Law Firm

Securities Tax Evasion Taxing the rules Taxing authorities bring a different dimension when counsel’s client is a target. International transactions that are complex and perhaps unique seem to attract a more eager level of interest, especially if the target has some profile. As noted in an earlier high profile case, it is very important to address the allegations early in the process, if one is to persuade the taxing authority that another interpretation is available for a set of transactions. First hand information gathering by the forensic accountant is essential for maximum creditability with the tax authorities, so some international... Read More...

Crosby Offshore Services, St. John’s, Newfoundland

Oil & Gas Management Fraud Stop it while you can This case involved a privately held company owned by a family who had been part of the country’s political history. The police had started an investigation aided by an outside accounting firm. Initially, the subjects believed that the matter would resolve itself. However, it continued with the prospect of becoming very serious. Some people believe that the more time an investigative body invests in a case, the more difficult it is for them to withdraw without making a criminal charge. The case was proceeding down this road. Retained by counsel... Read More...

Government of Trinidad vs. Minister Johnny O Halloran, Mr. 10%

Government Political Corruption, Bribery Mr. Ten Percent of Trinidad “It doesn’t sound like much to Mr. Ten Percent of Trinidad. A man named John H. O’Halloran made himself an extraordinarily wealthy man. Johnny O, as he was called on the island hadn’t come as a stranger to Trinidad; he grew up there. O’Halloran’s clout in Trinidad lay in the sway he seemed to hold over a man named Eric Williams, Trinidad’s father of independence, head of the People’s National Movement, a political party that came to power in 1956. Williams appointed his man to a series of powerful patronage positions.... Read More...

Alcan: Aluminum Company Of Canada

Manufacturing Bribery Housewife becomes Informant The forensic accountant must understand the cardinal rule of protecting the informant. Quite often, a secretary will become the informant, however, in this case, the informant was a housewife and the alleged beneficiary of kickbacks, a division head of a public company. The housewife heard the rumor from the receptionist working for the vendor, the alleged payor. The Director of Corporate Security Jim Poirier for Alcan called for assistance. It is tough, particularly as a jolly-faced accountant to try to convince a stranger to completely trust your investigative skills. But she did, along with her... Read More...

Windsor, Ontario vs. Detroit, Michigan

Retail Commercial Dispute It’s my tunnel! Who owns the Canadian half of the tunnel? The US Company was formed in 1929 to construct the tunnel with agreement that the Canadian half would revert to Windsor in 60 years. But in 1989, the US Company would not respond. I was retained by Counsel Harvey Strosberg in Windsor. For the case, the paper trail was significant. Until 1980, when Windsor gave its notice of intent to take over its half, one note to the financial statements disclosed the existence of their right. However, after notice, the US Company changed auditors and the... Read More...

Robert Campeau Development, Houston, TX

Real Estate Commercial Dispute Increased operating costs but no sales How friendly should you become with the target? The developer client knew the Houston market was slow, but the growing losses being incurred by his property manager seemed unreasonable. Retained by counsel, a visit was required and during the investigative process, I decided to accept the offer of courtside seats from the target to watch the Houston Rockets. Some might have declined, but as part of the ‘con vs. con’ approach, why can’t you have some fun and spend quality time with the target. At the end of the day,... Read More...

Continental Bank – Creating Something From Nothing

Financial Institution Management Fraud Creating something from nothing Management created this company, Windsor Ceramic Tile with promises of employment in exchange for government loans. With these loans and their equity contribution in place, a fixed asset bank loan was obtained to finance the purchase of equipment intended to reduce the need for a large labor force, in order to make the company more competitive with its foreign competitors. Profits never came and the bank called the loan. With $50 million of fixed assets on the books, it became a challenge to find these assets in the manufacturing plant. In the... Read More...

Politician: Minister Sinclair Stevens, Canada

Government Public Inquiry Taking advantage of one’s position? It was 1972 when I caught the end of a Royal Commission, now in 1986 the beginning. The Parker Commission was established to address the activities of a federal cabinet minister, Sinclair Stevens, who had been alleged to have violated the government’s conflict of interest guidelines. For me, while an honour to be retained, it was neither the public profile nor the press but the incredible speed demanded by the process to meet the start date. No cottage approach here! Television, drama, late nights, constant new findings from documents and interviews, ongoing... Read More...

Gulf Resources, Calgary, Alberta

Oil and Gas Bribery Oil Producing Bribes When a company’s management retains a forensic accountant to meet vendors regarding rumors of kickbacks, it obviously starts a lot of behind the scene movement between the payor and the payee when there is substance to the allegation. The phrase that describes such activity is simply actions not in the normal course of business, which can be reflected in both the personal and business relationships. For the forensic accountant, the question is whether or not a bad apple exists and the first challenge is to maintain the purity of both organizations. I consider... Read More...

Allied Lyons Vs Fosters Brewery

Manufacturing Financial Advisor International Battle over Booze Fosters, an Australian brewery through Elders had targeted a takeover candidate in the U.K., Allied Lyons PLC that sought the assistance of the U.K. anti-monopoly commission. The takeover candidate alleged that the Australian company was profitable only due to aggressive acquisition accounting. The question arose as to whether or not their public filings could support this allegation. It was time for international travel, a penetrating pursuit of public filings in Australia and lessons on how to make the best use of time in business class. With many available hours and no phones, it... Read More...

