Petitioner/First Wife and Respondent/Dead Husband

Family Fraud and Asset Search Firm was retained by Counsel on behalf of, a Chapter 7 Trustee in Bankruptcy to establish a legal basis from a financial perspective to justify a search for offshore assets of the bankrupt debtor. The Debtor had filed a Chapter 7 in 2013 and soon was dead.  He was survived by his second wife, after his first wife had obtained a $28 million Judgment against the Debtor in 2006. Over the five years, legal proceedings were filed in several foreign countries to trace the flow of funds and to locate assets. In 2023, a recovery... Read More...

Banco Cruzeiro do Sul SA, Brazil

Financial Institution Management Fraud “The Federal Public Prosecutor's Office in São Paulo denounced on Monday, January 7, 2018, 17 members of a criminal organization that worked on several fronts for the practice of financial-administrative illicit crimes at Banco Cruzeiro do Sul SA…between January 2007 and March 2012.” Subsequently, the bank was liquidated and audits showed "impairment of the institution's economic and financial situation and serious violation of rules issued by the National Monetary Council and the Central Bank." Firm was retained by Counsel on behalf of a Brazilian client who sought confirmation of a tracing exercise to recover property valued... Read More...

The World Bank Group, Washington, DC

Financial Institution Bid-Rigging The Washington Post reported on July 16, 1998 the headlines “World Bank Hires Auditors to Probe Its Own Spending” “Possible Kickbacks, Embezzlement Cited”.  It states: “World Bank President James D. Wolfensohn acknowledged yesterday that within the past two months he has setup a special internal fraud team and hired the global accounting firm PricewaterhouseCoopers.” The Post reported on October 24, 1998 an article entitled ‘World Bank Probes Pakistan Project’ where it referred to PWC and its work on tracing ‘Elwan’s international holdings and vast financial records of the Pakistan projects.’ As the engagement partner, I led our... Read More...

MasTec Acquisition of Pacer Construction and Subsequent Pursuit/Recovery of Purchase Funds

Securities Investor Fraud In June 2014, MasTec (NYSE: MTZ) purchased Pacer Construction and its related entities from Richard Pelletier, who was the founder and CEO of Pacer, his company Richard Pelletier Holdings Inc. and two others.  MasTec Inc. paid RP/RPHI a cash sum of approximately Can$59 million for his proportionate equity interest in Pacer.  At the time of the purchase, Pelletier was a resident of Calgary, Alberta, Canada. However, in the year 2015, Pelletier and his family moved to the Cayman Islands. Following the acquisition, it became apparent that Pelletier had falsely represented the financial condition of the companies.  In... Read More...

Alberto Chang Rajii, The Chilean ‘Madoff’

Securities Investor Fraud On April 12, 2016, a Chilean businessman wanted for an investigation into one of the biggest financial frauds in Chile, was identified by a Chilean camera crew in Malta in the reception of a hotel in Valletta. Alberto Chang Rajii (“Chang”), founder of the Arcano Group had left Chile on March 12, 2016 on a flight to the United States. In mid-April 2016, Chang’s bank accounts in Chile were frozen and the Chilean prosecutors delivered the search warrant that would later become an international arrest warrant. Previously, an anonymous complaint against the Arcano Group had been sent... Read More...

Government of Antigua vs. Lester Bird et al in the ‘IHI’ Matter

Government Political Corruption Payments Guaranteed by Tax Revenue In March 2004, Baldwin Spencer was elected as Prime Minister of Antigua and Barbuda replacing the former Antigua Labour Party led by Lester Bird. In May 2004, the Attorney General retained Lindquist to investigate allegations of corruption regarding the former government. Lindquist called in Howard Williams and Ron Piers to assist with the mandate. In March 2006 the Attorney General filed a civil claim in the High Court of Antigua and Barbuda in the “IHI” matter that included Lester Bird, Asot Michael and Bruce Rappaport as defendants. In February 2009, the Attorney... Read More...

