However, a massive FBI and RCMP investigation told a different story. According to American justice, Mr. Cazes was in fact Alpha02, the administrator of AlphaBay, the largest illegal marketplace on the dark web, where drugs, weapons, stolen credit card numbers and more can be bought and sold.
His spectacular arrest in Thailand on July 5, 2017, as well as his death under nebulous circumstances in prison a week later, caused a stir in the media around the world.
The then United States Attorney General, Jeff Sessions, personally announced at a press conference the arrest of Mr. Cazes, after what he called one of the most important criminal investigations of the year.
Less publicized was the corporate empire abroad that allowed the alleged cybercriminal to convert his illegally-sourced fortune into material goods, circumvent the laws and buy the citizenship of two countries.
Of the internal documents obtained by the Consortium international des journalistes d’enquête (ICIJ) and Radio-Canada montrent comment Alexandre Cazes has been granted access to a vast financial system parallèle et opaque, le même qui permet aux riches et puissants de cacher leur Argent dans des tax haven.
Two of the shell companies Mr. Cazes created also appear to have escaped authorities, according to our investigation.
This report is part of Pandora Papers, a leak of nearly 12 million documents from 14 firms offering overseas incorporation services. The documents were obtained by the ICIJ, a consortium of more than 600 investigative journalists in 117 countries and of which Radio-Canada is a partner.
A mini-empire of foreign companies
Radio-Canada was able to determine that Alexandre Cazes established no less than six companies, most of them incorporated in Hong Kong and Belize. These were associated with bank accounts in Switzerland, Seychelles and New Zealand and had virtual offices in London, Geneva and Hong Kong.
At least one of Mr. Cazes’s companies has allowed him to buy property illegally in Thailand. In the impeachment documents against Cazes, the United States Department of Justice included a letter written by the latter to an immigration consultant, with the aim of explaining the origin of his assets.
In this letter, written three months before his death in April 2017, Cazes claimed that his personal fortune came from investments made in 2011 in bitcoin speculation, long before the value of this cryptocurrency exploded.
The US justice claims, instead, that the cryptocurrency Mr. Cazes had come from the illegal AlphaBay marketplace, where he took 2% to 4% of all sales. At the time of Mr. Cazes’s arrest, US investigators estimated that the site was selling between $ 600,000 and $ 800,000 a day.
The US government alleges that all transactions, including withdrawals from Mr. Cazes, were carried out using cryptocurrencies.
In the letter, written in English, Cazes estimated that he owned a total of 18,700 bitcoins, most of them sold to buy property at a time when a single bitcoin was worth a few hundred US dollars. If he had kept it, his bitcoin fortune would be worth more than C $ 1 billion today.
Mr. Cazes explained that he bought an imposing villa in Phuket, Thailand, with the help of a shell company. We do not use KGYJ Management Ltd. [une société créée pour M. Cazes] because we found out that my name appeared there as founder. And since the laws of Thailand do not allow foreigners to own property, we had to find a way to circumvent this law and hide my name., he wrote.
The villa in question (New window), described as a masterpiece of modern architecture and contemporary Asian fusion, with five bedrooms and a 25-meter infinity pool, was purchased by Mr. Cazes for US $ 6 million (CAD $ 7.6 million).
Luxury properties, a vehicle for money laundering
According to James Cohen, executive director of Transparency International Canada, the purchase of luxury properties can be used as a vehicle to launder money. Purchased with money from illegal sources, the property becomes, on paper, a legitimate source of funds when it is sold, he explains.
Property is a key asset in global money laundering. It is possible to launder large sums by purchasing a multi-million dollar home or condo.
A quote from: James Cohen, Executive Director of Transparency International Canada
If a person owns a luxury property that they bought in London, New York, or Vancouver, say, not only can they live there, but it gives them the opportunity to whitewash their reputation in those countries. It allows you to establish your operations there. But also, he continues, she can sell it, because property prices almost always go up. So you make a profit on your initial investment of dirty money.
Front companies can be used to open bank accounts to help evade surveillance, he said. The front company can provide access to the legitimate economy. When you use a shell company to open a credible bank account, you’re done. The goal is to invest the money in credible institutions., he said.
