Millions sought from Vancouver company accused of processing mail fraud payments

Months after the U.S. Treasury lifted alabel placing Vancouver's PacNetServices alongside some of the world's most violent criminal organizations, the payments processor isfacing a lawsuit from B.C.'s Director of Civil Forfeiture.

The B.C. Supreme Court notice of civil claim alleges PacNetdealswith companies "it knows are engaged in unlawful predatory mail-fraud schemes, primarily targeting the elderly and vulnerable."

The documents specificallycitean international scheme which saw victims send money topsychic 'Maria Duval' in exchange forpromises of good fortune.

"PacNethas processed payments relating to millions of fraudulent and deceptive multi-page solicitations sent to hundreds of thousands of victims and potential victims throughout Canada, the United States and the world," the claim reads.

"The amounts collectively paid by the victims is estimated to be in the hundreds of millions of dollars."

'Utterly destroyed'

The lawsuit against PacNet, founder RosanneDay and five other people is the latest twist in a situation that made international headlines in September 2016.

At that time, the U.S. Treasury Department designated PacNetand 12 individualsa "significant transnational criminal organization."

The label referred to a 2011 presidential executive order concerningthreats to American national security, foreign policy and economic interests. Other designees included the Japanese Yakuza, Mexico's Los Zetas and the Italian Camorra.

But last October, the Treasury Department lifted the designation.

In subsequent media interviews, company officials said the announcement "obliterated" PacNet.

Paul Davis, the company's general counsel, told an Isle of Man radio station that the business was "utterly destroyed."

"All of us have lost financial relationships, all of us have suffered income-wise," Davis told Manxradio. "But some people have also taken mentaldamage and there were suicide attempts."

'Cover' for unlawful operations

In U.S. district court documents filed in New York, lawyers for the company described the criminal organization designation as "ill-considered, incorrect and contrary to law."

The documents claimPacNetboasted a roster of 700 clients, including Bloomberg Business Week and the Special Olympics British Columbia Society.

"A minority of PacNet's business pertained to merchants that distributed direct-mail promotions involving sweepstakes or astrological information," the company claimed.

The U.S. documents insist PacNet maintained a strict compliance program and regularly reported suspicious companies and transactions to FINTRAC, Canada's watchdog against terror financing and money laundering.

In the B.C. Supreme Court lawsuit, the director of civil forfeiture claims otherwise.

"PacNet has attempted to create an appearance that it has engaged in a broad-based spectrum of legitimate business activity, of which only a small portion is illegitimate," the civil claim reads.

"In fact, (the director of civil forfeiture) says that all or substantially all of PacNet's proceeds come from the unlawful activity ... and that any 'legitimate' sources of revenue have been deliberately established as a cover for its otherwise unlawful operations."

CBCstory raised red flag

On Wednesday, the director of civil forfeiture was granted an orderto freeze numerous bank accounts associated with the company and its directors.

The application for the order says Vancouver police have been investigating PacNetand its alleged involvement with direct mail schemes targeting Canadian citizens since October 2016.

The court documents includea letter fromFINTRACfrom last February warning PacNetthat its level of non-compliance with the requirements of anti-money laundering laws was "very significant."

The letter cites a situation involving a PacNet client which aroseas the result of a CBC Go Public story aboutseniors who noticed that they hadbeen charged $19.90 a month for four years by a1-800 number company.

"FINTRAC'Sreview of the article and of your client's transactions demonstrated that the entity in the negativenews article is in fact a 'payee' of your client," the letter says.

"Additionally, the transactions conducted contained suspicious activity and reasonable grounds for suspicion; however your organization did not report these transactions to FINTRAC."

The director of civil forfeiture claims Day and the others have used unlawfully gained money to purchase properties in Vancouver, Gibsons, West Vancouver, Keats Island and Delta.

Day did not respond to a call for comment.

None of the allegations have been proven in court.