Regina vs. Carl Rosen and John MacHibroda

Retail Bankruptcy Fraud The accountant took the money! This fraud case involved the planned bankruptcy of Brittany Antiques, which was in the furniture business. These cases are difficult, as one needs to prove that failure was not due to an inexperienced businessman but rather a guilty mind. The concept of “mens rea” is well suited to financial evidence through the effective documentation of patterns of business conduct, which are inconsistent with the normal course of business. It allows prosecution to assert that at a certain point in time, the accused knew or ought to have known that his course of... Read More...

Regina vs. Kotowski

Retail Management Fraud School over-billed; documents destroyed by arson As President, Kotowski operated the Central Fuel Oil Company, which delivered fuel oil to the local high school. For three years he over-billed the school by shutting off the delivery pipe while letting the meter run. Then, before the documents could be seized, the premises of the company were destroyed by arson. While record reconstruction is a challenge, access to third parties usually produces the required relevant documents. That is why I have never been too concerned when people fear document destruction. In this case, an engineer was retained to determine... Read More...

Regina vs. Hershey Rosen

Construction Mortgage Fraud Diversion of loan proceeds This was my first construction fraud case, one in which loan proceeds were applied for improper purposes. I gave evidence for the Crown as its last witness outlining the use of the construction loan proceeds and again was permitted to sit with Crown counsel during the trial, which was conducted by Judge Hugh Locke without a jury. What made this experience unique was the presentation to me of a document by defense counsel, which was later established to be fraudulent -- but at the time it drew my admission that I had not... Read More...

Regina vs. Harold Scheel

Manufacturing Management Fraud Deposits yes; skids no In a jury trial in November 1976, Judge Couture ruled in favor of the admissibility of accounting schedules, “having heard,” as he stated, “the testimony of Mr. Lindquist.” The ruling was appealed and in May 1978 the Supreme Court of Ontario, Court of Appeal set the precedent as to the admissibility of accounting schedules stating that the “learned trial judge did not err.” Their ruling included reference to the two unreported judgments noted earlier, Parks and Waddilove & Steele. This case also made me appreciate that there is no simple fraud case when... Read More...

Regina vs. Olan, Hudson and Hartnett

Retail Management Fraud Assets of a Company are used to buy the Company The case involved the purchase by Beauport Holdings of Langley’s Limited, a long established dry cleaning enterprise in Toronto that owned a substantial portfolio of blue chip securities in 1971. Hudson, President and Hartnett, Vice President of Beauport Holdings played the dominant roles aided by Olan who was to receive a finder’s fee for negotiating the sale. To complete the purchase, Beauport Financial received funds from Langley’s that it loaned to Beauport Holdings to complete its purchase of Langley’s. The issue was whether the funds were expended... Read More...

Regina vs. Mel Kurtz

Construction Bribery VP Construction costs $21,500 This case gave me my first experience giving evidence in a bribery trial, which is legally described as “unlawfully accepting a secret commission.” Kurtz was convicted in February 1977 for receiving $21,500 as vice-president of a construction company. At issue in the case was the question of who was really the guilty party, the payor or the payee. From the payor’s perspective, it is essential to examine the family of companies associated with the contracting party when looking for the source of the payment. It will be somewhere, because the payor views the payment... Read More...

Regina vs. John Pullman (Switzerland), Roger St. Germain and Robert Keyser

Securities Investor Fraud Buy Stock and Rent a Corner Gas Station Robert Keyser was the President of Aquablast Inc., and pled guilty to conspiracy to defraud European investors in a stock promotion involving a water blast industrial cleaning system in March 1977. While renting a corner gas station in Toronto, Aquablast boasted in Europe that it had a paper value of $5 million. My role was that of a consultant and not a witness. Accordingly, I was able to examine financial records seized in Switzerland by the RCMP from John Pullman who was the apparent moneyman for Meyer Lansky, a... Read More...

Regina vs. Pieckenhagen

Real Estate Financial Advisor Pieckenhagaens and Police Power The Crown charged the Pieckenhagens with stealing $3 million from his father-in-law who had, over time, liquidated his European assets and transferred the money to Ontario through a Liechtenstein company. The Pieckenhagens wired the money to Panama City, Florida, then flew down, picked up the money and went off to Brazil. This looked bad! And this time their defense counsel, Clay Powell retained me. I offer a couple of observations from the 1977 trial: It was the first time I had seen an expert accounting witness cross-examined and destroyed - - yet... Read More...

