More than 14 years after the Bre-X Minerals Ltd. gold scandal rocked Bay Street, the one person still facing scrutiny is the lawyer who got the company’s accused chief geologist off the hook.
Joe Groia won a dramatic acquittal for former Bre-X chief geologist John Felderhof on charges of illegal insider trading and issuing false or misleading information. Now Mr. Groia faces a trial of his own.
Mr. Felderhof’s acquittal came in 2007 after a bitter, contentious and hard-fought 160-day trial. Mr. Groia’s conduct during that trial is now being examined by a three-member disciplinary panel of the Law Society of Upper Canada. The legal regulatory body accuses him of “uncivil” attacks on prosecutors from the Ontario Securities Commission.
If found guilty, Mr. Groia could face anything from a reprimand to the ripping up of his licence to practise law. While Mr. Groia acknowledges his behaviour wasn’t perfect, he says he was merely vigorously defending his client and did nothing to deserve any official reprimands.
It is a story with no shortage of strange twists, like the Bre-X case itself. The tiny Calgary company had claimed a giant gold discovery in the Indonesian jungle, which was later exposed as worthless. Now the man at the centre of the Bre-X scandal, Mr. Felderhof himself, is expected to testify at his lawyer’s hearing.
And Mr. Groia, himself a former OSC director of enforcement, received support from an unexpected quarter on Tuesday: Mr. Felderhof’s ex-wife, Ingrid, who has been locked in litigation with Mr. Groia over millions in legal fees related to the Bre-X trial.
In an e-mail Tuesday, she gave him full backing, saying he is being victimized because he successfully defended Mr. Felderhof.
“I believe these charges against Joe are outrages and a witch-hunt,” she wrote. “Regardless of my differences in the past with Mr. Joe Groia, I will always admire and respect the representation he and his team provided in my former husband's defence.”
She added that Mr. Groia “did an outstanding job defending my former husband who in the eyes of the court of public opinion must have been guilty of something. … I wish Mr. Groia well in this upcoming case.”
Ms. Felderhof, who lives in the Cayman Islands and divorced Mr. Felderhof in 2001, said she still keeps in touch with her ex-husband, who has remarried and lives in the Philippines. She has been writing her own personal account of the Bre-X saga, called The X-Factor in the Shadow of Bre-X.
On Tuesday, Mr. Groia sat quietly in a sober blue suit, taking notes as Tom Curry, the lawyer for the Law Society, outlined the case against him.
“The manner in which he made his submissions was sarcastic and rude, discourteous and uncivil,” Mr. Curry told the panel in his opening statement, saying that Mr. Groia’s conduct distorted the trial and tarnished the administration of justice. “He made unfair and belittling comments about the prosecution ... specifically that their word could not be trusted.”
Neither Mr. Groia nor his lawyer would comment on Tuesday. But in a recent interview in his office, Mr. Groia said the case had already cost his career dearly. In addition to the $2-million in legal fees he says he is still owed in the Bre-X case, his fight with the Law Society could end up costing him $1-million in legal fees and lost revenue while he concentrates on fighting the charges.
Plus, he said, the acquittal of his client is now overshadowed by the Law Society case against him.
“My career has been damaged, and I’ll never get that back,” Mr. Groia said. “But more importantly, what should be one of the crowing achievements of my life has been ruined. Because no matter how this case turns out, it’s not going to change how people think about Bre-X.”
The Law Society’s case against Mr. Groia largely relies on comments about his conduct in two judgments released in the Bre-X case. In October, 2002, Mr. Justice Archie Campbell of the Ontario Superior Court ruled against an OSC attempt to have the trial judge, Mr. Justice Peter Hryn, removed for allegedly making unfair rulings and allowing Mr. Groia’s allegedly uncivil behaviour.
While ruling that both sides were at fault, Judge Campbell (who died in 2007) still said Mr. Groia had engaged in “guerrilla theatre,” “unrestrained attacks,” “sarcasm” and “petulant invective.”
In the other ruling, an Ontario Court of Appeal decision on the same issue a year later, the court also sided with Mr. Felderhof. But the ruling said Mr. Groia “made uncivil attacks,” “belittled the efforts of the prosecutors to prepare their case and accused them of laziness,” and was “prone to rhetorical excess.”
Still, Judge Hryn did not single out Mr. Groia for criticism and ultimately sided with his client, acquitting Mr. Felderhof of eight charges under the Ontario Securities Act.
Prominent litigator Earl Cherniak, acting for Mr. Groia, told the panel that the prosecution against him was “completely misconceived” and that policing lawyers’ conduct in courtrooms should be up to judges, not the Law Society. He pointed out that the society in this case was acting on its own, without a formal complaint from anyone involved.
Going after defence lawyers like this, based only on comments in judges’ decisions, would send a chill through the profession, Mr. Cherniak argued, especially since the Law Society was prepared to argue that the judges’ comments alone were enough to merit discipline against his client.
“The profession would be very upset to learn that if a judge makes an adverse comment against them – that’s it,” Mr. Cherniak told the panel. “ ... That will be major-league news to the profession.”
The Bre-X trial took place in a charged atmosphere in the wake of the scandal, Mr. Cherniak said, which shook Canada’s capital markets and cost investors billions. Mr. Felderhof had been portrayed as “the scapegoat and the whipping boy,” he said, and the OSC was determined to make an example of him.
During the Bre-X trial, Mr. Groia clashed with the OSC over the commission’s production of documents and other procedural issues, and accused the commission of “prosecutorial misconduct” and of exhibiting a “win-at-all-costs” mentality.
Mr. Cherniak also pointed out that the OSC’s lawyers, Michael Code and Jay Naster, made intemperate remarks about Mr. Groia. Before Judge Campbell, Mr. Code accused Mr. Groia of telling a “bald-faced lie” and compared him to “someone who drops a bomb and runs.” Yet they are not facing Law Society proceedings, Mr. Cherniak said.