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Canadian billionaire at centre of bizarre Mafia and fraud accusations after failed Caribbean casino deal
A bitter dispute over a US$112-million investment in Caribbean casinos has placed Michael DeGroote, one of Canada’s wealthiest businessmen, at the centre of bizarre accusations of Mafia exploitation, death threats and fraud.
Mr. DeGroote, 81 — hailed as a self-made billionaire who was awarded the Order of Canada and has faculties at Hamilton’s McMaster University named after him in recognition of vast donations — is embroiled in a series of ongoing civil lawsuits with former partners after financing Caribbean gambling enterprises.
Dream Corporation Inc.’s adventure began in 2011. Three men were at the helm: Francesco and Antonio Carbone, two businessman brothers from Woodbridge, Ont., who jointly held 85%; and Andrew Pajak, who owed 15%.
They arranged financing from Mr. DeGroote to secure 10 casino locations but their deal soon stumbled. Suspicions and arguments between the partners began less than a year into their venture.
By the time civil lawsuits were filed in Ontario, a widening circle of players had found their way into the business.
It featured Peter Shoniker, a disbarred Toronto lawyer previously convicted of money laundering; a man who has several passports from different countries in different names; and various mobsters, including Vito Rizzuto, who, until his death three months after he strolled through Dream’s flagship casino in the Dominican Republic, was the top Mafia boss in Montreal.
In hindsight, Mr. DeGroot “regrets and is embarrassed by his decisions to have made loans in relation to this project,” said William McDowell, a Toronto lawyer acting on Mr. DeGroote’s behalf.
“The court decisions reflect that Mr. DeGroote has been targeted by a series of unscrupulous people. He has been the victim of wrongdoing at every stage of this matter,” he said.
But the Carbones cast themselves as victims. Finger pointing continues over missing money, corporate records and control of the company. There are lawsuits between the Carbones and Mr. Pajak, between the Carbones and Mr. DeGroote, and between Mr. DeGroote and Mr. Prajak.
Many involved have complicated loyalty.
Mr. Pajak is a longtime acquaintance of both the Carbones and Mr. DeGroote and Mr. Shoniker also appears to have been friends or associates of both.
Mr. DeGroote was then introduced by Mr. Shoniker to a man who gave his name as Alex Visser, although he goes by many names.
In a suite at Toronto’s Ritz-Carlton on May 11, 2013, the meeting was secretly recorded by Mr. Visser, apparently without Mr. DeGroote’s or Mr. Shoniker’s knowledge. The recording was entered into court as part of a lawsuit and has been obtained by the National Post.
“You know a good judge of character?” Mr. Visser asked Mr. DeGroote, the recording says.
“I hope so,” replied the businessman.
‘I am going to go to war for you’
Mr. Visser then said he would go to the Dominican and bring back evidence from people that would bolster his lawsuit against the Carbones in return for $500,000.
“Look me in the eyes,” Mr. Visser said, “that’s what I am going to bring you… I am going to go to war for you … I am going to make sure that the Carbones can’t even sell chestnuts on the corner of the f—ing street.”
“Well,” replied Mr. DeGroote, “hopefully they’ll be in jail by then.”
The conversation swayed back and forth between offers and promises.
“I cannot buy evidence,” Mr. DeGroote replied on the recording. But he then haggled to pay Mr. Visser half the amount and said he would have to check with his lawyers.
Justice Frank Newbould gave Mr. DeGroote the benefit of the doubt.
“There is evidence, which Mr. DeGroote acknowledges, that he spoke to someone about obtaining evidence and paying the deponents for the evidence… he says he asked the person he was dealing with, a disbarred lawyer whom the Carbones had earlier hired, if that would be legal,” Judge Newbould wrote in a ruling. “He was told probably not. He then obtained advice from a Bermuda lawyer that it would be illegal and he then said he was not going to follow through with it. He acknowledges that he should not have started down that road.”
Judge Newbould ruled that Mr. DeGroote “established a strong case in fraud,” but without the company’s books and further investigation, by whom remained a question.
In an Oct. 29, 2014, interim ruling in a related claim, Justice Stephen Firestone deemed the unedited audiotapes to be “not reliable and should not be admitted” as evidence.
Meanwhile, the Carbones alleged they were victims of conspiracy and a sabotage campaign and told court their safety was at risk. Their casino business certainly got rocky. But they had faced trouble before.
In 2009, their cigar business was raided in a tobacco tax probe and two loaded firearms were found by police. The brothers said they had been “seriously threatened” and the Crown accepted the guns were not “for any nefarious purpose.” They pleaded guilty to possessing prohibited firearms and ammunition and received 60 days in jail. The man who posted their surety while on bail was Mr. Prajak, who told court he had known them for 18 years.
