MONEY-LAUNDERING STING BURNS BAY STREET LAWYER

FBI Case Shocks Canadian Colleagues

Miami -- One of Canada's most prominent international-trade lawyers faces more than 15 years in a U.S.  prison for conspiracy to launder millions of dollars in bonds and cash.

Jeffrey Burns, 53, who went from a Bay Street law firm to his own international firm with offices in Europe, the Far East and the Caribbean, was caught in a sting in which a Florida police detective posed as a big-time cocaine trafficker.

Mr.  Burns has been in the Miami federal detention centre since February, 1999.

Christine Burns, 39, his second wife and a former exotic dancer, has been under strict curfew in Miami on bail of $1.1-million ( U.S.  ) since she was arrested in the presence of the couple's 15-year-old daughter in a Buffalo, N.Y., hotel.

Mr.  Burns was the honorary consul of Honduras in Toronto at the time of the alleged offences.  He is a former Ontario Liberal Party candidate and long-time chief financial officer of the election campaigns of a former senior Ontario cabinet minister.

His brother, Michael Bernstein, is a senior criminal lawyer for the Ontario Attorney-General's Ministry.  Informed of Mr.  Burns's situation, Barry Appleton, a well-known international-trade lawyer, said he was shocked: "There's no question he was a very well-respected and well-known figure.  He is a very bright international lawyer."

Monte Kwinter, a cabinet minister in the governments of former premier David Peterson and the sitting MPP for York Centre, said he is dumbfounded by the allegations against his chief electoral financial officer: "It is absolutely amazing.  I just cannot believe it.  .  .  .  He's the least likely guy to do something like that."

Lawyers for Mr.  Burns and his wife say that their clients, now estranged, will plead guilty to some of the accusations, which include laundering almost all of $150,000, conspiracy to launder $10-million in bonds and $3-million in cash and conspiracy to sell fake passports.

Mrs.  Burns's lawyer said that her client, from Chatham, Ont., was coerced into the money-laundering scheme by her husband.

Marcelle Poirier, a Quebecker practising law in Miami, said she has already worked out a plea agreement with a U.S.  attorney and will be entering evidence about the Burns's 14-year marriage.

"She wants you to know she was a victim in this," Ms.  Poirier said in an interview in her Coconut Grove office.  "She never wanted to come down here to do the assistance Mr.  Burns requested."

Richard Sharpstein, Mr.  Burns's lawyer, said neither he nor his client would comment about the allegations of coercion.

"This is a sensitive issue of a very personal nature," he said in an interview.  "I do not wish to make comment on it.  Neither does Mr.  Burns, although Mr.  Burns expresses and continues to express love and affection for his wife and his regret for her involvement in this case."

A third accused, Michael McDowell, 25, from Pickering, Ont., was arrested in Ontario last month on a provisional warrant on U.S.  charges of money-laundering and conspiracy.  He was released on bail of $100,000 pending an extradition hearing.

The Burnses' lawyers say he presented himself to Mr.  Burns as a promoter organizing a tour for Puerto Rican rock sensation Ricky Martin.  It is not clear what truth, if any, there was to that story.

According to court documents in Ontario and Florida, all three were caught in a sting that began in August, 1998, when Fort Lauderdale Police Detective Wilfredo Hernandez began an investigation of money-laundering and cocaine-trafficking, focusing on suspects in Toronto.

U.S.  Drug Enforcement Administration agents got into the act.  They developed a "confidential human source" who gave Mr.  Burns and Mr.  McDowell the pager number of Det.  Hernandez, an undercover officer portraying an upper-echelon representative of a drug cartel.

According to both U.S.  and Canadian court documents, Mr.  Burns met Det.  Hernandez at the Intervault Bank in Fort Lauderdale.  The meeting was surreptitiously videotaped.

"During the course of the meeting, Burns confirmed that he was available to launder Det.Hernandez' money," the documents allege.  "Det.  Hernandez specifically informed Burns that portions of his money were from a load of '2,500 kilograms.' Det.  Hernandez had also represented that he had $10-million worth of negotiable bonds that had been provided to him, in addition to $3-million in currency, as payment for a large load and that he needed the proceeds laundered."

The court documents allege the following series of events:

Mr.  Burns proposed a number of ways to launder the drug proceeds, including buying property and setting up businesses, and that Mr.  Burns advised Det.  Hernandez to get a false passport, which Mr.  Burns could provide for $15,000.

In subsequent meetings, Mr.  Burns gave Det.  Hernandez business-incorporation documents for an offshore company called Brock Capital Management, to be used for the money laundering.  He also gave the undercover officer copies of land-title documents for Mr.  Burns's Costa Rican estate, which he offered as collateral for the bonds that were to be laundered.

