DD Support Board and Research Team

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He rubbed shoulders with a premier and is accused of spiriting away millions. He also doesn’t exist

http://news.nationalpost.com/2015/01/23/he-rubbed-shoulders-with-a-premier-and-is-accused-of-spiriting-away-millions-he-also-doesnt-exist/

MONTREAL – In the mid-2000s, Robert Vanier cut an impressive figure when he rolled into Rimouski, Que. Usually he was in his chauffeur-driven Bentley; at least once he landed in a private jet. He dropped names of the former premiers and business executives with whom he golfed, and a high-ranking provincial police officer was occasionally at his side.

A business professor from the local university introduced Mr. Vanier as he pitched investors on his plan to make a fortune from untapped oil-and-gas deposits in southwestern Ontario. And the people of Rimouski — by the hundreds — dug into their savings to finance what sounded like a sure thing.

“Any time he came here, or we met him in London, [Ont.], there were always serious people with him,” Marius Parent, who sold most of his rental properties to invest “hundreds of thousands of dollars” in Mr. Vanier’s Onco Petroleum Inc., said in a recent interview.

What the people of Rimouski did not know – but police did – was that the smooth-talking Mr. Vanier was in fact Carl Gagnon, a Quebecer with a lengthy criminal record who had been granted a new identity a few years earlier after agreeing to inform against members of the Hells Angels. Some $30-million that people in Quebec, Ontario and beyond invested in Onco has vanished, and this week Mr. Vanier, 59, was in an Ontario court to face charges of perjury and submitting a false prospectus on behalf of Onco. His wife, Terry Beattie, 55, who went by Terri Ramage when she was Onco’s secretary and treasurer, is also charged with submitting a false prospectus.

“In the beginning it was a fantastic story,” said Richard-Marc Lacasse, the business professor at Université du Québec à Rimouski who accompanied Mr. Vanier on a road show to pitch Onco and later served on the company’s board. “We had dreams. Natural gas was at $10 per thousand cubic feet, oil was expensive. The potential was there, except along the way we discovered he was a criminal. We didn’t know that.”

In Quebec, some investors are now targeting the Sûreté du Québec and the Royal Canadian Mounted Police, alleging that the police forces provided cover for a convicted fraudster while keeping investors in the dark. A lawyer’s letter sent last month seeks $70-million in compensation and damages, barring which they intend to file a class action lawsuit.

“Recently it has come to the attention of one of Onco’s investors that beginning in the 2000s, the Sûreté du Québec and its directors were informed of the fact that Carl Gagnon, who had already been convicted of fraud, was in charge of this company and was living a lavish lifestyle,” the letter from lawyer Gilles Daudelin says. It alleges that Mr. Gagnon initially assumed the false identity on his own but was later aided by SQ to have his name legally changed in Quebec. It adds that the RCMP was aware as early as 2006 of Mr. Vanier’s double life but neglected to inform the Ontario Securities Commission.

“I thought I had been naive to invest in that, but my naiveté was fed by the people Vanier hung out with,” said Mr. Parent, who is leading the legal action on behalf of Onco investors. He holds out no hope of getting his money back from Mr. Vanier, but he thinks investors are entitled to compensation from the police forces that were aware of the businessman’s true identity. “The SQ and RCMP knew he was an informant, knew he was CEO of Onco, and they did nothing to protect honest citizens,” he said.

Both the SQ and RCMP said they could not comment on the matter because it is before the courts.

Had people known Mr. Vanier’s life story, they likely would not have been so eager to invest in Onco. Born in 1955 as Carl Gagnon, he played two years of major junior hockey in Shawinigan in the early 1970s before embarking on his criminal career. Over two decades beginning in the early 1980s, he amassed 70 criminal convictions across Quebec before he turned informant. Those convictions included “numerous convictions for fraud,” according to a 2010 agreed statement of facts released when Mr. Vanier was eventually suspended and fined by the Ontario Securities Commission.

In 1999, he became entangled in a car-theft operation with three members of the Hells Angels criminal biker gang. According to news reports at the time, the bikers – including Robert Savard, the right-hand man of gang leader Maurice (Mom) Boucher – were alleged to have beaten him and forced him to commit an armed robbery to recover money that Mr. Gagnon owed them.

He decided to testify against them and obtained police protection. As an informant, he provided roughly 60 statements about various crimes, but when defence lawyers asked to see all of the statements to test Mr. Gagnon’s credibility, the charges against the three were dropped in November 1999. The Crown said it was because it did not want to jeopardize ongoing investigations, but defence lawyers said Mr. Gagnon was a habitual liar. As the prosecution fell apart, an SQ spokesman said Mr. Gagnon was being kept in a secure location for his own safety.

Shortly afterward, a Quebecer going by the name of Robert Vanier turned up in London, Ont. He “was in the Quebec witness protection program,” the securities commission would later report. At first he sold cars, the London Free Press reported, but soon he was hyping a plan to develop oil and gas deposits in the region.

