Email to Mr. Doug Weber, Ombudsman for Banking Services and Investments, OBSI

By their individual actions and inactions they have violated federal law. By their role in a cover up or conspiracy, their actions and inactions further implicate them in federal law violations.

I allege they created, sanctioned and supported a knowingly fraudulent CSBFA lending process,

  • set a lending trap that Noble was directed me into, and have tried to cover up this illegal activity by:
  • delaying, lying and trying to get me to abandon a perfectly valid claim,
  • refusing to act in good faith,
  • releasing information they knew third parties would use to intimidate me,
  • evading responsibility for similar claims by squashing my legitimate case, and
  • harassing me to such an extent that I required medical attention.

When they realized I had became aware that I was just one in a series of historical fraudulent franchise CSBFA loans (a process that continues today) and that publication of this would threaten their careers and that I had competent and advisors, they provided information to industry partners that they knew or should have known would have predictably caused my personal and corporate bankruptcy via the termination of my franchise agreement.

Email to Mr. Doug Weber, Ombudsman for Banking Services and Investments

To: Mr. Doug Weber, Deputy Ombudsman, Ombudsman for Banking Services and Investments
From: Mr. Andrei Oudovikine
Date: March 27, 2005
Subject: Answers to Questions

Mr. Weber,

Please find below the answers to the questions you sent me by email on March 22, 2005. If you would like any clarifications, please call me. Thank you.

Mr. Andrei Oudovikine
416-219-6576 Tel

Re: General and background Information
Question 1. How did you learn about the country style franchise opportunity?

Answer: My father and I attended a franchise trade show in Toronto. Mr. Roger Noble, President of Choice Corporation told us to attend a Country Style Donuts, CSD, open house and we did. We met Mr. Jeff Young, CSD, New Business Development Director. We had initially wanted Noble to help us find an operating business to purchase, like Mr. Sub, but he and Young convinced us to proceed only with CSD.

CSD presented us pro forma income statements. The lowest sales projections for the first year were $720,000. We achieved 31.8% ($229,000/$720,000) of that level in our first twelve months of operation.

Question 2. I note that Lebovic Enterprises Limited entered into a 10 year for the same franchise location that you operate. Who is Lebovic Enterprises and what was the nature (if any) of your dealings with this company?

Answer: Lebovic Enterprises is the landlord. We don't deal with them or have ever even met them. CSD holds the head lease and we sublease from them.

Question 3. When did you open the coffee shop for business to the public?

Answer: The store was opened on September 4, 2003. Our accumulated operating losses have been in the $1.5- to 2-million range.

Question 4. I note that you are trying to sell the franchise business. Are you currently operating the business?

Answer: Yes. We are still a franchisee in good standing. We are working very hard to maximize sales although we are losing $30,000 per month.

We have achieved 48.4% ($229,000/$473,506) of the Borrower's estimated annual gross revenue that Ms. Sue Fedorink, CIBC Senior Business Adviser filled out (see Government of Canada, Canada Small Business Franchising Act, Loan Registration Form, Box 9, Andralex Food Services Inc., August 19, 2003).

Question 5. Were monthly statements sent to the company with respect to the operating line of credit and loan accounts?

Answer: The only small business loan statements we have ever received were two pages on January 12, 2005. On the surface, these statements look quite suspicious. The loans have been in place since August 2003.

Re: Roger Noble
Question 1. According to the bank file Roger Noble, there is some question as to if he is a lawyer. I note that the loan application was received from Mr. Noble. Did Mr. Noble act for you and the company?

Answer: I did not either: retain Noble as a lawyer or contract him as an agent. No retainer or consideration was given until after the loan was approved. The core Bank Act and CSBFA violations and alleged fraud happened before I signed the loan papers.

Although apparently Noble is not a member of the Upper Canada Law Society, his role is irrelevant to the duty CIBC owed my family that is the subject of this complaint.

On September 28, 2004 my father and I met with Mr. Jeff Brown, CIBC, District Leader Small Business, Toronto West. I handed him two business cards. One of them said: "Michael J. Webster, Ph.D., LL.B., Barrister & Solicitor". I instructed Brown that Dr. Webster is providing me legal advice and can be contacted on my behalf. He has never been contacted.

I followed up Brown's meeting with an email on September 30, 2004. See Appendix B.