London Life

Insurance Management Fraud The Anonymous Letter A forensic accountant has a crucial obligation to maintain the purity of a corporation or any operating division while conducting an investigation. In a case as sensitive as this one, involving a most conservative insurance company, the top priority was to ensure purity at the highest level as the subject of the allegations was a very senior member of management. Retained by Counsel for the CEO, and with a damaging anonymous letter known only to two other people, I was asked to determine if there existed any merit to the contents of the letter.... Read More...

Public Gold Mining Company

Real Estate Financial Advisor On a Caribbean Beach as Sue This case involved the alleged use of insider information by a professional in a public company for personal gain in the form of real estate located in the Turks & Caicos. External counsel and I took a commercial jet to Miami and then a private jet took us to the Providenciales Airport and then we were taken to the only available hotel on Grace Bay Beach: Club Med. In those days only couples were permitted to stay, and you guessed right, counsel registered as he and I as Sue, all... Read More...

Continental Bank – Grain Commodity as Collateral

Financial Institution Loan Fraud Grain Commodity as Collateral A bank was stung by the realization that the collateral placed by a commodity broker had little substance. After preliminary inquiries, it became evident that trading records in the possession of one of the brokers were essential to the matter. However, they were not forthcoming and thereafter an application was made for an Anton-Pillar order. I had been retained by Counsel and the idea of being a part of the invitation to search (via the Anton-Pillar order) was attractive, particularly given the level of case knowledge that I had already accumulated. But... Read More...

Dylex Clothiers

Retail Wrongful Dismissal Who’s at fault for declining profit? With shareholder pressure to increase profits in the sportswear division, a Toronto retail company lured a key individual away from a competitor by offering a lucrative three-year guaranteed deal (void if fraud occurs) of $250,000 per year. To shorten the story, the profits never came, so this new management hire blamed and fired his number two -- who then sued the company for wrongful dismissal. The problem here was simple: whom should the president believe, the former employee or the new hire? Retained by Counsel for the owners, I started by... Read More...

Regina vs. Carnie

Real Estate Investor Fraud Argosy and the Backward Horse This $24 million fraud case was the largest ever mortgage fraud case in Canada, catching 1,600 investors who had placed their funds into syndicated mortgages with Argosy Financial Group of Canada Ltd. Argosy started in 1975 and in 1980 it was placed into receivership. Most of the investors were from the province of Ontario with the real estate projects located in Ontario, Alberta and Florida. John David Carnie, the President of the company eventually pled guilty and received a 6 ½ year sentence. It was fun to piece this case together,... Read More...

Amstel Brewery

Manufacturing Management Fraud Sleuthing with Counsel This case is a lesson learned about how not to investigate and still survive. It’s late Friday night, and the company’s President is still at work. Of course, we (including external counsel) are sitting in our carefully parked cars armed with allegations of expense fraud ready to pounce on the accounting records. But it gets late and we give up. We returned Saturday and why not, we had the right of access from its foreign owner and in-house counsel who wanted us to just get on with the investigation. Well, I am sitting at... Read More...

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... Read More...

Sunflight And Skylark Tours

Retail Bankruptcy Fraud The Collapse of Two Travel Agencies So you want high profile? Get a court appointment! A government ministry made me a court appointed inspector to examine the business of a travel agency under its legislation and to determine if it was meeting its financial obligations. It becomes an interesting human challenge to extract information from employees whose future is unsure due to your presence. It soon becomes clear that a successful investigator must have strong people skills and a quiet yet firm and respectful presence. Read More...

Windor Meat Packing

Retail Management Fraud Why honest management steals This case, like the previous one, is another lesson learned in understanding why honest people in management steal. There are a number of reasons: To maintain a lifestyle of apparent success Colleagues are stealing and succeeding Feel justified due to unfair compensation Simple greed For survival, either at the personal or corporate level The last is what we have here. The bank is usually the first to probe. Where are the receivables, the inventory, and the cash? For management the questions come from every direction. Well the short answer is they never existed!... Read More...

Regina vs. A. Pellizzari

Financial Institution Bribery One Bank Manager costs $10,000 This is a case of a bank manager eager to promote his loan program to meet his business objectives. There is nothing wrong with the objective but for the receipt of funds paid by the bank manager’s client to a company owned by the manager’s wife. Again, it is the human perspective, which requires study here, and that is why I include this case. The client’s loan amount was $1,647,000; the six payments to the bank manager’s wife’s company totaled $10,070.18. Clearly, the year, 1980, had not been good. Again and again,... Read More...

Regina vs. Katz, Swanbrough

Real Estate Investor Fraud Fraud in a law practice In this case, Katz and Swanborough operated a successful law practice for many years, but financial problems arising in their related mortgage company, Yorkfield Agencies, led to fraud charges in 1980. ‘Yorkfield’ was responsible for creating Hess Village located in Hamilton, Ontario where older homes were converted into shops, restaurants and galleries. This case was particularly interesting from the perspective of studying human behavior within a fraud context. Clearly, from the use of funds, one could study the mindset of the accused as the business pressures built, not only at the... Read More...

Regina vs. Grant Clark, and others

Financial Institution Loan Fraud $16 Million = $900 Thousand This was an extensive check-kiting scheme whereby the accused defrauded two banks and one credit union for about $900,000. However, over a period of seven months, $16,000,000 of bank deposits were generated, mostly involving checks issued to or from the controlled accounts operating within the kite. Removal of these checks issued within the circle of controlled accounts reduced total deposits to less than $800,000 of money actually received from outside sources. In preparation for trial in September 1980, a unique accounting schedule was designed to show the jury the chronology of... Read More...