BOB LINDQUIST AND FORENSIC LESSONS LEARNED #5

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Where you have the same parties conducting business over a period of time, we encourage forensic accountants to focus their initial investigation on the ‘before’ transaction(s) and not the ‘now’ transaction that is usually largest.  At the start of any management misconduct, the intentions behind any transaction are easier to ascertain, and witnesses are more co-operative since one or more are usually no longer part of the original management/employee team.  In summary the pattern of conduct to establish knowledge, relationships and intent is usually more visible.  

The following extracts come from two case examples that are presented in more detail at

                             lindquistforensics.com

‘Selected Cases’          ‘1980s’            ‘Greymac Mortgage, Seaway Mortgage and Crown Trust’
‘Selected Cases’          ‘2010s’            ‘UDECOTT’ vs. John Calder Hart et al’

“$500 Million Sale Creates $230 Million Profit”
Bill Player and others had purchased 10,931 apartment units in Toronto for $270 million and flipped them for $500 million to Saudi Arabian investors in the Grand Cayman that created an instant profit of $230 million.  But, two months later the profits were gone and the Ontario government had called for a Public Commission of Inquiry.  Its focus: the Cayman transaction.

Later the Attorney General retained Lindquist asking that I take advantage of the work already done.  However my approach was different. No matter how large a case: the fraud still had to start at some time and place.  In the early days of Player’s property flips, the nominees were not Saudis and the transactions were not in the Grand Cayman.  To the contrary, the initial property transactions were normal, taking place in small town Ontario with $50 drunks acting as nominees. 

With this approach, the pattern of conduct was established; the subsequent property flip transactions revealed a consistent pattern that was the same as their last deal, the $500 million sale to the Saudi Arabian investors in the Grand Cayman.

“Lindquist Goes After Hart”
In March 2010 the UFF Public Commission of Inquiry issued its report into the construction sector and in regard to the case involving the Brian Lara stadium and the tender submitted by Hafeez Karamath Limited their focus was on the ‘now’ transaction of 2006.  However, given that the issues involved parties with a history, Lindquist focused on the ‘before’ transactions in 2003 and 2005. 

In May 2003 the UDECOTT Evaluation Team had failed Hafeez Karamath Limited for a number of reasons set out fully in its report including ‘such financial statements as provided showed a deficient working capital…the related company may in any event, have been gravely insolvent’.

Then in March, 2005 the UDECOTT Evaluation Team found that Hafeez Karamath Limited for construction projects in excess of $100 million was lacking in the financial, construction management and/or management capability.

The benefit of the historical findings is summarized in Paragraph 9 of the Claim that states:

‘Prior to the award of the contract to Hafeez Karamath Limited the First and/or Second and/or Third and/or Fourth Defendant were involved in and obtained information from the tenders for the Customs and Excise Campus Plaza (2003) and the Ministry of Legal Affairs Tower (2005) which would have led a director and officer acting prudently to recommend the rejection of Hafeez Karamath Limited’s tender for the Brian Lara Construction Packages 2, 3 and 5 to 8.
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