On several occasions, I have given CIBC written directions to deal only with me, my father or Mr. Les Stewart. I have never instructed CIBC to communicate with Noble or anyone else. See Appendix F.

I find it disingenuous, especially after ten months of a protracted complaint process that an experienced banking official like Fitzgerald cannot differentiate between a lawyer and a citizen. See Appendix K.

The CIBC had a duty of competence and they have repeatedly failed that duty. They breached their lending duty under the Bank Act, CSBFA, PIPEDA and other federal laws. There are currently three open files with the Office of the Privacy Commissioner of Canada.

The bank itself is a member of the same trade association as Mr. Noble is and that they, presumably, have access to the internet. On December 22, 2004, a complaint to the Canadian Franchise Association was filed against CIBC that directly links the three together (CIBC, Choice Corporation and Country Style Donuts). See Appendix G.

Question 2. If Mr. Noble is not a lawyer, did you obtain independent legal advice from a lawyer prior to signing the contracts and agreements with Country Style Food Services Inc.?

Answer: I did not receive licensed legal advice although Noble told my father and I several times he was a lawyer. See Appendix K.

Noble's role is defined under Part 1, s.0.1 of Ontario's Arthur Wishart Act (Franchise Disclosure), 2000 Regulations as a "franchisor's agent" (O. Reg. 581/00). Grounds for damages as a franchisor's agent arise in Section 7.(1) of the Wishart Act, s.7.(1). He may be dealt with in the future.

The relationship between Noble and myself' is immaterial as those relationships are dealt with in provincial law. CIBC had a federal statutory confidentiality, lending and other duties that they have breached.

Young of CSD told us that they only deal with selected people and that Noble was one of them. Noble stated that he is a lawyer and CIBC will accept everything with his signature because he is a lawyer and we do not need any other help.

Question 3. Did you obtain advice from any accountants prior to entering contracts with Country Style?

Answer: We talked with several accountants and our decision was based on sales projections that Country Style supplied. Based on CSD's pro formas, the accountants confirmed that this is a good opportunity. Actual sales have been approximately 31.8% of their projections.

But again, professional advice we did or did not receive is irrelevant to the matter at hand. CIBC's legal obligations survive and stand alone, irrespective of any other person's performance

On September 28, 2004 my father and I met with Mr. Jeff Brown, CIBC. I handed him two business cards. One of them said: "Jay T. Harris, B.B.A., CA, CIP, President, Harris & Partners Inc., Trustee in Bankruptcy". I instructed Brown that Mr. Harris is providing me accounting and financial advice and can be contacted on my behalf. Harris has never been contacted.

What is not a red herring is we signed CIBC's Financial Advice Agreement for Small Business and Financial Advice Agreement with Sue Fedorink that states:

CIBC has assigned to the Business an adviser (CIBC Adviser) to provide Business with access to various products and services as well as financial advise. If requested by Business, the CIBC Adviser can provide financial advice on a range of matters to help Business guild and protect its net worth, make appropriate financial decisions, and achieve its financial goals. The advice can include investment planning, cash flow planning, credit planning, and other matters. This Agreement applies to all advice the Business receives from CIBC, whether through CIBC Adviser or otherwise. p. 2.

Question 4. Who prepared the pro-forma balance sheet for the company which I understand was submitted to the bank?

Answer: We did not and still do not know who (eg. Noble, CSD or CIBC) created the statements. We did not create nor have we even seen a pro forma balance sheet that is required for the CIBC lending.

CIBC has refused our repeated attempts to find out who, what, when, etc. since our sales have been averaging 48.4% of the projections Fedorink certified as true on the CSBFA application.

Question 5. Who prepared 3-year income and expense projections which I understand was submitted to the bank?

Answer: Same as #4: we did not create nor have we even seen a pro forma income statement that is required for the CIBC lending.

Under the Lender's Acknowledgement section of the application, Fedorink signed the following:

I, responsible officer of the lender, certify that:
a) to the best of my knowledge, the information contained herein is complete and accurate;
b) the loan was approved in accordance with the due diligence requirements of the Canada Small Business Financing Regulations;
c) the loan complies with all the eligibility requirements of the Canada Small Business Financing Act and Regulations;
d) no fees or charges other than those authorized by the Act and Regulations and declared on this form have been paid or are payable by the borrower. p.2.

