Ontario criminal | Bankruptcy
False pretences by bankrupt
Defendant contravened s. 198 of Bankruptcy and Insolvency Act (Can.) by fraudulently disposing of firm assets
General contracting firm was formed by defendant in early 2006. Defendant was controlling and directing mind and had previously been bankrupt, and his wife was sole shareholder. Defendant was made aware of cash flow problems by senior managers and liens by contractors began to appear in September 2007. Defendant made clear to senior management of firm throughout 2007 that he had plans for projects in Syria and Lebanon, and that he had arranged plan with Syrian government. Defendant drafted contract of purchase and sale of firm to bookkeeper at end of November. In order to free up planned $2 million to send to Lebanon/Syria, firm had taken and kept significant amounts from company under “factoring scheme” that should have gone to subcontractors, and borrowed $500,000 from company. Total of $1.7 million was sent to bank account in defendant’s name in Lebanon. In January 2008, senior manager received phone call from defendant telling him that money was frozen, was not going to be returned to Canada and that senior manager was to call bonding companies and shut firm down. Losses arising from failure to return money to Canada amounted to approximately $3.8 million. Defendant was charged with various charges under Criminal Code and was also charged under Bankruptcy and Insolvency Act (Can.). Defendant was found guilty of all charges. Financial statements were intentionally falsified by defendant in order to misrepresent to all potential lenders, creditors, and financial institutions that firm was profitable so that he could obtain credit. It was found beyond reasonable doubt that firm was insolvent from at least July 2007. Bankruptcy was necessary for orderly management of assets of firm and competing claimants where it was clearly insolvent. Since firm became bankrupt after clearly being insolvent, he contravened s. 198 of Act when he fraudulently disposed of assets of firm that also included firm proceeds of house sale and firm receivables factored by lender. Defendant knowingly created, directed or connived at fabrication of false financial statements and false deposit slip intending that they be relied upon so as to obtain credit and bonding.
R. v. Eid (May. 2, 2016, Ont. S.C.J., Timothy Ray J., Ottawa 12-20041) 132 W.C.B. (2d) 142.
Defendant contravened s. 198 of Bankruptcy and Insolvency Act (Can.) by fraudulently disposing of firm assets
General contracting firm was formed by defendant in early 2006. Defendant was controlling and directing mind and had previously been bankrupt, and his wife was sole shareholder. Defendant was made aware of cash flow problems by senior managers and liens by contractors began to appear in September 2007. Defendant made clear to senior management of firm throughout 2007 that he had plans for projects in Syria and Lebanon, and that he had arranged plan with Syrian government. Defendant drafted contract of purchase and sale of firm to bookkeeper at end of November. In order to free up planned $2 million to send to Lebanon/Syria, firm had taken and kept significant amounts from company under “factoring scheme” that should have gone to subcontractors, and borrowed $500,000 from company. Total of $1.7 million was sent to bank account in defendant’s name in Lebanon. In January 2008, senior manager received phone call from defendant telling him that money was frozen, was not going to be returned to Canada and that senior manager was to call bonding companies and shut firm down. Losses arising from failure to return money to Canada amounted to approximately $3.8 million. Defendant was charged with various charges under Criminal Code and was also charged under Bankruptcy and Insolvency Act (Can.). Defendant was found guilty of all charges. Financial statements were intentionally falsified by defendant in order to misrepresent to all potential lenders, creditors, and financial institutions that firm was profitable so that he could obtain credit. It was found beyond reasonable doubt that firm was insolvent from at least July 2007. Bankruptcy was necessary for orderly management of assets of firm and competing claimants where it was clearly insolvent. Since firm became bankrupt after clearly being insolvent, he contravened s. 198 of Act when he fraudulently disposed of assets of firm that also included firm proceeds of house sale and firm receivables factored by lender. Defendant knowingly created, directed or connived at fabrication of false financial statements and false deposit slip intending that they be relied upon so as to obtain credit and bonding.
R. v. Eid (May. 2, 2016, Ont. S.C.J., Timothy Ray J., Ottawa 12-20041) 132 W.C.B. (2d) 142.
