The art of espionage spying on the Police Commissioner a Julian Fantino production Thursday, November 18, 2010 1:38 PM

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Just before Julian Fantino left the Toronto force in 1991 to take over as chief of police in London, Ontario, detective Garry Carter says Fantino instructed him to begin surveillance of Susan Eng and Peter Maloney.

Toronto police farce: Part 1

Fifteen years ago, journalist Derek Finkle began working on a stranger-than-fiction story about the deepest undercover mafia operation in Canadian history. But a detective alleges the case imploded to prevent its dubious origins from coming to light

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BY Derek Finkle   November 18, 2010 05:11

Part 2 of this two-part series will appear in the Nov. 25 issue of EYE WEEKLY

Fifteen years ago, journalist Derek Finkle began working on a stranger-than-fiction story about the deepest undercover mafia operation in Canadian history. But a detective involved alleges the case imploded to prevent the dubious origins of the investigation from coming to light…

The year 2007 was a pretty big one for Julian Fantino.

That was when he published his autobiography, Duty: The Life of a Cop, which was a fairly decent indicator that he was planning a life in politics when his job as the commissioner of the Ontario Provincial Police ended. Duty was also an opportunity for Fantino to present his side of the story on a variety of well-publicized controversies that had flared up over the course of his long career, one that included stints as head of the police force in Toronto and London, Ontario. But even when the book had been put to bed, the headlines kept coming.

“Fantino under fire” was one such headline, part of a flurry of news stories ignited by a document leaked to a couple of Toronto reporters in the spring of 2007. According to that internal police report, dated March 30, 1992, Fantino had, in May 1991, while acting as the superintendent in charge of the Toronto force’s Detective Services, ordered a lengthy and highly secretive investigation that involved Susan Eng, the woman who would soon become the combative, reform-minded head of the city’s Police Services Board.

In any city, an investigation — secret or not — that included a civilian member of a police oversight body would be big news. It’s not that such an investigation would be illegal per se, but for a modern police force operating within a democracy, it’s a daring move, especially without obvious justification. There were a number of revelations contained in the leaked 17-page report, authored by an Intelligence Unit detective named Garry Carter, that gave this Hoover-esque saga added voltage. Carter wrote that his investigation of Eng — a left-leaning lawyer who challenged the authority of the force’s brass with her tough stances on such issues as police accountability, use of force and systemic racism — had been kick-started due to Fantino’s suspicions about her relationship with criminal lawyer Peter Maloney, her close friend and unofficial adviser.

According to Carter’s report, Maloney had allegedly been charged for being one of about 300 men rounded up during Toronto’s infamous gay bathhouse raids in 1981. Even though these charges were ultimately withdrawn, the report says that Fantino felt Maloney, with his access to Eng and, therefore, to police headquarters, “may be a security risk.”

In the course of Carter’s investigation, the report says, not only were Maloney’s home and office telephones wiretapped, but the police also conducted lengthy surveillance of him and Eng, eavesdropping on their conversations in restaurants on at least eight separate occasions. If Carter’s report is true, that a senior officer like Fantino could order an investigation into the friend of a police services board member — someone whom Carter concedes had no criminal record and happened to be a lawyer — would be seen as a dubious use of power. In fact, it raises the question of whether police resources such as the wiretaps on Maloney were deployed for political purposes — to spy on Susan Eng, for instance.

When the story of Carter’s report broke in the spring of 2007, provincial NDP justice critic Peter Kormos called for Fantino to step aside as commissioner of the OPP until the affair had been properly investigated. Fantino was defiant. When the press first confronted him about the issue, he refused to discuss it. His only statement, issued a few days later, was to say that at no time during his career had he ever authorized the eavesdropping or wiretapping of any member of the police board.

Even without her well-publicized run-ins with various police chiefs (see sidebar at the bottom of this article), Susan Eng has never been a popular figure at police HQ. In 1994, the Toronto Star cited a secret five-page police report full of “innuendo, gossip and allegations that have never been proved” that “makes vague allegations about Eng and Asian mobsters.” The paper referred to the document as “the ultimate poison pen letter”

Unbeknownst to Fantino, Kormos, Eng, Maloney or the reporters who’d been leaked a copy of the Carter memo, I’d been aware of the investigation into Eng and Maloney for more than a decade. Back in the 1990s, I’d planned to write about not just the secretive eavesdropping on the head of the police services board, but also about how the Eng-Maloney episode had accidentally morphed into what was then the deepest infiltration of the mafia in our country’s history, an investigation that cost taxpayers millions of dollars only to implode after the big-name mobsters it collared saw the charges against them quietly — and mysteriously — disappear.

