Episode #12: Recruiting Package? What Recruiting Package?

If you have been following this series, you’re hopefully beginning to get a better understanding of how CMT/FMT’s business relationship with the PEI Government first began in earnest in 2010. Garth Jenkins got the ball rolling after introducing his cousin Paul Jenkins to Paul Maines at Smitty’s restaurant in Charlottetown, near the end of July, 2010.

I’ve already written a lot about the corporate strategy to transition CMT to FMT and the RevTech/TargetCo fundraising launched to facilitate that process. But there were other things happening from late 2010 as well.

After FMT was incorporated as a 100%-owned subsidiary of CMT and Paul Jenkins became the sole director – as well as the local “face of the company” – he immediately began discussions with a number of key people in government about the FMT/Simplex business opportunity.

Not long into those discussions, Innovation PEI began a more formal process to explore the feasibility of establishing the Financial Transaction Platform that CMT/FMT could deliver, in conjunction with it’s technology partner Simplex, in PEI.

The plan was to work towards a formal agreement with the PEI Government culminating in a public launch announcing (1) the establishment of a Financial Transaction “Hub” in PEI; (2) an agreement with CMT/FMT; and hopefully, and (3) the successful recruiting of some gaming companies. That public launch almost happened in the Fall of 2012, and would have, if not for the fateful Securities Investigation.
As was explained in the last episode, Maines/FMT had successfully recruited Virgin Gaming, which prompted Wes Sheridan and the secret “E-gaming Working Group’ to declare a marriage between the two projects (e-gaming and financial Transactions Platform) and CMT/FMT was at the very center of that initiative. So let’s now take a look at what Judge Campbell had to say about these significant developments in 2010-11.

Judge Campbell on the Feasibility Study and Recruitment Package

What did Judge Campbell say about the PEI Government commitments and promises made to CMT/FMT in the Recruiting Package, and the many significant events that happened in the pre-MOU period? Events that featured prominently in CMT’s Statement of Claim? Here are three paragraphs from that section of the Claim:

Was there any documentary evidence before Judge Campbell to substantiate these claims? Or at least raise sufficient concern as to warrant a trial, where witnesses and evidence and full cross-examinations happen (remember, Campbell didn’t require Dowling to file an Affidavit or any documents in the CMT lawsuit, and Dowling wouldn’t allow cross-examination of his 2013 Securities Commission Affidavit)?

I used a two-sentence paragraph from Campbell’s ruling a couple of times already in this series, and I’m going to use it again, because it is such a pivotal paragraph that reveals how Judge Campbell somehow came to the conclusion that CMT/764 (FMT) was never involved in any way with the “so-called e-gaming project.” I want to now draw your attention to the second sentence in that key paragraph:

What else does Campbell say about those particular “statements in the amended statement of claim” ” that “referred to events during that time period” ? Nothing.

In fact Campbell ignores everything that happened before February, 2012, (when the PEI Government formally “ended” the e-gaming initiative). He obviously had to acknowledge that CMT/FMT made numerous statements and serious alleged claims about relevant events in the pre-MOU period in the Statement of Claim; however, by concluding CMT/FMT had nothing to do with anything relating to the e-gaming project, Campbell completely excuses himself from having to say anything more about those events in the critical pre-MOU period, and quickly moves on.

[Question: Could a lawyer please email me anonymously and tell me if I’m missing something here? Isn’t a Judge supposed to provide “reasons” for a conclusion that had the “kill-shot” effect of dismissing a major lawsuit? Especially when there is so much documentary evidence against drawing such a conclusion?]

The e-gaming initiative to locate gaming companies in PEI and establish FMT as the deliverer of a Financial Transaction Hub – with multiple applications only made possible with the establishment of a Financial Transaction Platform (e-gaming; the PEI Loyalty Card being developed by Tourism PEI; etc.) – did eventually lead to the MOU and seemed on track to being realized.

Yet, it’s as if Campbell thinks a MOU was somehow miraculously signed between the PEI Government and FMT “out of the blue” mid-summer of 2012, with no prior relationship between the PEI Government and CMT/FMT, and no relevant documentation produced and before him about that relationship that would say anything to the contrary.
What Campbell fails to mention in his Decision is that the PEI Government had already made a substantial and more foundational “commitment” to CMT/FMT about a year and a half prior to the much-discussed MOU in the Summer of 2012.

A Slight Digression: If you’ve been following my writings on e-gaming, you’ll recall that I filed an official complaint with the PEI Law Society against lawyer William Dow (Billy) earlier this year. Susan Robinson, the Secretary-Treasurer of the Law Society, responded by completely ignoring my complaint, treating it as if it was the very same complaint previously field by the former leader of the NDP, Michael Redmond.

Robinson played that card even though I explicitly and repeatedly asked her NOT to make the mistake of confusing the two separate complaints. You can read my letter and her response to see how completely my entire claim was ignored and never addressed. I expected as much, to be honest, even though it is, quite frankly, totally bizarre for a lawyer to have done such a thing. But I suspected there was just no way she was going to acknowledge that Billy Dow was already a lawyer on the e-gaming file when he took out his investment in RevTech, and that he knew exactly what he was doing with insider knowledge when he did so.

Like Susan Robinson at the PEI Law Society, and Steven Dowling at the PEI Securities Commission, Judge Campbell at the PEI Supreme Court made the same deliberate decision to completely ignore the pre-Mou period. He uses just one two-sentence paragraph in his 172 page report to completely dismiss everything and anything in the pre-MOU period with no explanation or evidence – just a mistaken claim that CMT/FMT had nothing to do with e-gaming.

Campbell refused to address those pre-MOU events that would have disproved all the false public claims made by Ghiz and Sheridan and many others who said they had never heard of Paul Maines, or denied having any knowledge CMT had anything to do with the PEI Government.

Campbell did this notwithstanding pages of supporting documentation (Exhibits) pertaining to the pre-MOU period that establish the evidentiary foundation for CMT’s entire Statement of Claim. The documents I’ve cited above were all BEFORE Judge Campbell.

The Truth?

If the PEI Government (a) pays a consultant $10,000 to undertake a “feasibility study” on establishing a Financial Transaction Platform and Gaming initiative through an agreement with a company like CMT/FMT; and then (b) “recruits” that company to establish a new business, making a number of “promises” and commitments spelled out in a formal “recruiting package;” and then that company (c) accepts those terms and conditions and takes dedicated and costly steps over a significant period of time to establish that business in PEI, as per the suggestions and recommendations of the PEI Government; and then (d) the PEI Government suddenly says: “go away, we don’t know you!”……well, I’m thinking there might be a potential legal breach of contract issue deserving at least a comment from the Judge adjudicating the case. That’s what CMT alleged happened in its Statement of Claim, and the documents show that’s exactly what happened.

Recruiting Package? What Recruiting Package? Oh…Now I remember!

Remember the fuss a few years ago when the PC Opposition tabled a document in the Legislative Assembly showing that the Ghiz government had provided “tax advice” to a company it was recruiting to PEI by suggesting it set up a “subsidiary” company to use as an offshore tax shelter to lessen the amount of Canadian taxes it would have to pay after setting up in PEI? This is from a CBC story about that:

A section on the logistics of establishing a business on P.E.I. included the following line. “Most companies set up subsidiary of the parent company and flow revenue and costs through an off-shore operation (i.e. US), limiting the tax implications in Canada.” Aylward said it is one of the most shocking documents he’s read in his time as an MLA. “To think that we have a branch of government that’s out there recruiting companies to come to Prince Edward Island to do business, but yet we’re giving them an idea of how to avoid paying corporate taxes here on P.E.I. by setting up a parent company offshore,” he said. “And it’s in black and white.”

Well, that company was CMT/FMT. The CBC article went on to report that the PEI Government’s official explanation for including this tax-avoidance strategy in the Recruiting Package was as follows:

Mary Moszynski, the acting director of communications for the province, said the brochure sent to CMT is one-of-a-kind, and the work of a former employee.…She said management did not review the document and would never have sanctioned that paragraph.

That’s what Ms. Moszynski was clearly told to say – the truth was something else entirely. ..and yes, as you’ll see, management did indeed review and sign off on the “one-of-a-kind” document.

The document was not a “brochure” sent it out to CMT/FMT at all – it was an 11 page “Recruiting Package” tailored specifically to FMT, spelling out what the PEI Government would offer CMT/FMT if it decided to establish a Financial Transaction Hub in PEI.

And it wasn’t a “former employee” of government who put together that Recruiting Package. It was a person Innovation PEI had contracted to undertake a feasibility study, Patrick Mason, described in the contract as “…a well respected person in the financial services sector.”
Mason was paid $10,000 for the “feasibility study” on CMT/Simplex establishing a Financial Transaction Platform in PEI. The plan was also to have FMT’s Financial Hub service new gaming companies, which the PEI Government was hoping Maines/FMT could recruit to PEI, one of which was already a secured client of CMT/Simplex which Maines had convinced move to PEI. This was key – as you’ll see in a minute – because the PEI Government had indicated that bringing that “first” gaming company would secure FMT/Simplex as the PEI Transaction Platform.
It was Paul Jenkins who first got the ball rolling with the feasibility study leading up to the Recruitment Package in discussions with some of his key government contacts, including Chris LeClair and Brad Mix. On January 31, 2011, Patrick Mason wrote to Philip Walsh informing him that:

That funding came through, thanks to Ghiz’s Chief-of-Staff, Chris LeClair, as is evident in the following email which Paul Jenkins sent to Patrick Mason on January 30, 2011:

After completing the “Business Development” side of this initiative, and putting Philip Walsh in touch with Patrick Mason, Maines moved on to other work to identify and recruit gaming companies, leaving Mason, Walsh and others with technical expertise do their work, sending the following email:

A contract with Patrick Mason was drawn up and signed on February 28, 2011, and was authorized by Brad Mix and then-CEO of Innovation PEI, Neil Stewart. A “Summary” for that contract stated:

That may be difficult to read, but it’s the first sentence which is really key:

“Innovation PEI is going to contract Pat Mason to undertake a feasibility study and market presentation on the establishment of a back office centre for the financial services / gaming sector.”

As Mason had earlier indicated in that January 31, 2011 email to Philip Walsh:

“I have been involved with the gaming file on PEI and can tell you that their [PEI Government’s] key priority at this time is to attract a gamer who will move processing, jobs and revenue ( via a taxation regime) to PEI. As such, the first gamer to “sign” will have a certain say in the requirements of the platform.”

Adding that:

Maines was able to “deliver” that company (Virgin Gaming) before the feasibility study was completed, notifying. CMT/Simplex were already in discussions with Virgin Gaming to come onto its platform as early as November, 2010 [Note that the email was cc’d to Paul Maines].

By March – before the Recruitment Package went out to CMT/FMT – Paul Jenkins had managed to connect Chris LeClair with Rob Segal from Virgin Gaming in a Conference Call Mtg to discuss Virgin moving to PEI.

That CMT/FMT was able to deliver on its commitment to bring Virgin Gaming to PEI was huge for the PEI Government, and significantly influenced the commitments and promises made in the Recruitment Package.

It was Patrick Mason who delivered the “Recruiting Package” to Paul Jenkins (CMT/FMT) when it was complete (not an former “rogue” employee delivering a brochure), which Jenkins then forwarded to Philip Walsh at Simplex on March 14, 2011:

Reviewing the Recruiting Package, it becomes clear that the PEI Government made a decision to formally “recruit” CMT/FMT to PEI to establish a Financial Platform, and made a number of significant promises in the recruitment package – all of which were outlined in CMT’s Statement of Claim.

