Peter Sabourin - 600 pound con man on the run

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Burnaby49
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Peter Sabourin - 600 pound con man on the run

Postby Burnaby49 » Mon Apr 27, 2015 7:39 am

We reviewed a Supreme Court of Canada decision a week or so ago so let's do another one today. This one;

http://canlii.ca/t/gh6lr

It relates indirectly to this guy. A 600 pound scammer, current whereabouts unknown.

Image


The title to this discussion might be misleading. Can you picture that guy actually running? The picture comes from this article;

http://www.cbc.ca/news/canada/toronto/s ... -1.1368947

Peter had a dream, to con people who were trying to avoid tax by sending their money to offshore tax havens; an area about which it turned out he knew nothing.

The story is laid out in this March 2009 decision of the Ontario Securities Commission;

https://www.osc.gov.on.ca/documents/en/ ... ourinp.pdf

1. The Sabourin companies, including Sabourin and Sun Canada Inc. and Camdeton, were purportedly used to create investments which were sold to investors as off-shore investment vehicles. The investments were allegedly a form of prime bank investment scheme, and were variously described as a “Letter of Credit Rental Program”, a “Currency Exchange Program” or a “Currency Trading Contract Program”.

2. The investments shared several characteristics. Through promotional materials, representations and agreements and other documents signed by and presented to them, investors were promised that:

(a) they would earn a return ranging from 15% to 22% per annum on the amount invested;

(b) the investment would be “locked in” and could not be withdrawn for a fixed period; and

(c) the principal and return on investment were “guaranteed”.

3. Investors’ funds were purportedly used or secured in some way by international banks. In respect of the investments, investors established and became the “agent” of their off-shore trust, typically in the British Virgin
Islands.

[50] Staff relies on the following description of a prime bank investment scheme from Tri-West
at para. 58:

Prime bank instrument frauds claim to involve the purchase and sale of fully negotiable bank instruments. These bank instruments are purported to be the debt obligations of the top, or prime, world banks. In fact, neither these instruments, nor the markets on which they allegedly trade, exist. According to the warning circulars and bulletins, each fraud will generally display several of the following common characteristics:

• The program guarantees unrealistically high rates of return within a short period of time.
• The program claims to be risk free.
• Investors are told that they are among the privileged few whose money will be pooled to invest in secret programs reserved for top financiers.
• Investors are asked to sign secrecy or confidentiality agreements.
• Investors are told that regulators and banks will deny the existence of these programs.
• The description of the program is complex and difficult to understand.
• The description of the program refers to official sounding financial terms
and instruments, such as prime bank notes, prime bank guarantees, standby letters of credit, bills of exchange, certificates of deposit or zero coupon books. Some of these instruments really do exist in the financial markets, but most do not.
• The program claims to be endorsed by the [International Chamber of Commerce], the [International Monetary Fund], the World Bank or some other well known international organization.
• Some part of the program is transacted through a country regarded as a secrecy haven, which, it is claimed, enables investors to avoid paying taxes on their returns.
• Investors are given financial incentives for bringing in new investors.
• The money from one group of investors is used to show a profit to a subsequent group. Eventually, the promoters pocket the proceeds and disappear, leaving the pyramid to collapse.
• Investors are solicited through the Internet.

The lawyers for some of the accused argued that the term "Prime Bank" should not be used because it is a meaningless phrase;

[51] Counsel for Smith, Lloyd and Delahaye submitted that we should be cautious about finding that the investment schemes here were a form of prime bank investment scheme because that is not a defined term and does not relate to a specific offence under the Act. Therefore it is not possible to identify the elements of the offence. Counsel submitted that Staff’s use of the term relates to its factual allegations rather than defining a specific breach of the Act.

[53] We agree that the investment schemes in this case display many of the indicia of a prime bank investment scheme referred to above. The investors were promised very high guaranteed returns with no or little risk. There was no clear statement as to the specific nature or terms of the investments, complex legal-sounding terms were used, investors were required to enter into a confidentiality agreement, and the investments purported to involve international banks in other countries such as Luxembourg and trusts in the British Virgin Islands. In our view, however, nothing turns on whether the investment schemes offered and sold are characterized as prime bank investment schemes.

