Episode #18: This REVELATION Should “BLOW THE ROOF” Off the Scandal

Episode #18 Pic

Preamble

In Episode #17, I provided a link to the Fresh Evidence Motion that CMT filed in the PEI Supreme Court of Appeal last Friday (December 1, 2019). I dealt with just one of the 68 new documents in episode #17, and indicated I would deal with more in this episode:

“My next episode relies on another key document CMT filed last Friday – that Jonathan Coady failed to disclose – only that story comes with a bizarre twist I haven’t, to be honest, fully figured out yet….but it’s another shocker! It will shed a whole lot more light on just what Wes Sheridan knew or didn’t know about CMT/FMT.”

If the last episode rattled the slats and loosened the rafters,

this one should blow the roof off!

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I’ve yet to figure out why Jonathan Coady did what he did, but it’s likely to go down in the history of Canadian Jurisprudence as a landmark civil legal strategic maneuver resulting in a win with damages. Never before has Counsel for the Defendant submitted a Second Affidavit with just four (4) attached documents to Counsel for the Plaintiff, AFTER the judge had ruled that he would entertain no further documents prior to making his ruling,. Since Coady’s bizarre disclosure came after Judge Campbell’s “death blow” decision against CMT, I’ve dubbed it the Jonathan Coady Post-mortem Document Disclosure legal strategy that can be summed up in three words and a punctuation mark: win, then disclose.

Although I’m not sure why Coady served those documents to CMT’s lawyer, I’m pretty sure he did it because of me. Two of those four documents are Government records that I’ve been hunting down for months and just received near the end of October 2019.

It appears that Coady somehow became aware that I was about to get a couple of really important documents from a FOIP request, documents which I came to know about little-by-little as a result of three previous, but strategically-connected, FOIPs.

I’m guessing Coady wanted to be able to say that he had provided a copy to the Plaintiff’s lawyer before I made the documents public. We’ll get to that, but first; it’s important to know a bit more about how I became aware of these documents and obtained them.

Following Brad Mix’s Bread Crumbs

When people are hiding things, and working diligently to keep them secret, they sometimes get nervous, go overboard in their denial, and leave clues suggesting pathways for further investigation. That’s how the story in this episode came about.

Step #1: FOIP for Brad Mix Records and Information Commissioner Review

I first suspected that Brad Mix had no records when the PEI Government told me they had none to give me for the specific time within the e-gaming period for which I was asking for records. I filed a Review of that FOIP with the Information Commissioner last January 2019. I eventually discovered from a July, 2019 letter [from the new Deputy Minister of Economic Growth, Erin McGrath-Gaudet, sent to the Information Commissioner] that Brad Mix and the PEI Government had been keeping me in the dark since I first asked for those records back in October 2018, knowing since 2015 they didn’t exist. But I also learned about an Incident Report.

Step #2: FOIP for Brad Mix “Incident Report”

Mix had sent an “Incident Report” to Information Technology Shared Services (ITSS) in March 2015, so I submitted a FOIP for that document. When it arrived, I read the following note:

“Summary: Missing emails in his GW archive…missing between June 2011 and March 2015. Description: He is trying to find a message from November 24, 2011. User has 2 archived files…Unable to remote to PE-10640…”

Mix didn’t seem particularly concerned about all the other records; he was only requesting ITSS’s help to find that one particular email from his sent archive. Another breadcrumb.

Step #3: FOIP for Mix-Malone-MacDonald Records

The person Mix was dealing with at ITSS was Ed Malone, the Director of Business Infrastructure Services, who answered to the Director of ITSS at the time, Norm McDonald. I decided to submit a targeted FOIPP request to see if there might have been other communications between Mix and Malone about that November 14, 2011 document:

Malone Request

I received a few documents and discovered that Mix had exactly the same idea as me about where he might find a copy of that important email (likely with attachments) – the inbox of the recipient. I – unfortunately – didn’t have enough detail about what document Mix was searching for, just that it was in the November 2011 time period.
It made me think it must be a pretty important document for Mix to get ITSS folk to get him a copy of the document from the recipient’s inbox, well, he’d have to tell them who the recipient was……and bingo!

Step #4: FOIP for Wes Sheridan emails to and from Brad Mix

The documents from the Malone FOIP came in and revealed exactly the detail I was looking for. On April 20, 2015, Mix emailed Edmund Malone with the following request:

Try another way

For whatever reason, Mix seemed extremely anxious to locate that particular email that he had sent to Wes Sheridan on November 24, 2011. I was getting anxious to get my hands on it as well, so I filed a FOIP request on September 2, 2019, for:

“All emails and email attachments either sent to Brad Mix from Wes Sheridan, or received by Wes Sheridan from Brad Mix from November 1, 2011, to December 15, 2011.”

In late October 2019, I received several incredibly important documents from that FOIP. Still, I was not provided all the documents, and I have three such records from other sources to prove it. As well, some of the documents I received were heavily redacted for which “solicitor-client” privilege was claimed, yet neither Mix nor Sheridan is a lawyer. Let’s just say I wasn’t surprised when the Information Commissioner accepted there were grounds to undertake a review of the matter. Her investigation is underway.

Before getting to those two new documents that Judge Campbell never saw, first, just two examples of what Wes Sheridan said about Paul Maines, CMT or FMT: one from a statement he made in the Legislative Assembly, and the other from a statement he gave the National media. Notice the dates when he made these statements, then also note the dates on the documents further on in the article.

What Wes Sheridan Said he Knew About CMT/FMT

Back when e-gaming was a hot topic in Question Period, and the PCs were the Official Opposition pounding away at the MacLaughlan Government on e-gaming almost daily, there were a lot of questions directed at the Minister of Finance. Keep in mind, the following Hansard statement from Sheridan was a full 2 years before the Auditor General’s E-gaming Report, so not a lot was known about the secret e-gaming project at the time. This was Sheridan’s response to a question about CMT:

“What the hon. member is mixing up is a company called CMT, Capital Markets Technologies, which has no affiliation with Simplex International whatsoever, no affiliation with our gaming initiative…[Hansard, November 21, 2014].

So much for upholding the Honour of the House. When an award-winning reporter for the Globe and Mail, Robin Dolittle, published her February 27, 2015 article Small Island, Big Bet, she received the very same line from Sheridan that he gave the House a few months earlier:

“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.

What Wes Sheridan “Really” Knew About CMT/FMT

On October 24, 2011, an opportunity presented itself to CMT/Simplex to acquire the 51% shares of Simplex owned by another financial company in Europe called Sterci. Back up a couple of steps.

The plan was for the PEI Government to establish CMT/FMT as the local company offering Simplex/CMT’s global “SWIFT” certified financial transaction platform [See Episode #13: “Why Did Brad Mix go to Osaka, Japan?”].

That plan was already well underway by the fall of 2011.
Paul Jenkins and Paul Maines had already incorporated FMT (100%-owned by CMT) a year earlier in a strategy to transition CMT to becoming a “local” and Canadian-incorporated company [CMT was registered as a business in Florida, US]; and Paul Maines had already recruited Virgin Gaming to PEI. There was clearly growing excitement about establishing the Financial Transaction Platform with CMT/FMT in PEI.
Philip Walsh, the CEO of Simplex was aware of the stage things were at with the financial transactions platform with the PEI Government, and he was concerned that if CMT/Simplex did not acquire the 51% of Simplex shares from Sterci, then another company that did might not have the same interests as the PEI Government:

As I’ve previously mentioned my biggest concern is that if control of the disposal of Sterci’s stake is lost (based on an agreeable period of time being passed after which Sterci will execute the right to sell to whomever they choose), then Simplex may see a new shareholder at the table whose interests and priorities are not aligned with PEI.”

Walsh proposed that the PEI Government buy those 51% shares from Sterci, and then FMT (CMT) would buy back those shares after two years, so as not to miss out on the opportunity. As Walsh put it:

“Simplex and FMT have the right of first refusal for the disposal of Sterci’s 51% stake. This unusually provides us with an opportunity to bring in a new shareholder for their 51% stake at a good price. I have listed below some of the benefits to both PEI and Simplex of this transaction but I want to make sure we all understand the need to execute (or at least be fully engaged with the process) quickly….In terms of our approach to the transaction, PEI would simply be dealing with Simplex and FMT who in turn will deal with Sterci. “

When I used this same quotation in a previous episode, I wanted to draw attention to the fact that it stated: “Simplex and FMT” – not just Simplex. Why no mention of CMT? Because FMT was CMT? I was driving home the fact that Simplex was aware that FMT was “CMT” on it’s way to becoming “rebranded” as a local PEI company that would provide the Financial Transactions Hub in PEI.

Simplex was CMT’s “technology partner:” however, CMT also held 100% ownership of FMT, as well as 100% ownership of the internationally-recognized “Claimatrix” software that was a key part of the CMT/Simplex’s Global Transaction Platform. But most importantly, CMT had exclusive North American rights to deliver that Global Transaction Platform. Again, that’s why the MOU was signed with FMT, not Simplex.

Like two companies building and selling cars – with one providing the chassis, the other the engine – customers weren’t buying “engines” from Simplex and “chassis” from CMT, they were buying cars from CMT/Simplex, and those customers included some of the biggest banks in the world. Yet Judge Campbell says CMT/FMT had nothing whatsoever to do with any of this “so-called” e-gaming, and nothing to do with the PEI government before the MOU in 2012. Sheridan said the same.

During Cross-examination, Sheridan offered the following answer – under oath – to a question whether he had a discussion with Walsh on the possible purchase of shares in Simplex:

Sheridan I do not

What were those November 2011 Documents Mix and I were Chasing?

Brad Mix sent a final draft of a letter addressed to Philip Walsh saying that the PEI Government was onboard to move quickly to see if the Sterci shares could be purchased by the PEI Government. He sent that letter to Sheridan for approval and he got it. The response from Wes was definitive: “Well done Brad, Thanks…..please send it off and copy me for my files.”

Brad to Wes

On October 24, 2011, Walsh had written DIRECTLY to Wes Sheridan with the following opening paragraph, indicating a prior meeting where it seems an “agreement in principle” had already been made to proceed with the plan, which was more formally confirmed on November 23/24:

Walsh to Sheridan, November 24, 2019

Notice that FMT’s Director (Paul Jenkins) and former Chief of Staff Chris LeClair are also recipients of that email. Those critically-important FMT/PEI Government documents were not disclosed by Coady, as required by the Rules of Court using Schedule “A”, and they were never considered by Judge Campbell. Would they have made a difference? You bet they would have!

Coady’s “Post-Mortem” Disclosure of those Wes Sheridan Records

Those November 2011 documents between Brad Mix and Wes Sheridan prove that Wes Sheridan was not telling the truth when he said he knew nothing about CMT/FMT. That’s the truth, and there are no consequences.

In fact, Campbell has accepted that “sworn testimony” from Sheridan, ignored requests to assist with full document disclosure, then ruled in favour of all defendants, awarding “substantial indemnity” costs which have already been paid out. He also forbid CMT to file another case.

As the Minister of Finance at the time, Sheridan gave a big thumbs up to Brad Mix sending a letter to Walsh expressing enthusiastic approval to proceed expeditiously with Walsh’s plan for the PEI Government to purchase 51% of the Simplex shares from Sterci, then them sell back to FMT.
It would have been impossible for Judge Campbell to have concluded, as he did, that CMT/FMT had absolutely nothing to do with e-gaming or the PEI Government if Coady had produced those records.
It was only on September 20 that Coady provided them to CMT’s lawyer, 2 weeks after Campbell said NO MORE NEW records:

Paragraph 646: Despite that, I considered the nature of the information counsel wanted to submit and the fact it had not been available to plaintiffs’ counsel prior to the completion of the hearing. After hearing from all counsel on the conference call on September 6, 2019, I concluded I would accept the additional documentation referred to in McDonald’s five-page letter of August 29, 2019. I also stated that apart from accepting the letters I had already received from McDonald and each of the defendants’ counsel, I would accept no further submissions on these motions prior to making my decision.

So I put in a request for those Wes Sheridan Documents on September 2, 2019, and Campbell rules four days later he won’t consider any more documents. Then on September 20th, just 5 days before Campbell’s ruling was released, Jonathan Coady served CMT’s Counsel with a newly sworn Affidavit with four documents, two of which were these November 2011 Wes Sheridan emails.

Why didn’t Coady disclose those “smoking gun” documents when they would have counted? Did he just become aware of them as a result of my FOIP request?

I don’t think so; it’s not like the documents just mysteriously appeared out of nowhere.

Brad Mix would have been contacted about producing records shortly after CMT filed a January 2015 notice that a lawsuit was being commenced by CMT. In hindsight, we can now see why Mix was frantically looking for that particular document. He obviously knew it was materially-relevant and key to the legal action.
I’m assuming that if I had been provided copies of those documents from Wes Sheridan’s email inbox in 2019, and Mix went looking in the same inbox back in March/April 2015, then Brad Mix must also have had a copy of those documents. So why didn’t Coady file them with the Court? Is that how he became a civil litigation Lawyer of the Year in PEI? Winning a major civil case by revealing the most important documents to the Plaintiff’s Counsel only after they can no longer be filed for the court, but before I make them public?

Would Judge Campbell have ruled there was no issue for trial if those Sheridan Government Records had been produced? It would have been impossible for him to have dismissed the case. Absolutely impossible!

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Episode #17: It’s about Corruption and Coverup – not E-gaming

Cover for Episode 17

Preamble

Last Friday (December 1, 2019) Capital Markets Technologies (CMT) filed a Fresh Evidence Motion with the PEI Supreme Court of Appeal. The document is 519 pages, comprising an Affidavit sworn by Paul Maines, President of CMT, and 68 Exhibits.

