Really bad investment advice

By Jason Kirby - Tuesday, September 13, 2011 at 10:35 AM - 5 Comments

These days, Richard Kelertas, a financial analyst at Dundee Securities, isn’t saying much about Sino-Forest, the beleaguered Chinese forestry company at the centre of a fraud investigation by regulators. “I’m not speaking with the press or anyone, unfortunately,” he says. That is unfortunate, because a lot of investors who followed Kelertas’s advice to buy Sino-Forest’s shares—either before the company got into trouble, when he insisted Sino-Forest was a “class act in timberland management in China,” or after, when he called the fraud allegations a “pile of crap”—no doubt have a few choice words for him.

The Sino-Forest debacle has the potential to be the biggest stock market scandal to hit Canada since the Bre-X gold-mining fraud in the mid-1990s. Until June, Sino-Forest was the most valuable forestry company on the Toronto Stock Exchange, with a market capitalization of $6 billion. Then Muddy Waters Research, a U.S. investment firm, issued a damning report that claimed Sino-Forest “massively exaggerated its assets” and is nothing more than a Ponzi scheme. Muddy Waters said it was short selling Sino-Forest, or betting that the company’s share price would plunge. It did. By the time the Ontario Securities Commission suspended trading in the stock on Aug. 26 and raised its own concerns about fraud, Sino-Forest had shed three-quarters of its value.

At this point none of the allegations have been proven. The OSC’s accusations of fraud at the company could ultimately prove unfounded. This still may turn out not to be “Tree-X.” Even so, investors would be right to wonder why a company with the potential to completely collapse on the basis of a single critical report was regarded so highly by analysts in the first place. Kelertas wasn’t alone in his effusive praise of the company in recent years. Of the 10 analysts covering Sino-Forest before the Muddy Waters report hit the street, nine rated the stock a “buy” or “outperform,” while just one considered it a “hold,” according to Reuters.

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A cop car towed and a granny robbed

By Emma Teitel - Tuesday, July 26, 2011 at 11:00 AM - 0 Comments

Prince Edward Island: A 45-year-old French Village farmer has been charged with obstructing an officer, uttering threats, assault with a weapon and mischief under $5,000. RCMP detained the farmer after he towed the local sheriff’s car off his property with a tractor. The sheriff was there to seize the farmer’s property; he maintains the warrant was not lawful.

Nova Scotia: A Halifax man has been charged with five criminal offences including breaking and entering, larceny and possession of stolen goods. The 39-year-old had been on the run for a year when Halifax police dogs tracked his scent to Country Club Road. He was carrying two white bags—alleged spoils from a recent robbery.

Ontario: A 46-year-old Toronto caregiver has been charged with 12 counts of fraud for stealing $100,000 from the elderly woman she was hired to look after. Police say the caregiver filled out cheques in her own name, then had the 87-year-old woman sign them. The caregiver was arrested when the victim’s family noticed large sums of money missing from her bank account.

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Credit card tricks

By Chris Sorensen - Thursday, July 7, 2011 at 10:25 AM - 2 Comments

Photograph by Jessica Darmanin

Credit card fraud is big business in Canada. Last year, crooks racked up nearly $366-million worth of charges on lost, stolen or otherwise compromised cards, targeting nearly half a million customers, according to figures from the Canadian Bankers Association. That explains why the industry has been pushing the adoption of more secure microchip cards that require users to slide their plastic into a terminal and enter a PIN, similar to the way debit cards work. But a word of caution: just because you have a new chip card in your wallet doesn’t mean you’re safe.

While the industry says it has already seen instances of fraud drop since the new cards were first introduced two years ago, the expensive process of moving cardholders and merchants to the new technology has also created new opportunities for crooks—including some scams that can make it appear as though it’s the cardholder that is at fault, possibly leaving them on the hook for losses.

