An Ontario cabinet minister’s Cuban connection to a ‘massive, colossal fraud’ that rocked southwestern Ontario

An Ontario cabinet minister’s Cuban connection to a ‘massive, colossal fraud’ that rocked southwestern Ontario

This is an account of Michael Tibollo’s role in a business connected to a $40 million fraud in the late 1990s. Today, Tibollo is Ontario’s minister of community safety, responsible for policing and corrections in the Progressive Conservative Government, and overseeing the Ontario Provincial Police. Throughout the 2018 election campaign and the first few months of the Doug Ford government, Tibollo’s role in what happened was almost entirely unknown to the media and most of the voting public.

This story is based on Ontario Court of Appeal documents and records from the Ontario Securities Commission (OSC), obtained by QP Briefing, and reveals the following:

  • In the late 1990s, Tibollo was the president of a company connected to a Ponzi scheme that saw nearly 800 Ontarians invest about $40 million dollars and lose nearly all of it.
  • Tibollo was charged with securities law violations in connection with the scheme and acquitted, but the Securities Commission raised concerns about his actions.
  • Tibollo, a lawyer, was informed that the people he was involved with had violated Ontario securities law, the Securities Commission found, and yet he continued his involvement with them and their companies.
  • He was described as the “man in Cuba” and would speak with investors in Ontario about the Cuban business ventures they were investing in. In these meetings, he would speak of his close connections with the Cuban government and Castro family, which served to convince people to invest money that they ultimately lost, an Ontario Securities Commission investigation into Tibollo alleged.
  • Tibollo was never criminally charged.
  • Tibollo has maintained throughout that he was unaware of the details of the investment scheme — he was concerned only with running a legitimate business in Cuba — and today says he had nothing to do with the financial fraud that took place in Ontario.

Every Ponzi scheme needs a dream, a story of an amazing investment opportunity to sell people that explains why they’ll make too-good-to-be true returns on the money they hand over.

What separates a Ponzi scheme from a legitimate business is that when investors are paid out, they’re paid with other investors’ money because the story is in some way a lie. Either the amazing investment opportunity doesn’t really exist, or it isn’t all that amazing. It’s not profitable enough to generate all of the promised returns.

As Ontario criminal courts and the Securities Commission would eventually hear, the latter was the case in the Saxton Investments fraud, which resulted in criminal conviction against one of the men responsible for the scheme.

The dream that investors were sold in the Saxton case was mostly about Cuba.

It can be seen in one of the brochures given to investors that was preserved in court records. It includes a picture of an attractive woman on white sand beach wearing an orange bathing suit cut high on the thighs, lounging next to a red-and-white umbrella that spells out “C-u-b-a.”

The investors were told that because of the geopolitics of the 1990s, Cuba held rich potential for Canadians — a burgeoning market with no competition from Americans. They were told that Saxton’s Cuban businesses were making money hand-over-fist.

The business was real and making products for the growing hotel industry. Whether it was profitable is something that would be argued over in court eventually. It certainly didn’t provide enough money to support the wild promises that the investors were sold.

All in all, nearly 800 people, mostly from southwestern Ontario, invested about $40 million, told they’d make 10 to 30 per cent returns, with many believing their investment was guaranteed.

Instead, they lost almost all of it.

Michael Tibollo didn’t sell the investments, but for a time he ran the Cuban business operations.

Today, he’s the minister of community safety and correctional services in Ontario’s Progressive Conservative government, or what used to be known as the solicitor general.

Dubbed by TVO as the “most unlikely member of Doug Ford’s cabinet,” the MPP for Vaughan-Woodbridge was elected for the first time in 2018. Tibollo first met Ford back in 2010, when Ford was running for city councillor and the premier’s late brother Rob Ford was taking his first run at the mayor’s chair, TVO reported. Tibollo was then president of the National Congress of Italian-Canadians, which hosted a mayoral debate.

He’s also a fourth-degree black-belt in Tae-Kwon Do and heavily involved in that community.

As minister, Tibollo oversees the Ontario Provincial Police and so far has been a staunch defender of law-and-order.