Those attached documents were either obtained through various Freedom of Information and Privacy (FOIP) requests, or are documents associated with those FOIP requests, or Reviews on those FOIPs undertaken by the Information and Privacy Commissioner, Karen Rose. The next few episodes deal with shocking revelations from that new documentary evidence.

This is not a Netflix “Who Done It?” crime series like “The Making of a Murderer,” where the line between real life and being entertained gets completely blurred. This is really serious stuff, and it’s happening on our Island, right now.

No one in our current Government – which came into power promising to address corruption, and which has the responsibility to respond to this situation in an ethical manner – is doing anything about it so far. 

Absolutely nothing has been said about the following aspects of the e-gaming scandal; (1) the costs of the lawsuit (which the PCs repeatedly demanded the Liberal Government disclose when in Opposition) have not been disclosed; (2) that most of the people involved in the scandal are still working in senior-level positions in Government; and (3) why, in an unprecedented denial of Access to Information, the Government has refused to release countless e-gaming documents in multiple FOIPs, resulting in four Orders from the Information Commissioner, which have since become four Supreme Court Enforcement Orders.

The CBC, the Guardian, and the Eastern Graphic have said nothing about any of these recent disturbing events as if they weren’t even newsworthy, while both Opposition Parties have said even less. How many times was e-gaming mentioned in the Legislative Assembly during the first two House sittings? Zero times. Yet, the last major interview that CBC did with Party Leaders before the election was on what they would do about corruption and scandals if elected Premier, with the focus on the e-gaming scandal: [See: Will the PEI Election be haunted by ghosts of Liberal’s Past?  Yet here we are.

Some Background on Supreme Court Document Disclosure

Islanders have been hearing about the e-gaming scandal since 2013. We’ve witnessed countless lies from Government officials in the Legislature and Media, and countless occasions where Government policies were ignored, laws were broken, and officials were found in a serious conflict of interest situations.

PEI’s Auditor General conducted an 18 month investigation reviewing over 10,000 documents, but the Liberals denied her access to key documents and used their majority status to vote down the witnesses who the Opposition wanted to question at the Public Accounts Standing Committee.

For the entire time, up until today, the Government, and the Government’s lawyers have denied any misfeasance by any Government actors and agents, despite the fact that most Islanders know that there was a very major and very “secret” scandal, we’re still trying to figure it out. The secrecy was protected for years by denying, lying and either hiding or destroying documents. But things have changed now that information is coming into the light of day, and in due course, I believe there are going to be serious consequences.

The difference between lying in the Legislature vs. lying in Affidavits and Cross-examination in a lawsuit is that you can’t be held accountable when you’re “inside the rails” (as they say) with the protection of the Legislature. But when you lie in Affidavits and Cross-examination under oath in a civil litigation lawsuit, well, that’s really frowned upon (in other provinces at least) and is regarded as an offense for which there are serious repercussions (ie. possible disbarment for a lawyer, or possibly jail time for government agents). Of course, the tricky part is “proving” someone lied and/or deliberately misled the Court.

The interesting thing about the e-gaming lawsuit is that the longer it goes on, the more sworn documents are submitted to the Court. For example, the Government has filed two sworn Affidavits, both approved by Jonathan Coady (Legal Counsel for the PEI Government). Those affidavits require that all three document-disclosure “Schedules” be attached to the Affidavit. This episode takes a look at how Coady dealt with two of those Schedules.

All materially-relevant documents must be identified in one of three ways. There is a separate “Schedule” for each of those three categories of documents, with the following information at the top of the page for each Schedule:

Schedule A.JPG

Schedule B

Schedule A

Schedule “C” is of particular interest to me because it refers to Government documents that are no longer in Government’s possession.

In the interest of not making these episodes too long and convoluted, I’ll deal with just one of those new documents filed last Friday in this episode – a document that Coady kept from Judge Campbell’s eyes (not produced under Schedule “A”).  I’ll also examine Coady’s failure to disclose information to the Court concerning Brad Mix’s missing records (as required under Schedule “C”).

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(1) Failure to Disclose that Materially-relevant Documents once in the Possession of the PEI Government but no longer with Government

When I first submitted a FOIP Request in October 2018 for Brad Mix’s e-gaming records, I was looking for answers to questions about e-gaming and the Financial Transaction Platform. Instead, it opened a Pandora’s Box. It led to the exposure of a depth of Government corruption that shocked me.

After 9 months of seeking those Brad Mix records, and challenging Government, the Department finally admitted that they had known since early 2015 that Brad Mix had no emails for the entire e-gaming time period, in a Letter from Deputy Minister Erin McGrath-Gaudet to the Information Commissioner.

In fact, Mix also sent an Incident Report about those missing records to Information Technology Shared Services (ITSS) in March 2015, around the same time the CMT lawsuit began.

So how is 9 months of lying to me and the Privacy Commissioner to be understood in any other way than a cover-up? Did they want me or anyone else to ever find out that Brad Mix’s records were gone? Obviously not. But now that we know about those two years of missing records, we also know that the Government’s “Schedule C” disclosure was woefully incomplete. Information was provided for Rory Beck’s, Melissa MacEachern’s and Chris LeClair’s deleted emails in Schedule “C” [That information had been made public by the Auditor General in 2016]; however, BRAD MIX’S 2 YEARS OF MISSING RECORDS WERE NOT MENTIONED ON SCHEDULE “C” !

One of the things about destroying emails is you can’t control what happens to the ones you send. CMT produced some emails from Brad Mix from that 2 year e-gaming period, but suspected there were many more, and went hunting for them, first by asking Brad Mix about his record disclosure during Cross-examination.

It’s insightful to review Brad Mix’s sworn Cross-examination transcript with the knowledge that he knew at that time that all of his emails for that two year period were gone.

Consider the following exchange between CMT’s lawyer John McDonald, Brad MIx, and Jonathan Coady during Brad Mix’s Cross-examination held January 19, 2019, starting on page 9 of the transcript. Remember, FMT (Financial Markets Technology) was 100%-owned by CMT:

MR. McDONALD: So we are at Exhibit D.

MR. COADY: So we are at tab number D which is an e-mail from Patrick Mason to
Paul Jenkins, copied to Paul Maines, 17 January 30, 2011.

MR. McDONALD: Q. All right. And in the body it says “…I met Chris again yesterday over FMT. He has lined up a meeting with Brad Mix. Brad will approve doing an analysis for FMT, the benefits of moving to PEI. As well, how FMT fits into the payment chain and should be the province’s favourite claims adjudication engine for new business. This should include how Bomark, Sterci, RBC, along with CA and others can form the basis of a service industry focused on tech such as gaming…” And I will say it now, it’s Paul Jenkins. Now, I am sort of curious. Have you disclosed all the e-mails that would exist between you and Paul Jenkins to your counsel?

McDonald directed that question to Brad Mix; however, Coady jumped in and answered for him, notwithstanding the fact that it was impossible for Coady to know whether Mix had disclosed all the e-mails or not, especially if Mix was hiding that fact from Coady. What was Coady’s response?

MR. COADY: I believe so, Mr. McDonald.

MR. McDONALD: Q. Right. And the reason that this is extremely important, Mr. Jenkins has no e-mails at all because his computer system was hacked. So I have got nothing more to say on that, but we are going to explore the fact there were a lot of emails between the two of you [Brad Mix and Paul Jenkins] that weren’t disclosed.

Coady’s statement “I believe so” was not only misleading, it was a full-blown lie. Both the Government and Coady were aware that the emails didn’t exist, and they kept that secret to themselves, misleading the Court with false sworn testimony, just as they misled me and the Information Commissioner. How could Coady say he believed he had received all relevant records when there were no records to receive? For that critical two years e-gaming period, he received no documents to inspect!

CMT’s lawyer, John McDonald, didn’t believe Coady and filed additional FOIPs looking for Mix’s emails in “inboxes” of other Government employees who Mix had dealt with on the CMT/FMT file. These FOIPs led to the new “Fresh Evidence” Motion filed last Friday and attached as a PDF in the link above.

I’ll deal with just one of those 68 Exhibits in this episode to give you some inkling of the width and breadth of the cover-up. If Brad Mix’s records had not been destroyed, this document would have been produced years ago by Coady.

(2) Failed to Produce Materially-Relevant Documents

I have frequently mentioned in previous articles that many more materially-relevant documents are about to see the light of day as a result of a number of FOIP Requests. Some of those documents are records that Judge Campbell refused to consider before filing his decision; documents that would certainly have made it more difficult for him to have drawn the following false conclusion; a belief he mentions several times throughout his ruling as the main reason to either deem certain issues and events irrelevant, and presumably why he completely ignored many other key issues in CMT’s Statement pf Claim, but situated in the pre-MOU period.

Paragraph 17: Neither CMT nor 764 were ever involved in any way with the so-called e-gaming project. However, some of the statements in the amended statement of claim referred to events during that time period.

Paragraph 256: …As I set out earlier in this decision, CMT and 764 [FMT] were not involved in the e-gaming project. The engagement of the working group was with Simplex, not CMT.

Notice that Campbell notes that there were parts of CMT’s Claim dealing with events in the pre-MOU period:

Paragraph 652: The issue regarding non-archived sent emails relates to a period …between June 2010 and April 2012. The claims against Mix do not relate to matters in 2010, 2011, or prior to July 6, 2012. No relevance has been shown to Mix’s emails from earlier periods.

After concluding that CMT/FMT had absolutely nothing to do with e-gaming, Campbell doesn’t deal with the pre-MOU period, but simply dismisses those matters as irrelevant, despite strong evidence to the contrary. There was already some documentary evidence before his eyes indicating that FMT was involved with the Government, but no real “smoking guns,” so he could choose to ignore, misinterpret or downplay those documents.

If Jonathan Coady had disclosed to the Court what he was both legally and ethically required to disclose, perhaps Judge Campbell would have concluded CMT/FMT obviously did have something to do with e-gaming and the PEI Government after all (whether he would have wanted to admit that or not) because the documentary evidence would simply be too strong to dismiss or ignore.

What if, for example, there was a document more than a year before the MOU that Coady had not disclosed to the Court with Subject “FMT” which is identified as “…a company that is part of the secret gaming file”? That’d be hard to ignore. Well, fasten your seatbelts and feast your eyes! The following is one of the documents CMT filed last Friday:

Neil Stewart Email

This email speaks for itself. The PEI Government has known for the entire time since May, 2011that CMT/FMT was recruited to set up a Financial Transaction Hub. Because all that was kept a secret, it appears when the lawsuit started, they denied everything, probably thinking Maines would never have been able to put up a million dollars in security with the Court. When he did, and they had already filed a Statement of Defence full of denials about knowing anything, it appears a decision was made to never fess up, and nothing about what they really knew about CMT/FMT was shared with the Court.
John Eden sent that email, and also signed the “Recruiting Package” provided to FMT as a Senior Investment Officer with Innovation PEI. Eden is working on this file with both his Supervisor (Neil Stewart) and Brad Mix.

My next episode relies on another key document CMT filed last Friday – that Jonathan Coady failed to disclose – only that story comes with a bizarre twist I haven’t, to be honest, fully figured out yet….but it’s another shocker! It will shed a whole lot more light on just what Wes Sheridan knew or didn’t know about CMT/FMT.

Jonathan Coady Appointed “Queen’s Counsel”

and Named “Lawyer of the Year”

Coady.jpg

Jonathan Coady

Jonathan Coady’s peers have been doing all they can to elevate his stature lately. Stewart McKelvy law firm has issued two News Releases in the last three months announcing esteemed designations recently bestowed upon Coady.

On Monday of this week (December 2, 2019) Coady was awarded the Queen’s Counsel, which, according to that Stewart McKelvey News Release, is a designation “…given to experienced lawyers in recognition of their commitment to the legal profession and contributions to their communities.” TheNews Release noted that Coady “…will be formally recognized for the Queen’s Counsel designation at Government House by Her Honour, the Honourable Antoinette Perry, Lieutenant Governor of Prince Edward Island.”

bloyce.jpgHon. Bloyce Thompson, PEI’s Attorney General, congratulated Coady, saying “Jonathan’s many contributions in the field of law and to communities in Canada and Prince Edward Island will have a positive, enduring impact for generations to come.”

Just a few months ago (August 22), Stewart McKelvey issued another News Release announcing that Jonathan Coady had just been named “Lawyer of the Year” in his field of “civil litigation” by “Best Lawyers in Canada,” which, according to the News Release, is “…. a designation given to the lawyer in each practice and metropolitan area with the highest overall peer-feedback.

“Lawyer of the year” in any given field of professional expertise is laudable, and something special to put on a resume for sure. When I read that Eighty-six lawyers from Stewart McKelvey alone were acknowledged at the same time by Best Lawyers in Canada© as “leaders in more than 40 practice areas” I wondered if there were any Stewart McKelvey lawyers who didn’t get a designation. Wouldn’t want to be that guy.

If you stick with this series, stop and ask yourself after each of the next couple of episodes – and this one as well – whether you would consider the facts surrounding the breaching of the Rules of Court with both disclosure and non-disclosure of materially–relevant documents in this major CMT vs Government legal action, as the standard that legal “peers” should use to evaluate their fellow lawyers when making their nominations to Best Lawyers in Canada©?

