Wayne Hatala of Prefco was majority owner of restaurant and marina labelled crime hot spot

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Ex-crime hot spot sold in Harrison
Man acquitted of laundering money buys restaurant, marina
Kim Bolan
Vancouver Sun

The Breakwater restaurant on Harrison Lake was previously run by Daryl Giles Desjardins, now serving a 41/2-year sentence for marijuana trafficking and a weapons violation.
CREDIT: Peter Battistoni/Vancouver Sun
The Breakwater restaurant on Harrison Lake was previously run by Daryl Giles Desjardins, now serving a 41/2-year sentence for marijuana trafficking and a weapons violation.

A Harrison Lake marina and restaurant at the centre of a cross-border drug smuggling operation has been sold to a controversial businessman who was arrested with former Vancouver lawyer and convicted money-launderer Martin Chambers.

Jack Purdy and his Armac Investments Ltd. took official possession of the Breakwater Restaurant and Marina, near the Village of Harrison Hot Springs, on Oct. 11, according to property transfer records obtained by The Vancouver Sun.

Purdy faced a series of U.S. money-laundering charges, along with Chambers, after a joint FBI-RCMP investigation culminated in their arrests in 2002.

Chambers was convicted and sentenced to 15 years in a U.S. jail, while Purdy was acquitted by a jury on the money-laundering charges. He later pleaded guilty to a financial reporting offence.

Purdy owns millions of dollars of resort properties on Vancouver Island, in Hawaii, the Caribbean and in Italy, according to court documents.

He bought the Breakwater for $1.4 million after the previous owners were foreclosed upon.

Purdy could not be reached for comment this week. His lawyer Gerry Mazzei, whose office is listed in corporate records as the address of Armac, said Purdy bought the property so he could develop it as he has done with similar sites.

"I let him know that you were calling and he said, 'You can just tell them I bought this at a court-ordered sale. I don't know the previous owner. I am in this kind of business.' It is just business as usual for him," Mazzei said.

"I expect he's got plans to revive it and make it operational."

He said Purdy lives primarily in Alberta now and was not aware of the police investigation that focused on the restaurant and marina and helicopter drug smuggling earlier this year.

That investigation led to the arrest last May of Daryl Giles Desjardins, the last man to run the once-popular Breakwater restaurant.

Police said at the time that the restaurant, with its scenic lakeside location, was a hot spot for organized crime groups ranging from bikers to Asian and Indo-Canadian drug gangs. They said Desjardins, a 44-year-old with a penchant for fast, luxury cars, contracted out his services to move large quantities of pot across the U.S. border.

Even before the land sale was official last Wednesday, Purdy had been introducing himself to officials in both the village of Harrison Hot Springs and the District of Kent. The Breakwater is in Kent, but visitors to the scenic spot must go through the nearby village.

Harrison Mayor Leo Facio confirmed Thursday that Purdy attended a Sept. 28 village community plan meeting with an associate.

"It was the end of the evening and he just sort of introduced himself," Facio said of Purdy. "He just happened to mention he had some interest in the Breakwater."

Facio said Purdy had some discussions with village planners, but the mayor was not involved in those talks.

Larry Burk, Kent's director of development, said Purdy and two associates also paid a visit in mid-September.

"He just gave us some of his ideas," Burk said, adding that nothing has been formally proposed for the site. "They were just talking about logistics."

The restaurant remains closed and there is no business currently operating there, Burk said.

"There is not much that place does except give us some notoriety," he said.

Desjardins, who parked his Bell JetRanger helicopter in a tin shed on the site, pleaded guilty in August to two marijuana-trafficking charges and to violating a weapons ban. He is now serving a 41/2-year sentence.

He admitted in court to flying the chopper across the border and landing near Loomis, in Washington state, with 155 kilograms of marijuana worth $1.2 million stuffed into hockey bags.

When police searched Desjardins' house in nearby Popkum, they found two sets of ballistic armour and eight firearms, including two assault-style rifles and four handguns, some of which were loaded. Police also found $21,000 in cash and a Glock handgun, with its serial numbers removed, inside one of Desjardins' vehicles.