[72] Fourteen witnesses were called by Staff to testify about the investments they made with Sabourin and Sun and Camdeton during the relevant time period of August 2001 to December 2006. These investors came from different backgrounds and circumstances and included a number of unsophisticated, older or vulnerable persons. The investors testified about the circumstances and events surrounding their investments, what they were told by the Respondents, the manner in which the investments were sold to them, and the expectations they had in making them. Many of the investors invested their life savings or very large portions of their financial assets in the investment schemes. Almost all of the investors testified that they were attracted to the Sabourin and Sun and Camdeton investments because of the promise of a guaranteed high rate of return, in most cases approximating 17.5% per year, with no or very limited risks. They did not have extensive knowledge about how off-shore investing worked, but had the expectation, based on the representations made to them, that their funds would grow without any active involvement on their part as a result of the efforts of others. Some investors received back a relatively small amount of their original investments, but almost all of the investors lost a large portion of the funds they initially invested, and some lost their entire investment. One investor testified that he had invested $330,000 (US) in addition to the approximate $530,000 (US) that his two brothers invested at the same time. In total, the family lost over $860,000 (US). Some of the investors told very heart-wrenching stories about the impact of the financial losses on them.

And concluded;

[369] We find that the investors who testified, and many other investors, were offered and sold investments with Sabourin and Sun and Camdeton between August 2001 and December 2006. Investors were led to believe, based on the representations made to them, that they would profit from substantial returns on their investments with little or no risk and with no active involvement on their part. Many of them were encouraged to mortgage their homes, draw down their lines of credit or collapse their RRSPs in order to invest. An amount of up to $33.9 million was invested in the investment schemes and investors lost most of their money. We note that the investment schemes had attributes similar to the characteristics of a prime bank investment scheme as described in para. 50. The investment schemes were a sham and the representations made to investors were lies. Sections 25 and 53 of the Act are intended to protect the public from such illegitimate schemes.

[370] We find that Sabourin concocted and orchestrated the investment schemes and sold sham investments, directly and through Irwin, Haver, Smith, Lloyd, Delahaye and others. He was the directing and controlling mind of Sabourin and Sun and Camdeton and directed everything, including where funds went, how investments were processed and what information and payments were sent to investors. He solicited and sold investments he knew to be a sham, lied to and misled investors, and misappropriated investors’ funds. Based on the evidence, it appears that at least $3.3 million (Canadian) and $200,000 (US) was received by Sabourin or paid to third parties for his benefit. We also find that the Corporate Respondents contravened sections 25 and 53 of the Act and acted in a manner contrary to the public interest and harmful to the integrity of Ontario capital markets.


Sabourin disappeared as soon as the decision came out and has not been seen since. He phoned home once after his mother died to see if there was anything left for him in her will (no). Lawsuits ensued, money all gone, and the overall results you get from all scams when they eventually collapse.

So what does this have to do with our Supreme Court of Canada case Carey v. Laiken? Laiken is a 72-year-old former photographer and filmmaker who lost about $800,000 in the scam and became proactive about getting it back. From the newspaper article;

One of Sabourin's first marks, and the first investor to cry foul, was (Judith) Laiken, the artist and filmmaker from Montreal who had recently come into a minor fortune from a divorce settlement and an inheritance, but was worried about the tax consequences ("I was so innocent that I didn't realize … those two sources are not taxable," she said.)

Sabourin set up Laiken with an ostensible offshore stock-trading account at a brokerage he claimed was based in the British Virgin Islands. But Laiken gradually noticed her account was in a shambles. An order to sell 1,000 shares in Yahoo would be posted to the account as a buy. Inconsistencies multiplied in her account statements, totalling hundreds of thousands of dollars. When she called Sabourin to sort it out, he couldn't be reached.

Eventually, Laiken decided to fly down to the brokerage's offices in the British Virgin Islands to fix the mess.

"I was expecting to see a dark room full of servers and traders sitting at an array of desks with computers, like the floor of the stock exchange," she recalled, "and that I would get to the bottom of it."

Instead, there was a "ramshackle" three-storey building, and no sign of Sabourin's brokerage.

The building housed a company called Commonwealth Trust Limited. Founded in the mid-1990s by Toronto millionaire Tom Ward, CTL, as it was known, was a so-called registering agent, a company that set up and then administered thousands of British Virgin Island corporations on behalf of foreigners. Many of those companies were mere shells; CTL was their mailbox.

Sabourin had become one CTL's "master clients," a sort of wholesaling intermediary who would round up customers in Canada looking to incorporate companies in the British Virgin Islands. In all, the leaked tax-haven files show he used CTL to form 240 corporations there for his clients as part of his sham offshore investment scheme. But apart from those paper identities, he had no presence in the Caribbean locale.

When Laiken couldn't find the man to whom she had handed all her savings, she grew incensed. She stood outside CTL's offices and "screamed as loud as I could" and threatened to call the government's fraud investigators. "I could hardly talk, I was so hoarse," she recollected.

