from The Brenda Martin Case

The first thing I did upon hearing through the ex-TW grapevine that Rebecca and Brenda had been arrested was to contact Charles Rusnell from the Edmonton Journal, who had tracked the story since Alyn's arrest in 2001.  I asked if any of the contacts he'd made in Puerto Vallarta had informed him of this.  He in turn contacted a journalist friend in PV but came up empty-handed.  On February 23, 2006 he attached her response, which noted that the Federales had no record of arrests of people with their names, but that one can be held in Mexico for 72 hours before a record is made.  His summation: "Doesn't seem like it is true." confused me.  Two and a half years later, however, made wise by hindsight, everyone involved is left saddened and sickened by just how true it turned out to be.

The following is one of the best articles I read about the TriWest case.  I had been back in Canada for almost two years when it came out, on February 15, 2003, and I think it's one of the best-researched and -written pieces on the TriWest fiasco.

A RICH, INFAMOUS LIFESTYLE
He paid cash for his mansions. He paid all the tabs. Then the fantasy ended, and Waage found himself in jail

EX-EDMONTONIAN ALYN WAAGE WAS LIVING THE HIGH LIFE IN MEXICO -- BUT AT WHOSE EXPENSE?

Charles Rusnell
The Edmonton Journal

Saturday, February 15, 2003

Former Edmontonian Alyn Waage is in jail in California charged with an alleged fraud believed to be one of the largest scams ever conducted over the Internet. Tens of millions of dollars from thousands of investors were allegedly used to buy Mexican real estate, including a costly house in Puerto Vallarta, fleets of vehicles, a helicopter and a yacht. Journal reporter Charles Rusnell is in Mexico investigating Waage's life there.

- - -

PUERTO VALLARTA, MEXICO - For most of his adult life, Alyn Waage had been a small-time Edmonton businessman and realtor with two bankruptcies and a string of lawsuits against him dating back to the '70s.

By 2000 however, Waage was telling people in his new home of Puerto Vallarta that he had made it big as a private investment banker.

Waage, by all accounts, had decided he would have everything denied to him in the past.

When Waage saw the stunning 15,538 square-foot, cliff-side Castillo Cristina in the exclusive cobble-stoned enclave of Conchas Chinas, high in the hills above the city, he did not negotiate the $2.2 million US asking price. He just bought it.

Neighbours say it was the highest price ever paid for a house in Puerto Vallarta, possibly even the whole Mexican Pacific Coast at that time.

It was the same with Casa Tatiana, another house directly below Cristina. Waage paid $850,000 for it, and between $200,000 and $280,000 for nine beach-front condominiums, including a penthouse, he bought in Vallarta's old city.

"Mr. Waage always paid the asking price," one Mexican real estate agent said with a grin. "And he always paid cash." Real estate agents in Mexico are paid an eight-per-cent commission. They loved Alyn Waage.

Waage filled one floor of the stark, white three-storey Castillo Cristina with more than a dozen computers and staff, including his son Cary.

An Internet site touted a remarkable investment opportunity offered by the Tri-West Investment Club and soon bags of cheques were arriving daily, sent by eager investors from all over the world.

Waage would send a chauffeur, or sometimes his bodyguard, the former deputy police chief of Puerto Vallarta, to fetch the cheques from the courier company in one of his 11 new vehicles. He paid cash for all of them.

"It looked like a friggin parking lot outside that house most days," said Sandy Smith, who asked that her real name not be used. She still lives in Vallarta and fears the Mexican federal police. The Toronto native worked as Waage's chef and lived in Castillo Cristina for 10 months beginning in July 2000.

 

ACQUIRED EXPENSIVE TASTES

Although Waage's culinary tastes initially ran to macaroni with stewed tomatoes, Smith said he soon developed a taste for $500 bottles of wine, which he bought three cases at a time, and King Crab flown in fresh from Alaska.

"Our liquor bill was $2,000 a week -- minimum," she said.

Smith said she placed one order for 80 kilograms of crab and then sent a mozo (houseboy) out to buy two new freezers to hold it all.

"He wanted only the best and I got it for him," she said.

"He was very generous and I had carte blanche with money. If I went to him and said I needed some money to get groceries or whatever provisions he would say to me, 'How much do you need, this much?' " she said, miming Waage holding his index finger and thumb about two inches apart.

" 'Or do you need this much?' " she said, and moved her fingers about four inches apart. "Then he would reach into the safe where he kept the cash and take a wad out of money out and just give it to me. Sometimes he never even counted it."

Waage, she said, became an "out-of-control egomaniac" and that was reflected by a sharp escalation in his spending and his ever-increasing paranoia.

Waage bought a $150,000 Bell helicopter to ferry him to a ranch in Costa Rica and his other substantial real estate holdings in that country. He bought an $818,000 motor yacht and showered his family, friends, and employees with gifts.

"Anything went," Smith said. "It was like some fairytale, except that Alyn was in charge."

The fairytale ended abruptly on April 19, 2001, at 9:40 p.m.

That's when Waage, his old Edmonton friend and drinking buddy Jerry Patrick Elder, and Waage's bodyguard, former deputy police chief Gonzalo Cuevas Perez, arrived at Puerto Vallarta airport on a chartered Lear Jet from Belize City, Belize.