In fact, as far back as 1997, I interviewed Garry Carter’s old Intelligence Unit boss, Ron Sandelli, the man Carter’s 1992 report is addressed to. Sandelli, who’d retired from the force and was working as a corporate security director by the time I met up with him, acknowledged to me during a series of interviews that the investigation of Eng and Maloney had taken place. When I suggested that he, Fantino and the chief of Toronto’s force at the time, William McCormack Sr., had initiated the investigation, Sandelli defended the decision by saying it “became a concern” that in her capacity as the chair of the Police Services Board, Eng might very well have been “associating with people she shouldn’t be associating with.” When I suggested that Eng might not have been too happy about being the subject of such an investigation, he said, “No, she wouldn’t. She was never happy about anything.”

But when the press came calling 10 years later in 2007, as a result of the leaked report, Sandelli offered a different defence. In an article in The Globe and Mail, he denied that he’d ever ordered surveillance on Eng or Maloney. By this time, Sandelli had landed a much more high-profile job as the director of team safety for the Toronto Blue Jays, a position he still holds. The former inspector explained away Carter’s 1992 memo to the CBC by suggesting that Carter was a lone wolf who often conducted surveillance on targets without orders.

With denials from Fantino and Sandelli, reporters went looking for Carter, but much to their chagrin, they couldn’t find him. Carter was an experienced undercover officer who’d put a lot of bad people behind bars during his career, and when he retired, he set his life up so that the only thing that could locate him was his pension money. And without Carter to contradict what his former superiors had said, the story faded once again.

I, too, was looking for Carter. He’d been an important source over the years as I’d tried to piece this story together, but we hadn’t been in contact with one another for five years. Carter was no longer living in the same house near Erin, Ontario. None of the phone numbers I had for him were in service. Every trick I employed from the investigative journalist’s handbook laid a big, fat goose egg. 

Then, in early June of 2007, just as I was about to call it quits, Carter found me. It was an email. He wrote that he was living in the country, well north of Toronto, and that he checked the news only occasionally. “I gather you must be looking for me,” he said. I didn’t get the impression that he was shocked by the way Sandelli and Fantino had distanced themselves from his report; still, he didn’t seem thrilled to have been tossed under the bus, either.

So began a new chapter in a story that has spanned my entire career as a journalist — almost 20 years. Julian Fantino is no longer the commissioner of the OPP — he retired last summer — but his ambition has hardly abated. In October, he declared that he would run as the Conservative Party candidate in the upcoming November 29 by-election, hoping to represent the people of Vaughan as their member of parliament in the House of Commons. This story has, for two decades, lived mostly behind closed doors but, according to Carter’s leaked report, it all began in 1991 when Fantino decided to trail Peter Maloney through the hallways of police headquarters.

This picture, taken in 1986, is one of the few publicly available photographs of Garry Carter, a legend in undercover policing. For Project Atom, he posed as the owner of a fake company, allowing him to get up close and personal with top organized crime bosses during the three-year investigation

I first met Garry Carter while working as an editorial intern at Toronto Life magazine in the summer of 1993. The father of one of my childhood friends was at the centre of a bizarre criminal trial making news just as my internship was beginning. Two men were being tried for conspiring to kill my friend’s dad, Stephen Dulmage, after he’d accused them of bilking him out of more than $500,000 in investment scams. Carter played the undercover biker hit man at the centre of an elaborate sting.   

I was the only journalist to interview Carter once the trial had ended. We met in an office at the Intelligence Unit building in Don Mills. Carter would stay in touch over the next few years after my story was published. He confided to me that he’d gone for the undercover cop’s version of the long bomb with his current investigation — a complete infiltration of the Italian mafia. He had multiple identities, different vehicles, different pads around town and a keychain that would make any night watchman envious. Best of all, though, he told me that I would get the inside scoop when the whole thing went down.

What Carter would tell me, after making numerous arrests in the mob case, is that the origins of the case stretched back to May of 1991. Carter said he was actually on his way out of the Intelligence Unit at that time, just two weeks away from being transferred to Toronto’s Hold-Up Squad, when he was called to a meeting with his direct boss, Inspector Ron Sandelli, and Sandelli’s boss, Julian Fantino. Carter’s 1992 report describes how Fantino explained that he’d seen Maloney try to sit in on closed, confidential police board meetings and that he had been spotted walking the halls of Toronto’s police headquarters — where Eng’s office was located — without a visitor’s pass. When Fantino looked into Maloney’s background, Carter now says, he discovered that Carter had been the officer who’d charged Maloney during the gay bathhouse raids a decade earlier. Suddenly, Carter’s transfer to the Hold-Up Squad was off.

