This episode revisits issues dealt with in previous episodes concerning the Securities Investigation against Paul Maines and CMT initiated in September 2012 by Steven Dowling, a PEI Government Department of Justice lawyer at the time.
We’ll be looking at those players, actions, and events with new glasses, however, as revelations over the past couple of months shed new light on those actions and events. Things not considered “significant” just weeks ago have suddenly become incredibly important, providing new keys to unlock puzzles making sense out of more and more things, and the connections between them, providing a clearer understanding of what really happened and why.
Such is the case with Shane MacEachern. Never once mentioned in the local media in connection with the e-gaming scandal, Paul Maines, CMT, the Securities Investigation, CMT lawsuit, or the bid to establish FMT as the local company delivering the CMT/Simplex Global Transaction Platform for North America in PEI.
Nor was MacEachern ever called before the Public Accounts Committee investigating e-gaming. He was referred to just once in the Auditor General’s report, but only as a faceless “broker” handling the RevTech reverse-takeover Investment money-raise; his name wasn’t provided.
The Significance of the Pre-MOU Period
More and more pieces of the investigative e-gaming scandal puzzle are now coming together. As sections of those pieces are linked, they reveal what was really going on behind the shroud of secrecy which the PEI government draped around its business relationship with Paul Maines and CMT/FMT.
That Shroud is comprised of materials like (1) a “scorched-earth” policy of e-gaming document destruction; (2) unexplained missing records; (3) non-disclosure of materially-relevant documents to the Court; and now, (4) contempt of a PEI Supreme Court Order to release government documents to Paul Maines requested in a FOIP request, which Maines has a legal right to obtain under the FOIP Act, and which the PEI Government had finally agreed to provide when Deputy Minister Erin McGrath-Gaudet signed a Consent Order issued by Information and Privacy. Commissioner, Karen Rose.
In this quite extensive article, I’m providing a substantial amount of new information within a new framework and context, so it really was impossible to keep this episode any shorter. I was considering breaking it up into a “mini-series,” but the information is best kept together.
The conclusion from the documentary evidence will – if you’re able to persevere through the 20 pages or so – leave you completely gob-smacked. There truly has been so many “shocking” scandals identified within the entire scandal, however, for this one, it’s important to carefully work through that new information leading to the conclusion, not present the conclusion and then see how it was reached; there’s too much new material to cover.
In this episode – which is really the second-last in the series – since episode #25 will be a synopsis of the key findings from all previous episodes – I want to show how the PEI government’s business relationship with CMT/FMT started, in earnest, in the Fall of 2010, gained significant momentum over the winter, leading up to a big, expensive, and secret “gala event” with CMT/Simplex at the provincially-owned Crowbush golf course (as Steven Myers put it in the video clip I present a little later in the episode) back in May 2011.
The truth is that CMT/FMT had a dynamic business relationship with the PEI government since 2010, and there were several early “stages” of development in that working business relationship that had been identified, agreed upon, initiated, and in some cases, achieved (such as CMT’s success in recruiting Virgin Gaming to PEI as a major client for the FMT Global Transaction Platform).
‘There were ongoing discussions and negotiations aimed at eventually reaching a formal agreement, and there were even hopes that progress could lead to a major public announcement later in 2011 to inform Islanders that FMT would be hosting a SWIFT-certified Global Transaction Platform in North America from little ole Prince Edward Island, and Virgin Gaming, a global gaming leader, would be relocating to PEI as a major client on the Platform.
The ridiculous narrative presented by Justice Campbell in his nearly 200-page ruling dismissing the CMT lawsuit rests entirely on two foundational factual errors: (1) that neither Paul Maines nor CMT/FMT/764 had anything to do with e-gaming, and (2) that FMT/764 had absolutely no business relationship with the PEI government prior to the signing of the MOU in July 2012.
Here are just two examples of statements that show how Campbell effectively “severed, then discarded” anything that happened outside the MOU period (60 days + a 30-day extension):
Paragraph 17: Neither CMT nor 764 were ever involved in any way with the so-called e-gaming project.