On Wednesday, the Globe and Mail reported that Tibollo and his law firm is “mired in multiple ongoing lawsuits that include allegations of professional misconduct by his law firm and a failure to pay debts” that are unrelated to the Cuban business — and Tibollo responded that he can’t speak about them because they’re ongoing, but they’re civil matters that he has defences and counter claims to them.

But this story took place two decades before Tibollo entered politics. One of the central questions — something that was argued over when the Ontario Securities Commission held a hearing into charges against him — is how much he knew about what was going on around him.

The Securities Commission “staff” — the equivalent of a prosecutor in these kinds of hearings — would argue that Tibollo did know about and was complicit in the securities law violations, or at the very least was wilfully blind to them. Drawing on a witness’s testimony, the prosecutor described him as a man with his hands over his ears saying, “Pretend I can’t hear this.”

But Tibollo’s lawyer, Alan Lenczner, took a different view: Tibollo was doing honest business down in Cuba and wasn’t responsible for the investment scheme or any of the financial devastation that it caused.

The OSC acquitted him of all charges, including illegally advising or trading of Saxton securities and making inaccurate or misleading representations to investors contrary to the law. But it determined he did know about the illegality of the sales of Saxton investments by others he was involved with, who had dodged regulatory oversight and scrutiny of their books by claiming to rely on a loophole in Ontario securities law that didn’t actually apply.

He was never charged with fraud, and no court or tribunal has found he knew anything about the criminal fraud that was built on the Saxton investment scheme and the Cuban business operations.

QP Briefing has put together this account based on the Court of Appeal records and documents from the OSC hearing.

Tibollo’s response

In a media scrum in a hallway of the Ontario legislature Wednesday, QP Briefing asked him several specific questions about the Saxton fraud.

“I had no role, other than to run operations in Cuba,” he said. “I wasn’t involved in anything up here in Canada with that. That was long ago resolved with the Ontario Securities Commission.”

Asked when he learned that investors were being defrauded, he said he didn’t recall.

“You know, you’re talking from 22 years ago, I can’t give you specifics at this point,” he said.

Tibollo said the Ontario Securities Commission had found “no wrongdoing” on his part and the province’s Integrity Commissioner, which reviews MPPs’ personal finances, has reviewed the matter and is content.

“I had nothing to do with anything that was going on in Ontario, I was living at the time in Cuba and running the operations in Cuba,” he said.

Ontario Securities Commission found Tibollo did meet with investors in Ontario. But asked more questions, Tibollo walked away from reporters.

The investment scheme

It began in 1995 and lasted until mid-1998. James Sylvester of Woodstock, Ont., had started various business enterprises in the Caribbean and his partner of sorts, Mark Allan Eizenga of Burlington, began raising money from Ontario investors, ostensibly to support the expansion of those business enterprises. The money was raised through a series of companies, the central one called Saxton Investments.

Sylvester and Eizenga are the main players in this fraud case — they were also the only people who were criminally charged.

It was a complex scheme and there are many companies involved. But to help keep things straight, it helps to know there are basically two different sides: “Saxton” refers to the investment arm — the part that illegally raised money from investors — and “Sussex” refers mainly to the operations arm, mostly the Cuban business operations, which received investor money.

Eizenga would eventually be convicted of criminal fraud. His co-accused, Sylvester, died before his day in court.

In Ontario, almost anyone selling securities — investment opportunities — must be registered with the OSC and the issuer of securities must file a prospectus, which requires detailed disclosure about the company and the investments being offered.

They purported to use what’s called a “seed capital” exemption in securities law, which at the time allowed companies seeking start-up capital to do so by selling securities to no more than 25 investors, without filing a prospectus or registering with the commission. There were rules around it — including only using it once a year — and they broke them. Eizenga abused it by setting up 38 different numbered companies in about three-and-a-half years to raise funds from new investors over and over again, raising about $40 million in that short time.

Eizenga set up a sales team in Ontario, some of whom were already insurance salespeople who sold the investments to their existing clients, most of whom were investors themselves.

