Andrea Bosco, left, and her father Albert BrunoBrian Kersey/The Globe and Mail
The era of Wal-Mart and Home Depot has not been kind to mom-and-pop stores like Bruno Appliance and Furniture on Chicago's Northwest Side, whose aging sign, easy to spot on a desolate-looking strip lined with parking lots, is a reminder of a lost age.
The business, says Andrea Bosco, was founded by her grandfather more than half-a-century ago after he arrived penniless at Ellis Island from Italy. The furniture store used to have as many as eight employees, but today it has just two part-timers, plus the long hours put in by family members.
But it's not just new big-box competition that is the problem. A decade ago, her father, Albert Bruno, now 75 and the family business's current patriarch, put $1-million into an investment opportunity based out of Toronto that promised big returns. But the money vanished.
"This was something that brought a huge humiliation," said Ms. Bosco, a 43-year-old mother of five who has taken up the fight to get the money back on behalf of the family business, which also includes a restaurant and banquet hall. "He felt like he had failed his family."
Her quest has spawned a six-year legal battle in which the family has alleged in a statement of claim that a prominent Bay Street law firm, Cassels Brock & Blackwell LLP, and a former managing partner of the firm, Gregory Peebles, were involved in a "fraudulent scheme," along with another Toronto man - a former client of the law firm named Robert Hryniak.
Alleged fraud victims in the U.S. and Canada have increasingly been pursuing banks, accounting firms and lawyers who they believe failed to stop, or even aided, a fraudster. Cassels Brock, which denies the allegations, would not discuss the lawsuit. A lawyer for Mr. Peebles, who left the in firm 2004, did not respond to requests for comment. But Mr. Peebles has denied the allegations, according to court documents. None of the allegations against Cassels or Mr. Peebles have been proved in court.
The tangled story of Mr. Bruno's ill-fated investment goes back a decade. According to court documents, he flew to Toronto for a February, 2002, meeting at Cassels Brock's Bay Street offices with Mr. Peebles and an investment promoter named Robert Cranston, who was also involved in the plan. (Mr. Cranston, who initially brought Mr. Bruno into the investment scheme, had once had a temporary cease-trade order issued by the Ontario Securities Commission. He has since faced unrelated criminal charges for fraud.)
In March, 2002, Mr. Bruno wired $1-million (U.S.) to Cassels Brock's trust account to participate in a "joint venture" investment that promised double-digit returns and was explained, as described by the judge in the case, in a "dizzying fashion." Another group of investors, made up of 13 U.S. senior citizens who are also plaintiffs in the case, had also wired $1.2-million to the law firm's trust account in 2001.
Unfortunately for the investors, all of their money is now missing. In their lawsuit, they accuse Mr. Hryniak and Mr. Peebles of having "masterminded" a scheme to defraud investors. At the very least, they accuse Mr. Peebles of "turning a blind eye" to the fraud, according to court documents.
The case is before the Ontario Court of Appeal on Wednesday as Mr. Hryniak's lawyer challenges an unprecedented summary judgment - a ruling issued before a full trial - that found that Mr. Hryniak had committed fraud against Mr. Bruno and the other group of investors and demanded that he pay back $2.2-million.
The ruling was made by Mr. Justice Duncan Grace of the Ontario Superior Court last October under new rules that gave judges broader powers to issue such rulings. It is one of several similar summary judgments being examined this week by a special five-judge panel. Mr. Hryniak's lawyer, Sarit Batner of McCarthy Tétrault LLP, said she will argue that the new rules were not meant to be used to avoid a trial in such a complex case. Her client also denies the allegations against him.
Judge Grace dismissed Mr. Hryniak's explanation that the investors' cash had been taken by a senior official of a bank called New Savings Bank A.D., where it had been deposited. New Savings Bank A.D. was purported to have $25-billion in assets and a base in Montenegro, although Judge Grace says "it seems it actually operated out of a residence in California."
Mr. Hryniak also told the court that he had informed the Federal Bureau of Investigation about the alleged theft, but nothing came of it. Judge Grace dismissed Mr. Hryniak's explanations as "utter nonsense."
Judge Grace's summary judgment, however, stopped well short of finding Mr. Peebles or Cassels Brock liable for the fraud, ruling that a trial was needed. But the judge did highlight the plaintiffs' allegations that the presence of Cassels Brock and its former partner lent the investment scheme an air of legitimacy.
"I have little doubt the presence of a respected partner at a venerable law firm, even at one meeting, created an air of legitimacy, professionalism and integrity which provided some comfort to investors," Judge Grace wrote.
Cassels is not the only venerable institution dragged into court in connection with fraud allegations in recent years. Increasingly, from the litigation spawned by Bernie Madoff's multibillion fraud on down, victims are targeting major banks, accounting firms, law firms and other institutions they say should have known something was wrong, or that they accuse of profiting from the wrongdoing.
"I think it is part of a growing trend of pursuing all participants where a fraud has been committed," said veteran fraud litigator John Keefe, with Goodmans LLP in Toronto, who said anyone who was "reckless" or "willfully" blind to a fraud could be held liable.
And established institutions make for obvious targets, he adds: "In any fraud case, or mop-up case, it is always a hunt for the deep pockets."
Ms. Bosco is in Toronto this week with the other plaintiffs for a press conference with their Toronto law firm, Heydary Hamilton, as the case is heard by the Ontario Court of Appeal. Whatever the result of Mr. Hryniak's appeal, she says she plans to keep pressing her allegations against Cassels Brock and its former partner, which she says made the investment look credible to her father.
"It wasn't an Internet scam," she said. "He met with a prominent attorney. He wasn't in a corner restaurant with some schemer."
She said she has come to believe that Canada is too soft on fraud and white-collar crime, and would never invest in this country again: "At this point honestly, I wouldn't give my money to Canada at all. … Canada is just very, very soft on white-collar crime."