The problem stems from the fact that chip cards are still equipped with a magnetic stripe. That’s so cardholders can pull out their plastic at stores that may not have the latest equipment, or use them in the United States, which so far has balked at the cost of adopting the technology. Like regular credit cards, the stripes can be “skimmed” by thieves using special equipment and a compromised terminal. The new twist is that if crooks also manage to observe the cardholder entering their PIN—either by watching over their shoulder or by setting up a hidden camera—it may be possible for them to use the forged cards either in bank machines without chip and PIN technology, or on machines designed to fall back on verifying magnetic strips (to accommodate foreign visitors without chip cards).

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Signing away your savings

By Risha Gotlieb - Friday, March 25, 2011 at 6:00 AM - 8 Comments

Skip Nall/GETTY IMAGES

At 85 and with failing eyesight, Donna (not her real name) was relieved when her daughter returned to Toronto to assist her. Eventually, she added her daughter’s name to her bank accounts to facilitate bill payments. A year and a half later, Donna’s eldest son, who works overseas, hired Jayne-Ann Steele, a long-term care specialist, to surrogate some of his sister’s duties. “One day Donna asked me to read her bank statements aloud,” says Steele. “She was shocked when I read out the huge sums of money being withdrawn like clockwork every month—to the tune of over $200,000″ in the span of 18 months. When I saw her daughter’s name beside hers, I instinctively knew who was taking the money.” Today Donna no longer speaks to her daughter. She must rely on her other three children to subsidize her retirement expenses. “These families never recover from the betrayal,” says Steele.

Joint bank accounts are increasingly being used as a vehicle to defraud Canadian seniors. Although the banking industry recognizes the problem, most banks do little to curtail it, say experts. Toronto lawyer Jan Goddard, an estate and elder law specialist, says banks are making it dangerously easy for their senior clients to add others to their accounts. In fact, sometimes the bank staff “steers” them into this arrangement, she says, because they recognize they need help with the simplest of banking tasks. (Raising the question: are seniors giving informed consent if they can’t even decipher a bank statement?) It’s a process that can take mere minutes, ruin lives, and yet seniors may be encouraged to do it without the benefit of legal advice.

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What not to hide in your wallet

By Patricia Treble - Thursday, March 17, 2011 at 3:25 PM - 0 Comments

British Columbia: Among Canadians, those in the West Coast province are the most sympathetic toward the poor, according to a new poll for the Salvation Army. There, only 17 per cent believe that all the poor need in order to improve their lives is “to pull themselves up by their own bootstraps.” In contrast, 36 per cent of their Prairie neighbours feel that way. And the disparity widens dramatically when comparing those who are “jaded” and believe lower-income residents have “lower moral values.” Only five per cent of those in B.C. fall into that category, compared to 21 per cent of Albertans.

Alberta: When it comes to buying a house, 39 per cent of Albertans are willing to plunk down extra money to get a brand-new home, compared to a national average of 22 per cent. Seventy per cent of prospective homebuyers in the province are in the market for a place that doesn’t need any work.

Saskatchewan: Premier Brad Wall is the most popular premier in Canada, with a 63 per cent approval rating. Kathy Dunderdale, Newfoundland and Labrador’s new premier, finished second with 55 per cent. Meanwhile, the bottom spot was snagged by Quebec’s Jean Charest, who is backed by a measly 13 per cent.

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It just didn't add up

By Jen Cutts - Thursday, February 24, 2011 at 9:31 AM - 2 Comments

Oli Scarff/Getty Images

A former British MP is the fourth politician in less than three months to be convicted for claiming bogus expenses in a scandal that’s trying Britons’ patience with their parliamentarians. Jim Devine, 57, was found guilty of two counts of false accounting. A London court ruled on Feb. 10 that he’d forged receipts for over $13,000 in printing and cleaning costs he’d never incurred.

In an interview with Channel 4 earlier this month, Devine denied any wrongdoing. He said he’d simply been “moving money from communications to the staffing budget”—a move that, he claimed at his trial, another MP had told him, with a “nod and a wink,” was acceptable. Devine also tried to deflect blame by accusing his former office manager of the duplicity—the same woman to whom a tribunal awarded $55,000 last October after deciding he had harassed her out of a job. Despite Devine’s efforts, prosecutor Peter Wright was able to show he had committed “fraud on the public purse.” He’s now facing up to seven years in prison. Former MPs Eric Illsley and David Chaytor are serving jail time for similar convictions, while lawmaker John Taylor is awaiting sentencing.

