Guarantee Company of North America v. Gordon Capital Corp, Toronto

Fidelity Claim, Management Fraud

A Lesson in Derivatives

Gordon Capital was an investment dealer and brokerage firm in Toronto that carried a $25 million fidelity insurance policy with Guarantee for “dishonest and fraudulent acts committed by an employee…” and Eric Racher was a Gordon partner responsible for the Derivative Products Group in Toronto.

Bottom line: Because of Rachar’s misrepresentations, Gordon accepted worthless collateral which exposed the firm to high risk.

On June 14, 1991, the CEO of Gordon received a phone call from a third party who expressed some concerns and two weeks later I received a phone call to conduct an investigation. I presented my report in February 1992.

For a forensic investigative accountant each case becomes a study of a business and an industry, this time with a focus on the business of derivatives. In addition a live investigation, conducted while your client is attempting to maintain the purity of his business and manage his people demands an exceptional level of professionalism and sensitivity.

One final point: While the report was issued in February 1992, my deposition was completed over eleven years later on September 2, 2003, the ultimate test of your investigation with all its details.

pdf Read a Supreme Court of Canada decision on Guarantee Company of North America v. Gordon Capital Corp