That’s why those two years of missing Brad Mix records (the ones related to the Order on my review which the Information and Privacy Commissioner will be issuing soon) were deemed to be totally “irrelevant” by Judge Campbell. It didn’t matter to him what was in the documents, they were of no value to the plaintiff, in Campbell’s view, because they fell outside the time scope of the MOU period:
Paragraph 652: …The claims against Mix specifically relate to actions occurring “during the course of the MOU” or “during the period of exclusivity”, which is the same period of time as the MOU was in place. The issue regarding non-archived sent emails relates to a period well before that, being 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.
What a completely wrong-headed way to look at those missing records. Limiting the scope of consideration on whether those records were of “relevance” to specific “claims” against Brad Mix completely fails to acknowledge that Brad Mix was a key player throughout that entire 2 year period, both sending and receiving many key documents that would shed light on countless issues, including claims against other named Defendants. Tying those key documents to only Brad Mix is a misdirection away from, well, everything that’s about to follow in this article.
Campbell puts the complete onus on Maines to prove that Brad Mix’s emails from the pre-MOU period are relevant, but how exactly was Maines or his legal Counsel supposed to do that when: (1) information was not produced and made available to the Court by Counsel Coady, denying the Plaintiff’s knowledge of the particulars and details of those materially-relevant emails and documents that existed; (2) Coady had stated during Brad Mix’s Cross-examination last January 2019 that he believed he had received all of Mix’s emails; and (3) Coady had already told the Court that he had disclosed all relevant documents, yet, in fact, did NOT inform the plaintiff or Court that 2 years of missing records from Brad Mix that were once in the possession of the government were missing, something he was required to do by law; and (4) particular Brad Mix emails eventually identified in inbox’s of other government employees with whom Brad Mix worked on the file, and requested through targeted FOIP requests, are being illegally withheld by the King government.
Judge Campbell’s refusal to acknowledge the 2-year relationship between CMT/FMT and the PEI government – and everything that transpired between them since 2010, all of which paved the way for the MOU in 2012 – was made easier by Coady withholding documents that would have swiftly and unequivocally demolished Campbell’s rationale for concluding nothing of importance happened before the MOU was signed in July 2012.
In previous episodes, specific issues in Campbell’s ruling were addressed. In this episode, I’ve structured it to show how Campbell’s reckless “severing” of the pre-MOU period represents a fatal flaw in both his legal argument and his ability to tell a truthful story.
To correct Campbell’s distorted narrative, it’s necessary to start from the beginning and tell it the way government documents say it happened. When you’ve finished reading this episode, I want you to remind yourself of this one thing: Absolutely everything discussed in this episode happened in the pre-MOU period. They say if you want to get to the bottom of a covered-up secret scandal just follow the money.
Follow the Money
But first, we have to understand why there was a need for money. To grasp that, we need to recall how and when CMT/FMT first became engaged with the PEI government.
For the purpose of this article, I’ll provide only as much information from previous episodes as needed to provide sufficient context to support the claims being made, and the conclusions that are drawn.
1. Genesis of the “CMT/FMT-PEI Gov’t” Business Relationship
Garth Jenkins introduced Paul Maines to his cousin Paul Jenkins at a meeting at Smitty’s in the summer of 2010 – 2 years before any talk of a MOU. In a July 16, 2010 email, Garth suggested Paul meet Maines:
I’ve already provided the documentation on that initial meeting in a previous episode, but again, with a different purpose in mind: previously it was to show how Paul Jenkins became aware of the CMT investment opportunity from his cousin Garth Jenkins, not Paul Maines.
We revisit that meeting with an eye to understanding the money trail, why the money was being raised, who was involved in raising the money, who actually invested, and how those people became aware and involved so they could invest, i.e., investigate whether there were any “connections” between all of those investors and if so from whence they sprang as the initial source of information about the money-raise.
Spoiler Alert: Undertaking this investigation on the “investment” side of the story revealed that Paul Maines was never traveling on that yellow brick road – it was initiated by Garth and Paul Jenkins, and from the get-go involved Paul Jenkin’s good friend and “Broker,” who was best friends with Premier Ghiz, Shane MacEachern. All that happened before Paul Maines even met Paul Jenkins.
We need to back up a step.
