Wednesday, October 5, 2011

NO to a $7.5 million Settlement Proposal from RSM Richter & KPMG

All investors should have received the following correspondence from RSM Richter.

Time for another insult to victims of the Norshield disaster. After over six-years of investigations and reports comes a pathetic offer from RSM Richter (and Stikeman Elliot, lawyers representing investors). They have negotiated a settlement with KPMG, who were the auditors of Norshield, to obtain $7.5 million dollars. KPMG is admitting no wrong-doing, but will give $7.5 million - as a donation?
Of course, there is a catch.
If the investors (we are creditors too) accept this deal, then there must be a "full release" of KPMG and parties related thereto (what does that even mean?). It certainly does mean that KPMG, the auditors whose responsibility it was to confirm that Norshield's claims were correct and accurate, can not be made accountable and can not be sued. In other words, the Class Action Lawsuit can not identify KPMG or Olympus (Norshield) as responsible. It was KPMG that was supposed to confirm Norshield was not lying. How can KPMG not be responsible? If you accept the RSM offer, no legal fault can be directed at KPMG.

Just to make it painfully clear, remember that all fund companies (including Norshield) provide their own fund values to investors; these are the Net Asset Value numbers or NAVs we see on statements. It tells us how much each unit we bought is worth. Because the fund companies themselves provide these assessments, it is crucial that someone check to make sure they haven't made a mistake. Perhaps it would be wise to make sure the fund companies are not lying and have not simply made up the valuation numbers. This is why auditors are required to go into all public companies yearly. The purpose is to make investors (the general public) comfortable that experts have reviewed the claims of a company because investors are not accounting experts or financial experts. The audited financial statement from a major organization such as KPMG is the seal of approval for investors to be comfortable and confident.

At this time, the only thing I'm comfortable and confident of is that KPMG was irresponsible and incompetent in auditing Norshield. KPMG clearly did not do what they were supposed to do. For almost 15 years, there may have been practices carried out at Norshield that allowed them to cheat, steal and lie. After all, Norshield did make almost $500 million dollars disappear. As the Ontario Securities Commission stated, "the NAVs were artificially inflated". In other words, Norshield completely lied about how much investments were worth. KPMG conducted their yearly audits and happily told the world that all was well at Norshield; Norshield was following accepted practices for honest financial accounting according to GAAP (Generally Accepted Accounting Principles that all audit firms follow) and the public could rest assured that they were getting honest financial information from Norshield.

By accepting the proposal that RSM Richter has sent out and by accepting the $7.5 million settlement, investors can not continue any class action suits naming KPMG or OUFC. Remember that $7.5 million is less than 5% of the money individuals invested into Norshield (assuming that $159 million is the correct total - 16th Receiver's report, page 6, paragraph 17). Be aware that the $7.5 million is for all creditors: this includes unpaid suppliers, employees owed salaries or vacation pay, and any other company or person owed money.
You would receive much less than 5 cents for each dollar you invested or are owed.

Is a Class Action Lawsuit likely to get any money at all? No one knows for certain. You will soon have a chance to make your opinion heard.

Wednesday, March 16, 2011

Here's Johnny! Quebec Police get their final man in the Cinar fraud scandal.

According to the Globe and Mail, "John Xanthoudakis was arrested Tuesday morning at Montreal’s Pierre-Elliott-Trudeau airport, where he arrived on a flight from Bermuda.
"Mr. Xanthoudakis is the suspected mastermind behind the alleged fraud involving the animation company, which has been at the centre of a 10-year police investigation."

The Globe and Mail article goes on to infer some shocking ties between Cinar, Xanthoudakis, the Norshield funds and Montreal's Mafia.

Friday, March 11, 2011

Where's Johnny?

John Xanthoudakis, if nothing else, is consistent.
First, he managed to hide millions of dollars and he got countless people to search in vain to find them. Now he has managed to hide himself so that Sûreté du Québec are searching for him while they have managed to arrest three of the other four charged in this fraud. 

According to the Montreal Gazette,
On Wednesday, SQ Sgt. Martine Isabelle said one of the men had fled the country, 
but wouldn't say which one. Xanthoudakis is believed to have a residence in Greece.

Also according to the Montreal Gazette,
Weinberg was arrested at Trudeau Airport Thursday night when he returned from the Dominican Republic. Already arraigned are Richmond Hill, Ont., resident Hasanain Panju, 44, Cinar’s former chief financial officer, and Lino Matteo, 48, former president of Mount Real. Police are searching for Norshield president John Xanthoudakis, 52.

To summarize; the police said that one man has fled the country and that Xanthoudakis may have a residence in Greece. He is the only one who has not been arrested. Remember that much of the millions of dollars that disappeared has never been found. Now think, residence in Greece. Heeeeeeeere's Johnny.

Wednesday, March 2, 2011

Norshield back in the News - Warrant for John Xanthoudakis' arrest - Fraud Charges pending

Although there is no immediate benefit to investors of Norshield, it is also of no surprise to see that John Xanthoudakis has been charged with fraud in connection with Cinar and Norshield. It appears that four men in total have been charged with fraud, two from the Cinar corporation, Xanthoudakis from Norshield and Lino Pasquale Matteo of the Mount Real, yet another Canadian fraudulent fund in which 1,600 clients were defrauded of $130 million dollars.

The charges relate to misappropriation of $120 million dollars of the Cinar Corporation's funds which were invested for the personal profit of then CEO & CFO. The allegation is that Xanthoudakis helped to invest the funds in the Bahamas while Matteo helped to hide the investments. The warrant lists 36 criminal charges including fraud, forgery, and use of a false prospectus.

Some irony in this story is that the AMF (Quebec's securities commission) had earlier fined both of Cinar's CEO &CFO $1 million for these illegal actions. Why didn't they uncover more info? Why didn't they move on criminal proceedings? Did the $1 million each ever get paid?

Here are the links to the news stories.