Some were Ontario farmers who’d later describe pouring their life savings into what they were told was a golden opportunity and convincing friends and family to do the same. In victim impact statements and witness testimony they described the devastation they felt and how their relationships fell apart when it all came crashing down.

Most of these regular people were told they were investing in a highly profitable business opportunity connected to the growing hotel industry in Cuba, with operations involving draft beer called Caribbean Ice, “bag-in-the-box” drinks, coffee, milk, juice and other soft drinks, aided by close connections to the Cuban government. A printing press project was to come online. Backed by the Cuban government, it would be the “golden gem” of the Cuban operations.

Some investors bought “Guaranteed Investment Certificates” that weren’t actually insured, that they were told would pay 10.25 to 12 per cent annual interest, believing they were guaranteed and risk-free. Some bought shares and were promised 30 per cent returns. Some investors used Registered Retirement Savings Plans through Laurentian Bank to invest, even though Saxton wasn’t actually RRSP eligible.

What the investors weren’t told was the business operations weren’t actually highly profitable. Investors were paid with other investors’ funds, the court of appeal determined years later.

A forensic accounting would eventually find a great deal of the money raised from Ontarians went to a bank account controlled by Sylvester and to support Eizenga’s lifestyle.

Where Tibollo comes in

Tibollo’s involvement with the players in the Saxton scheme began on a plane heading back to Canada from Cuba in late 1995 or early 1996, according to his testimony to the Ontario Securities Commission (OSC).

An acquaintance of his sat next to Sylvester on the flight and told him Sylvester was someone he had to meet — he had connections to the Cuban government and really “got” how things worked in the small island nation.

And with that, it wasn’t long before they started working together, Tibollo doing consulting and legal work for Sylvester’s Cuban businesses.

In time, Sylvester would call Tibollo “our man in Cuba” and Tibollo fit the description. He was an international lawyer and businessman who spoke five languages, including Spanish, and spent a great deal of time in Cuba. He was known to be acquainted with Former Cuban President Fidel Castro’s brother, some of the investors who lost their savings would later say.

When the OSC held a hearing into the securities law charges against Tibollo in 2005, he would testify that it was true — but he didn’t specify which Castro brother he knew, Ramón or Raúl.

Before Sylvester, Tibollo was already doing business in Cuba. He testified at his OSC hearing that, when the Russians were loading their container ships and leaving Cuba in the early ‘90s, he was standing in front of the consulate watching them go. Their departure opened the island nation up to new business opportunities — ripe for those who’d made a connection with Castro’s government. Tibollo had, and he represented some major companies, including Kraft Canada, in setting up business there.

The OSC documents show Tibollo played three roles in what happened: Starting in early 1996, he worked as a lawyer and business adviser to Sylvester, working on the Cuban business operations.

In mid-1997, he took over the leadership of those businesses from Sylvester, becoming the president of a newly amalgamated company — Sussex Group — that operated the Cuban businesses and other more minor enterprises in Mexico and the Caribbean, Sussex Group. He also did legal work that involved the investment operations.

Tibollo came under scrutiny from the OSC. He — and many others involved with Saxton — were charged. Part of the case against Tibollo was that he had been updating the Saxton salespeople and investors on the Cuban business operations and on business opportunities in Cuba generally, something that started when he was doing consulting work for Sylvester and continued after he became president of Sussex Group.

“Tibollo knew, or ought to have known, that the investing public and Saxton salespeople relied upon his representations concerning the Saxton securities and their value and the financial health, profitability, potential growth and development of the Cuban operations,” the OSC prosecutor had alleged. “His professional status and strong links with the Cuban government gave credibility to the Saxton securities and to the misleading claims that such securities were a no, or low, risk investment with significant growth potential.”

The OSC tribunal found Tibollo had spoken with investors and sales representatives on numerous occasions, which “may have provided comfort to potential investors and existing investors with respect to their investment and may have facilitated the raising of the funds.”

However, the OSC didn’t find any evidence he was involved in illegally selling the securities himself — that was mostly handled by Eizenga and his sales team — and his updates on Cuba didn’t constitute a sales pitch and so the tribunal found Tibollo wasn’t guilty of violating securities law.