When Garth Jenkins was pitching PEI to Paul Maines as the ideal place for CMT/Simplex to locate its North American financial transaction platform, Garth had already forwarded CMT’s confidential company financials to Paul Jenkins, and Paul Jenkins, in turn, and unbeknownst to Paul Maines at the time, forwarded them on to his Broker, Shane MacEachern:
Why would Paul Maines be so naive to think that just because his “relation-through-marriage” (Garth Jenkins) was well-connected to key players in the PEI government he’d be able to convince the Boards of Directors of CMT and Simplex that PEI was the place to establish its North American Financial Transaction Hub?
Well, here’s another part of the story that’s never been made public. Garth Jenkins was a major player (VP of Business Development, the same role Maines had with CMT) in a company called Ventis, that offered exactly those kind of services:
Garth Jenkin’s “bio” certainly would have given Maines a sense of confidence, given Jenkin’s past success in pulling off major financial deals such as was being considered with locating the CMT/Simplex Global Platform in PEI:
When Garth Jenkins passed the information on to Paul Jenkins about the CMT/Simplex location in the North American plan and the possibility of that happening in PEI, with government cooperation, as well as the money-raise with Raymond James (a brokerage firm in Toronto), Paul Jenkins expressed strong interest in spearheading the venture, as we know in retrospect.
Garth contacted the person managing the fund at Raymond James to inform him that his cousin (Paul Jenkins) was not only interested in making an investment in CMT, but had knowledge of potential “shell” companies to target for a takeover.
Just a month later, in an August 19, 2010 email from Garth Jenkins to Philip Walsh, (also cc’d to Paul Jenkins and Paul Maines), we see just how far things had moved down the road with the PEI Government plan to recruit and establish FMT in PEI for CMT/Simplex’s planned launch of the Global Transaction Platform/Claimatrix in North America. FMT had been incorporated, and hundreds of thousands of dollars had already been raised for the initiative:
“PJ [Paul Jenkins] and Paul [Maines] will see Gary [Jessop, CMT’s lawyer] in Ottawa. The only thing to do now is for Gary to clarify the steps for completing the transaction and to come to agreement/decision on the allocation of the initial CDN $300k in funds…We have prepped the PEI government to the fact that we will have a business plan for submission by mid-Sept. As well, the financial budgets are 90% complete. For the business plan, we will just need your final budget for work in the UK.”
Garth Jenkins went on to explain how the money that was being raised would be divided up and allocated: a 1/3 component was to go to the RevTech Shell Company purchase.
It was, in the beginning, Garth Jenkin’s connection with Paul Maines that gave birth to the idea that the CMT/Simplex Global Transaction Platform presented a huge opportunity for PEI.
It was both Garth and Paul Jenkin’s connections with certain key individuals in the government that gave rise to the secret CMT/FMT Simplex Global Transaction Platform initiative beginning in July of 2010, two full years before the MOU.
It was especially the “Jenkins” direct line to Premier Ghiz through Jenkin’s Broker that clearly expedited the process, without question. Things moved quickly, and by early 2011 the due diligence on CMT/Simplex and the PEI government had contracted an expert to undertake a study of the feasibility of the CMT/Simplex Platform locating in PEI.
February 28, 2011: Innovation PEI signs a contract with Patrick Mason on February 28, 2011, authorized by Brad Mix and then-CEO of Innovation PEI, Neil Stewart.
March 14, 2011: Paul Jenkins emails Paul Maines (CMT), and Philip Walsh (Simplex), to say that Patrick Mason’s report on FMT (100%-owned by CMT) on the PEI Government potentially locating the Simplex Global Transaction Platform in PEI through FMT (CMT had exclusive North American rights to distribute the Simplex Global Platform) was completed.
Following the completion of Mason’s “big doc” report, FMT was formally recruited to establish in PEI. Innovation PEI provided a tailored recruitment “package” with details on what the PEI Government was offering if FMT decided to establish the Transaction Hub in PEI, including the following:
There was growing enthusiasm about the prospect of getting an internationally-recognized SWIFT-accredited financial services platform established in PEI and “all systems were a go” for FMT to establish the Financial Transaction Platform.