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PostScript: My good friend, and leader of the PEI New Democratic party, Joe Byrne, sent out a great News Release last week asking tough questions, which he sent to the Eastern Graphic, Guardian, and CBC. None published it. Nor has there been any mention of the Fresh Evidence Motion. If you’re concerned about this refusal of those who get paid to report the news or represent our interests in the Legislative Assembly not doing so, why not send a short letter to the editor expressing your concerns and asking some questions? And if you think this information should be available to other Islanders, please be courageous and share on social media.

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Dear PEI Government: If Aquabounty Comes Knocking – Don’t Answer!

Aquabounty Graphic for PostYou never hear a peep about Aquabounty if you live in PEI. But PEI gets mentioned a lot in places around the Globe as the incubator for the world’s first “marketable” genetically-modified animal – a salmon. It’s actually made us quite famous…in a transylvania kind of way.

Islanders were never given a say about growing genetically-modified animals in PEI. Nor were we consulted when the American Billionaire – Randall J Kirk – received money from the PEI Government. Kirk owns 64% of the shares in Aquabounty and has controlling interest.

I published an article titled “Aquabounty Swims to the Bottom”  on December 4, 2017 with very concerning financial information about how Aquabounty’s stock share price had plummeted from over $30 a share to around $4. [FYI – The stock closed on Friday at $2.25 a share.]  In that article, I  asked that no more loans or grants be provided Aquabounty given it’s very risky financial status:

Aquabounty 1

In a May, 2017 article  titled “PEI Must Say No to GE Salmon” I offered some background on the corporate structure and money behind Aquabounty:

“AquaBounty’s parent company is Intrexon, controlled by American bio-tech billionaire Randal J. Kirk (Forbes puts his worth at $4.1 billion). Intrexon is the majority owner of AquaBounty, and Kirk personally owns 60% of Intrexon. Intrexon holds patents on GE mice, rats, monkeys chimpanzees, cattle, goats, pigs and sheep; owns numerous companies cloning livestock (and pets); recently purchased UK-based Oxitec (which produces genetically-engineered insects) and Okanagan Specialty Fruits (which developed the GE “Arctic” apple).”

Why I’m bringing this up again now

Earlier this morning I came across an article titled, “Will GM salmon ever pay off for AquaBounty?” published by Intrafish.  Things aren’t looking very rosy for the company, despite Canada granting approval for Aquabounty to grow GE Fish to market in PEI: See “Health Canada Approves GE Salmon.

Aquabounty got what it wanted in the decision – some GE products need to be labelled as “Genetically-engineered” in Canada, but Health Canada decided that Aquabounty’s GE Salmon wouldn’t be one of them:

“Health Canada requires labelling for food products, including genetically modified foods, where clear, scientifically established health risks or significant changes to the nutritional qualities of the food have been identified and can be mitigated through labelling,” concludes the agency. “In this case, given that no health and safety concerns were identified, there are no special labeling requirements for AquAdvantage Salmon.” See Health Canada News Release, May 19, 2016.”

Labelling is required in the United States. [See: “GMO products to be Labelled in the United States.”]

In September,  2019, the US Department of Agriculture awarded $494,000 to AquaBounty to study technologies that would make their genetically engineered Atlantic salmon sterile. This is interesting, given that when the Salmon was approved in 2016 the claim was being made that the salmon were sterile.  Many see the grant as a “bailout” given Aquabounty’s dire financial situation. [See: “USDA Bails Out AquaBounty for Genetically Modified Salmon“].

Read what the Intrafish article says about the current financial state of Aquabounty:

“As of Sept. 30, AquaBounty’s cash balance totaled $6.4 million (€5.8 million). According to the financial report, currently, the company does not have sufficient capital to continue its operations after the first six months of 2020.”

The article went on to quote from Aquabounty’s recently released Third Quarter Report:

“If we are unable to generate additional funds through financing, sales of our products, government grants, loans or from other sources or transactions, we would exhaust our resources and be unable to maintain our currently planned operations and continue as a going concern,” the report said.

So, to wrap up, a short letter to the leaders of the three political parties forming the current Minority Government:

DON’T GIVE  ANOTHER PENNY OF PEI TAXPAYER’S MONEY TO AQUABOUNTY!

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Episode #16: “He Said – She Said” THE FINALE

He said She said

PREAMBLE

Welcome back to the Sheridan Centre for E-gaming Excellence in beautiful downtown Charlottetown.  The crowd  is anxiously awaiting  the return of our two contenders as the halftime show comes to end.   

You’re probably wondering: Halftime show after 5 rounds in a 12 round bout? What’s up with that?” Well, you’re not alone. We just returned from the Boxing Federation booth with the scoop.

The Judge was hurting pretty bad after the 5th round, and the Ref was just about to call the match – arguing the Judge couldn’t see straight with his bad eye – but the Judge apparently found a loophole in the Boxing Federation Regulations allowing him to call an emergency halftime after 5 rounds.  Way to stay alive Judge! Only seven more rounds.

And just when I thought the night couldn’t get any weirder, when I got back to the broadcast booth Howard Cosell had disappeared.  While I  sat there looking around whispering “Howard?” (hoping no one saw me talking to myself like a lunatic, wondering what I was going to do for a fill-in as the Judge and General reentered the ring) my cell phone suddenly rang with “private number” beside a vibrating purple grape – like I said, “weirder”:

Me:   “Hello! Whose this?

Me: “Don Cherry!” You’re kiddin me….Don Cherry? “

Cherry: “I was live streaming the first 5 rounds and I was sending you a big donation and noticed your phone number, and just wanted to call and tell ya “You’re doin good kid….that’s some pretty entertaining  writing about something that seems pretty darned important to you guys down there….so thumbs up!”

Me:Well Thanks Don…that means a lot to me.”   Then without really thinking, I blurted out: “Cosell’s disappeared/”  Before realizing what I’d done, Cherry jumped in…

Cherry: “Coach’s E-corner! Coach’s E-corner! – ya know I’m lookin for a new gig.” 

Me: “Well that’s a generous offer Don, but what d’ya know about e-gaming in PEI?”

Cherry:It’s some kind of traditional PEI word game isn’t it, where ya… ya know… ya  try to find slots or spaces to create words you can stick a letter “e” on the end of or something …..it’s got some connection to Anne of Green Gables…ahh…don’t get me going on  “Anne with an ‘e’ “.  I always said there’s something’s wrong with that girl…scared to death someone might spell her first name without an “e” – constantly reminding people  “It’s Anne with an ‘e’ —  It’s Anne with an ‘e’ ”  I’m tellin ya….that’s not normal.  Listen – I don’t want to offend anyone, but that last letter  “e” is totally silent and everyone was illiterate back then in PEI and didn’t write anyhow so what’s the big deal.  But hey,  don’t get me wrong, “e” is one of my two favorite sounds – the other one’s “hock” .  I’m just saying….. there’s TWO WAYS to spell Ann(e) and they both sound EXACTLY THE SAME! If you people want to sit around  playing  “e” games before the altar of your fictitious, neurotic little redheaded folk hero – well, by all means….knock yourselves out.”

Me:Hmm” I thought. “This could be fun.

So I  transferred remote keyboard access to Cherry, wished him luck, and called it a day.  I’ll check in tomorrow – I don’t have the nerve to watch!

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

Well, the Judge and the General probably never thought they’d be dukin it out in the public square when they were penning those respective e-gaming reports in the solace of their private offices…but here we are!  And there’s the bell.

ROUND #6.  Both CMT and Simplex worked on the Loyalty Card Program – which company had the “Contract” with the PEI Government?

Loyalty Card Program22

Cherry 2O.K….Let me get this straight. The General says there never was a contract for the Loyalty Card Program.  The Judge says  there was  a contract with that British company but not CMT.

Does the Judge have that contract? Hold on, hold on – someone’s talkin in my ear. They’re telling me  the Judge DOES NOT have a copy of any contract on the Loyalty Card Program.

You’ve gotta be kiddin me! You’d think this guy was a former President of the PEI Liberal Party or something……”what’s that?”…..Geez Louise…..now they’re telling me he actually was!   DING DING DING. Round 7.

Round #7.  Was Gary Scales a Government “Agent”  & “E-gaming Project Manager”? 

Project Manager

Look its like thisO.K., what the hell is going on with you people? Just because you live in the “cradle on the waves” doesn’t mean you have to be asleep all the time.

I first heard of e-gaming 30 minutes ago and I can see what’s going on! Look … the Judge  doesn’t want to see documents. That’s obvious. The General wanted to see lots more documents and was denied access on bogus legal grounds.  The General wanted to find out the truth – the Judge doesn’t. That tells you a lot right there folks!

The Judge is thinking to himself: “Sure, I know….Islanders paid for everything, but you know what? I think I’m gonna let Gary and the boys keep things secret. They worked so hard to set it up so they could.” 

The General is absolutely right: SOLICITOR/CLIENT PRIVILEGE DOESN’T EXTEND TO PROJECT MANAGEMENT. – I’m a hockey coach and even I know that. 

Hold on a sec….they’re yappin in my ear again.  Now they’re telling me the Judge used to be Partners with Gary Scales in the same law firm.  Am I being “pranked”?   Ron MacLean better not be hiding in back? {nervously looks around searching for cameras}…And there’s the bell! 

Round #8: :That’s All She Wrote!”………or “She Wrote it All.”

last round 8

I gotta tell ya….that was a thing of beauty: a double one-two, one-two establishing some interesting conflict of interest situations with what looks like two of the main e-gaming secret society buds: Chris LeClair and Billy Dow.  And…the….judge….said….. nothing. Just stood there, arms dangling by his sides, taking the blows.

That’s what can happen when you let your guard down – you say absolutely nothing about a few important issues that might get your friends in trouble, hoping no one will notice. Then you challenge someone like the General to a public fight and – lo and behold – you suddenly realize at least one person noticed.  You get a one-two, one-two…..and you’re down for the count.

Cherry 3[ONE} Look, I’ve only got a couple of minutes left while the Ref counts it out – he’s not getting up from that in 9 –  so I’m gonna let you guys know what I think you’re dealing with here: [Two] A few goons thought they’d make a killin from e-gaming and set up a  “secret” file” outside the normal framework of your provincial government, [Three] paid the law firm 100% of their project management “fees”  from the public purse,then screwed up big time by getting caught, then the government got sued, [Four] and now the Government and the Judge are obviously both trying to keep the bodies buried. [FIVE] If the Judge was playing hockey he’d be “benched”[SIX] but since he’s already on the bench, you’re going to have to find another place for him [SEVEN]. Screw up in hockey, you get taken off the ice; [EIGHT] Screw up in the Supreme Court, you get put on ice. [NINE}.  Nice touch General. Freezing him out like that!

AND THE WINNER IS, BY UNANIMOUS DECISION, THE GENERAL!

EPILOGUE: The Judge has crawled up the ropes and is back on his feet, shaking his head in disbelief. He’s pacing back-and-forth demanding a rematch.  The General has just announced her retirement from the ring. The Judge may not have long to wait for another crack at Liberal fame and glory.  He has a match on the books soon-to-be scheduled with three PEI Supreme Court of Appeal Judges relying on the same Ruling.

Special thanks to Don Cherry for filling in on such short notice for this episode.

From all of us here at ringside – Goodnite.

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Episode #15: “HE SAID – SHE SAID” [Part I]

He said She said.jpg

PREAMBLE

Welcome to the Sheridan Centre of E-gaming Excellence!

Two of PEI’s most successful and prominent intellectuals are about to square off in a 12-round bout putting their e-gaming investigative skills on the line.

IN CORNER #1:  Jane MacAdam, PEI’s Auditor General – aka “The General” – comes to this match with an impressive resume. She has published countless investigative reports over the years without a public challenge. Government implemented all recommendations from her egaming report . Although denied access to records by the PEI Government who asked her to do the investigation –  as well as McInnes Cooper law firm – she nonetheless produced a stellar report.

IN CORNER #2:  No stranger to the ring, Gordon “The Judge” Campbell has punched the face of a prominent public official or two in his day (e.g., Geoff Hussey, CBC Manager) and is obviously not afraid to take on a strong woman yet-to-be defeated in the public domain.

NOTE: All quotations in the Charts are “verbatim” – taken from Judge Campbell’s Ruling and the Auditor General’s Special Assignment on e-gaming.  The entire paragraphs and sections were not provided in all instances in the interest of reducing length.

I know you’re going to find this hard to believe – I know I would – but legendary Boxing Commentator Howard Cosell – God rest his soul – appeared to me while I was writing this, and he offered to do a bit of play-by-play commentary. How d’ya say “no” to Howard Cosell? Have at it Howard!

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

Round #1 – The Purpose of the Auditor General’s E-gaming Investigation

New Focus

howard cosellWell e-gaming enthusiasts! It looks like we’re in for an evening. The Judge comes out swinging with a few intimidating digs at the General’s investigation, clearly attempting to curtail and minimize her efforts.  Good luck with that Judge. The General poured over 10,000 e-gaming documents for five years and interviewed countless people involved with e-gaming.  She’s not going to be denied tonight: the General delivers a good slap to the side of the Judge’s head the very first round reminding him that her “focus” was also on “arrangements with third parties” and a lot more! It looks like we’ve got a match on our hands folks! And there’s the bell….

2.  Capital Markets Technology (CMT) and E-gaming

New CMT.jpg

Cosell.jpgNever in my career has it been easier to decide a round – con – grat – u – lations General! What was the Judge thinking to even suggest CMT was never involved with e-gaming? The General saw the opening and pounced on the poor Judge like a cat on a mouse; then played with him, slobbered in saliva, for the rest of the round.  Ouch!  The General’s confident explanation of how CMT and Simplex were each involved in both the e-gaming and the financial transaction programs landed like a gut-punch to the Judge, leaving him wobbling like a weeble  only they don’t fall down-  “And He Could… Go… All… The… Way!  but ….he scrambled back to his feet and finished the round. He might be wondering right about now whether he chose the wrong profession people.  The bell.

