KPMG challenges email leaks linking company to suspected offshore companies in massive Ponzi scheme

KPMG disputes confidential emails from an offshore financial data leak which show the Canadian accounting firm helped set up four shell companies on the Isle of Man which experts say were later involved in a massive fraud fraud. investor that took place for years in Montreal

More than half a billion dollars disappeared overseas in the mid-2000s in what has been called one of the biggest investor frauds in Canadian history.

Three men were ultimately convicted in 2016 for their roles in what is known as the Cinar / Norshield / Mount Real fraud, but most of the embezzled money that went missing overseas has not been recovered.

The fifth state and Radio-Canada Investigation reported earlier this year that four Isle of Man shell companies appear to be linked with the missing millions.

KPMG’s outside legal advisor Mark Gelowitz has denied any connection between the accounting firm and the Isle of Man shell companies, calling the allegations “false and defamatory”.

In question, four companies discovered by CBC / Radio-Canada bear the name of ancient swords. Shashqua, Katar, Sceax and Spatha were established on the Isle of Man, a Crown dependency in the Irish Sea between Ireland and England, known to keep offshore secrets and help the wealthy avoid taxes.

Ronald Weinberg, left, co-founder of Montreal animation studio Cinar, John Xanthoudakis, former CEO of Norshield, and Lino Matteo, former CEO of Mount Real, were convicted of fraud charges in Montreal in 2016. (The Canadian Press, Christinne Muschi / The Globe and Mail, Radio-Canada)

The sword companies were all formed in December 2001, just as financiers began to hide millions of people abroad.

Records obtained by The fifth state/Inquiryêyou use of the Isle of Man public registry also shows that three of the sword businesses were closed when the Montreal-based fraud came to light in 2005.

“The timing is too fortuitous to be a mere coincidence,” said Toronto lawyer Wes Voorheis, a professional asset tracker who has spent years searching for some of the missing offshore money.

“If I had had this information … while we were still at the scene we would have tried to get to the bottom of it,” Voorheis said, referring to the apparent links between the fraud and the sword companies. .

Lawyer Wes Voorheis, managing partner of Voorheis and Co., was hired to find the missing Cinar money in 2004. (Harvey Cashore / CBC)

Identifying who is behind these companies and who helped set them up could be key to knowing where Cinar / Norshield / Mount Real’s missing money ended up.

KPMG denies any link to Sword companies

KPMG acknowledges having implemented a confidential tax and asset protection system for ultra-wealthy Canadian clients in the Isle of Man starting in the late 1990s.

However, the accounting firm, also known for its advisory and auditing services to federal and provincial governments, denies that it was instrumental in setting up the four sword companies on the Isle of Man.

“KPMG Canada has carefully reviewed and refuted any connection between KPMG Canada and the sword companies,” Gelowitz, KPMG’s lawyer, said in a recent letter to CBC.

KPMG said it searched its internal records and found no reference to any involvement in the sword companies.

“Unless CBC has further evidence of KPMG Canada’s involvement with the sword companies it has not shared with KPMG Canada, the proposed allegations are clearly unfounded, false and defamatory.

Confidential emails link KPMG to sword companies

One of the links between KPMG and the sword companies comes from the Paradise Papers, a massive leak of confidential offshore financial documents obtained by the German newspaper Süddeutsche Zeitung and shared with the International Consortium of Investigative Journalists (ICIJ) and its partners. media, including CBC / Radio-Canada.

Confidential emails authored by Sandra Georgeson, an Isle of Man ‘offshore services’ provider and director of several companies involved in KPMG’s offshore program, identify the saber companies as part of the group of companies created by the firm Canadian accountant.

In an email dated December 16, 2015, with the subject line “Canadian Tax Investigations”, a manager asked Georgeson “who was [the] program / product promoter “?

She replied that it was “KPMG in Canada” and then explained, in writing, how the KPMG Canada program worked.

Georgeson attached a spreadsheet of all the businesses that KPMG Canada helped start in the Isle of Man, a document that included the sword companies, Shashqua, Sceax, Katar and Spatha.

