Episode #12: Recruiting Package? What Recruiting Package?
If you have been following this series, you’re hopefully beginning to get a better understanding of how CMT/FMT’s business relationship with the PEI Government first began in earnest in 2010. Garth Jenkins got the ball rolling after introducing his cousin Paul Jenkins to Paul Maines at Smitty’s restaurant in Charlottetown, near the end of July, 2010.
I’ve already written a lot about the corporate strategy to transition CMT to FMT and the RevTech/TargetCo fundraising launched to facilitate that process. But there were other things happening from late 2010 as well.
After FMT was incorporated as a 100%-owned subsidiary of CMT and Paul Jenkins became the sole director – as well as the local “face of the company” – he immediately began discussions with a number of key people in government about the FMT/Simplex business opportunity.
Not long into those discussions, Innovation PEI began a more formal process to explore the feasibility of establishing the Financial Transaction Platform that CMT/FMT could deliver, in conjunction with it’s technology partner Simplex, in PEI.
The plan was to work towards a formal agreement with the PEI Government culminating in a public launch announcing (1) the establishment of a Financial Transaction “Hub” in PEI; (2) an agreement with CMT/FMT; and hopefully, and (3) the successful recruiting of some gaming companies. That public launch almost happened in the Fall of 2012, and would have, if not for the fateful Securities Investigation.
As was explained in the last episode, Maines/FMT had successfully recruited Virgin Gaming, which prompted Wes Sheridan and the secret “E-gaming Working Group’ to declare a marriage between the two projects (e-gaming and financial Transactions Platform) and CMT/FMT was at the very center of that initiative. So let’s now take a look at what Judge Campbell had to say about these significant developments in 2010-11.
Judge Campbell on the Feasibility Study and Recruitment Package
What did Judge Campbell say about the PEI Government commitments and promises made to CMT/FMT in the Recruiting Package, and the many significant events that happened in the pre-MOU period? Events that featured prominently in CMT’s Statement of Claim? Here are three paragraphs from that section of the Claim:
Was there any documentary evidence before Judge Campbell to substantiate these claims? Or at least raise sufficient concern as to warrant a trial, where witnesses and evidence and full cross-examinations happen (remember, Campbell didn’t require Dowling to file an Affidavit or any documents in the CMT lawsuit, and Dowling wouldn’t allow cross-examination of his 2013 Securities Commission Affidavit)?
I used a two-sentence paragraph from Campbell’s ruling a couple of times already in this series, and I’m going to use it again, because it is such a pivotal paragraph that reveals how Judge Campbell somehow came to the conclusion that CMT/764 (FMT) was never involved in any way with the “so-called e-gaming project.” I want to now draw your attention to the second sentence in that key paragraph:
What else does Campbell say about those particular “statements in the amended statement of claim” ” that “referred to events during that time period” ? Nothing.
In fact Campbell ignores everything that happened before February, 2012, (when the PEI Government formally “ended” the e-gaming initiative). He obviously had to acknowledge that CMT/FMT made numerous statements and serious alleged claims about relevant events in the pre-MOU period in the Statement of Claim; however, by concluding CMT/FMT had nothing to do with anything relating to the e-gaming project, Campbell completely excuses himself from having to say anything more about those events in the critical pre-MOU period, and quickly moves on.
[Question: Could a lawyer please email me anonymously and tell me if I’m missing something here? Isn’t a Judge supposed to provide “reasons” for a conclusion that had the “kill-shot” effect of dismissing a major lawsuit? Especially when there is so much documentary evidence against drawing such a conclusion?]
The e-gaming initiative to locate gaming companies in PEI and establish FMT as the deliverer of a Financial Transaction Hub – with multiple applications only made possible with the establishment of a Financial Transaction Platform (e-gaming; the PEI Loyalty Card being developed by Tourism PEI; etc.) – did eventually lead to the MOU and seemed on track to being realized.
Yet, it’s as if Campbell thinks a MOU was somehow miraculously signed between the PEI Government and FMT “out of the blue” mid-summer of 2012, with no prior relationship between the PEI Government and CMT/FMT, and no relevant documentation produced and before him about that relationship that would say anything to the contrary.
What Campbell fails to mention in his Decision is that the PEI Government had already made a substantial and more foundational “commitment” to CMT/FMT about a year and a half prior to the much-discussed MOU in the Summer of 2012.
A Slight Digression: If you’ve been following my writings on e-gaming, you’ll recall that I filed an official complaint with the PEI Law Society against lawyer William Dow (Billy) earlier this year. Susan Robinson, the Secretary-Treasurer of the Law Society, responded by completely ignoring my complaint, treating it as if it was the very same complaint previously field by the former leader of the NDP, Michael Redmond.