3.  Was CMT engaged with the Mi’kmaq Confederacy or PEI Government?

Project Manager

howard cosellThere’s no way the Judge is going to make it to the end of this battle! He’s probably wishing he was sitting on his bench right now, rather than a stool with 30 seconds left to go before having to get up and face the General again!  Meanwhile, in the other corner…if I’m seeing this correctly….. the General appears to be using her break to review and sign some documents her assistant (and apparently coach) brought from the office while the Judge spits blood into a bucket. And we’re back!

4.  Removal of Government Records was “Standard Practice” 

New destroyed records.JPG

Cosell.jpgWow!  I did not see that coming! Going for the “knock-out” punch this early in the match when already battered was a gutsy move for the Judge, but risky. The General saw that one coming a mile away.

The General countered nicely with a quick flurry of “you forgot to mention the part about following the law” jabs that left the Judge confused.  And boy oh boy did she take advantage of that. What do you get when you  stick your nose where it doesn’t belong? Well, for you radio listeners I’ll say I’m looking at the ref wiping up a trail of blood back to the Judge’s corner! The Judge better get his act together if he hopes to have any chance of surviving 12 rounds!  Round 5!

5.  Were there “Binding” provisions in the MOU?

binding.JPG

howard cosellI have to say….it looks pretty bad for the Judge. It’s hard to imagine him lasting another 7 rounds, but he has surprisingly showed some spunk in that last round so I suppose anything’s possible.

Admitting that there were “legally binding” provisions in the MOU temporarily disarmed the General. But she recovered when the Judge went too far and drew the conclusion there was no breach of either provision.  By the look on the General’s face, I’d say she detected that weakness in the Judge and it’ll likely come back to haunt him in future rounds. 

 

……..to be continued

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Episode #14: Remembering the Loyalty Card Program

Episode Cover #14.jpg

Episode #14: Remembering the Loyalty Card Program

Paragraph 127 in CMT’s original Statement of Claim read:

127.  In October of 2011, the Loyalty/VIP Program was given approval by the Department of Tourism and Culture and representatives of CMT created a survey to determine what local business operators would be looking for in such a program.

Jonathan Coady responded to that claim  in paragraph 32 of his “Statement of Defence” saying Government had “no knowledge of the allegations” made by CMT in paragraph 127.  The PEI Government denied the existence of the Loyalty Card Program completely in both the first Statement of Defence filed April 09, 2015 and the second Statement of Defence filed June 14, 2018 . 

memory eraserWhen I read that over a year ago I thought to myself: “If a PEI government department official gave approval to CMT/Simplex to develop a Loyalty Card program, and CMT then conducted a survey of local business operators to see what they would want such a program to entail – well, that shouldn’t be too hard to confirm.  And if that happened, then it’s not logically possible that the government could – at one and the same time – develop a Loyalty Card program and have no knowledge of that program, without suffering some kind of  mass government-wide amnesia.”

Premier Ghiz also swore that he never heard of the Loyalty Card Program in Cross – examination; but then again, he also swore he didn’t know what happened to all his chief of Staff’s documents he signed to have destroyed, claiming not to have read what he signed (a one page form) ] – the “Q” is from lawyer John MacDonald; the “A” is from former Premier Ghiz:

Ghiz - Loyalty Card

I had also come across a document that had been filed with an Affidavit in the 2013 Securities Investigation  from “Eddie Francis” addressed to Melissa MacEachern, then Deputy-Minister of Tourism and Culture. who was apparently heading up the Loyalty Card initiative at the time. That email unequivocally confirmed that there was indeed a PEI Government Loyalty Card program involving CMT/Simplex, and that program wasn’t simply discussed as a possibility, but had been officially declared a “go”.

I wrote a couple of previous articles about this issue, the first one over a year ago, then another when I obtained 207 pages of Loyalty Card documents through an Access to Information Request in January, 2019, which I made public as a Package at that time.

CMT entered those documents as “fresh evidence” in the Supreme Court Motion Hearing, so I was anxious to see how Judge Campbell would respond to the claim made by Coady that his PEI government defendants had no knowledge of the program, now that he had 207 pages in front of him all about the Loyalty Card Program.

Jonathan Coady – having denied any knowledge of the program – had obviously not produced any of the Loyalty Card records, notwithstanding CMT’s allegations in its Statement of Claim making all of those documents materially-relevant. I also wondered what Campbell would say about him withholding relevant documents?

What Judge Campbell Said About the Loyalty Card Program

When I obtained those 207 pages of Loyalty Card Program government records nearly a year ago (January 4, 2019) I wrote a blog article title Government Amnesia and the Loyalty Card Program which I  concluded by writing:

 ” I can hardly wait to see how Jonathan Coady … proves his claim that his clients – agents of the PEI government – had no knowledge of the Loyalty Card program. “

Well, the movie didn’t live up to the trailer! Coady didn’t explain anything about his client’s amnesia about the Loyalty Card, and Campbell never asked him about it. Nor did  Campbell say anything about the fact that those materially-relevant documents which CMT filed from an Access to Information request had not been produced by Coady in his document disclosure, as required by the Rules of Court.

So what did Campbell say about the Loyalty Card Program? Not much. Other than that CMT, FMT/764 and Maines had absolutely nothing whatsoever to do with it and nothing was lost financially because it never went forward. In Paragraph 361 he states: “Neither CMT, 764, or Maines were mentioned as being involved in those contracts,” but then he obviously feels compelled to deal with those 207 pages of documents that mention “Eddie Francis” on almost every page, and says in paragraph 373:

Paragraph 373: While Maines may have been an instigator in getting Simplex and the Department of Tourism and Culture into discussions about a loyalty program, the contract with respect to that project was strictly between Simplex and the Department.  Similarly, there were references to an individual named Eddie Francis in the additional materials filed by the plaintiffs at the commencement of the hearing. The documents show that he was actively involved in email discussions with Tara Jackson of Tourism PEI in refining details of the proposed program. That does not change the fact that the plaintiff corporations CMT and 764 were not parties to the contract under which that work was undertaken.

The evidence clearly shows that CMT and 764 (FMT) were indeed “parties” to the Loyalty Card Program – Judge Campbell either doesn’t  understand the nature of the corporate affiliation between these two companies or is deliberately choosing to ignore it….either way, it completely skews everything he says about Maines and CMT/FMT because he’s interpreting the facts through a broken lens.

The Truth?

To understand the significance of the “Loyalty Card Program” in CMT’s claim it’s first necessary to grasp the fundamental nature of the CMT/FMT offer to the PEI Government to establish a Financial Transaction Hub in PEI, and the terms and conditions of the “recruitment package” that the PEI Government provided to CMT/FMT.  There were several components to the overall project, one of which was the establishment of a Financial Transaction Platform, another was to attract new businesses to PEI and also to create business for the “Hub” with initiatives like the Loyalty Card Program.

Remember, the MOU was signed with FMT (not Simplex).  CMT/FMT was the local company through which all “hub” programs would flow – including the Loyalty Card Program. In particular, CMT would benefit immensely from the Loyalty Card Program by acquiring access to customer information  which the Loyalty Card Program would make available for subsequent marketing campaigns.

There needed to be a financial transaction “hub” – ideally one that had access to the SWIFT global network – which CMT/FMT would be providing for a range of businesses, as well as the PEI Government, to tap into. But there also needed to be new “clients” recruited for the hub, something CMT/FMT undertook to do with its existing global network of contacts.

There were no “contracts” signed between the PEI Government and CMT/FMT for those recruitment efforts for the same reason there was no contract signed between the PEI Government CMT/FMT with the Loyalty Card Program: CMT stood to benefit as much as the PEI Government from every new client, including from Tourism PEI’s Loyalty Card/VIP Program.

Wes Sheridan was pushing for “gaming” clients and when Maines delivered Virgin Gaming, Sheridan let the officials at Innovation PEI know that he wanted to “marry e-gaming with the financial transaction platform” projects.   Why? Because it was CMT/FMT delivering both components, and the platform for further expansion.

The Loyalty Card “contract” that Judge Campbell makes so much of may have been with Simplex, but that was because Simplex was – as the Auditor General fully understood – CMT’s “Technology Partner.” The AG understood that it was a “joint effort” between CMT and Simplex with both the Financial Transaction Platform and the Loyalty Card Program:

Section 4.3:  In May 2011, the former Deputy Minister of Tourism and Culture MacEachern] contacted the Vice President of Business Development for CMT [Maines] regarding the establishment of a loyalty card program for PEI. The work on the loyalty card program overlapped the E-gaming initiative and involved both Capital Markets Technologies and Simplex. … .”;

Judge Campbell can’t seem to grasp that Simplex was CMT/FMT’s “technology partner” and while the technical aspects of the Loyalty Card Program fell to Simplex (and another company in the UK, which Simplex subcontracted work to because Simplex was too busy to meet the PEI Government timeline for the Loyalty Card Program launch) CMT/FMT was  diligently working on the “marketing aspects of the program” during the very same time period.  

It was Paul Maines as CMT/FMT V-P of Business Development who the Deputy Minister approached – not the other way around. Campbell says Maines “instigated” the project, but it was Melissa MacEachern who did that. Consider the following email from MacEachern to Paul Maines on May 4, 2011: 

Hello Sir

And what those “High level thoughts’ were was included in the email as what was envisioned:Loyalty ObjectivesAnd of even more interest to Maines and CMT/FMT I’m sure was the potential for a business partnership with the program by being the service provider:

Areas of Collaboration

When MacEachern learned from Maines that CMT/FMT could deliver the Loyalty Card Program through the transaction hub, MacEachern gave the project the “go”…in an email to Eddie Francis – an employee of CMT – not Simplex.   So who exactly was Eddie Francis?

Judge Campbell refers to “Eddie Francis” in Paragraph 373  of his ruling (as cited above) acknowledging he had some involvement in the Loyalty Card Program.  He doesn’t explain his involvement, and sees nothing significant with his involvement, and goes on to conclude that CMT/FMT was  in no way involved with the Loyalty Card Program contract with Tourism PEI.

Here’s what Eddie Francis swore in his 2013 Securities Commission Affidavit:

My engagement.JPG

Why would Eddie Francis swear that he was “engaged by CMT/FMT” to lead the sales and marketing division of a project called the PEI Loyalty/VIP Program” if that wasn’t true?

The partnership with the “sales and marketing”  component of the Loyalty Card Project was, in fact, entirely between CMT/FMT and Tourism PEI, with Tara Jackson working on behalf of Tourism PEI; and Eddie Francis working on behalf of CMT/FMT, again, as he swore in his Affidavit:

Francis 2

Campbell’s only reference to Francis acknowledges only that the “…documents show that he was actively involved in email discussions with Tara Jackson of Tourism PEI…”  His  involvement on behalf of  CMT/FMT was a little more extensie than sending and receiving a few emails, as is evidenced by the fact that CMT/FMT sent Eddie Francis to London, England “twice” doing work on the Loyalty Card/VIP project.

Francis 3

Campbell seems bent on saying anything and everything he can in his Ruling to highlight a separation between the two corporate entities (CMT and Simplex) while choosing to completely ignore the fact that the PEI Government recruited CMT/FMT  to establish in PEI – not Simplex – knowing CMT had exclusive North American right to the Financial Transaction Hub in PEI and the Loyalty Card Program was just one additional revenue stream for CMT/FMT as would have been companies like Virgin Gaming.

The Consequences?

None.

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Episode #13: WHY DID BRAD MIX GO TO OSAKA, JAPAN?

Episode 13 .jpg

Episode #13: Why did Brad Mix go to  Osaka, Japan?

This episode deals with a very important part of the e-gaming story and CMT lawsuit  that I’m pretty sure you’ve never heard anything about before. And I’ll confess, I’ve struggled to figure out how to present the complexities of this particular issue in a way that can get to the really important core insights – understandings that reveal how Judge Campbell’s interpretation of these events is fundamentally mistaken.

So why did Brad Mix go to Japan in 2012?  Why is that event important to understand the CMT lawsuit and Judge Campbell’s ruling to dismiss that lawsuit?

CMT dedicated 11 consecutive paragraphs to this issue in its Statement of Claim (paras 151-161) so it is obviously important to CMT’s case.  Here is the first of those paragraphs:

151.JPG

I won’t provide all the details of those 11 paragraphs, but the crux of the allegation and core claim against Mix was expressed succinctly in paragraph 156:Paragraph 156CMT alleged in its claim that Brad Mix was having discussions with other financial transaction processing companies at the SIBOS conference in violation of the Memorandum of Understanding (MOU) between Innovation PEI and CMT/FMT. The documentation does show he attended, and had between 6-10 formal meetings set up.

Before we take a look at what Judge Campbell said about CMT’s allegations concerning Mix attending SIBOS, we first need to review a little background information about the global financial transactions sector to make sense out of things.

Do we really need to know About “SWIFT” and “SIBOS”?

I’m afraid so.

The world of  “global financial transactions” is a very specialized one, comprising the most powerful financial institutions and banks in the world.  That world is governed by SWIFT.

SWIFT: The Society for Worldwide Interbank Financial Telecommunication (SWIFT) provides a network that enables financial institutions worldwide to send and receive information about financial transactions in a secure, standardized and reliable environment.

To establish a “financial transaction hub” of any merit in PEI, it would be necessary for that Hub to be “SWIFT-accredited” so it can provide clients access to the global SWIFT network.