Further, according to the Canada Small Business Financing Act Regulations, Section 8.(b)

DUE DILIGENCE REQUIREMENTS

In making and administering a loan, the lender must apply the same procedures as those that would be applied in respect of a conventional loan in the same amount, including, before making the loan,…

(b) completing an assessment of the repayment ability of the borrower, taking into account all other financial obligations of the borrower.

The repayment ability is linked directly to achieving sales projections. CIBC alone is responsible for ensuring the CSBFA loan was likely to be repaid. They have never produced any justification for Fedorink's sales projections, although there are specific requirements and guidelines for that under the Canada Small Business Franchising Act and Regulations.

Re: Allegations of Breaches of Confidentiality
Question 1. You state in your e-mail message to me dated March 16, 2005 under the Sue Fedorink subheading that she divulged confidential information to a third party without permission. You then state that she met with Roger Noble. Is Mr. Noble the third party that you are referring to?

Answer: Yes. Noble said he had a long-standing relationship with a specific CIBC lending officer. Fedorink and Noble met without us. All paper work was done by two of them and we were only called in to sign the papers. A more detailed explanation can be found at Appendix I.

Question 2. If not, who was the third party?

Answer: I believe Noble acted as a conduit for information to CSD, on both a pre-sale and post-sale (Fitzgerald) basis. CIBC violated their duties in communicating matters to Noble. He has no federal legal obligations.

Fitzgerald likely inappropriately contacted several people, both in and outside CIBC.

I know Noble was contacted. He telephoned Mr. Les Stewart, my business advisor, and me independently on December 9, 2004. During our telephone conversation, he challenged me as to why I was complaining to CIBC's Ombudsman and advised me to drop the complaint. Noble subsequently sent me an email and someone in his firm visited the store and told my mother and father to drop the complaint.

Question 3. When was the information divulged?

Answer: The first occurrence would have been, before the signing of the documents, when Fedorink, lacking my authorization, continued her relationship with Noble regarding my financial matters. Noble wrote out the CIBC Business Loan Application for us, presumably getting those documents from Fedorink. Federal confidentiality violations would have continued (within the bank, between Noble and Fedorink, etc.) until now.

Question 4. How was the information divulged, by telephone, by e-mail, by letter, by fax or in person?

Answer: By several means, I believe. See Appendixes G and I.

Question 5. If Mr. Noble is the third party, help me to understand how there can be breach of confidentiality if you retained Mr. Noble to act for you and the company?

Answer: Once again, this complaint concerns CIBC's legal obligations in their relationship with me. Mr. Noble's involvement is beside the point, outside of federal law and unsettling as a point of OBSI investigation.

I never retained or contracted Noble as an agent, let alone as a lawyer. I only paid him less than $4,000 after the loan was approved. The core Bank Act and CSBFA violations happened before I signed the loan papers.
Whatever the nature of my relationship with Noble (agency, solicitor:client, mother:child, etc.), CIBC violated federal law.

Fitzgerald's position that she thought Noble was both (1) a lawyer and (2) my lawyer, does not stand up under scrutiny. She and other CIBC officials breached their confidentiality duties repeatedly.

Federal confidentiality laws bind financial institutions regarding their customers' information. The only legal relationship was between CIBC and me. Noble's relationship, as fraudulent as provincial law may prove it to be in the future, does not absolve CIBC of their requirements under federal law. That the Office of the Privacy Commissioner of Canada has accepted three complaints against CIBC from me supports this position.

Question 6. Is Mr. Noble the third party that you refer to under the Sandra Fitzgerald subheading of your March 16, 2005 e-mail?

Answer: Yes. On December 8, 2004, I had what I perceived to be a harassing telephone conversation with Ms. Sandra Fitzgerald, Manager, CIBC Ombuds Office. See Appendix H.

I asked her for the opportunity to meet and discuss complaint during one-on-one private meeting, in a setting of her choice, but she refused. I was forced to endure a 1½ hour-long very dramatic and emotional telephone conversation in which we discussed very private and sensitive financial issues over the an unsecured commercial phone line that could have been easily overheard by 15 of my co-workers. Fitzgerald was extremely aggressive and argumentative and told me that if we did not talk now, my complaint would be delayed further.

