Online casino franchise scams. Billionaire Michael DeGroote's casino dream turns into organized crime nightmare - CBC News - Latest Canada, World, Entertainment and Business News

One of Canada's richest men, a philanthropist and an officer of the Order of Canada, poured $112 million US into a gambling venture headed by three businessmen with ties to organized crime, and is now locked in an international fight over Caribbean casinos with links to one of Canada's most feared Mafia clans. Online casino scams.

Michael G. DeGroote, who has the business and medical schools at Hamilton's McMaster University named after him, and who has been lionized as a self-made billionaire philanthropist, lent the money to a trio of men from the Toronto area to create a chain of gaming facilities in Jamaica and the Dominican Republic.

There is no evidence that at the time DeGroote knew of their underworld connections.

Now, as a yearlong joint investigation by the CBC and the Globe and Mail found, the companies known as the Dream Group have descended into a bitter conflict of alleged murder plots, threats, armed robbery and bribery allegations, featuring an underworld roster right up to the late Montreal godfather Vito Rizzuto.

The tale began innocently enough in 2010 when DeGroote, the 81-year-old tycoon who built Hamilton-based Laidlaw Transport into one of North America's biggest waste-haulage firms before selling his stake in 1988, ran into an old friend, a businessman named Andrew Pajak.

Pajak made the following pitch: He was working with two brothers, Antonio and Francesco Carbone of Vaughan, Ont., on a company manufacturing electronic slot machines. They had plans to install them at a nightclub casino in Jamaica.

Wowed by the gambling terminals and Antonio Carbone's sales job, DeGroote agreed to put up $5 million US in December 2010. "He was very enthusiastic. He was all-in," Francesco Carbone, 47, said in an interview with CBC's Terence McKenna that airs Friday night on the fifth estate.

The early returns seemed promising, and they smoothed the way for DeGroote agreeing to become the sole investor in Dream Group's acquisition of sports betting outlets, lottery kiosks and a dozen casinos one island over, in the Dominican Republic.

By May 2012, the billionaire's total underwriting of the Caribbean operations stood at $111.9 million US. "I am not an owner of Dream. I am strictly a creditor," DeGroote later said in sworn testimony.

Payments stop

By their own account, the Carbones worked day and night to turn their newly acquired Dominican Republic casinos into a chain of glittering gaming houses worthy of Las Vegas. "A lot of hard work, lot of hours... leaving our families, seven days a week," Francesco Carbone said.

The Lamborghini-driving brothers threw promo events featuring models and Dominican celebrities, took out splashy newspaper ads and gave away cars.

And at first, Dream Group was making good on its loans.

But then, in May 2012, the payments to DeGroote stopped.

After a summer of haggling, in October, DeGroote sued to get access to the company's books and to get his money back, alleging the Carbones and Pajak had misappropriated portions of the funds. One judge ruled in November 2013 that DeGroote had established "a strong case" for fraud.

And as the lawsuit unfolded, so did the Carbones' and Pajak's history.

Handgun convictions

It turned out this was not the first time the Carbones had been sued over large debts. Before Dream Group, they ran a house-painting business and a cigar-importing company. Both were pursued by banks over unpaid loans, and both had receivers appointed who found serious flaws in the companies' books, according to court filings.

The provincial government had pursued them as well, raiding the cigar business in 2009 on suspicion it was underpaying tobacco tax. During the raid, police found two handguns — one in Antonio Carbone's filing cabinet, the other under Francesco Carbone's desk, loaded and with the serial number filed off.

The brothers pleaded guilty in July 2011 to illegal possession of firearms and were sentenced to 60 days in jail. In interviews with the CBC, they admitted it was a "terrible idea" to acquire the guns, but said they had received threats — five bullets in the mail and an accompanying note — and wanted to protect themselves and their families.

There is also evidence they were involved in a bookmaking operation linked to organized crime.

The Carbones deny it, but the investigation by CBC and the Globe and Mail found corporate filings from Panama, Costa Rica and Britain, as well as court and website records, which indicate the brothers were behind an online gambling website called Don Carbone Sportsbook and Casino, or DCSC.com. Banking records show they wired at least $245,000 from their tobacco company's bank account to DCSC in 2008.

Until it closed shop in 2010, DCSC was affiliated with a wider bookmaking network called Platinum Sportsbook, which police took down in February 2013 in a series of raids in southern Ontario. Investigators have publicly described Platinum as a joint undertaking of the Hells Angels and Italian Mafia.

As for Pajak, DeGroote has said he's been friends with the 62-year-old businessman for over 40 years.

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Pajak has no criminal record, but four former investigators — two from the RCMP, two from Toronto police — said he has a history of association with known Mafia figures, with one of those investigators describing him as "a mob associate of the first degree."

In a secret recording filed in court by the Carbones as part of litigation over the Dream Group, he is heard saying that "I used to take care of all, a lot of the mob's money."

Notorious fraud artist

While DeGroote's legal battles with the Carbones progressed in the first half of 2013, other characters with a dubious past entered the fray.

In May of that year, DeGroote was visited by two men at his family's luxury condo in downtown Toronto.

One of them was Peter Shoniker, an outgoing, white-haired former Crown attorney who had been convicted of money laundering in 2006 after he became caught up in an RCMP sting. Shoniker had been hanging around the Dream Group's Toronto offices for most of the prior year, and came to believe the Carbones were swindling DeGroote.

The other was a large, broad-chinned man introduced as Alexander Visser.

Unbeknownst to DeGroote, Visser had a long criminal history, amounting to more than 40 convictions in Canada for fraud, uttering threats and assault.