What Tibollo knew, or didn’t know

Tibollo (pictured) testified he knew nothing about the investment scheme, and OSC didn’t determine what exactly he knew about it, aside from the fact that he learned the money had been raised in violation of securities law.

Tibollo testified that he didn’t know anything about false promises that Eizenga and his salespeople were making to investors about the nature of their investments and the profitability of the Cuban business operations. He said that when he was updating investors, he didn’t actually know how much money the Cuban business operations were or weren’t making.

There’s no indication he ever came to realize that a criminal fraud was transpiring, while it was still ongoing.

Tibollo’s case was heard in 2005, seven years after the commission stepped in and stopped the trading of Saxton securities. Some of the witness testimony elicited by Tracy Pratt, the OSC staff who served in the prosecutorial role in the hearing, delved into what Tibollo may, or may not, have known.

One scene described by Larry Ayres jumps out in that regard.

Ayres was a farmer who, along with his wife, invested $610,000 in Saxton and lost it all. He testified he believed he would get a return of 10.5 per cent, and that would come out of the profits of the Cuban business. Enthusiastic at first, he opted to become a Saxton investment salesperson himself, and sold the financial products to others, including friends and family.

The scene that jumps out of his testimony is about a meeting he attended at the home of another farmer-turned-Saxton-investor-and-salesperson in early 1997. At that meeting, Tibollo gave a talk about the political and business situation in Cuba, mentioning his connection to Castro’s brother, and gave an update on Sussex’s business operations, Ayres testified, and it was all good news — Tibollo never mentioned any weaknesses or risks.

At this point, Tibollo hadn’t yet taken on the role of Sussex president, but he had been doing more and more work in Cuba for the company and, according to others’ testimony, had become Saxton’s go-to man for all things Cuba. But Tibollo testified that at this time he knew “virtually nothing” about what Sussex had been doing in Cuba — the legal and consulting work for it over the past year-and-a-half was on a contract-by-contract basis.

At the meeting, the investment side of business was discussed — someone had a question about whether or not the salespeople, such as Ayres, required a licence to sell the Saxton securities. The correct answer according to the law is “Yes.” But the Saxton vice-president who was present that day said “No,” Ayres testified.

“And how, if at all, did Mr. Tibollo participate in that aspect of the discussion?” asked Pratt.

Ayres replied: “Well, when things like that were mentioned, he said, ‘Well, I shouldn’t be listening to this,’ and he — you know, he put his hands kind of up to his ears. He says, ‘Pretend I’m not listening to this.’”

Pratt would return to that image in her closing remarks to the tribunal, arguing that the evidence showed Tibollo did know things about the illegal investment side of things that he claimed to be ignorant of.

“If Mr. Tibollo didn’t know these things, then he ought reasonably to have known of these things and his wilful blindness is not sufficient to defend him in this case,” Pratt said. “Staff submits that one cannot insulate themselves from the requirements of the Securities Act by covering their ears and pretending they are not involved and not responsible to the public interest.”

QP Briefing tried to ask Tibollo if Ayres’ testimony about this is true, but the minister walked away from the media scrum and, through his press secretary, did not answer this and other questions by email.

Ultimately, the OSC decided Tibollo came to learn that the securities were sold illegally — if not from this meeting, from legal advice he would hear a few months later.

“Although we determined that he did not solicit the sale of Saxton or Sussex International securities, he, as the president of Sussex Group from November 1997 until 2000, knew by virtue of his meetings with two lawyers in the summer of 1997, about the illegality of the sales of Saxton securities and that Eizenga had not complied with securities law in raising funds that were used for the Cuban operations,” the OSC panel found.

According to Ayres, other financial matters were discussed at that meeting. He was told some of the Cuban business contracts were making 50 to 52 cents on the dollar — so that helped him know he had made a pretty good investment, he said.

What Tibollo said at that meeting, and other gatherings, influenced his decision to sell Saxton investments to others, Ayres said.

“I found him to be what I thought was knowledgeable about the Cuban operation, and a down-to-earth person and easy to talk to when I met him, and he gave me a good feeling, and I conveyed that to the people,” Ayres testified.