Cohen adds that other luxury items, such as works of art or sports cars, are popular with those looking to launder money.
According to the US justice, Alexandre Cazes would have tried to obtain citizenship in at least six Caribbean and Mediterranean countries, particularly with the help of your front companies. At the time of his death, Mr. Cazes was a Canadian citizen, but had also obtained citizenship in Antigua and Barbuda in 2016 by purchasing a property worth $ 400,000 in that country.
In his letter written to an immigration advisor, Mr. Cazes also stated that he was about to buy another property in Cyprus with the aim of obtaining citizenship there. According to him, the house was valued at 2.4 million euros (3.6 million Canadian dollars).
Those golden citizenships, offered by some countries when making real estate or business investments, are appreciated by criminal actors, Mr. Cohen argues.
If a person needs to leave quickly, they can easily do so. In addition, it allows you to establish operating bases in several countries, have more properties and have better access to global financial centers that allow you to move your money., he says.
AlphaBay back online
In August 2021, the AlphaBay site suddenly came back online on the deep web. It can only be accessed by specialized browsers to connect to the dark web.
The former right-hand man of Mr. Cazes, a certain DeSnake, who had never been arrested or even identified by the authorities, explained in a forum post of the new version of AlphaBay wanting to continue the dream by Alexandre Cazes relaunching the site. He validated his identity using a public cryptographic key, which matches the one DeSnake was using when Mr. Cazes ran AlphaBay. This key is practically impossible to forge.
In the post, DeSnake states that few people know, but [Alexandre Cazes] had a contingency plan in case of [les autorités le démasqueraient]but didn’t have time to turn it on.
Following the arrest and death of Mr. Cazes, his family had expressed doubts that Trifluvien was a cybercriminal. Anyway, he hadn’t been tried yet and he will never be able to defend himself against these accusations … it’s easy to blame him now., had written to his mother-in-law to The Canadian Press in the summer of 2017. However, in his post, DeSnake confirms that Mr. Alpha02, the creator of AlphaBay.
Companies that managed to escape from the authorities
Two of the companies owned by Mr. Cazes, Infinite Estate Limited and Cosmos Devices Holding, had nominees acting as directors. As a result, his name did not appear in the business records of those companies in Hong Kong and Belize.
The death of Alexandre Cazes did not end the legal proceedings against him. In the following months, the United States government tried to seize all of his properties. In addition to his multiple properties, bank accounts and vehicles, three front companies were seized. On November 24, 2017, these companies, all located at the same address in Hong Kong, received a seizure notice from the US justice system. They were finally seized in September 2018.
Infinite Estate and Cosmos Devices Holding do not appear in the seizure documents released by the US courts, and it is unclear whether the US government was aware of their existence.
This type of shell company can be a perfect vehicle for bad actors, according to Jonathan Légaré, a financial crime expert.
Aiming at tax evasion and money laundering, cybercriminals, drug dealers, and criminals of all kinds are crazy about these front companies. They can hide behind these companies and thus transfer their funds – buying houses and other goods – all over the planet without attracting the attention of the authorities and the media., he explains.
The business model of companies offering these incorporation services abroad is based on confidentiality, continues Mr. Légaré.
Identity verification requirements are minimal in many jurisdictions around the world when it comes to registering a business. You will be asked more IDs and questions to get a library card than to start a business.
A quote from: Jonathan Légaré, financial crime expert
It’s a problem that’s compounded by local laws that often allow this kind of privacy, he says.
The other problem is that many states in the world have no idea who is behind the companies registered on their soil. These states are simply not asking the question. The companies that offer this type of incorporation services only apply, asking the least amount of questions possible to their clients, laws that are deficient., he says.
Jonathan Légaré and James Cohen agree that greater transparency could be a good solution to end these financial privileges, for example by forcing corporate records to reveal not only the names of the company’s directors, but also the identity of the owner. .
The existence of public databases that show the true owners of these businesses would be an indispensable tool. It would allow not only the authorities, but also investigative journalists and civil society, to trace the money., Cohen concludes.
With Frédéric Zalac and Benoit Michaud
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