The Canadian 'mastermind' of the Panama Papers is still a free man despite criminal charges

One by one, the pins were pulled out from under West Vancouver businessman Fred Sharp. He was ordered to pay the equivalent of $70 million to the US government and $2 million to Quebec's securities regulator for his role in the stock price manipulation scheme. You are banned from the stock market in Canada. His bank and brokerage accounts were frozen and confiscated. Known as the Canadian mastermind behind the Panama Papers, Sharp has lost case after case in court.

But Sharp still has his freedom: Despite pressure from within the Canada Revenue Agency over the years to investigate him for a crime, he has never been charged in Canada. And while the US Department of Justice indicted him two years ago for securities fraud and conspiracy, there was no public evidence of an extradition effort.

Former financial crime investigators who spoke to CBC News said it is not unusual for Canadian authorities to choose to have people accused of crimes outside of Canada charged and tried in the US, because of the uphill battle to prosecute such crimes in Canada.

“There is a belief that criminal cases, including complex white-collar crimes, can be dealt with more effectively in the United States,” said Peter German, a lawyer, anti-money laundering expert and former head of financial crimes for the RCMP.

But that requires the defendants to be arrested and brought to trial in a Canadian court, and — five years after Sharp was first charged in the US — that has yet to happen. It is not clear why.

Canada's King of the Panama Papers

When the Panama Papers were revealed publicly 10 years ago this month, Fred Sharp emerged as the leader of a Vancouver-based organization helping wealthy Canadians move tens of millions of dollars into tax havens. A self-proclaimed independent banker with downtown offices, Sharp was a Canadian agent for Mossack Fonseca, the Panamanian law firm at the center of a massive leak of financial records.

Leaked documents showed his business, called Corporate House, helped register or manage overseas entities for more than 1,100 clients. A CBC investigation when his company was found known as a “travel” investment company. for wealthy Canadians who want to keep assets private and offshore to reduce their tax burden.

It's been pretty much downhill since then for the previous attorney and from time to time short film actor. The Canada Revenue Agency began investigating him and many other clients and employees soon after the Panama Papers were revealed. Sharp and his colleagues contested the audit, filing more than 90 lawsuits against the CRA, but lost in Federal Court again. on appeal.

A year later, Quebec's markets regulator, the Autorité des marchés financiers, or AMF, applied. allegations that Sharp and four other men he was involved in an illegal, multi-million dollar scheme to pump and dump shares in a mining company called Solo International. Sharp and three others challenge the power of the AMF all the way to the Supreme Court of Canada and lost, and last month the AMF court found against them and imposed fines of $3.6 million.

In an audio recording presented as evidence at the AMF hearings, Sharp can be heard instructing his private bank in Switzerland to take steps that appear to help boost Solo's stock price – which Sharp and his associates almost secretly control, the court found.

Joven Narwal, Sharp's Vancouver-based lawyer, said the court's decision will be appealed.

Then in 2021, the US Securities and Exchange Commission (SEC) and the FBI filed fraud charges against Sharp and several other British Columbians, alleging a long-term conspiracy to pump and dump large amounts of shares traded on American markets.

They suspect that the scheme involves Sharp and its associates establishing and operating a network of offshore shell companies and accounts around the world that they lease to clients. By going private, shell companies would acquire a stake in a publicly traded company that was below the ownership threshold — typically five percent of the shares — that required them to publicly disclose their holdings. However the shell companies would collude to inflate the stock price and lower it to the unsuspecting public.

The fraud netted more than a billion dollars in profits between 2011 and 2019, according to the SEC.

Sharp never disputed those fraud allegations in a US court and a default judgment was entered against him in 2022, when a judge ordered him to pay US$52.9 million in fines, interest and restitution (known as “disgorgement”).

“For ten years, Sharp operated as the mastermind of a network of services designed for the sole purpose of managing fraud. His plans were classified as 'stock manipulations,'” the SEC said in a filing, citing what it described as Sharp's writings.

The findings of the US court include that Sharp provided an encrypted communication system, using devices called “xPhones,” to his clients, which run on servers based in Curaçao, and that he told one client in an xPhone message that the Corporate House's offer is “complete; it is not limited to trading. It includes payments, loans, private placements and keeping clients abroad.”

The SEC then went after the assets of Sharp and his associates in British Columbia. It is sharp appealit was lost, and now it is again trying to file a complaint in the Supreme Court of Canada.

“Mr. Sharp has used the legal means open to him to dispute these allegations, as any person in his position has the right to do,” said his lawyer Narwal, referring to all of Sharp's various complaints.

The SEC won't say how much its $52.9-million order against Sharp has now collected. Quebec's AMF said it is taking steps to collect the civil penalties it received from Sharp and his co-defendants.

There is no record of the trial

Despite his announcements about staying out of jail, a number of those accused of having ties to Sharp – including two Canadians who are fighting extradition in BC – have been arrested and at least one of them has served time in a US prison.

Roger Knox, the British founder of a Swiss asset management firm called Wintercap, was arrested in Mexico City in 2018 and flown to Boston to face securities fraud charges. He pleaded guilty and became a cooperating witness with US authorities against Sharp and others, testifying that Sharp “gave people, bank clients, broker accounts to invest in shares where they did not have to declare them to regulators or Canadian tax authorities.”

Knox testified that he visited Sharp at a recent vacation home in Puerto Vallarta, Mexico, for four or five days in the spring of 2018.

Sharp's primary residence is in West Vancouver, one of the wealthiest municipalities in Canada.

CBC News was unable to obtain a record of his trial in British Columbia's Supreme Court, and neither the Canadian nor the US Department of Justice would say whether an extradition request had been made.

Through his lawyer, Sharp did not respond to questions about the US criminal charges and any efforts to extradite him.

Commenting in general and not on Sharp's case in particular, the German lawyer and expert in financial crimes, said there could be various reasons why the United States would not immediately request the extradition of an indicted person, including factors such as valuables and resources.

“Many times, when it comes to securities litigation in the US,” said German, “the decision is made to go after the money rather than the people.”

Got a tip on this or another story? Contact reporter Zach Dubinsky: [email protected] or 416-205-7553.