Feature Articles

September 11, 2000

Hells Angels, Starnet and Crime of the Future

By John William Tuohy

John William Tuohy is a writer who lives in Washingon, D.C.

     John Tuohy's book, The Last Gangster; The Life and Times of Roger Touhy and the Chicago Mob, will be released by Barricade Books this fall.

     Organized Crime in Canada is wearing a new face these days. While the traditional mob remains alive and well in the land of the Maple Leaf, the Hells Angels Motorcycle Club is quickly and brutally shootings its way to the top spot.

     The image of the Angels image as portrayed by Marlon Brando and Lee Marvin in The Wild Ones, as beer guzzling, rude by otherwise shiftless vagabonds on oversized Harley's is a thing of the past.

     The ancient past.

     The Hells Angels of twenty-first century are organized, ambitious and greedy and no where is that displayed better then in the wide-open spaces of our northern neighbors who have been plagued with by an explosion of Hells Angels chapters in recent years.

     The Angels, who are now an international organization, have been slowly and steadily muscling control of Canada's booming money laundering, narcotics and prostitution markets, and the gang is taking traditional steps to defend itself from outside interference.

     In January of this year, it was revealed that the prestigious Royal Canadian Mounted Police, a federal, national investigatory force, has been looking into allegations that the bikers have successfully infiltrated the Edmonton City police force over the past seven years. As of today, the investigation had shown that Edmonton police officer partying with drug dealers from Vancouver branches of the group, and the RCMP believes that some officers have been leaking information to bikers which has substantially damaged several federal investigations into the Angels criminal doings.

     According to the RCMP, the Angels have good cause to infiltrate the local police. The Edmonton chapter, which was recently officially stripped of its colors by the national chapter, controls cocaine trafficking, and distribution of marijuana, money laundering, and prostitution.

     The founder of the Edmonton Hells Angels' chapter and two other gang members are currently on trial for robbery, extortion unlawful confinement, aggravated assault, and assault with a weapon and firearms-related offenses.

     The three were charged after they kidnaped and beat an extortion victim and forced him to hand over his truck and trailer to clear up a debt.

     In another investigation, this one conducted by Canadian Forces counterintelligence, it was learned that over the past seven years, the Angels have been trying to recruit Canadian soldiers for their expertise in weapons. A second investigation is looking into allegations that the Angels are trying to channel some of the militaries high-powered weapons to the bikers, or provide expertise in bomb-making.

     And why do the Hells Angels need heat guided missal launching rocket launchers? Well, the club is at war. In Quebec alone, over 150 bikers are dead in the last six years in a struggle to control that city's lucrative drug trade, prostitution and money laundering trades.

     It's a bitter turf war between the Angels and another group of bikers known as the Rock Machine.

     This recent rash of Hells Angels found murdered in the Ontario province are seen as a major challenge to the club which has long wanted a foothold in Canada's most populous province. Police report that while the Angels do control large segments of Ontario's underworld rackets, their grasp is tenuous at best due to fierce opposition from the Rock Machines, Ottawa Outlaws, Satan's Choice, Vagabonds, and the Loners.

     The Loners are considered the biggest threat to the Angels by police who recently fired tear gas through the windows of the Loners bike gang clubhouse in Toronto and arrested 16 people. Police say that the tear gas was used to chase the members out after they ignored phone calls urging them to surrender. On the same day 150 police officers simultaneous raided thirteen different biker hangouts and seized $1.5 million worth of drugs -- including a kilo of cocaine -- 11 long-barreled rifles, a. 45-caliber revolver, four replica handguns, and an assortment of swords, machetes, bayonets, and butterfly knives in the raids. Also seized were large amounts of homegrown marijuana, hashish, mushrooms, Valium, and Percoset. Among the rifles, at least one of which was stolen, was a copy of an AK- 47, the preferred assault rifle of guerrilla armies, complete with two prohibited, oversize magazines capable of holding 30 rounds each.

     In Quebec police launched a crackdown against the Hells Angels after gang violence there claimed the lives of at least ten bikers since July of this year.

     Nationally, the bikers are vying for control of Canada's vast and lucrative sex trade. A recent CIA report named the Canadian city's Vancouver and Toronto hubs for the trafficking of sex trade workers.

     According to the CIA, between 700,000 and two million women and children are trafficked through the sex business annually the agency places most of the blame on the Vancouver Angels and other organized-crime groups, including the Asians.

     The report said that American girls are also being smuggled from the US to Canada for sexual exploitation. Many of the women are recruited to Vancouver with false promises of jobs as exotic models and exotic dancers. However, once in Canada, they are forced into prostitution or sweatshop labor.

     Vancouver, perhaps as a result of the sex trade centered there, has also become the new center for money laundering before the cash mysteriously reappears in one of a hundred, or perhaps a thousand dummy companies in the Caribbean.

