Money Laundering, Asset Tracing & Recovery & International Aspects of Fraud Individual

Instructions

Maximum of 12 pages.

Remember to support your comments with an explanation of why you say what you are saying. For example, if you say you would want a particular document then tell us why you would want it, as well as what you expect to find in the document to further your investigation.

QUESTION 1:

Case of Asset Misappropriation at Eagle Glen Golf & Country Club Overview of the Club: Eagle Glen Golf & Country Club (the Club) caters to the desires of its 700 dues-paying full members, 450 associate members and their guests. It also rents out its halls and ballroom for weddings, reunions, and other gatherings. Built on the banks of the picturesque Eagle River in southern Ontario, Eagle Glen Country Club offers a variety of activities for its members. The Club was established in 1984 with a nine-hole golf course and an outdoor swimming pool. Since opening, the Club has steadily expanded. It now (in 2018) has one of the most impressive 27-hole golf courses in Ontario, with six tennis courts, a spectacular clubhouse with lovely views, two swimming pools, a gym, racket, squash and handball courts, an indoor basketball court, beautiful dining rooms with chandeliers, a four-star restaurant, a bar and other opulent amenities. The Club facilities are in great demand and there is a six-month waiting time to book the halls for company picnics, banquets, family reunions, wedding receptions, and the like. Membership is full which means a member must leave before a space opens up for a new member. The waiting list is a secret but anecdotal evidence suggests a person can wait over fifteen years on the list. Before being accepted as a new member they must be sponsored by three members in good standing. The club anticipates a 5% annual attrition. Initiation fees of $55,000 are used for club improvements and are therefore non-refundable when leaving the club. Annual dues of $10,500 are used for operation. Eagle Glen Golf & Country Club is a member-owned, private country club. The seven members volunteer board of directors is elected every two years by the full members. There is usually fair bit of arm twisting to get people to agree to sit on the board. Not because the task is onerous but members would rather golf then meet. The board of directors includes four officersthe president, vice president, secretary and treasurer and is responsible for the day-to-day management of the Club. The board has broad powers to borrow money and to enter into contracts necessary for the normal operation of the Club. The Club has five committees - membership committee, the finance committee, the nominating committee, the construction and maintenance committee and the special events committee. The finance committee has three members elected from the membership at large and the treasurer is an ex-officio member of the finance committee. The finance committee meets three times a year. The Club takes in approximately $14 million each year in annual membership fees alone. In addition, the restaurant, the bar, banquets, rentals and a variety of other programs brings in an additional $9 million each year. The president of the club, Bennett Jones, is a friendly jovial fellow and treated everyone with great warmth. He has no accounting or finance background. He is very trusting of people, in general and considered all employees and members as belonging to one big happy family.

The general manager: Oscar Ross has been employed by the Club in a variety of capacities for twenty-two years. Initially he joined in high schools as a part time grounds keeper. After college he returned full-time as an assistant to the bookkeeper. Over the years as the club grew so too did Oscar's responsibilities. In 2009 to 2011 Oscar left for an opportunity to become the general manager at a smaller country club in the area. He left on good terms. After Eagle Glen's general manager, Alex Patel, died of a heart attack while on vacation the club asked Oscar Ross to return as the new general manager. When Oscar agreed to return to the club, he was able to set his own terms. Other than his compensation, he wanted free reins to change some of the old ways things were done. For example he expressed concern that occasionally children and friends of members were hired by the club. He said as the general manager he wanted to have the right to hire and fire staff and particularly would not stand for nepotism. While Oscar had always liked working with Alex Patel he felt Patel could be a bit too procedure oriented. Oscar's style was more just 'get the job done' how you got there was of lessor importance. The club's executive accepted all Oscar's terms without issue. Oscar has served as the general manager since 2011 but since he had previously held many positions within the club he is a bit of a 'jack of all trades'. In the end Oscar has been able to reduce the number of full time and part time staff considerably for which he is rewarded with an annual bonus. While some of the club's executives were critical about Oscar behind his back because he controlled all aspects of the clubs administrative mostly they were happy to let him handle the details. Some of the more critical executive members considered him a dictator whilst others say he just was not a good delegator. They realized they would never be able to replace him and if he ever left they would have a tough time managing things without hiring a couple more people. Included in his responsibilities are many of the senior accounting functions. Since this is where Oscar started after college he liked to keep his hand in things. There are virtually no written policies and procedures. While Alex Patel had initiated the development of some Oscar did not bother to read these let alone supplement them. If asked he would say that he had his finger in everything and nothing gets by his observation. As the general manager, Oscar had cheque signing authority and had final approval on all purchases. The Club policy requires two signatures on each cheque. The other signature had to come from either Sarah Smith, the chief accountant or from the Jackson Leung, who is on the board of directors and is the treasurer. Oscar often asked Sarah to sign blank cheques in advance so that he can pay the bills on time and does not have to wait for the second signature. Sarah obliges and signs several blank cheques from time to time, after all Oscar is his boss.