Fitzgerald forced me to "name names" even though CIBC had a very comprehensive file since September 2004. I was trying to deal in good faith but she was not. I would never have answered her if I thought she would actually call them and ask questions in regards of my complaint. I had been explicitly warned by Staff Superintendent Crawford not to have information get back to Country Style Donuts. Crawford said they might retaliate violently.

She never requested my permission to contact anyone nor did she ask who my lawyer was, although I had told Jeff Brown on September 28, 2004 that Michael Webster was my lawyer.

On December 9, 2004, I was shocked when Noble called me and told me CIBC has contacted him. He demanded an explanation what is going on with me and CIBC and why I am complaining. Considering the sensitivity and importance of these issues, I refused to speak with him. He emailed me on December 12, 2004.

I cannot prove Fitzgerald contacted CSD although I started receiving the first of a series of termination threats from my franchisor. Franchise relationships are well known to be rife with conflict, predatory behaviour and opportunism.

I believe CIBC breached their duty to me by informing Noble, CSD and others to intimidate, harass and threaten me. Their objective was to have me abandon my complaint so as to protect their fraudulent collusion centred on small business loans.

Stewart submitted a paper to Industry Canada providing a framework entitled "Franchising Opportunism" on February 25, 2005.

Question 7. Fitzgerald maintains that she called Mr. Nobel who she understood at that time was your lawyer, left a message, and that Mr. Noble has never called her back. Do you have evidence that Mr. Noble discussed matters with Fitzgerald and what was specially discussed?

Answer: Ms. Fitzgerald's position lacks credibility. She had no reasonable grounds for assuming Noble were both (1) a lawyer and (2) my lawyer. I understand all officers must "exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances." Bank Act s.158.(1)(b).

Fitzgerald and other CIBC officials have been acting in bad faith throughout and this is reflected in their thinly disguised fiction. I told Jeff Brown, CIBC that Michael Webster was my lawyer at our September 28, 2004 meeting. I, in front of my father, gave Brown his business card. The letter I hand delivered to him copied Michael Webster, LL.B. Ph.D. (see Appendix A).

Even if this Brown's file was destroyed, which also included the original complaint letter, she could have easily proven Noble was not even a lawyer (see Appendix K). She made no attempt to clarify our relationship with me although she had ample opportunity to do so and is either blatantly incompetent or covering up wrongdoings.

On several occasions, I have given CIBC written directions to deal only with me, my father or Mr. Les Stewart. I have never instructed CIBC to communicate with Noble or anyone else. See Appendix F.

The treatment from Fitzgerald was so abusive that I was forced to ask Stewart to act on my behalf for the rest of the CIBC dealings. He informed Mr. Lachlan Maclachlan, CIBC Ombudman of Fitzgerald's conduct (see Appendix H). I am sure Maclachlan, when he sent the OBSI all material documents, included his reply to this email.

Question 8. Did you ever instruct the bank not to or no longer deal with Mr. Noble?

Answer: Yes. On September 28, 2004, my father and I met with Mr. Jeff Brown, CIBC. I handed him two business cards: one for Mr. Jay Harris, President, Harris & Partners Inc. and Dr. Michael Webster, Ph.D., LL.B. I told Brown that Harris was our accounting and financial advisor and Webster were providing legal advice.

During this meeting I gave Brown a proposal letter in which Michael Webster, LL.B., Ph.D. was copied. See Appendix A.

On December 9, 2004, I emailed Ms. Gail Sparks/Joanne MacLeod, CIBC Senior Manager,
Director's Office, Customer Care, Mr. Josef Timar, Coordinator, Office of the CIBC Ombudsman, and Ms. Sandra Fitzgerald, Manager, Office of the CIBC Ombudsman instructing them to deal only with Stewart because of Fitzgerald's abusive interrogation on December 8, 2004. See Appendix F.

Additionally, I have sent at least 10 or 15 letters to different CIBC officials asking to treat my complaint confidentially, especially not to inform CSD or any third parties who have commercial relationships with Country Style such as Choice Corporation. This request was sent many times to many CIBC officials including Mr. John Hunkin, CIBC, President and CEO.

I believe that this leakage of information was intended to force me to abandon my complaint. After information was released to the franchisor we have had numerous threats. I believe they are trying to "kill the messenger" because I suspect many CSBFA loans, across all banks, may be fraudulent.