By this time FMT had of course already been incorporated with Paul Jenkins as the sole director while funds were being raised (RevTech/TargetCo), but the recruiting package nonetheless reiterated the importance of having a local company, suggesting a 100%-owned subsidiary (which is exactly what CMT did).

Here’s a small part of what was in the recruitment package to give you a sense of what was offered to CMT/FMT:

Ironically – and sadly – one of the promises (clearly playing on the “we’re small, we’re beautiful” line) was that there would be no-red-tape and a bureaucracy-free “partnership” relationship with Government:

Yes, the PEI Government did indeed go “beyond our original agreement,” as promised, but unfortunately not to CMT/FMT’s benefit.
Special Request for Assistance:

I’m wondering if a few readers might be willing to take a minute to make sure there isn’t something wrong with the “search” feature on my computer. Here is a link to Campbell’s Ruling. – I couldn’t find one single occurrence of any of the following in the Ruling. I find this so unbelievable that I’m having a hard time accepting it’s true. I therefore feel compelled to rule out the possibility that my computer has a search “glitch” before making any definitive pronouncements about Judge Campbell negligently refusing to address major segments of CMT’s Statement of Claim, so do a search for the following and let me know if you find anything:

Patrick Mason – Feasibility Study – Recruitment Package

Judge Campbell never denied that a “recruiting package” was provided to CMT/FMT by the PEI Government – how could he, it was tabled in the House and the mainstream media covered it. He just totally ignored mentioning it in his decision.

The next episode will take a look at another part of the story Campbell really got wrong. Yes, it once again involves Brad Mix – the PEI Government employee who features so prominently at every turn in this entire story but produced no records for the lawsuit – NONE. Why?

Well, lawyer Jonathan Coady told the court that everything relevant had been produced by Brad Mix, but as a result of an Access to Information request and subsequent review by the Information and Privacy Commissioner, it was discovered a few months ago that Brad Mix had – as the PEI Government put it in it’s confession letter to the Information Commissioner – a “gap” in his records. As it turns out, that “gap” is ALL HIS RECORDS for exactly the 2-year period beginning when Mix first discussed FMT with Paul Jenkins in 2010 when he took the lead on recruiting CMT/FMT to PEI to establish a Financial Transaction Hub right up to and after the Securities Investigation.

The Information Commissioner has been investigating this matter since I first filed a review last January, 2019. That review has since been combined with four additional reviews also involving missing records of Brad Mix from another applicant .

The next episode is all about what Brad Mix was up to after Dowling instigated the Securities Investigation in September 2012, and of course, how Campbell misinterprets those events.

The Consequence?

None.

Preamble

This one’s MUCH shorter than the last!

+++++++++++++++++

Episode #11: Judge Campbell’s Unfortunate Confusion Over “Claimatrix”

In the last very long and complicated episode, it was explained how CMT was in the process of becoming “FMT” by acquiring a “shell company” (RevTech) to become listed on the stock exchange.

What’s important to understand with all this corporate stuff is that CMT had 100%-ownership in FMT, and was soon to move all its assets into FMT to transition from being a company registered in the United States to being a Canadian company residing in PEI with a Board of Directors that included local PEI residents.

This is what the PEI government had requested from CMT, it made good sense, and CMT was actively engaged in bringing it about as early as the fall of 2010.

I also want you to recall how Wes Sheridan stood in the Legislative Assembly and pronounced that CMT had absolutely no connection to Simplex, and Simplex was only doing business with the Mi’Kmaq confederacy, not the PEI Government.

Now recall that “Amended” deal with the PEI Government that Brad Mix told Philip Walsh (CEO of Simplex) that the PEI government had endorsed. That was a deal Wes Sheridan gave the go-ahead for to have the “Financial Transaction Hub” acquire additional assets (Sterci).

What Philip Walsh told Mix clarifies that it was CMT/FMT (not Simplex) that would be the “local company” for the entire project and that “Simplex and FMT have the right of first refusal for the disposal of Sterci’s 51% stake.” Why did he say this? Because he knew that FMT was CMT, and CMT had a major shareholder stake in Simplex.

Simplex and CMT may have been two separate corporate entities, but with respect to the plan to establish a financial transaction platform in PEI – although Simplex was a core technology partner with CMT, and essential for CMT to be able to deliver the financial transaction platform – the PEI Government deal was always with CMT/FMT (not Simplex), which is why the MOU was also signed with FMT (not Simplex).

So where does “Claimatrix” fit into the picture?

What Judge Campbell said about Claimatrix

I also mentioned in the last episode that Paul Maines would respond to inquiries by Paul Jenkins and others requesting company overviews or information describing the nature of the financial transactions “hub” that CMT/FMT would be delivering in PEI. The following closing paragraph in one of those “overview” documents mentions Claimatrix:

This was a document that Jeff Trainor had acquired.

The mention of “Claimatrix” by Campbell appears incidental to his main concern, Dowling’s sworn testimony about the investment Jeff Trainor made in CMT (Target-Co). Campbell’s one mention of Claimatrix in his 172 page ruling was in conjunction with this paragraph about Jeff Trainor:

Paragraph 486: “Dowling also described the contents of an email and attachments originally sent by Maines to Jeff Trainor which included the same investment information Hashmi had received from Maines. The information included a 2011 slide presentation referring to CMT as the company which “delivers” Claimatrix (reference to another tech company and its services) in the UK. Dowling’s affidavit does not state that Maines solicited the Trainors to invest. However, there is no denial an investment was made.

With all due respect to Judge Campbell, “Dowling’s Affidavit does indeed state that Maines solicited the Trainors to invest.” In paragraph 5(d) Dowling states:

“Upon transferring her investment account, Ms. Trainor informed Mr. Curran that, on the recommendation of Mr. MacEachern, she and her husband Jeff Trainor had, during 2011, made a $30,000 investment after having been solicited to do so by Mr. Maines.”

Judge Campbell obtained his information about “Claimatrix” from a paragraph in Dowling’s 2013 Securities Commission Affidavit, even copying the quotation marks around the word “delivers”:

However, it appears Campbell “misread” what Dowling said, at least to some degree. Dowling only said that CMT “delivers” Claimatrix in the UK, nothing about Claimatrix being a company in the UK. Campbell obviously didn’t review the actual 2010 slide presentation regarding, as Dowling put it: “Simplex and Claimatrix making several claims about their operations” – which was a document he had in front of him – or he would have known that Claimatrix was not a UK company.

Campbell likely wouldn’t have mentioned Claimatrix at all if it hadn’t been for the fact that the 2010 slide show on Claimatrix was one of the documents in the package sent to Jeff Trainor. Why would it be there? You’d think it would be worth at least scanning!

Campbell denies Dowling’s false testimony that Maines “solicited” Jeff Trainor, which he most certainly claimed (Episode #4); and that is immediately followed by an admission that he thinks Claimatrix is a company in the UK, revealing that Campbell knows absolutely nothing about a critically-important part of the story and case.

The Truth?

Claimatrix is a “collaborative claims platform” that can integrate with Simplex’s financial transaction platform to offer the following services to customers. Specifically, Claimatrix is able to:

• Automate in real-time the numerous types of claims normally communicated via letter, email, faxes and telephones;
• Produce enterprise wide counterparty payables/receivables exposures; and,
• Consolidate claims control across business entities and offer claims aggregation and net settlement opportunities.

Claimatrix is provided as a Secure Web-based SaaS service which requires no software installation and comes with data collection templates, process and working practices standards for manual and automated input.

Claimatrix was developed by a company in the UK, but has been 100%-owned by CMT/FMT since 2010. From the very outset, CMT and its ownership of Claimatrix has been a core value component with the Financial Services Platform “hub” project with the PEI government.

Part of the reason Claimatrix is so valuable was its global recognition as having ISITC Certification, European Best Practice Guidelines recognized and accepted worldwide:

“The claimatrix collaborative claims platform was recently presented to the ISITC Europe leadership team and was shown to conform to the Industry Standardization for Institution Trade Communications Committee (ISITC) Europe best practice guidelines for Claims management.” [ See: “Claimatrix conforms to ISITC Europe “Claims – best practice guidelines“].

Claimatrix was also noted as a major asset in the CMT/Target-Co fundraise in the plan to establish a local company (FMT) with a stock listing, and then have CMT transition into becoming FMT.

When Garth Jenkins first introduced Paul Maines to his cousin Paul Jenkins, and then Paul Jenkins introduced Paul Maines to numerous government people – including Wes Sheridan and the members of the secretive e-gaming committee. CMT/Simplex was then “recruited” to PEI to establish a local company to deliver the Financial Transaction Platform “Hub”,

Garth Jenkins was initially involved with setting up the investment and CMT corporate transition strategy. In an email with Raymond James (managing the “targetCo” investment plan to raise money for CMT) what the corporate “ownership” breakdown would look like after all the corporate transactions were all complete was presented:

What’s key here is the last sentence: “So at the close of the transaction TargetCo will own 48.5% of Simplex and 100% of Claimatrix.”

Remember, “Target-Co” intended to purchase “RevTech” (a stock-listed “shell company” with no other assets, although having a “listing” is incredibly valuable because it saves $1/2 million or so getting on to the stock market through the regular IPO process which I know nothing about other than it’s very expensive). Once that happened, “RevTech” would become FMT, and CMT would then become FMT (layman’s version).

If Judge Campbell had understood what Claimatrix really was, he would have also understood how CMT/FMT was the company behind the entire “Financial Transaction Hub” initiative, and that initiative most definitely included “e-gaming,” because Wes Sheridan and Chris LeClair’s main interest was to use that “hub” for e-gaming.

Wes understood e-gaming and the financial transactions platform initiatives to be essentially “one project.”  Read what Neil Stewart wrote to Brad Mix and Michael Mayne on June 3, 2011:

“Wes Sheridan is heading this way with the gaming…..based on my last discussion with him they are viewing gaming and financial services as one thing. Minister Sheridan had checked with me when he heard we were in discussion with Virgin Gaming.”

And that the two were essentially the same thing was also confirmed by the Auditor General:

Section 6.15: “In May 2011, the former Chief of Staff (LeClair) and these individuals presented the opportunity of marrying the two projects (E-gaming and the financial services platform) to the E-gaming working group. Simplex, CMT’s Technology Partner, was then engaged by local law firm to prepare a report on how the platform would work for E-gaming and the technical requirements it would need to operate.”

Yet Judge Campbell felt justified in proclaiming:

In just one paragraph – the one cited above (# 486) there are the following two significant errors: (1) He said Dowling didn’t swear that Maines solicited Trainor – he did; and (2) Claimatrix is a UK company – it isn’t.

If Campbell had understood what Claimatrix is as a CMT/FMT asset with a central place in the financial transaction platform initiative married to e-gaming, then he would not likely have drawn such a patently ridiculous conclusion that neither CMT nor 764 (FMT) had anything to do with the “…so-called e-gaming project.”

Campbell relied on Dowling’s Affidavit and references it frequently throughout his ruling. However, the Affidavit is chalked-full of hearsay; or worse still, false claims attributed to people he interviewed that had to be corrected in sworn Affidavits from those people.

Had Campbell simply read the Exhibits that accompanied Dowling’s Affidavit he would have seen the following in an official News Release from Europe:

Two MAJOR errors in one paragraph, actually, in a consecutive string of just 26 words (what’s highlighted in red above).

