The fraud fighters (Part 2)

FBI Special Agent Ross Gaffney called Interclaim in 1998, after the Bureau was unable to retrieve more than $12 million of the victims' money. Like most government agencies, it simply didn't have the resources necessary to pursue this global case, and had found just 900 victims. Down had plea-bargained a six month jail sentence (which he served last year) in return for which 144 other felony counts, including money laundering and racketeering, were dropped. The victims were dying off and few knew where to turn.

"Our one-man marketing office on the East Coast [of America] has thousands of letters from these victims," explains Kenney. "These people were elderly and vulnerable and they thrived in a mid-20th century era which was very different from today's. We're talking about our grandparents and great-grandparents here."

"We've been contacted by the daughter of one lady who lost over $1 million and who has Alzheimer's," he continues, turning to address me directly. "The daughter says that her mother was so fooled by these people that she would get all dressed up in her Sunday best on the nights that the lottery was being announced - because she would win the lottery, she was guaranteed to be a millionairess. She would phone caterers to bring platters of food, to welcome all the news broadcasters from television because she would be announced as this new lottery winner. . . " his voice drops, " . . . and of course, nobody called her. They just took her money."

"She actually had access to a million dollars of the family's money," says James McGunn (55), Kenney's co-manager of investigations. "And it was taken," adds Kenney.

Later, in McGunn's office, I study surveillance pictures of Down, a heavy-set, moustachioed figure appearing to glance nervously around him. "You're talking about a huge case, involving hundreds of millions of dollars moved offshore," says McGunn, surrounded by certificates from his days as a US Secret Service Agent. Jotting down a quick note to speak to one of his informants, he adds: "To find that money involves tracing the activities of that individual, from different ends - finding out where the money went, and where it is now. These people don't write a cheque from the bank. Land is not in their name."

He tells me that the economic criminal will sometimes move millions of dollars in cash from one bank to another across the street, inside an armoured security van, to destroy any electronic or document trail. "So you try and identify partners and business associates, business connections, any financial institution they're using. You determine who leased their vehicles, who lives at certain addresses, and tie it all together."

McGunn explains how such techniques were used to launch a series of raids against Down on January 29th, 1999 - the day after he entered prison to serve his six month sentence. Over 110 people were assembled across the world for the raids: lawyers, videographers, interim receivers, security personnel, computer specialists and local law enforcement officials.

Among the raids which took place were those on 25 office buildings and commercial properties in Calgary, Canada, as well as on Down's personal address, those of his legal and financial advisers in Vancouver, and a seaside mansion in Barbados. Irving Cohen later related to me the look of shock on their faces, as the magnitude of the raids took effect. Over $100 million of assets - from real estate to race horses - was seized and frozen.

McGunn's dry, business-like tone conceals the complexity of this task. His team - former intelligence operatives and private investigators hired for the case - shadowed Down for months. The chase took in Vancouver, Calgary, Washington, and places as far away as the Caribbean, South America, Australia, Hong Kong and Papua New Guinea. Agents assembled in covert teams, often at short notice and in situations of considerable danger. They even befriended Down's brother, Tim.

The two sides have now locked horns in a bitter legal struggle in the Canadian appeal courts. Interclaim has already sunk some several million dollars into its battle. If it wins, it will return 50 per cent of the proceeds to the several hundred thousand victims it has identified to date. If it loses, all effective chance of regaining their money is lost.

In the meantime, there is other work on the books. The company recently collected a large debt owed by a Montenegrin company (based in Yugoslavia) to a London metals trader. It is also chasing a several million dollar fraud, linked to the bribing of a Florida bank official, and is in the "silent running" phase of a huge case involving abuse of power and corruption of foreign government officials.

As I prepare to leave, Kenney seems clearly fired up about the effects of such cases on the victims: "I've had a banker have a heart attack, seen others lose careers. People lose their edge, they lose their confidence," he says, "because they've been tricked and lost faith in themselves. It's like rape. It's that kind of violation. You know, I've seen victims - an elderly couple who lost $52 million and are now living in a trailer in Florida - that can't pay a phone bill. They had $52 million and the fraudster took it all, picked them clean."

Although he refers to his battles as a "grand play", there is a barely concealed loathing in Kenney's voice when he talks of the fraudsters: to him, they seem sociopathic, not loveable rogues who do little harm except to bloated financial institutions. "They're as sophisticated and bright and as well organised and articulate as some of the best commercial business people in the world could ever be. They get their 'jollies' off of victimising and laughing at people. Why do they do this? Well, there's a sickness there; they have sick, states of mind."

This vision has brought Kenney his critics. Robert Millar, one of Blair Down's Vancouver lawyers, has said that his client was "blitzkrieged" into submission by Interclaim. "I don't like what they do. It may be novel and ingenious, but it's wrong." Another member of his team said he saw them as "international economic terrorists who practise extortion".

Others, however, have nothing but praise. "We find ourselves very much frustrated by our inability to help victims," says John Moscow, assistant district attorney in the Office of the New York County District Attorney. "We have no horses to pursue assets . . . we often get the criminal but not the money," which is where Interclaim comes in, he believes.

Martin Grieves, a principal financial investigator with Britain's Serious Fraud Office, adds: "I think we've got a moral duty to recover the citizens' money, whether you consider them to be highworth mugs who were simply greedy, or whether they were purely duped. We should be able to do something as far as the money is concerned. Because unless we can take away the money from the criminal, we're not removing the deterrent. And it's a serious problem."

Kenney himself is circumspect. "You know, we're only a small part of the opposing force," he says, sweeping up his briefcase. "There's probably room for another five or six Interclaims out there, easily. Ten years ago, what we do was almost unheard of. Now there's tens of billions of dollars stolen every year by fraudsters - and that's probably a conservative figure. I tell you, if, figuratively speaking, we catch some of these swindlers, that will mean more to our victims than any cheque."