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$250K investment mystery: Accountant admits in recorded call he doesn’t know where money is
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The daughter of a Kingston, Ont., senior who lost $250,000 after his trusted accountant encouraged him to invest in a « questionable » financial scheme says police did little to investigate when the suspected fraud was reported, despite all kinds of suspicious documents and the loss of the bulk of her father’s retirement savings.
« I approached the [Kingston] police with this evidence and said, ‘There’s something very wrong here, »‘ Diane McEwen-Loveys told Go Public. « Their response was that they couldn’t do anything. »
McEwen-Loveys with her father, Mendal McEwen, who is now suffering from dementia. (Photo submitted by Diane McEwen-Loveys)
A former senior RCMP investigator who now consults on white-collar crimes says McEwen-Loveys’ experience isn’t unusual, adding police often have little financial crime expertise and few resources for such investigations.
« There is a limited pool of investigators with financial crimes experience, » says Greg Draper.
Odd document
McEwen-Loveys says the financial nightmare began in 2016 when her father, Mendal McEwen, had to be placed in long-term care due to dementia.
While going through his papers, she discovered a strange-looking « participation agreement » that her father had signed in 2008.
« Standard wording that’s required for that type of documentation was missing, » says McEwen-Loveys, who has a financial background.
« It quickly became clear to me that something was very wrong. »
Her father’s long-time accountant, Douglas Raymond of Kingston, had arranged an agreement with a financial company called New Dawn International — no mention of it can be found online. The document does not explain what type of company New Dawn is, or how McEwan’s money would be used.
The agreement says New Dawn operates in « the Principality of Hutt River, » a small region in western Australia that claims to be an independent, sovereign state.
« What’s going through my mind is, ‘This can’t be a hoax,' » says McEwen-Loveys. « There’s gotta be some reality to this. »
She did a little digging and discovered that the Principality of Hutt River has its own self-declared prince, its own currency, its own stamps and passport — but none of that is recognized by any government.
McEwen invested $250,000 in 2008 and was promised a rate of return of 24 per cent a year, starting 60 days from the date of deposit.
Mendal McEwan committed $250,000 in this agreement brokered by his trusted accountant. (Submitted by Diane McEwen-Loveys)
McEwen-Loveys couldn’t find any paperwork on the agreement — no statements, no prospectus — so she’s not sure what the deal was all about, or what happened after her father handed over a large chunk of his retirement savings.
She did find a record for a wire transfer for $250,000 her father made the same day he signed the agreement, moving money from his registered retirement fund, which resulted in a hefty tax bill.
But it’s not clear who the money was wired to, or where. Banks aren’t required to keep records for longer than seven years.
McEwen-Loveys also discovered two emails from her father to Raymond, in which he asks for some of the money supposedly resulting from his investment.
In 2010, Raymond told his client in an email that « the cash flow is not positive at this point. » In a second email a year later, Raymond wrote: « We are still months away from turning this into a positive situation that can start paying out. »
With suspicions growing, McEwen-Loveys contacted various securities regulators and confirmed that the investment was not registered in Ontario.
She also called the Chartered Professional Accountants of Ontario and learned that Raymond was no longer a registered accountant, and had not been registered when her father made the large withdrawal from his retirement savings.
She decided to call Raymond and record the call.
During the conversation, Raymond said he couldn’t discuss the investment with McEwen-Loveys because « it’s complex » and « complicated. »
Listen to call with the accountant
He told her he couldn’t say where the money is now, because information about the investment « is not available. »
He cut the conversation short, saying, « I’m not going to continue the discussion at this point. »
Go Public wanted to speak further with Raymond, but he did not return calls or emails.
Turns to police
Unable to track down the $250,000, McEwen-Loveys turned to Kingston police.
The case was reviewed by fraud investigators, who determined they couldn’t proceed with a criminal investigation.
In an email to McEwen-Loveys, a constable wrote that the investment scheme was « questionable to say the least, » but because McEwen’s father had dementia he could not be considered « a viable witness/victim. »
Greg Draper, a former RCMP fraud investigator turned forensic accountant, specializes in white-collar crime and says police often don’t have the mandate or resources to investigate complex fraud cases. (CBC)
McEwen-Loveys says investigators told her they didn’t listen to the recording of her call with Raymond, because they couldn’t open the audio file.
« It’s very frustrating, » she says. « The only body that has any authority would be the police. And they were unwilling to take up the case. »
After Go Public contacted Kingston police, they said they were reviewing a fraud report, but could not comment due to confidentiality concerns.
Draper says one of the challenges of investigating possible financial crime is the time required.
« They are document intensive and often it takes several steps — multiple search warrants or interviews, evidence gathering sessions — to get the materials you need, » he says.
« They can take months and years to properly collect everything under the standards that are needed for criminal prosecution. »
Tips for avoiding financial fraud
- If it’s too good to be true, it probably is. High rates of return are a red flag.
- Ask questions: Who is selling the product? Does it make sense?
- Check registration: People selling many financial products need to be registered.
- Be transparent: Talk to your family before making a sizeable investment.
- Never wire money to a stranger.
