Winnipeg Free Press - PRINT EDITION
Empire built on kiting cheques: police
Businessmen charged with fraud; investors pleased
The arrests this week of former Winnipeg businessman David Wolinsky and three others in what police say was a massive fraud scheme is seen as good news for a group of investors now suing him and Assiniboine Credit Union.
Lawyer Dave Hill said the evidence that comes out in the trial of the four men will help several Winnipeg individuals who lost millions by investing in companies that Wolinsky operated.
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"The evidence that comes out at a criminal proceeding often times can help a civil case," Hill said.
Winnipeg police announced Friday that Wolinsky, the former chairman of Protos International and Maple Leaf Distillers, has been charged with fraud and conspiracy to commit fraud. Also charged are David Mollins, a former chief financial officer of Protos, Barry Milne, a former chief financial officer of Maple Leaf Distillers, and Clarke Culbertson, the former chief credit officer of Astra Credit Union, which has since merged with Assiniboine Credit Union.
Hill represents several prominent Winnipeggers -- including Thomas Steen, plastic surgeon Dr. Ken Murray and consultant Max Feierstein.
Winnipeg police described the fraud as a cheque-kiting scheme where cheques totalling $300 million were circulated in and out of the accounts of three companies controlled by Wolinsky, between 2004 and 2006. The carefully timed movement of cheques gave the impression to Astra officials that the three companies had more funds than they actually did, allowing the three companies to increase their line of credit. It is alleged that the writing and cycling of cheques enabled Wolinsky to borrow more money than was authorized.
Police allege that as a result of the fraud, Astra lost $3.9 million.
The charges against all four individuals must still be proven in court.
Wolinsky, who moved to White Rock, B.C., was arrested by RCMP in B.C. and flown to Winnipeg to be charged.
Allen Godfrey, executive vice-president and chief financial officer at Assiniboine Credit Union, said the charges against Culbertson supports the credit union's position that no other credit union employee was involved in the scheme.
"What we've been saying since the beginning is that there was one senior (Astra) official involved in something that was inappropriate," Godfrey said.
Godfrey said the credit union alerted Winnipeg police to its suspicions in 2006 and co-operated with the investigation.
Maple Leaf, once touted as one of the fastest-growing companies in Manitoba, was placed into bankruptcy last year. It was subsequently sold to a Trinidadian producer of rum and bitters, Angostura Ltd.
Salisbury House has since been taken over by new owners.
The charges are just part of the mountain of legal troubles facing Wolinsky. In addition to the civil action by the investors, he also filed for bankruptcy in B.C. last month.
Republished from the Winnipeg Free Press print edition March 14, 2009 A5
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Posted by: Bonnie
March 15, 2009 at 10:46 AM
I fully agree with Gord R. And, I believe that maybe this employee was not qualified for his position. There are a lot of "factors" here. Who did his "yearly review"???? Did it show that this employee had "problems" with his work load, and was capable or incapable of making serious decisions?? What about his personal life. Was there an alcohol (or drug) problem? If this is the case, then he should not have been in that position either in the first place or allowed to continue in the position. And whose fault is that????? Like you said "Plenty of other heads......" I don't believe that this employee acted alone. Hey, why not give him an I.Q. Test???? Though I'm certainly not suggesting he's a moron or anything like that!!
Posted by: Jason Wayne
March 14, 2009 at 9:30 PM
Would someone explain to me what Chuck W does except make inane worthless comments on here?
Posted by: Gord R
March 14, 2009 at 5:00 PM
As a member of Astra and now Assiniboine, I'm outraged of course. Allen Godfrey states that the one credit union official actually charged was the only culprit at the credit union, and asserts it was the credit union that tipped off authorities in 2006, two years into the scheme. Where was oversight and external audit for the period the scam was underway? Plenty of other heads had better have rolled over this gaffe. Has the organizational structure of the credit union been overhauled so no single employee holds sufficient authority to pull off schemes like this without oversight and approvals from other credit union officials as part of day-to-day operations? What large business allows only one person to sign cheques of any size to heaven knows whom, yet on one signature, the credit union has lost millions. If this isn't gross negligence, I don't know what would be. The $3.9 M is long gone but what about potential liability to investors now suing the credit union over the millions they invested and lost while the lack of credit union oversight and poor external audit allowed this scheme to carry on unchecked for two years?? What will credit union negligence cost members in the future? Will Assiniboine sue the external auditors' internationally known company of chartered accountants to spread the liability if the investors' suit succeeds?
Posted by: Chuck W
March 14, 2009 at 4:52 PM
What about it WFP? Did Sam Katz do business with this David Wolinsky? Did he do much business with him on various deals? Give us voters "news we can use" when the next election rolls around. If you don't deliver the straight goods on our politicians, bureaucrats, police, and movers and shakers, you are not doing your part for society as journalists. And whose financial interests are served when our city is so urbanist in comparison with successful growing cities?
Posted by: Chuck W
March 14, 2009 at 4:46 PM
Would someone please explain, in terms a lay person can understand, why it takes so long? Is it fighting in the courts for disclosure and search warrants? Is it lack of man power? Or what? Four years seems to be a really long time.
Posted by: Henry P
March 14, 2009 at 3:19 PM
Lawyers think they can help those who lost $$$$$? What a joke. It will be like getting blood from a stone.
Posted by: Newsjunkie
March 14, 2009 at 11:17 AM
David Wolinsky is one of the owners of Salisbury House. He's the guy who owed Sam Katz a lot of money when our mayor granted Salisbury House the contract to start a restaurant on the Provencher bridge, also the restaurant that was not a bistro and would not be direct competition with the Gold Eyes' Hu's On First.
Posted by: vernon
March 14, 2009 at 9:51 AM
please read the book lawyers gone bad,