Regina vs. Waddilove & Steele

Financial Institution Loan Fraud An Acquittal of the Banker and the Bankee In May 1976, this fraud trial was held in Toronto, a trial that involved the largest allegation of bank fraud in Canadian history: $3 million. I spent 7 days in the witness box, in a jury trial using graphs and schedules to explain the circular flow of funds in a significant kiting scheme. Several interesting points arose from this case: The jury returned with an acquittal and a lesson was learned that there is no need to prove all the transactions in a case as it becomes too... Read More...

Regina vs. Sid Rosen, Irving Kott and others

Securities Investor Fraud Flogging in Somed Mines This was a stock market scheme involving shares of an obscure Quebec company called Somed Mines Ltd. The case heard in May, 1976 involved allegations of stock market manipulations, which included bribes to stockbrokers to encourage selling to their clients. Unique to this case was my role as a witness. Crown Counsel (now Honourable Justice) David Doherty felt it unnecessary to call me as his final witness because his case submissions had gone well. However, defense counsel decided to call me as their witness and in the box I went. This was an... Read More...

Regina vs. Glenn Turner, Dare To Be Great of Canada Ltd

Retail Consumer Fraud Dare to be Great through a Go-Tour Known for his harelip, Mr. Turner from Florida was the owner, founder and creator of many promotion methods called such names, as “Would I like to better myself?” “Would I like to double my salary?” “Go-Tours” This was my first investigation into pyramid selling. Their marketing plan claimed that for $5,000 one becomes, as they put it, an ‘Independent Sales Agent’ who would receive 40% commission on those persons one enrolls and then 20% commission when their enrollees enroll another person. Marketing involving the sale of the product (which, in... Read More...

Regina vs. Lucas, Lipson and Kendall

Retail Consumer Fraud Lost quarter; Lost trial Sunway Distributing Ltd, a vending machine distributor advertised in newspapers across Canada, offering substantial, guaranteed, spare-time income which could be earned for an investment of only $1,000 to $3,000. In fact, no one made any money. I was in the witness box being cross-examined when in front of the jury defense counsel proceeded to insert a quarter into a machine. The only problem was that he lost his quarter. His eyes moved toward his client; it was a moment of comfort for me and a lesson in courtroom theatre. I recommend to young... Read More...

Regina vs. Chronis and Corrigan

Charity Consumer Fraud Helping the Blind The charity was operating the Canadian Blind Associates; it raised funds by promoting concerts in various cities to raise money for the blind. This was my first experience investigating a consumer fraud involving a charity. From all known disbursements, none was found to have helped the blind in any way. We also established that a practice existed to deposit only 55% of all receipts, that I labeled the ‘known deposits’. Canadian Blind Associates itself was not registered as a charitable organization. In October 1975 Judge Costello found them guilty. Both accused weighed over 300... Read More...

Regina vs. Parks

Government Management Fraud A County Engineer with the County’s Tractor In January 1974, this case gave me the opportunity to sit with Crown Counsel Rod McLeod at the table through a jury trial. Once again as the last witness, I gave fact evidence of financial transactions regarding the acts of the accused Don Parks as the County Engineer. The Defense argued against the use of an overhead projector and lost. The Defense also argued against the introduction of accounting schedules and lost. The presiding Judge Garth Moore ruled the accounting schedules admissible given what he described as the “veritable blizzard... Read More...

Regina vs. Harold Ballard

Sports Entertainment Management Fraud Wedding: a hockey expense This was the first case in Toronto to answer the question as to whether there is one law for the rich and a different law for the poor when a high profile person in the community is the subject of a major fraud. Harold Ballard was the owner of the Toronto Maple Leafs NHL hockey club and I had the pleasure of working in Maple Leaf Gardens identifying vendor invoices that were later determined to be fraudulent – with wedding expenses charged to the Gardens’ hockey stick expense account. The accused gave... Read More...

Honorable S.H.S. Hughes

Financial Institution Public Inquiry The Collapse of Atlantic Acceptance Corporation This was my first case after a “Big 8” audit partner had challenged me to decide whether I wanted to drive rally cars or be a professional auditor.  Well, I moved on when the late Brian McLaughlin asked me to join their insolvency group in February 1972.  At the time, Brian was working on a Public Inquiry. My first assignment was to proofread a draft report of the Public Inquiry entitled ‘Report of The Royal Commission Appointed to Inquire into the Failure of Atlantic Acceptance Corporation Limited’.  By way of... Read More...