In 2011, there were apparently only three SWIFT-accredited companies in the U.K., – CMT/Simplex being one of them – and there were none in North America. It was CMT/Simplex’s intention to establish a SWIFT-accredited financial and data transactions Hub in North America.  The PEI Government recruited CMT/FMT in early 2011 – then signed an MOU for CMT/FMT in 2012 on the way to a formal agreement –  for CMT/FMT and Simplex to do exactly that.

SIBOS: Sibos is an annual conference, exhibition and networking event organised by SWIFT for the financial industry. It is known as the “premier business forum” for the global financial community to debate and collaborate in the areas of payments, securities, cash management and trade. It is not a “recruitment” event or Job Fair.

SIBOS is also the place and time when companies announce new projects, innovations and endeavours. In 2008, CMT/Simplex’s financial transaction platform was highlighted in a major announcement by the Royal Bank of Scotland (read at least the last paragraph):

Royal Bank of Scotland.JPG

Take note that “Gary Wright” was at that time the head of International Cash Management and Product Development, Global Transaction Services, for the Royal Bank of Scotland. He subsequently joined CMT/Simplex as the Head of Market Industry Strategy. Wright was also very involved with the PEI financial transaction project.  In fact, he was at the “Roundtable” meeting in the Premier’s office about eight months prior to the SIBOS Conference. Here’s the list of non-government people who attended that meeting:

List of Attendees.JPG

Slight Digression: This is another good example of how Judge Campbell mistakenly fails to see how key technology partners of CMT/FMT are “representative” of CMT/FMT’s interest in the initiative.  Paul Maines didn’t attend the meetings – that was left for the technology experts and market strategists like Gary Wright.

Paragraph 345: [Alan] Campbell confirmed that he did attend a meeting with MacLean, Evans, Jessop, and Sameet Kinade on October 17, 2012. Gary Wright participated in that meeting by telephone. Each of Evans, Jessop, Kinade, and Wright, stated they were representatives on behalf of TBT. None stated they were representatives of CMT or Maines.

Judge Campbell’s relentless campaign to create the impression that Paul Maines and CMT had nothing to do with the e-gaming and financial transaction platform initiative is truly baffling! Maines – in his capacity as V-P of Business Development – probably arranged to have Wright participate in that Roundtable meeting.  And TBT (Trinity Bay Technologies) was – at that time – just a Trade Name being used for the 100%-owned subsidiary of CMT (764/FMT).

Just two SIBOS Conferences after the RBS announcement in 2008, the largest bank in the world  (HSBC) made a big announcement at the SIBOS 2010 Conference that it too was now using Simplex/Sterci’s Platform (at the time, CMT owned 100% of the shares of Simplex):

simplex and sterci.JPG

The 2012 SIBOS conference was when CMT/FMT and Simplex were hoping to announce the launch of a North American Swift-accredited financial transaction platform located in Prince Edward Island, but of course that never happened.

That’s probably enough to know to realize that Brad Mix had absolutely no business being at SIBOS 2012 in Osaka, Japan. But that’s not the way Judge Campbell saw things.

What did Judge Campbell say about Brad Mix going to SIBOS?

Not just anyone can “register at SIBOS” – you need to have “expertise in the field” of financial transactions and have a “referral” from a SWIFT-accredited company, neither of which Brad Mix had.  So why did he go?

Just when the PEI Government seemed on the cusp of a great deal with the leading SWIFT-certified financial transaction company in the world, the PEI Government sends a “recruiter” to the same Conference? Keep in mind that many of the SIBOS attendees would have been very familiar with CMT/Simplex given their global prominence in the field – along with their patented technology solution “Claimatrix” – and they would have been made aware that CMT/Simplex were nearing a deal to launch a North American Swift-accredited Financial Transaction Platform. What were they to think with a PEI Government recruiter milling about trying to “prospect” other financial services companies?

Mix was only allowed to register at SIBOS because he used “Philip Walsh” as a referral. When he first tried to register, he received the following reply:

Need approval.JPG

Mix swore in his cross-examination that he got permission from Walsh to use his name as a “SWIFT contact” to register for SIBOS, and Judge Campbell accepted that, concluding there was no evidence to refute Mix’s sworn testimony:

Paragraph 280: With respect to attendance at the SIBOS conference, Mix testified on cross-examination that he was invited to attend the SIBOS conference by Philip Walsh, CEO of Simplex. He stated that in a previous meeting with Walsh regarding Mix’s role in attracting outside businesses to PEI, Walsh told him if he wished to go to the next SIBOS conference, he could feel free to use Walsh’s name as a reference. The exhibits attached to his affidavit included an email exchange in May, 2012, with the organizers of the SIBOS conference in which they asked Mix for the name of his SWIFT contact person in order to gain approval from SWIFT for his registration to be processed. (SWIFT is the Society for Worldwide Interbank Financial Telecommunications). As offered by Walsh, he provided them with Walsh’s name and telephone number, following which Mix’s registration was approved.

The other main point Campbell made several times about Mix attending the SIBOS Conference was the Conference happened after the MOU extension expired:

Paragraph 290: On October 15, 2012, Mix was advised by their matchmaking consultant that they had arranged a meeting between Mix and Kaflon of Sterci. Mix advised Paynter and asked if he should decline the meeting. I note again that the email respecting a future meeting was sent 5 days after the final expiration of the MOU. Mix did meet with Kaflon at the SIBOS conference and expressed in his travel summary that he felt Sterci had no interest in following up on his invitation to invest in PEI.

That initial extension of 30-days happened because at the time 30 days was deemed to be more than enough time to conclude the agreement. Then the Securities Investigation happened which led to a temporary suspension of talks on finalizing an agreement, and then the MOU extension expired.

However, documentation in subsequent weeks and months clearly shows that the PEI Government’s intention was to continue negotiations with CMT/FMT toward a launch of the financial hub once the  Security Investigation mess was cleaned up.  However, the degree of sincerity with those stated indications in documents after the Securities Investigation was launched is very suspect and is difficult to determine.

After Maines discovered (from Tracey Cutcliffe) that the PEI Government had been in discussions with other financial institutions and the Securities Investigation was launched, the Government was no longer making comments in documents that they needed to “wait for the MOU to expire” to proceed with other companies, and consciously avoided making any statements that might support the claim that Innovation PEI had breached the MOU.

Although the documentation clearly shows  a “good faith” intention with the PEI Government to carry on negotiations with CMT/FMT, at the very  same time,  Mix is paying a UK “head hunter” (likely in the $10,000 price range) to schedule meetings at SIBOS for Mix to “prospect” other financial companies. And those meetings were set up during the time when the MOU was in force, and are clearly in violation of the MOU.

As future episodes in this series will discuss in much more detail – during the same time period that the PEI Government was keeping CMT/FMT on the “hook” as a possible option for a financial transactions Hub (with a signed MOU) the PEI Government was also secretly engaging in discussions with other financial companies which were CMT/FMT and Simplex’s competition in the field. Brad Mix’s maverick efforts at Osaka were by no means an isolated instance of a violation of the MOU, just another piece in the puzzle, as will be seen in subsequent episodes.

The Truth?

Consider the following email sent form Cheryl Paynter to Clerk of Executive Council at the time, Steve MacLean:Paynter to McLean October 15How does this make any sense? “…to set up prospect meetings…’  Why would the PEI Government be “prospecting” companies that could establish a financial transaction centre in PEI when they already had one – FMT/Simplex?

And why would the PEI Government make a conscious decision to avoid even meeting with Simplex at the Conference, going so far as to “cancel” a meeting that the owner (sic – CEO) of Simplex (Philip Walsh) had agreed to have after being asked by the “match-maker” hired to set up meetings?

For Brad Mix to have used Walsh’s name to get into the Conference without even letting him know – in conjunction with the decision to decline a meeting that was already set up with Simplex by Mix’s consultant –  is evidence that Walsh did not tell Mix he could use his name to go to SIBOS in Japan on his own, as you’ll see from Walsh’s shocked response after finding out about Brad Mix attending SIBOS.

On the other hand, the PEI Government knew that “Sterci” had already divested itself of its shares in Simplex – you may recall that Wes Sheridan had given his support for the PEI Government buying those shares, then selling them back to CMT/FMT after 2 years, however that deal never materialized (see Episode #11).

Now all of a sudden, shortly after Sterci becomes unhinged from Simplex, and shortly after CMT/FMT becomes embroiled in a bogus Securities Investigation thanks to Steven Dowling, with its international reputation on the line – not to mention malicious and completely untrue rumours circulating around town that Maines had defrauded a little old lady with cancer – Mix suddenly has a meeting arranged with Sterci at an elite financial services conference on the other side of the world.

The really puzzling thing about Mix’s attendance at SIBOS in Osaka is that no one within Government told CMT/FMT or Simplex anything about it. Why not? That’s CMT/Simplex’s “wheelhouse” – not the PEI government’s.

Mix openly admits he met with and attempted to recruit Sterci to invest in PEI, also indicating that Sterci showed no interest.  Campbell acknowledges all of that in his decision, saying, “Mix did meet with Kaflon at the SIBOS conference and expressed in his travel summary that he felt Sterci had no interest in following up on his invitation to invest in PEI. “

It’s little surprise Sterci showed no interest in PEI.  As already noted, SIBOS is not a “recruitment” conference – companies don’t go there to be recruited. Recruitment officers from governments from around the world are known for having one thing in common: they never go to SIBOS, except for that one legendary year, when Brad Mix went from PEI. 

Sterci’s CEO, Simon Kaflon, learned about Mix’s plan to attend SIBOS from that matchmaking consultant in the U.K., and immediately sent the following email to his long-time business partners Philip Walsh and Gary Jessop (CMT’s lawyer):

Kaflon.JPG

“Senior Director at Canadian Development Agency/Canada,” sounds prestigious enough for SIBOS, but Brad Mix does not hold that position – in fact no such position exists,  because no such organization exists.

The first thing to note from Philip Walsh’s very next communication after receiving this news is his obvious surprise and shock that Brad Mix was planning to attend SIBOS on his own. It’s clear that he knew absolutely nothing about Mix attending before Kaflon told him, despite Mix using his name to get into SIBOS and swearing that Walsh said he could do so – with Campbell accepting that as true.

Walsh sent the following email within an hour of being notified by Kaflon that Mix was attending SIBOS. Note that Gary Wright is also cc’d on the email. This is not the tone of someone who had given Mix permission to use his name to get into SIBOS!

—–Original Message—–
From: Philip Walsh <pwalsh@simplexgtp.com>
To: Gary Jessop <GARY.JESSOP@blakes.com>, Paul Maines <
paulmaines75@telus.blackberry.net>, Paul Maines < pmaines@hurricanecapital.com>
Cc: Gary Wright < gwright@simplexgtp.com>
Date: Mon, 15 Oct 2012 12:48:24 -0500
Subject: Re: SIBOS meeting
Guys, this is ridiculous. PEI randomly targeting companies at Sibos destroys our credibility. This is extremely embarrassing. We’ve asked for a united approach to the market in targeting players in this sector. I think we should walk away from any relationship with PEI. We can’t afford people using our name to get meetings at events like Sibos. Let’s move on. There’s no point to this and I’m extremely uncomfortable.  Brad Mix is registered as a specialist in the focus area of payments. He’ll undoubtedly use all our engagements to support that position.

Once it was determined that Mix was indeed going to be attending the conference – despite the shock and obvious displeasure and concern from everyone with CMT/FMT/Simplex – a “damage control” strategy was nonetheless employed in a bid to keep the “financial transaction hub in PEI” train on the tracks and reputations intact.

Any message other than that the PEI Government was continuing to work in collaboration with CMT/Simplex to establish a financial transaction platform could be potentially disastrous for CMT/Simplex. Walsh wanted to make sure the only message Mix was giving at the SIBOS conference was aligned with what he had already shared with his colleagues, one about the anticipated launch of the FMT/Simplex “Hub” in PEI.

Walsh’s email reads like a nervously-polite, semi-panicked attempt to make sure Brad Mix didn’t blow things up completely while flopping around the halls of SIBOS like a fish out of water, prospecting for financial companies where he knew exactly nobody and even less about the business of global financial payments and transaction systems.

The “optics” were terrible.  That subsequent contact from Walsh to Mix was clearly and solely to “align messages” with Mix and to inform him that many of the people he might be talking with at SIBOS were already aware of the PEI initiative. As Walsh put it: “We’ve mentioned PEI and the prospect of it establishing a FSC (Financial Services Centre) to a number of organisations including large banks….”    There is absolutely no indication that Walsh was in any way approving of Mix attending SIBOS in his email, as Campbell suggests in his ruling:

Walsh to Brad.JPG

Campbell made a big deal that there was no hard evidence that Mix disclosed any confidential information while at SIBOS. What Judge Campbell never mentions is another important and legally-binding exclusively clause in the MOU that doesn’t deal with breach of “confidentiality” strictly speaking, but a promise to not even discuss “with any entity” that PEI is interested in establishing a financial transactions platform:Exclusivity.JPG“..not to discuss with any entity its interest and/or capabilities in hosting or creating a financial services centre in the Province.”  That’s exactly what Brad Mix was doing at SIBOS – how else could he “prospect” financial services companies?

The 30-day extension began on September 10, 2012.  On that same day, Brad Mix sent an email to Cheryl Paynter with the following information:

Sibos Paynter september 10, 2019.JPGAnd he was already lining up meetings in mid-August, when the initial 60-day MOU was in force:

Brad to Cheryl.JPGYes, the SIBOS Conference happened a few days after the MOU expired, but if you’re a “recruiter” like Brad Mix, you only go to SIBOS for one reason: to recruit a financial transaction company.  And that plan was hatched and put into play during the period of time the MOU was in force.