Help for investors
While looking online for help, McEwen-Loveys came across the Investor Protection Clinic at Toronto’s Osgoode Hall Law School.
Opened last fall, the clinic gives free legal advice to people who believe their investments have been mishandled.
Founder Poonam Puri, an expert in corporate and securities law, says her clinic hears from many people like McEwen-Loveys who were turned away by police.
« Municipal police are really focused on traditional crimes involving physical harm and the things that you would think of when you think of police and crime, » says Puri. « I think the police are less well-equipped to deal with economic crimes. »
Law professor Poonam Puri says the best advice for the elderly to avoid financial fraud is for parents and their adult children to have regular conversations about money matters. (Tina Mackenzie/CBC)
Even when a suspected victim has dementia — as is the case with Mendal McEwen — a case can still be pursued.
« It’s important to hear from the person who’s been harmed if that’s possible, » she says, « but if there’s documentary evidence that tells a story of wrongdoing and harm, that’s equally important and perhaps even more powerful. »
McEwen-Loveys is hoping a team of students at York University’s Investor Protection Clinic — Max Ledger, Eric Cheng and Paniz Ghazanfari — can build a criminal case to get her father’s money back. (Tina Mackenzie/CBC)
McEwen-Loveys has teamed up with three law students at the clinic, including Max Ledger.
« Our goal is to produce a narrative that is compelling, » says Ledger, « and will eventually convince a police officer to look at the case, look at the timeline, look at the evidence and say, ‘This is something I think we should pursue.' »
McEwen-Loveys says it’s not about the money anymore.
« I see my father being victimized, and I don’t want that happening to anyone, » she says. « At this point, it’s really about ensuring this doesn’t happen to others. »
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In downtown Montreal, it’s festival season.
In the city’s entertainment district, a musical act was conducting a sound check on stage Friday evening — the second day of the French-language version of the renowned Just For Laughs comedy festival. Tickets for many of the festival’s free outdoor shows — limited by COVID-19 regulations — were sold out.
Two blocks away, more than 100 people were watching an acoustic performance by the Isaac Neto Trio — part of the last weekend of the Festival International Nuits d’Afrique, a celebration of music from the African continent and the African diaspora.
With COVID-19 restrictions continuing to limit capacity, festival organizers say they’re glad to be back but looking forward to next year when they hope border restrictions and capacity limits won’t affect their plans.
Charles Décarie, Just For Laughs’ CEO and president, said this is a “transition year.”
“Even though we have major constraints from the public health group in Montreal, we’ve managed to design a festival that can navigate through those constraints,” Décarie said.
The French-language Juste pour rire festival began on July 15 and is followed by the English-language festival until July 31.
When planning began in February and March, Décarie said, organizers came up with a variety of scenarios for different crowd sizes, ranging from no spectators to 50 per cent of usual capacity.
“You’ve got to build scenarios,” he said. “You do have to plan a little bit more than usual because you have to have alternatives.”
MONTREAL — MELS Studios will build a new film studio in Montreal, filling some of the gap in supply to meet the demand of Hollywood productions.
MELS president Martin Carrier said on Friday that MELS 4 studio construction will begin « as soon as possible », either in the fall or winter of next year. The studio could host productions as early as spring 2023.
The total investment for the project is $76 million, with the Quebec government contributing a $25 million loan. The project will create 110 jobs, according to the company.
The TVA Group subsidiary’s project will enable it to stand out « even more » internationally, according to Quebecor president and CEO Pierre Karl Péladeau. In the past, MELS Studios has hosted several major productions, including chapters of the X-Men franchise. The next Transformers movie is shooting this summer in Montreal.
Péladeau insisted that local cultural productions would also benefit from the new facility, adding that the studio ensures foreign revenues and to showcase talent and maintain an industry of Quebec producers.
STUDIO SHORTAGE
The film industry is cramped in Montreal.
According to a report published last May by the Bureau du cinéma et de la télévision du Québec (BCTQ), there is a shortage of nearly 400,000 square feet of studio space.
With the addition of MELS 4, which will be 160,000 square feet, the company is filling part of the gap.
Carrier admitted that he has had to turn down contracts because of the lack of space, representing missed opportunities of « tens of millions of dollars, not only for MELS, but also for the Quebec economy. »
« Montreal’s expertise is in high demand, » said Montreal Mayor Valérie Plante, who was present at the announcement.
She said she received great testimonials from « Netflix, Disney, HBO and company » during an economic mission to Los Angeles in 2019.
« What stands out is that they love Montreal because of its expertise, knowledge and beauty. We need more space, like MELS 4, » she said.
There is still not enough capacity in Quebec, acknowledged Minister of Finance, the Economy and Innovation Eric Girard.
« It is certain that the government is concerned about fairness and balance, so if other requests come in, we will study them with the same seriousness as we have studied this one, » he said.
Grandé Studios is the second-largest player in the industry. Last May, the company said it had expansion plans that should begin in 2022. Investissement Québec and Bell are minority shareholders in the company.
For its part, MELS will have 400,000 square feet of production space once MELS 4 is completed. The company employs 450 people in Quebec and offers a range of services including studio and equipment rentals, image and sound postproduction, visual effects and a virtual production platform.
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