There are 686 paragraphs in Campbell’s ruling.

Do the math.

The Consequences?

None.

Episode #10: The Securities Commission “Agreement” with CMT and Paul Maines

Preamble

This is the final part of my three-part “mini-series” on the Securities Commission within my 25-part “Truth and No Consequences” series. The next episode will return to the initial format with shorter pieces on targeted parts of Judge Campbell’s decision.

It’s been an incredible education for me to put this last episode together. It involved having to learn about things like “shell companies and ” convertible debentures.” Stuff I have no background in – and to be honest – not much interest in either. But it was the only way to sort out “what’s what?” in order to understand”who’s who?” in this entire affair.

Learning about the actual investments and how they were structured with the different corporate entities in the transitioning of CMT to become a “local company” is necessary knowledge. That corporate transition process – including raising funds – was all to achieve a certain objective that intimately connected to the business plan CMT/FMT had with the PEI Government. Making sense out of all that also revealed who was (or was not) telling the truth when they publicly denied that they knew Paul Maines or CMT/FMT, or scoffed at the notion that either Maines or CMT had anything to do with the PEI Government.

Since those days, hundreds of PEI Supreme Court documents and official government records have come to light through Access to Information Requests which now expose a number of pretty serious lies and double-standards with the application of Securities laws that support the claim that CMT and Paul were indeed “targeted” for purposes that constitute “malfeasance”.

This episode is the final “plank”in the backstory laying the foundation needed to understand elements of Judge Campbell’s ruling that will be discussed in subsequent episodes. I see it as the “keel” – the longest plank in the boat – upon which everything else is attached and rests.

+++++++++++++++++++++++++++++++++++

Setting the Stage for the Settlement Agreement Signing

I mentioned in the last episode that CMT’s lawyer, Mary L. Biggar, had initiated a legal action after the Hearing against Paul Maines and CMT was cancelled. That prompted the PEI Securities Commission to cancel the second scheduled Hearing set for April 22, 2013.
The Superintendent, Katherine Tummons, noted that the reason for the Adjournment was the “Notice of Constitutional Question,” which Maines and CMT had filed with Hon. Janice Sherry, then Attorney General under Robert Ghiz:

Not long after that transpired, the PEI Securities Commission sent a draft “Settlement Agreement” offer with the absolute minimum fines and restrictions, giving CMT and Maines a clear way out of the quagmire in which they had been embroiled with the Securities Commission investigation.

The Settlement Agreement also effectively “excised” Dowling and the PEI Securities Commissioner from the much bigger story that was fast-emerging – a tale of insider designs, corporate sabotage and cover-up; the kinds of issues Van Der Laan and the PEI Securities Commission made abundantly clear they had absolutely no intention of entertaining.

I don’t have the particular document containing the comment that Mr. Van Der Laan made about his “disbelief” of Paul Maine’s sworn Affidavit testimony which he sent to Ms. Biggar; however, I do have a letter dated April 12, 2013 that Biggar sent to Van Der Laan in response, indicating it was government officials that he had refused to allow to be questioned who were the source of the information Maine’s swore :

Signing the Settlement Agreement was a “No Brainer”

I suspect Maines jumped at the chance to settle for three key reasons, and probably many more:

1. CMT and Maines were suffering severe losses that would continue and worsen as long as this dark cloud of suspicion and allegation was hanging over their heads with an active file at the Commission.

The totally-unreasonable blocks erected by the Securities Commission and Dowling denying due legal process; the denial of documents and “sealing” of documentary information and evidence; and the refusal to allow witness testimony from government officials or even cross-examination of Affidavits…all this made it clear there would be a long and costly battle ahead for Maines and CMT to have a full defence against a “cease-trade” order heard fairly at the Securities Commission.

On top of that, Maines and CMT received no cooperation (or even replies) from Wes Sheridan; Kevin Kiley; Gary Scales; Chris LeClair; Mike O’Brien; Cheryl Paynter; and others when they were sent formal requests by Biggar. Furthermore, the issues needing to be addressed were really not “securities” issues from CMT’s and Maine’s perspective.

2. CMT and Maines were presented an incredibly easy way out of a very big mess without having to “admit” any wrongdoing whatsoever. The “statement of facts” and “penalties” noted in agreement all had to do with either an issue of (a) “late filing” of a document with the PEI Securities Commission, which Jessop argued wasn’t necessary under the corporate set-up and national “exemption” granted to CMT for the Debenture Investments Program they set up; (b) an unsettled difference of legal opinion about whether CMT investments were “loans” or “securities,” and (c) an admission that a “prospectus” (apparently a very costly venture) which had not been required with a virtually identical investment (RevTech) was a “violation of the PEI Securities Act.”

Again, although Maines and CMT agreed to these conditions, Jessop made it very clear that it was purely a “business decision” by CMT’s Board of Directors so they could move past a very bad state of affairs for their company created by the investigation. As Robin Dolittle reported in her Globe and Mail article:

CMT’s litigation lawyer, Mary Biggar, said it was a “relatively minor infraction in the context.” Added lawyer Gary Mr. Jessop: “It was a business decision, made at the time, to settle it and move on.”

3. CMT and Maines immediately realized that the draft “Settlement Agreement” unbelievably did not contain a “waiver” preventing either Maines or CMT from initiating a civil litigation case in the PEI Supreme Court. I suspect Dowling would have known that Maines and CMT would not have waived such rights if they were asked, so he didn’t bother putting that in the agreement.

I imagine by May, 2013, Dowling et al. were becoming increasingly aware and concerned that CMT and Paul Maines were not going away, and when they realized they had come to do battle, and given all the alleged skullduggery that was afoot, I suspect they were anxious to cut ties with that litigious ship sailing out to sea: a vessel that already had a school of PEI government officials and agents in the dragnet, one of which was Dowling.

The more that Tummons (the Superintendent) and other staff at the PEI Securities Commission learned about the “big picture” lurking beneath and behind Dowling’s investigation, the more I’m sure they were looking for a way out of any involvement to mitigate backlash on, or damage to the Commission.

At any rate, the Settlement Agreement was the illusive “key” Maines and CMT needed to unlock the millstone hanging around their necks which had caused them such damage during the previous 8 months. Maines and CMT could finally get on with the PEI Supreme Court litigation, in which Dowling and his Securities Investigation against Maines and CMT play a big part.

It’s good to recall at this juncture that no one ever came forward with a complaint against Paul Maines or CMT alleging that investments were solicited except Dowling. No evidence substantiating such allegations were ever provided. Dowling’s Affidavit (the only evidence “relied on” by the Securities Commission) offered sworn testimony alleging solicitation by Maines without any direct knowledge, which Dowling claimed he received from several CMT/Target-Co investors. And those claims were completely refuted by those very same investors in Affidavits sworn solely for the purpose of correcting Dowling’s inaccurate claims about them.

All 36 investors were happy with their investments. Many are still investors, quite upset about what happened to CMT and Paul Maines. They were all fully-aware of what they were doing according to the documentation. They were mostly either sophisticated Island investors, or family and friends of sophisticated investors. The lengthy Subscription Agreement mapped out the exact nature of the investment and the risks involved in great detail, as well as confirmation of the reporting exception granted CMT to raise the money under authority of the National Instrument 45-106.

It’s also clear no investor made a claim against Maines or CMT, because Dowling wouldn’t have had to ask Jessop for a copy of the “Subscription Agreement” if any investors had complained – he’d have their copy. In the spirit of cooperation (no doubt hoping Dowling would reciprocate and finally tell him what was going on, and give him a chance to clear things up) he provided a copy as a ‘courtesy;’ however, stressing that the document was being shared voluntarily and on a strictly “confidential” basis:

How did Dowling respond to this gesture of goodwill and cooperation from a corporate lawyer and director of an international company (CMT)? A company that Dowling had so recklessly put under siege? He never responded to Jessop. To add insult to injury, Dowling filed the Securities Agreement in his Affidavit as an “Exhibit” for the whole world to see.

“No Admission of Wrongdoing” With CMT’s Investment

Maines may have been elated at the opportunity to get out from under the Security Commission’s thumb, but his lawyer, Mary L. Biggar made sure the Commissioner knew there would be no admission of having done anything wrong…just legal questions that remained unsettled, a couple of ‘concessions’ with reservations, and some fines/costs.

Accepting the offer was exclusively “for the purposes of settlement,” and her clients were only prepared to admit that the “loan” might fall within the broad definition of a “security” under the PEI Securities Act. In a letter dated April 12, 2013, Biggar wrote to Van Der Laan saying:

Earlier, in a response to a “production request” from the PEI Securities Commission dated March 21, 2013 (before the second scheduled-hearing was cancelled) Biggar forwarded documentation to Van Der Laan (cc’d to Dowling) making the same important distinction between “lenders” and “shareholders” in her letter:

Target-Co……RevTech……What the Heck?

You may recall that the Auditor General raised a concern about an “investment” that then-chief-of-staff to Ghiz, Chris LeClair, had made in “RevTech” in the summer of 2011. Robin Doolittle’s exposé on e-gaming, “Big Bet Small island: How PEI lost its online gambling gamble,” published in the Globe and Mail in early 2015, mentions LeClair’s investment. What he said is worth revisiting.

LeClair told Doolittle that he and his wife made the investment “…because we heard it [CMT] was a company that could be used for a variety of purposes, including financial services,” adding that: “It was a small sum of money that we invested into a debenture, perhaps mistakenly on our part, without a lot of due diligence. … However, in the event that any investment in any company ever posed a potential conflict of interest to me, we would have forfeited any potential benefit.“

The issue with LeClair isn’t just his “conflict of interest” when he made the investment, but also that he engaged in “insider trading.” LeClair was not only “involved” with the gaming file, he was leading that file with Wes Sheridan. When LeClair left government, he kept working on the file. By the Fall of 2012 when the Securities Commission investigation was launched by Dowling, LeClair had already secretly “presented” a new company (which Maines had heard about from Tracey Cutcliffe).

When the main players involved discovered Paul Maines was asking questions about “Newco” they clearly got spooked. It was then decided that Innovation PEI would need to extend the MOU as a sign of good faith with the heat on from Maines. In fact, they were “ready to go with NewCo” when the first 60-day MOU expired, and submitted their plan to Government the very same day. The email chains show they were clearly “waiting” for the MOU to expire, something that was explicitly stated in emails during the time the MOU was still in force.

As LeClair and Sheridan and others looked into the future: the initiative their secret initiative they were all ready to launch was suddenly never going to happen because the 30-day extension provided ample time to conclude the deal with FMT and sign the agreement, and there was no tangible or legitimate reason for Innovation PEI to stop the two-year process and say “no deal” at the 11th hour.

Enter the Securities Investigation initiated by Dowling about a week after the MOU extension was signed. The MOU was subsequently suspended. No Agreement was ever signed.

A lot more of this will be unpacked in future episodes. What is important to understand now is that the investments that Chris LeClair (and lawyer Billy Dow, etc.) made in RevTech were exactly the same kind of investments made by the 36 investors to CMT with Target-Co. RevTech was a “shell company” with no assets other than a stock market listing, so the plan was for CMT to acquire RevTech and use that shell to provide a stock market listing for FMT – the “local presence” for the CMT/Simplex financial transaction hub in PEI.

Why weren’t Chris LeClair and Billy Dow and all the other investors in RevTech investigated by Dowling? If it wasn’t really a “security” (share) but a “debenture” (loan) – as LeClair told Robin Doolittle, why were Maines and CMT dragged before the Commission in an investigation since those investments were exactly the same as those of RevTech investors?

