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Report On Business OSC charges former brokerage head for improper share sales

The allegations involve the sale of shares of Intrinsic Minerals Ltd. in 2012.

Peter Power/The Globe and Mail

A brokerage industry executive at the centre of one of Bay Street's biggest criminal frauds in the 1980s is facing new accusations of improperly selling shares in a small mining company.

The Ontario Securities Commission said Tuesday that it has laid quasi-criminal charges in provincial court against Venard (Lenny) Gaudet of Toronto, accusing him of unregistered trading in shares and selling securities without issuing a prospectus. The allegations involve the sale of shares of Intrinsic Minerals Ltd. in 2012.

Mr. Gaudet was sentenced to eight years in jail in 1995 after presiding over the collapse of brokerage firm Osler Inc., a Bay Street institution that was 101 years old at the time of its failure in 1987.

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Investors were outraged to learn the firm had lost $60-million, mostly from disastrous bond trades overseen by Mr. Gaudet and two others at the firm, who were later accused of concealing the losses and funnelling more than $10-million into their own bank accounts. Osler's failure was the costliest collapse of a brokerage firm in Canadian history, and it remains the biggest loss ever covered by the Canadian Investor Protection Fund.

A judge overseeing the fraud trial in 1995 said Mr. Gaudet and two other former Osler executives also charged in the case were "basically good men who, during 1986 and 1987, let greed take over their judgment." He called Mr. Gaudet, who was chairman of the firm, "the principal instigator of these crimes and the largest beneficiary."

Mr. Gaudet was sentenced to eight years in jail and served one year before being granted day parole at a halfway house.

Mr. Gaudet was known for his opulent lifestyle, including a house with eight fireplaces in Toronto's Kingsway area, a chauffeur-driven Mercedes Benz limousine and a multimillion-dollar art collection. He filed for bankruptcy in 1988, saying he had no assets.

In addition to facing criminal charges following the collapse of Osler, Mr. Gaudet was also sanctioned by an OSC tribunal in 1991 for his role in the fraud.

In a release Tuesday, the OSC alleged Mr. Gaudet's new trading in Intrinsic Minerals shares was done despite the fact he had his registration permanently revoked in 1991 and faced permanent trading restrictions. The commission hearing panel said at the time his conduct was reprehensible and he "should never again be allowed to participate in the capital markets of this province."

The OSC has laid the new charges in court following an investigation by its Joint Serious Offences Team, which is a partnership between the commission, the RCMP and the Ontario Provincial Police.

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Charges laid in court under the Ontario Securities Act carry penalties of up to five years in jail and fines of up to $5-million.

Mr. Gaudet is scheduled to make a first appearance in court on Dec. 12 to face accusations he improperly sold Intrinsic Minerals common shares to four investors in July, 2012.

Intrinsic was incorporated in 2007 and said its mission was to acquire and explore prospective mineral projects. In a 2008 news release, the company announced it had entered into an option to buy a half-interest in properties in the Ring of Fire location in Northern Ontario owned by Noront Resources Ltd., but the option expired unexercised. The company also said it was involved in other joint venture projects, including nickel projects in Labrador.

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