Illicit sex and fine cars spurred bank manager to $16.3-million fraud

The fraud was detected during a routine random audit in August, 2002, when a bank official noticed that the signature of the applicant was the same as the handwriting of the person who filled out the loan application.

The Globe and Mail
August 31, 2004

Illicit sex and fine cars spurred bank manager to $16.3-million fraud
Jill Mahoney

EDMONTON — A former Edmonton banker pleaded guilty yesterday to defrauding his employer of $16.3-million that he lavishly spent on fine cars, real estate and a posse of escorts.

Nick Lysyk showered one of his 14 companions with a total of almost $3.5-million — $2.5-million more than he gave his wife — in nine homes and other gifts.

Mr. Lysyk averted a trial on multiple counts of fraud by saying, shoulders hunched and voice quivering slightly, "I plead guilty."

He then sat quietly in court yesterday, his head resting in his hands, as Mr. Justice R.P. Belzil of the Court of Queen's Bench heard the details entered into evidence.

In a 5½-year period, as a Bank of Montreal branch manager, he orchestrated the massive fraud by creating 64 false demand loans totalling $16.3-million in the names of customers, friends and associates.

The prosecution is arguing that the 53-year-old Mr. Lysyk was motivated solely by greed.

The defence, however, says he was fuelled by a toxic combination of chronic severe depression and extortion by some of the escorts and their associates, along with a dose of avarice.

"We don't dispute that some of the motivation for the offence was greed," said Brian Beresh, Mr. Lysyk's lawyer.

"But we say that you ought to have the entire picture because we dispute that greed was the sole motivating factor and we point to the depression and we point to the extortion."

In an agreed statement of facts, Mr. Lysyk, whose annual salary was about $61,000, admitted he gave at least nine of the escorts millions of dollars in gifts, including houses and credit cards. He told several of the recipients of his largess that he had inherited money from relatives.

Mr. Lysyk claimed the escort who received almost $3.5-million as his common-law spouse on his income-tax return for three years. However, Mr. Lysyk, a car aficionado who owned seven vehicles when he was arrested in August, 2002, says about $1-million of the money was extorted from him by escorts or their associates.

A detective who investigated the allegations wrote in a report that "there was threats or extortion to some extent," and that the husband of one of the escorts, who himself received about $125,000, called Mr. Lysyk "a sugar daddy and a mark."

A receiver appointed to recover the proceeds of Mr. Lysyk's crime found that the money had been, in part, spent on 17 homes, approximately 40 vehicles and $3.5-million in credit-card purchases.

Mr. Beresh, a noted criminal-defence lawyer, argued that a mitigating factor in Mr. Lysyk's sentencing should be that he was depressed during most of the period he committed the offences.

The court heard from forensic psychologist Marc Nesca, who diagnosed Mr. Lysyk as suffering from chronic major depressive disorder, which he said was caused by his discovery in 1997, of his wife Jennifer, from whom he was separated, holding hands with another man.

"This was an emotionally needy individual who has clamped onto this woman, and she has neglected him," he said. (Ms. Lysyk faces charges of possessing property obtained by crime, which will be dealt with after her husband is sentenced.)

The psychologist described Mr. Lysyk's association with escorts as "emotional" and suggested he sought them repeatedly because he had been spurned. However, in the agreed statement of facts, his relationships with the women are described as "sexual."

The Crown is seeking the maximum penalty, 10 years in jail, for Mr. Lysyk, who had no criminal record before this case.

Mr. Lysyk orchestrated the elaborate scheme by using legitimate names to apply for the loans and ensuring their approval by including fake information about the purported borrowers' assets.

Once the loans were approved, Mr. Lysyk assigned each to deposit accounts in fictitious names that he controlled. As a measure of protection against detection of the scheme, he then altered the name of the loan holders and changed their addresses to property owned by himself or his wife. The fraud was detected during a routine random audit in August, 2002, when a bank official noticed that the signature of the applicant was the same as the handwriting of the person who filled out the loan application.


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