A bit old for bumper cars, aren't you?

By macleans.ca - Thursday, November 18, 2010 at 1:00 PM - 0 Comments

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New Brunswick: A drunk high school student was chased down and arrested after allegedly stealing a CPR kit from a police car that was parked at the RCMP headquarters in Moncton. The 19-year-old, already under an order not to drink, was charged with stealing as well as breaching an undertaking to the court.

Ontario: A driver flipped his truck, which was carrying 18,000 kg of tomatoes, on a ramp linking two major Toronto-area highways. It took hours to remove the produce from the pavement and the truck, ruining rush hour for commuters. The driver was charged with careless driving.

Manitoba: A Winnipeg man was caught at a Royal Canadian Legion allegedly pretending to be the commander of the local RCMP detachment in East St. Paul. A search of his home reportedly turned up a police uniform. The RCMP says he has never been associated with the force. He’s facing charges for impersonating a peace officer.

Alberta: On a routine patrol of a Calgary mall in the early morning of Nov. 2, police came across what they described as a makeshift “demolition derby” using stolen vehicles. Three men were allegedly racing around the mall parking lot, smashing into each others’ vehicles. Police say that one suspect almost ran down one of the officers, who was chasing the two other youths who’d abandoned their vehicles. All three were arrested.

British Columbia: A woman is facing what authorities call the first immigration-related bigamy charge. She allegedly married two men in the Greater Vancouver Area even though she was already married to a third man. Then she reportedly tried to sponsor those two foreign nationals for permanent residency in Canada. She has been charged with two counts of bigamy and two more counts of knowingly misrepresenting or withholding material facts under the Immigration and Refugee Protection Act.

Conrad Black’s partial victory

By Chris Sorensen - Friday, October 29, 2010 at 4:26 PM - 0 Comments

Conrad Black has scored another partial victory before the U.S. criminal justice system, but it’s not clear whether it will be enough to prevent him from going back to jail.

A U.S. appeals court on Friday reversed two counts of fraud against the former chairman of Hollinger International Inc., who was once accused of masterminding a “corporate kleptocracy” that defrauded shareholders of millions. But the court also upheld Black’s more serious obstruction of justice charge, which stemmed from security camera footage that caught him removing 13 boxes of documents from his Toronto offices while under investigation. “No reasonable jury could have acquitted Black of obstruction,” wrote Judge Richard Posner of the 7th U.S. Circuit Court of Appeals in his ruling.

As well, the court upheld a single count of fraud relating to a $600,000 payment to Black and his co-defendants as part of deal struck by Hollinger to sell newspapers to two companies in 2007. Continue…

The ideal crime?

By Chris Sorensen - Thursday, October 14, 2010 at 10:20 AM - 0 Comments

John Lund/Getty Images/ Rick Wilking/Reuters

Several years ago, the Bank of Montreal first noticed what it described as “irregularities” in some mortgages sold in Alberta. After conducting an internal investigation, it quietly launched a lawsuit last year that alleged a massive mortgage fraud scheme involving hundreds of people, ranging from lawyers to mortgage brokers and four of the bank’s own employees—even a Calgary MP. It also hired a forensic accounting firm to try to trace the funds. BMO claims it advanced a total of about $70 million in mortgage funds to the scheme’s architects, with its losses estimated at $30 million.

Those who work in Canada’s mortgage lending industry described the case, which only came to light earlier this year, as unusual—not because mortgage fraud is rare in Canada (police say it’s not), but because of the size and sophistication of the operation, which involved as many as 14 different interconnected groups.