Trust in Tibollo was a theme from a few witnesses. Ron Masschaele, the former farmer whose home had hosted the meeting, said he and members of his family had invested a little over $1 million in Saxton. They lost nearly all of it. Masschaele also became a Saxton salesperson who convinced friends and family to invest.

Like Ayres, Masschaele said Tibollo always presented a very “rosy” picture of the business with no negatives at that meeting. He said he trusted him and the Saxton vice-president, who was also a lawyer.

“I trust lawyers. I had two lawyers sitting in my house, so basically you trust two lawyers,” he said, adding, “At the time, I used to.”

Tibollo’s status as a lawyer didn’t just mean people trusted him — he also did legal work for the companies. In that capacity, he attended two meetings with other lawyers who specialized in securities law who told Tibollo and other Saxton executives that the way Saxton was raising money — attempting to exploit the seed capital exemption — was illegal.

In the summer of 1997, a Saxton executive had some questions about compliance with securities law and asked Tibollo for advice and Tibollo set up a meeting for the two of them with Nick Torchetti, a securities lawyer and a partner in Toronto law firm Aird & Berlis, with whom Tibollo had gone to law school.

Torchetti testified that they presented him with some Saxton documents and he immediately recognized what the Securities Commission would later determine: the money had been raised illegally. The securities had been distributed without a prospectus. Those who were selling the securities were not registered with the OSC, and there were no securities law exemptions (such as the seed capital exemption Eizenga relied on) to cure these problems, he said.

Tibollo testified that Torchetti had said the problems were “not insurmountable” and he couldn’t recall whether he’d said they were serious.

The missing money

Torchetti didn’t offer any solutions, and so another lawyer was found. Tibollo and a larger group of Saxton executives including Eizenga, met with Geofrey Myers, a partner at the Toronto law firm Lang Michener. He came to the same conclusion Torchetti had — this was an illegal public offering — but he also stressed that another fundamental problem was that Saxton couldn’t account for all of the money that had been raised.

He told them they had to stop raising new money from investors.

“If you can’t demonstrate and prove that the investors have been protected, that there’s been no misappropriation of the money, the money had not been inappropriately used, to be frank, that they haven’t defrauded a bunch of people, how can you go out and raise more money?” he explained in his testimony.

Myers didn’t know it then, but Saxton would go on to raise another $6 million, according to the OSC prosecutor’s case.

Myers was retained to work on a solution to the securities law problems, but he emphasized that it could only be done on the condition that they could fully account for the money.

“You need to be able to go up to (the Ontario Securities Commission) and say, ‘Here’s the money,'” he testified. “'We may have done bad things. We may have not complied about the Securities Act,’ but as bad as that may be, that is a far cry from saying there’s $36 million that’s been lost or stolen.”

Meanwhile, Eizenga had retained an Alberta-based lawyer who recommended that a solution to the securities law violations was to list the company on the Alberta stock exchange via a reverse takeover, but it never materialized, in part because of a dispute over who owned the Cuban operations.

But as part of that plan, the various Caribbean operating companies were amalgamated into a single company, Sussex Group. Tibollo did the legal work, which was finalized in July of 1997, and became the president of the new company.

The same summer, following Myers’ recommendation, Saxton retained Deloitte & Touche to do a forensic audit, tracing the money. They determined Saxton had raised $34 million from investors by that point and were planning to trace where the money had gone. But the auditors didn’t get very far before Eizenga fired them, and Myers, and most of the Saxton executives in early December, Myers testified.

“I drew my conclusion that there were probably things that people didn’t want found out therefore you couldn’t let Deloittes go further in their analysis,” Myers said.

It was a pivotal time for Tibollo. He wasn’t fired with the others and would become increasingly involved in the Cuban operations, becoming president of Sussex Group.

The later days

The Saxton scheme only lasted between 1995 and mid-1998. In the last year, investors started to worry and questioned Eizenga’s use of their money, the OSC heard.

