The hearing panel heard unflattering descriptions of the behaviour of the OSC’s lawyers, with whom Groia clashed repeatedly, and of the foot-dragging by the OSC on the required production of documents for the defence as the trial neared—the root of Groia’s repeated accusations of “prosecutorial misconduct.”
But the real battle may be over whether the hearing panel needs to consider any defence from Groia at all. The two sides have yet to fight over the law society’s position that the condemnation of Groia’s behaviour in the rulings by the Superior Court and the Court of Appeal are on their own enough to warrant punishment. Cherniak will argue that the judges’ harsh words are merely observations or asides—the Latin legal term is obiter—since it was Felderhof, and not Groia, who was on trial.
No one from the law society will comment on the case; the ruling is not likely to materialize before late next year.
For as long as it takes to resolve the case, defence lawyers will be less than certain about the rules of courtroom conduct. The Criminal Lawyers’ Association has expressed concern over the “potential chilling effect” of the law society’s intervention. That apprehension was echoed in an article on The Globe and Mail’s website by prominent litigators Edward Greenspan and David Roebuck, who argued, “Trial lawyers should not have to temper their obligation to vigorously defend a member of the public out of fear of appearing ‘uncivil’ to a disciplinary committee that never attended the trial.”
Ronald Weinberg and his wife, Micheline Charest, founded Cinar, the Montreal-based children’s animation company, in the mid-1970s. They built it into an entertainment juggernaut, boasting a market capitalization of $1.5 billion by 1999, thanks to successful TV shows such as Arthur.
But after it was alleged Cinar had abused federal tax credits, investigations soon uncovered other improprieties involving Weinberg and Charest. For example, they’d arranged for $108 million (U.S.)—raised mostly in public offerings—to be sent offshore to the Bahamas to be invested. This highly unusual move was made without the approval of Cinar’s board. During the winter of 2000, Weinberg and Charest were forced to resign their positions as co-CEOs of Cinar.
They were soon targets of a bevy of lawsuits and investigations. The Quebec securities regulator began an inquiry, while Cinar’s board launched a lawsuit against the couple, claiming they owed the company’s shareholders $100 million. Charest and Weinberg hired Groia to guide their legal strategy. Between 2001 and 2004, they moved $6 million into his law firm’s trust account, from which Groia drew legal fees and paid out fines, settlements and other disbursements. Lawyers’ trust accounts are commonly used in this manner; in part, they’re a way of making sure that the defence side of a case has the means to carry on.
Groia soon negotiated settlements with the securities regulator and Cinar’s American shareholders, who had launched a class-action lawsuit. But the board’s lawsuit remained unresolved, even after the company was sold in 2004 to an investors’ group headed by Michael Hirsh, co-founder of the film company Nelvana Ltd. (Charest died that same year after a botched plastic surgery operation.) The new owners remained convinced that Weinberg still owed them the $100 million, and set up a litigation committee, headed by lawyer G. Wesley Voorheis.
Voorheis runs a Toronto-based law firm, Voorheis & Co., that specializes, on behalf of shareholders, in salvaging companies mauled by financial scandal. Voorheis’s most high-profile job was taking over as CEO of Hollinger Inc. in 2007 in the wake of the Conrad Black meltdown. On the Cinar file, Voorheis joined forces with William Brock, a Montreal-based lawyer at Davies Ward Phillips & Vineberg who was already on the case for Cinar. Together they began investigating Weinberg and Charest’s habit of moving money offshore.
Cinar alleges in court documents that between 2003 and 2004, Weinberg and Charest sent $11 million to the Barrington Bank International Ltd. in the Bahamas, and $1.7 million (U.S.) to Lochaven Financial Ltd. in the Turks and Caicos. Both countries are infamous tax havens, out of reach of the courts in Canada. “The question is why are they moving assets offshore?” asks Brock. “If you are being sued in Canada, are you trying to render yourself judgment-proof? If the lawsuits had not been pending against them in Quebec, would they have moved money offshore or would they have invested it in Montreal or New York or somewhere else where a creditor could get to it more easily? They were being sued for over $100 million. You would have to be a little naive to expect one wasn’t a factor in the other.”
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