Oscar maintains control over the accounting records. He does the monthly bank reconciliation as well. Every three months Oscar meets with the finance committee of the board and report about the financial situation. He also prepares simple profit and loss statements and a balance sheet. Working with the treasurer, he also presents the annual budget to the finance committee for its approval. An unexpected call for the bank: Jackson Leung was just coming off the golf course two days ago when his cell phone rang; it was Mavis Cho the manager of the CIBC branch where the club banks. She asked Jackson to meet her at the bank the following day without notifying anyone at the club. Leung had never met Cho before as Oscar had all the dealings with the bank. At the meeting the Cho explained that an incident concerned her which she wanted to bring to Leung attention. She explained the club was overdrawn in their operating account last week. She had contacted Oscar as general manager of the club to determine when the overdrawn position would be corrected. Immediately thereafter the situation was rectified. Cho did some investigation and discovered that the funds to correct the overdraft were transferred from Oscar's personal bank account. Alarm bells rang for her so she contacted Jackson about her suspicions as the board member whose name appears on the banking documents. Jackson thought about the problem overnight and then went to see Oscar the next morning. Oscar laughed off Jackson's concerns and said the bank was always making errors in the account. Jackson was not satisfied as he didn't think Mavis Cho would have called him in if this was a bank error. After Jackson could not be convinced Oscar said he would go to his office and get the documents required to explain the entire confusion. Jackson waited about 15 minutes but Oscar did not return. When he went to look for Oscar he was told that he had gotten in his car and sped off. Jackson was left standing there not sure what to do. Investigation: In Oscar's absence, Jackson Leung phoned you, recognizing your knowledge as a forensic accountant, as you and his daughter were good friends. Jackson provided the brief summary of events and explained that he is quite suspicious of Oscar. He explained that, before confronting him again, he wanted to know exactly what was going on and the extent to which Oscar might be doing something wrong (if at all). Jackson also wanted as few people as possible to know about this problem. He trusts that you will help him investigate the issue quietly. He does not want any other members of the Eagle Glen Golf & Country Club to get wind that something may be amiss, after all they own the club

Required:

You have a meeting scheduled with Jackson Leung tomorrow morning but you have agreed to email him a memo tonight that he can read in advance of your meeting. He has told you all he knows about the situation. The goal for your memo is to organize your thoughts concerning what you need to find out and how to do so.

Included in the memo should be:

your initial speculation(s) of what transpired and what will be your approach to prove or refute your speculation(s)

A list of investigative procedures that you will perform over the coming days, as well as what you will be looking for or hoping to obtain from those procedures. Identify which of these steps you will be able to complete at the club's office the following afternoon versus those steps that will require additional legwork.

Investigative Research: List the evidence you will be seeking

-For the evidence that you require for your investigation that should be readily available at the club, indicate why you want this particular evidence, what you would do with the evidence if obtained and how it would relate to one or several investigative procedures.

-For the evidence that is not available at the club, indicate why you want this evidence, how this evidence could be obtained, the reasons for requesting this evidence and how it would relate to one or several investigative procedures.

-List the people you would want to interview, the order in which you would interview them and the information you would hope to obtain from them. (10 marks)

Interview methods: Assume that you are able to reach Oscar and that he agrees to discuss with you.

-Explain your initial considerations about taking and setting up the interview at that stage.

-List the first 5 questions you would ask Oscar and explain your motivation for each of these questions.

QUESTION 2:

In this article (http://vancouversun.com/opinion/op-ed/opinion-law-society-guardsagainst-money-laundering), the president of the Law Society of British Columbia asserts that "Law Society rules and our Code of Professional Conduct for B.C. ensure that lawyers don't, knowingly or unknowingly, participate in money-laundering schemes."

Required

a) Through open source research, identify one Canadian case where a lawyer or law firm was accused of or was convicted of involvement in money laundering. Summarize one of the money laundering methods used by the lawyer according to the stages of money laundering explained in Class 1

b) Research and summarize the anti-money laundering controls imposed on lawyers and law firms by another country, and explain how they might have had played a role in detecting or deterring money laundering in the case you summarized in (a) should it have occurred in that country.