in Canadian history.

    In an exclusive interview with W-FIVE, Damji admits he defrauded his community,

    "If someone would take my life, I would deserve it."

    But he's got quite an elaborate explanation on how it happened.

    He claims he had won $800,000 playing Ontario's Pro-Line Sports Lottery and wanted to make that money grow.

    Damji says he first spotted Instant White on the Shopping Channel and thought it looked like a great way to invest his winnings. He even flew to New York to talk to the marketing company about buying the rights. But the deal never went through.

    During his search for investment opportunities, Damji says he met up with some shadowy figures in Miami. When he didn't invest in a deal they proposed, he says the threats then started.

    Back in Toronto, Damji says he was at a restaurant when a stranger approached him.

    He started talking business with a man he calls Richard Dawson and told him about wanting to distribute Instant White.

    According to Damji, at a later meeting, Dawson took out a picture of Damji's wife, who was then his girlfriend, and threatened her life if he didn't give him his money.

    "I could go to the police... But I thought money is not as important as the lives as the people I love. So I said, "Okay, fine.'"

    Damji says he believed it was all tied to the threats from Miami. So he started doing what he was told, delivering packages of money with tens of thousands of dollars at a time around Toronto.

    But those underworld figures had even bigger plans for him, according to Damji. Damji says he had told the people in Miami about his idea to market Instant White and they later came up with a multi-million dollar idea of their own.

    "I had to go along with it. I had no choice. They used my family as bait," says Damji.

    Damji says they told him to set up STS and get investors for Instant White. No one else knew it was a fraudulent company and there was no shortage of investors. Thousands of people wanted in. Within a year, Damji had raised more than $30-million.

    Records from his Bank of Montreal bank account show where some of that money went. In one month, withdrawals amounting to millions of dollars were sent offshore to two Internet gambling sites - Olympic Sports in Jamaica and BC Sport in Costa Rica.

    Most of it went there, but certainly not all. Damji claims he was forced into a life of luxury.

    "They would force me to buy things, luxury items, to make it look like I was doing the fraud."

    He spent about $4-million on property, including an $800,000 condominium on Toronto waterfront, paid for in cash; two houses in Markham; a small strip mall in midtown Toronto, worth over $2-million; and nine luxury cars, mostly Mercedes and BMW's.

    By the end of the first year, the scheme was coming undone.

    The key to this scam was Damji's claim that he was about to be bought out by Colgate Palmolive. But Colgate got wind of this and issued a flat denial.

    The Ontario Securities Commission, and eventually the police, started to investigate. But while that investigation was underway, Damji managed to raise another $45-million.

    It all to came to an end when police arrested Salim Damji at his luxury condominium on April 26, 2002. While the police and prosecutors got the crook, they didn't get the money.

    Investors worried that the criminal proceedings would leave them high and dry. A group of investors filed a civil lawsuit, got the court to appoint an interim receiver and hired a private investigator to unravel the story and find the money.

    Sandy Boucher is an intelligence operative for the Canadian firm, Intelysis. Six months ago, he was brought into the Damji case. His job is to track down the money and get it back for the investors.

    "I haven't seen any evidence at all to support his contention that he was extorted in some way."

    In fact Boucher doesn't even believe that Dawson exists, but he has found criminal connections in this story, specifically Maynard 'Chuck' Garber. He is a convicted con man and one of the owners of the Internet site in Costa Rica where Damji sent $54-million. Yet Damji denies knowing Garber.

    However Boucher says he has spoken with both of them and knows that they were in regular contact through late 2000 and shortly before Damji was arrested.

    "He said he was involved with some shadowy figures... Some of these people have ended up with some of the money, but I wouldn't characterize it that Damji was victimized by them," says Boucher.

    In fact, there is no evidence of any organized crime connection to the Instant White scam. The mob was just happy to take Damji's money. It appears he pulled this off all by himself.

    The easy part of the investigation was finding out how the money went offshore out of Canada from his bank accounts.

    Forty-five million dollars went from his Bank of Montreal accounts to Costa Rica. Under Canada's money laundering laws, that should have raised more of an alarm.

    It is a key concern for the investors. A group of them agreed to meet with W-FIVE to speak publicly for the first time.

    "I think the biggest culprit here is the financial institutions who let this type of money roll through their systems without questioning it," says one investor.

    W-FIVE asked the Bank of Montreal to explain how this could have happened. But the bank declined requests for an interview.

    There is evidence that Damji was forging documents and carefully managing the scam. He returned investors' money if they asked for it. Damji was playing on the tradition of trust within the Ismaili community.

    "Our community is a trusting community. Our successes as a merchant business class are built in the trust that we have," says another investor.

    There is one other person who believes she's a victim. Damji's wife Zara participated in the scam by selling shares in the fictitious company. But she claims she was duped.

    "My family, my parents, my brother, my friends, and my co-workers have lost a lot of money. They all invested."

    But where did the money go? Did he gamble it away, did he give it away, or is there still something left? This is what everyone is asking.

    "All I know is the money is where they told me to send it, and that's Costa Rica. And that's the last I heard of it," says Damji.

    But his wife doesn't believe him.

    "If you're smart enough to do this, I don't think you're dumb enough to lose it all."

    The one man who may know more about this case than anyone else has his own suspicions about the money.

    "It's still quite possible that some was gambled, and some was laundered and hidden in a safe place. After spending a short time in prison, he could get out and recover those funds and live a good life," says Boucher.

    One week after Salim Damji's interview, detectives from the Toronto Police fraud squad arrived at the W-FIVE offices with a warrant to seize the tapes of the interview with Damji.

    W-FIVE handed over the tapes, but insisted they be sealed until the seizure could be challenged in court.

    Nine days later, Damji pleaded guilty to the charges against him and now faces up to 10 years in prison. He will be sentenced on Monday, November 18.

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