To this day it is not known who invested in RevTech beyond a few people. The Auditor General mentioned RevTech in conjunction with LeClair and Dow’s investments, but there’s never been any annual reportings, or no one knows how much was lost in the venture.

LeClair – one of the people who Biggar wanted to call as a witness at the Securities Hearing – and Billy Dow, did exactly the same thing that the 36 other investors did with “Target-Co”: they invested in a venture by loaning money on the hope that the venture would prosper, so at some point down the road, those “debentures” could be “converted” into shares in the company and everyone would make a ton of money, having come in on the ground floor of a very promising venture at a very low share price.

All 36 Island investors happily invested their money in the “Target-Co” with full knowledge of the risks – which they had to read and acknowledge with their signature in pages of documentation. The vast majority were sophisticated investors, many of whom you’ll probably recognize as prominent PEI business people: see the following list of investors.

Again, why has the PEI Securities Commission never investigated RevTech? Why hasn’t Dow or LeClair or other investors who invested in CMT before RevTech started being called “Target-co”? Some would call it a double-standard, others would call it being “targeted” for very deliberate and unsavoury reasons.

I want to take a look at exactly what was in the Settlement Agreement a little later, as well as what Judge Campbell said about what was in the Agreement. But there’s a far more important “bigger-picture” story to tell first about how the PEI Supreme Court would be the only possible place the issues which Maines and CMT/FMT needed to have addressed could be addressed, and the “settlement agreement” was what made that possible, and this seems like a good place to do it.

The “Big Picture” Story Behind the Settlement Agreement

I’m now convinced there was indeed a very deliberate plan to sabotage Maines and CMT to make room for LeClair and Newco, or possibly other potential clients the PEI government were also in negotiations with at the time, in violation of the MOU (a future episode).

Wes Sheridan could have taken a few minutes to drop by the PEI Securities Commission Office to clear everything up – but he chose not to – and that says a lot about his (and other government agent’s) willingness to deliberately hurt Maines and CMT. This is a pretty serious accusation, so I want to provide the documentary evidence that has led me to draw that conclusion.

How might Sheridan have cleared up any misunderstanding with the Securities Commission’s investigation concerning the money that was being raised for CMT/FMT? He could have told the truth and confirmed what Jessop swore in his Affidavit was indeed true:

Take special note of the words “…for the purpose of having a Canadian entity resident in Prince Edward Island with local management.”

In the last episode I drew attention to how CMT/Simplex and especially Paul Maines had already been working with Innovation PEI to move things forward for nearly two years by the time the investigation was initiated by Dowling in mid-September, 2012. When that investigation commenced not a single person involve with the project, Paul Maines and CMT/FMT/Simplex, including PEI government officials such as Wes Sheridan, would cooperate or even reply to Maines, Jessop or Biggar to vouch for what CMT was doing with the plan to raise funds for a legitimate “government-endorsed” and recommended project. Why not? Why didn’t Sheridan tell the truth and go to bat for CMT/FMT and Paul Maines?

Wes Sheridan definitely could have made the problem disappear for Maines and CMT because what those “Target-co” CMT investors in PEI were doing is exactly what the PEI Government asked CMT/Simplex to do!
In a October 24, 2011 email from Philip Walsh to Brad Mix (copied to Wes Sheridan, Paul Jenkins, Chris LeClair and Neil Stewart) Walsh begins by saying how it was “great to connect on Friday” and went immediately into the need to move quickly to “executive this transaction”. Any such transaction would have been executed with FMT. Besides being Technology Partners with Simplex, CMT also owned 33% of Simplex at that time and had “veto” voting power on the Board.

Efforts to establish a financial transaction hub in PEI were already well underway on a number of fronts, including the RevTech/Target-co investments aiming to raise funds and establish a “local company” for the CMT/Simplex transaction hub, and the recruitment of “gaming companies” or other clients to PEI by CMT/FMT to support and build the transaction Hub .

Mix reiterated to Walsh that there would need to a “local company” presence. This was first mentioned in a “recruiting package” provided to FMT from Mix in early 2011. That’s another crucial part of the story we’ll get to in a future episode – but for now what’s important to know is that Campbell completely ignored entire sections of CMT/FMT’s Statement of Claim dealing with core issues in the “pre-Mou” period. One of those issues was the recruiting package that guaranteed “first mover advantage” and promised that CMT/Simplex “would thrive” if they came to PEI to establish a financial transaction hub. But as Mix spelled out in a his letter to Walsh concerning “next steps”:

“Locally-populated”, “the simpler the better” – that’s exactly what happened with CMT: the newly incorporated company was first called 764 then FMT. The RevTech/Target-Co investments were all raised to help CMT establish FMT in PEI, have FMT listed on the stock exchange, then have CMT’s assets moved into FMT. Dowling and Campbell were both well-informed of this entire strategy from various sources, including from Jessop’s 2013 Affidavit:

If Mix believed “simpler was better” you can’t get anything less complicated than what CMT did – “Paul Jenkins” became the sole director of FMT in the interim, start-up period, in advance of a permanent Board being established when the corporate transition process was complete.

Jenkins also became the “face of the company” so to speak. Paul Jenkin’s name appears on dozens of documents both to and from Wes Sheridan, Brad Mix, Chris LeClair and many other – everyone knew at the time that Jenkins represented FMT – wholly-owned by CMT, and they were working with Government to lay the groundwork for the transaction hub.

CMT and FMT have always effectively been one and the same in terms of ownership and control, although Campbell doesn’t see it that way in his ruling and treats them as completely separate corporate entities i.e., the MOU was with FMT, which Campbell says has absolutely nothing to do with CMT. Well, he may be technically correct, but who cares if he is? Both companies are named in the lawsuit.

What’s really important to understand is how FMT was part of the CMT/PEI plan to establish this new financial hub, but from the minute the securities investigation started against Maines and CMT – then extending into the future from the time the Settlement Agreement was signed til now – no one in the PEI government apparently knew Paul Maines or CMT.

Despite a long-term, heavily-involved relationship with CMT/FMT & Simplex, Wes Sheridan stood up in the Legislative Assembly on November 21, 2014 and presented Simplex as only having a relationship with the Mi’Kmaq Confederacy. In fact, the contract with Simplex identified “the PEI Government” as the “client. Sheridan also unbelievably denied that there was any connection between CMT and Simplex:

Robin Dolittle got the same line from him in early 2015:

“In a December interview with The Globe, the finance minister said he had no idea CMT and Simplex were connected. “I to this day do not know that Paul Maines and Philip Walsh had a business relationship. And he wasn’t part of any of our work,” Mr. Sheridan said.”

Sheridan resigned days after the Globe article was published.

I should also point out that the Ontario Securities Commission action was simply a reciprocal Order accepting PEI’s Order, and not a different investigation or matter.

It might be a good time to mention that part of the multi-pronged plan was for CMT/FMT to bring new gaming companies to PEI. Paul Jenkins noted in his Affidavit that Paul Maines had a lot of contacts on Bay Street to help do deals, find shell companies to acquire etc. Maines did in fact secure an agreement with Virgin Gaming to establish in PEI. You may remember that event – there was a big announcement from the PEI Government at the time.

Paul Jenkins, as the “face of FMT in PEI” and sole director had all the connections FMT needed with both business and government, so it was Jenkins who delivered the news to Mix that FMT had secured a tentative agreement from Virgin Gaming to set up in PEI. Jenkins made plans with Brad Mix to have the Virgin Gaming people meet with Ministers Wes Sheridan and Allen Campbell:

Look at the date. June 8, 2011. Notice that Wes Sheridan is being copied on the email from Brad Mix. Paul Maines isn’t mentioned here for good reason – he didn’t involve himself or participate in communications or meetings other than to set them up and put the right people around the table or on the file to keep things moving forward – his work as Business Development V-P was already over with Virgin Gaming, and Jenkins – the local guy with all the government connections – was taking it from there, so to speak.

Sheridan fully understood all of that and much more. Read what Paul Jenkins said in a Voluntary Statement he gave during that period of time between the first Cancelled Hearing and the second Scheduled hearing,

“So from there, we [Garth Jenkins and Paul Jenkins] invested in,the first of September and, you know, we continued on to work with, with Big Paul [Maines] and their group, Philip Walsh and, and Simplex, to introduce the Island opportunity. And that, that resulted in a whole bunch of different things. One was, you know, did, you know, is there, was there an opportunity to recruit businesses to P.E.I.using the P.E.I., kind of, advantages on, you know, innovation and such like that; labour force; et cetera. Another arm of it really was the CMT, the transactions piece, in creating a transaction hub. So I would introduce Big Paul and the group to, you know, various people that I knew inside the community and try to move that business forward. The same as you would move any business that you were invested in, at that point, forward.”

When asked how he came to be in Ottawa with “Big Paul” [Maines] registering FMT as a new company with him as the sole director, “little Paul” (that’s how he said people referred to him in the transcript) provided the following information:

“A. Well, to do business on Prince Edward Island, you need to be local. You need to have a local address. You need to have a local flavour. That’s just the way this community works. So, you know, they – you know, we would invest in, it needed a local address of which I used my address. And since I was the only local person there, that’s how, I was subsequently placed on the Board of Directors, I guess.”

“I guess?” I would think that’s something an experienced businessman wouldn’t have to guess about.

Now here’s what Walsh proposed to the PEI Government on October 24, 2011: Note the reference to FMT (FMT was by this time understood by all the players to be the “local company,” and CMT would effectively become FMT once that corporate transition process was complete, so FMT rather than CMT is used in the correspondence):

What Judge Campbell doesn’t seem to fully appreciate is that at all material times, CMT had 100% ownership and control of FMT, and 764/FMT (the very same incorporated company) was part of the plan to establish a PEI-based, Canadian-registered and “stock exchange-listed” company in PEI.

Thirty-six (36) people wanted in on the ground-floor action of the “hub” project and spin-offs trusting that if things went as expected and their debentures (loans, e.g., unsecured investment) were eventually “converted” into Shares in FMT, they would likely make a killing.

The evidence shows that Maines was never personally involved with this endeavor, other than providing some background information on CMT and Simplex and the workings of the financial transactions platform services they offered together, including other potential ways it could be used once established (e.g., “loyalty Card”), activities falling within the scope of his capacity as CMT’s V-P of Business Development.

No investor lost a cent investing in CMT. All were offered their money back with interest (interest wasn’t required in the Settlement Agreement). Many decided to remain investors to this day.

On the other hand, all of the Investors [there is only evidence in Court Records and other government documents of Billy Dow, Chris LeClair, Paul Jenkins and some of the staff at Lawton’s pharmacy (Jenkins owns Lawton’s) bought debentures in RevTech] and they all lost 100% of their money.

I was having a hard time sorting out the connection between “RevTech” and “Target-Co” until I read in the Debenture Subscription Agreement that CMT had submitted a “letter of intent” to buy RevTech – the shell company that CMT was going to acquire to then be able to “list” on the Stock Exchange, and then have CMT fold into FMT.

The plan would likely see CMT takeover RevTech by giving them some percentage of CMT shares. That plan fell through once the Securities Investigation commenced, and all those RevTech investors (it wasn’t managed through CMT/Jessop, but by Jenkins and/or others locally who were adept in such undertakings.