Around this time, Tibollo knew there was an issue with missing funds — he testified that he came to believe both Sylvester and Eizenga each had at about $10 million in their accounts and said he had pressured them to invest it into the business operations, where it belonged.

Two of the investors-turned-salespeople who testified at Tibollo’s hearing said their impression of him soured around this time.

A meeting was held at a golf course in St. Thomas in July of 1998, in part to address some investors’ concerns about Eizenga. Ayres — the farmer who’d spoken about Tibollo putting his hands over his ears at an earlier meeting — testified that Tibollo gave an update on the Cuban operations and spoke of the need of an additional $5 million investment to get a printing press up and running.

Ayres testified that at that meeting he and Masschaele had asked Tibollo if he had personally invested in Saxton, as he had, and Tibollo said he had not.

“Well, I didn’t have a good feeling about that,” Ayres testified. “Well, I figure if everything’s so good, and there’s money to be made, why wouldn’t you invest yourself into it?”

Masschaele looked at it the same way.

“So I looked at Larry and he looked at me and we weren’t too impressed with somebody for the last year-and-a-half was telling us how gung ho it was and he didn’t have anything invested at all,” he said in his testimony. “Not too impressive.”

The end of Saxton

The end of the Saxton was long and messy.

The OSC had received single complaints about Saxton in 1996 and 1997 and wrote to Eizenga making inquiries in October of 1997, beginning an investigation in January of 1998 and ordering one of Saxton’s accounts frozen in August of that year. Tibollo began voluntarily meeting with the OSC that month.

In September, the OSC launched a court action against Saxton, alleging the illegal distribution of securities, and weeks later forwarded a complaint to the Ontario Provincial Police. In October, the court appointed KPMG as the custodian of Saxton’s assets and another outside firm was appointed to manage the affairs of the Saxton Group in conjunction with KPMG.

Over the next several years the OSC would charge numerous people involved in the Saxton fraud, including its executives, salespeople who’d also invested and lost their own savings, and Tibollo.

Some settled, but Tibollo defended the charges and was acquitted. One part of the OSC decision hinged on the fact that the prosecutor failed to show the Cuban business was operating at a loss when he was making updates to investors — therefore, the OSC couldn’t determine that what he was saying was false or misleading.

He had testified that there were no financial statements for the Cuban business operations when Tibollo was acting as a business adviser to Sylvester, who was running the Cuban operations prior to mid-1997, and that as president in 1997 and early 1998, he had no idea if Sussex was making or losing money, but he did know it had lost all credit in Cuba and had sizable payables due.

The Securities Commission panel acquitted Tibollo, but it didn’t have glowing things to say about him.

“Our role is not to censure or suspend Tibollo as a lawyer, nor are we to judge the adequacy of his business conduct,” its decision states. “That was not the essence of the allegations against Tibollo … There were nevertheless some disturbing aspects to his behaviour.”

The Securities Commission concluded that it was “regrettable that Tibollo did not recognize the potential impact that his activities would have on investors,” which was that some might invest more money based on his words.

And “it is also regrettable that Tibollo failed to address the implications that the securities law issues would ultimately have on the investors,” which is that they would lose all, or nearly all, that they invested.

On the stand at the Securities Commission hearing, Tibollo admitted he did have some concerns back in 1997 about becoming the president of a company whose finances he said he knew little about, knowing he had owed a “fiduciary duty” to the company, and said he had even consulted a lawyer about that.

But he continued running the business and speaking to investors until OSC stepped in and put a stop to things a year later.

The missing millions would be roughly traced as part of Eizenga’s criminal case.

But one of the complexities of that case was the lack of reliable financial documentation. The Court of Appeal found there was no evidence the Cuban business operations ever generated profits that went back to investment side of the operation during the three-and-a-half years of the fraud. It also found investors who were paid out were paid with other investor’s money.

A chart entered into evidence shows $17.6 million went to Sylvester, and some of that would have gone toward propping up the business operations. Sylvester refused to turn over his books, serving time in custody because of it. He was eventually released, but took his own life shortly before a preliminary hearing was set to begin in his case, leaving his financial documents out of reach of authorities.

