Anatomy of an alleged fraud
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Hey there, time traveller!
This article was published 14/03/2009 (5130 days ago), so information in it may no longer be current.
The trouble
Between 1999 and 2004, Crocus gave Maple Leaf Distillers $8.4 million in loans and guarantees but the money ran out as Crocus started to unravel.
A Free Press investigation in April 2006 revealed that when the Crocus money dried up, David Wolinsky, the former chairman of Maple Leaf, allegedly initiated a cheque-kiting scheme to prop up the troubled company.
The alleged scheme
Between 2004 and 2006, Wolinsky allegedly circulated a series of cheques totalling $300 million between Maple Leaf, its holding company Protos International and another Protos investment, Salisbury House Restaurants. The flow of cheques deposited to the accounts of the three companies allowed each company to appear as if it had more money than it did, enabling Wolinsky to increase each firm’s line of credit and draw out more funds than had been authorized.
The co-charged
Winnipeg police allege that Wolinsky was allowed to carry out his scheme because of the co-operation of a senior Astra Credit Union employee, Clarke Culbertson, the former chief credit officer, and with the co-operation of David Mollins, the former chief financial officer of Protos and Barry Milne, the former chief financial officer at Maple Leaf Distillers.
The lawsuit
Astra is facing a multimillion-dollar lawsuit from a group of investors that lost money when Maple Leaf and Protos went under. Astra — which has since merged with the Assiniboine Credit Union — has filed a third-party claim against Culbertson, Wolinsky and his partner, Costas Ataliotis, the former CEO of Maple Leaf.
Astra alleges that Culbertson gave altered credit reports to Astra’s senior management and board of directors to conceal the total amount of money owed by Maple Leaf, Protos and Salisbury House.
Astra alleges that Culbertson worked with Wolinsky and Ataliotis to co-ordinate the scheme, advising Maple Leaf managers each morning of the dollar amounts of cheques to be moved between the three company accounts so as not to alert credit union managers about what was going on.
The claim also alleges Culbertson misled Astra’s employees, management and board when questions were made about a possible cheque-kiting scheme, and manipulated the credit union’s computer system to hide the total amount of credit obtained by the three companies.
