Island-hopping private eyes indicted on fraud, money laundering charges
Kevin Donovan, The Star Canada
Ontario PI couple extradited to the U.S. from the Turks and Caicos this week to face charges. [Faked Cayman banking records.]
A U.S. grand jury has indicted two Ontario private detectives and a consultant on fraud and money laundering charges.
The detectives faked Cayman Islands and Swiss banking records to convince divorcing spouses or business associates that someone they once trusted had stashed millions of dollars offshore, according to the indictment filed in a courthouse in Newport News, Va.
Cullen Johnson and Elaine White were extradited from the Turks and Caicos this week to face charges. They are being held in jail in Newport News. A third man, Theodoros Grontis, a Toronto consultant who was living in Virginia, is also facing charges.
The Canadian side of the married couple’s elaborate scheme was first exposed by the Star in 2009. The Ontario Provincial Police charged the pair with fraud related to some Canadian cases but let them slip through their grasp and the couple fled first to the Bahamas, then to the Turks.
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Elaine White, Johnson’s wife and partner in alleged crime, once worked for forensic accountants in Toronto. zoom
Now, U.S. authorities, primarily the Internal Revenue Service, have caught up to Johnson, White and Grontis after discovering the same scam was allegedly pulled on Americans.
Eric Cunningham, a former Liberal MPP from Hamilton who is one of the Canadian victims, said he hopes the investigation on both sides of the border digs even deeper into arrangements between the detectives and the lawyers and law firms that hired them.
“Invented, false and fraudulent investigations reports are sold to lawyers who should know the so-called evidence is false. The lawyers tender it to the courts regardless,” said Cunningham, who spent many years and $313,000 defending a case brought by his ex-wife who was led to believe by the detectives that he had $2.3 million in offshore accounts in far-flung places like the Cook Islands, Panama, the Bahamas, Hong Kong and the Cayman Islands. An Ontario judge ruled that all of the banking documents were false.
“This behaviour results in horrific costs to victims such as myself, and a serious expense to taxpayers,” said Cunningham.
In another Ontario case, friends who purchased lottery tickets and won were led to believe that one in their group had stolen all of the funds and sent it offshore. That also proved false.
After fleeing Ontario, Johnson and White set up their “asset recovery” business in the Bahamas, with the help of Grontis. According to allegations filed in support of the indictment, the three did a sort of financial striptease for their eventual victims, revealing more and more damning documents showing millions of dollars salted away offshore in exchange for an escalating series of fees.
The documents — detailed and authentic looking — show apparently real wire transfers and account information.
According to documents filed in court, the IRS became interested in the case because of Grontis, a Norfolk, Va., resident originally from Canada. Grontis failed to declare income of over $500,000. Grontis also had a residence in the Bahamas and had a business association with the two Ontario detectives. The money that raised the IRS investigators’ suspicion, as it turns out, was allegedly some of the fees paid for the bogus banking documents.
The IRS documents describe how Johnson used his stature as a former Toronto police detective, and White’s work for a forensic accounting firm in Toronto, to establish their credibility with new clients. Grontis is described as a former private detective with a fondness for Jaguars and other fine cars.
The indictment does not name the seven American victims it relies on as evidence but does describe the scenarios.
In once case, an Alabama law firm contacted private detective White and hired her to locate assets for a case the firm was working on. A series of banking documents were produced for the law firm, including the signature card for a Swiss bank account. The law firm became suspicious at the date — the man who supposedly signed for the bank account was known to be in jail on the day it was signed. That led the law firm to Google Elaine White, the Star stories from 2009 were unearthed and authorities in the U.S. contacted.
Emails intercepted by the IRS also helped the case. In an affidavit filed by special agent Brian Pelfrey, he describes how the emails, obtained using a search warrant, showed that Johnson, White and Grontis were discussing the “preparation” of the banking reports.
Grontis is facing charges of conspiracy to commit wire fraud, money laundering and tax evasion. White and Johnson are charged with conspiracy to commit wire fraud and money laundering.
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