Mr. Ken Monteith, Country Style Director Canadian Operations told me in a personal meeting that Mr. Patrick Gibbon, Country Style President told him (Monteith) to tell us that our relationship [franchisor:franchisee] would become much less "generous" unless I immediately stopped talking to Stewart.

Re: Your Allegation that the Bank Failed to send you Requested Documents
Question 1. Do you still have a copy of your September 30, 2004 e-mail to the bank which I understand is the initial request for documents which were listed in the e-mail? I cannot locate a copy of your September 30, 2004 in the bank file. If you still have a copy could you provide me with a copy?

Answer: Yes. Please find a copy of the September 30, 2004 email at Appendix B.

Question 2. If you no longer have a copy, would the documents requested be the same documents as listed in your letter dated October 30, 2004 to Joseph Timar?

Answer: Not applicable (see above).

Question 3. You stated that you sent another list of requested documents in a November 5, 2004 e-mail. I cannot locate the November 5, 2004 e-mail but I did locate a November 8, 2004 e-mail to Jeff Brown in which you referred to a November 7, 2004 e-mail to him in which you specified the documents that you are requesting. I could not locate a copy of your November 7, 2004 e-mail to Brown. If you have copies of the November 5 and 7, 2004 e-mail messages to Brown, could you send them to me?

Answer: Yes. Please find a copy of the November 5, 2004 email. See Appendix D.

I have been unable to find a November 7, 2004 email.

In my November 8th email, I mention "Friday, Nov 7/2004" which never existed. It was either Sunday the 7th or Friday the 5th. See Appendix E. If I can locate another email to Jeff Brown I will forward it along.

Re: Allegation that the Loan Proceeds should not have paid to Country Style but directly to the company
Question 1. Did you give specific instructions to anyone with respect to payment of the loan proceeds?

Answer: No. I had assumed that a properly secured loan would be arranged in accordance with the laws and regulations of Ontario and Canada. I assumed that if I had to re-pay a loan, I would not be stripped of the control of the proceeds or that it would not be used to fund a fraud.

According to CIBC's Financial Advice Agreement, Section: What Services will my CIBC Adviser Provide?:

I can instruct my CIBC adviser to transfer money between my CIBC accounts, to perform other account transactions for me and (if written arrangements are made for this) to buy or sell certain types of investments for me. p.1

I have never given written permission for this or other transfers.

Question 2. If so, how and when did you provide the instructions?

Answer: Not applicable

Question 3. In light of fact that the closing funds of $314, 343 had to paid to Country Style pursuant to the agreements and contracts and that the two bank drafts were made payable to Country Style total $314,343, what would have you done with the loan proceeds had the bank made the bank drafts payable to the company?

Answer: This is a hypothetical question that, in my opinion, has nothing to do with this complaint. I allege the CIBC failed in their duties as defined by law.

I presume that there are very good legal reasons to have the borrower, first, receive the proceeds of any loan. When I talked to Staff Inspector Tony Crawford of the Toronto Police Services Fraud Squad (see "Criminal fraud investigations" below) he advised that it always takes "two to tango" in criminal fraud.

Staff Inspector Crawford, also advised very strongly never to inform or talk to Country Style Donuts as they were under fraud investigation and may act violently. He said it was extremely important for the safety of my family that these matters remain confidential.

Hypothetically, if I had the $314,343 in my current account, I may have been in a better bargaining position when CSD showed up with $40,000 worth of equipment that CIBC so obligingly loaned $160,000 against. If I had control of the money, I would not have less business risk.

The CIBC is a federally chartered financial institution that enjoys a favoured regulatory position. Canadians perceive them to be and are expected to be experts in high-quality lawful lending practices. When they or others don't it brings disrepute upon all financial institutions.

Paying a 3rd party directly is wrong for many reasons, irrespective of the ends. Any oversight institution that defends this practice brings scrutiny upon their own organization.

The CIBC have acted as if they were above the law by engaging in a systemic process within the franchise industry that crushes the legitimate interests of the Canada Small Business Loan Program and my family.

Other Issues

Notwithstanding my initial complaint to OBSI and also not precluding any future topics, a few issues have arisen that should be added to my original complaint.

Bad faith dealings
The CIBC has been actively hostile regarding this complaint. They have acted in bad faith, abused their dominant information and economic power position and acted opportunistically.