May 4, 2011 – Melissa MacEachern, still the Deputy Minister of Tourism, contacted Paul Maines and learned that FMT could deliver a Loyalty Card Program through the Transaction Platform. MacEachern’s “it’s a go” email response to Eddie Francis (Maines hired Francis to work on the Loyalty Card Program, on behalf of CMT) was a testament to the confidence MacEachern had that the FMT deal was also “a go,” and that her view was that it would just be a matter of working out the details. She was obviously counting on the Platform being in place by the time the program was developed and ready for roll-out in about a year – without the Platform, there could be no Loyalty Card.
MacEachern’s contact with Maines on the Loyalty Card Program wasn’t just a question of getting an opinion from Maines, but I’d say some pretty high-level thoughts. Here’s some of what Maines provided MacEachern in response to her inquiry:
What was MacEachern’s response? Pretty much exactly the same as mine:
The pace at which things were moving forward for CMT/FMT from late summer, 2010 to early Spring, 2011 was actually quite remarkable.
The recruiting package provided to FMT stipulated the need to establish a local company with local investors and local representation on the board, and from all appearances, Maines and others with CMT and Simplex were satisfied that Paul Jenkins was doing what they expected him to do: establish FMT (raising money for the Shell company takeover) and move things forward with the PEI government.
Paul Jenkins seemed to have everything under control and headed in the right direction. He was working with his trusted “Broker of Record” Shane MacEachern, money was being raised with all the paperwork in order, and up until September 2012, there were simply no red flags that might have alerted Paul Maines that all was not as it seemed when he learned of the “Keith Laslop” Newco sabotage from Tracey Cutcliffe in September 2012.
Everything was going so well by May 2011, Ghiz apparently offered his buddy MacEachern the Crowbush Golf Course to wine and dine CMT/Simplex on the very day before the golf course was scheduled to open to the public, allowing a select group of Island individuals to socialize with CMT and Simplex on the greens while working out a game-plan for the eventual rollout of the transaction platform. The Agenda shows there was also a scheduled meeting with Premier Ghiz with prepared “briefing notes”.
2. Remember Crowbush?
Let’s start with a video clip of Steven Myers asking Allen Roach about that CMT/Simplex get-together on the greens at Crowbush with PEI government personnel (and others) at the Crowbush golf course that took place in May 2011. That event only became public knowledge in 2013, when the PC Official Opposition obtained e-gaming documents from a FOIP request:
Yes, the Loyalty Card Program was a part of the discussion, but the Crowbush event was not happening because of the Loyalty Card Program. And no, efforts to establish gaming on PEI had not ended – it had been “married” to the Financial Transaction Platform project just after Neil Stewart informed Wes Sheridan about Virgin Gaming, a client of CMT/FMT, deciding to relocate to PEI.
The only thing that “ended” with the drive to establish gaming was the illegal scheme by the “gaming committee” [Gary Scales; Don McKenzie; Mike O’Brien, Wes Sheridan, and Chris LeClair] to regulate online gaming and collect tax revenues, which was deemed in contravention of the Canadian Criminal Code and should never have been initiated in the first place.
The plan to recruit a financial transaction platform to host gaming companies, financial institutions, etc. was actually intensifying at the time, and the assumption was that FMT was going to be that Transaction Platform company.
Melissa MacEachern had contacted Maines in May 2011 to inquire about FMT/Simplex’s capacity to deliver a Loyalty Card Program for Tourism PEI [She was still Deputy Minister of Tourism in the Spring of 2011] BECAUSE she knew things were moving forward with the FMT Platform. The Crowbush event planning was already well underway by that time, and, as you’re about to see, the discussion was all about the platform, not the Loyalty Card Program as Roach stated.
Notice that the date on MacEachern’s email to Maines was May 4, 2011. That was the very same time the Crowbush plans were coming together, and lots of chatter was happening amongst the e-gaming secret society members, one of whom was Melissa MacEachern. Consider the following email sent on May 5, 2011, the day after MacEachern’s email to Maines:
The information Paul Maines, as VP of Business Development, provided to Paul Jenkins by way of background information and “briefing notes” on the Platform, as material for the briefing notes to the Premier, began as follows:
The presentation was all about what FMT/Simplex could offer PEI, and although I won’t present all the details of that here, consider the information in just one slide in the document:
Myers doesn’t mention that Shane MacEachern attended the event, and why would he have singled him out? Shane MacEachern was a financial broker at RBC. Sure, his wife was the Deputy Minister involved with both the Loyalty Card Program and MOU with FMT, and apparently, he golfed twice a week with Premier Ghiz, but still, Shane MacEachern was NOT a government employee or agent contracted by the government.
