Barry Sherman has spent a long career building a multibillion-dollar drug firm, becoming one of Canada's wealthiest men and keeping his personal life private.
But a simmering family feud has erupted in court, and a group of relatives is suing Mr. Sherman, alleging he violated a 40-year-old agreement that entitled them to 20 per cent of his company, Apotex Inc., Canada's largest generic drug-maker.
The relatives, who are Mr. Sherman's cousins, say they found out about the agreement only a few years ago and when they started asking Mr. Sherman questions about it, he stopped supporting them financially. They are seeking $1.5-billion in damages from Mr. Sherman and Royal Trust Co., which was involved in drafting the agreement.
In an interview, Mr. Sherman called the allegations "bizarre" and said the lawsuit "has no substantive basis whatsoever."
"I've spent millions of dollars trying to help these kids but they've got a lawyer who smells money, it seems," he said. "It's just an unbelievable story. It's actually very distressing to me."
"I'm saddened that it has come to this," said Kerry Winter, one of the cousins who is suing. "It's a tragedy."
In court filings, Toronto-based Royal Trust denied the allegations and said the agreement expired long ago. The company added that the cousins have waited far too long to sue.
Court filings and interviews with relatives reveal a bitterly divided family that has been beset by a series of troubles. One cousin, Dana, died of a heroin overdose in 1995 shortly after being charged with conspiracy to commit murder. Royal Trust alleges in court filings that one reason the cousins could never become involved in Apotex was because of "significant personal issues, which included criminal activity, incarceration, serious drug addictions and mental health issues."
The turmoil dates back to the early 1960s when a young Barry Sherman was introduced to the pharmaceutical business by his uncle, Louis Winter. Mr. Winter was a biochemist and he ran a series of drug ventures in Toronto under the umbrella of Empire Laboratories Ltd.
Mr. Sherman started working summers at Empire when he was 18, driving trucks and helping in the manufacturing plant. His father had died of a heart attack eight years earlier and Mr. Winter took his nephew under his wing.
But Mr. Sherman's real passion was mathematics. He went on to excel at the University of Toronto and the Massachusetts Institute of Technology, where he graduated at the top of his class with a doctorate in systems engineering.
On Nov. 5, 1965, Mr. Winter died suddenly at the age of 41. His wife, Beverley, died a few days later. Their four young children -- Dana, Kerry, Paul, Jeffery -- were adopted by another family, the Barkins. Royal Trust was appointed executor of Mr. Winter's estate and took control of Empire.
Shortly after Mr. Winter's death, Mr. Sherman offered to buy the company but Royal Trust turned him down. Two years later Royal Trust put the business up for sale, and Mr. Sherman and a partner submitted an offer. "I said if you are going to sell it and there are other buyers, I suggest you give me first right of refusal because that's something my uncle would have wanted," Mr. Sherman recalled in an interview, adding that the company was facing insolvency. Royal Trust received two offers, according to court filings, and Mr. Sherman's bid won.
The terms of the sale included a provision to give Mr. Winter's four children an opportunity to work for the company once they turned 21. And, after two years employment, they could buy 5 per cent of the business.
However, in court filings, Royal Trust alleges the agreement included several conditions. For example, it was only enforceable so long as the company remained under family control and provided each of the children was capable of "being a responsible employee."
In 1972, Mr. Sherman sold the company to ICN Canada, a subsidiary of a U.S. company that was publicly traded. A year later, Mr. Sherman started Apotex.
In their lawsuit, the cousins allege Mr. Sherman never told them about the agreement and "turned his back on the orphaned children." They claim that the roots of Toronto-based Apotex can be traced back to Empire and that Mr. Sherman owed them royalties on products Mr. Winter developed.
In an interview, Mr. Sherman said the sale to ICN was straightforward and that he did not use Mr. Winter's products at Apotex. Royal Trust said in court filings that since the sale involved a public company, ICN, the agreement relating to the children couldn't be enforced. And none of the children were 21 at the time.
The cousins and Mr. Sherman lost touch for more than 10 years after he started Apotex. It wasn't until 1988 that contact was re-established. Dana was facing trouble and turned to Mr. Sherman for financial help. Mr. Sherman gave him money, bailed him out of jail and helped him land various jobs. But Dana's drug problem worsened and he died seven years later.
Soon Mr. Sherman was providing substantial support to the other children. Apotex had become a major generic drug company with roughly $1-billion in annual sales and Mr. Sherman, married with four children, was a billionaire.
He bought his cousins homes, cottages, financed various business ventures and gave them millions of dollars, according to court filings. Kerry received up to $15,000 a month for years, according to court filings. After Dana died, Mr. Sherman bought his widow a home and sent monthly cheques to her two children.
The cousins allege the money made them dependent on Mr. Sherman and he used it to keep them under control, often requiring security for financial gifts.
Around 2000, the cousins allege they first became aware of the sale agreement and began asking Mr. Sherman questions. In 2001, they went to court and won an order requiring Royal Trust to turn over documents relating to the deal.
The cousins allege Mr. Sherman demanded that they drop the legal action or he would cut off financial support. When they filed a suit against Royal Trust last year, Mr. Sherman allegedly told Kerry to sell his cottage and slashed his monthly stipend to $2,000. He also allegedly cut off monthly support to Jeffery and Dana's widow. The cousins aren't backing down and in the court filing they claim Mr. Sherman has illegally interfered with their rights by not telling them about the agreement and withholding royalties.
Not all the cousins agree. Jeffrey has backed out of the lawsuit and, according to Mr. Sherman, he is furious at the others. They claim he is fearful of Mr. Sherman.
Mr. Sherman, 64, can't understand how it has all come to this. "To suggest that I was trying to keep control and cover up information is ridiculous," he said exasperated. "When I found out these kids had problems I did everything I could to help them. So you've got an extraordinary and bizarre situation here."