Astra Credit Union remains tight-lipped on cheque scam

Hey there, time traveller!
This article was published 14/10/2007 (5647 days ago), so information in it may no longer be current.

ASTRA Credit Union has some explaining to do.

Astra no longer exists; it merged with Assiniboine Credit Union earlier this year. But in its last full year of existence, Astra was victimized by a “cheque-kiting” scheme that resulted in millions of dollars in unauthorized loans.

The loans were made to Protos International, a holding company, and a series of related companies including Maple Leaf Distillers and Salisbury House Restaurants.

Although the recipients of the loan are well known, what is not known is how these companies could have short-circuited credit union policy and procedure to access the money. And to date, Astra/Assiniboine hasn’t been all that forthcoming about the ‘how.’

The credit union is being sued by a group of investors — including former Winnipeg Jets captain Thomas Steen — who lost millions of dollars in Protos and Maple Leaf. The investors claim Astra knowingly participated in the cheque-kiting despite owing a duty to them to stop the practice.

This legal action may be the only chance to find out what really happened at Astra in 2005. As it stands now, there are many parties to this mess who are quite satisfied to let the story slowly fade away.

The trouble began in 2004 and 2005 when accounts held by Protos, Maple Leaf Distillers and Salisbury House Restaurants began a daily process of swapping cheques worth between $1 million and $3 million. In 2005 alone, more than $300 million in money that didn’t exist was moved from account to account.

When the smoke cleared, Protos and Maple Leaf obtained $4 million above its authorized credit limits. Astra fired a senior employee for his role in the scheme, and asked the Winnipeg Police Service to investigate. That was almost two years ago.

One might think that entrepreneurs David Wolinsky and Costas Ataliotis, the men behind the Protos empire, would be a focus of efforts to recoup the credit union’s money.

To date, however, it appears Astra/Assiniboine has made no move to have either repay the unauthorized loans. This is odd given that one of them, Ataliotis, is on record as having provided Astra with a personal guarantee for $3 million of the money borrowed by Maple Leaf.

Instead of pursuing those personal guarantees, Astra/Assiniboine has instead chosen to pursue a series of minor small business loans taken out by former employees of Protos companies — loans which were funnelled to Maple Leaf Distillers in plain view of credit union officials.

In one instance, a former employee of Maple Leaf Distillers agreed to participate in a subsidiary to manufacture tube-shaped packages of sugar for restaurants. Court documents claimed the former employee was encouraged by Wolinsky and Ataliotis to take out a $250,000 small business loan to finance the new company.

However, the court documents claimed shortly after the loan was obtained, Wolinsky and Ataliotis asked for access to the money to help with cash flow problems at the distillery. The former employee obliged, with an agreement Maple Leaf Distillers would take over responsibility for the loan. The employee claimed the agreement was conducted in the presence of and with the full approval of Astra managers.

For the better part of a year, the former employee was not required to service the loan. When Protos and Maple Leaf went into bankruptcy in early 2006, however, Astra told the former employee he was on the hook for $190,000.

Astra has always maintained the cheque swapping was engineered by one employee who deceived the company. That has always been hard for the investors who lost money in the companies to believe.

In a 2005 interview with the Free Press, Wolinsky confirmed that money had been moving between accounts of Protos and related companies, but he said it was done with the full approval of the credit union. Former Protos and Maple Leaf employees told the Free Press that a number of Astra officials, including branch managers, were aware of the cheque-swapping practice.

Why not pursue Wolinsky and Ataliotis? One is left to conclude that a suit against the two men would likely open up an entirely new — and much larger — can of worms.

All we really know for sure is that Astra/Assiniboine is saying as little as possible about what really happened in 2005.

dan.lett@freepress.mb.ca