R.C. Morris Capital Management Ltd., a Vancouver-based private lender that backed Gary Ng’s failed spate of wealth-manager acquisitions, has taken extraordinary legal and strategic steps to avoid being publicly identified as one of the financiers taken in by Mr. Ng’s alleged falsified-collateral scheme.
On Wednesday, R.C. Morris convened an emergency hearing at Toronto’s Old City Hall, where it argued that court records legally obtained by The Globe and Mail weeks earlier should be sealed before the newspaper published a story about them. The company argued that disclosure of the details of its involvement with Mr. Ng could harm its reputation, but it failed to persuade Justice Vincenzo Rondinelli of the Ontario Court of Justice, who denied the request. Anyone asking to block access to public court records needs to meet a high bar, and R.C. Morris’s case did not meet the “exceptional circumstances” necessary to displace “the strong presumption of open courts,” Justice Rondinelli ruled.
The emergency hearing was just one of several measures the company took to keep the details of its failed loans to Mr. Ng from surfacing publicly, court records show.
The asset manager, which has promoted itself as a special situations investor, was one of four lenders backing Mr. Ng’s acquisition spree of independent wealth management companies between 2018 and 2020. The company lent Mr. Ng $60-million – $20-million of which he paid back – to back his 2018 acquisition of PI Financial, the Vancouver-based investment advisory firm.
Mr. Ng, who borrowed a total of almost a quarter of a billion dollars from the four lenders, was later found by the Investment Industry Regulatory Organization of Canada to have used forged and falsified account statements as collateral for those loans. The RCMP also charged Mr. Ng, who had professed to have investment accounts worth more than $90-million, with fraud and money laundering earlier this year.
Records filed in court as part of that police investigation show that R.C. Morris tried to get the Mounties to agree to strict terms as a condition of the company’s co-operation with their investigation. These included R.C. Morris having input on the RCMP’s media strategy, as well as a publication ban on any criminal charges that might be laid against Mr. Ng. When the Mounties concluded that they could not abide by those terms, R.C. Morris officials withdrew from an interview scheduled for Nov. 3, 2020.
The two sides then went back to the negotiating table. On Jan. 26, 2021, a lawyer for R.C. Morris, Anil Kapoor, said his client would agree to an interview so long as the RCMP promised not to hold a news conference or issue a news release about Mr. Ng’s arrest. Mr. Kapoor also demanded that in any criminal charges against Mr. Ng, any references to R.C. Morris, or two of his other lenders, should be “anonymized.”
R.C. Morris’s third condition was that the police would notify the company if Mr. Ng’s defence lawyers made any effort to unseal the voluminous records police are required to file in court before they seek a production order or a search warrant.
Mr. Kapoor’s letter does not mention that, by that point, R.C. Morris had already been identified in a Globe news article as one of the lenders allegedly defrauded by Mr. Ng – and that the company’s relationship with Mr. Ng was clearly spelled out in other public records. Shortly after the fraud came to light, an R.C. Morris subsidiary placed liens on seven of Mr. Ng’s vehicles, including a 2017 Lamborghini Huracan Spyder.
But the RCMP agreed to the terms, and R.C. Morris representatives sat down for an interview. Accordingly, when Mr. Ng was charged on Jan. 31, 2022, there was no RCMP news release about the arrest. Also in keeping with R.C. Morris’s conditions, none of Mr. Ng’s lenders is mentioned by name in the official charge document – just an accusation that he “defrauded multiple corporations.”
But on June 28, 2022, the RCMP took the same step they take whenever they charge someone with a major criminal offence: They asked a judge to unseal all the documents they had filed in support of the many production orders they had served on Mr. Ng’s lenders and other financial institutions. This was necessary, the RCMP said, both to provide Mr. Ng’s lawyers with a full record of the case – what is known as disclosure – and because of the principle of open courts.
When The Globe accessed the records late last month and sought comment from R.C. Morris’s managing partner, Christopher Morris, the company’s lawyers moved quickly and obtained the emergency hearing.
In Justice Rondinelli’s courtroom Thursday, another lawyer for R.C. Morris, Ian Kasper, emphasized that his client was an innocent victim and said it should have been given an opportunity to oppose the unsealing. Mr. Morris, who founded R.C. Morris in 2009, said in an affidavit that the information in the court documents could “disrupt transactions” and reveal the company’s “confidential and proprietary lending methods” – though he didn’t point to any specifics.
Justice Rondinelli pushed back, asking Mr. Kasper to provide cases in which a victim of fraud had convinced a court to reseal records. Mr. Kasper said he was not aware of any examples.
“Doesn’t that tell you something?” Justice Rondinelli asked.
As a private lender that caters to accredited investors, R.C. Morris does not advertise much about its business. Court records show it has lent to an array of companies, including Cymax Stores Inc., an online furniture retailer, Quest University Canada, a private, non-profit school in Squamish, B.C., and Zenabis Investments, a cannabis company.
Other records obtained by The Globe show that, of all of Mr. Ng’s lenders, R.C. Morris was the smallest player. A PowerPoint presentation about an R.C. Morris investment opportunity shows that, as of March, 2020, the company offered four funds with a total of $264-million under management. That means Mr. Ng’s $40-million debt at that time represented about 15 per cent of those assets.
R.C. Morris declined to comment for this story.