When notified of serious allegations, they have acted irresponsibly and illegally, refused to: meet with me, provide documents and deal with my delegate, unnecessarily put my family at risk, multiple times, from reprisal from others and have taken an unconscionably long time to process this complaint.

The CIBC is reckless with public money. Mr. Rodgrigue told me in a face-to-face meeting that CSBLA funds were not important because "it wasn't their money".

My allegations are supported by my initial complaint, this document (including Appendixes A, C, F, G, H, J and K) and other documents.

Codes of Ethics violations
The following CIBC staff have violated large parts of, at least, these four codes of ethics: Mr. Jeff Brown, Team Leader of Small Business Banking, Toronto West, Ms. Sue Fedorink, Senior Small Business Banking Advisor, Ms. Sandra Fitzgerald, Manager, Office of the Ombudsman, Mr. John Hunkin, President and CEO, Ms. Joanne MacLeod, Senior Manager, Director's Office, Customer Care, Mr. Lachlan Maclachlan, Senior Vice-President & Ombudsman, Mr. Robert Paterson, Senior Vice-President, Small Business Banking, Mr. Larry Rodrigue, General Manager of Small Business Banking, Mr. Charles Scrivener, General Manager, Franchise and Commercial Finance Programs, Ms. Gail Sparks, Senior Manager, Director's Office, Customer Care, Ms. Debbie Storie, Specialist, Customer Care, and Mr. Jeff Timar, Coordinator, Office of the Ombudsman.

1. Financial Consumer Agency of Canada
Model Code of Conduct for Bank Relations with Small- and Medium-Sized Businesses
http://www.cba.ca/en/filenotfound.asp?page=404;http://www.cba.ca/eng/Publications/ModelCode/modelcode.htm
Sections: Openness, Complaint handling (failure to: respond as quickly as possible, provide timeframe and notify how long), see 2. & 3.

2. Canadian Imperial Bank of Commerce Code of Conduct
http://www.cibc.com/ca/inside-cibc/governance/governance-practices/code-of-conduct.html
Sections: 1.1 Following the law, 1.2 Honesty and integrity, 2. Conflicts of Interest, 3.1 Harassment and discrimination, 4.1 Customer Service, 4.2 Confidentiality and privacy, and 5.6 CIBC's Image.

3. Canadian Imperial Bank of Commerce Code of Ethics for Directors
http://www.cibc.com/ca/inside-cibc/governance/governance-practices/directors-code-of-ethics.html
Sections: 1.1 Following the law, 1.2 Honest and integrity, 2. Conflicts of Interest, 3.1 Confidentiality, 3.4 Maintaining records.

4. Canadian Franchise Association
http://www.cfa.ca/ethics.html
See Appendix F.

By their individual actions and inactions they have violated federal law. By their role in a cover up or conspiracy, their actions and inactions further implicate them in federal law violations.

I allege they:
● created, sanctioned and supported a knowingly fraudulent CSBFA lending process, set a lending trap that Noble was directed me into, and have tried to cover up this illegal activity by:

  • delaying, lying and trying to get me to abandon a perfectly valid claim,
  • refusing to act in good faith,
  • releasing information they knew third parties would use to intimidate me,
  • evading responsibility for similar claims by squashing my legitimate case, and
  • harassing me to such an extent that I required medical attention.

When they realized I had became aware that I was just one in a series of historical fraudulent franchise CSBFA loans (a process that continues today) and that publication of this would threaten their careers and that I had competent and advisors, they provided information to industry partners that they knew or should have known would have predictably caused my personal and corporate bankruptcy via the termination of my franchise agreement.

Risk Management
The CIBC's major concern is not my claim. They're afraid because of the dozens, perhaps hundreds, of similar claims that could be brought forward having to do with opportunistic lending. There are 1,300 franchise systems in Canada with most of them relying very heavily on CSBFA lending. In one system, Country Style, there are 92 former franchisees that may have a similar claim as I do.

While errant facsimiles may be somewhat troublesome, that pales when compared to an media exposés implicating all franchise lending banks (http://cfa.ca/members/support_banks.html), Industry Canada, Ministry of Consumer and Business Services, the Office of the Privacy Commission of Canada, Ms. Susan Kadis, MP, Mr. Dan McTeague, PC, MP, Mr. Mario G. Racco, MPP, etc.

