Vas Georgiou was convicted of fraud Tuesday in the redevelopment of St. Michael's Hospital.Sammy Kogan/The Globe and Mail
Recent fraud convictions, including of two men involved in the multimillion-dollar redevelopment of Toronto’s St. Michael’s Hospital, are being seen as a step forward in Canada’s fight against white-collar crime.
The guilty verdict against Vas Georgiou, the hospital’s former chief administrative officer, and John Aquino, the former president of Bondfield Construction Co. Ltd., follows another high-profile fraud conviction in Ontario court earlier this year.
In May, Jawad Rathore and Vince Petrozza, the co-founders of now-defunct syndicated mortgage company Fortress Real Developments Inc., were found guilty of fraud after a lengthy criminal trial. The sentencing hearing has been set for Dec. 3. Their lawyers have said they plan to appeal.
Experts say the pair of convictions demonstrates that Canadian law enforcement, prosecutors and courts have the capacity to tackle complex financial investigations. However, they note that more work remains for the country to shake its reputation for being lax on white-collar crime, particularly as police and securities regulators grapple with a surge of fraud enabled by new technologies such as cryptocurrencies and deepfakes generated by artificial intelligence.
“We need a strong police presence in white-collar crime investigations in Canada, it’s absolutely critical for our reputation abroad,” said Jeff Kehoe, the former director of enforcement for the Ontario Securities Commission.
“These two successful investigations are clear indications that the police possess the necessary skill sets to investigate complex white-collar crime and are continuing to develop expertise,” he added.
The charges against Mr. Georgiou and Mr. Aquino were the result of a four-year investigation by Ontario’s Serious Fraud Office, or SFO, an initiative launched in 2019 with the aim of strengthening the province’s ability to prosecute complex white-collar-crime cases.
Inspired by similar structures in Britain and the United States, the office brings together investigators and specialized Crown prosecutors and gives them the time and resources to focus on tackling complex financial crimes. Its establishment followed a confidential 2015 report by former Ontario Court of Appeal judge Stephen Goudge.
Dominic Chong, a retired senior police officer who ran the investigative branch of the SFO for three years, said the St. Michael’s case “is a good example of how serious and complex fraud cases can be successfully investigated and prosecuted.”
“I’m pretty confident in saying that without the SFO, this case would not have been investigated to the extent that it was, and it certainly would not have been prosecuted as successfully as it was,” Mr. Chong said.
Although the Ontario Provincial Police lead the initiative, they don’t have operational oversight over the SFO, which operates independently. That gives investigators the latitude to pursue lengthy, complex fraud cases, rather than getting diverted, said Mr. Chong.
“Look at the St. Mike’s case – it took years. If you go to any other police agency and say, ‘Hey, we’ve got a fraud case here that’s going to take you three years,’ they probably won’t even start because they don’t have the resources to do that,” he said.
What to know about the hospital redevelopment at the centre of the Bondfield fraud case
The SFO’s structure also allows prosecutors, who work out of an office on the same floor, to receive information at the outset of a case, rather than receiving stacks of evidence only after an arrest has been made.
“When it comes time to make the arrest, they already have some prosecution strategy. They may have identified some gaps that they need to address already. They’re ready to move,” said Mr. Chong.
That makes it more likely for fraud cases, which take a long time to investigate, to make it to court before the deadlines imposed by the Supreme Court’s R. v. Jordan decision. The decision requires cases heading to provincial court to be tried within 18 months and those heading to superior court to be tried within 30 months.
Mr. Chong said that while fraud is sometimes seen as a victimless crime, he believes that perception is changing.
“The public, police and politicians are actually responding to some of these fraud challenges that we have,” he said.
Prior to the recent convictions, a number of high-profile cases involving fraud allegations either resulted in acquittals or were pursued under Ontario’s less-punitive securities laws.
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No criminal charges were ever laid in the Bre-X Minerals Ltd. scandal, which saw investors lose $6-billion after tests in 1997 revealed core samples at Bre-X’s Busang site in Indonesia had been faked.
No criminal charges were laid against executives of Sino-Forest Corp., either. The publicly traded forest products company had purported to own 500,000 hectares of timber in China, valued at US$2.5-billion in 2010. But an independent committee of the company’s board was unable to find any trees.
The Bre-X and Sino-Forest cases were both pursued under the Ontario Securities Act rather than in a court.
More recently, executives of Bridging Finance Inc., which was once one of Canada’s largest private lenders and managed funds of more than $2-billion, were found by the Ontario Capital Markets Tribunal to have committed fraud.
David and Natasha Sharpe, the husband-and-wife team that ran Bridging, have not been criminally charged.
The tribunal, an independent division of the OSC, has ordered the Sharpes to pay more than $27-million in sanctions.
The OSC filed applications last August seeking to force the Sharpes into bankruptcy and appoint a trustee over their assets, after they failed to pay the sanctions due on June 17.
The securities watchdog said in a statement that the Sharpes appealed the tribunal’s orders and decisions, including the sanctions, in July, but did not seek or obtain a stay.
“Neither David nor Natasha Sharpe paid any of the sanctions or costs ordered and gave no indication of any intention to make payment. In light of the appeals, no payment is expected,” the securities watchdog said.