A group of investors who claim they were defrauded in an investment scheme have filed a notice of action in Ontario Superior Court, naming Cassels Brock & Blackwell LLP and a former managing partner of the firm, Gregory Jack Peebles, as defendants in the statement of claim.The $150-million suit, Willock v. Cassels Brock & Blackwell LLP, brought under the Class Proceedings Act and filed on Nov. 29, is the third to be filed against the firm and Peebles this year. Robert Hryniak, Robert Cranston, Frontline Investments Ltd., and Tropos Capital Inc. are also named in the statement of claim.
The latest claim alleges that class members were invited by Hryniak and Peebles, assisted by Cranston, to participate in a fraudulent investment scheme through Frontline Investments. They were then allegedly instructed to "deposit their funds either into the account of Cassels Brock or directly into a bank account identified by the conspirators," according to the claim.
The plaintiffs claim Peebles "was authorized to act on behalf and did act on behalf of the firm throughout his dealings with the plaintiffs and the other class members."
Peebles resigned from Cassels Brock in August 2004.
The current managing partner of Cassels Brock, Mark Young, said the firm had not yet been served with notice of action, but after searching, he found a copy of the statement of claim on the plaintiffs' lawyer's web site.
"This particular claim I think is absolutely without merit. Mr. Willock was represented by his own counsel so to suggest that he would rely on representations he alleges our partner made is, I think, is quite outrageous.
"My former partner, Mr. Peebles, has said that he made no such representations. And finally, Mr. Willock, if he made an investment, and I don't know that he did, was not a client of our firm, may not have made an investment and if he did make an investment it didn't find its way to our firm through any kind of subscription agreement or documentation that we're aware of. Nor did any of his monies ever find their way through our law firm's trust accounts.
"As for the issue of a class action, I don't believe that there's any merit whatsoever to this being a proper subject for a class action. I think, quite frankly, it's being used as a means to sensationalize this claim. The damages number that's suggested is quite unbelievable," said Young.
A similar non-class action suit, Mauldin v. Cassels Brock & Blackwell LLP, was filed in Ontario Superior Court on Nov. 10 on behalf of 13 American plaintiffs seeking $20 million in damages, claiming they were defrauded in a similar investment scheme.
In a Nov. 23 written statement in regards to Mauldin, Young said, "Greg Peebles has not been a partner of Cassels Brock since the firm agreed to accept his resignation in August 2004. Cassels Brock considers the claim against the firm wholly without merit and it will be vigorously defended.
"While sympathetic to the plight of those who may have suffered loss, the firm was not asked to, nor did it give, any assurances to the plaintiffs regarding their alleged investment."
Lawyer for the plaintiffs, Xavier Navarrete of Heydary Hamilton LLP, who has joined with Groia & Company in the proposed class actions, said he's not sure exactly how large the proposed class might be.
"We don't know the full extent of it. Right now we know of Mr. [John] Willock and we understand that he's got a number of investors who invested as well. I believe there's about five or six of them," he said.
"We understand there's also some potential investors in the United States as well."
Young says that claim, as well as the first lawsuit filed in March — Bruno Appliance v. Cassels Brock & Blackwell LLP — are without merit because Cassels Brock did not act for the plaintiffs named in the statements of claim.
Navarrete said that while this may be the case, the actions of one partner bind the firm.
"I don't know how they're going to get around that. This is a partner that they put out there as a securities expert," he said.
"If you try and get an old copy of the web site you'll see that they represent him as an expert in securities law, a former managing partner with 20-odd years of experience, so this isn't an associate . . . this is the most senior levels of the law firm . . . so I think they're going to have a really difficult time with that aspect of it."
In Bruno, a $30-million claim alleging a similar scheme, Cassels Brock's statement of defence denies all allegations, except that Hryniak was a client of the firm. The firm also brought a cross-suit against Peebles in the amount of $1 million for breach of fiduciary duty and breach of contract.
Peebles' statement of defence in Bruno says he denies having knowledge of or participating in any investment scheme or conspiracy with Hryniak, Cranston, or any of their affiliates, fraudulent or otherwise. Peebles also brought a counter-claim against Bruno and a cross-claim against Cassels Brock in the amount of $1.6 million.
Counsel for Peebles, Paul Pape, said the proposed Willock class action was news to him. He did not wish to comment on the case, other than to say, "We're defending it vigorously."
Young said that the firm does not wish to argue the particulars of the cases in the court of public opinion.
"We can choose to argue the merits of our defence in the press, or we can choose to argue the merits of our defence in court," he said. "I think court's the right place to do it. The fact that someone else has chosen to try and argue it in the press and in the public forum means that we have to respond to a certain extent and we've done that. The rest of it has to wait its day in court."
According to the Mauldin claim, both "Hryniak and Peebles are being investigated by the RCMP about their role in the conspiracy and the fraudulent investment scheme."
Law Times could not reach Peebles for comment.
No statements of defence have been filed by any parties in Willock or Mauldin and none of the allegations in any of the actions has yet been proven in court.