The Isle of Man, a tiny Crown dependency in the Irish Sea, is an offshore tax haven that attracts accounting firms from around the world. (Harvey Cashore / CBC)

KPMG said it had not been able to reach Georgeson, but concluded that it must have included the names of the sword companies in error.

The accounting firm maintains that Georgeson did not have direct knowledge of their operations in order to tie KPMG to the saber companies.

Georgeson, the KPMG lawyer said, “expressed only a belief” that sword companies were part of the accounting firm’s program on the Isle of Man.

Gelowitz said the companies had been incorporated 14 years before this email was written and that there was “no basis to suggest” that Georgeson had a “permanent role with them.”

Marwah Rizqy, professor of tax law at the University of Sherbrooke, reviewed documentation obtained by CBC / Radio-Canada, including emails from the ICIJ offshore leak.

Rizqy, who is also a liberal member of the Quebec National Assembly, said she believes the documents clearly show that Georgeson was involved for years as an administrator of the KPMG regime and would have known firsthand that the sword companies were linked to Canadian accounting. solidify.

“I do not believe [Georgeson] made a mistake. She declares that she was involved from the start of this project. “

A confidential Isle of Man company spreadsheet set up for KPMG Canada clients includes four shell companies that experts believe are involved in massive investor fraud. (Appleby)

Isle of Man corporate documents show that Georgeson was appointed a director of Shashqua, one of the sword companies, in October 2002 and remained in that role for over seven years, until in November 2009.

Georgeson, who is now managing director of Acclaim Limited, a trusted Isle of Man service provider, did not respond to recent phone calls about his 2015 email linking the sword companies to KPMG.

At the time of writing the emails, Georgeson was Client Director at Appleby Trust Limited, a global offshore service provider.

In 2015, Georgeson told CBC / Radio-Canada that KPMG Canada’s Isle of Man program used “candidates” to ensure the confidentiality of the accounting firm’s high net worth clients.

Sword companies similar to KPMG companies

Rizqy said that additional documentation obtained by CBC / Radio-Canada from the Isle of Man Public Registry also shows many other similarities between the KPMG Canada Program and sword companies.

Documents obtained by CBC / Radio-Canada show that the sword companies were formed at the same time as some of the Isle of Man KPMG companies, that they used the same appointed local directors and shareholders, and that they listed the same Isle of Man address. so many KPMG companies.

“There are too many similar or even identical elements,” Rizqy said. “In my personal opinion, they are related.”

KPMG also said that there are key differences in the articles of association between the saber companies and the ‘offshore company structure’ they have put in place on the Isle of Man that would have defeated the tax benefits of their product. .

Marwah Rizqy, professor of taxation at the University of Sherbrooke and liberal member of the National Assembly of Quebec, says it is unlikely that the Isle of Man sword companies are in any way linked to KPMG . (CBC)

However, KPMG’s own internal documents indicate that it was selling its Isle of Man product to high net worth clients for “asset protection” and estate planning, not just to avoid paying taxes in Canada.

KPMG said anyone could have copied their offshore structure by accessing company records in the Isle of Man public registry and then used that information without their permission.

Yet public records also show that three of the sword companies were registered on the Isle of Man on December 17, 2001, exactly the same time KPMG Canada helped set up a company called Parrhesia.

Isle of Man registry documents show Parrhesia was set up by the accounting giant’s Montreal office and has the same address, Isle of Man shareholders and signatories as the sword companies .

An official document submitted to the Isle of Man Companies Register for the company Parrhesia was sent from a fax number of KPMG in Montreal. Parrhesia was formed along with three of the four sword societies. (Isle of Man Companies Register)

KPMG said all “alleged links” between the accounting firm and the saber companies have been “systematically disproved”.

Rizqy said he believes it is “highly unlikely” that the sword companies have any connection with KPMG.

“You have to be blind not to see the connection,” she says. “He must be bound.”

If you have any advice on this story, email [email protected] or call 416-526-4704. To pursue @HarveyCashore on Twitter.

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