“He was a good promoter, the best promoter I’ve ever met. I’ve been in finance my entire life and I’ve never met anybody like him,” said Peter Bilodeau, an early investor who became president of Onco after Mr. Vanier was forced out in 2008. “You entered a room having a bad day and you left feeling you had wind under your wings and you were flying. He just had a gift with people, very charismatic.”

Mr. Vanier rubbed shoulders with former Newfoundland and Labrador premier Brian Tobin and former Ontario premier Mike Harris at charitable events. At one point he assured investors that Mr. Tobin was going to become chairman of the board when Onco went public. Mr. Tobin ended up declining, though he never suspected anything fishy. In an emailed statement to the National Post, Mr. Tobin said he did not believe joining Onco was the right thing for him at the time. “I had no indication that he was anything other than as he represented himself, as an entrepreneur in the London area,” Mr. Tobin said of Mr. Vanier.

Mr. Vanier did manage to enlist the highly successful Quebec pulp-and-paper entrepreneur Michel Perron to serve as chairman in 2006, with company documents hailing Mr. Perron’s “impressive corporate governance track record.”

Other members of that board included former Luc Robitaille, a former player for the NHL’s Los Angeles Kings; the university professor Mr. Lacasse; and Mr. Lacasse’s wife, Berthe Lambert, who had been director of the Université du Québec’s executive MBA program.

Then there was William Del Biaggio III, a director and chairman of Onco’s audit committee — the man given the job of ensuring everything was on the level.

Nicknamed Boots, Mr. Del Biaggio ran a venture-capital firm in California when he joined Onco’s board. He had owned a small stake in the NHL’s San Jose Sharks and was involved in a group buying the Nashville Predators when his world crumbled in 2008. It turned out a passion for hockey was not all Mr. Del Biaggio shared with Mr. Vanier, and in 2009 he was sentenced to eight years in prison on charges of securities fraud. It was revealed that he had forged documents to obtain $110-million in loans used to finance the Predators purchase and that his investment business was a Ponzi scheme.

The Ontario Securities Commission later found that of the $21.8-million Onco claimed to have in available assets when it published a prospectus for investors in 2007, $20-million was owed to Onco by Mr. Del Biaggio. About all Onco really had in the bank was a worthless IOU.

Onco owned and operated oil and gas wells in southwestern Ontario and Michigan, but production was minimal. “The potential was there,” Mr. Lacasse said. “They were old oil and gas deposits, and with some exploration we could have found more. But there was never an effort.”

After opening trading at five dollars a share in November, 2007, Onco shares had dropped to 15 cents when trading was halted in July, 2008 for a failure to file financial statements. In August, 2008, Mr. Lacasse and Ms. Lambert suspended Mr. Vanier and Ms. Ramage, as she was then known, from their positions with the company. An audit had revealed that “a significant portion of Onco’s funds (approximately $17.3-million) was paid to Mr. Vanier and Ms. Ramage personally and/or to one or more companies associated with them,” Mr. Lacasse and Ms. Lambert said at the time.

Mr. Vanier had not even paid the bill for the room at Toronto’s Hockey Hall of Fame where the company’s initial public offering was launched in November, 2007, in the presence of “an international group of luminary entrepreneurs and celebrities,” in the words of the Onco news release.

Mr. Lacasse and Ms. Lambert said they alerted police in 2008, but it would be another five years before the RCMP announced the charges of submitting a false prospectus and perjury. After a number of delays in the case, the Ontario Crown advised the court this month that it would bypass the preliminary hearing and proceed to trial through a direct indictment. A trial date has not been set.

The disintegration of Onco and the revelation by the London Free Press in 2010 that Mr. Vanier was Mr. Gagnon caused embarrassment for police, but in the end no one was punished. Louis Raiche, the SQ officer who accompanied Mr. Vanier at some public events and was photographed next to him at a Rimouski golf tournament, told the Drummondville newspaper L’Actuel in 2013 that confidentiality rules had prevented him from divulging that Mr. Vanier was a former informant. He underwent an internal inquiry in 2010 and was cleared of any wrongdoing. “I can understand that there were shareholders who lost money and are trying to find someone guilty, but this was settled four years ago,” Mr. Raiche, now retired from the SQ, told the National Post.

Mr. Lacasse prefers not to say how much money he sunk into the venture, but he adds that investors who lost everything in Onco had a chance to get out with a small profit before the stock hit rock bottom. “In mining and oil, all the plays are like a casino,” he said.

Usually, though, the casino is not being run by a convicted fraudster benefiting from police protection. Mr. Lacasse acknowledged that he feels badly about his role in touting Onco. “I was naïve, trusting,” he said. He teaches good governance to his university students, but even he did not sense anything was amiss until it was too late.

Mr. Parent saw Onco swallow his retirement savings, but even worse is the guilt he feels over encouraging others to invest. “For sure that chilled the relationship,” he said. “That is what is especially hard, trying to regain credibility among my friends and family. I recommended that they invest. I said it was a sure thing.”