Finally, Tom Ward emerged, spoke to her and got in touch with Sabourin, who was back in Canada. The self-declared offshore guru emailed Laiken that afternoon. "Don't be shouting fraud," he pleaded. "We obviously started out with some major hiccups but we can get past it — no question."
Six months later, Laiken sued. As the Supreme Court says;

[7] Ms. Laiken retained Mr. Sabourin and his group of companies to conduct off-shore security trades on her behalf. To this end, she transferred approximately $885,000 to various bank accounts he and his businesses held. Ultimately, these funds were lost and, unsurprisingly, the business relationship between Ms. Laiken and Mr. Sabourin soured. In 2000, he sued her for $364,000, alleging a deficit in her margin account. She counterclaimed for over $800,000, alleging that he had defrauded her. Mr. Carey represented Mr. Sabourin and his business entities in these proceedings.


While these lawsuits were in progress Ms. Laiken obtained an ex parte Mareva injunction from the Ontario Superior Court of Justice freezing the assets of the defendants to her counterclaim, including Mr. Sabourin. The injunction prohibited Mr. Sabourin and any person with knowledge of the order from “disposing of, or otherwise dealing with” any of Mr. Sabourin’s assets. A few months after the initial order had been made Sabourin sent Carey, the lawyer retained by Sabourin to fight the lawsuit, a cheque for $500,000. Carey deposited the cheque in his trust account.

In October and November 2006 Carey transferred a total of $440,000 back to Mr. Sabourin even though he was aware of the injunction. In early in 2007 Sabourin terminated his retainer with Carey, went out of business, and vanished.

Laiken eventually won her lawsuit, a judgment of $1,200,000 in damages and interest in 2007. Her problem, obviously enough, was collecting it. So she went after Carey for disbursing the funds while the injunction was in effect.

Carey had a hearing for contempt for breaching the injunction. The motions judge found beyond a reasonable doubt that the Mareva order was clear and that Mr. Carey “knowingly and deliberately breached” it by transferring the funds from his trust account to Mr. Sabourin. However the judge ordered the parties to appear before her for another hearing where she stated she would take into account any further evidence and testimony the parties submitted. In that later hearing she changed her mind and decided that Carey had not deliberately and wilfully breached the injunction so she set her decision aside.

Lailken appealed and the Ontario Court of Appeal unanimously allowed the appeal and restored the initial contempt finding. The court gave two reasons. The first was pretty obvious. The judge should not have held a second hearing after coming to her decision. While Carey had evidence he wanted to put before the court he could have done so at the first hearing. Once the contempt decision was made the trial was over.

The second reason was more to point with the actual offense. The Court of Appeal accepted that Mr. Carey did not desire or knowingly choose to disobey the order but found that it was unnecessary to establish this in order to find him liable for civil contempt. Mr. Carey knew of a clear court order and he committed an act that violated it. This was sufficient to constitute civil contempt.

So Carey appealed to the Supreme Court of Canada and they accepted the case. The Supremes focused on this finding of the motions judge;

Based on Mr. Carey’s oral evidence, because of the protracted history between Mr. Carey’s clients and the plaintiff and the way that Mr. Carey viewed the merits of the plaintiffs claim, the unusual form of the May 4, 2006 Mareva Order, and the variations discussed and agreed upon between counsel, which were not set out in one document by formal amendment, I have a reasonable doubt as to whether the terms of the May 4, 2006 Mareva Order were completely clear to Mr. Carey, and I am not satisfied beyond a reasonable doubt that Mr. Carey’s interpretation of the May 4, 2006 Mareva Order was deliberately and willfully blind. [Emphasis added; 2012 ONSC 7252, at para. 36.]


Carey had argued that since he was a lawyer he was super-duper special and, to convict him of contempt, the court had to find he met a higher standard of guilt than they would with a common everyday prole like me.

[39] The appellant submits, however, that in situations in which the alleged contemnor cannot “purge” the contempt, is a lawyer or is a third party to the order, the intent to interfere with the administration of justice must be proved. I understand this to mean that “the intention to disobey, in the sense of desiring or knowingly choosing to disobey the order” must be established: TG Industries, at para. 17. This is sometimes also referred to as “contumacious” intent.

[40] The appellant submits that the mental element of civil contempt must address at least one of the two goals of civil contempt: securing compliance with court orders or protecting the integrity of the administration of justice. Finding a party in contempt where he or she cannot purge (either because the act that constituted the contempt cannot be undone or because a conflicting legal duty prevents compliance with the order) furthers neither of these goals absent some heightened mental element for contempt. Only if the person is shown to have had the intent to interfere with the administration of justice would one of these purposes — protecting the integrity of the administration of justice — be served.