“Fantino was concerned about a ‘known criminal’ associating with Eng,” Carter told me in an interview after his report had been leaked to the press in 2007. “He told me to do the investigation quietly and that I could use all available resources. There was a lot of paranoia within the force at the time that Eng was trying to undermine the chief, William McCormack. Fantino reinforced the fact that this had to be very secretive and that if word got out, his and the chief’s asses were on the line.” (Fantino did not respond to messages left with his campaign office for this story.)

According to Carter’s 1992 report, he began his investigation by making contact with an informant who told him that “Maloney was involved with persons who were distributing drugs and that his home and office were being used for this purpose.” Carter says that the idea of using wiretaps on Eng and Maloney had been raised during his meeting with Fantino and Sandelli, but Carter says he insisted a judge wouldn’t grant wiretaps until other investigative routes had been exhausted. Instead, they authorized Carter to begin monitoring Maloney’s office and home telephone lines with a device called a dialled number recorder (DNR). 

DNRs, which back in 1991 didn’t require judicial authorization (though they do now), tell police what numbers are being dialled both in and out of a given telephone line. Carter’s report details the “pattern of calls” between Maloney and Eng, as well as another board member at the time, an ally of Eng’s named Laura Rowe. (In fact, Carter now alleges a DNR was put on Eng’s telephone line at the same time one was put on Maloney’s, though he left this out of his 1992 report.) Carter’s DNRs on Maloney confirmed what the informant had told him — that Maloney’s home and office telephones were often in contact with a number belonging to a known Toronto drug dealer. A pleasant surprise for Carter was that this wasn’t just any old dealer; he was a “major cocaine trafficker” Carter knew from a previous investigation, and Carter was pretty certain he wasn’t calling Maloney for legal advice.

A young officer, Constable John Irwin, was brought on board by the Intelligence Unit to work undercover to better determine what Maloney’s involvement was with the drug dealers. Irwin’s investigation quickly determined that it wasn’t Maloney who was dealing the drugs. Carter’s report says it soon became clear that others who had regular access to Maloney’s telephone lines were the ones carrying out the drug deals.

“Maloney himself became very much a side issue,” Irwin told me in 2007, when he was working as a detective. (He retired recently.) “But we still had to look, because if he’s involved with these drug dealers, how involved is he? Plus, he’s got this relationship with the chair, which is a problem for us — and [Eng], too. That said, I didn’t know the origins of the investigation.”

By the end of the summer, Carter says, Fantino and Sandelli felt he and his growing web of DNRs had secured enough evidence to obtain judicial authorizations for wiretaps on about 50 different individuals in a massive drug investigation intended to deeply penetrate organized crime. Carter says Sandelli arranged for him to present his wiretap application — the largest in the history of the force, according to Carter — to John O’Driscoll, a judge who is widely known to be pro-police, on October 28, 1991.

Once O’Driscoll authorized the wiretaps, Carter says Sandelli brought in 20 monitors (people who record, track and store wiretapped telephone conversations), about 15 investigators, two supervising detective sergeants and one clerk to assist Carter at the Intelligence Unit building. Carter was somewhat surprised when Sandelli seconded two detectives, Tom Klatt and Jim Downs, to concentrate solely on the Maloney part of the investigation. Because there was more to the Maloney investigation than drugs,  says Carter, the three monitors who worked on Maloney’s wiretaps were put in a different room than those working on all of the others. “Klatt and Downs were in charge of the Maloney wiretaps,” says Carter. “They used the wives of police officers [as opposed to other civilians who might have loose lips] as monitors. No one else was allowed in that room. It was locked.” (Klatt and Downs have declined to comment on any aspect of any wiretap investigation, saying it would be illegal for them to do so.)

While Sandelli was amassing the troops to embark on the investigation — dubbed Project Atom, the one Carter would abandon the Maloney-Eng effort for and that would last another three years — his boss, Superintendent Julian Fantino, would leave Toronto in early November to become the chief of police in London, Ontario, about a week after Judge O’Driscoll’s wiretap order had been signed.

