Secret tax-haven files lift veil on $32M Ontario fraud

To Time magazine, Peter Sabourin was a "venture capitalist." In the pages of Canadian Business, hebecame a "tax consultant." For the Financial Post,he transformed into an expert on offshoreinvestment.

No matterthe label, this much is certain: The Torontobusinessman was a silver-tongued swindler, a consummate con man who left a $32-million trail of victims from North Carolina to North Bay, Ont.

Sabourin is one of the more than 550 Canadians whose names appear in themassive leak of offshore financial recordsrevealed by CBC News and the International Consortium of Investigative Journalists in early April. A number of those people have dodgy pasts, but Sabourin's name stands out.

• 10 Canadians from the tax-haven data leak
• Secret files reveal more Canadians using offshore tax havens
• List oftax-haven names released to public

The leaked files show the inner workings of how he lured dozens of investors with the promise of heady returns from offshore ventures, and provide a cautionary tale for anyone thinking of investing offshore. Among those taken in were a navy veteran, a doctor, property developers, a farmer, nurses, a filmmaker and retirees.

"He promised amazing returns, that I cannot lose, to stick with him, he will take care of me," said Judith Laiken, a 72-year-old former photographer and filmmaker who lost all her savings, more than $800,000, to Sabourin. "I had no doubts."

'Dazzle 'em'

Sabourin was born in 1959 in Tmiscaming, Que., and grew up in the eastern Toronto suburb of Scarborough. In high school, his gift for gab made him popular and convinced peers he might one day found a new religion, but it was paired with a greedy streak that saw him lose his golf clubs and typewriter playing poker with pals.

He grew tall his driver's licence puts him at a robust 6-foot-2. The Toronto Star, profiling him in 1978 after he enrolled in basic training in the Canadian Forces, called him "big, bright and articulate." But eventually his weight soared, peaking somewhere beyond 600 pounds.

"He'd always say, 'If I can't dazzle them with brilliance, just baffle 'em with bulls--t.' That was one of his favourite sayings," childhood friend Derrick Fenwick recalled.

Sabourin dabbled at odd jobs, working at a supermarket and plowing snow, before landing a gig as a school janitor. And then, with no financial experience or training, he went from pushing brooms to pushing investments.

In the mid-1990s, he founded a company, Sabourin and Sun, that promoted moving money into Caribbean tax havens. He was quoted as an expert in offshore investing in the Financial Post and Canadian Business, cobbled together a book on the topic, and boasted his firm was 45 years old and had a dozen offices worldwide.

Between Sabourin's newspaper ads and appearances on business TV shows, middle-of-the-road investors started to notice. They attended free seminars in hotel ballrooms, where Sabourin trotted out credentialled investment experts to highlight the tax advantages of stashing cash in the Bahamas.

Those who took the bait scheduled an appointment at Sabourin and Sun's opulent offices in midtown Toronto. The Persian rugs, elegant furniture, soft music and promises of guaranteed returns above 17 per cent were the finishing touch, and they began to sign over amounts from $80,000 up to $350,000 at a time.

"There was quite a lot of people, and there were older people," said Margaret Stevenson, whose late companion Roland Grittani Sr. was a navy veteran in his 80s when he forked over $150,000, ultimately losing most of it.

Hunted him in British Virgin Islands

One of Sabourin's first marks, and the first investor to cry foul, was Laiken, the artist and filmmaker from Montreal who had recently come into a minor fortune from a divorce settlement and an inheritance, but was worried about the tax consequences ("I was so innocent that I didn't realize those two sources are not taxable," she said.)

Sabourin set up Laiken with an ostensible offshore stock-trading account at a brokerage he claimed was based in the British Virgin Islands. But Laiken gradually noticed her account was in a shambles. An order to sell 1,000 shares in Yahoo would be posted to the account as a buy. Inconsistencies multiplied in her account statements, totalling hundreds of thousands of dollars. When she called Sabourin to sort it out, he couldn't be reached.

Eventually, Laiken decided to fly down to the brokerage's offices in the British Virgin Islandsto fix the mess.

