Scams funded terror in Iraq

A high-tech Canadian criminal organization was funding terrorism in Iraq by working under the control of a mysterious London-based leader and his group of Muslim extremists, a Winnipeg court heard Wednesday.

Gerald Blanchard, 35, pleaded guilty to 16 charges and was given an eight-year prison term under a joint agreement between Crown and defence lawyers.

Blanchard admitted he was the brains behind several sophisticated attacks on banks in Winnipeg, Edmonton and British Columbia that netted his group millions of dollars.

“Cunning, clever, conniving and creative. Add some foreign intrigue and this is the stuff movies are made of,” Crown attorney Sheila Leinburd told court.

Winnipeg police took the lead on the international investigation and started wiretap surveillance on Blanchard last fall and were stunned to overhear a conversation with a man he called “The Boss” – who was based in England and appeared to be calling the shots, she said.

The man ordered Blanchard and his associates to fly to Cairo last November and begin stealing money from bank machines using counterfeit credit cards, said Leinburd.

He also sent three of his own associates to meet with Blanchard in Egypt and make sure things were done right, she said.

The group spent 10 days in Egypt and stole several hundred thousand dollars. They all wore burkas — the traditional dress for Muslim women in which they are covered head to toe — to avoid detection from surveillance cameras, said Leinburd.

Blanchard stopped in England on his way home and met again with “The Boss” to give him his “cut.” Blanchard cleared C$65,000 while the man kept the rest, she said.

Police later overheard a conversation in which Blanchard discussed what the money was being used for.

“It was to fuel terrorism,” said Leinburd. She said Blanchard told his associates how “The Boss” was sending money to Kurdish fighters in northern Iraq, court was told.

“And Mr. Blanchard was aware of that?” Associate Chief Justice Jeffrey Oliphant asked Wednesday.

“Yes, he was,” said Leinburd.

The three Muslim associates tried to come to Canada last year to meet with Blanchard but immigration officials at the airport in Montreal turned them away for not having proper paperwork, she said.

Defence lawyer Danny Gunn said his client cut ties with “The Boss” once he learned of the terrorist connection.

“It was at this point he realized he’d gotten himself involved in something pretty serious and with people who didn’t abide by the same code as he did,” said Gunn.

Blanchard was briefly held as a “hostage” in England when one of his associates he’d brought with him stole $50,000 and 50 counterfeit credit cards and then fled to Africa.
“I guess it proves there’s no honour among thieves,” said Oliphant.

Police heard a frantic Blanchard making calls to get the man to return the goods. He was eventually allowed to return home to Canada unharmed.

Oliphant asked what’s become of “The Boss,” whose identity was not disclosed in court or by lawyers outside of court.

“I don’t know,” said Leinburd.

“The authorities in England have identified him, but they don’t share information with us.”

Blanchard was not charged with any terrorism-related crimes and Oliphant said it’s clear he got in over his head.

“I’m satisfied you really weren’t aware of where the majority of money you were stealing was going. I guess this just says something about the world we now live in,” said Oliphant.

Winnipeg police Insp. Tom Legge, who headed up the Project Kite task force that eventually caught Blanchard earlier this year, admitted they were surprised at where the case led them.

“We have no evidence (Blanchard) is a terrorist. But he is an opportunist,” said Legge, adding the scope of his crimes was “something we’ve never seen before.”

Winnipeg police first began investigating in 2004 following the theft of $510,000 from seven automatic banking machines inside a new CIBC branch on Empress Street just days before its grand opening.

They would later learn Blanchard and associates had secretly installed a pinhole camera and two listening devices — including a baby monitor — inside the walls and roof of the bank while it was still under construction.

That allowed him to monitor everything going on inside the branch from a remote location — and to know exactly when huge sums of money would be put inside the ABMs.

Blanchard also admitted Wednesday to a pair of similar heists in Edmonton that netted him over $60,000 in 2002.

He was set to try a similar robbery earlier this year in Chilliwack, B.C. and believed he would be able to get at least $800,000, court was told.

However, Blanchard somehow became aware police were monitoring his conversations and actions and called off the planned heist at the last minute.

The true “gem” of the police investigation involved recovering the Koechert Pearl Diamond from Blanchard’s grandmother’s house in Winnipeg earlier this year. He had told police about it, then led them directly to the basement where it was hidden in a hollowed-out piece of Styrofoam.

The historic jewel-encrusted brooch once belonged to Elisabeth, the Empress of Austria, during the 19th century. It was stolen from a castle in Vienna during a daylight robbery in 1998.

No one has been charged with the theft. Blanchard admitted to possession of stolen goods. Leinburd said the item is valued at about $10,000 but is priceless to Austrians because of its connection to royalty.

“The police would not have been able to find the diamond if not for the co-operation of Mr. Blanchard,” said Leinburd.

Blanchard’s other crimes included using electronic “writers” and high-tech computer hardware to copy the data from existing credit and bank cards to make duplicate, usable replicas.

Blanchard and his associates would also steal expensive electronics, then return them to stores using fake receipts they had created and make off with the cash in what is known as “rehashing.”

Leinburd told court “this is a true plea negotiation” as a trial would have lasted at least a year and involved more than 60,000 documents. Police also made 120,000 telephone intercepts and would have had to call witnesses from across Canada and beyond.

“You’re no hero Mr. Blanchard but you could have made this a lot more difficult,” said Oliphant.

Blanchard has also agreed to liquidate his assets in B.C., which will net around $500,000 and be paid to the banks he defrauded.

“He could have been a successful and lawful entrepreneur,” said Leinburd.

“Instead he chose this route. And now he must pay for it.”

Blanchard was given two years of credit for his time already spent in custody, then sentenced to an additional six years in prison. He will be eligible for parole in two years.

Seven co-accused remain before the courts, although Gunn hinted Wednesday that many charges may be dropped now that Blanchard has taken responsibility.