Robinson played that card even though I explicitly and repeatedly asked her NOT to make the mistake of confusing the two separate complaints. You can read my letter and her response to see how completely my entire claim was ignored and never addressed. I expected as much, to be honest, even though it is, quite frankly, totally bizarre for a lawyer to have done such a thing. But I suspected there was just no way she was going to acknowledge that Billy Dow was already a lawyer on the e-gaming file when he took out his investment in RevTech, and that he knew exactly what he was doing with insider knowledge when he did so.
Like Susan Robinson at the PEI Law Society, and Steven Dowling at the PEI Securities Commission, Judge Campbell at the PEI Supreme Court made the same deliberate decision to completely ignore the pre-Mou period. He uses just one two-sentence paragraph in his 172 page report to completely dismiss everything and anything in the pre-MOU period with no explanation or evidence – just a mistaken claim that CMT/FMT had nothing to do with e-gaming.
Campbell refused to address those pre-MOU events that would have disproved all the false public claims made by Ghiz and Sheridan and many others who said they had never heard of Paul Maines, or denied having any knowledge CMT had anything to do with the PEI Government.
Campbell did this notwithstanding pages of supporting documentation (Exhibits) pertaining to the pre-MOU period that establish the evidentiary foundation for CMT’s entire Statement of Claim. The documents I’ve cited above were all BEFORE Judge Campbell.
If the PEI Government (a) pays a consultant $10,000 to undertake a “feasibility study” on establishing a Financial Transaction Platform and Gaming initiative through an agreement with a company like CMT/FMT; and then (b) “recruits” that company to establish a new business, making a number of “promises” and commitments spelled out in a formal “recruiting package;” and then that company (c) accepts those terms and conditions and takes dedicated and costly steps over a significant period of time to establish that business in PEI, as per the suggestions and recommendations of the PEI Government; and then (d) the PEI Government suddenly says: “go away, we don’t know you!”……well, I’m thinking there might be a potential legal breach of contract issue deserving at least a comment from the Judge adjudicating the case. That’s what CMT alleged happened in its Statement of Claim, and the documents show that’s exactly what happened.
Recruiting Package? What Recruiting Package? Oh…Now I remember!
Remember the fuss a few years ago when the PC Opposition tabled a document in the Legislative Assembly showing that the Ghiz government had provided “tax advice” to a company it was recruiting to PEI by suggesting it set up a “subsidiary” company to use as an offshore tax shelter to lessen the amount of Canadian taxes it would have to pay after setting up in PEI? This is from a CBC story about that:
A section on the logistics of establishing a business on P.E.I. included the following line. “Most companies set up subsidiary of the parent company and flow revenue and costs through an off-shore operation (i.e. US), limiting the tax implications in Canada.” Aylward said it is one of the most shocking documents he’s read in his time as an MLA. “To think that we have a branch of government that’s out there recruiting companies to come to Prince Edward Island to do business, but yet we’re giving them an idea of how to avoid paying corporate taxes here on P.E.I. by setting up a parent company offshore,” he said. “And it’s in black and white.”
Well, that company was CMT/FMT. The CBC article went on to report that the PEI Government’s official explanation for including this tax-avoidance strategy in the Recruiting Package was as follows:
Mary Moszynski, the acting director of communications for the province, said the brochure sent to CMT is one-of-a-kind, and the work of a former employee.…She said management did not review the document and would never have sanctioned that paragraph.
That’s what Ms. Moszynski was clearly told to say – the truth was something else entirely. ..and yes, as you’ll see, management did indeed review and sign off on the “one-of-a-kind” document.
The document was not a “brochure” sent it out to CMT/FMT at all – it was an 11 page “Recruiting Package” tailored specifically to FMT, spelling out what the PEI Government would offer CMT/FMT if it decided to establish a Financial Transaction Hub in PEI.
And it wasn’t a “former employee” of government who put together that Recruiting Package. It was a person Innovation PEI had contracted to undertake a feasibility study, Patrick Mason, described in the contract as “…a well respected person in the financial services sector.”
Mason was paid $10,000 for the “feasibility study” on CMT/Simplex establishing a Financial Transaction Platform in PEI. The plan was also to have FMT’s Financial Hub service new gaming companies, which the PEI Government was hoping Maines/FMT could recruit to PEI, one of which was already a secured client of CMT/Simplex which Maines had convinced move to PEI. This was key – as you’ll see in a minute – because the PEI Government had indicated that bringing that “first” gaming company would secure FMT/Simplex as the PEI Transaction Platform.
