Civil forfeiture suit alleges funds from money laundering scheme were moved through shell companies and virtual banks to purchase family home in Victoria

The province is seeking to have forfeited a Victoria house allegedly used to launder money linked to a $325-million international stock fraud.

In a B.C. Supreme Court action filed on Dec. 31, the B.C. Civil Forfeiture Office alleges the house at 1819 Hillcrest Ave. in Victoria is the proceeds of unlawful activity and was used to launder money.

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Included in the civil forfeiture office’s accusations are violations of the U.S. Securities Act and the U.S. Exchange Act, violations of the B.C. Securities Act, fraud and failure to declare taxable income.

Named in the suit are Paula Adriane Psyllakis; her spouse Brian Alexander De Wit; Paula’s sister Penelope Elizabeth Psyllakis, also known as Poppy Psyllakis; and Amalthea Properties Ltd.

None of the parties have responded to the civil forfeiture claim that includes allegations not proven in court.

Paula Psyllakis and Brian De Wit are accused of being involved in a money-laundering conspiracy led by Greg Mulholland, a joint Canadian-U.S. citizen, and U.S. citizen Robert Bandfield. The pair pleaded guilty in 2017 and were sentenced to 12 years and six years in U.S. jail respectively for setting up an elaborate structure of shell companies and brokerage firms in Belize and the West Indies that enabled clients to manipulate the stocks of dozens of publicly traded U.S. companies. The so-called pump-and-dump scheme netted US$250 million.

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Paula Psyllakis and Brian De Wit were indicted in the U.S. for money laundering related to the scheme in 2015.

In the indictment filed in the U.S. District Court, Eastern District of New York, De Wit was named as president and prime broker of a company accused of being involved in the money-laundering scheme. He worked at the company’s offices in Belize and Panama.

Psyllakis managed the back office of the same company, also working at offices in Belize and Panama, according to the indictment.

According to the B.C. civil forfeiture suit, criminal charges in the U.S. remain open against De Wit and Psyllakis as a result of their roles in the scheme.

“As part of the fraudulent scheme, Mr. De Wit and Ms. Paula Psyllakis defrauded shareholders by fraudulently concealing beneficial ownership interests and engineering artificial price movements and trading volume in publicly traded companies,” states the civil forfeiture office’s claim filed in court.

The civil forfeiture office filing alleges that De Wit and Psyllakis moved nearly $900,000 from the money-laundering scheme through shell companies to purchase the Victoria house from Pysllakis’s mother in 2017. The house was purchased by Amalthea Properties, whose sole director was Poppy Psyllakis, Paula’s sister.

The civil forfeiture suit alleges that Paula Psyllakis and Brian De Wit are the true owners of the house.

The civil forfeiture office claims that Psyllakis and De Wit used a virtual bank in the U.S. to wire transfer the money used to purchase the Victoria house.

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That bank, WB21, is allegedly involved in another major stock fraud of more than $200 million. In a separate claim, the civil forfeiture office says money from that pump-and-dump scheme was laundered in properties in Kelowna.

It also seeks to have those properties forfeited: a $1.6-million Kelowna home and a $524,000 condo at nearby Big White ski resort.

The defendants in that case have denied any wrongdoing and called the civil forfeiture office’s suit “cavalier and abusive.”