Two customs agents came aboard and asked the men if they had anything to declare. The men, who had been drinking heavily, said they did not. A search of their luggage uncovered $4.5 million in cheques and money orders made out to one of Waage's companies.

The high life of Alyn Waage was over. Waage has now been indicted in California in relation to one of the biggest alleged frauds in Internet history.

Waage, 56, and his co-accused, 40-year-old California Web designer James Michael Webb, will be tried in Sacramento later this year on 24 charges including fraud and money laundering in relation to their alleged role in the Tri-West Investment Club. They face at least 10 years on each count.

The prosecutions are in Sacramento because the first victims to complain were from that judicial area, and while other federal jurisdictions were certainly willing to prosecute Waage, they deferred to California because that state is known for its comparatively harsh treatment of white-collar crime.

American authorities allege that from 1999 to 2001 the complex scheme raked in more than $60 million from as many as 15,000 victims in 57 countries, including Canada.

It was a high-tech version of the Ponzi scheme, in which early investors are paid off with money from later investors, not from return on investments.

Investors were enticed to the Tri-West Investment Club through a slick Web site, offering investors huge returns for investing in bank notes issued by "key international prime banks."

But it was all a shell company, there are no prime banks and Waage and others are alleged to have kept millions enticed from the investors.

 

FLED AFTER RELEASE

Jailed for several months in Guadalajara, Mexico, Waage was eventually released on bail of more than $2 million US and immediately fled to Costa Rica where he was arrested again, this time with Webb, at his ranch. He was eventually extradited to California.

Elder was released because authorities didn't believe he was involved in the scheme. Police are still looking for Waage's wife, Michelle Higgins, and his sister, Lynne Waage Johnston.

Waage's 26-year-old son Cary is also in jail in Sacramento awaiting sentencing next month. He was caught in Dallas in December 2001 while on his way from Calgary to Costa Rica.

Under a plea bargain agreement, Cary Waage is co-operating with the American authorities and is prepared to testify against his father in return for a reduced sentence.

"Alyn told Cary to testify against him," insists Smith, who regularly communicated with Alyn Waage while he was in jail in Guadalajara. "He said: 'I'm dying in jail anyway so he might as well help himself as much as he can.' "

Anything can be bought in a Mexican jail if you have the money. Smith said Waage stocked his private cell with a computer and Internet service, a cellular phone, stereo and at least one 26-ounce bottle of Crown Royal whisky every day of his four months at the Puente Grande Prison.

Waage fled Canada in 1998 after he was charged with 44 counts of mortgage fraud totalling $1.2 million Cdn in Edmonton, and another small fraud in Hinton. It's believed he settled first in the Bahamas, where -- with Higgins, his second wife -- he opened a small steak house.

Smith said Waage showed her pictures of the place.

"It was pretty simple; nothing special," she said.

It's not known why Waage came to Puerto Vallarta in 1999. Some longtime residents from Canada and the U.S. who live in Vallarta speculated Waage chose the tourist city of about 250,000 because it has always drawn unusually large numbers of rounders, shifty people who live for today on the margins of society and sometimes the law.

"We have a saying," said one resident. " 'You are either wanted or you're not wanted back home,' which means either the law or tax people are after you back home or your family doesn't want you around."

So many rounders wash up on the shores of Vallarta that some enterprising locals have created a business as bounty hunters.

"There was one very attractive, well-endowed blonde woman here, an American, and she makes a good living turning people in to the FBI or IRS," said the resident. "She talks them up and gets them to brag about their crimes, what they're wanted for and then turns them into police. They pay her for it."

There are about 5,000 foreigners living in Vallarta who are officially registered with the Mexican government. Of those, about 3,000 are Americans and about 2,000 are Canadians.

There are uncounted thousands more who live full time, or at least several months of the year, in Vallarta but for reasons of their own have decided not to tell the government of their residency.

 

POPULAR WITH EXPATRIATES

Waage was a popular man with many of the expatriates. He drank at several known gringo bars near the beach in Vallarta's old city every day. He would sit at a table and soon a group of people would gather around him because they knew he always picked up the tab.

"He was always treating people to drinks and dinner," Frank said. Like Smith, Frank doesn't want his name used because he's afraid Mexican authorities investigating Waage will freeze his bank account. In fact, several people with no connection to Waage have had their bank accounts frozen by the money-laundering squad of the Mexican federal police.

Frank said Waage was very open about having lots of money but he never talked about his business and he wasn't a flamboyant spender in public.

Frank and several others said Waage was a chain-smoking alcoholic. He would sit quietly and rarely took part in the conversations, which Frank characterized as your typical "alcoholic bullshit.

"For a person who wasn't very interesting, he certainly did cause a stir," Frank said.

"I mean, he wasn't at all charismatic or engaging. He was actually quite a boring person to be around."

Smith said Waage would often invite as many as eight or nine people, some of whom were total strangers, back to the house for dinner without any prior notice. Waage would get home and promptly pass out on the couch and Smith would be left to cook dinner for everyone and act as hostess.

Roger Vogt, a semi-retired American businessman, sometimes shared a drink with Waage but like many others, he said he didn't really get to know Waage very well.

"After he got caught and it was in all the papers, we got a junk e-mail or something from him asking for a donation to help him out," Vogt said. "I just chucked it out."

 

crusnell@thejournal.canwest.com

© Copyright 2003 Edmonton Journal