It was Paul Jenkins who first got the ball rolling with the feasibility study leading up to the Recruitment Package in discussions with some of his key government contacts, including Chris LeClair and Brad Mix. On January 31, 2011, Patrick Mason wrote to Philip Walsh informing him that:
That funding came through, thanks to Ghiz’s Chief-of-Staff, Chris LeClair, as is evident in the following email which Paul Jenkins sent to Patrick Mason on January 30, 2011:
After completing the “Business Development” side of this initiative, and putting Philip Walsh in touch with Patrick Mason, Maines moved on to other work to identify and recruit gaming companies, leaving Mason, Walsh and others with technical expertise do their work, sending the following email:
A contract with Patrick Mason was drawn up and signed on February 28, 2011, and was authorized by Brad Mix and then-CEO of Innovation PEI, Neil Stewart. A “Summary” for that contract stated:
That may be difficult to read, but it’s the first sentence which is really key:
“Innovation PEI is going to contract Pat Mason to undertake a feasibility study and market presentation on the establishment of a back office centre for the financial services / gaming sector.”
As Mason had earlier indicated in that January 31, 2011 email to Philip Walsh:
“I have been involved with the gaming file on PEI and can tell you that their [PEI Government’s] key priority at this time is to attract a gamer who will move processing, jobs and revenue ( via a taxation regime) to PEI. As such, the first gamer to “sign” will have a certain say in the requirements of the platform.”
Maines was able to “deliver” that company (Virgin Gaming) before the feasibility study was completed, notifying. CMT/Simplex were already in discussions with Virgin Gaming to come onto its platform as early as November, 2010 [Note that the email was cc’d to Paul Maines].
By March – before the Recruitment Package went out to CMT/FMT – Paul Jenkins had managed to connect Chris LeClair with Rob Segal from Virgin Gaming in a Conference Call Mtg to discuss Virgin moving to PEI.
That CMT/FMT was able to deliver on its commitment to bring Virgin Gaming to PEI was huge for the PEI Government, and significantly influenced the commitments and promises made in the Recruitment Package.
It was Patrick Mason who delivered the “Recruiting Package” to Paul Jenkins (CMT/FMT) when it was complete (not an former “rogue” employee delivering a brochure), which Jenkins then forwarded to Philip Walsh at Simplex on March 14, 2011:
Reviewing the Recruiting Package, it becomes clear that the PEI Government made a decision to formally “recruit” CMT/FMT to PEI to establish a Financial Platform, and made a number of significant promises in the recruitment package – all of which were outlined in CMT’s Statement of Claim.
By this time FMT had of course already been incorporated with Paul Jenkins as the sole director while funds were being raised (RevTech/TargetCo), but the recruiting package nonetheless reiterated the importance of having a local company, suggesting a 100%-owned subsidiary (which is exactly what CMT did).
Here’s a small part of what was in the recruitment package to give you a sense of what was offered to CMT/FMT:
Ironically – and sadly – one of the promises (clearly playing on the “we’re small, we’re beautiful” line) was that there would be no-red-tape and a bureaucracy-free “partnership” relationship with Government:
Yes, the PEI Government did indeed go “beyond our original agreement,” as promised, but unfortunately not to CMT/FMT’s benefit.
Special Request for Assistance:
I’m wondering if a few readers might be willing to take a minute to make sure there isn’t something wrong with the “search” feature on my computer. Here is a link to Campbell’s Ruling. – I couldn’t find one single occurrence of any of the following in the Ruling. I find this so unbelievable that I’m having a hard time accepting it’s true. I therefore feel compelled to rule out the possibility that my computer has a search “glitch” before making any definitive pronouncements about Judge Campbell negligently refusing to address major segments of CMT’s Statement of Claim, so do a search for the following and let me know if you find anything:
Patrick Mason – Feasibility Study – Recruitment Package
Judge Campbell never denied that a “recruiting package” was provided to CMT/FMT by the PEI Government – how could he, it was tabled in the House and the mainstream media covered it. He just totally ignored mentioning it in his decision.
The next episode will take a look at another part of the story Campbell really got wrong. Yes, it once again involves Brad Mix – the PEI Government employee who features so prominently at every turn in this entire story but produced no records for the lawsuit – NONE. Why?
Well, lawyer Jonathan Coady told the court that everything relevant had been produced by Brad Mix, but as a result of an Access to Information request and subsequent review by the Information and Privacy Commissioner, it was discovered a few months ago that Brad Mix had – as the PEI Government put it in it’s confession letter to the Information Commissioner – a “gap” in his records. As it turns out, that “gap” is ALL HIS RECORDS for exactly the 2-year period beginning when Mix first discussed FMT with Paul Jenkins in 2010 when he took the lead on recruiting CMT/FMT to PEI to establish a Financial Transaction Hub right up to and after the Securities Investigation.
The Information Commissioner has been investigating this matter since I first filed a review last January, 2019. That review has since been combined with four additional reviews also involving missing records of Brad Mix from another applicant .
The next episode is all about what Brad Mix was up to after Dowling instigated the Securities Investigation in September 2012, and of course, how Campbell misinterprets those events.