"I was expecting to see a dark room full of servers and traders sitting at an array of desks with computers, like the floor of the stock exchange," she recalled, "and that I would get to the bottom of it."

Instead, there was a "ramshackle" three-storey building, and no sign of Sabourin's brokerage.

The building housed a company called Commonwealth Trust Limited. Founded in the mid-1990s by Toronto millionaire Tom Ward, CTL, as it was known, was a so-called registering agent, a company that set up and then administered thousands of British Virgin Island corporations on behalf of foreigners. Many of those companies were mere shells; CTL was their mailbox.

Sabourin had become one CTL's "master clients," a sort of wholesaling intermediary who would round up customers in Canada looking to incorporate companies in the British Virgin Islands. In all, the leaked tax-haven files show he used CTL to form 240 corporations therefor his clients as part of his sham offshore investment scheme. But apart from those paper identities, he had no presence in the Caribbean locale.

When Laiken couldn't find the man to whom she had handed all her savings, she grew incensed. She stood outside CTL's offices and "screamed as loud as I could" and threatened to call the government's fraud investigators. "I could hardly talk, I was so hoarse," she recollected.

Finally, Tom Ward emerged, spoke to her and got in touch with Sabourin, who was back in Canada. The self-declared offshore guru emailed Laiken that afternoon. "Don't be shouting fraud," he pleaded. "We obviously started out with some major hiccups but we can get past it no question."

Six months later, Laiken sued.

'Jacked around'

Slowly but surely, Sabourin's difficulties multiplied. Word got out about the Laiken lawsuit. Another pair of investors sued. Eventually, the Ontario Securities Commission launched an investigation.

Through it all, however, the offshore files show that CTL never dumped its master client, even as it became one of his victims.

"We got 'jacked around' again," CTL boss Ward wrote to an employee at one point, when Sabourin and Sun owed $11,000 for services but was stalling on sending a cheque.

By late 2003, Sabourin and Sun's tab for offshore services had run up to at least $60,000. CTL went to court to enforce the debt, and even went after Sabourin's bank accounts. Internal documents show CTL was worried "that there is a high probability" Sabourin and Sun would commit fraud to avoid payment "if this has not happened already."

Finally, in 2006, the British Virgin Islands'financial regulators came knocking, asking for information on Sabourin and Sun as part of the Ontario Securities Commission investigation.

But through all of this, CTL kept up business with Sabourin and Sun, administering its client companies and even signing new "terms of engagement" in 2007 to do business together.

"It's stunning that people would continue to do this with the knowledge that they were impressed with by that time," said lawyer Peter Jervis, who represented Laiken in her lawsuit. "They should have had a very clear picture of the problems back in 1999 when Mrs. Laiken visited them.

"It doesnt appear that they care at all about investors who might be misled by what Mr. Sabourin was up to, using the facilities they were providing."

Ward, for his part, said in an email that he didn't oversee the day-to-day operations of his company at the time and was "unaware" it had had "further dealings with Sabourin and Sun" after the initial troubles. CTL suffered, too, because it was owed a substantial sum by Sabourin, Ward wrote.

Fallout

Laiken, the Montreal-born photographer and filmmaker, was awarded $1.2 million in damages and interest in 2007. In a parallel court case, two more victims got $1.8 million. None of themwas able to collect more than a small fraction of that, though, from what assets Sabourin left behind.Then in 2010, the Ontario Securities Commission awarded a group of investors $29.1 million in fines and restitution, the second-highest penalty it has ever meted out. That, too, remains unpaid.

As for Sabourin, he hasn't been seen since before the court judgments came down against him. The last his family heard from him was two years ago, when his mother died. He called to find out whether she had left him anything in her will; she hadn't. The Ontario Provincial Police are still investigating, as well, but wouldn't say anything more.

"Peter was basing all his stuff on the greed of people," said Marian, who asked to withhold her last name because she still has concerns about the man who took more than $250,000 of her and her farmer husband's retirement money. "And I've come to realize that most people are greedy. It's a hard lesson to learn. It really is."

If you have more information on this story, or other investigative tips to pass on, please emailinvestigations@cbc.ca.