Cabinet ministers didn’t know supporter was guilty of money-laundering
OTTAWA – A Canadian businessman who pleaded guilty to money-laundering in San Diego in 2008 was able to hob-nob with Canadian politicians for four years because American authorities kept his file sealed while he helped with their investigation into an illegal online pharmacy.
Nathan Jacobson, a Winnipeg businessman who struck it rich in Russia in the 1990s, rubbed elbows frequently with Canadian politicians, including Foreign Affairs Minister John Baird and Citizenship and Immigration Minister Jason Kenney, because they had no idea he faced legal trouble in the United States.
Jacobson was one of 18 defendants indicted by a grand jury in San Diego in 2006 in connection with Affpower, an online pharmacy that shipped drugs to patients in the United States from Costa Rica without legal prescriptions.
Jacobson cleared more than $46 million in drug payments through his credit card company, RX Payments Ltd., which was registered in Malta but operated in Tel Aviv, Israel, sending the money to bank accounts in Cyprus.
In May, 2008, he pleaded guilty to money-laundering, but the plea was sealed while Jacobson worked with American investigators.
“Defendant Jacobson then proceeded to co-operate with the government in an ongoing international investigation for several years,” wrote his American lawyer, Patricia Holmes, in a motion to withdraw as his counsel last month. “The co-operation necessitated several continuances of the sentencing so as not to compromise the ongoing investigation.”
The requirement for that co-operation come to an end as the case wrapped up this summer, and this spring Jacobson signed an acknowledgment of sentencing date stating that he would appear in a San Diego courtroom on July 30. The U.S. Attorney’s office was seeking prison time.
Last week, when Postmedia was preparing a story on Jacobson’s sentencing, Toronto lawyer Howard Wolch wrote that Jacobson “is in Asia on business and is most certainly not in court in San Diego on Monday nor is he aware of any legal matters involving him proceeding on Monday.”
Wolch did not respond to an email or phone call seeking clarification.
When Jacobson failed to show up for sentencing, Judge Irma Gonzalez, in the U.S. District Court for the Southern District of California, issued an arrest warrant for him and unsealed documents that had been sealed while Jacobson was working with investigators.
A bail order from 2008 shows that Gonzalez agreed to release Jacobson from custody, forgoing two usual conditions: that he remain in San Diego County and that he report to a parole officer. Another document shows that he agreed to forfeit $4.5 million to the U.S. government, beginning with $1 million at the time of the plea deal and the rest by November, 2009. A source says he has paid about half the total amount.
Someone who communicated with Jacobson recently said the businessman was in Myanmar, the isolated southeast Asian country formerly known as Burma.
Until recently, Jacobson was listed as a team member on the web site for a Yangon-based company, Myanmar Access, which helps foreign companies do business in that country. The company did not respond to an email query.
Until this summer, Jacobson was represented by Holmes in the United States, although his defence was led by prominent Toronto lawyer Steven Skurka. In July, Holmes wrote to the judge, asking to be removed as the attorney of record, since she was not able to communicate with her client, who she said had “fired” Skurka. Neither Holmes nor Skurka would comment, citing lawyer-client privilege.
American authorities may now issue an international arrest warrant, said Phillip Halpern, Assistant U.S. Attorney at United States Department of Justice in San Diego
“The decision to issue an international warrant will be made following a careful consideration of all relevant factors,” he said in an email.
In January, Holmes sought an extension for Jacobson’s sentencing because her client “had been prevented from entering the United States,” and stated that he would “work out the logistics” with American Immigration and Customs Enforcement to allow him to appear in the San Diego courtroom.
Elections Canada records show that Jacobson started making donations to the federal Conservative party in 2007, making the maximum annual donation until 2011. He was a generous philanthropist, donating to Jewish community causes, and was on the board of the Canada Israel Committee and the Canadian Jewish Political Affairs Committee. He remains on the board of directors for the Canada Israel Chamber of Commerce.
He rubbed elbows with Kenney and Baird at receptions in support of Israel, and became friendly with both ministers, seeing them socially, spending time in Israel with Baird.
Spokespeople for both ministers said last week that they were unaware of Jacobson’s troubles with the law in the United States, or his difficulties with American immigration officials.
Jacobson has had a colourful career in international business, working in the United States, Iraq, Russia, Ukraine.
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After growing up in poverty in Winnipeg, he served in the Israeli Defence Forces, fighting in Lebanon.
He worked for American software companies, then made a lot of money in Russia in the 1990s, selling cars, gasoline and cigarettes as the economy opened up, before branching out into construction. In 1992, he told the Toronto Star that he “grew” his own mob to counter armed Russian organized criminals who sought to muscle him out of a mansion in Moscow.
In 1999, he filed a lawsuit against CSIS, accusing the agency of falsely linking him to Russian mobsters.
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Jacobson eventually went into the internet pharmacy business, establishing MagenDavidMeds.com, an Israeli online pharmacy, with Doron Almog, an Israeli war hero. He also ran Paygea, a credit card clearing company that handled payments for adult web sites and gambling sites. Neither business is still active and Israeli media have reported that Paygea left creditors in the lurch.
Jacobson has told friends he knows Israeli President Benjamin Netanyahu, Russian President Vladimir Putin and Canadian Prime Minister Stephen Harper. A spokesman for Harper said last week that the prime minister may have met Jacobson at a community event.
With files from Glen McGregor, Ottawa Citizen