Police say they've dismantled a Canadian money-laundering ring that used dummy international companies to recycle illicit cash.

Quebec provincial police said Wednesday that it had frozen $48 million in assets, among the largest seizures of its kind in Canada.

Four people were arrested as officers swooped down on a number of targets in the Montreal area -- including Ronald Chicoine, 57, the owner of Speedo Financial Corporation and the scheme's alleged mastermind.

Insp. Denis Morin said the scheme received help in Europe from three people who ran shell companies: two of them are Swiss nationals, and the other is a Belgian on the lam and believed to be abroad.

Investigators said money was sent to false overseas companies based in Europe, with the money then being sent back to Montreal in the form of fake loans to Chicoine's company.

Speedo Financial Corp. would then lend the money out to clients as legitimate loans at legal interest rates, police said.

Authorities said the process concluded with a double-whammy on the government: at income-tax time, the suspects allegedly inflated their declared expenses.

"The strategy allowed for fake interest charges to be declared, and then for tax evasion," Morin said.

Chief-Insp. Francois Roux said while the initial capital came from "various cells of organized crime," the legitimate clients of the business, about 300 in total, were unaware and completely innocent.

Roux declined to say what kind of people were seeking loans. He said they would be contacted by a private firm hired to handle Speedo's affairs in the coming weeks.

"They work in sectors where it is sometimes harder to come by loans," Roux said.

Three men, including Chicoine, face a number of charges including gangsterism, forgery, fraud, money-laundering, receiving stolen goods and breaking bail conditions.

A woman also arrested Wednesday faces a charge of improper storage of a firearm.

Accounting records and computer data were also seized as police executed seven search warrants in Montreal suburbs, including in the offices of a lawyer and two notaries.

In addition to the $38 million in Chicoine's company coffers, police seized five bank accounts in Canada and Switzerland containing $5.7 million, as well as four buildings in Montreal and on the city's South Shore worth $2.5 million.

Police also seized two Porsches and two private homes.

The amount of money allegedly defrauded from both the federal and provincial governments is estimated at $12 million between the 1996 and 2009 tax years.

Police said Chicoine, 57, the owner of the financial company, was the brains behind the scheme.

Police said the firm used loopholes to stay in business even though police had long had their eye on Chicoine's activities. In 2003, the company was found guilty of money-laundering and in 2005 it faced a heavy fine for tax evasion.

The Montreal businessman was initially arrested in November 2008 under Project Dorade, which involved allegations of fake billing in the construction industry to the tune of $40 million. That case is still before the courts.

Police said the current investigation stemmed from that previous one.

This investigation, dubbed Dorade 2, suggested that Chcoine also owned the European shell companies, but that he used cohorts as figureheads.

Also arrested were Serge Perrier, 50, an accountant who handled the books for Chicoine, and Andre Ronald Comeau, 58, a disbarred Quebec lawyer who acted as a facilitator between the European shell companies.

Police were still looking for Regis Dini and Alain Vayda, both Swiss, and Jacques Stalmans, a Belgian.