The Supremes didn't buy it;

[41] I cannot accept this position. There is no principled reason to depart from the established elements of civil contempt in situations in which compliance has become impossible for either of the reasons referred to by the appellant. Where, as here, the person’s own actions contrary to the terms of a court order make future compliance impossible, I fail to see the logic or justice of requiring proof of some higher degree of fault in order to establish contempt. The appellant’s submission also overlooks the point that one of the purposes of the contempt power is to deter violations of court orders, thereby encouraging respect for the administration of justice. It undermines that purpose to treat with special charity people whose acts in violation of an order make subsequent compliance impossible. It seems to me that the existing discretion not to enter a contempt finding and the defence of impossibility of compliance provide better answers than a heightened degree of fault where a party is unable to purge his or her contempt for the reasons the appellant outlines: Jackson at para. 14; Sussex Group Ltd. v. Fangeat, 42 C.P.C. (5th) 274, at para. 56 (Ont. S.C.J.).

[42] The appellant correctly notes that civil contempt is quasi-criminal in nature, which he says justifies a higher fault element where contempt cannot be purged. But civil contempt is always quasi-criminal, so this provides no justification for carving out a distinct mental element for particular types of civil contempt cases. As I have already discussed, requiring contumacious intent would open the door to mistakes of law providing a defence to an allegation of civil contempt. It could also permit an alleged contemnor to rely on a misinterpretation of a clear order to avoid a contempt finding, which would significantly undermine the authority of court orders.

[43] Further, adopting the appellant’s proposal would in effect make the required mental element dependent on the nature of the order alleged to have been breached. Those who breach a prohibitory order would benefit from this heightened mental element disproportionately, due to subsequent impossibility of compliance, as compared to those who breach a mandatory order, with which the alleged contemnor will be able to subsequently comply absent a conflicting legal duty. I see no principled basis for creating this distinction.

[44] The appellant also submits that lawyers should benefit from a heightened fault requirement, but I do not agree. As the Court of Appeal recognized, reliance on legal advice does not shield a party from a finding of contempt: para. 61, citing Re Tyre Manufacturers’ Agreement, [1966] 2 All E.R. 849 (R.P.C.), at p. 862; Canada Metal Co. v. C.B.C. (No. 2) (1974), 1974 CanLII 835 (ON SC), 48 D.L.R. (3d) 641, at p. 661, aff’d (1975), 1975 CanLII 544 (ON CA), 65 D.L.R. (3d) 231 (Ont. C.A.). Still less should the law permit lawyers to escape a finding of contempt because they have, in effect, relied on their own legal advice.


Carey's final arguments seemed, at least to me, to be acts of desperation;

[48] Mr. Carey submits that he was not in contempt, making two main points. He submits first that the payment of funds from his trust account to Mr. Sabourin was not a “transfer” within the meaning of the order, either because beneficial ownership of the funds did not change or because it amounted to a permissible return of an overpayment of legal fees that informal variations to the order permitted. Second, he also says that his conduct complied with his solicitor-client obligations and that such compliance cannot be considered to have been in breach of the Mareva injunction. The existence of Mr. Sabourin’s funds in his trust account attracted solicitor-client privilege and, as such, Mr. Carey was bound not to disclose that the funds were in his account. But, he submits, leaving the funds where they were and maintaining the privilege would have sheltered them from execution. He maintains that his only option that was consistent with both his professional obligations to his client and to the court was to return the funds to Mr. Sabourin as he did. The privileged nature of the funds precluded him from seeking advice about the proper course of action from the court.


The court's answer was pretty blunt;

[49] Respectfully, neither of these points withstands careful scrutiny.


The Supremes also said it was inappropriate for the motions judge to have held the second hearing and reverse her original decision;

[67] Although the motions judge was concerned that refusing to consider the new evidence would lead to a miscarriage of justice, I agree that neither Rule 60.11 nor the case law permitted her to revisit her earlier finding in the circumstances of this case. Rule 60.11(8) allows a judge, on motion, to “discharge, set aside, vary or give directions in respect of an order under subrule (5) or (6) and . . . grant such other relief and make such other order as is just”. Relying on the Court of Appeal’s comments in its stay decision, the motions judge thought that there was no need to “reopen” Ms. Laiken’s motion for contempt, as it was not yet completed: 2012 ONSC 7252, at para. 8. I agree with the Court of Appeal that the motions judge misinterpreted this aspect of the stay decision. The Court of Appeal correctly held that in these circumstances, the motions judge erred in exercising her discretion to permit Mr. Carey to relitigate the initial contempt finding and erred in setting that finding aside.


So the Supreme Court dismissed Carey's appeal leaving him in contempt where, as far as I can tell, he should have been all along.
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