Not-Fun Fact:  Registration alone for SIBOS is about $7,000. Probably another $10,000 for the U.K.. headhunter. Flights to Osaka, Japan, hotels and food for a week…all told, Mix’s trip to Osaka, Japan probably cost Island taxpayers upwards of $30,000, give or take.

The Consequences?

None.

Posted in E-gaming | Tagged , , , , , , , | 1 Comment

Episode #12: Recruiting Package? What Recruiting Package?

Episode 12 cover.jpg

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:

LeClair sought and obtained funding.JPG

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:

Not involved in Claim

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:

Mason about Jenkins.JPG

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:

Jenkins to Mason
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:

Talk Amongst Yourselves

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:

Summary

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:

payment platform.JPG
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].

Walsh to Virgin Gaming

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:

mason.JPG

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:

Recruiting FMT.JPG

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:

No Bureaucracy.JPG

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.

Posted in Provincial Politics | 1 Comment

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

Eisode 11 .jpg

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:

Paul Maines on 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”:

Dowing 5f

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:

Garth Jenkins post transaction

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:

Not involved in Claim

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:

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.

Posted in Provincial Politics | 2 Comments

Episode #10: The Securities Investigation Against Maines and CMT – Part III

Episode #10
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:

Reason for Adjournment of Hearing

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 :

Biggar on Newco

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:

Confidential Subscription Agreement.JPG

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:

Biggar to Van Der Laan

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:

Investors.JPG

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:

CMT Incorporation by Jessop.JPG

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.

Walsh 44

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”:

Brad Mix to Philip Walsh - populated locally.JPG

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:

CMT Incorporation by JessopIf 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:

Two of them not mixed.JPG

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:

Virgin

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):

Sterci.JPG

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

37000.JPG

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.

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Episode #9: The Securities Investigation Against Maines & CMT – Part II

Episode 9.jpg

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”:

Clients did 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:

Dowling evidence

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 longer public.JPG

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:

Make a Motion
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:

Biggar letter to gaming committee members
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 to Cheryl on Plan

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:

Denial of 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:

LeClair to Rodd

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:

March 6 letter from Mary Biggar to Paynter.JPG

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):

Cutcliffe Newco.JPG

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.

Posted in Provincial Politics | 1 Comment

Why I Keep Researching and Writing about E-gaming & the CMT Lawsuit

Investigate

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:

LivingstoneIt 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!

Posted in Provincial Politics | 5 Comments

Episode #8: The Securities Investigation against Maines & CMT – Part I

Episode 8

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

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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:

Won't Meet.JPG

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:

Jessop to Shauna

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):

news release final

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:

must attend

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.

Posted in Provincial Politics | 2 Comments

Episode #7: Who Filed the Securities Complaint Against CMT & Paul Maines?

Episode 7.jpg

Episode #7: Who Filed the Securities Complaint against CMT & Paul Maines?

My last three episodes were a tad tedious, and perhaps not riveting story-telling; but unfortunately, if you want to understand the riveting stuff when we get there, you’ll have to first understand exactly who Steven Dowling is, and why he is so important to the CMT lawsuit.

Judge Campbell’s flawed ruling dismissing the CMT/764’s lawsuit relies heavily on what Dowling swore in his 2013 Securities Commission Affidavit, and there are countless false sworn claims in that document that are proven false by other documents Campbell chose to ignore.

Steven Dowling was a lawyer working in the Department of Justice under Robert Ghiz during the 2010-12 timeframe when the e-gaming and financial transactions projects were open files. One of his assigned clients was the PEI Securities Commission.

In September, 2012, Dowling initiated a Securities Investigation with the PEI Securities Commission against CMT and Maines. What prompted him to do that? Let’s see what Judge Campbell says about it:

Para 20: In early September, 2012, Steven Dowling (Dowling), in his role as counsel for the Prince Edward Island Superintendent of Securities, was contacted by Edward Curran, a registered representative and branch manager of the Charlottetown office of ScotiaMcLeod regarding what Curran perceived to be suspicious trading activity being undertaken by Paul Maines (Maines), who was alleged to be illegally soliciting investment in Financial Markets Technologies (FMT).

Dowling formally initiated the Securities Investigation on September 18, 2012. The very next day, Gary Jessop, CMT’s lawyer in Toronto, emailed Tracey Cutcliffe about the allegations (Cutcliffe had left government by that time, and was working as a consultant for CMT), repeating in his email what he had heard. Campbell cited what Jessop said in that email in his ruling:

Para 416: Again on September 19, 2012, Jessop emailed Cutcliffe: “I have just arrived. I have just been briefed on a few issues regarding unfounded allegations. I will need to deal with this this afternoon. I am trying to meet with the branch manager at Scotia Mcleod – the source of the allegations.

Here Campbell attempts to “confirm” the conclusion he draws from what Dowling said in his 2013 Affidavit with words from CMT’s own lawyer, who is seemingly agreeing that Scotia McLeod was the “source of the allegations,” which Jessop declares are “unfounded”.

Elsewhere in his ruling Campbell reiterated that point, and then took it a step further by accusing the plaintiffs (CMT/764) of making unsupported allegations:

Para 524: When that statement and other statements like it were made, the plaintiffs had no evidence whatsoever to support the allegation. In fact, their own information identified Curran as the source. Yet, that did not stop them from making their unsupported allegations in the statement of claim.

The Truth?

Scotia McLeod never instigated a complaint against CMT and Paul Maines with the PEI Securities Commission, despite what Dowling said about his conversation with Edward Curran, and despite the conclusion Judge Campbell drew from Dowling’s unsupported claim – remember, Dowling filed NO SUPPORTING DOCUMENTS with the Motion to Dismiss, so all Campbell relied on was his sworn affidavit.

Dowling may have had a conversation with Edward Curran about Paul Maines and CMT, but securities investigations that can ruin international companies like CMT/Simplex are not initiated on hearsay, rumours or tips from a local “registered representative” at Scotia McLeod. Security Investigations are very serious matters that can easily result in significant harm to the party being investigated. Securities matters are highly regulated. A decision by Scotia McLeod to file a complaint would involve a thorough investigation of allegations by competent legal compliance experts and senior officials within the financial institution, usually in “head office” off-Island.

The truth may never have been discovered on this important point if it had not been for a series of emails between Mark Rodd – a CMT investor – and Scotia McLeod personnel that Rodd filed in January, 2013 as “exhibits” with his Securities Commission Affidavit.

Rodd was contacted by Dowling sometime after Dowling initiated the Securities Investigation on September 18, 2012, and learned from Dowling that Scotia MacLeod had “…released information with respect to my portfolio without my knowledge or consent” (Rodd Affidavit, para 1).

Rodd then wrote a formal complaint dated January 4, 2013 to his Registered Representative at Scotia McLeod, Yousef Hashmi. Four days later, Rodd received an email from John De Pompa, Director of Compliance with Scotia McLeod in Toronto, informing him that the request for his information came from the PEI Securities Commission and Scotia McLeod was obligated to provide the documentation.

Rodd received a final email from De Pompa on January 31, 2012 wherein De Pompa confirmed that the securities complaint against CMT/Maines had not been initiated by Scotia McLeod, information which Rodd provided in his affidavit:

Scotia

De Pompa’s exact words in the email were: “As previously stated, a complaint was not initiated by our office as it related to the September 18, 2012 Order.”

Capital Markets Technology (CMT) was “recruited” to PEI to establish a financial transaction “hub”. Just days before finalizing a formal agreement – after a 60 day period of negotiations and work (the MOU period) which was then extended for another 30 days to allow for that work to be completed in anticipation of a signed agreement – that entire deal with the PEI government was torpedoed by a totally-groundless Securities Investigation initiated by Steven Dowling without anyone ever having filed a complaint!

Why didn’t Campbell say anything about what Mark Rodd swore in his 2013 Securities Commission Affidavit WITH SUPPORTING DOCUMENTS which Rodd said he filed to “correct” Dowling’s false claims? The answer will become clearer in coming episodes when other events happening during this same time period are discussed.

The Consequences?

None.

Posted in E-gaming, Provincial Politics | Leave a comment

Episode #6: Did Paul Maines Solicit an Investment from Paul Jenkins?

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Episode #6: Did Paul Maines Solicit an Investment from Paul Jenkins? 

The real story behind the CMT/764 lawsuit will only be fully known when the truth about what happened during a few fateful days in September, 2012 is revealed – when the first and only Securities Investigation (file #001) to EVER have been conducted in PEI was launched. There’s an incredibly-important story to be told about how the Securities Investigation against Paul Maines and CMT was shut-down immediately before Maine’s lawyer – flown in from Toronto – was about to cross-examine Dowling and other witnesses, but I’ll leave that for another day. This episode (and the previous two) are intimately tied to those events.

This final episode deals with additional false allegations made by Dowling alleging Paul Maines solicited investments for CMT/FMT.  In Episode #5, I mentioned I would deal with Dowling’s allegation that Maines solicited Paul Jenkins to invest in CMT/FMT, so let’s start there.

Dowling’s Claims about Paul Jenkin’s Investment in CMT/FMT

Dowling interviewed Paul Jenkins in the course of his 2012/13 Securities Investigation and made sworn statements in his affidavit about that encounter:

Para 25.  ​In September and October 2012 I [Dowling] met with Paul Jenkins. During this meeting he advised me and I believe that  A. In July 2010, a cousin of his, Garth Jenkins, introduced him to Mr. Maines.

That much is true. But in 25(a) Dowling says: “This introduction occurred at Mr. Maine’s Home, 140 Plug Street, Malpeque, Prince Edward Island.”

That’s not true – that introductory meeting happened in late July at Smitty’s in Charlottetown. As Jenkins clarifies in his Voluntary Sworn Statement given in 2013:

“He [his cousin Garth Jenkins] introduced me to Paul Maines in July of that year — I think it was late July – at Smitty’s one morning. And Paul Maines, you know, gave us a rough outlook of what transactions, you know, financial transactions are and, and would look like, and some opportunities of which, you know, it was totally foreign to me.”

Maines was discussing his business – not soliciting an investment – and Jenkins made that clear.  Yet Dowling goes on in the next subparagraph of #25 of his affidavit to say that when Garth introduced Paul Jenkins to Paul Maines in July, 2010, Maines approached him about investing:

“25(d) While at 140 Plug Street, he [Paul Jenkins] was approached by Mr. Maines about investing in a business venture.”

Again, that never happened.  That discussion happened exclusively between Garth and Paul Jenkins before Paul Jenkins had even heard of Paul Maines.

What Really Happened

CMT’s Factum provided two quotes from  “Exhibit 11”.  The first was from a July 14, 2010 email to Peter Marshall – the person handling the CMT/FMT investment account – wherein Garth Jenkins mentions his cousin Paul Jenkins to Marshall as another interested investor:

“Also, I have another interested investor in the round (my cousin) who would like to see the material. He actually may have a few targetco shells at his fingertips.”

Two days later, (July 16, 2010) Garth Jenkins emailed Paul Jenkins to inform him that Raymond James Ltd. (brokerage firm) was handling the CMT/FMT investments:

“See responses from Peter Marshall, VP at Raymond James.  Peter is Handling the financial raise for CMT.  Paul Maines is the VP of Bus Dev.  He is my future wife’s  cousin and he lives in PEI in Malpeque.  You can meet him next week if you  wish.”

Paul Jenkins not only became aware of the investment opportunity from Garth Jenkins, it was his faith in Garth Jenkin’s business smarts that made him decide to invest in the same venture in which Garth had to decided to invest – something he speaks about in a number of places throughout his sworn Statement and explicitly confirmed in response to a leading question he was asked about what motivated him to invest in CMT/FMT:

Q. Okay. And it would have been your discussions with Mr. Maines that would have motivated you to invest. Is that a fair statement? Or was it other things?

A. Well, it would have been my faith in, in my cousin

The Truth?

According to the documentation submitted to Judge Campbell, all communications and administration concerning CMT/FMT’s investment opportunity were handled by Peter Marshall, (V-P of Raymond James Ltd.) and CMT/FMT’s corporate lawyer (Gary Jessop, CMT lawyer at Blake’s & Cassels).

Despite providing no credible supporting evidence, Dowling swore numerous serious and false statements alleging activity (e.g., Paul Maines soliciting investors) of which Dowling had no direct personal knowledge but attributed to others – and repeatedly misrepresented what he allegedly was told by other individuals who actually had direct knowledge of those activities and events. 

Campbell relies on Dowlings false claims; however, as was pointed out in the previous post, Dowling did not file any documents in the Motion Hearing supporting the “hearsay” claims he made in his 2013 affidavit.

On the other hand, the sworn evidence I have provided in these last three episodes provided by those individuals with direct knowledge of the events and activities which Dowling discusses – especially his claims that Maines solicited investors – was before Campbell and was clearly ignored, otherwise Campbell would not have drawn the following conclusion in his decision:

” 484 Through the course of the investigation, Dowling obtained various emails and other documentation confirming that Maines was soliciting investments.”

The Consequences?

None.

Posted in Provincial Politics | 2 Comments

Episode #5: Did Paul Maines Solicit an Investment from Mark Rodd?

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Episode #5: Did Paul Maines Solicit an Investment from Mark Rodd?

