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Philanthropist Sean McCoshen at a fundraiser for Diversity Gardens attend the Leo Mol Garden Event in 2019.PHIL HOSSACK

Bridging Finance Inc.’s largest borrower used fabricated documents when posting collateral, falsely suggesting to the private lender he had nearly $180-million in investments, The Globe and Mail has learned.

Sean McCoshen, the founder of a Bridging-backed company that proposed to build a railway from Alberta to Alaska, provided the private lender with a 2017 account statement showing he had investments with the Carlyle Group, the U.S. private equity giant.

The statement showed that Mr. McCoshen and his ex-wife held millions of units in two infrastructure funds purportedly offered by Carlyle. The statement, dated Dec. 22, 2017, shows that the units had a total value of $104-million. The next year Mr. McCoshen valued the Carlyle units at $179.2-million in a personal net worth statement.

The two funds listed in the purported Carlyle statement, however, do not exist and have never existed.

The Globe supplied Carlyle with the account statement to verify its authenticity and a spokesperson replied in an e-mail: “The funds in the document are not funds Carlyle ever managed or sponsored.”

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Regulatory filings show no record of Carlyle offering either of the two funds listed in the document, which are identified as the “Infrastructure Americas” fund and the “Infrastructure Mid East Africa 1.” Carlyle launched its first U.S.-focused infrastructure fund in 2006, some eight years after Mr. McCoshen claimed he received his units in the “Infrastructure Americas” fund.

A lawyer for Mr. McCoshen declined to comment.

The revelation raises more tough questions about what due diligence Bridging performed on Mr. McCoshen, and how much Bridging’s business practices were scrutinized by the many Bay Street institutions that promoted the company’s products. It’s unclear how much Bridging relied on the purported accounts when it lent to Mr. McCoshen, but the fictitious collateral is certainly more bad news for the 26,000 investors in Bridging’s funds – the vast majority of whom are retail investors waiting to learn what can be recovered from the company’s portfolio.

In April, an Ontario judge put Bridging under the control of a receiver at the request of the Ontario Securities Commission. The OSC alleged that Bridging, which managed more than $2-billion, engaged in “serious misconduct” with respect to several loans, including a number tied to Mr. McCoshen.

Bridging’s largest and most troubled loan is to the Alaska-Alberta Railway Development Corp., or A2A, a project still at the conceptual stage that aspired to ship bitumen from the northern part of the province to ports in Alaska. The company, which was the brainchild of Mr. McCoshen, owes Bridging more than about $208-million and has no hard assets. Bridging also had an equity stake in A2A that it valued at $109-million. In all, Mr. McCoshen has ties to more than $500-million worth of Bridging’s loans, about one-quarter of its assets under management.

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David and Natasha Sharpe, of Bridging Finance Inc., in the company's downtown Toronto offices in 2019.Fred Lum/The Globe and Mail

Bridging’s receiver, PricewaterhouseCoopers LP, declined to comment for this story. A source close to the case said PwC was aware of issues around Mr. McCoshen’s collateral and that the matter will be addressed in a coming report to the court. The Globe is not identifying the source because the individual did not have authorization to speak publicly about the matter.

The falsified collateral is not the first time Mr. McCoshen has left business associates with the impression he had close ties to Carlyle, which manages US$293-billion on behalf of major institutional investors and wealthy families.

When the OSC first interviewed Bridging executives in October, 2020, investigators asked the company’s then-chief executive officer, David Sharpe, what he knew about Mr. McCoshen’s background. Mr. Sharpe replied: “Sean McCoshen is a businessperson who has had some solid success. He was a former employee of Carlyle Group in, I believe, Washington, D.C.” Carlyle, however, says it has no record of ever employing Mr. McCoshen.

Mr. Sharpe, who allegedly received undisclosed payments totalling $19.5-million from one of Mr. McCoshen’s companies and has since been fired from Bridging, declined to comment for this story.

According to the document Mr. McCoshen supplied to Bridging, the investments could not be cashed out for decades. The account statement says Mr. McCoshen received his stake in the supposed Carlyle funds at three points in 1998, 1999 and 2000. Public records show that during those years, Mr. McCoshen was the president of a Winnipeg-based clothing company, Brawd Inc., which manufactured jeans and other rave-themed clothing.

One of Mr. McCoshen’s next companies, the Usand Group, published promotional material that said he previously worked as an investment banker who specialized in infrastructure. A brochure for Usand said he spent three years in Dubai working with “a large multinational private equity firm” – which is not identified by name – building a “billion-dollar grain terminal.”

With A2A, his most recent venture, Mr. McCoshen again tried to establish connections to Carlyle, enlisting a former Carlyle managing director to help him get the project off the ground. Robert Dove, who helped launch Carlyle’s U.S. infrastructure fund in 2006, worked for A2A as a consultant and was touted in the project’s promotional material. Mr. Dove retired from Carlyle in 2017.

There is nothing to suggest that Mr. Dove was aware of the fictitious account statement. In a statement to The Globe, Mr. Dove said: “I have no knowledge or information about whether Mr. McCoshen was, or is, an investor with Carlyle.”

The fabricated Carlyle accounts are also not the first time that Bridging was supplied with allegedly falsified collateral from a borrower.

Companies owned by Gary Ng, another businessman from Winnipeg, borrowed a total of about $100-million from Bridging between 2018 and 2019. The Investment Industry Regulatory Organization of Canada has since alleged that Mr. Ng supplied falsified documents, which vastly inflated his net worth, in support of one of those loans.

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