BMO’s decision to file a lawsuit (in a bid to recoup its money) is also seen as an oddity, with some suggesting that banks and other lending institutions are reluctant to talk about what is believed to be a relatively easy—and lucrative—crime to commit. “If you’re a bank with 1,200 branches, they would probably say that by talking about it, they’re going to educate people on how to pull off a fraud,” says Gerald Soloway, the chief executive of Home Capital Group, which sells mortgages in British Columbia, Alberta, Ontario and Nova Scotia. “I happen to feel that it is a big problem. And I, for one, would like to see more resources devoted to trying to stamp it out.”

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Magic spells and flying fence posts

By macleans.ca - Thursday, September 30, 2010 at 12:20 PM - 0 Comments

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Nova Scotia: Wildlife officials seized a white-tailed deer allegedly kept as a pet on Big Tancook Island. It is illegal to own wildlife, enforcement officer Terry Beck stated. “It’s not Bambi, I can tell you that.” The deer was sedated, then moved by helicopter to the mainland. Wildlife officials are talking with prosecutors about possible charges.
Ontario: A man in Brampton has been charged with pretending to practise witchcraft at his home. Peel Regional Police claim that he’d promised to solve customers’ problems for money. It is illegal to say you can magically solve problems for money. The 44-year-old is also charged with fraud.

Manitoba: Three men were arrested after allegedly committing a string of offences that culminated with throwing a fence post from a moving Grand Am at a truck on a highway. Police quickly found the suspects’ car in a ditch. Officers also accuse the trio of burning a storage facility and damaging mailboxes. While all three have been charged with mischief under $5,000, two of the accused are allegedly connected to a fire of 50 hay bales near Morden in southern Manitoba.

Alberta: A reckless stunt involving a car in the Calgary suburb of McKenzie Lake ended with a 15-year-old in hospital with serious head injuries. The boy was perched on the trunk of a car doing less than 30 km/h when the vehicle “turned a corner and this young lad slipped off the back of the car thus hitting his head,” says Const. Jim Lebedeff. The 16-year-old behind the wheel is charged with careless driving.
British Columbia: Police in West Vancouver didn’t have to go far to make arrests recently when they nabbed two alleged thieves on a building site. The construction zone was beside police headquarters. According to Capt. Jag Johal, two men were pilfering copper fixtures on a quiet Sunday afternoon. The pair has also been charged with carrying weapons, including a baton.

'Couples' fake it for money

By Kate Lunau - Thursday, August 12, 2010 at 1:40 PM - 0 Comments

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An optimist might think the uptick in marriages performed by Rev. Alex Brown of East Sussex, U.K.—who officiated at 13 ceremonies from 2001 to 2005, and a whopping 383 in the four years that followed—was a sign of love in the air. In fact, police say it was part of a massive immigration fraud. On July 29, the vicar and two other men were found guilty of organizing about 360 sham marriages from 2005 to 2009, part of a scheme that saw African nationals marrying Eastern Europeans in order to gain residency in Britain.

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Conrad Black: Let the vengeance begin

By Jason Kirby and Chris Sorensen - Monday, July 26, 2010 at 8:41 AM - 0 Comments

M. Spencer Green/AP

It has been a good summer for Conrad Black. He won a key victory at the U.S. Supreme Court that could help overturn his fraud convictions and, this week, managed to secure his release on bail from a Florida prison. For Black’s accusers, though, the mood is likely less jubilant. With several defamation lawsuits already filed, Black has been promising vengeance on those who played a role in his downfall—and his moment of retribution appears to be drawing closer.

Black still has a way to go before he can claim complete vindication, but experts say those who dismissed his flurry of litigation as long as he languished in jail might want to think again. “If you’re convicted of a crime, that makes it very difficult to win any defamation lawsuits,” says Peter Henning, a professor at Wayne State University Law School and a former attorney with the U.S. Securities and Exchange Commission. “If Black can get his convictions reversed that puts him in a much better position.”

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The Interview: Chris Alexander

By Kate Fillion - Tuesday, November 3, 2009 at 2:56 PM - 13 Comments

Q:Why, after six years in Afghanistan, did you leave in May?

A: My wife and I left because we had a child and the children of UN employees in Afghanistan have to live elsewhere. Had that rule not existed, we might have stayed, because we felt it was a very welcoming environment for babies. In Kabul, life for families is relatively safe.

