Lawyer acquitted of all charges

Madam Justice Patricia German acquitted lawyer Tom Baker of six criminal counts in a resounding judgment that described Baker as an honest man who was duped by a con artist.

The Toronto Star
May 2, 2003

Lawyer acquitted of all charges
Not guilty of money laundering, tax evasion, Honest man was duped, judge decides.
Kevin Donovan

A millionaire Toronto lawyer is innocent of tax evasion and money laundering charges, a Superior Court justice ruled yesterday.

Madam Justice Patricia German acquitted lawyer Tom Baker of six criminal counts in a resounding judgment that described Baker as an honest man who was duped by a con artist.

"I find Mr. Baker not guilty on all counts," German told court, bringing to a close a trial that begin well over a year ago. She said there was no basis to believe Baker evaded paying taxes or participated in a scheme to launder money through the Cayman Islands.

Baker, 57, was hugged by his wife and children immediately after the judgment was read by German. Baker's legal team — Brian Greenspan, Kim Beatty and Karen Erlick — were elated.

"This is not merely an acquittal," Greenspan said. "It is a vindication for Mr. Baker." While his client declined to comment, Greenspan said the ruling was "an acceptance of Mr. Baker's honesty and credibility."

Asked what his client plans to do now, Greenspan said: "Hopefully he goes on to the next chapter of his life and closes this one."

German told court that accountant Michael Graye, who was Baker's co-accused in the charges, was the only villain in a scheme that saw $18 million looted from four business deals in the 1980s, sent to the Cayman Islands and brought back to Canada. The companies included Seven Up Canada (later called Pepsi-Seven Up Toronto) and Agnew Shoes. Baker, a Bay Street lawyer at the time, was a lawyer on three of the four deals. He went on to become president of Pepsi-Seven Up Toronto after leaving his law practice, then sold the soft drink company at a handsome (though undisclosed) profit.

"As to Mr. Graye's credibility, I found him to be a liar from the word go," German said.

Graye was a key part of the prosecution's case against Baker. Last year, Graye agreed to drop his own defence and plead guilty in return for a sentence of about four years in prison. Graye was in jail in the United States on unrelated securities charges at the time.

Graye testified against Baker, his long-time friend, and repeatedly told court that the two men pulled off the fraud together. Baker took the witness stand in his own defence. German said she believed Baker, not Graye.

German said it was Graye alone who set up the scheme. Graye created a secretive company in the Cayman Islands called Mogul Holdings. Graye made arrangements for a total of $18 million to be looted from the four companies and sent to Mogul. Graye was the sole person behind Mogul, she said.

Graye's plea agreement was finalized on April 4 of this year. He was sentenced to four years, but let out the same day because he had served 18 months in pre-trial custody (on his U.S. charges and time in Canada waiting to testify against Baker). A separate Toronto court decided his time served was equal to a four-year sentence, based on a calculation that pretrial custody is worth more than regular custody.

During the Baker trial, prosecutors Marlene Thomas, Robert Goldstein and Nancy Dennison introduced Cayman Island banking documents related to Mogul that showed Baker's signature. Baker testified he became a co-signatory of these accounts as a favour to Graye. If something happened to Graye, Baker said, he as co-signatory would be able to access money in the account and turn it over to Graye's son.

German said she believed Baker's explanation. Prosecutors showed that Baker received money that came from the Mogul accounts. The money was used by Baker to build an expensive house and buy a Porsche. Baker and Graye also built a Whistler, B.C., ski chalet around this time.

In his testimony, Baker explained that Graye loaned him the money for these purchases. Since the money was loaned, he was not required to report it on his income tax returns.

Baker had no idea of the Mogul scheme that put these funds into the Caymans, German found.

Prosecutor Thomas said the crown was disappointed with the judgment. She said prosecutors will review the judgment "to consider whether there is any legal basis for appeal."

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