The “Modified” Plan Proposed by Walsh and Adopted by PEI

That letter to Philip Walsh at Simplex indicated that the PEI Government was supportive of the proposal that Walsh had presented. An opportunity came up for the purchase of “Sterci” (you don’t need to know details) which would greatly increase the value of the entire transaction hub endeavour, creating a “win-win” for both PEI and CMT/Simplex.

Without getting bogged down in details, Walsh was proposing that the PEI Government would become a temporary “Partner” to effect the purchase of Sterci, and then FMT would buy out the PEI government after 2 years. The deal was “time sensitive” and Simplex had “first right of refusal” on the deal, but that was expiring in a few months.

Summary Observations

If you were to read what Judge Campbell said about the Securities Commission without the background provided in this episode and the last three, you would have no real understanding of what transpired. You’d assume that some really serious “illegal” activity was identified, intercepted and halted by an astute and fair Securities Commission Order delivering swift justice. It was a parking ticket. It was a parking ticket that caused an international corporation to miss its flight leaving it stranded.

I underlined the conditions/restrictions to make the analysis short and sweet:

Paragraph 21: Dowling undertook an investigation of the activities of Maines, CMT, and 764. Dowling concluded that in excess of $700,000 had been raised for CMT from some 36 investors on Prince Edward Island in contravention of the Securities Act, R.S.P.E.I. 1988, Cap. S-3.1, and in contravention of National Instrument 45-106. Each of CMT, 764 and Maines, who at all material times was an officer of CMT, signed a Settlement Agreement acknowledging the facts surrounding the illegal distribution of securities and confirming they had each received full and proper independent legal advice prior to executing the Settlement Agreement. The Order issued by the Superintendent of Securities [1] imposed restrictions on CMT’s ability to market its securities for a period of five years and required CMT to [2] pay a fine (administrative penalty) in the sum of $10,000, together with a further sum of [3] $5000 to cover the costs of the investigation.

Here’s the bottom-line on each of those three “conditions and/or restrictions” in the Settlement Agreement:

[1] Imposed restrictions on CMT Maines and CMT: Do you honestly think Maines, Walsh or any other business person they talk to for the rest of their lives would ever, ever do business in PEI again? I’m thinking maybe Maines insisted that go in the agreement.

[2] Pay a fine (administrative penalty): That unsettled dispute about whether CMT – who never did business in PEI before and relied on well-established exemption criteria under federal law never got resolved and Jessop provided copious evidence that everything was above board and legal, and that his clients had done absolutely nothing wrong. Paying a fine rather than turning down a “get out of PEI Securities Commission Free” card was quite frankly a no-brainer.

[3] $5,000 to cover the costs of the investigation. Wrong. That low figure was no where near what that investigation cost PEI taxpayers. The BC Securities Commission Charges $300 bucks an hour, so do the math. And that’s another  shocking part of the hidden story for PEI taxpayers – I don’t know what the total costs might have been but likely a couple of hundred thousand at least. Dowling even subcontracted outside legal help from a colleague at Cox and Palmer, and that alone was $37,000, so $5,000 was definitely not going to cover the costs of the investigation. That information was obtained in an Access to Information Request

The next much, much shorter episode will talk a bit about one of CMT’s greatest assets and how Judge Campbell thought what they had 100%-owned was a completely different UK company.

++++++++++++

To receive an email notification of the next episode once it published with a link to it, type your email in the blank field near the top on the right-hand side, over the word “follow.”

Episode #9: The Securities Investigation Hearing that Never Happened!

Episode #8 set the stage for the Securities Investigation Hearing scheduled to take place against Paul Maines and CMT on March 7, 2013. This episode deals with the period of time from when the Hearing Notice was served (February 14th) to just after the scheduled Hearing on March 7, 2013.

This episode relies heavily on screen captures from documents or quotations because it is of such central importance in this entire story: it is long and not something you can skim through on a commercial break – so be forewarned.

A Brief Recap Leading up to Hearing Preparations by Maines & CMT

The last episode left off with CMT’s corporate lawyer, Gary Jessop, desperately trying to get information from Steven Dowling – the Department of Justice lawyer working for the PEI Securities Commission – after hearing rumours that Dowling had apparently launched an investigation against Maines and CMT.

Jessop was in Charlottetown at the time concluding negotiations with Innovation PEI on a Financial Transactions Platform “hub” initiative they’d been working on with the province for nearly two years. He tried a number of times to meet or speak with Dowling with no success.

As the days passed, although Dowling wouldn’t talk with either Jessop or Maines, it seemed he was talking to other people, and the word on the street was that Maines and CMT were the “target” of Dowling’s Securities Investigation because Maines had bilked some elderly woman with cancer out of her life savings – a claim that was later thoroughly confirmed to be fictitious by an ex-RCMP officer hired by CMT to investigate the claim. That such a thing never happened was also reported by Robin Doolittle in her 2015 Globe and Mail article on e-gaming.

As Jessop noted in an email letter to Billy Dow dated October 8th, although Dowling never communicated with him directly, he did receive one communication which put his mind at ease that Maines and CMT/FMT were not the targets, and it was all apparently just rumours run wild:

“I did receive a call from Dowling’s office {not Dowling) on Thursday October 18, 2012 and was told that he is aware that we are available to talk and that he had no need to talk with us and if there becomes a need to contact us he will. The only conclusion that I can glean from this is that Trinity Bay and Capital Markets are not the targets of the investigation.”

What Securities Investigator would initiate an investigation against an international company doing business with the PEI government and have “no need” to speak with the person(s)/companies being investigated, especially knowing the potential harm and financial losses the investigation would cause….especially when the person/company under investigation are both forthcoming and anxious to address any and all concerns to remedy the situation? No one. Ever. That is, before the inaugural PEI investigation launched by Dowling – still the only one listed on the PEI Securities Commission Website.

Although Jessop’s conclusion that Maines and CMT were not targets was completely reasonable, it was unfortunately also dead wrong. Maines continued to hear from others – including people Dowling had interviewed – that the investigation was indeed targeting him and CMT.

After nearly five months without getting any response from Dowling, Jessop finally wrote to the Deputy Minister of Justice at the time, Shauna Sullivan-Curley on January 21, 2013. The urgency of the situation coupled with the ongoing harm being caused to CMT and Maines is palpable throughout Jessop’s letter to the Deputy Minister. He was seeking urgent intervention because, as he put it, his clients “…have done nothing wrong”:

Sullivan-Curly informed Jessop 8 days later that she had forwarded his letter to Dowling!

Of course Jessop’s promise that his clients will defend themselves “against any claims made against them” was founded on the presumption that his clients wouldn’t be denied their constitutional rights to a fair hearing in accordance with the principles of natural justice. Again, a perfectly reasonable assumption, but unfortunately, Jessop was dead wrong about that as well.

Preparations for the Hearing

After receiving the Notice about a Securities Hearing to be held on March 7 – with all responding materials having to be filed by March 2 – Maines immediately drove to Toronto to work with Mary L. Biggar, a Securities Lawyer with a Baystreet firm retained by CMT – to put together a defence.

The best way to explain what happened during the short time since Biggar was hired to the Hearing date is to break things up chronologically and let the documents speak for themselves.

February 14, 2013

Paul Maines and CMT are served a “Notice of Preliminary Motion” by the PEI Securities Commission with a scheduled Hearing date of March 7, 2013. The Notice indicates that the Commission will be seeking a “Cease-Trade Order” against Paul Maines and CMT on grounds that it is in the “public interest.” The Notice states that the evidence relied upon will be as follows:

If they planned to attend, Maines and CMT were required to file all “responding materials” not later than 5 days before the date of the Hearing (March 2, 2013).
February 15, 2013

The PEI Department of Justice issues a Press Release to every news outlet in Atlantic Canada announcing the Hearing on March 7th, asking Islanders to essentially be on the look out for fraudulent activity by Paul Maines and to report anything they deem to be suspicious if such contact occurs to the PEI Securities Commission. Ouch!

February 25, 2013

Biggar sends emails to the Superintendent announcing that in addition to a number of sworn affidavits, Maines and CMT will be calling witnesses. A request to schedule a cross-examination of Dowling’s Affidavit was also submitted.

February 26, 2013

Maines and CMT received a “Procedural Direction” from the PEI Securities Commission on February 26 informing them that the recently announced “Public” hearing Notice announced throughout Atlantic Canada just days earlier, was now to be rendered “secret,” and all documents were to be “sealed” and completely kept from any public scrutiny:

No explanation was provided as to why something so widely announced as a public hearing suddenly became “prejudicial to the public interest” and totally secretive.

February 26, 2013

Biggar receives an email from the Superintendent’s Office with the following information:

Ms. Biggar:

This is in response to your emails dated February 25, 2013 requesting cross-examination and witness evidence in this matter. We have noted the position of staff in accordance with the email of Mr. Vanderlaan of today’s date. Your request for cross examination and witness evidence is denied.”

February 27, 2013

Not willing to accept that decision, Biggar pursued the matter on grounds that it was a violation of natural justice to deny the opportunity to address the issues that had precipitated the investigation – her clients had a right to defend themselves. She was subsequently informed on February 27 that she would have to make a Motion to allow cross-examination and witnesses:

February 28, 2013

Biggar also sent individual letters dated February 28 to each member of the secret “gaming committee” (Gary Scales; Wes Sheridan; Chris LeClair; Kevin Kiley; Don MacKenzie) requesting records materially relevant to the Hearing:

February 28, 2013

Biggar also wrote to Cheryl Paynter on February 28 concerning information that Maines and CMT were alleging about how Chris LeClair and Wes Sheridan were advancing a different proposal from different companies in violation of the MOU:

Biggar never received any reply from any member of the gaming committee, nor did she receive a reply from Cheryl Paynter. Knowing that she did not have the power to “compel” responses, documents or attendance of witnesses, Biggar was left to rely on the decision of the Superintendent.

A key part of the “malfeasance” claim against a number of the dependents in the current CMT/764 lawsuit is that an attempt was underway in August/September 2012 to “undermine” the MOU in place for CMT/FMT complete negotiations toward an agreement with the PEI government to establish a “financial transaction hub” in PEI.

Maines alleges that the Securities Commission investigation suspending the almost-completed negotiations between CMT/FMT and the province, damaging CMT/FMT’s Global reputation and hurting business, was totally groundless (and it is the case that neither the name of the person “complaining” nor any document signifying a “complaint” has ever been produced).

Maines further contends that the investigation was deliberately orchestrated and launched to sabotage the deal that was about to be signed between the PEI government and CMT/FMT. The plan was to confirm through witness testimony and cross examination what Maines and CMT were certain had happened. That never happened with the Securities Commission. What Campbell had to say about those claims will be dealt with in a future episode. But it was a key issue during the Securities Investigation as you’ll see from the documentary evidence below.
March 4, 2019

As the Hearing date fast-approached, Biggar was still awaiting a response to her Motion to find out about cross-examination and witnesses. Three days before the Hearing date she received a “Submission Regarding Respondent’s Motion,” from the PEI Securities Commission saying they had concluded there was no need for Maines or CMT to cross-examine Dowling or call witnesses:

March 5, 2013

Chris LeClair – Robert Ghiz’s former Chief of Staff, whose records were all destroyed by Ghiz – had continued to work on the gaming file with McInnes Cooper – and is incidentally the chief “architect” behind the “Newco” company attempting to undermine the CMT/FMT/Simplex MOU agreement with the province [to be explained in a future episode].

Chris LeClair had also invested in the CMT/FMT initiative (while still Chief-of-Staff) and was a friend of Mark Rodd’s, and was on contract as a consultant with Rodd’s. LeClair sent the following email to Mark Rodd on March 5, 2013:

Why would LeClair refer to the “Maine’s affair” as a “shitstorm” that he expected would do enormous damage to him and his family?

