Greymac Mortgage, Seaway Mortgage And Crown Trust

Financial Institution
Management Fraud

$500 Million creates $230 Million Profit

“Public Money and Private Greed: The Greymac, Seaway and Crown Trust Affair” (Terence Corcoran, Harper Collins, 1984) provided this opening description:

“The true story of the rise and fall of three men-Leonard Rosenberg, William Player and Andrew Markle-who almost pulled off the greatest real estate deal in Canadian history: the $500 million sale of 10,931 Cadillac Fairview apartments to Arab investors that created an instant profit of $230 million….Two months after the sale their profits were gone and their business empires….had been taken over …by the Ontario government…”

It came to pass that Bill Player “could see hidden value in just about any piece of real estate” with the added step known as the property ‘flip’.

One day, I received a call from Howard Morton, QC, and Director of the Crown Law Office, Criminal in the Attorney General’s department. Yes, I was thrilled to be considered, as a ‘Big 8’ accounting firm had already been retained to conduct a special examination. Described as possibly the largest such investigation in Canadian history, I was asked to consider only the more significant transactions and to take advantage of the work already completed.

But the lesson is simple, no matter how large a case: the fraud still had to start at some time and place. This is my preference and my recommendation to the client. In this case, how was Bill Player, a person of no known wealth, able to buy a trust company?

At the start of any fraud, the scheme should be well thought out, there should be no sloppiness and there should be a degree of care in the cover up. The fraudsters are usually taking smaller amounts – it’s a test stage, in reality — and the jurisdiction and nominees will be local. In summary the pattern of conduct will be more obvious.

This means that witnesses are local, with the main concern for the investigator being the witnesses’ health and memory. And, these local witnesses are more willing to talk since they are no longer part of the original team.

In this case, this approach proved successful. The nominee in the property flip was not an Arab, the location for the property flip was not the Grand Cayman. To the contrary, all the activity took place in Ontario, in small towns like Elmvale and Collingwood. The initial property transactions were in small, local jurisdictions and involved local nominees.

The excess mortgage proceeds were found to be used to finance various costs, including some $450,000 required by Player to fund (along with a bank loan) the purchase of Seaway Trust Company, in the names of Markle and Cornacchia in 1980 for $1.5 million.

And with this purchase, the ‘Method of Operation’ was established; the subsequent property flip transactions revealed a consistent pattern of conduct that was applied to and was the same as their last deal, the $500 million sale of 10,931 Cadillac Fairview apartments to Arab investors in Grand Cayman.

For me, this case brought an everlasting memory of cross-examination in 1991, two days with Brian Greenspan followed by two days with Eddie Greenspan. Well in this business there are the easy days and then the TOUGH days ‘in the box’!

pdf Read press dated July 10, 1987