Myers doesn’t mention that Shane MacEachern attended the Crowbush event with FMT/Simplex because, I suspect, he regarded his presence on that list of attendees as insignificant. Who was Shane MacEachern in the e-gaming scandal besides a low-level broker at RBC doing administrative paperwork on a money-raise anyway?
Nor does Myers mention – because I’m sure he didn’t know – that it was Paul Jenkins and Shane MacEachern who planned the Crowbush event with Premier Ghiz.
Pay close attention to the details in this May 15, 2011 email that Shane MacEachernail sent to Paul Jenkins:
In fact, it was Shane MacEachern who worked with Paul Jenkins on a draft of the “Briefing Notes” prepared for Robert Ghiz on the FMT/Simplex meetings and, using the overview description of the FMT/Simplex Global Financial Transaction Platform information drafted by Paul Maines regarding establishing CMT’s North American hub for that Platform in PEI.
You’ll notice from the following email exchange between Shane MacEachern and Paul Jenkins that a draft of those “Briefing Notes” for Ghiz was attached, however, Maines was not copied on that email, and never obtained a copy of the actual briefing notes provided to Ghiz, nor did Jonathan Coady disclose that key document to the Plaintiff or the Court.
To sum up a bit: The initiative to establish a local company (CMT was a US-registered company) to provide the Global Transaction Platform came entirely from the PEI government – not Maines – after Garth and Paul Jenkins enlisted government support for the initiative. A very big part of that “support” came from Shane MacEachern’s close friendship with Robert Ghiz.
The “money raise” wasn’t something that was initiated by, or in anyways involved, Paul Maines, who was the VP of Business Development for CMT at the time, It was entirely driven by the two Jenkins as they began picking and choosing who they were going to “let in” on what they belived would be a bonanza coming from the purchase of “convertible debentures” that would later become “shares” in FMT, paying huge returns.
3. There’s Zero Evidence Paul Maines Solicited Investments
If Paul Maines didn’t solicit investors for CMT, then the Securities Investigation launched against him was not only bogus, it was incredibly malicious.
There is absolutely no evidence anywhere in the Court Record that Maines solicited any investments, as Judge Campbell claims he did. Once we better understand the genesis of the CMT/FMT “money-raise,” we’ll see how it happened just like any other secret insider deal among a tight-knit group of Island business people, bureaucrats, and politicians, and Maines wasn’t a part of that circle.
As this first 25-part series winds down, it’s important to pull some of the findings together to reveal what has not previously been known or understood about who did in fact “solicit investments” – someone like the hidden e-gaming power Broker nobody knows anything about, Shane MacEachern.
I spent three full episodes proving that the accusations that lawyer Steven Dowling swore – and Judge Campbell accepted – claiming that three investors in CMT had told him that Paul Maines had solicited investments from them (Paul Jenkins; Jeff Trainor; and Gary Evans) – were all completely false. Those three individuals each swore an Affidavit proving those sworn claims from Dowling about what they each said to him were false. Campbell went with Dowling’s “direct evidence” which he said was “unrefuted” nonetheless.
Campbell not only relies on Dowling’s sworn testimony that some of the investors had been solicited by Maines, but he also relies on a document he claims that Paul Maines distributed “for the purpose of soliciting investments”:
Paragraph 286: I note the slide presentation 764 shared with Innovation in late 2012 was actually a set of slides copyrighted by Simplex and identified as confidential which had previously been in the possession of Paul Maines and had been distributed by him to others in 2011 for the purpose of soliciting investments.
I’m not sure if Judge Campbell reviewed that slide presentation document, but I have, and there is absolutely no mention of “investments,” or any particular business plan or initiative. They are slides that CMT/Simplex used repeatedly with prospective clients to describe the Global Transaction Platform, how it works, and all the services that CMT/Simplex can offer clients with that SWIFT-accredited platform, including CMT’s world-class “Claimatrix” patented software providing a foundational and highly-valued “stack” on the Simplex Global Platform.
