Joe Groia, perhaps the best-known securities lawyer on Bay Street, enjoys a maverick reputation he owes largely to his biggest case: His successful defence of John Felderhof, the geologist at the centre of the Bre-X gold fraud that rocked Bay Street in the 1990s.
The Bre-X affair has long since faded into history – but not for Mr. Groia. The case that defined his career remains very much a present-day preoccupation.
Wearing a jacket and tie with faded jeans and gesticulating over a half-plate of orecchiette at Oro – a downtown Toronto Italian restaurant where he had a party after his wedding 25 years ago – he tells of how his link to the Bre-X saga began, recalling a promise he made to Mr. Felderhof that things would turn out all right.
Back in 1997, the geologist was under a cloud of suspicion after faked gold-drilling results from Indonesia caused stock in his company, Bre-X Minerals Ltd., to crater, costing investors billions. The Ontario Securities Commission, the U.S. Securities and Exchange Commission, the RCMP and the FBI were all on the case.
But over drinks in the Cayman Islands, where Mr. Felderhof then lived, Mr. Groia told his client he would find a way out of it all.
“I said: ‘John, I don’t know how this will end,’ ” Mr. Groia says. “But I can promise you that I’ll get you home safe, somehow.’ ”
He did get Mr. Felderhof home safe, winning him a stunning acquittal in 2007 on insider trading and other securities charges after perhaps the most controversial white-collar crime trial in Canadian history.
Mr. Felderhof, who maintained his innocence throughout, was free, although his reputation never recovered, and he now lives in the Philippines.
Close to 14 years after the epic trial began, with a bit more salt in his salt-and-pepper beard, only one player in the Bre-X drama faces any official sanction: Mr. Groia himself.
In a much-watched fight in legal circles, he has been waging an all-out war against allegations that his courtroom behaviour violated the legal profession’s rules on “civility.”
During the trial, Mr. Groia repeatedly and relentlessly attacked OSC prosecutors, accusing them of misconduct for allegedly trying to convict his client “at all costs.” He used what one judge called “unrestrained invective” as heated battles erupted over the use of various documents and other procedural issues and effectively paralyzed the trial.
Mr. Groia accused his opponents of laziness, threatened to call the chairman of the OSC as a witness, and engaged in what one judge called “guerrilla theatre.” At one point he said the OSC’s “promises aren’t worth the transcript paper they are written on,” calling a prosecution proposal on a procedural dispute “nonsensical.”
Mr. Groia acknowledges that his behaviour wasn’t perfect. But he argues his attacks on the prosecution were justified and did not break any rules. And he says that the Law Society of Upper Canada should leave policing courtroom behaviour to the authorities best placed to do so: judges. In his case, he points out that the trial judge, Peter Hryn, never complained.
He insists that the OSC prosecutors were trying to convict his client at any cost, forcing him to fight back hard. He says the trial moved smoothly once the initial OSC prosecutors were replaced.
But after a lengthy investigation by the Law Society, Mr. Groia found himself facing professional discipline and the threat of a suspension. Despite advice from other lawyers to accept a settlement, he chose to fight. He blames the Law Society for refusing to guarantee what it would say about his case if he settled.
In 2011, after a disciplinary hearing presided over by three elected “benchers” of the Law Society, he was was ordered to serve a two-month suspension. An appeal panel knocked down the suspension to one month, and asked for an order that he pay nearly $250,000 in costs to be reconsidered.
Mr. Groia says he now plans to appeal the ruling to Ontario Divisional Court – and he says the case could one day end up before the Supreme Court of Canada.
For Mr. Groia, the battle has always been about more than just his own fight. He takes issue with the Law Society’s so-called civility campaign, and prominent lawyers have offered support.
Defence lawyers have warned that the ruling could have spillover effects, causing some to bite their tongues rather than confront prosecutors, for fear aggressive rhetoric could be second-guessed by the Law Society years later.
“You can’t have some kind of censorship process that’s going to be out there, without it having a very damaging effect on the way trials are run,” Mr. Groia says.
His clash with the Law Society takes up most of the conversation over lunch. It is even in the very wine we drink: He insists I choose a bottle from his very own Niagara Region winery, 16 Mile Cellar, which he launched with his wife, Susan Barnacal, four years ago. Their first two vintages, a pinot noir and a chardonnay, are cheekily branded Incivility and Civility.