Criminal lawyer Peter Maloney’s close personal relationship with Susan Eng resulted in the wiretapping of his home and office telephones — often unlawfully. These wiretaps led police to accidentally stumble on a drug trafficking ring that would become the focus of an investigation dubbed Project Atom

In order to protect the confidentiality of Peter Maloney’s legal clients — none of whom were named in the wiretap order — Judge O’Driscoll included a number of restrictions on the wiretaps. For one, only individuals named in the wiretap application could be intercepted on Maloney’s home and office lines. Wiretap monitors were permitted no more than a minute to determine whether Maloney was conversing with someone named in the order or an “unknown,” which meant anyone else. If a monitor was unable to identify a caller as one of those “named” within 60 seconds, the police were required to terminate the wiretap interception.

One of the challenges police faced was the fact that Susan Eng was an unknown and, therefore, they weren’t permitted by law to listen in on her conversations with Maloney beyond 60 seconds.

What I discovered in the course of my investigation was that the legal boundaries of O’Driscoll’s wiretap order were ignored on numerous occasions. While Carter’s report refers to a $2.5-million hydroponic marijuana seizure that came as a result of wiretapped conversations involving someone who had access to Maloney’s telephones, it’s clear that Maloney’s phone calls were of interest to the Intelligence Unit for other reasons. I was able to listen to a number of cassette tapes — emblazoned with the Toronto Police force logo — that contain conversations between Maloney and “unknowns,” among them Susan Eng, that last much longer than one minute. In some cases, they go on for more than half an hour.

One of the calls on these tapes is a lengthy discussion on November 22, 1991, between Maloney and a reporter with the Toronto Star named Andrew Duffy. Duffy was working on a story — the developing rift between the progressive Susan Eng and the city’s old-school, spit-and-polish chief of police, William McCormack. Knowing that Eng wouldn’t speak to him, Duffy turned to Maloney as a background source. In Carter’s March 30, 1992 leaked report, this call was identified as having been discontinued after one minute. This wasn’t true. The police had listened to the entire conversation. Then, moments later, the police also recorded Maloney’s next telephone call, to Eng, in which he delivers a lengthy, blow-by-blow account of each item discussed with Duffy. After two 60-day wiretap orders on Maloney’s phone lines, Carter felt a third order wasn’t “justified or of benefit.” As he explained in his report to Sandelli, Carter believed his investigation had “progressed to a level above that of Maloney and his associates.” In order to protect the ongoing investigation — which Carter claimed had “reached the highest level of traditional organized crime,” spanning “Canada, the USA and into Europe” — the detective recommended that laying charges against “traffickers identified from the Peter Maloney portion of the investigation” be delayed.

When Carter’s report was leaked to the press in 2007, Toronto’s former chief, William McCormack, told reporters that he’d received “very, very, vague” briefings about the investigation of Eng and Maloney, but said he knew nothing about the wiretapping. Carter told me in 2007 that McCormack had read his entire report during a meeting, which included Sandelli, at the chief’s office. Carter also claims that once McCormack had finished reading his report, the chief handed it back to him and said, “I never want to see that again.”

Reached at home a few months after Carter’s memo had been leaked, McCormack said he did recall something about that meeting. “Yes, I do remember something of that nature,” McCormack told me. “The report was generally in relation to the investigation, yes.” Did McCormack now recall attempting to distance himself from the report as well? “Well, that’s correct,” the retired former chief replied. “[I handed the report back to Carter] for the simple reason that it’s got nothing to do with me. I wasn’t the investigating officer and I wanted nothing to do with it.”

Ron Sandelli, pictured here in 1991, is director of team safety for the Toronto Blue Jays. He was instrumental in getting Project Atom off the ground, acting as a conduit between Carter and higher-ups on the force

When Susan Eng, currently the vice-president of advocacy for the Canadian Association of Retired Persons and a board member of the Canadian Civil Liberties Association, first spoke to me for this story in 2007, it wasn’t long after the Toronto Police Services Board had issued a brief news release on November 15 of that year. The release stated that the board had completed its “enquiries” into the “allegations” of surveillance during her term as chair from 1991 to 1995. It summed up its findings in one sentence: “The board is satisfied that Ms. Eng was never the subject of a judicial authorization obtained by the Toronto Police Service for the interception of private communications.” Having swept aside any concerns about what had motivated the investigation of Eng in the first place, the board declared it had “satisfied itself” that the matter had been “resolved appropriately.”

Eng wasn’t amused. In comments to the press, she’d called this conclusion “mind-bending subterfuge,” as no one had suggested she’d been the subject of a judicial wiretap authorization in the first place. She was convinced that the police had placed the wiretap on her friend, Peter Maloney, as a means to eavesdrop on her. In her opinion, the board had missed the “essential public policy” issue at stake — namely, “whether there was an abuse of conduct, whether it was investigated and treated seriously, and what protocols did they put in place to prevent future misconduct — none of that was done here.”

