The provincial government has filed a civil claim alleging a property in Saanich was used to launder money from stock fraud and is seeking forfeiture of the property, its proceeds, and any interest.
The Director of Civil Forfeiture filed supreme court action on Dec. 31, 2019 that alleges the property at 1819 Hillcrest Ave. in Saanich was purchased with profits from a fraudulent scheme and used to launder money from the scheme.
The defendants are alleged to have participated in a scheme between January 2009 and September 2014 to defraud shareholders of publicly traded companies, defraud the U.S., and launder money. It is alleged Brian De Wit and Paula Psyllakis committed fraud by fraudulently hiding ownership interests and engineering artificial price movements and trading volume in the publicly traded companies.
The claim names Amalthea Properties Ltd., sisters Penelope “Poppy” Psyllakis and Paula Psyllakis, and Paula’s husband Brian De Wit as the defendants in this case. The notice states Amalthea Properties is currently the registered owner in fee simple of 1819 Hillcrest Ave., and that Poppy Psyllakis is the sole director of Amalthea Properties which was incorporated in June 2016. The office of Amalthea Properties is also registered at 1819 Hillcrest Ave.
The claim alleges Amalthea Properties was incorporated by the defendants to receive, distribute, and launder the proceeds of unlawful activity. It also alleges Amalthea Properties was incorporated to conceal the source of the money, acquire the property and the proceeds from it, and obscure the true ownership of the property.
Court documents allege a fake mortgage of $400,000 was registered against the title of the property on March 9, 2012, by Paula Psyllakis and De Wit for the purpose of laundering money. The document states the mortgage was not a legal transaction for value and was later canceled by Psyllakis and De Wit on July 25, 2017. On July 19 of the same year, it is alleged Amalthea Properties purchased the property using funds from a fraudulent scheme under the direction of Psyllakis and De Wit.
Additionally, it is alleged Amalthea Properties entered into a line of credit with Santos Torres LLC for $980,000 in June 2017, but that the loan was not valid or enforceable. It is alleged three wire transfers of over $260,000 each were made to Amalthea Properties from Santos Torres on behalf of Paula Psyllakis and De Wit, and the money was then used to purchase the property on July 19, 2017.
Court documents state the person who approved the wire transfers, Michael Gastauer, helped the defendants and others commit securities fraud by setting up several unregistered virtual financial firms. The claim states Gastauer and/or Roger Knox controlled various corporations with accounts at unregistered virtual financial firms, including Santos Torres, and set up accounts at registered U.S. banks and elsewhere to distribute the proceeds of fraud.
On Sept. 17, 2018, Knox was charged criminally in the U.S. with conspiracy to commit securities fraud and securities fraud. The next month, the U.S. Securities and Exchange Commission (SEC) started proceedings against Knox for various violations of the U.S. Securities Act. On Oct. 2, 2019 the SEC also started proceedings against Gastauer for aiding and abetting violations of the U.S. Securities Act.
On Sept. 9, 2014, the U.S. filed an indictment against De Wit and others in relation to the fraudulent scheme he and Paula Psyllakis are alleged to have taken part in. Criminal charges remain open against De Wit and Paula Psyllakis.
Two of the others named in the scheme, Canadain-U.S. citizen Gregg Muholland and Belize resident Robert Bandfield pleaded guilty to their roles in the scheme in the District of New York on Feb. 6, 2017. Mulholland forfeited two B.C. residential properties as a result of the fraud charges, according to the U.S. Department of Justice.