The joke may have cost him, as the humour was lost on the Law Society, which cited it as evidence he lacks remorse. I choose a bottle of the red, Incivility – and the bill later shows an $80 charge.
“I taste some cherry and some raspberry in there, not like crap raspberry jam, more seductive than that,” Mr. Groia says, confiding that managing the winery has been a welcome distraction from the disciplinary proceeding and his other personal trials.
His wife, Susan, has been (so far successfully) battling a severe form of breast cancer, even coming to the Law Society hearing room to support him with her hair falling out. “When Susan got sick, it made me realize how a lot of this stuff really didn’t matter all that much.”
But the Law Society fight still clearly matters a great deal. He has spent months of his own time on it, and hired veteran litigator Earl Cherniak to represent him. In all, he says, the fight has cost him about $1-million in fees and lost time.
Mr. Groia is no stranger to fights. A lightweight, precocious kid raised in a tough Italian neighbourhood near Bloor and Lansdowne Streets in Toronto’s west end, he has always been a bit of an outsider in the clubby world of Bay Street law, a position he blames on his time as the head of enforcement at the OSC in the 1980s. He shook up the regulator, breaking new ground by taking on landmark cases against establishment players, such as Canadian Tire and Gordon Capital.
He remembers early on having to settle a case for the commission with legendary litigator John J. Robinette, then approaching 80, and meeting him in a McCarthy Tétrault LLP boardroom. “I was awestruck,” he recalls. “It took us about five minutes to make a deal. I’d like to think it wasn’t a bad deal for the commission. Frankly, if he’d said, ‘Joe, I’d like your shirt, too,’ I would have given it to him … I was a fifth-year lawyer, and here I was dealing with one of the legends of the bar, and he’s calling me Mr. Groia.”
At his disciplinary hearing, being questioned by his lawyer, Mr. Cherniak, Mr. Groia recounted this anecdote and suddenly had to stop. He was overcome with emotion, his voice cracked, and he took deep breaths.
He remains proud his time at the OSC, but he says it cost him any hope of landing a job at Bay Street’s top firms, dubbed the “Seven Sisters,” when he left in 1990. His contacts at the big firms told him that senior partners quashed the idea of hiring him: “One of them, we went out and got drunk, and he said he actually raised it with a client, and the client said, ‘If you hire that son of a bitch we’ll take all our work away.’”
He landed in Heenan Blaikie’s then-new Toronto office. But he would leave a decade later to start his own boutique white-collar-crime defence firm as the controversial Bre-X case took over his practice and Heenan Blaikie, he said, got “uncomfortable” with it.
His status as an outsider in the profession, he believes, is partly to blame for the predicament he is in now. “I believe that the case never would have gotten to where it got to, but for that reputation,” he says at one point. Later, he adds: “I think they thought I was impertinent. I think the Law Society believes that I am a vocal thorn in their side.”
But it is those outsider and street-fighter instincts that attract clients accused of white-collar crimes, whose reputations and livelihoods and, sometimes, freedom are at stake. Mr. Felderhof testified at Mr. Groia’s disciplinary hearing in 2011 that he didn’t want a lawyer who called his colleague on the other side his “learned friend,” as is customary. “In the end, I would be the defendant,” Mr. Felderhof told the Law Society panel. “Who’s my friend?”
Mr. Groia says he still speaks often with the former Bre-X geologist, who told The Globe in 2011 that he runs a small convenience store and restaurant with his new wife in the Philippines. He still owes Mr. Groia $2-million in legal fees, a bill no one expects to be paid.
Mr. Groia agrees that someone, not Mr. Felderhof, got away with a massive fraud in the Bre-X scandal. He speculates, as others have over the years, that perhaps Michael de Guzman, the Bre-X geologist who apparently took his own life by jumping out of a helicopter flying over the Borneo jungle in 1997, is still alive.
Despite the mess it has left him in, Mr. Groia sees Bre-X as the finest work he has ever done.
“At the end of the day, I know what I did for John Felderhof … and the Law Society is not going to take that away from me,” he says. “And however it turns out, after I have fought with them for a good long time, I am always going to say, I have no regrets.”