The PEI Auditor General – Jane McAdam – did some amazing work with her e-gaming investigation given that she (1) had to fight the MacLauchlan government for months just to get records,; (2) was denied access to most of the government e-gaming project records because they were at McInnis Cooper law firm and they refused to give them to her; and (3) the entire trove of e-gaming records belonging to several senior e-gaming government officials (Rory Beck; Chris LeClair; and Melissa MacEachern) were completely destroyed by Robert Ghiz and Neil Stewart. Nonetheless, McAdam somehow managed to uncover a significant amount of evidence documenting numerous improprieties and illegal activities.
The ‘weakness’ with her report is the language she used to describe those events and activities – it was a writing style which tended to obscure the illegal nature and sordid implications of the activities she reported. For example, Ghiz’s chief-of-staff and Deputy Minister back in 2011, Chris LeClair, clearly engaged in “Insider Trading” (See: Why wasn’t Chris LeClair Charged with Insider Trading?) when he and his wife bought shares in an e-gaming company based on Insider information, yet McAdam only referred to that purchase as an “apparent conflict of interest”.
Likewise, the Auditor General stated only that the manner in which the former PEI Minister of Finance who was heading up the e-gaming project – Wesley Sheridan – paid for the same e-gaming report TWICE was “problematic.” It was at one and the same time both a blatant case of MISAPPROPRIATION OF FUNDS and FRAUD. I’ll explain.
CMT/Simplex were commissioned to produce an e-gaming report for the PEI government costing $60,000, and that’s exactly how much CMT/Simplex received for that report.
As the AG explained in her report under section 3.52 (see below), the funds covering the cost of that report came from a PEI government grant, and a clause in that grant stipulated that the PEI government would have access to that report. In other words, that report was available to the PEI Lotteries Commission “free-of-charge” as per the terms of the initial government grant that paid for the report.
So why did Wes Sheridan take $60,000 from PEI’s portion of the Atlantic Lottery Corporation’s (ALC’s) revenue to “buy” the e-gaming report he already had? Why? Because the Ghiz government was facing something of a dilemma trying to figure out how to come up with $390,000 which the lawyers at McInnis Cooper law firm were claiming they were still owed on the e-gaming file as of the Fall of 2012 – 25% of which they billed after the e-gaming project had already ended in February, 2012! At the time they submitted that bill to the Ghiz government, there was only $300,000 remaining from previous e-gaming loans and grants, which left a short-fall of $90,000.
According to the AG (see above) McInnis Cooper agreed to “write off” $30,000 of the $390,000 amount, which left $60,000 outstanding, which just so happened to be exactly what that CMT/Simplex e-gaming report cost. Bingo! That was apparently Wes Sheridan’s “aha” moment.
He must have thought to himself that given that the e-gaming project had already ended in February, 2012, there was no possible way to justify any further e-gaming loans or grants, so – in his dual role as both Minister of Finance and Chair of the PEI Lotteries Commission – Wes Sheridan came up with an ingenious (but illegal) scheme to either keep the other PEI Lotteries Commission board members and staff at the Atlantic Lottery Corporation (ALC) completely in the dark about what he was really up to – or mislead them by pretending to have to “buy” a report that he already paid for [since the AG took care to point out that senior staff at the ALC told her that they did not “request” the report, and that they had purchased it on the direction of Wes Sheridan]…..as part of a fraudulent scheme he concocted to access funds to pay that troublesome $60,000 outstanding e-gaming bill balance from McInnis Cooper law firm.
What Wes Sheridan did is a text-book case of both “misappropriation of funds” and “fraud”: the funds were “misappropriated” because they were used for something other than what he claimed they were to be used for; and the funds were acquired “fraudulently” because the reasons he provided to the ALC and staff of the PEI Lotteries Commission (if he told them at all) were entirely false.
So why wasn’t Wes Sheridan charged with misappropriation of funds and fraud? That’s the $60,000 question now isn’t it!