04.03.2018

Fraudster loses ruling in Sudbury case

Harold Carmichael

 

Fraudster loses ruling in Sudbury case

By Harold Carmichael, The Sudbury Star

Atlas Copco.

Atlas Copco.

A former Atlas Copco Canada executive in Sudbury is on the hook to repay $20 million for his role in a massive fraud scheme.

Lawyers for Dirk Plate had argued their client played a “passive” role in the $23-million fraud and shouldn’t be on the hook to repay the stolen money.

Superior Court Justice Sean Dunphy, however, ruled Plate, as a senior executive, had a legal obligation to stop the fraud, but didn’t and instead benefitted from it. As a result, like his co-conspirators, he must repay the money back.

“The damages continued to accrue and he continued to do nothing to stop the scheme despite having the knowledge and the duty to do so,” Justice Dunphy wrote. “The amount of the damages attributed to the breach of fiduciary duty is, in my view, all of the damages arising from the fraudulent scheme that he failed in his duty to put an end to.”

A jury in Sudbury convicted Plate of one count of fraud over $5,000 on June 29, 2016, for defrauding his former employer. He was sentenced to five years in jail on Oct. 25, 2016.

Superior Court Justice John Poupore also issued a restitution order of $77,930, along with annuities Plate purchased at a cost of $1.44 million. Poupore said both amounts were “fraudulently received funds” and Plate was ordered to return or pay them to Atlas Copco Canada.

Three other men were part of the scheme. Paul Caron, of P.A. Caron Courtier d’Assurance, the company that administered Atlas Copco’s employee benefits program, was convicted at the same time as Plate. Paul Caron, like Plate, was convicted of one count of fraud over $5,000.

A third man, Leo Caron, Atlas Copco Canada’s human resources manager during the fraud period, pleaded guilty on April 5, 2014, to fraud and theft over $5,000. He was sentenced to five years, minus time already served.

A fourth man, Randy Hillier, who served as Plate’s finance manager from 2002-05, returned about $400,000 he was not entitled to and was given immunity against civil and criminal proceedings. He then testified for the Crown at Plate and Paul Caron’s trial.

In a sworn statement that surfaced at Leo Caron’s trial, Hillier said the idea was to submit invoices for fake employee benefits to Atlas Copco Construction and Mining Canada’s Sudbury office from the benefits company, Manulife Financial. The men were accused of pocketing the difference between the fake claims and the legitimate ones.

In 2004, Atlas Copco overpaid benefits by $5 million, then by $5.6 million in 2005, $9.7 million in 2006, and $2.7 million in 2007 as the scheme wound down.

In addition, Leo Caron paid advances to himself worth $1.5 million that were not repaid.

Court was told the men embarked on the scheme because they were unhappy with their pensions.

Since the scheme unravelled, Atlas Copco Canada has been attempting to recover the money. The statement of claim filed by Atlas Copco Canada sought $20 million in damages for several reasons, including that a fraudulent scheme existed and that Plate breached his duties under the Canada Business Corporations Act.

The company’s lawyers had argued the verdict and accepted facts from the criminal trial should be used for a civil suit without the defence raising objections and challenging the information. They argued a legal principle — abuse of process, which prevents lawyers in civil cases from retrying the facts already accepted as fact in criminal trials — should be used in this case.

Justice Dunphy agreed. “I have found that evidence sufficient to warrant a verdict in the plaintiff’s favour for breach of fiduciary duty and that the defendant has failed to place before me sufficient evidence to persuade me that it would be unfair to apply the doctrine of abuse of process here,” he wrote.

Dunphy ruled Atlas Copco Canada is entitled to judgment as claimed for breach of fiduciary duty, and that the company should give credit to Plate against the total future net recoveries from the other participants in the fraud (excluding annuities already seized or in the process of being seized).

“The parties are (strongly) encouraged to be pragmatic here and to use some of that initial 60-day period to agree on simple numbers for costs and interest instead of trying to shave each other to the nearest penny,” Dunphy also wrote. “Thick pencils will be much more cost-effective than sharp ones. I suspect both sides by now have a very realistic view of how little or much of any judgment will ever likely be able to be satisfied and can calibrate the utility of their future efforts accordingly.”

Plate was general manager of Atlas Copco Canada’s Construction and Mining Technology division based in Sudbury from 2002 to 2005. He was promoted in December of 2005 to vice-president Global Strategic Customers, but his employment was suspended and then terminated in 2007.

The $20 million Atlas Copco Canada is seeking includes $3 million in unauthorized advances, unauthorized bonuses and expense re-imbursement that should not have been paid, and $17 million in kickbacks and the payment of invoices for services not provided.

Plate and Paul Caron’s Superior Court judge and jury trial, which lasted about 10 weeks, was the largest fraud trial in Greater Sudbury’s history. The Crown said the men stole nearly $24 million from Atlas Copco Canada’s CMT division from Jan. 31, 2001, to Dec. 31, 2007, in Sudbury, across Ontario and Quebec.

Plate, of Dorval, Que., is now 74. Paul Caron, of Sherbrooke. Que., is 70.

hcarmichael@postmedia.com

Twitter: @haroldCarmichae