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.