The sentencing judge said Desjardins was "the organizational facilitator in a drug-distribution chain."

"This incident was a well-planned and carefully coordinated scheme that involved a multitude of other individuals, both in Canada and the United States, for the pickup, delivery and distribution of drugs. The defendant was not a mere courier hired for the specific purpose of delivering marijuana," Chilliwack Provincial Court Judge Brent Hoy said. "The defendant was involved in a large-scale commercial operation in the distribution of marijuana, with economic gain as the driving force for his participation."

Desjardins also had been ordered by the U.S. District Court a year ago to pay more than $5 million US for his role in a fraudulent scheme to sell the stock of Pay Pop Inc., a now-defunct telecommunications company that was based in B.C.

Desjardins, who acted as Pay Pop's president, worked with controversial Vernon stock promoter Robert Zaba, in what the U.S. Securities Exchange Commission alleged was a classic "pump-and-dump" scheme that earned them millions as they put out false news releases about the company's assets.

SEC documents also say Desjardins "even boasted that Pay Pop was his own 'printing press' for money, while at the same time bartering Pay Pop stock for several exotic cars and an ownership interest in a thoroughbred racehorse."

During the Pay Pop probe, the RCMP said the company was linked to the Hells Angels.

Property records show the Breakwater Restaurant was owned by the Harrison Lake Marina Corp., which had run into financial trouble, and that Desjardins had put in a bid to buy the restaurant before his arrest, according to a court case filed against it.

Instead, a B.C. Supreme Court order dated June 28, 2006 approved the sale of the site to Armac and its sole director, Purdy, with a closing date of Aug. 30. Purdy's mortgage for the property was registered on Sept. 29 with many of the same Calgary-based investors who were previously involved.

"It is a public record and it is coming out of Calgary and they are the people who foreclosed and they are providing the financing in the present transaction," Mazzei said.

Purdy's latest land acquisition was made days after he and Armac were sued by his former common-law spouse, Kim Galavan, in B.C. Supreme Court.

Galavan's statement of claim, filed Sept. 18, alleges Purdy did not live up to an agreement to compensate her for the contributions she made to the acquiring, renovating and managing of several properties in B.C., Hawaii, Italy and Anguilla in the Caribbean, during their eight-year relationship.

The businesswoman says in the court papers that she helped preserve Purdy's business interests while he was facing charges in the U.S. and arranged for his bail and "provided US $50,000 from her bank account for the initial legal fees."

The documents allege Purdy agreed to buy Galavan a house in May 2004, but later reneged on a commitment to cover the cost of the renovations and mortgage, as well as breached an agreement to compensate her for her interest in several of Purdy's properties.

Purdy has yet to file a statement of defence in the suit.

Chambers, Purdy and three other B.C. men were drawn into an FBI-RCMP money-laundering and stock sting operation codenamed Bermuda Short in August 2002. Disguised as financial front men for a Colombian drug cartel, undercover officers tried to induce them to launder hundreds of thousands of dollars of cash, which they represented as the proceeds of drug trafficking.

On Aug. 14 and 15, 2002, all five men were arrested on U.S. soil and charged with money-laundering offences.

Two pleaded guilty and agreed to cooperate with federal prosecutors. Chambers fought the charges against him, but was convicted on all five counts by a Miami jury in the fall of 2003.

Purdy, a longtime stock promoter, pleaded not guilty and was forced to stay in Miami wearing an electronic monitor until he was eventually acquitted and returned to Vancouver.


© The Vancouver Sun 2006

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KPMG alleges fraud in deal involving leaky condo repair company Prefco and Harrison Lake Marina


 This case will be of particular interest to leaky condo owners whose strata corporations contracted with one of the Preferred companies before and after the collapse of New Home Warranty.





