It probably wouldn't come as a surprize to many that rich people hide money in offshore tax havens for sinister and greedy purposes. Many often assume that with high-powered lawyers and complex financing agreements they have the money and means to do so.
But walking by 3000 Yonge street, many Torontonians might be surprized at how easy it is for someone to dupe dozens of investors, partners, and the offshore banking industry itself.
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How did a man living at Yonge and Lawrence manage to abuse senior investors, set up hundreds of shell companies and disappear with millions of dollars even screwing the company that helped him do it?
The Toronto Media Co-op looks at the case of Peter Sabourin and his company Sabourin and Suns in our coverage of the offshore leaks database in Toronto.
Sabourin, raised in Scarborough, started his forays into offshore investing in the mid-90's helping investors throw money into tax havens in the British Virgin Islands.
Sabourin quickly used the mainstream media to his advantage to promote his image and company Sabourin and Sun, picking up various monikers from Time, the Financial post and others such as "venture capitalist" and "tax consultant." He even appeared on former Green/Conservative MP Garth Turners investment TV show.
Sabourin began to lure in a number of investors putting their money in one over 240 offshore accounts that he set up through Commonwealth Trust Limited, an offshore 'registering company'.
According to the CBC, Commonwealth Trust Limited (CTL) was "founded in the mid-1990s by Toronto millionaire Tom Ward." CTL set up and administered thousands of British Virgin Island corporations on behalf of foreigners. Ward did not respond to email requests for comment.
Many of Sabourin's companies were shells to dump money into. CTL was simply a building with an address in the British Virgin Islands which allowed them to do so.
Sabourin would round up customers in Canada looking to incorporate companies in the British Virgin Islands and act as an intermediary between them and CTL.
Signs that things were not all hunky-dorey with Sabourin started to show up in 1999, when one of his clients flew down to his BVI "office" to demand money back after a number of irregularities with their account. in 2007, the client was awarded 1.2 Million in damages, but like many of Sabourin's victims, have not been able to collect it for the most part.
Things started going from bad to worse. In 2003, Sabourin absconded with money from one of the shell companies he founded in 2000 called Overweightpeople.com Inc. The company eventually issued a request for information and allegations of possible criminal activity after he emailed staff saying he had fled the country.
In 2004, CTL, the company that Sabourin used to create shell companies in the BVI began legal proceedings against him trying to use Dun & Bradstreet Canada Ltd. a financial services company to try to collect on $60,000 in debt that he owed them.
Emails available on CBC's website show that Dun & Bradstreet found Sabourin's account "frozen as Revenue Canada (Government) has issued a garnishment on debtors bank account for unpaid taxes. There are no funds to remit. The debtor owes Revenue Canada almost five figures debt.."
You'd think this would prompt CTL to cut ties with Sabourin or at least prevent him from using them to set up shell companies. But bafflingly, you'd be wrong.
CTL never dumped Sabourin. It kept housing his shell companies and even signed a new "terms of engagement" agreement in 2007 pledging they would continue to do business together.
The allegations and issues mounted.
Two separate Ontario Securities Commision (OSC) investigations were launched in 2006 while another one of Sabourin's shell companies was at it again trying to start another weightloss program in Huntsville.
In 2007, 3 individual investors were awarded 3 million in damages stemming from the OSC cases.
In 2008, Sabourins various schemes turned into a trainwreck. Thirteen witnesses testifyed against Sabourin and six others at the OSC. Sabourin and the others were accused and eventually found guilty of of violating securities law involving $23-million and an offshore currency trading project.
A year later, the OSC found that Sabourin "lied to and misled" to investors and "misappropriated investors' funds". It ordered $29.2 million in fines and restitution — the second-highest award ever meted out. A civil-court judge also found him liable for fraud from the 2007 judgements.
Meanwhile Sabourin has disappeared and the trail of shady dealings continue.
Documents obtained by the Toronto Media Co-op show that, as part of the attempts to get the money back, the court appointed Mintz and Partners Ltd. as a receiver to try to sort through Sabourin's assets and find money to give to the people Sabourin defrauded. They found that "Sabourin personally or through other individuals under his direction moved substantial funds through lawyers trust accounts."
Three Toronto lawyers named in the document stated that they had held hundreds of thousands of dollars for Sabourin in trust but that they could not disclose the trust accounts due to solicitor-client privilege.
After being contacted by the Toronto Media Co-op, one lawyer threatened the TMC with legal action saying that the allegations that he "moved money around for Peter Sabourin’s benefit and to avoid detection by a person defrauded by Mr Sabourin, is absolutely untrue" without offering any explanation for the allegations made in the receiver report.
A separate lawyer stated he was not hired by Sabourin but by an "entity not covered" by the injunction requiring Sabourin to pay the money back. He claimed that Sabourin only put money in his account to hire him for the OSC hearings and provided evidence that he returned the money held in his trust accounts to the receiver when confronted by them.
When asked to comment on the system which allowed Sabourin to do this the lawyer added, "I would and I could [comment] but I am constrained by my duty to solicitor client privilege, which continues going forward."
Sabourin hasn't been seen since before the court judgments came down against him. The Ontario Provincial Police continue investigating.
This story is part of TMC's coverage of offshore finances in Toronto.