National Hockey League Players’ Association, Toronto

Sports Entertainment Financial Advisor Collective Bargaining Agreement The Executive Director of the National Hockey League Players’ Association, Paul Kelly retained Lindquist as Financial Advisor in regard to the Collective Bargaining Agreement that had been negotiated between the players and the thirty team owners of the National Hockey League. The key issue was to ensure that all “Hockey Related Revenue” was being recorded properly by each of the teams, since the player’s compensation is based upon 57% of the total of such revenues. Lindquist worked closely with Executive Director Kelly over a period of nearly two years, including participating is several... Read More...

Government of Antigua vs. Lester Bird et al in the ‘IHI’ Matter

Government Political Corruption Payments Guaranteed by Tax Revenue In March 2004, Baldwin Spencer was elected as Prime Minister of Antigua and Barbuda replacing the former Antigua Labour Party led by Lester Bird. In May 2004, the Attorney General retained Lindquist to investigate allegations of corruption regarding the former government. Lindquist called in Howard Williams and Ron Piers to assist with the mandate. In March 2006 the Attorney General filed a civil claim in the High Court of Antigua and Barbuda in the “IHI” matter that included Lester Bird, Asot Michael and Bruce Rappaport as defendants. In February 2009, the Attorney... Read More...

The World Bank Group, Washington, DC

Financial Institution Bid-Rigging Tracing Loans Across Borders The Washington Post reported on July 16, 1998 the headlines “World Bank Hires Auditors to Probe Its Own Spending” “Possible Kickbacks, Embezzlement Cited”. It states: “World Bank President James D. Wolfensohn acknowledged yesterday that within the past two months he has setup a special internal fraud team and hired the global accounting firm PricewaterhouseCoopers”. As the engagement partner, I had the opportunity to work with counsel in conducting global investigations into allegations of corruption, conflicts of interest and fraud, regarding the Bank’s loan program and to advise on the Bank’s anti-corruption initiative. This... Read More...

United States v. James Merrill and Carlos Wanzeler

Retail Consumer Fraud Firm was retained by Counsel for the accused Merrill to assess the government's allegation of a ponzi scheme where it reported"total losses by the victims of about $3,045,000,000" located around the world. We must determine if the characteristics associated with an alleged Ponzi scheme are evident in the nature of the revenue and expense recorded by the company. To assemble the full financial picture, a list of missing financial records from the government's case along with a list of various computer-based analyses that became their basis for the allegations were requested. The requests were necessary in order... Read More...

Harry Sargeant III and Mohammad Al-Saleh

Asset Search Firm was retained by Counsel on behalf of the plaintiff, Mohammad Al-Saleh to conduct a study of the $1.5 Billion in disbursements among domestic and foreign bank accounts for the years 2006 to 2010; to determine the business reality of the movement of funds that revealed the parallel disbursement structure between the United States and Europe/Middle East; to identify potential assets related to the targets. An overview of the process and result is presented with extracts from the following sources: Web of 14 Lawsuits Settled Stemming from Sargeant Family Fight By Jane Musgrave May 1, 2015 "…The bankruptcy... Read More...

Lisa Armoyan, Petitioner/Wife and Vrege Armoyan, Respondent/Husband

Family Asset Search Firm was retained by Counsel, namely Astigarraga Davis on behalf of the plaintiff to conduct a search for the assets of the husband subsequent to the “Armoyan Final Judgment” that was in the amount of some $18 million. The asset search investigation delved into public and private companies of an international nature covering several years. View Mother Wins $13.4 Million Settlement View Armoyan Final Judgment and Dissolution of Marriage View Vrege Armoyan His Cautionary Tale… Read More...

Anwar, et al., vs. Fairfield Greenwich Ltd, et al. re: Bernie Madoff

Securities Professional Negligence, Investor Fraud Firm was retained by Counsel, namely Boies, Schiller & Flaxner, LLP on behalf of the plaintiffs in a matter known as 'Anwar, et al., Plaintiffs vs. Fairfield Greenwich Ltd, et al., Defendants' where the subject matter is Bernie Madoff and his Ponzi scheme. The engagement was as a testifying expert on forensic accounting matters in the Anwar class action. Lindquist issued a “Rebuttal Expert Report” to opine on issues raised in three “Expert Reports” that essentially expressed the opinion that the defendants could not have “uncovered the Madoff Ponzi scheme because it was so sophisticated... Read More...