KPMG et al v. Harrison Lake Marina Corporation,


2006 BCSC 143

Date: 20060127
Docket: S045361
Registry: Vancouver


KPMG Inc. in its capacity as Trustee of Prefco Enterprises Inc.
and Coast Flashing and Scaffolding Inc., P.C.G. Construction Group Inc.,
and Preferred Restoration & Emergency Services Inc.



Harrison Lake Marina Corporation


- and -

Docket: H040947
Registry: Vancouver


Kozul Holdings Inc.



Harrison Lake Marina Corporation, KPMG Inc., in its capacity as trustee in
bankruptcy of Prefco Enterprises Inc., Prefco Consultants Inc., Wayne Hatala,
Mike Blake, B. Ford Pharmacy Ltd., Chizen Farms Ltd., Crestmount Holdings Ltd.,
Greentree Mortgage Corporation, Moonpool Capital Corporation, Richard Connors,
Joanne Gerl, Werner Gerl, Esther Hauck, James Masleck, Suzanne Seliga,
Jenifer Gray, Olympia Trust Company, Canadian Western Trust Company,
Richard Frank Simon d.b.a. Harrison Landscaping


Before: The Honourable Madam Justice Martinson

Reasons for Judgment

Counsel for KPMG

J. Grieve
K. Robertson

Counsel for Harrison Lake Marina Corporation

F. Eadie

Counsel for the First Mortgagee

J. Goheen

Counsel for the Second Mortgagees

D. Nugent

Date and Place of Hearing:

January 9 and 19, 2006


Vancouver, B.C.


[1]                There are two proceedings involving several applications before the Court. 

[2]                The first proceeding is a fraudulent conveyance action by KPMG, in its capacity as trustee in bankruptcy for a group of companies (the “Prefco Group”), against the Harrison Lake Marina Corporation (“HLMC”).  The action relates to the payment of over one million dollars by the Prefco Group to HLMC while the Prefco Group was insolvent.  KPMG, in its statement of claim, asks for repayment of the funds and relies on the Fraudulent Preference Act, R.S.B.C. 1996, c. 164, the Fraudulent Conveyance Act, R.S.B.C. 1996, c. 163, the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, and the Land Title Act, R.S.B.C. 1996, c. 250.  The action is scheduled for trial on May 15, 2006.  In relation to this action, KPMG registered a certificate of pending litigation (“CPL”) against the titles to HLMC’s lands and water lot leases (the “Property”). 

[3]                The second proceeding is a foreclosure petition by Kozul Holdings Inc., the first mortgagee of the Property (the “First Mortgagee”).  The First Mortgagee was granted an Order Nisi in May 2005 (the “Order Nisi”) and the redemption period has expired. 

[4]                In the applications before this Court: HLMC was seeking cancellation of the CPL so that it could complete a sale of its shares; KPMG was seeking conduct of sale of the Property (the First Mortgagee supported this application); and, a group of companies and individuals who are respondents to the foreclosure petition and second mortgagees of the Property (the “Second Mortgagees”) were seeking a six month extension of the redemption period of the Order Nisi and conduct of sale of the Property (HLMC supported this application).

[5]                At the initial hearing of the CPL application on January 9, 2006, this Court had to consider whether the proposed sale of HLMC’s shares was provident.  It was advised that the only available appraisal of the Property was prepared at the request of HLMC by Cunningham & Rivard Appraisals (Vancouver) Ltd. on January 12, 2004 (the “Initial Appraisal”).  The appraised value as at that date was $1,750,000 - significantly higher than the value of the proposed share sale.  HLMC argued that this appraisal was entitled to little weight.  This Court reserved its decision and intended to give oral reasons for judgment on the CPL application on January 19, 2006.  On that morning, counsel for KPMG asked permission to present evidence of an updated appraisal that had been prepared by Cunningham & Rivard Appraisals (Vancouver) Ltd. for HLMC before the initial hearing, but which had not been presented by it at the hearing.  This Court considered that new evidence and gave its decision dismissing the application to remove the CPL and granting KPMG conduct of sale.  These are the reasons for those decisions.