Q: Just after we went to press, six U.N. staff were killed in Kabul. Do you still think it’s a relatively safe place for young families?

A: Of course Kabul is far from entirely safe from terrorist attack, even though millions of people do live there with their young families. This attack was a cold-blooded attempt to prevent the UN from doing its job: supporting a fair and legitimate outcome from the second round of voting. It is sickening to think some in the Taliban leadership believe this sort of attack–the murder of innocent Afghan and international civilians–will help their cause. Its shows how radical and extreme they have become–and how dangerous. Until the sanctuaries housing the groups that train for and stage such attacks, especially North Waziristan, become subject to effective and sustained military operations, these dreadful incidents involving suicide attackers will continue. Everyone in Afghanistan and Pakistan is a potential target. My heart goes out to the UN family in Afghanistan: in spite of everything, they are showing fortitude. But they will need the support of the whole world at this difficult time. Continue…

He once was lost but now he’s found

By Nicholas Köhler - Thursday, October 8, 2009 at 1:20 PM - 0 Comments

Not long ago, a mysterious organization calling itself simply “The Agency” began plastering wanted-style posters around the Honduran capital of Tegucigalpa, where Calgary businessman Gary Sorenson owns a palatial home and where he was thought to be hiding from Canadian authorities.

The posters invited tipsters to send information about Sorenson’s whereabouts to an email address; unsigned, they promised a $100,000 reward for information leading to his arrest. (In an email to the Calgary Herald, the Agency said it had been contracted to recover lost money, but would not say by whom.) Pictured alongside Sorenson was his wife, Thelma. Continue…

‘We trusted him’

By Martin Patriquin - Wednesday, July 29, 2009 at 10:45 AM - 0 Comments

UPDATE: After several weeks on the lam, disgraced financier Earl Jones was arrested and charged with four counts of fraud and four counts of theft yesterday. His lawyer, Jeffrey Boro, suggested more charges will be laid in the coming weeks. Jones, who is free on bail, is expected to plead not guilty to the charges. This week, Maclean’s looked into how Jones allegedly defrauded his trusted clients for $50 million.

Until he scurried off in the night to parts unknown earlier this month, Bertram Earl Jones was a pillar of Montreal’s English community, an affable and charming fellow to whom hundreds of people entrusted their financial well-being for decades, a peerless businessman and loving father who doted on his elderly clients almost as much as his two daughters.

His reputation had already soured considerably by the evening of July 7, when Jones slipped away without saying a word to those whose savings he allegedly stole. Apparently, he couldn’t leave fast enough: investigators found thousands of documents packed into seven suitcases ready at the door of his office. In the days following, as calls went unanswered and cheques continued to bounce, he became known as a mini-Madoff, WASP instead of Jewish, Montreal instead of Manhattan, who allegedly targeted the very community where he’d lived for over 40 years—friends, associates, his own flesh and blood—for upwards of $50 million, maybe more. Jones has since hired a criminal lawyer and has purportedly been in Canada most of the time since his disappearance. His legacy will the hundreds of lives he’s upended and the millions of dollars he allegedly stole. “He knew what he was doing for a long time,” says lawyer Neil Stein, who represents numerous Jones clients. Continue…

Champagne wishes

By Steve Maich - Thursday, July 2, 2009 at 9:20 AM - 119 Comments

The experts will tell you that most frauds start small—maybe a few hundred bucks pocketed here, a little accounting fudge there—and get gradually bigger over time as the thief warms to the task, and gains confidence. That’s the way it almost always goes.

