In April 2017, Canadian authorities charged currency exchange operator Farzam Mehdizadeh for his alleged role in a global network that laundered funds for criminals and Islamist militants, including Hezbollah and the Taliban.
(Photo: James O’Brien/OCCRP)
But it was too late. Despite being under police surveillance, Mehdizadeh had managed to board a flight out of Toronto 11 days earlier, disappearing into thin air.
Police had been investigating Mehdizadeh for over three years, but the case fizzled out after he left Canada. Mehdizadeh has never returned to face trial, and reporters could find little trace of him in his home country of Iran, which police believe was his final destination.
But new details about his alleged role in the global money laundering ring –– and Canada’s failure to bring him to justice –– have emerged during the eight-week espionage trial of Cameron Ortis.
A former director of intelligence for the national Royal Canadian Mounted Police (RCMP), Ortis was found guilty on November 22 of violating the Security of Information Act.
Ortis had passed secret information to people associated with the money laundering ring, giving one person details of an investigation into his activities. Police found that Ortis had also reached out to Mehdizadeh, although there was no proof he shared information with him.
These revelations were found in a package of evidence provided to OCCRP by the Ontario Superior Court of Justice, where Ortis was tried.
The documents show that Mehizadeh was scrutinized as part of an investigation into the global money laundering network by the “Five Eyes” intelligence sharing alliance, made up of the U.S., Canada, U.K., Australia and New Zealand. Several suspects were living in Canada, including Mehdizadeh.
OCCRP also obtained legal documents about the case police built against Mehdizadeh, which include information that has not previously been made public.
The Mehdizadeh case highlights Canada’s struggles to tackle transnational organized crime, in part because of the sluggish pace of its justice system, said retired senior RCMP officer Calvin Chrustie.
“It’s extremely difficult to lay a charge, as it was perhaps in this case,” said Chrustie, who has worked on similar investigations. “And then it’s extremely difficult, borderline impossible, to get a conviction.”
Mehdizadeh was arrested in 2016, but he was released and it took a full year before charges were brought against him. By that time, he had already boarded a Lufthansa flight from Toronto to Frankfurt.
In the months leading up to his departure, the RCMP watched Mehdizadeh “liquidating his assets” as he made preparations to leave, according to a police affidavit included in the legal documents from his case.
But until charges were laid, there was probably little the RCMP could do to prevent Mehdizadeh from exiting the country, said Chrustie, who now works with the security and intelligence advisory firm Critical Risk Team.
He said charges can usually be brought more quickly in Canada’s Five Eyes partner countries. Canadian cases take longer to prepare primarily because of broad disclosure laws, he said, which require defense lawyers to be provided with far more information than their counterparts in other countries.
An RCMP spokesperson told OCCRP that charges were filed as soon as prosecutors felt they had a strong enough case.
“Charges were laid when the criminal investigation was completed and the case properly assessed by the Public Prosecution Service of Canada to meet a standard of Reasonable Prospect of Conviction,” Corporal Christy Veenstra said in an email.
Reporters were unable to contact Mehizadeh via his son, his former lawyer, and an Iranian phone number associated with one of his businesses.
Justice Delayed
Evidence from the Ortis trial shows Canadian authorities zeroed in on Mehdizadeh after a September 2014 meeting in Vancouver of the Five Eyes Law Enforcement Group.
At that gathering, the intelligence allies agreed to share information about the global network run by Altaf Khanani, a Pakistani national who would be sentenced three years later in the U.S. for conspiracy to commit money laundering.
Khanani’s clients included Chinese organized crime, Latin American cocaine cartels, the Taliban, al-Qaeda, and the Iran-backed militant group Hezbollah, according to the U.S. Department of Treasury.
Mehdizadeh was allegedly one of Khanani’s agents in Canada, and internal police emails show that authorities were keen to convict him at home rather than in the U.S.
“Personally I’m pleased to see that (the Ontario RCMP division) appears to be committed to go after MEHDIZADEH with the view of laying charges in Canada, versus simply assisting a US investigation,” wrote one officer.
Mehdizadeh was arrested on April 17, 2016, after being stopped while driving from Montreal to Toronto with more than 1 million Canadian dollars stuffed into a bag in the trunk of his car.
