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!

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

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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