He used trust as a decoy to lure victims

The man who lost the most, Doc Roberts, out $13-million, made no efforts through the courts to recover his money. The $13-million barely made a dent in his assets, but Roberts spent the last few years of his life humiliated and depressed. Like a few of Holoday's other victims, he died a broken man while justice slowly took its course.

The Financial Post
November 29, 2001

He used trust as a decoy to lure victims
Derek Finkle

FREE RIDER: HOW A BAY STREET WHIZ KID STOLE AND SPENT 20 MILLION
By John Lawrence Reynolds McArthur & Co., 356 pp., $32.95

If you have recently entrusted your life savings to a respected broker at a blue-chip investment firm, reading John Lawrence Reynolds' book will be most disconcerting. For Free Rider is an incredibly detailed and engaging account of how a young, hot-shot Toronto broker named Michael Holoday pilfered around $20-million from his clients in the early 1990s with little interference from anyone, including his employers.

Like a lot of other kids from sleepy towns like Revelstoke, B.C., with "Poverty Sucks" posters on their bedroom walls, Holoday came to Toronto looking for Gordon Gecko-like success on the Bay Street of the mid-80s. Undeterred that the first day of his entry-level job with Midland Doherty was Oct. 19, 1987 —
"Black Monday" — Holoday got his securities licence and became a licensed financial advisor and trader within two years.

Almost immediately, the 25-year-old brashly ignored his clients' conservative instructions and exposed them in one ill-conceived short-term commodities trade after another. Or, worse, Holoday would simply dip into their accounts. One of his early clients, who was lucky enough to see a $4,000 profit on his $25,000 investment over a few months, could only scratch his head when he saw that Midland (which had since become Midland Walwyn) was banking $11,000 in commissions from his account for the same period.

Holoday could not doctor the statements that Midland Walwyn was sending his clients, some showing losses of almost $200,000, so he blamed the discrepancies on computer problems in the accounting department and sent out his own, often hand-written, statements that painted a much rosier picture. In many cases, this pacified his clients, but Holoday's employers, first Midland Walwyn and, later, after
August, 1992, First Marathon Securities, were privy to some solid indicators something might have been amiss with Bay Street's latest Boy Wonder.

In perhaps the funniest scene in the book, Holoday was giving the runaround to one client who wanted to withdraw $10,000 from his account, so the client called First Marathon's senior vice-president, David
Wood. When Wood told the client that First Marathon could not transfer $10,000, let alone 10¢, from his account, as it was essentially empty, he turned to Holoday, who was listening in via speakerphone, to explain. Holoday didn't get very far before the client threatened to jump through the phone right into Wood's office "and throttle the two men … He wanted his money now, damn it!" To which Holoday replied by gurgling something unintelligible and promptly blacking out on the floor in front of Woods' desk.

The most interesting storyline has to do with Holoday's relationship with Ken "Doc" Roberts, whom he met at the Ontario Club, which he joined to meet retirement-age people with lots of money. Roberts, a prominent Toronto allergist turned entrepreneur, made millions in land development, mining and other businesses. Then in his early eighties, he was among the wealthiest men in Canada, and was through his holding company, Fahnestock Viner, in control of assets worth more than US$600 million.

Largely through persistence and flattery, Holoday weaseled his way into Roberts' life and cheque book.
After resisting Holoday's pitches for a while, Roberts succumbed when Holoday promised him a $6,000 return on a five-day, $80,000 investment. Holoday called it a "yield curve arbitrage" deal; Roberts had no idea what that was but agreed to give it a try.

A year and a half later, these transactions were so frequent they were called the "daily trades." The final daily trade was for about $5.5-million. In the end, these weren't trades at all; it was nothing but a massive cheque kiting scheme, whereby Holoday was paying Roberts back with Roberts' own money and pocketing the difference.

Pretty soon, Holoday had too many balls in the air to keep juggling, and everything came crashing down. First Marathon forced Holoday out in October, 1994, and the police were on his trail shortly thereafter.
The case was so complex it took them almost three years to charge him.

Facing 14 counts of fraud and embezzlement, Holoday went on trial last fall. He was still so deluded he announced that he would be acting on his own behalf. He lost. Declared "a dangerous man," a judge sentenced him to serve 7.5 years. Now in a minimum-security facility near Muskoka, Ont., he will be eligible for day parole next summer.

After years of civil suits, Holoday's former clients managed to retrieve only a small portion of the money taken from them. The man who lost the most, Doc Roberts, out $13-million, made no efforts through the courts to recover his money. The $13-million barely made a dent in his assets, but Roberts spent the last few years of his life humiliated and depressed. Like a few of Holoday's other victims, he died a broken man while justice slowly took its course.


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