Nearly $5 million went to Eizenga and his family and nearly another $500,000 went toward automobiles, according to the allegations in Eizenga’s case.

Tibollo’s salary as president was $30,000 a month, over half-a-million a year in 2018 dollars, and before that he was paid on a fee-for-service basis as a lawyer and business consultant, and was compensated for use of his office space, according to testimony at the OSC hearing.

No total compensation for Tibollo was identified in the documents obtained by QP Briefing. While Pratt, the OSC prosecutor, alleged he was compensated “handsomely,” his lawyer, Lenczner, said it argued it was standard for the work and Tibollo had no profit-motive that would convince him to knowingly participate in an illegal securities scheme.

Tibollo co-operated with the OSC investigation and continued on as the president of Sussex Group, keeping the Cuban businesses running, at the same salary, until 2000.

Investors tried to organize but failed to get their money back. A document entered into evidence in Eizenga’s criminal case tallied up how much each of them invested, how much each of them redeemed, and how much each of them lost.

It says of more than $38 million raised from investors only $2.7 million was returned. A different accounting document entered into evidence said $4.5 million was returned.

The trial judge who sentenced Eizenga to eight years for criminal fraud in 2007 came to the conclusion precise figures didn’t matter so much. Justice John Getliffe noted the Crown had argued $42 million was originally raised but Eizenga said it was only $37 million and said, “by anyone’s arithmetic, this was a massive, colossal fraud.”

It was an unusual sentencing hearing because even though Eizenga pleaded guilty to the fraud charge two years prior, he then disputed the written statement of facts about that fraud that his plea had been based on. He later appealed, but the conviction was upheld. The Ontario Court of Appeal found there was no evidence to doubt his guilt and upheld the lower court’s conclusion that Eizenga’s disputing of the facts of the case was “nothing more than extreme rationalization and a self-serving interpretation of the facts.”

(QP Briefing has attempted to locate Eizenga to seek his comment, but has so far been unable to reach him.)

According to a news report from the London courtroom, only a few of the investors who’d been duped came to watch Eizenga be sentenced, but that’s not to say they didn’t care: two hundred of them poured feelings of anger and regret into victim impact statements filed with the court. The judge described the letters as “heartrending” accounts of the investors’ “devastating emotional and financial loss.”

“Many of those persons were and are at an age when this assault on their financial situation leaves them in bleak circumstances,” said Getliffe. “They trusted the wrong man.”

Some of the witnesses in Tibollo’s securities hearing also testified about the impact the fraud had on their lives. For Ayres, it was a matter of self-esteem, he said.

“It created a lot of stress, and when it come in the paper and in the news, I mean, you just felt ashamed, and you didn’t have any self-esteem,” he replied. “I mean, I didn’t even feel like leaving the house.”

For Masschaele, who like Ayres had lost his own money and sold the investments to family and friends, it was about the devastation of his personal relationships.

“That’s a hard one,” he said, and began to list off some of the consequences.

His mother used to go to Florida to visit her sister but can no longer afford to, and he has a brother-in-law and a nephew that won’t talk to him anymore, he said. His best friend’s daughter invested money she intended to use for a down payment on a house and now she won’t talk to him either.

“So it’s been pretty bad,” he continued.

He’d had cancer and was forced to sell his farm shortly before all of this began. Cancer was traumatic, he said, “but not as bad as what this stuff has been.”

The cancer had been personal, while the fraud continues to hurt his family and friends. Just that day a widow he knows who’d invested and lost the money from her retirement income fund had called him, he testified.

“And what makes me mad is I had two lawyers in my house along with an insurance agent telling me how good this company was,” he continued. “And people believed me and I believed those two guys. And then in the end I had one guy turn around and say he didn’t have anything invested in it, that he was preaching how well it was, I’m not very impressed with that situation. And it’s been bad. It’s been very bad. Not good at all.”

To contact the reporter on this story:
Jessica Smith Cross
416-212-5913
jscross@torstar.ca
@jessiecatherine

(Photos of Michael Tibollo by Andrew Francis Wallace/Torstar)

Jessica Smith Cross

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