Simplex’s Global Transaction Platform has been mentioned often in my previous articles, and I’m sure a lot of readers struggle to envision what it might look like, so it’s probably a good time to show you. Here’s one slide from that package that Campbell refers to:
The reason I said earlier that I’m not sure whether Campbell even reviewed these slides is that Campbell refers to “Claimatrix” in his decision as a UK company [See Paragraph 486], and doesn’t seem to realize that Claimatrix was financial services transactions software 100%-owned by CMT/FMT.
4. “Who Exactly is Shane MacEachern Again?”
I mentioned there was but a single reference to Shane MacEachern in the Auditor General’s E-gaming Report. She drew attention to the fact that the Deputy Minister of Innovation [Melissa MacEachern] was in a potential Conflict of Interest situation when M MacEachern authorized both the MOU and Loyalty Card programs with FMT:
Section 6.19: Section 9 of the Conflict of Interest Policy in place at the time, which applied to Deputy Heads, outlines the concept of preferential treatment. Specifically, it states that “employees must not accord preferential treatment in relation to any official matter to family members, friends, other persons or organizations in which the employee, family members or friends have a financial or other interest”.
Melissa MacEachern was the Deputy Minister of Tourism and Culture when the Loyalty Card Program study began. She was subsequently made the Deputy Minister of Innovation and Advanced Learning, during the time the MOU was signed.
This was problematic for the AG since it raised the question of whether the Deputy Minister provided preferential treatment to CMT and Simplex involving both the Loyalty Card Program and the Memorandum of Understanding signed with TBT, a subsidiary of CMT, because those came about without any public tendering process.
What the AG didn’t mention – because she apparently wasn’t provided the documents that would have made her aware – was that FMT was already in a business relationship with the PEI government on track to establish a local company to deliver the CMT/Simplex financial transaction platform and had “first-mover advantage” on things like the Loyalty Card Program. The government was keeping all of that entirely secret at the time.
In a May 16, 2011 government email confirms that the government knew exactly why FMT was later offered a MOU and was asked to develop the Loyalty Card Program – because, as Eden put it, FMT is the “company that is part of the secret e-gaming file”:
The other day I was discussing my research on this episode with someone who used to be a client of Shane MacEachern. I don’t rely on “hearsay” in my research, but this individual knew him well, and told me that Shane MacEachern had told him once that he had inside connections with Billy Dow and Robert Ghiz, and golfed with them on a regular basis (he said “twice a week”).
Of course, another close friend of MacEachern was Paul Jenkins, the “sole director” of FMT at the time and the face of the company to the PEI Government. It was to Shane MacEachern that Paul Jenkins went to get a “Broker of Record” for the CMT investment money-raise.
Shane MacEachern – despite being the money-man for the entire Global Financial Transaction project with FMT/Simplex – has flown under the radar in PEI. He has somehow managed to keep everyone unaware of his core role in the secret e-gaming scandal and that activity completely hidden. He was, however, “detected” by Robyn Doolittle as having played a significant role in the scandal nearly 5 years ago.
It’s taken me 2 years to realize what Robyn Doolittle somehow grasped when she looked into the E-gaming scandal back in early 2015, then published her piece in the Globe and Mail, titled Small Island, Big Bet. When I recently returned to her article to fact-check something else, the first three words in her piece struck me as incredibly significant for the first time: John….Shane…MacEachern:
“John Shane MacEachern worked in finance. His wife was PEI’s deputy minister of tourism. Jeff Trainor was a manager at a golf club, and his wife worked part-time at an investment firm in town. The couples lived next door to each other and had kids around the same age. They saw each other nearly every day.
So when Mr. MacEachern learned about a big money-making opportunity, he told the Trainers about it.
Mr. MacEachern was brought in by his pal Paul Jenkins, who’d gotten involved via his cousin, Garth Jenkins, who was dating the cousin of one of the main players, a man named Paul Maines.
The tip making its way around Charlottetown went like this: A U.S.-based tech firm wanted to open some sort of global banking platform on the island and the province was supposedly interested. If things played out the way boosters envisioned, a big payday was awaiting everyone involved.