Southern Health Network, Inc. vs. Turks and Caicos Islands

Healthcare Commercial Dispute Firm was retained by Sidley Austin LLP on behalf the Turks & Caicos Islands in a matter that involves the ‘Southern Health Network Inc., a Miami based company that was responsible for providing transportation and medical services for Turks & Caicos Islanders sent to Miami. The Miami company filed the lawsuit against the Turks and Caicos government for non-payment in the sum of almost $17 million US Dollars’. The case was settled for an amount of less than $500,000. The origin of the involvement of Southern Health Network, Inc. is reported in the “Auld Commission of Inquiry... Read More...

Government of St. Lucia

Government Political Corruption Firm was retained by the Attorney General of the Government of St. Lucia to address matters raised by Prime Minister Anthony in his ‘Address to the Nation on Relations with China and Taiwan’. The ‘PM’ referred to his ‘concern regarding the alleged payments made to UWP members of Parliament by the Government of Taiwan and its agents upon the establishment of diplomatic relations and during the ensuing period…I wish to indicate that the Government of Saint Lucia has engaged the services of Bob Lindquist to look at these alleged transactions…This audit will go beyond the issue of... Read More...

UDECOTT vs. John Calder Hart et al

Construction Breach of Fiduciary Duty, Bid Rigging "Lindquist Goes After Hart" ‘…Bob Lindquist has been given the mandate to investigate if there was bid-rigging, manipulation of the tendering process and kickbacks to public officials in the award of contracts for two specific projects, the Ministry of Legal Affairs Towers and the beleaguered Brian Lara Cricket Academy…’ Background In March 2010 the UFF Commission issued its report into the construction sector and in regard to the Brian Lara matter their focus was on the ‘now’ events in 2006. However, given that the issues involved parties with a history, Lindquist focused on... Read More...

Central Bank of Trinidad vs. CL Financial et al, a 10 Billion Dollar Bailout

Insurance, Financial Institution Management Fraud, Asset Search "Central Bank calls in Lindquist in CLICO probe" "…the Central Bank has retained the services of ace forensic investigator Robert Lindquist to sift through the tangled records of financially troubled insurance giant, CLICO, to determine whether it was a case of bad judgment or corporate malfeasance…tasked with the job of finding out what happened to cause the avalanche of financial troubles at the Lawrence Duprey-owned empire…Lindquist had no comment…'No disrespect to you but I am not talking to the press' was all he said. The investigation will be conducted within the context of... Read More...

Confidential Case, Chicago

Retail Financial Advisor Permanent Secrecy Counsel for the plaintiff in Chicago retained me with my involvement subject to a protective order. It had been agreed between Counsel for the plaintiff and the defendant that a forensic accountant, acting on behalf of the plaintiff would be granted access to the financial records of a company related to the defendant. The task was to determine if there was merit to the allegations through the examination of business transactions over a four year period and to report thereon. Upon completion and as instructed, I submitted my report to counsel for the defendant and... Read More...

National Hockey League Players’ Association, Toronto

Sports Entertainment Financial Advisor Collective Bargaining Agreement The Executive Director of the National Hockey League Players’ Association, Paul Kelly retained Lindquist as Financial Advisor in regard to the Collective Bargaining Agreement that had been negotiated between the players and the thirty team owners of the National Hockey League. The key issue was to ensure that all “Hockey Related Revenue” was being recorded properly by each of the teams, since the player’s compensation is based upon 57% of the total of such revenues. Lindquist worked closely with Executive Director Kelly over a period of nearly two years, including participating is several... Read More...

Desalcott, Trinidad

Construction Bid-Rigging, Money Laundering Procurement Process is Drained Dry The Desalination Company of Trinidad and Tobago is the largest operating desalination facility in the western hemisphere that was formed to sell desalinated seawater to a government owned agency from 2000 to 2024 on a build, own and operate basis. The Attorney General retained Lindquist to investigate allegations of bid-rigging in a process that lead to award of the plant construction to Hafeez Karamath Engineering Services Ltd and Ionics, Inc., based in the U.S. in August 1999 at a cost of US$121 million. Lindquist retained Paul Kelly and Tom Daly to... Read More...