But Paul Champagne was not your typical fraudster. For one thing, Champagne had no particular expertise in finance. He was a computer engineer, brought in to manage maintenance contracts at Canada’s Department of National Defence in 1992. He was a technical authority, who could tell the bureaucrats how to buy, operate and maintain their computer systems more efficiently, and to save the taxpayer money in the process. For most of his time at DND, he wasn’t even an employee, but an outside contractor. And, up until the day he was fired in 2003, most of his colleagues thought he was doing a great job. Even when he was fired, it was for exceeding his authority in approving contracts that were beyond his position. Continue…

Britain's unravelling

By Michael Petrou - Thursday, June 18, 2009 at 11:00 AM - 19 Comments

Given British Prime Minister Gordon Brown’s reportedly paralyzing fixation on the smallest details of running a government, it is perhaps fitting that he was brought to the brink of his political demise because of a bath plug. Well, that and a toothbrush holder, a box of matches, horse manure, a chocolate Santa, moat cleaning, and a duck house—not a duck blind, a place where hunters conceal themselves while shooting ducks, but a structure where ducks can shelter in case they’re cold. Or maybe wet.

These are among the things that British MPs have charged to taxpayers under rules that permit them to claim for expenses supposedly related to the performance of their parliamentary duties. And while sticking the taxpayer with the bill for an ice cube tray or a souvenir mug from the Tate Modern museum strikes most Britons struggling in the midst of a recession as outrageously miserly, many of the abuses were much costlier.

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Councillor ousted over faked email

By Nancy Macdonald - Thursday, June 11, 2009 at 12:20 PM - 2 Comments

Can B.C. politicians lie their way into office? Not anymore, says a new court ruling, which has turfed out 22-year veteran White Rock city councillor James Coleridge—the longest-serving member on council—for engaging in “deceit and lies” during last fall’s election campaign in the Metro Vancouver suburb.

Last October his wife wrote a widely circulated email using the false names “Allison and Tom Baker.” The email alleged that several candidates were running a secret, pro-development slate that would foist high-rises on bucolic White Rock. Rather than keep his mouth shut, Coleridge, who learned immediately of the fraud perpetrated by his wife, told reporters that the “Bakers” had raised a good point. When confronted with evidence the email was sent from his home, Coleridge first denied any knowledge, and claimed to have been the victim of identity theft. Then, in court, he said he was trying to protect his pregnant wife, Anna. He later testified that he’d partially authored the email.

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Just where are those billions for infrastructure going exactly?

By Philippe Gohier - Wednesday, April 8, 2009 at 7:06 PM - 2 Comments

I’ll admit it: DMA has been pretty hard on the ADQ. I’d apologize if I felt it was unwarranted but, alas, I don’t. That said, when props are due, they are awarded.

The ADQ had its first good idea in a long while yesterday when they called for an inquiry into the dodgier elements in Quebec’s construction industry. Interim leader Sylvie Roy, who was last seen championing an out-of-nowhere campaign against pedophiles, says the Charest government should look into the corruption allegations before it begins pouring $43 billion into the sector by way of infrastructure spending. And it’s a request that appears to be getting more reasonable by the day.

Let’s recap: Continue…

How busting Madoff cost the U.S. government billions

By Philippe Gohier - Monday, December 29, 2008 at 2:42 PM - 6 Comments

Over at the American Interest editorial blog, economist Peter Heller looks at where the money from Bernard Madoff’s $50-billion ponzi scheme might have gone:

First, one must assume that some of the capital simply went to support Mr. Madoff and his life style of an apartment in Manhattan, fancy houses in Montauk and Palm Beach, and if I recollect from the news, a house or apartment in Europe. I also seem to recall yachts with the name of “Bull,” as well as country club memberships in Palm Beach and the Hamptons. All of this does not come cheap, and one may assume that Mr. Madoff pocketed and spent, after tax, at least $25 million a year—or $35 million pretax– (my ignorance of this standard of living may mean that I have underestimated what such a life style costs by a factor of two or three even). But there is also significant overhead to the production of Ponzi income of this magnitude. Add three floors of rent in the so-called Lipstick building of Manhattan, as well as the overhead costs of the employees and other running costs of his legitimate securities transactions business (presumably including at least two well-paid sons and other relatives), and we can potentially account for another $40 million in expenses (again, my numbers are completely arbitrary). So this would imply that Madoff would have had to have annual inflows of capital to his operation of at least $75 million to cover these costs.

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