The justice system knows him as Zeljko Zderic, 44. But he also kept passports from various countries under the names Sasha Vujacic and Pavle Kolic, and had ties to a series of mobsters.

At the meeting, Visser made a stunning offer, according to secret audio recordings he made that have been filed in court by the Carbones.

He said he could get Dream employees in the Dominican Republic to sign affidavits claiming the Carbones had massively defrauded DeGroote, but for a price.

"You pay me half a million you're going to get all that. You have my word," Visser said. "I am going to make sure that the Carbones can't even sell chestnuts on the corner of the f—king street."

Initially, DeGroote objected, saying "I cannot buy evidence." But eventually he began negotiating over the asking price, according to the tapes.

They settled on $500,000 — $250,000 for Visser, and another $250,000 to pay the Dream employees' back wages. By the end of the meeting, however, DeGroote again had doubts and said he would first check with his lawyer.

The next day, he retracted the offer.

He nevertheless told Visser he would send him $150,000 with "no strings attached" for possible future help.

DeGroote declined to be interviewed by CBC and the Globe and Mail, but through his lawyers, he said the secret recordings were manipulation, created by "individuals with a long history of practising deceit."

He has also testified under oath that he never actually sent any money to Visser.

But he acknowledged that Visser did end up working for the Dream Group in the Dominican Republic.

Godfather shows up

Visser flew there in July 2013, and soon began making death threats against the Carbones and one of their associates.

Security footage from around that time shows him walking the floor of a Dream casino in Punta Cana. He's accompanied by none other than Vito Rizzuto, who until his death later that year was the godfather of the Montreal Mafia and one of the most powerful mobsters in Canada.

Rizzuto had a long history in the Dominican. For years, Canadian police compiled evidence that his Mafia clan was using the island to ship drugs to Canada. Testimony at Quebec's Charbonneau inquiry into municipal corruption revealed the godfather often went to the DR to golf and vacation.

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The Carbones claim that this time, however, he was there as part of an effort by their partner Pajak to take over their company.

Starting that fall, Rizzuto began to have a series of meetings at the tony Casa de Campo community in the eastern Dominican, according to two sources who were present. The meetings were also attended by Visser and Dream Casinos president Pajak, the sources said.

Peter Shoniker, who had flown down to the country and partook in some of the gatherings, said that the men discussed what to do about Dream and the Carbones — and that he was astonished to discover at one discussion that the Mafia godfather would now have a substantial involvement in Dream.

"I recall Mr. Rizzuto saying that, you know, somebody's gotta get this all approved by Mike DeGroote. At which point in time Andy Pajak said, 'I speak for Mike DeGroote,' " he said.

"It was after that conversation that Mike DeGroote called me and said, 'Peter, what the hell is Vito Rizzuto doing involved in this?' I said, 'Why don't you ask your boy Pajak? He's staying at his house.' "

Summoned

Through the fall, a number of Rizzuto henchmen showed up in the Caribbean.

They included Stacey Richard (Rick the Russian) Krolik, convicted in 2010 for his role in a Rizzuto clan online gambling operation, and Gianpietro Tiberio, who has no criminal record but was named in the Charbonneau commission as an "organized crime figure." Tiberio even attended court representing Dream Casinos and showed up at a radio interview about the company.

Tiberio's lawyer Franco Schiro called CBC News on Friday afternoon to say that while his client met Vito Rizzuto in the Dominican Republic, he was never an operative for the Rizzuto clan. Schiro added that Tiberio was doing legitimate business for Dream Casinos and that he acted as "a management consultant" and met "all sorts of people."

Back in Toronto, in November, Antonio Carbone got an ominous phone call, he claims.

"I was contacted by an individual to attend a meeting. The individual told me that Vito Rizzuto was in Toronto, and he needed to speak to me urgently, and it was in my best interest to meet with him," Carbone said in an interview.

The ensuing meeting was held at a steakhouse north of Toronto, Carbone claims. He maintains Pajak also attended, as well as a number of other Toronto-area men affiliated with Rizzuto.

"He was brought in to intimidate us. And when the time was right that we were putting up a fight, Rizzuto presented himself and told me to walk away, or else," Carbone says.

Whatever Rizzuto's plans might have been, he died shortly after — two days before Christmas — of lung cancer.

CBC asked DeGroote, the billionaire who had lent a fortune to the Dream venture, about the involvement of Rizzuto. His lawyer answered: "Mr. DeGroote has never met Mr. Rizzuto, has never spoken to him and has never had any association with him of any kind."

There were many signs by that Christmas of organized crime involvement in the Dream Casino business. DeGroote, however, continued to pour money in, lending a further $2.4 million in "emergency funding" to Dream, which two separate court-appointed supervisors have reported is in financial distress.

His lawyer said in a statement that DeGroote has never "been complicit in members of organized crime becoming involved in any of his business affairs."

Carbones adamant

The Carbones are adamant they will prevail in court, oust Pajak and retake control of the casinos.

They have also countersued DeGroote and Pajak, alleging a conspiracy to sabotage the Dream venture.

Sasha Visser remains a fugitive from Canadian justice and still has business in the Dominican Republic.

As for the billionaire investor, for his part, he rues ever advancing a single cent to the Caribbean endeavour.

In his only on-the-record statement about the Dream fiasco, issued through his lawyers, DeGroote said: "Frankly, I sincerely regret that I ever agreed to invest in this venture. Indeed, I am embarrassed by it."

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His lawyers later added: "Mr. DeGroote is someone who has been wronged, rather than a wrongdoer."

With files from CBC's Joseph Loiero, Chelsea Gomez, Harvey Cashore and Terence McKenna

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