Government of Antigua vs. Lester Bird et al in the ‘IHI’ Matter

Government Political Corruption Payments Guaranteed by Tax Revenue In March 2004, Baldwin Spencer was elected as Prime Minister of Antigua and Barbuda replacing the former Antigua Labour Party led by Lester Bird. In May 2004, the Attorney General retained Lindquist to investigate allegations of corruption regarding the former government. Lindquist called in Howard Williams and Ron Piers to assist with the mandate. In March 2006 the Attorney General filed a civil claim in the High Court of Antigua and Barbuda in the “IHI” matter that included Lester Bird, Asot Michael and Bruce Rappaport as defendants. In February 2009, the Attorney... Read More...

Piarco International Airport, Trinidad

Construction Bid-Rigging, Money Laundering A Flight into the Procurement Process In September 2000, the Attorney General of the Republic of Trinidad & Tobago retained Lindquist to conduct an investigation into allegations of corruption and procurement fraud regarding the construction of the country’s Piarco international airport at a cost of some US$110 million. Lindquist called in Hans Marschdorf and Rod Stamler to assist with the mandate. Our interim report was issued within two months on the Friday prior to the country’s general election held in early December 2000. The AG’s political party won the election, but the investigation did not continue.... Read More...

LISA vs. Juan Jose Gutierrez Mayorga, et al, Defendants, Guatemala

Manufacturing Financial Advisor Egg Hunt The first LISA, S.A. lawsuit was dated February 1998 and filed in Miami which touched off litigation between the parties in ten different jurisdictions over a ten year period. Some cases do need staying power. After the events in 1998 and 1999, Counsel required the assistance of a forensic accountant to assist their client in defending the various allegations of financial impropriety and in particular to critique the other side’s expert report. The plaintiff, a family member and a minority shareholder, alleged various claims against his fellow family members and majority shareholders. Each allegation was... Read More...

Shanghai Centre, China

Construction Financial Advisor Cost Overruns and Wrongful Termination Shanghai Centre is the first mixed-use project in Shanghai that includes 472 apartments and a 605 room Ritz-Carlton hotel. The dispute resulted in one party seeking recovery of lost fees and an undetermined amount connected to the alleged wrongful termination. Counsel required the assistance of a forensic accountant to critique the other side’s expert report that alleged a $70 million fraud in the overseeing of the renovations and management of the property. Each allegation was investigated and a response prepared to assist counsel with the action. Read “Portman seeks fees from partners... Read More...

Petroleo Brasileiro SA, Brazil et al vs. U. S. Fidelity et al

Oil and Gas Surety Claim, Financial Advisor Surviving a Bankrupt Contractor Petrobras, the national oil company of Brazil, filed a claim under its surety bond with two U.S. insurance carriers, US Fidelity and Guaranty Company and American Home Assurance Company who had provided coverage to Brazilian contractors for the construction of two naval oil rigs known as P-19 and P-31 at a coverage amount of $110 million and $168 million respectively. P-19 was the conversion of a platform formerly used for oil and gas exploration into a semisubmersible oil and gas production platform. P-31 was the conversion of an oil... Read More...

Bre-X Minerals, Calgary, AB

Securities Investor Fraud Many Fools’ Gold May 5, 1997 Headlines: Bre-X Minerals Limited was a “Canadian mining exploration company that falsified the gold strike (in Indonesia) and then hyped its stock price to the heavens” from Wall Street Journal. The Washington Post headlines read “A Lode of Lies: How Bre-X Fooled Everyone No Deposit, No Return”. The Calgary Sun, home city of Bre-X in Canada headlines read “Bre-x: There’s No Gold - MASSIVE FRAUD”. Two days earlier, before the story had broke, I had arrived in Calgary to attend a meeting in the boardroom of Bre-X the next day with... Read More...