Mr. Trainor wired $10,000 to Capital Markets Technologies. He was one of 36 islanders to invest a combined $701,030 in CMT.
Even those close to power got in on the gold rush. A Charlottetown lawyer – one of then-premier Robert Ghiz’s close confidants – invested $10,000, then later advised the government during a phase of the proposed deal. PEI’s conflict of interest commissioner put in $15,000. The premier’s chief of staff also had an interest: Records show his wife invested in a dormant shell company that CMT was trying to buy. The money flowed despite the fact that only a handful of CMT’s investors knew the full plan behind the financial hub.”
Shane MacEachern and Paul Jenkins were the main “financial architects” operating behind the scenes, always in secret, driving things forward, step-by-steps from the very beginning.
If Shane MacEachern was the Power Broker for the FMT money-raise, why was Paul Maines accused of soliciting investments? If any of the investors were, in fact, not “accredited” as Dowling claimed, shouldn’t have Shane MacEachern been the person penalized for that, not Maines?
Shane MacEachern was eventually investigated and fined, but that too was covered-up by the PEI government. He was not investigated and fined for security irregularities by the PEI Securities Commission (Dowling) – but rather, a National Regulator, IIROC.
The PEI Securities Commission decided not to post the documents about that on the website, like other cases, such as Paul Maines & CMT. All cases are supposed to all be posted on the website, but someone apparently has the power to decree that only Paul Maines and one other poor schmuck need to be publicly flogged – Shane MacEachern got a pass:
The CBC – the only news outlet that reported the Securities violations by Shane MacEachern back in May 2014 – was (for reasons I’m not privy to) careful to provide no information that would make a connection to e-gaming, CMT, Robert Ghiz, or, quite frankly, anything. I decided to take a closer look.
5. IROC’s Investigation Into Shane MacEachern
The Investment Industry Regulatory Organization of Canada (IROC) is the national organization that regulates brokers like Shane MacEachern, as well as the “Dealer” companies and institutions which those brokers belong to, like RBC Financial.
In early 2014, it appears Mr. MacEachern was investigated and found guilty of various “investment securities” irregularities. To my knowledge, there was just one news article reporting that incident.
It’s unfortunate the CBC reporter didn’t mention the name of the company for which Shane MacEachern solicited and brokered investments with RBC clients. notwithstanding he hadn’t been “…approved by his employer” to do so. So what was the company?
Settlement Agreements – like Court rulings – are public documents. In fact, you can find Shane MacEachern’s Settlement Agreement online. Anyone want to venture a guess as to what company MacEachern sold investments to his clients behind the backs of his boss and compliance officer?
The following is from the News Release issued by IIROC following reaching the agreement with S. MacEachern:
What’s especially important to note here is that several of the Investors Shane MacEachern solicited were not deemed to be accredited by IIROC
Paragraph 22: In total, 17 potential investors who were communicated with by the Respondent invested approximately $178,000 in securities of CMT. Twelve of these investors were clients of RBC DS. None of the investments were recorded on the books of RBC DS. Although some of the investors qualified as “accredited investors” pursuant to NI 45-106, several did not.
Shane MacEachern was acting – as far as Paul Maines knew at the time – as a bona fide Broker on the request of Paul Jenkins. I suspect Maines had no reason to assume anything other than that all the proper procedures were being followed, and all the regulations and rules requiring compliance with RBC and IIROC policy, as well as the PEI Securities Act and Regulations were being complied with by Shane MacEachern as a result of RBC’s internal compliance procedures and officer.
Even more shocking than learning that MacEachern facilitated investments with RBC clients without RBC’s oversight and approval, is the discovery that Shane MacEachern had sought approval from his supervisor to act as the “Broker of Record” for the CMT money raise and was declined approval, but went ahead and did it anyway, on the sly..
From the Settlement Agreement:
When someone tried to throw Paul Maines under the bus and essentially ruin him -as well as CMT/FMT’s venture with the PEI Government – by spreading a bogus rumour that Maines bilked some old lady with cancer out of her life savings, Steven Dowling almost immediately began a securities investigation into Paul Maines and CMT.