I suspect that when LeClair learned that Maines and CMT had miraculously managed to mount a legitimate legal defence to the Motion Hearing, and had submitted sworn affidavits from a number of investors “correcting” false claims made in Steven Dowling’s Affidavit, and that they were pushing to be allowed to cross-examine Dowling and possibly call him as a witness, he must have realized that the sordid truth of what was really going on behind the scenes was about to be exposed. No doubt he would have been correct if the Hearing had proceeded as scheduled, but that wasn’t in the cards. The very same day – LeClair may not have sent that email if he had known – the Hearing was “Adjourned.”
March 5, 2013

After spending a gruelling two weeks preparing all the legal materials: a responding motion, a “factum”, preparing numerous sworn Affidavits, etc – Maines and his lawyer received a Notice on March 5 informing him the Hearing had been cancelled.

March 6, 2013

Not having heard from Paynter, Biggar sent another plea for cooperation:

She never got a response.

March 8, 2013

In something of a surprise twist to the story (to me at least) Maines was asked by the Securities Lawyer if he would provide a “voluntary statement” which he agreed to do on the day after the Hearing that never happened.

That 137-page transcript is a fascinating read. In particular, what Paul Maines explained about Tracey Cutcliffe – who used to work for Innovation PEI, but was contracted by CMT to work with government on CMT’s behalf. That’s all he had to go on at the time – what he was told by Ms. Cutcliffe – but what he said then can now be substantiated with new government documents (a future episode) so I want to draw your attention to what he told that Securities Lawyer from St. John (Jake Van Der Laan):

Maines was only going on what Cutcliffe had told him at the time, and had no documentary evidence to back up his claims. The “day it was expiring” refers to the MOU.

Not only was Maines happy to answer all the lawyer’s questions, Biggar and Maines (throughout the transcript) continually emphasized that they would provide Jessop (he was in Charlottetown at the time) or anyone else requested immediately to answer any and all questions as expeditiously as possible. They were clearly anxious to clear up the mess.

Maines and CMT were convinced the entire investigation and hearing was a ploy to derail CMT to make room for a new business venture with new people and new companies. They just didn’t have any real details or documents at the time to prove it, and were looking forward to getting to the bottom of things at the Hearing.

Van der Laan took Maines through the list of all 36 investors one-by-one. From the responses and discussions contained in the transcript in response to that line of questioning, it is clear that Maines did not “solicit” any investments. In fact, he only knew or ever met a handful of those 36 people, and that was for other reasons, including the business relationship with the province having nothing to do with soliciting investments (Paul Jenkins; Mark Rodd; and Chris LeClair for example).

No investor ever complained about their investment, nor did any of the investors claim that Maines “solicited” the investments they made. In addition, the false claims made by Dowling in his Affidavit that several investors had indicated to him that Maines solicited an investment from them were “corrected” by sworn Affidavits submitted by Biggar to the Securities Commission for the Hearing that never happened (Jeff Trainor Episode #4; Mark Rodd Episode #5; and Paul Jenkins Episode # 6.

April 9, 2013

The Securities Commission issued a Notice of Hearing to take place on April 22, 2013. Having been denied the right to call witnesses and cross-examine Dowling, Maines and CMT decided to go another route.

April 17, 2013

After the second hearing was scheduled, Maines and CMT launched a legal action challenging the Commission’s refusal to allow cross-examination and witnesses. That action would have “broke the seal” of secrecy and made all the documents public again. Perhaps not surprisingly, the Commission immediately wanted to “settle” the matter. On April 17, 2013 the Securities Commission issued a Notice that the Hearing scheduled for April 22 was adjourned to be “scheduled for a future date”. No new Hearing date was ever set.

Summary Observations

What Judge Campbell had to say about how Dowling conducted the Securities Investigation of Paul Maines and CMT will be dealt with in future episodes. However, you will get a general sense of what to expect on this matter from the following paragraph in his ruling:

Paragraph 483: I note that, even though Jessop was anxious to meet with Dowling as early as possible during the investigation, there was no obligation on Dowling to meet with Jessop, or Maines, or any other particular individual at any point in time. How he conducted his investigation was for him to decide, within the limits of the law.

How did this securities matter finally get resolved? That critically-important part of the story will be explained in the next episode.

I receive a lot of private facebook messages and emails about the research I’m doing on  e-gaming and the CMT lawsuit, and I really appreciate all the comments and  feedback. A frequent question I get is: “Why are you still beating a dead horse?”

I’ve pondered how to respond to that question a lot, and I have given different answers to different people –  there are many reasons. Bottom line: I don’t believe the horse is dead.

Before proceeding any further with my 25-part investigative series “Truth and No Consequences,” I thought I’d publish an essay with some of the information I’ve given to various people.  I’ll discuss just two reasons here, which should be enough to explain why I feel compelled to keep punishing myself with this work.

Reason #1: E-gaming is not “Old News”

It’s easy to think of e-gaming as “old news”. Who doesn’t want it all to just go away? For example, CBC did a “yeah!….it’s over” news story on all platforms when Campbell issued his ruling dismissing the CMT law suit, but never reported when CMT filed a Notice of Appeal.

Islanders have been hearing about e-gaming for years now without getting much insight. It’s complicated and confusing, and Islanders are left not knowing who or what to believe so it’s easier to just forget about it – it’s “old news” – that point of view is valid and totally understandable.  But here’s the thing: although what is going on today does indeed involve the past, the events and issues of real interest are happening in “real time” as the entire e-gaming scandal starts to unravel. As it does, the revelations will be more than “newsworthy.”

When was the last time a PEI resident had to get four Court Orders to force a new PEI Minority Government to release public documents being withheld for no legitimate legal reason? Never. Those Orders went into effect a couple of weeks ago. Paul Maines submitted several Access Requests because he knew there were documents in government files (or should be – many were destroyed) that should have been produced in Court by government’s Counsel, Jonathan Coady, and were not.

If the full truth doesn’t come out about what happened, and for some reason CMT is denied the Appeal and goes away; then no one will understandably ever want to think or speak of e-gaming again outside of a lecture in a PEI history course at UPEI. Things will carry on as usual; and therein lies the problem.

The many wrongdoings with this ongoing scandal and coverup need to be fully understood, and there has to be some consequences for those wrongdoings, some repair of the damage done to those wronged, and some changes to ensure this kind of thing can never happen in PEI again.

I don’t have the full story yet, but I have most of it, and it is shocking from start to finish. Keep in mind I have 17 more episodes.  There’s also more Access documents that will be released soon.

It’s not that I’m obsessed with e-gaming and don’t have things I’d rather do with my time; but quite honestly, I don’t think there’s anyone else in a position to tell this story at the depth needed to expose the lies and reveal the truth – that is, as far as it can be revealed with well-organized facts from sworn documents or official government records – so I believe I have a moral obligation to keep doing this research and writing regardless of whether it ends up doing any good.

I put no importance on how many people read or like or share what I write, although I’d love to see as many Islanders as possible come to know what really happened . For that to eventually happen, it’s really only important that a core group of people with a legitimate interest (ethical lawyers, for example) or those with direct involvement (Islanders who chose to remain CMT Investors, for example) get to see a version of the facts in my investigative series other than the completely skewed one presented by Judge Campbell dismissing the case. 

Reason # 2: Allowing the Destruction of Gov’t Records Subverts Democracy

In Ontario, the Chief-of Staff destroyed records and was sentenced to six months in jail – it’s a criminal offence, not just in Ontario, in Canada.

In PEI, the Premier destroys all his Chief-of-Staff’s records in a “scorched earth” approach and Judge Campbell calls it “standard practice”. Well it’s not standard practice, it’s criminal.

To get to that conclusion Campbell had to totally ignore every law, regulation, and policy within government that clearly and consistently declares that no one can destroy government records “legally” but the Provincial Archivist.

Procedures demand that electronic records are copied in accordance with the Archives and Records Act and Treasury Board Directives before ordering ITSS to delete all electronic records, which Ghiz did. I know this well because I charged Ghiz with a criminal offence last year (“mischief to data”) and prepared an extensive 60 page legal brief, which Judge Nancy Orr unfortunately – but not surprisingly – refused to allow to proceed.

Ghiz said in cross-examination that he didn’t read what he signed when he directed ITSS to destroy all those records, and that he had no idea what happened at ITSS after the form was sent from his office. Such sworn statements from a Premier are ridiculous and not believable.

Ghiz ordered his  Chief-of-Staff’s email accounts and electronic files destroyed without first copying them having no idea what he was doing?  Well, that sworn testimony was good enough for Judge Campbell.  He referred to what Ghiz did as “Standard Practice,” cherry-picking a quotation from the Auditor General’s report and misinterpreting what she intended by the word “remove” (i.e., Access can be removed when accounts are “disabled,” but the emails and documents remain intact; whereas ordering an account to be “deleted” – what Ghiz did – before ensuring the records are first copied was most definitely illegal.

In contrast to Campbell’s opinion on destroying government records, read what Judge Lipson said in his ruling regarding how public officials destroying  government records subverts democracy, which was, in his mind, “the most serious aggravating factor in the case” leading to his 6-month jail sentence:

It can’t be allowed that such enmasse destruction of government records by a Premier is dismissed as insignificant and accepted as “standard practice” with government record-management and carries no consequences. As Lipson states so eloquently, the public have a right to expect the “court’s protection” to establish confidence that our government and judicial institutions are operating independently and democratically. That’s another reason I continue the work.

Like I said at the outset, there are many reasons to continue with this research, but my essay is already getting too long.  But know this: the e-gaming story is really only beginning to be told.  Things are unravelling.  More and more of the truth is coming out.  And the story is not pretty. Like a cancer diagnosis, it’s not easy or fun to hear, but if things are ever to change, Islanders need to step up and swallow that pill.

Regarding the seemingly perennial problem of secret deals and insider circles abusing power for personal gain in PEI, I’m convinced that if this e-gaming scandal is allowed to somehow just “go away,” then the hope that PEI will ever put an end to this embarrassing legacy of corruption and cover-up will die on the same hill as e-gaming.

Let’s be clear, there’s proven false sworn claims in affidavits; insider trading; countless lies in cross-examination transcripts; and an ongoing investigation into the missing e-gaming records of Brad Mix by the Information Commissioner; not to mention an imminent filing at the PEI Court of Appeal by CMT that will include all of the new “Court-Ordered” documents not made public before.

No, I am most definitely not beating a dead horse – the most explosive information is yet to come out. What was Government hiding? Who ordered the “code red”?

Trust me, we will find out soon!

Preamble

It’s not possible to understand Judge Campbell’s ruling, or the ongoing cover-up of this multi-pronged and continuing scandal, without knowing why Steven Dowling’s six-year old affidavit features so prominently in the Motion to Dismiss ruling by Judge Campbell. The answer lies in what happened with the Securities Investigation and Scheduled Hearing against Paul Maines and CMT that Dowling initiated and commandeered.