Signet Bank, Richmond, VA

Financial Institution Loan Fraud Tracing the proceeds in the ‘Bank Caper of the Century’ “BANK CAPER OF THE CENTURY” is how Virginia Business magazine described the way former Signet Bank in Richmond, Va., was victimized by John Reiners, a former Philip Morris executive who obtained more than $300 million in bogus loans through Nelco, a local computer leasing company and a New York computer firm owned by Ruffo. Briefly, the two men invented a fictitious secret project for which the tobacco company supposedly needed millions of dollars worth of computers. Two Richmond banks and six other international lending institutions relied... Read More...

IBM, Amsterdam, Netherlands

Securities Investor Fraud A Personal Pension? The internal auditor for this Fortune 100 Company raised kickback allegations involving someone in management responsible in Europe for investments made with the company’s pension fund. Counsel retained me to conduct an investigation in the Netherlands. When company documents were examined, it became apparent that these allegations had been raised without considering alternative explanations and situations that, in the end, did answer the issues. However, to be safe, the investigation was extended to include meetings with certain brokers used extensively by the pension director. There was no foundation for the allegations. Read More...

Dormant Bank Accounts of Victims of the Holocaust, Switzerland

Financial Institution - The Volcker Commission Asset Search A Search for the Assests for the Victims of the Holocaust Mr. Paul Volcker, Chairman of the Independent Committee of Eminent Persons issued a press release on November 19, 1996 announcing “…its Mandate and Instructions for the investigative audits of dormant accounts, financial instruments, and other assets deposited in Swiss banks by the victims of Nazi persecution”. Price Waterhouse was one of the three firms chosen and I was one of the three US partners selected to address the Mandate. I was also able to again work with a good friend, Hans... Read More...

Sunrider International, Los Angeles, CA

Retail Tax Evasion A ‘yen’ for Asian Antiques Counsel in one of the largest income tax cases in the U.S. involving a privately held international company was required to refute allegations including money laundering and customs violations made by the U.S. government. The investigation focused upon the company’s business activities in Asia. The husband and wife who owned the company were indicted in federal court for conspiracy, tax evasion and smuggling, where it was alleged that they had underreported their 1987-1990 income by more than $125 million. It is essential that the forensic accountant in his financial fact-gathering role identify... Read More...

Marriott Hotels, Washington, DC

Construction Bankruptcy Fraud Judgment but no money to pay This was a particularly detailed accounting investigation where Counsel was looking to establish evidence of fraud by the contractor who was attempting to avoid a $3 million judgment in a fraudulent conveyance action. Marriott terminated the contractor and filed a lawsuit and soon thereafter the typical reaction occurred: The contractor began to funnel new business to an otherwise dormant sister corporation. These projects had contract values of some $81 million and their transfer ultimately lead to the contractor’s insolvent position. By analyzing the timing of the relevant transactions and comparing those... Read More...

IBM, Poughkeepsie, New York

Manufacturing Bid-Rigging, Management Fraud Roger was Too Busy to Chat Hi-tech products can have a relatively short shelf life, which requires procedures including environmental to properly dismantle parts that are used, discontinued or deemed to be surplus. Counsel’s client had chosen through the bid process to contract with various vendors to obtain this service with their agreement requiring the vendors to share their sale proceeds from recycled parts and to not sell parts scheduled for scrap. However, field investigators had found and confirmed the movement of scrap in the gray market and our mandate was to determine if any person... Read More...

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

Securities 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... Read More...

Government of Romania vs. former President Nicolai Ceausescu

Government Political Corruption, Asset Search A Journey Inside the the Padded Walls Investigative findings for this case are in the public forum as the result of a television documentary. This case reinforced my belief in the importance of the human element in fraud investigations, irrespective of the culture. Your first arrival to meet the client is always special, and here on April 5, 1990, Rod Stamler and I were greeted at Bucharest’s Otopeni airport by the military, whisked around armed security and taken directly to the Ministry of Justice in Bucharest, via a government vehicle, a black Dacia, otherwise aka... Read More...

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. 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. 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...

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...