The Facts: James P. was the owner of Tri-Capital Auto Co., along with his wife and brother-in-law. They regularly bought cars at auction and sold them at two dealerships they owned. The deals were bankrolled by three different finance companies. The financing contracts stipulated that as each car was sold, the loan was to be repaid to the finance company. The finance company kept the original of each car’s ownership document as collateral. Unfortunately, as the credit crisis unfolded in 2007 and 2008 (the commercial paper market in Canada and the banking crisis in the U.S.), and the auto market crashed, Tri-Capital had trouble maintaining cashflow. Faced with insolvency, the company began selling cars without informing the finance companies, and without repaying them. They got around the ownership issue by applying for new ownership papers for each car, declaring that the originals had been lost. Eventually one of the finance companies found out, and called the police. The company declared bankruptcy and the owners were charged with fraud in the amount of almost half a million dollars.
The Defence Strategy: We represented James. P. and made sure that his wife and brother-in-law were represented by lawyers that we have a good working relationship with, so that we could collaborate on the defence strategy. A thorough analysis of the evidence gave us the opportunity to argue that while the clients had been underhanded in their business dealings with the finance companies, what they had done was not necessarily criminal. For example, the ownership documents, while they remained in the possession of the finance companies, listed Tri-Capital as the owners. Therefore, while shading the truth to the Ministry in declaring the originals “lost”, they were within their rights as owners to apply for and transfer the documents to the purchasers. We showed that the owners’ intent all along was to repay the lenders from the sales proceeds, as soon as the company was solvent again. Indeed, from each car sale, they set aside a portion of money in a separate account to repay the loans. Unfortunately that money was seized as part of the bankruptcy. Our position was that this was a matter more properly suited for the civil courts, as a commercial dispute over breach of contract, not a criminal fraud.
The Result: In a series of negotiations and judicial pre-trials, we were successful in persuading the Crown that this was a more of a contract dispute than a criminal offence. The defendants were able to borrow against their personal savings and their homes, and come up with just under $200,000 in restitution to the lenders, who were happy to recover two-thirds of their losses without having to pay for an expensive lawsuit. In return, the Crown withdrew the charges against all the defendants.Back
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