That story can’t be told in a few paragraphs. I’m therefore breaking the information up into three separate “parts” and episodes as follows:

• Part 1: The announcement of a Securities Hearing against Maines & CMT
• Part 2: Preparations by CMT for the Securities Hearing
• Part 3: The Settlement Agreement

++++++++++++++++++++++++++++++

Episode #8 (Part 1): Announcing a Securities Hearing against Maines & CMT

When Steven Dowling initiated the Securities Investigation against Paul Maines and CMT on September 18, 2012, Gary Jessop – CMT’s lawyer – happened to be in PEI, as was stated in Jessop’s sworn Affidavit:

“Philip Walsh and I were in Charlottetown for the purpose of negotiating the agreement between 7645686 and Innovation PEI contemplated by the MOU…”

You would expect that Dowling would be anxious to talk to Jessop. He wasn’t.

Despite numerous attempts by Jessop to meet or talk with Dowling to learn what basis there was for the allegations which had frozen the company’s activity, and why an investigation had been commenced, Dowling would not communicate with him. That refusal to communicate goes to CMT’s claim of malfeasance.

Campbell recognizes that one of the claims for malfeasance by CMT/764 was, as he puts it in paragraph 4, ” initiating a securities investigation against the plaintiffs for ulterior motives,” then further notes in paragraph 61 of his ruling that “He [Jessop] made various efforts to contact Dowling during the course of the securities investigation,” and then elsewhere states in paragraph 479:

Para 479: According to Jessop’s affidavit, on September 20, 2012, Jessop emailed Dowling stating he was counsel for “Capital Markets/Trinity Bay” and that he would like to meet with Dowling to get further information on what he understands might be a complaint against Trinity Bay. Dowling responded on September 21, 2012 indicating he was not aware of a complaint referencing Trinity Bay. Jessop then suggested the claim might reference FMT and asked Dowling to let him know if he would like to meet Jessop to discuss it. Dowling thanked him for his email and advised he would let him know. Jessop made other efforts to arrange a meeting with Dowling, but Dowling did not accept the invitations to meet until later in the process.

The Truth?

Dowling didn’t respond to Jessop on September 21, 2012 as Campbell states in para. 479; but his Administrative Assistant left a voicemail message, which Campbell would know from Jessop’s affidavit, In paragraph 30 Jessop says:

Dowling’s refusal to provide any information to Jessop or Maines over a four-month period (September 18 – January 18) finally prompted Jessop to go over Dowling’s head and write to the Department of Justice seeking information about the investigation. As Jessop states:

Ms. Curley responded eight days later on January 29 to inform Jessop that she had forwarded his letter to – of all people – Mr. Dowling.

Gary Jessop and Paul Maines were then kept completely in the dark for the next two weeks. On February 13, 2013, at roughly 4pm, Dowling’s Affidavit and Hearing notice were served on Paul Maines and CMT.
The very next morning, the senior communications officer with the Department of Justice issued the following Press Release to every news outlet in Atlantic Canada (Note: I highlighted the words and phrases I think we all would like to see associated with our name in a government press release):

After desperately trying to find out “who” was making “what” complaint about “what” issue – and being told absolute nothing – Maines and CMT were blind-sided with roughly ten working days to file a defense, with no information to go on other than what was in Dowling’s Affidavit.

The alternative was to accept whatever ruling the Securities Commission deemed proper, a point that was “double-emphasized” in the Hearing Notice:

With so little time and information to mount a proper defence against the allegations in his Affidavit, Dowling probably assumed that Maines and CMT would be forced to accept whatever decision the Commission ended-up making and just go away. I suspect he never imagined what was coming next – (the next episode) – but here’s a ‘spoiler alert’ – CMT and Paul Maines did not go away.

CMT’s lawyer noted in a subsequent court filing, that the preparation for that Securities Hearing cost was in excess of $150,000. A Bay Street law firm specializing in securities law was immediately retained, and the lawyer taking the case – Mary Biggar – filed a Response Motion on March 1, 2013.

Biggar also began reaching out for documents and information from a number of key players. including the entire membership of the notoriously “secret” “gaming committee” (Wes Sheridan; Gary Scales; Kevin Kiley; Don MacKenzie; and Mike O’Brien). Biggar was also seeking to “cross examine” Steven Dowling regarding the allegations in his Affidavit…..but now I’m getting ahead of myself. Stay tuned.

The Consequences?

None.

Episode #3: Was Chris LeClair an “Agent of Government”?

CMT made a number of “claims” involving Chris LeClair, who was Robert Ghiz’s Chief-of-Staff from June 12, 2007 until October 17, 2011.   In episode #2, I dealt with Chris LeClair’s investment in a CMT-related business venture and noted that Judge Campbell made no mention of that conflict of interest and insider trading issue with Chris LeClair in his decision.

The more important allegation in CMT’s Statement of Claim involving Chris LeClair had to do with his involvement in recruiting CMT/Simplex to PEI to establish a Financial Transaction Hub.   That information related directly to the promises made  to CMT/Simplex in the government’s “recruitment package” which sought to establish a financial transaction platform hub in PEI, giving CMT a number of preferential benefits, including “first mover advantage” on future business.

CMT provided Campbell all of this documented information in its Statement of Claim and supporting documents:

This happened in 2010, long before the MOU was negotiated and signed in 2012.

CMT’s allegations that LeClair was intimately involved with the recruitment of CMT and Simplex in the Fall of 2010 – along with  the documents submitted to substantiate that claim – including a copy of the recruiting package – were never mentioned or addressed in Campbell’s 172 page ruling.

I draw your attention to this because there appears to be a strategy on the part of the PEI government and judicial system to avoid putting anything “on the record” about CMT’s involvement with the PEI government prior to the period of the “Memorandum of Understanding” signed in the late summer and early fall of 2012.

The very same thing happened with my complaint to the PEI Law Society against Billy Dow (See: Disappointing Response….).  Despite my best efforts to direct attention to my complaint being exclusively tied to events in the Pre-MOU period – within which I was arguing the evidence was that Billy Dow was contracted as outside legal counsel on the e-gaming file in early 2010 – my actual evidence was totally ignored, and absolutely no mention or written reference was made to anything prior to the 2012 MOU agreement period of the e-gaming story in the Law Society ruling.

Two-thirds of the  “alleged claims” of CMT (which they’ll have to prove in court with hard evidence) relate to the “pre-MOU” period. However, like the PEI Law Society’s response to my Billy Dow complaint, it appears Judge Campbell decided to ignore those “pre-Mou” claims entirely, focusing exclusively on the MOU part of CMT’s claim against Chris LeClair – and others – in an attempt to make those issues disappear.

Campbell’s View on Whether LeClair was an “agent” of government

Campbell states in his decision (a number of times) that Chris LeClair left government on October 11, 2011 and concludes:

“Para 209: “…I also find LeClair, at times material to this action, not to have been an officer or agent of Government and not to have been performing any public function.”

He went even further, completely removing LeClair as a person relevant to the legal action, in paragraph 268:

268 I find LeClair was not a public officer, Government employee, or agent of the Government, and was not performing any public function, at any time material to this action. Therefore, he cannot be liable for misfeasance in public office.

On the face of it, this claim seems totally bizarre, since a “Chief-of-Staff” to the Premier is clearly an “agent of government,”  and LeClair was most definitely Chief-of-Staff when he recruited CMT/Simplex in 2010, which happened  “at times material to this action.”  Campbell’s statement only make sense if you accept his unstated view that Chris LeClair has nothing to do with this case until the MOU was negotiated in 2012, which is not true.

The Truth?

Chris LeClair was intimately involved with the e-gaming and financial transaction platform file from early 2010 as an “agent” of government (chief-of-staff to the Premier) yet his key role in the recruitment of CMT/Simplex to PEI in 2010 outlined in CMT’s claim was never once mentioned or addressed by Campbell in his decision.

The Consequences?

None.

Question #2: Did Chris LeClair commit “Insider Trading” with the egaming file?

+++++++++++++++++++++++++++++++++++++++++++++++

Background

After the Auditor General made public her report Special Assignment on E-gaming, the media jumped all over her finding that two senior government officials had an appearance of “conflict of interest” in the e-gaming file: Billy Dow and Chris LeClair.

Chris LeClair was Premier Ghiz’s Chief-of-Staff from June 12, 2007 until October 17, 2011.  Following his departure from Government, LeClair formed his own private consulting company (Policy Intel); however, he continued to work on e-gaming as a private consultant with McInnes Cooper law firm.

LeClair’s involvement as a private consultant on the e-gaming file in the summer and fall of 2012 is key to understanding the full e-gaming affair, but that’s a story for another day

Meanwhile back at the Premier’s office – just days after LeClair’s departure – Ghiz ordered that all of LeClair’s emails and documents be destroyed without first copying them for the Provincial Archives (as is the law). I’ve already noted Campbell’s view on that issue in my article: “Judge Campbell’s Flawed E-gaming Ruling Throws Auditor General under the Bus  Campbell considered Ghiz’s action “standard procedure.”

It wasn’t the AG’s mandate to do anything more than draw the government’s attention to the matter of perceived “conflicts of interest”.  It was government’s duty to take the next step. The AG’s concerns didn’t go unnoticed by the media or opposition, but numerous opposition MLAs calls for disciplinary action and further legal investigation at the time were ignored by government.

The AG was aware of Chris LeClair’s relationship with Paul Jenkins who is the “local business owner” – in the following quotation from the AG – who introduced LeClair to CMT’s Vice President of Business Development at the time (Paul Maines) and the CEO of Simplex (Philip Walsh):

It was obviously this “personal” involvement that concerned the AG and offered grounds to believe LeClair relied upon insider knowledge for an investment opportunity made by his wife.

Chris LeClair was actually involved in the egaming file at least a year earlier than “early 2011.”  Consider what Gary Scales said in his sworn affidavit concerning both Chris LeClair’s and Billy Dow’s involvement in egaming  (Note: Billy Dow is with Carr, Stevenson and MacKay law firm):

It was because of LeClair’s intimate involvement in the egaming/financial services platform project that the AG raised a concern about a potential “conflict of interest” and offered two paragraphs to explain the factual basis for that concern:

CMT’s Claim Against LeClair and LeClair’s Response

(a) From the First CMT Statement of Claim (2015-04-09)

101. Unbeknownst to CMT, Maines or Jessop, the wife of LeClair, Christine Daprat, also purchased securities of RevTech.

(b) From the First Government Defence: (2015-04-09)

Does not respond to para 101 and is silent on the issue

(c) From the Amended Statement of Claim

86. On or about June 5, 2011, unbeknownst to Maines or Walsh, on information provided by Jenkins, LeClair used his wife’s maiden name to invest in the public company that was being targeted by CMT.

(D) From the Government Defence: (2018-04-14)

24. As to the allegations made in paragraph 86, LeClair states and the fact is, that the wife of LeClair purchased a convertible debenture in Revolution Technologies Inc. for $1,500.00, the debenture was never converted, and no financial benefit was ever received from the debenture.  LeClair otherwise denies the remainder of the allegations.

LeClair here admits to the fact that his wife purchased a convertible debenture – this was already confirmed and made public by the Auditor General –  but DENIES CMT’s claim that he obtained information about that investment opportunity from Paul Jenkins – a connection that would clearly show that LeClair did indeed obtain information about the investment opportunity as “insider” information on a file he was working on for the PEI government.