Their friendship did not survive the Dream debacle.
“It is quite evident that Mr. Pajak and the Carbone defendants have had a falling out,” said Judge Newbould, “and there are allegations going every which way.”
Secretly recorded conversations purporting to be of Mr. Pajak suggest the depths of animosity: The man says he wants to “put a f—ing gun right down their mouths.”
‘These events demonstrate that a lifetime of financial success and philanthropy does not provide a safeguard from becoming victim of fraud’
Robert Trifts, lawyer from Mr. Pajak, declined to discuss the details of the case.
“We don’t have any comments about that. My client will be litigating his case in the courtroom and not in the newspapers,” said Mr. Trifts. He said any secret recordings filed in court have not been accepted as evidence.
“They’re a distraction from the issue that there’s a whole lot of money that’s missing,” he said.
Mr. Visser — also known as Zeljko Zderic, under which he has amassed a significant criminal record, and Sash Vujacic, under which he has a Canadian passport — did travel to the Dominican Republic soon after his meeting with Mr. DeGroote.
There he started making decisions about the casino operation, as if he was the manager. (Mr. Visser could not be reached for comment.)
It caused turmoil within the operation. Working with Mr. Visser was Gianpietro Tiberio, a Quebec man named as a Montreal Mafia figure by the RCMP at Charbonneau commission into corruption.
Not long after, Mr. Visser is seen on casino security footage strolling through Dream casino with Mr. Rizzuto, Montreal’s powerful Mafia boss who, 10 months before, had been released from a U.S. prison for his role in three gangland murders.
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Antonio Carbone said it was around this time that he was threatened by gangsters to walk away from Dream.
“[An] individual told me that Vito Rizzuto was in Toronto and he needed to speak to me urgently,” he reportedly told CBC in an interview.
“He was brought in to intimidate us … Vito Rizzuto presented himself and told me to walk away, or else.”
Mr. Rizzuto was not acting on Mr. DeGroote’s behalf, according to his lawyer.
“He has never been in business with him, he has no association with him, he’s never met him,” said Mr. McDowell on Mr. DeGroote’s behalf.
“As we all know, there are many unscrupulous people who prey on the generosity of retired Canadians. These events demonstrate that a lifetime of financial success and philanthropy does not provide a safeguard from becoming victim of fraud.”
Meanwhile, the civil dispute continues in court. Most of the key people involved in the bizarre case have now been drawn into court actions. Except for Mr. Rizzuto, who died unexpectedly of natural causes on Dec. 23, 2013.
OTTAWA — Crown attorneys are lining up a wide range of senators – including some who have not previously been named in RCMP court documents – to be witnesses at the fraud trial of suspended Senator Mike Duffy.
The law clerk for the upper chamber warned several senators over the winter break that subpoenas would soon be delivered calling on them to appear at the trial. As well, the outgoing clerk of the Senate, Gary O’Brien, is also to be subpoenaed, along with members of the Senate administration.
The subpoenaed senators will then have to decide whether to invoke their rights as parliamentarians not to testify at trial.
Mr. Duffy faces 31 criminal charges, stemming from his Senate expenses claims and a $90,000 payment from the prime minister’s former chief of staff, Nigel Wright, that is the source of two bribery charges.
The suspended senator has long maintained his innocence in the face of allegations from the RCMP that he filed inappropriate housing claims, gave $65,000 in contracts to a former colleague for little in return and redirected some of the money to paying a makeup artist for a photo shoot and a personal trainer.
It is also alleged that Mr. Duffy improperly expensed the Senate for personal travel to funerals and for days when he was campaigning for the Conservatives.
Some of the key senators in the Duffy expense drama have either been warned, or expect to be called by the Crown as witnesses in the case, including former government Senate leader Marjory LeBreton; Sen. David Tkachuk, former chairman of the internal economy committee; and Sen. George Furey, the committee’s deputy chairman.
Postmedia News has also learned that a small number of senators not named in the RCMP court documents – which outlines the case police were building against Mr. Duffy – are to be subpoenaed because they were with Mr. Duffy at a public or private event that is the subject of one of the allegedly fraudulent expense claims.
Those senators were also interviewed by the RCMP as part of its investigation, but did not have their names used in court documents filed by investigators.
Once the subpoenas are delivered, senators will have to decide whether to invoke parliamentary privilege as a reason for not testifying at the trial. That privilege means sitting MPs and senators do not have to unwillingly testify at a trial if it would interfere with their role as parliamentarians. (It doesn’t prevent them from testifying at trial if they are personally subject to criminal charges, however.)