     Just how important and flooded with cash Vancouver has become was demonstrated recently with the arrest of two prominent Vancouver stockbrokers for participating in an alleged boiler room stock fraud masterminded by the Colombo crime family.

     The pair, who are charged with mail and wire fraud, money laundering, and tax fraud, were involved in a stock fraud case whereby they traded shares of Orlando Supercard Inc. through accounts set up with their former employer, Pacific International Securities Inc. in Vancouver.

     In another case this past, Jeffrey Burns, a former Liberal Party candidate and longtime chief financial officer of the election campaigns of a former senior cabinet minister, was arrested with his wife on charges that they conspired to launder $10-million in bonds and $3-million in cash and conspiracy to sell fake passports.

     Police suspect that the gangs are using their vast cash reserves to buy up big hotels and landmark buildings in Canada for their front men to look respectable.

     Inspector Kim Clark, in charge of Vancouver RCMP Proceeds of Crime Section, said he could personally identify dozens of such properties and businesses in major Canadian cities, where the front men may not even know where the money is coming from.

     Clark said the police work involved in tracking laundered money and financial fraud has become extremely complicated, because of the various jurisdictions into which the money is pumped. By mixing the dirty money with the proceeds of legitimate businesses, the mobsters behind the scenes have succeeded in "muddying the water to the extent that investigators and forensic accountants find it difficult to tell who owns what and why".

     This may or may not explain the phenomenal growth of a Starnet Communications, a Vancouver-based Internet Casino software operator.

     Before its spectacular fall from grace, Starnet was the pride of Vancouver, where it was hailed as an Internet success story. Its founder, Ken Lelek was hailed as an Internet pioneer. A local boy made good through hard work and dedication to a dream. Even the national government praised their rapid rise to the top. Starnet's stock was considered one of the best buys on the market, and in less then a year its price leaped from 37.5 cents to a high of $29 by July of 1999. At its peak, Starnet's paper value neared $900 million. In fact, the company's stock was selling so well that Starnet applied for permission to trade on the prestigious Nasdaq market.

     In 1998 a "Nightline" broadcast about online businesses hailed Starnet as a "reputable pioneer of Internet gambling." Starnet's revenues for fiscal 1999 totaled $9.7 million.

     Starnet was the up and comer.

     Then it all fell apart. At the break of dawn on August 20, 1999, in Vancouver's seediest neighborhood, several squads of heavily armed members of the Royal Canadian Mounted Police kicked in the steel-vaulted security door to Starnet's corporate office and working around the clock over the next three days seized all of the company files, papers and computer equipment.

     The Starnet probe, dubbed "Project Enigma," by the federal police, even searched through the garbage at the homes of company executives and impounded their personnel phone books.

     The raid on Starnet shocked Vancouver and the Internet business community. However, the raid was the culmination of an 18-month probe of Starnet's operation, which the RCMP was now describing "substantially and fundamentally an illegal enterprise." involved in pornography and money laundering through the Internet. This is no small charge considering the CIA claims that Vancouver is the new center for the illegal sex trade in North America.

     Police also said that the company's adult-entertainment Web sites contain graphic depiction's of sadomasochism, which violated Canada's anti-obscenity laws.

     The day after the raid, Starnet honcho's tried to empty the company's bank accounts but police had already frozen the accounts. Starnet's once promising stock plunged to its value of less then two dollars a share. It withdrew its application to Nasdaq and quietly, and quickly, relocated its headquarters to Antigua, far beyond the reach of the Canadian Royal Mounted Police or the U.S. Customs Service and the Internal Revenue Service which are now also investigating Starnet.

     It turned out that Starnet was far more then the hapless casino software developer it claimed to be. The company had branched out from providing software to running its own on line gambling casinos. Starnet was also selling sex, lots of it including Gay porn, live strip shows and all manner of hard-core pornography with customers in more than 60 countries.

     But it was the alleged illegal wagering that brought around a police sting. Officers posing as Canadian and American gamblers approached Starnet and placed bets with them, a violation of Canada's rigid anti gambling laws since Starnet didn't have a license to provide gambling services.

     Then new light was shed on Starnet's founder Ken Lelek, who now denied any substantial role in the company, a statement the police flatly dispute. According to the national police, Lelek was close to Lloyd Robnson, whom prosecutors and organized crime experts identified as a leader in the Hell's Angels Motorcycle Clubs Vancouver branch which is noted for its violent behavior and dealing in narcotics.

     Further digging showed that Lelek and Robnson ran a booking agency strippers for nightclubs which provided strippers for Starnets live Internet shows. And although the police won't confirm or deny it, the word around Ottawa's official circuit is that the RCMP opened its investigation of Starnet based on the Hells Angels link.

     Stay tuned. This one is only beginning to unfold.

Mr. Tuohy can be reached at

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