In December, Mr.  Burns flew to Miami, picked up $50,000 in supposed narcotics proceeds from Det.  Hernandez, returned to Canada and channelled the money through Brock Management in increments of less than $10,000.

In another test laundering, Mr.  and Mrs.  Burns and Det.  Hernandez met in New York, where the couple took $100,000 and talked about plans to transfer the $10-million in bonds.

In a subsequent meeting in Fort Launderdale, also videotaped, the couple inspected the bonds and plans to launder them.  As well, Mr.  Burns told Det.  Hernandez that he had already laundered 80 per cent of the $100,000 but that the large number of small bills was slowing the process.

The following month, the couple were arrested, Mrs.  Burns in upstate New York, where she was visiting her son by a previous marriage, and Mr.  Burns in Miami.

Ms.  Poirier, Mrs.  Burns's lawyer, said her client was coerced by her husband into displaying her breasts to Det.  Hernandez as a way of ingratiating themselves with the purported drug dealer.

"Yes, that's true, she was forced into doing that.  That was not her free will."

Ms.  Poirier said the incident was part of a pattern in their marriage and that she would present evidence using police reports, hospital records and witnesses when Mrs.  Burns enters a guilty plea to laundering $100,000.

"That's the only time she was involved.  She was not involved in the millions of dollars of laundering that her husband was involved in."

Ms.  Poirier said that while Mr.  Burns's family put up the $1.1-million bail, they have left Mrs.  Burns virtually destitute.  Ms.  Poirier said that she even had to put up Mrs.  Burns at her own home and that she is providing legal defence free of charge.

Mr.  Sharpstein, Mr.  Burns's Miami lawyer, said he is now in the midst of negotiations with the U.S.  attorney in which his client will be pleading guilty to some of the charges.

"Mr.  Burns," he said, "is thoroughly, totally, utterly remorseful and regrets not having been of clearer mind at the time and is very painfully regretful of the involvement of his wife and the destruction it has taken upon his family personally, from his relationship to his 15-year-old daughter to familial relationships of substance."

Michael Bernstein, Mr.  Burns's brother ( Mr.  Burns changed his name legally in the early 1970s ) is deputy director for criminal matters in the Crown law office for the Ontario Attorney-General.  He declined to comment.

Mr.  Sharpstein said his client suffers from diabetes, and that his conduct may be explained by use of an experimental drug to combat the illness's effects.

He said that he intends to use his client's health problems as an extenuating factor in both the plea and sentencing.  He said he is trying to limit his client's prison time to five years.  However, he said that Mr.  Burns faces more than 15 years in prison under tough U.S.  mandatory sentencing guidelines for drug-related offences.

Mr.  McDowell, who is required to live with his parents in Pickering as part of his bail conditions, did not return messages.  His lawyer could not be reached.

Mr.  Burns's descent "right into a cesspool of activity," as Mr.  Sharpstein described it, followed signs of trouble over the past few years.

His early life was promising enough.  The son of a well-to-do businessman, Mr.  Burns grew up in Toronto's Forest Hill district.  He received a law degree and a master's degree in business administration from York University before going to the London School of Economics, where he received a master's degree in law.

He joined a prestigious Bay Street law firm, McDonald & Hayden, specializing in international law, and married the daughter of a wealthy grocery-store magnate.  The couple moved into a Forest Hill mansion.  The marriage later collapsed in the middle of Mr.  Burns's aborted quest for public office.

In 1981, he was nominated as an Ontario Liberal candidate but dropped out after the election was called.  He nevertheless remained very active in provincial politics, including helping Mr.  Kwinter in his campaigns.

With the end of the Cold War, Mr.  Burns ventured into the area of economies emerging from Communist rule.  In the words of Mr.  Appleton, he was "ahead of his time."

"He was probably a pioneering lawyer in these areas in Canada," said Mr.  Appleton.  "The work he did in economies in transition was probably groundbreaking."

In the mid-1980s, he met his present wife, Christine, in a strip bar where she worked.  The couple had a child soon after and moved into a Tudor-style mansion in North York that had previously belonged to a prominent Toronto-area land developer and condominium builder.

But the $459,000 home was later mortgaged to almost $500,000.  Neighbours said that although the couple were outgoing and friendly, there were signs of financial trouble beyond the huge mortgage.

Even though Mr.  Burns bragged of owning an estate in Costa Rica and a farm north of Orangeville, Ont., tradespeople and gardeners complained of unpaid bills.  Acquaintances said he drove, erratically, beat-up old luxury cars that became a source of neighbourhood amusement.

In 1996, he had a brush with the Ontario Securities Commission about his incorporation of companies for a Toronto family that was found to have manipulated stock markets.

The investigation was hampered when OSC staff lawyers found that "it was not Mr.  Burns' practice to keep any record of these transactions of the offshore companies incorporated by his clients or to send records to his clients."