Mehdizadeh had been surveilled picking up the cash “from a person with known ties to organised crime,” according to the police affidavit from the case against him. Police questioned Mehdizadeh, searched his home and business, and confiscated financial records, but ultimately released him pending charges.
Over the next year, Mehdizadeh remained free as the wheels of justice turned slowly. On April 19, 2017, charges were finally approved against him, and an Ontario provincial arrest warrant was issued the same day.
But Mehdizadeh had already taken the flight to Germany on April 8, according to the police affidavit, which was submitted as part of an application for a Canada-wide arrest warrant. The affidavit states that Mehdizadeh had “probably returned to reside in Iran,” where he had maintained citizenship after emigrating to Canada in 2003.
Closing Shop
Documents from the Mehdizadeh case show that his departure from Canada could hardly have come as a surprise.
The police affidavit states that Mehdizadeh may have maintained his business interests in Iran while living in Canada, and that he told the RCMP after his April 2016 arrest that he “held a lot of assets.”
The document says Mehdizadeh’s Toronto currency exchange and money transfer business operated as part of a “hawala” network, a traditional way of moving funds via trusted contacts rather than banks.
“As such, he had easy access to a system through which he could transfer his wealth anywhere in the world, without leaving any trace in the Western financial system,” it says.
The affidavit shows that police were aware that Mehdizadeh traveled frequently to Iran, as well as destinations like Panama and the United Arab Emirates. They also reveal that the RCMP was watching Mehdizadeh closely as he prepared for his departure.
In December 2016, Mehdizadeh put his home up for sale for 4.8 million Canadian dollars. It sold two months later, according to the affidavit. Police surveillance confirmed in January 2017 that Mehdizadeh had closed down his Toronto money service business.
On March 17, 2017, U.S. Homeland Security Investigations informed the RCMP that Mehdizadeh had crossed the border the previous day, the affidavit says. Mehdizadeh told border control he was traveling to the U.S. to shut down a bank account, and would return to Canada with about $20,000 cash.
The last time Canadian police appear to have seen Mehdizadeh was on April 13, 2017, when they received a report from the Air Transport Authority notifying them that he had boarded a flight five days earlier.
“A photograph showing Farzam Mehdizadeh passing through airport security was provided with this information,” says the affidavit.
The legal documents show that Mehdizadeh’s lawyer, Peter Zaduk, contacted him after he left the country, and informed him about the charges and provincial arrest warrant. On April 26, 2017, Zaduk wrote to the prosecutor: “I have been in touch with him and will advise when he intends to return to Canada.”
Zaduk told OCCRP that he has not had contact with Mehdizadeh since he “disappeared from Canada,” and added: “What he may have told me about his whereabouts is of course privileged.”
‘Flight Risk’
Two years before he left Canada, Ortis had tried to contact Mehdizadeh through his son, Masih, according to evidence presented in court.
Ortis argued that his tip-offs to the money laundering network were part of a secret operation he had launched, without the knowledge of others at RCMP, after receiving a tip from a foreign intelligence source about a threat to Canada. He said the operation aimed to “nudge” people involved in Khanani’s network to use an email service that could be monitored by intelligence agencies.
The prosecution rejected that argument, and Ortis now faces a possible 20 years in prison. A sentencing hearing is scheduled for January.
Evidence from the trial suggests he planned to share information about investigations into Mehdizadeh’s affairs.
“I hate to reach out like this, but are you Farzam’s son? I’ve got some docs that he needs to see but I can’t find a way to reach out to him securely,” Ortis wrote to Masih in an April 2015 email.
Masih declined to tell OCCRP whether he passed along messages from Ortis to his father. He also declined to answer further questions, including about where his father is today.
If Mehdizadeh is living in Iran, he has kept a low profile.
Reporters could find no mention of Mehdizadeh on Iranian news sites or social media. No one answered multiple calls to an Iranian phone number listed in connection with his shuttered Toronto currency exchange.
Corporate records say a currency exchange company called Farzam Mehdizadeh and Partners, on the Persian Gulf island of Qeshm, was closed down in August 2022.
Meanwhile, Canadian authorities are waiting to bring him to justice –– if he ever comes back.
The RCMP affidavit submitted as part of the application for a nationwide warrant called Mehdizadeh a “flight risk who has left Canada, and may not return.”
Research was provided by OCCRP ID.
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