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MARCOS TOWNSEND THE GAZETTE / Police investigators and tax inspectors visit a mansion under construction on Beaconsfield
Police raid snuffs out contraband cigarette ring
Beaconsfield couple arrested; Money laundered through A TMs. Head of vending machine empire and wife alleged heads of operation
PAUL CHERRY
The Gazette
Thursday, March 20, 2008
MARCOS TOWNSEND THE GAZETTE / Police investigators and tax inspectors visit a mansion under construction on Beaconsfield
In 1956, Gerald O'Reilly founded a company that for years kept a relatively quiet existence on Delmeade Rd. in Town of Mount Royal.
The 74-year-old businessman and his wife, Félicitas (Phyllis) O'Reilly, gradually built a small empire through Alouette Amusement, selling coin-operated machines and video lottery terminals. They were in the process of building a mansion in Beaconsfield worth an estimated $6 million.
That empire appears to be in jeopardy as O'Reilly and his wife were arrested yesterday as suspects in one of the biggest contraband tobacco rings investigated in Quebec. The waterfront mansion on Beaconsfield Blvd. and two other Beaconsfield properties owned by the O'Reillys are now the subject of seizure orders as the suspected proceeds of crime.
The joint police investigation, dubbed Project Conquest, also produced the arrest of Gilles Thibault, a South Shore lawyer suspected of using the names of dead people to help the O'Reillys obtain tax credits and create fake companies so they could secure government loans.
"Our investigation led us to establish that the couple ... supplied a large contraband tobacco market based principally in Sydney, N.S.," said Capt. Patrick Bélanger, of the Sûreté du Québec.
"Our investigation also showed that more than 200,000 containers of tobacco, containing 21 million cigarettes, were introduced illegally into the Canadian market between July 2007 and now."
Project Conquest, a joint investigation by the RCMP, the SQ and the Montreal police, resulted in the arrests of 14 people yesterday, with another six being sought on warrants. It centred on the O'Reillys and their business activities. Bank accounts tied to their companies, holding more than $5 million, were frozen. Revenue Quebec is also looking to collect more than $3 million from the couple as well.
"This is one of the biggest raids we've seen in the last few years and there certainly will be more of these investigations down the road," said Sgt. Michael Harvey of the RCMP-led regional task force that investigates contraband tobacco.
Bélanger said police not only probed the sale of contraband tobacco but followed the money as it flowed back from Nova Scotia to Montreal. Profits from the sale of illegal cigarettes were laundered in the city, he said.
"We're able to affirm that a good part of those sums found their way into private automated bank teller machines." said Bélanger adding the ATMs were owned by Les Systèmes Ascot IV Ltée, a company headed by Félicitas O'Reilly.
Bélanger also alleged the couple used Alouette Amusement to create fake documents, under the names of dead people and living people who consented, to falsely obtain tax credits. The O'Reillys also face fraud charges where they are alleged to have created small companies that obtained government loans and purchased products, like VLTs, from Alouette Amusement at inflated prices.
Thibault, whose offices are in Varennes, was arrested and faces six fraud charges. In 1997, an employee at Thibault's offices found 132 sticks of dynamite inside a bag.
The dynamite had been planted by the Hells Angels in an attempt to kill members of the Rock Machine who had hired Rochon to represent them in a civil case. The Hells Angels knew the Rock Machine used Thibault's conference room for meetings.
Gerald O'Reilly has a long history of clashes with the SQ. In the 1990s, he was charged in several criminal cases alleging he controlled illegal gaming establishments.
He was acquitted in almost every case but in 1998 he pleaded guilty to one count of keeping an illegal gaming house and was fined $10,000.