In episode #4,  false  statements made in a sworn affidavit filed by Steven Dowling during the 2013 Securities Investigation claimed that Maines engaged in unauthorized investment activity by soliciting Jeff Trainor to invest in CMT/FMT.  Dowling did the very same thing with another investor, Mark Rodd::solicited

When Mark Rodd read Dowling’s sworn affidavit, out of frustration, he filed his own sworn affidavit to correct Dowling. As he put it in his opening paragraph:

Rodd

In Paragraph 10, Rodd refutes Dowling’s allegation that Maines solicited Mark Rodd’s investment in CMT/FMT:Rodd not solicited.JPG

One other paragraph in Rodd’s affidavit is of special interest. Dowling interviewed Rodd in the course of his Securities Investigation which Rodd discussed in several paragraphs of his Affidavit:

“Para 17:  At the outset, I advised Mr. Dowling that I was and continue to be happy with my investment. Nevertheless, Dowling seemed intent on making any number of statements that appeared to have the goal of discrediting CMT and Mr. Maines. He made few concrete statements in support of his allegations.”

What Judge Campbell Said about Rodd and Dowling’s “Evidence”?

There is only one direct reference to Mark Rodd in Campbell’s 172 page ruling, and that’s where he lays out the various claims of “malfeasance” made by CMT, including CMT’s allegations that Dowling made false statements  involving a number of people found in his sworn affidavit in Paragraph 177 (g): 

“….included information about CMT in his [Dowling’s] affidavit of February 14, 2013, that he either knew to be false or was reckless as to its validity with respect information obtained from Curran, Hashmi, Maines, John [sic] Trainor, Kellie Trainor, Mark Roddand Kevin Murphy, knowing the submission of the affidavit would cause substantial reputational damage to CMT…”

Judge Campbell does not address Dowling’s claim that Paul Maines “solicited” an investment from Mark Rodd. However,he does mention in para 485 that two other CMT investors informed Dowling that they were “not solicited by Maines,” but he doesn’t give names. Despite this information, in the preceding paragraph Campbell makes the following claim which is not supported with any credible evidence:

” 484 Through the course of the investigation, Dowling obtained various emails and other documentation confirming that Maines was soliciting investments.”

The full significance of these false claims against Maines and CMT will become clearer in subsequent episodes.

The Truth?

Steven Dowling swore that Paul Maines solicited investments from a number of people who became investors in CMT/FMT. Those baseless allegations led to the securities investigation and a decision by the PEI government to put negotiations with CMT/FMT on establishing a financial transaction hub in PEI on hold.  No documentary evidence “confirming that Maines was soliciting investments”  was ever presented by Dowling.  In fact, Dowling provided no supporting documents for the Motion to Dismiss whatsoever, nor did he swear a new Affidavit which would have allowed CMT’s lawyer to cross-examine him.

My next episode will explain how the 36 investors actually “invested” in CMT/FMT – including Paul Jenkins who was mentioned specifically by Dowling in his Affidavit – as well as Garth Jenkins, Paul Jenkins cousin.  It will explain how Paul Maines had no role in the investment side of the business: he was V-P of Business Development for CMT, and was working with numerous players focused on advancing the financial transaction hub. The documents Dowling (and Judge Campbell) reference are documents that explain CMT’s background, capacity, and the business model proposed for PEI –  they were not financial documents, and make no mention of how individuals can “invest” in CMT/FMT.

The Consequences

None.

Posted in E-gaming | 1 Comment

Episode #4: Did Paul Maines Solicit an Investment from Jeff Trainor?

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Episode #3: Did Paul Maines Solicit an Investment from Jeff Trainor?

Judge Campbell states, “Dowling’s affidavit does not state that Maines solicited the Trainors to invest. However, there is no denial an investment was made.”

In fact, notwithstanding Judge Campbell’s claim, 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.”

Jeff Trainor’s Affidavit completely refutes Dowling sworn testimony:

“With respect to paragraph 5(d) of the affidavit of Steven Dowling…in connection with my investment in Capital Markets Technologies, I confirm that I was not “solicited” by Mr. Paul Maines.” 

Judge Campbell goes on to state in paragraph 486 of his ruling that:

“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.”

Again, Jeff Trainor completely denies Dowling’s claim that Paul Maines sent an email and attachments to him, as is clear in paragraph 6:

dowling false claim

There are a number of other “corrections” to Dowling’s affidavit by Trainor, including that his wife never invested in CMT, that she never worked for RBC Securities, and that the amount of $30,000 cited by Dowling was inaccurate.  His affidavit essentially portrays Dowling as having harassed him – and especially his wife – and he provides the following reason why he decided to swear an affidavit in this matter:

“11.  I agreed to make this affidavit in large part by what I perceive to be unprofessional conduct of Mr. Dowling as a lawyer and as a representative of the Superintendent of Securities.”

Read the entire affidavit (5 pages) to get a sense of how Dowling inappropriately involved Jeff Trainor and his wife in this matter and misrepresented the facts in his sworn affidavit.

The Truth?

Despite unequivocal refutation by Jeff Trainor in his sworn affidavit refuting claims made by Steven Dowling that Trainor: (a) was solicited by Paul Maines to invest in CMT, and (b) received “an email and attachments” from Paul Maines with investment information; Campbell excuses the false information sworn by Dowling as insignificant saying: “There was no evidence presented to show any intentional misstatement by Dowling, and if the statements were incorrect through inadvertence, negligent conduct does not constitute misfeasance.” 

The Consequences?

None.

Posted in E-gaming | 1 Comment

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

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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:

Recruiting Package

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.

Posted in Provincial Politics | Leave a comment

EPISODE #2: CHRIS LECLAIR’S “INSIDER TRADING”

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

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BetterBackground

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):

Chris LeClair.JPG

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):Gary Scales Affidavit

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:

Chris Leclair Investment in AG report

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:

LeClairs Affidavit

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:

Chris Leclair cross

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.

Posted in Provincial Politics | Leave a comment

Truth & No Consequences: The Justice Campbell E-gaming Quiz Show

campbell

Remember that pioneering TV game show “Truth or Consequences?” On the show, contestants received roughly two seconds to answer a trivia question correctly before a buzzer sounded. If the contestant could not complete the “truth” portion, well…there’d be “consequences.”

In coming days and weeks, I plan to post not less than 25 separate e-gaming questions/issues of significance to the e-gaming story and Judge Campbell’s recent decision to dismiss the CMT lawsuit.

I’ll ask you how you would decide based on the evidence I provide, then see what Judge Campbell decided and wrote in his decision about that issue. You  will hopefully get the truth, but unfortunately with PEI’s version of this time-tested quiz game there are no consequences.

If you’d like to receive email notifications of new episodes in the series enter your email address and click the “Follow” button found on the right-hand side above the “Search”

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Question/Issue #1:  Did Lawyer Billy Dow know about the extension of the Memorandum of Understanding (MOU) with Capital Markets Technology?

Judge Campbell acknowledged that at the time discussions on extending the MOU were happening between CMT and the Provincial government, CMT’s lawyer  (Gary Jessop) met with Billy Dow on September 20, 2012.

In Paragraph 417 of his decision, Judge Campbell presents the communication as relating exclusively to a securities matter, and makes no mention of the MOU or financial transaction platform issue:Paragraph 417Why would Judge Campbell mention anything about Dow’s knowledge of the MOU extension when Dow swore in his Cross-examination testimony  – which was in front of Campbell –  that he had absolutely no knowledge of the MOU extension:

Dow Cross.JPG

“To this day, I don’t know” leaves no doubt that Dow testified under oath that he knew nothing about the MOU extension.  But don’t answer the question just yet!

Two days before Jessop (who lives in Ottawa) was to be in Charlottetown to meet with Dow on September 20, 2012 “...to discuss the [MOU] extension and other transaction issues,”  he informed Dow that the MOU had been extended “…by an exchange of emails” and suggested that “…it makes sense to properly paper the extension.”   

Jessop

The Truth?

Billy Dow swore he knew nothing whatsoever about the MOU extension in his Cross-Examination. Irrefutable evidence that Dow knew about the MOU extension was before Judge Campbell’s eyes but he never mentions that document, nor points out Dow’s false sworn testimony and completely misrepresents  the purpose of the meeting between Jessop and Dow on September 20, 2012, which was spelled out clearly in Jessop’s email which is inserted above.

The Consequences?

None.

Posted in E-gaming | 1 Comment

The PEI Law Society’s Disappointing “Response” to my Billy Dow Complaint

billdowI 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.   

IMG_4314

[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”:

first mover.JPGJudge 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:subsidaryYet 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.

Posted in Provincial Politics | 4 Comments

Judge Campbell’s Flawed E-gaming Ruling throws Auditor General Under the Bus

Judge Campbell

“A former provincial Liberal Party president and chairman of several election campaigns, Judge Campbell said that some critics cling to a ‘ridiculous’ belief that politically active lawyers always keep one eye trained on a judgeship. ‘I was involved in politics because I loved it,’ said Judge Campbell, who was appointed in 2001 by former prime minister Jean Chrétien’s Liberal government. ‘In PEI, politics is in your blood. It’s the provincial sport. Nobody is looking at whether they will get this or that reward.’ “

[Globe & Mail, “Appointment of Judges too Political, Critics Say,” May 16, 2005]

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

Campbell’s Liberal connections certainly didn’t hurt his chances of getting appointed to the bench, especially given that he had just a few years earlier – as a practicing lawyer – pleaded guilty to assault after punching a CBC producer in the face, a crime for which he was granted an “absolute discharge.”

In an award-winning article Paul MacNeil published in “Grassroots Editor” by the International Society of Weekly Newspaper Editors titled, “Are Gordon Campbell’s Robes Tainted?” he begins with some pretty strong words:

“The Appointment of Gordon Campbell to the PEI Supreme Court is a mockery to the justice system he now serves.”

You should read the entire article, but here’s an excerpt to give you the guts of the story:

MacNeil Article on Gordon Campell

What really makes a mockery of the justice system is Judge Campbell’s 172 page ruling last week against Capital Markets Technology (CMT) dismissing their lawsuit. I was shocked to see how blatantly obvious Campbell’s bias against CMT was in his reasons for dismissing CMT’s action. Campbell’s decision appears to have been written with one aim in mind: to protect the named defendants in the lawsuit, especially the former Liberal Premier Robert Ghiz.

I’ll provide just a couple of examples of Campbell’s flawed reasoning in this article:

  1. GHIZ’S ORDERED DESTRUCTION OF GOVERNMENT RECORDS:

Campbell’s total acceptance of Ghiz’s “sworn testimony” about authorizing the deletion of all his chief-of-staff’s records without first copying them as required by law is laughable.

The normal policy after people leave government is to copy or somehow “back up” all government records before asking ITSS to delete the electronic files and accounts.  The head of ITSS told members of the Public Accounts Committee that if the person doing the work had known the records had not been backed-up as required by the Public Archives and Records Act, ITSS would not have deleted them. The law completely forbids the wholesale deletion of important government records, but Campbell falsely declares that Ghiz followed standard procedure.

If you want a full explanation for why Ghiz shouldn’t be excused for ordering the destruction of government records read the Brief I submitted to Judge Orr in 2018, and you’ll see how wrong Judge Campbell is to say that what Ghiz did was done in the course of “normal business”.

2.  CMT’s INVOLVEMENT IN E-GAMING AND THE LOYALTY CARD PROGRAM

Note: This is a pretty long story in itself, but it ends with Judge Campbell throwing the Auditor General under the bus by discrediting the findings of her E-gaming report, so bare with me.

In CMT’s Statement of Claim, Paragraph 127 we read:

127.  In October of 2011, the Loyalty/VIP Program was given approval by the Department of Tourism and Culture and representatives of CMT created a survey to determine what local business operators would be looking for in such a program.

The government’s lawyer, Jonathan Coady responded in paragraph 32 of his Statement of Defence claiming government had “no knowledge” of any Loyalty Card Program.

I published an October 20, 2018 article titled “Government Amnesia and the Loyalty Card Program” after receiving Loyalty Card documents through an Access to information request, proving Coady’s claim false. Those documents were subsequently made public and entered into the CMT court record.  Judge Campbell nowhere mentions that those records prove that Coady’s claim that government had “no knowledge” of the Loyalty Card Program is completely false.

Campbell then mistakenly dismisses the entire issue of CMT’s involvement in the Loyalty Card Program by concluding that CMT had nothing to do with the Loyalty Card Program, only Simplex. Yet, the Auditor General confirmed CMT’s involvement in the Loyalty Card Program in many sections of her report, including section 4.3:

4.3 In May 2011, the former Deputy Minister of Tourism [Melissa MacEachern] contacted the Vice President of Business Development [Paul Maines] regarding the establishment of a loyalty card program for PEI. The work on the loyalty card overlapped the E-gaming initiative and involved both Capital Markets Technologies and Simplex.

And in section 4.6 the AG further states that: “These two companies [CMT and Simplex] worked together to assist government in the development of the Loyalty Card Program.” 

And in section 4.4 she provides additional details about CMT’s lead role in the project: TestThat local consultant mentioned was Eddie Francis, who was hired by CMT and took direction from Paul Maines. All the communication from the PEI government was with CMT in those 207 pages before Judge Campbell, and an email from the Deputy Minister (Melissa MacEachern) to CMT employee Eddie Francis confirming that the Loyalty Card Project “was a go” was also in front of Judge Campbell. If CMT wasn’t involved in the Loyalty Card Program, then how does Campbell explain that email? Eddie Francis worked for CMT, not Simplex.

Campbell completely fails to acknowledge the fact that CMT had exclusive North American rights to the Simplex Financial Transaction Platform and Simplex was CMT’s “technology partner,” as the Auditor General confirms in section 6.15 of her report.