This oversight was largely the result of the board having asked Toronto’s current chief of police, William Blair, to investigate only the source of Carter’s leaked report, not the surveillance itself. When I asked the chair of the Toronto Police Services Board, Alok Mukherjee, about how this investigation had been conducted, he grew defensive. In fact, Mukherjee wondered if the root problem was his predecessor, Susan Eng.

He pointed out that Maloney would have been informed of the wiretapping of his telephones after the surveillance had ceased, as required by federal law. Surely, Mukherjee assumed, Maloney hadn’t wasted much time telling Eng that the police had been tapping his phones. If Eng knew this as far back as the early 1990s, then why, Mukherjee wanted to know, had she chosen to remain silent on the matter for more than a decade?

Mukherjee is correct about Maloney having informed Eng as soon as he learned of the wiretaps. Eng says they immediately agreed to cut off all communications. “We didn’t talk for six months, not even in person,” says Eng. “That was a loss for me. I was pretty much alone.”

Eng says she also wrote a letter to the federal Department of Justice requesting that she be informed whether she was — or had been — the subject of judicial wiretap authorizations. “I wrote this useless letter so I could show it at a closed meeting of the board,” Eng recalls, knowing she would never receive a response from Justice. “I read it aloud, especially to [Chief] McCormack, to say to him, ‘I know what you’re doing.’ I told the other members of the board, ‘This is what happened to me…think about yourselves.’ I didn’t go to the press because, until the leaked document [in 2007], I wasn’t able to prove that I was the real target.”

When asked if Toronto’s police force has changed since the McCormack era, Eng sighed and said that Chief William Blair, despite his cozy relationship with the current board, refuses to shake her hand at public events. (Fantino describes Blair as a “good friend” in his autobiography, which may offer one possible explanation.) So one can only wonder whether it’s a coincidence that Blair’s investigation into the leak of Carter’s Intelligence Unit report was as tepid as his feelings for Eng.

Blair’s investigators managed to find the Carter document on a police computer file, but couldn’t “ascertain who had created or ever accessed the computer file in question.” Beyond that, the chief’s detectives contacted Dave Seglins, a CBC radio reporter to whom Carter’s 1992 report had been leaked; Seglins immediately referred them to his lawyers. Susan Eng wasn’t much help, either. Incredibly, no one from Blair’s team appears to have attempted to contact Garry Carter, Tom Klatt, Jim Downs, Ron Sandelli, Julian Fantino or anyone involved in Project Atom. (Interview requests left with the Toronto Police Service for Chief Blair regarding his investigation elicited no response.)

Eng thinks all of this is relevant when it comes to the question of the larger public good: would the police do this to anybody else?

“I think it’s a mindset,” Eng said. “William Blair and the current Toronto police board have displayed exactly the same kind of mindset today that Carter’s report ascribes to Julian Fantino back in 1991. So I can’t help but wonder: what else is being hidden from public view?”

Another episode that has definitely stayed out of the public’s view is what happened once the surveillance of Maloney and Eng had been shut down. Carter would soon find himself buried deep undercover in Project Atom, creating a fictitious persona and owning a phony company all in the name of getting up close and personal with organized crime. Yet despite the impressive string of charges that Project Atom produced at great cost, most were withdrawn without requiring a legion of defence attorneys to ever break a sweat.

Carter was less than pleased to learn that years of work had gone down the drain. In late 1995, Carter gave me a copy of a letter he says was sent to Ontario’s assistant deputy attorney general, the deputy solicitor general and Toronto’s new chief of police, David Boothby, among others, to complain of a massive cover-up that would have been front-page news had a reporter got his or her hands on a copy. In the end, this letter might have been a mistake — because the next target to emerge from Project Atom was none other than the cop who’d been at the heart of it, Garry Carter.

Part 2 of this two-part series will appear in the Nov. 25 issue of EYE WEEKLY

Derek Finkle is the author of No Claim to Mercy, the award-winning account of the Robert Baltovich case, as well as the former editor of Toro magazine and the current head of the Canadian Writers Group.

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STRAINED BEDFELLOWS
Tax lawyer Susan Eng’s appointment to the Toronto Police Services Board in 1989 was controversial, and not just because she didn’t swear an oath to the Queen. Due to her desire for change and outspoken defence of police critics, she was labelled by many as having an anti-cop agenda. But that was a mere warm-up to the main event: her appointment as chair of the board two years later. Here, a brief look at Eng’s stormy relations with police chiefs past and present.



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