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In tight blue handwriting on a scrap of a white jail form, Nick Lysyk said he is sorry.

The disgraced former Edmonton banker who embezzled $16.3-million from his employer took pains to distance his wife Jennifer and estranged daughter, Sheri Paquette, from what is one of Canada's largest bank frauds.

"I apologize to everyone that I have hurt through my conduct. I want the public to know that Jennifer Lysyk knew nothing of my crime nor did any of my family," said the statement read to reporters yesterday by his lawyer Brian Beresh.

"My daughter has been humiliated by my conduct and I want her to know that I am very sorry, even though we have not spoken for almost two years. I will always love her."

Mr. Justice Paul Belzil of the Court of Queen's Bench yesterday sentenced Mr. Lysyk, 54, to seven years and four months in prison, a term jointly recommended by Mr. Beresh and Crown prosecutor Sheila Brown. Mr. Lysyk will be eligible for full parole in early 2007.

"In perpetrating this fraud, he committed an egregious breach of trust in which, as branch manager, he had the responsibility to safeguard his employer's financial interests," the judge said.

As Mr. Lysyk was taken from the courtroom to begin serving his sentence, he began sobbing and hugged his lawyer.

"I just tried to comfort him. As you can appreciate, that is the metaphorical guillotine that drops and at that moment I think reality hit home," Mr. Beresh said.

The lawyer said he "would never have agreed" to the sentence, which is less than the 10-year maximum, if Mr. Lysyk had not been charged last week with breaching his bail for being in contact with an escort upon whom he had showered $3.5-million in gifts. He called the incident part of a "pattern," but would not elaborate.

As well yesterday, Ms. Brown withdrew a charge of possessing property obtained by crime against Ms. Lysyk, which was part of the former banker's sentencing deal. She said that pursuing the case was not in the public interest.

Last week, Mr. Lysyk pleaded guilty to defrauding the Bank of Montreal of $16.3-million over a 5½-year period. He used the money to fund an extravagant lifestyle of fine cars, real estate and escorts. His lawyer said the defendant was deeply depressed and not fully in control of his actions. as well as being extorted by some of the escorts and their associates.

A court-appointed receiver identified an estimated $5.2-million in assets the bank will be able to recover. However, more than $10-million has been traced and is "spent and gone," Ms. Brown said, used for day-to-day expenses.

The Bank of Montreal brought a civil lawsuit, which is ongoing, against recipients of the money. Mr. Lysyk, whose lawyer was paid by legal aid, is also involved in bankruptcy proceedings.

In a victim-impact statement introduced into court yesterday, Mr. Lysyk's only child, Sheri Paquette, said she "lost a father whom I trusted more than anyone, someone whom I believed in, and someone whom I never would believe could harm me the way he has." Her father's sordid crime, she said, ruined her reputation.

"Every time I give my name, I wonder if the person knows who I am. Every time I look in the daily newspaper, I have to worry whether my name is appearing on the front page," she wrote last October.

Ms. Paquette, who is a teacher, said parents have "insisted" their children not be in her class and some students have "slandered" her name.

"Every time I walk into my classroom, I question the stares the children give me, wondering, 'Do they know who my father is.'"

(A psychologist's report introduced in court last week quoted Mr. Lysyk as saying his daughter and her husband drove to his branch with a Jaguar demo they wanted him to buy for them. "I personally felt pressure," Mr. Lysyk said.)

In her victim-impact statement, Laurie Shinkewski, the bank employee who discovered the massive fraud through a routine audit, said she lives "in fear for my personal safety" and changed jobs within the bank because she no longer wanted to audit files.

She said she has trouble sleeping and sometimes dreams about the case.

"It's always on the back of my mind, hanging over my shoulder. When I think I can put it behind me, an article shows up in the paper and I feel sick to my stomach thinking about going to court and having to face him," she wrote last year.

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