Attempts to establish Simplex’s financial transaction platform in PEI were for both the e-gaming and loyalty card programs – and “overlapped” as the AG puts it – because both those initiatives would be with CMT if either were to go forward. That’s why the government negotiated the MOU for the establishment of the Financial Transaction Platform with CMT, not Simplex.

So, despite overwhelming evidence to the contrary from both the documentation and the Auditor General’s report, Campbell nonetheless makes the following outrageous claim [764 was a 100%-owned subsidiary of CMT]:

Not involved in Claim

Here’s how the AG describes CMT’s ongoing business relationship with the PEI government:cmt

Throwing the Auditor General under the bus probably wasn’t the smartest strategy for Judge Campbell: her fact-finding mission uncovered 10,000 e-gaming documents, even though she was denied access to many more, and many others were destroyed.

But here’s the thing: only a small portion of the 10,000 records were produced for Court, to say nothing of the thousands more the AG couldn’t access – and they continue to be withheld from CMT’s lawyer.

Perhaps if all those documents were produced – notwithstanding the thousands more that have been destroyed or have mysteriously “gone missing” – we might finally begin to see a more complete and truer story about what happened with the secretive and corrupt e-gaming fiasco.

A Two-fold Cover-up

The PEI government and its legal counsel (Stewart-McKelvey) have worked diligently over the past year to keep the most important documentation about what really happened with e-gaming from being entered into the court record for consideration by Judge Campbell in his decision.

Brad Mix – who was then (and still is) the Director of Business Attraction with Innovation PEI, and was heavily involved with CMT – had two years of his records mysteriously go missing (Mix believes a phone upgrade somehow wiped select years of files off the government server) during the key e-gaming period (2010-2012), and government was aware that they were missing even before the court case began.  That information was not disclosed, in violation of the Rules of Court.

When I asked for Brad Mix records in October, 2018 I wasn’t told they were missing, I was led to believe there never were any records after months of waiting. It was only much later (July, 2019) that it was discovered by the Information Commissioner that the government knew since 2015 that two years of Brad Mix’s records (during the period when Mix was heavily involved in e-gaming) were gone, and government knew that fact since at least early 2015.

In addition, hundreds of new e-gaming records identified through Access to Information requests continue to be illegally withheld by the government.

A cover-up has so far been achieved to some extent at least in two ways: (a) government failed to disclose relevant and material e-gaming documents and information about documents to the court; and, (b) government refused to release e-gaming records in compliance with the FOIPP Act in time to be considered in the lawsuit. 

The government is currently refusing to release Access records in accordance with the FOIPP Act with a number of e-gaming Access Requests, and there are at least four reviews of such requests with the Information Commissioner on the never-before used grounds in section 9(2) of the FOIPP Act, which amount to an unjustified refusal to release records: e.g., there are no legal grounds to withhold the documents – and the government isn’t arguing there are any grounds – government just won’t release the records.

But how does this government cover-up involve Judge Campbell?

Judge Campbell was repeatedly alerted to the fact that the Defendants to the initial action were refusing to produce thousands of e-gaming records by CMT’s counsel, John McDonald.  I sat through 3 of the 4 days of the Motion Hearing in April and heard first-hand how frustrated CMT’s counsel was that Jonathan Coady wouldn’t produce the government documents which MacDonald had identified as likely being material and relevant to the case.

MacDonald asked the Judge to accept some records that had come from Access Requests, explaining that his plan “B” was to get access to at least some of those undisclosed e-gaming records through a number of targeted Access Requests which had already been submitted many months earlier by Maines, but government was not releasing those documents despite a legal requirement to do so, so MacDonald was left to argue that to put his “best foot forward” he needed access to the records. Campbell wasn’t swayed.

In response, Campbell ruled that he would not receive or consider any new evidence or documentation. Ironically, just days after releasing his ruling, a number of those key Access documents were released by government, and over a thousand more are yet to be released.

I expect the Notice of Appeal which CMT has promised to file soon will contain a very long list of inaccurate claims, biased and selected reasoning, cherry-picking facts, and countless instances where important information relevant to the issues and arguments in Campbell’s ruling is completely ignored.

Campbell was a “case management” judge charged with moving the action along to some conclusion. Instead, he has failed to ensure a just hearing for CMT which indeed makes a mockery of our justice system.

If the Appeal Court doesn’t overturn Campbell’s decision and allow this matter to go to trial, then I’ll be satisfied that our judicial system in PEI is corrupt from top to bottom, inside and out.

 

Posted in E-gaming | Tagged , , | 5 Comments

Is another corrupt PNP scandal now operating in PEI?

PEI

Last week, I received a call from a person I consider “reliable,” informing me that a recent immigrant to PEI told him that he was able to get his federal Permanent Canadian Residency status thanks to the PEI government, through a quite elaborate scheme orchestrated by some PEI Immigration consultants and their companies.  What my source heard shocked him, and although skeptical, was able to verify it was true after speaking with an Island Immigration Intermediary.  Here’s how the scheme works.

An Island business (I wasn’t informed which one) was paid $30,000 by an Island Immigration Agent (I wasn’t informed which Island Intermediary) to simply offer him a job and pretend he was working for his company if ever questioned. Then the immigrant provided the Intermediary with $170,000 to cover the costs of the job, including his own salary, his employee contributions and taxes, as well as all the employer’s deductions and costs.

I thought this was pretty-far out there to be honest, but I trusted my source enough to pass this information on to a reputable local journalist.

Then on Sunday, (September 16, 2019) I received an email from my initial source with a link to a CBC article and a note saying: “This is what I’m talking about.”

After reading that investigative report, there is now absolutely no doubt in my mind that what I was told about another corrupt PNP scam operating in PEI is sadly true.

CBC Reporter Geoff Leo broke the story on Saturday (September 15, 2019) titled: “Toronto immigration firm charges $170K for fake Canadian job,” Geoff Leorevealing shocking details about how immigration consultants are using exactly the same approach as was explained to me last week to scam PR status out of the government.  I trust you will take the time to read this important article in its entirety, but for the purpose of this blog article, I want to highlight a few details that connect directly to Atlantic Canada and PEI.

Geoff Leo’s Investigation of PNP Immigration Fraud

Posing as a wealthy foreign national seeking permanent residency in Canada – and with the help of a translator – Mr. Leo established a relationship with a Toronto-based immigration consulting company, WonHonTa Consulting Inc., and eventually received a job offer proposal costing $170,000 for a bogus job, an amount explained as needed to cover the “Canadian employer’s fee, the paper trail, and their own wage.”

The owner of WonHonTa suggested either Saskatchewan or Atlantic provinces for the provincial nominee application:

Song recommended the undercover journalist consider either Saskatchewan or Atlantic Canada because the qualification requirements are low and the wait times are short. He said it’s $180,000 for a job in Saskatchewan or $170,000 for the Atlantic provinces.

The reporter was told that WonHonTa had placed more thanIf you don't work a dozen people in Atlantic Canada in the previous year, saying his company had a “…national network of head hunters who help recruit willing employers,” some of which he claimed were government immigration officials.

The following information in the CBC article grabbed my attention:

Erica Stanley, an immigration consultant in Charlottetown, told CBC she’s been flooded with calls from foreign nationals looking for an employment offer. “So, just the volume of phone calls is ridiculous. And my inbox is full of website inquiries,” Stanley said. “They’re like, ‘Well, we’re willing to pay.’ I said, ‘Oh I’m sure you are but it’s illegal to do that.’ ‘Oh, but everybody’s doing it.’ I said, ‘Well, that’s nice, then you can find someone else who can do it.'”

I know Erica very well. When I was the Executive Director of the PEI Association for Newcomers to Canada from 2000-2010, Erica was the Coordinator of our Community Outreach Program for most of that time, before she left to work with international students at UPEI.  She later moved into the immigration consultant business (Mazu Consortium Ltd) and is currently one of the 12 intermediaries authorized to submit PNP nominations to the PEI government.

Below is a list of the twelve (12) immigration companies or “intermediaries,” but first a bit of background – up until recently, there were only seven (7) intermediaries:

Seven Intermediaries

On June 28/17, under the former Liberal government, Executive Council authorized Island Investment Development Inc. (IIDI) to issue a Request for Proposals (RFP) to expand and designate up to 10 Island agents for a five-year term. In the end, 12 companies were granted “intermediary” status.

For reasons I’m not privy to, HP Consultants was dropped from the initial seven (Henry Philips currently has a lawsuit against the PEI government regarding this matter) and six new companies were added to the original list. The current intermediaries are as follows:

12 companies

I have full confidence that Ms. Stanley would never be involved in such an unethical and illegal scam, and her quick assessment that what she is continually being solicited to do by would-be immigrants is “illegal,” – and her candid discussion with Geoff Leo about that solicitation – bears that out.

However, there are eleven other companies feeding PNP nominations to the PEI government, and it would appear one or more of them are involved in this PNP corruption.  I was told by my source that there is such a shortage of skilled construction workers that the Intermediaries are choosing occupations in this sector to expedite processing times and avoid scrutiny.

Little is apparently being done to follow-up on worker applicants by Canadian Immigration officials – both federal and provincial – but the statistics with those audits and reviews that have occurred should definitely have raised enough red flags for government to take action to put an end to this corrupt practice, at both federal and provincial levels:

“21 of the 33 files chosen for review found the applicants were not working for the employer or had never worked for the employer.” 

It is important to understand that there are actually several different PNP programs or “streams” under which workers can come to PEI and become Permanent Canadian Residents:  the one that allows this particular scheme to operate in PEI is called the “Atlantic Immigration Pilot”.

The Atlantic Immigration Pilot

This federal program was launched in March 2017 in all four Atlantic provinces, and has just recently been extended for another 2 years, so it’s really no longer a “pilot” project. It is an employer-driven program that facilitates the hiring of foreign workers. All principal applicants arriving in Canada under the pilot program must have a job offer from a designated employer.

How many designated businesses for the Atlantic Immigration Pilot exist in PEI?

A CBC article published October, 2018 stated that: “More than 200 companies on P.E.I. are now designated to apply to hire foreign nationals under the Atlantic Immigration Pilot Program (AIPP).”  The PEI government needs to make public an updated list of those designated companies, and I suspect there will now be many more companies on the list.

It would be interesting  to see exactly how many of the total number of designated businesses are “newly registered companies”and bona fide businesses, and how many are doing little or no business beyond offering bogus jobs to wealthy foreigners so they can become Permanent Residents of Canada, and receiving extremely lucrative sums for doing essentially no work. 

Immediate PEI Government Action Required

As you can see from the most recent Annual Report of Island Investment Development Inc., there are really only about 4-5 hundred Atlantic Immigration Pilot files that would need to be investigated.

Immigration stats PEI

And by “investigate,” I mean sending someone to the workplace (multiple times if necessary) to discover whether the person is actually working for the company as stated on the paperwork –  which we can assume will all be in perfect order, and “technically” meeting all the terms and conditions stipulated for the program.  As the Immigration consultant told Geoff Leo:

“For Immigration Canada, they are understaffed,” Liu said. “The massive size of the country makes it impossible to pull resources for site visits just to find out if you are actually working at this company.” However, in the unlikely event that an immigration official makes an unexpected site visit to see if the foreign national is at work, Liu said the employer would say the worker was out of the office on business.

A less comprehensive and extensive investigation requiring fewer resources and time would look at just those files in the Atlantic Pilot Program processed since the PNP-Investor Program was shut down in September, 2018, as a result of fraud concerns (See: “Citing concerns, P.E.I. shutting down PNP’s immigrant entrepreneur program“).

I suspect that it was at the time that the PNP Investor stream ended that creative thinking caps were dawned to come up with a new way to keep already lined-up Investor clients happy and the big bucks flowing.

The Atlantic Immigration Pilot allotment for PEI in 2018 was 220 people – a provincial annual allotment which Jamie Aiken, the executive director of P.E.I.’s Office of Immigration reported would easily be filled – so an initial investigation should focus on Atlantic Immigration Pilot files processed in the last quarter of 2018, and the first three quarters of 2019 (likely a couple of hundred people). A thorough examination of those cases would tell the tale on whether the people receiving immediate Permanent Resident status thanks to the PEI government’s nominations are actually “at the job”.

If the statistics cited in the CBC Investigation article by Geoff Leo are accurate, Atlantic Canada – and PEI – are clearly infected with this latest PNP malignancy.

The King government needs to immediately reassure Islanders that this matter will be properly dealt with by announcing some form of investigation or inquiry by an objective agent with a credible degree of independence (perhaps the RCMP) to determine the extent to which this egregious and fraudulent scheme reported by Mr. Leo is operating in PEI.

Posted in PNP | 7 Comments

PEI’s NEW “BUSINESS CORPORATION ACT” MUST BE AMENDED IMMEDIATELY

corporate secrets

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:

 

But what possible use would a new “name search” in the Business/Corporate registry be if the new Business Corporations Act doesn’t require the names of corporate shareholders to be inputted into the registry? None!

Clearly, amendments to the Business Corporations Act (or “regulations” – depending on where the authorization to withhold shareholder names is granted) should be the SECOND order of business when the House reconvenes this Fall. The FIRST order of business should be to amend that same legislation to ensure that no secret, corporate-to-corporate land transfers are ever allowed again in PEI, and the Irving family be forced to sell the 2,200 acres to the local farmers who were willing to pay $6,200 per acre for it. The THIRD order of business would be to put a name search on the Corporate/Business registry.

For the government to do anything less would make a complete mockery of the PC commitment to provide Islanders with a truly open and transparent government.

Posted in Provincial Politics | 4 Comments

Breaking News: Brendel Farms had a “done deal” with local farmers; then sold to Irving

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!