You can say pretty much anything in a Statement of Claim or Statement of Defence, but when it comes time to file affidavits you need to swear an oath that you’re telling the truth, and there are potential consequences for not telling the truth. LeClair admitted a bit more of the truth in his sworn affidavit – namely that he did obtain the information about the investment opportunity from an insider, Paul Jenkins:

When LeClair was cross-examined under oath last January, he admitted a bit more of the truth when he casually stated that “we had invested” which grabbed CMT’s lawyer’s attention. The following exchange between MacDonald and LeClair then took place:

Judge Campbell’s Decision

Judge Campbell never mentions anything at all about the matter of Chris LeClair’s conflict of interest and insider trading. The evidence before him is the same evidence you are reading.  Nor does he mention (a) the false defence from LeClair denying knowledge that Paul Jenkins was the source of the information on the investment, (b) LeClair’s subsequent admission of that fact in his sworn affidavit, nor (c) LeClair’s admission in his sworn testimony at Cross examination that he was personally involved in the investment, not simply his wife.

Campbell does make a few comments about “conflict of interest” and quotes the Auditor General, but remains silent on the matter he was actually called upon to consider:

117    Other matters addressed by the Auditor General included the need for improved conflict of interest guidelines at the time in question. [Campbell’s Ruling].

The Truth?

Chris LeClair not only had a “conflict of interest” but committed “insider trading” while serving as Chief-of=Staff for Robert Ghiz when he obtained information from Paul Jenkins about an e-gaming investment opportunity with which he was personally involved on behalf of the PEI government.

The Consequences?

None.

I posted a blog article on April 2, 2019 titled, “Complaint Letter to the Law Society against Billy Dow,”   That followed another article in my e-gaming funding series which documented Dow’s involvement in that fiasco: “A Conspiracy to Commit Fraud: The Full Story on the E-gaming Loan.”

I’ve since received a decision letter from the Law Society Secretary-Treasurer, Susan Robinson.

When I filed my complaint, I expected I would receive a response from Dow. That’s the process mapped out on the PEI Law Society website :

“The lawyer involved will be sent your complaint and asked for a response within 2 weeks (or longer in appropriate circumstances). Once the lawyer’s response is received, a copy will be sent to you. Along with the lawyer’s response, you will be given an opportunity to make additional comments. At this point, you may be satisfied with the lawyer’s response. “

Well none of that happened.  Dow likely received a copy of my material and complaint letter, but I heard nothing from anyone until I received the decision letter in the mail.

My initial complaint letter explained how there were two separate issues I wanted addressed:

“As described in my articles, the nature of my complaint against Mr. Dow is two-fold: (1) that Billy Dow had a conflict of interest while representing the government on the e-gaming file; and, (2) that Billy Dow both acted and failed to act in ways that did not properly serve and protect his client, the PEI government, especially regarding his handling of the $950,000 e-gaming loan issued to the Mi’Kmaq Confederacy of PEI from the PEI Century Fund.”

Regarding my documented incidents in support of my #2 complaint that Billy Dow “acted and failed to act” in ways to protect his client regarding his handling of the $950,000 e-gaming loan, the Secretary-Treasurer for the PEI Law Society simple stated: “This office does not deal with a lawyer’s negligence or errors made.”  

Of course, the PEI Law Society could have chosen to investigate the mishandling of the e-gaming loan by Dow not from the perspective of “negligence” but how so many of the ethical provisions of the Law Society’s Code were violated by Dow which were well-documented in the material I supplied. However, the Law Society apparently had no interest in looking into those events and activity any further.

I expected as much regarding that part of my complaint.  But what I received in response to Part #1 of my complaint was totally unacceptable, and it’s the reason I’m writing this article to make this disgraceful “lack of response” to my complaint public information.

As I explained clearly in my complaint letter, my allegation that Billy Dow was in a “conflict of interest” had nothing to do with a previous complaint which Michael Redmond (when he was leader of the NDP) filed with the PEI Law Society against Dow. That complaint had to do with Dow’s involvement representing Innovation PEI in the Memorandum of Understanding (MOU) with “764” – a 100% owned subsidiary of Capital Markets Technology (CMT).  I wanted to be absolutely sure there was no confusion on this pont, so I wrote the following in my complaint letter:

“I am aware that a previous complaint alleging that Mr. Dow had a conflict of interest with his involvement in the e-gaming file was previously filed with the PEI Law Society by the former Leader of the PEI New Democratic Party (Michael Redmond), and resulted in a disciplinary committee ruling that Mr. Dow was not in a conflict of interest.

Redmond’s complaint related specifically to Mr. Dow’s involvement in the signing of a Memorandum of Understanding (MOU) in the late summer/fall of 2012 between the PEI government and Trinity Bay Technologies (TBT) [a wholly-owned subsidiary of Capital Markets Technologies (CMT)]. This issue is not the basis of my complaint.

New documents have recently come to light, as a result of filings with the PEI Supreme Court, revealing that Mr. Dow’s involvement in the e-gaming file did not begin with his involvement with the MOU in 2012, but that he was retained by the PEI government to act as outside counsel on the entire e-gaming project much earlier, in February, 2010. Mr. Dow continued to act in that capacity up to and beyond the date the PEI government ended the e-gaming project on February 24, 2012.

Despite my efforts to ensure clarity on this key issue, there was ABSOLUTELY NO REFERENCE WHATSOEVER to my complaint, which was treated as if it had been the same complaint made by Redmond. Unbelievable!  Read what Ms.  Robinson wrote, keeping in mind what I wrote in my letter and cited above:

“The allegation of conflict of interest has already been dealt with by this office and confirmed by a Discipline Committee in August, 2017. I repeat the findings here.”

And that’s what she did, but why?  Why “repeat the findings here” when they had  NOTHING whatsoever to do with my allegation of conflict of interest against Dow? My complaint alleged a conflict of interest more than a year earlier “before” he invested in the company.

I thought about pursuing this matter further with the PEI Law Society but decided against it. What would be the point given the blatant refusal to even acknowledge the complaint I made in writing?

The facts supporting the legitimacy of my complaint will eventually be known by all I’m sure.   I believe the evidence will show that Billy Dow purchased shares in a company involved with the e-gaming/financial transaction platform initiative while acting in his capacity as a lawyer for the PEI government on that same file.   

The simplest of checks which lawyers are required to make to eliminate potential conflict of interest situations with investments would have revealed exactly the connections between the company Dow invested in and CMT/FMT.  Was such a search not undertaken by Dow when he made the investment?

I believe Dow had personal “insider” knowledge of the company’s involvement with e-gaming.  Dow was legal council for the province on the secretive e-gaming file and was attending the clandestine e-gaming working group meetings at the time.  It was fully-known by members of that group that CMT had exclusive rights to deliver the financial services platform in North America owned by Simplex in the UK (CMT also owned 30% of the shares in Simplex).  

Look at the date and subject lines on the following email.  And don’t forget – Billy Dow was the e-gaming lawyer at this time and this was before he purchased shares in a venture of FMT (Financial Markets Technology – which was 100% owned by CMT)  and was set up on advice from the PEI government.   

[Note to John Eden: It’s probably not wise to refer to a “secret” gaming file as a “secret gaming file” in an email available to the public through Access to Information].

It was John eden who was listed as the contact person in the recruiting package which the PEI government put together to entice CMT/FMT to set up in PEI, making the following claim that CMT/FMT would have “first mover advantage”:

Judge Campbell says the MOU has nothing to do with CMT. FMT (764) was only set up as a 100%-owned subsidiary because CMT knew that was an expectation of the PEI government, as John Eden expressed on page 12 of the recruiting package:Yet Judge Campbell says CMT/FMT (764) had nothing whatsoever to do with e-gaming: “Neither CMT nor 764 were ever involved in any way with the so-called e-gaming project.”  

Baffling!

I can’t wait to read CMT’s appeal documents which I expect will be filed before too long with the PEI Supreme Court of Appeal.

Island Farmer reporter, Andy Walker, recently wrote an excellent synopsis of the recent Irving land grab of 2,200 acres titled, “The Line has been Drawn.”  Please take the time to read it before continuing.

Walker agrees with me that there is no “loophole” in the Lands Protection Act that allowed this Irving land deal.  The claim that the deal was “legal” apparently relies on provisions found somewhere in the new Business Corporation Act or Regulations; however, no one has yet explained how exactly that happened, or what specific provisions were relied on.

Whatever made the Brendel Farms deal with the Irving family “technically legal” in the mind of Geoffrey Connolly – Irving’s lawyer who both advised his client on the matter and effected the deal – must be precisely identified and immediately changed.

Andy Walker is absolutely correct to say that if the new Business Corporations Act – brought into law by the previous Liberal government – which apparently “legally” allows corporation-to-corporation transfers of land without first receiving approval from government (or even requiring corporations to notify government of the deals), then the Lands Protection Act is completely worthless.

One has to wonder how a law governing the dealings of corporations can be allowed to “exempt” itself somehow from another widely-supported piece of legislation in force: the Lands Protection Act.

As well, the new Business Corporation Act does not require the disclosure of the names of the corporation’s shareholders; so Islanders – or even members of the government for that matter – will no longer be able to calculate the total land holdings of individuals belonging to interlocking corporations.

I first discovered the MacLauchlan plan to render corporate shareholders “invisible” to Islanders with a new Business Corporation Act nearly two years ago, and raised concerns in various blog articles, Guest Opinions in Island newspapers, and in direct communication with both PC and Green MLAs when the Bill came to the House for debate.

In the end, the Bill received unanimous support from all MLAs on the final day of the House sitting (June 12, 2018). The Bill also received Royal Assent that same day.

I honestly don’t believe opposition MLAs realized at the time they said “yeah” that this new Bill could completely gut the Lands Protection Act, or render the shareholders of all corporations operating in PEI completely invisible to Islanders.

As you may be aware, I have repeatedly been calling for a “name search” to be added to the Corporate/Business Registry empowering Islanders to easily see all the corporations that individuals are involved with so they can then discover the land holdings of all those corporations to arrive at an accurate calculation of the total owned acreage.

Although a name search field on the Corporate Registry still wouldn’t reveal the total amount of land that an individual corporation would be required to count toward the 3,000 acre limit (which includes “leased” land) it would nonetheless provide a good start to getting a clearer picture of the amount of land individuals in corporations – and interlocking corporations within the same family (which is defined as “one corporation” as per the legal definition of “corporation” in the Lands Protection Act) – own.

Premier King is on record as being strongly supportive of doing this – adding a “name search” field to the corporate registry – as you can see from his response to question #4  at the all-leader debate on the land:

Yesterday I posted an article with  information on the market price of prime farmland in Prince County at rates as high as $6,500 per acre, pointing out that the Irving family was somehow able to acquire the 2,200 acres for a little more than a third of the market value for the land, roughly $2,300 per acre ($5.1 million). 

After posting that blog article, I was contacted by a person privy to what actually happened with the Brendel/Irving land transfer scheme.  I agreed to protect that person’s anonymity, but I’m absolutely certain what I’m about to report is true.

Six separate farmers in the Bedeque area had learned that the Gardiner family (Brendel farms Ltd.) was selling roughly 32 parcels of land, totalling approximately 2,200 acres.

Negotiations between the Gardiner family (Brendel Farms Ltd.) and the six local farmers  culminated in what was described to me as a “done deal.”  And here comes the real shocker:  The price the local farmers offered was $6,200 per acre ($13,640,000). 

The group of six farmers was then shortly-thereafter informed that the land was “unfortunately already sold.”

The price the media reported Irving paid for the 2,200 acres ($5.1 million) was approximately $8.5 million less than the group of local farmers offered!

It would appear the Gardiner family was in some way indebted to the Irvings, and was forced to sell to settle that indebtedness, despite receiving a much better offer from the six local farmers.

The provincial government should force the Irving family to divest themselves of the complete 2,200; and that land should go to the local farmers at the same price Irving reportedly paid for it: $2,300 per acre!