The main point I want to make here is that it was BECAUSE Dowling began that investigation that we now know he would have discovered that it was Premier Ghiz’s good buddy Shane MacEachern who did all the soliciting on the CMT money-raise (with his good friend Paul Jenkins) – not Paul Maines.–
Dowling nonetheless proceeded to launch an investigation against Paul Maines for which there was absolutely no evidence, notwithstanding the fact that no one EVER filed a complaint against Maines, and not a single one of the CMT investors ever complained about the investments they had in CMT. Nor has anyone ever lost any money. Those wanting their money back received it, with 12% interest. Many chose to keep their shares in CMT and attempt to ride out the storm.
What did Shane end up having to admit he did following the IIROC Investigation? Get ready to be shocked!
“Paragraph 5. The Respondent admits to the following contraventions of IIROC Dealer Member Rules, Guidelines, Regulations or Policies: Between July 2010 and June 2011, he recommended and facilitated an investment in securities without the consent or knowledge of his Dealer Member, contrary to IIROC Dealer Member Rule 29.1. 6. Staff and the Respondent agree to the following terms of the settlement: a) A fine in the amount of $25,000; b) A 6 month period of strict supervision; and c) The Respondent shall re-write and successfully complete the Conduct and Practices Handbook Course within 12 months of acceptance of this Settlement Agreement. 7. The Respondent agrees to pay costs to IIROC in the sum of $5,000.”
I’ve seen the documents for those particular CMT Investments, and CMT’s lawyer – Gary Jessop – was careful to include a waiver where each and every investor signed to confirm that they were “accredited”. With the documentation coming from a bona fide broker with RBC, why would Paul Maines or Gary Jessop have any reason to question that all due diligence and compliance by the broker had taken place?
But here’s the problem for MacEachern, and it’s a big problem, one that would have probably put Shane MacEachern on the list of Defendant’s in CMT’s lawsuit if it had been realized at the time of filing: Shane MacEachern had asked for, but was denied permission to act as the Broker of Record for the CMT investment, but went ahead and did it anyway, behind the backs of his supervisor and compliance officer.
By undertaking this underhanded strategy to engage in raising funds while presenting himself as an RBC Broker when he was doing that privately, in defiance of his supervisor and compliance officer, he was, by so doing, denying himself all the compliance tools and authority needed to undertake proper due diligence and compliance assurance: in effect, although he continued to present himself as a bona fide RBC Broker to CMT, he was effectively acting on his own without the approval or support of RBC. Surely Dowling would have discovered that at the time!
So why didn’t Dowling drag Shane MacEachern through the muck and issue a news release across Atlantic Canada warning the public that if anyone should be approached by Shane MacEachern, and he mentions “money,” they should immediately contact the PEI Securities Commission? Like they did with Paul Maines.
More importantly, Dowling would have also discovered what IIROC discovered, namely that there were “several” of the investors who (although they signed documents saying they were accredited investors) that IIROC had determined were not accredited, investors.
If MacEachern had asked the compliance officer at RBC whether those “several” investors met the standard to be considered “accredited” (whatever that is) he would have been told “no;” but MacEachern denied himself access to that critically-important service legitimizing his brokerage work by doing his dealing completely on the sly.
The really important question remains: If Dowling (1) discovered the truth about who solicited the investments (Shane MacEachern) that were (2) deemed to be not accredited, thereby (3) violating securities regulations, why did Dowling pin what he surely knew Shane MacEachern did – regarding soliciting and brokering CMT investments – on Paul Maines? Someone who had anything whatsoever to do with either soliciting investors or offering brokering services of any kind – and for which there is no evidence produced to support to this day, notwithstanding Campbell’s declarations that’s what Maines did. Goes to show the power with the hidden e-gaming Power Broker that no one ever heard about I guess.
Meanwhile, the scapegoat used to effect this ongoing cover-up, Paul Maines, has spent five years, and probably a couple of million dollars (with the $1 million Judge Campbell forced him to pony-up just to have his case considered by the former President of the PEI Liberal Party, and then years wasted, only to finally to be denied a trial) is still trying to get his day in Court in PEI’s justice system – that’s all – his day in court!
Most days I’m bursting with pride to be an Islander. This is not one of those days.