All of these organizations or individuals have a duty to report suspected white-collar crime. Stewart is known as one of the most vocal observers in North America regarding franchisee problems. He was an expert witness in the public hearinigs that lead up to Ontario's Arthur Wishart Act (Franchise Disclosure), 2000 and founded the Canadian Alliance of Franchise Operators in 1998.

There are several venues this dispute could have played out on but I have chosen to keep this private and within official channels. The reward to me so far for trying to (not profit but) not lose because of other's recklessness and negligence has been threats, stonewalling and contempt.

Criminal fraud investigations
On at least two separate occasions in September 2004, I gave evidence to Staff Inspector Tony Crawford of the Toronto Police Services Fraud Squad regarding Country Style Donuts. He advised that they would be continuing their investigation and that I was NOT to communicate with Country Style about potential fraud issues. Crawford said there is never a fraud without a source of funds and that there must be an inside man [banker] for a fraud to happen. Specifically, he said: "it takes two to tango".

On September 21, 2004, my father and I met with Mr. Larry Rodrigue, CIBC General Manager or Small Business Banking, I handed him a copy of print out of a web page that has been continuously posted on http://www.cafo.net since July 28, 2004. It is a notice that the Ontario Provincial Police Anti-Rackets Bureau, R.C.M.P. and York Regional Police are investigating Country Style Donuts for fraud under the Criminal Code of Canada. I stated to Rodrigue that I was in contact with the police.

On September 28, 2004, my father and I met with Mr. Jeff Brown, CIBC. I handed him a copy of print out of a web page that has been continuously posted on http://www.cafo.net since July 28, 2004. It is a notice that the Ontario Provincial Police Anti-Rackets Bureau, R.C.M.P. and York Regional Police are investigating Country Style Donuts for fraud under the Criminal Code of Canada. I stated Brown was in contact with the police.

I consider it a material fact that my loan proceeds were sent directly to a firm that was under criminal fraud investigation by municipal, provincial and federal law enforcement agencies.

The document that I gave to Rodrigue and Brown that I assumed stayed with my complaint is the attached file, OPP_CSD_CIBC.pdf.

CIBC's ongoing fraud
The CIBC continues, to this day, to process CSBFA loans, only through Fedorink, to new Country Style Donut franchisees. I was refused any CSBFA loan when I applied independently to CIBC's Commerce Court branch in 2003. They said: "Country Style? No way, no how, Sorry."

Upon entering the words "Country Style Donuts" into the Google worldwide web search engine, the fifth of 144,000 results reads as follows (accessed March 26, 2005):

CAFO | Country Style Donuts Dispute
Country Style Donuts Dispute. Use the Quick Links scroll menu to view other sections >. … It is still very early in the process. Country Style Donuts Dispute. …
www.cafo.net/CS_content/CS_overview.htm - 9k - Cached - Similar pages

This web page has been continuously posted on www.cafo.net since July 28, 2004.

I assume the twelve CIBC bank officials (above under "Codes of Ethics violations") have notified the appropriate law enforcement agencies, as they are required to under federal and provincial laws.

Fraud across financial institutions
In 2003, there were $13.8-million in claims filed by the banks for defaulted franchised loans. I have been told by a two very reliable sources that all banks: (1) have their own "back door" CSBFA lending officials (same role as Fedorink) and that (2) will adamantly deny their existence.

I believe CIBC's bad faith dealings are a consequence of my choice of advisors. Stewart's understanding of how modern franchising works and his willingness to publicly question the conventional wisdom challenge certain industry cash flows. His February 25, 2005 paper to Industry Canada recommends stopping all payments of franchised loan claims until the incidence of fraud and opportunistic lending is determined.

Summary
Throughout this paper, I have tried to apply the relevant legislation the best I can as a layman. I assume that legislation that is not mentioned would be applied where appropriate.

Stewart work and my case are before Industry Canada officials for review. See Appendix J

I would hope my complaint is being judged solely on its merits as defined by relevant statutes.

Mr. Andrei Oudovikine
March 26, 2005


Risks: Able to finance and sell negative cash flow franchise on crooked appraisals, Andrei Oudovikine, Appearance of government oversight, Arthur Wishart Act (Franchise Disclosure), 2000, Canada, Asset-based lending, Auditor General of Canada, Bad faith and unfair dealings, Bank Act, Canada, Bank violates federal privacy laws, Bank complaint process protects those who pay their salaries, Bank pays franchisor with franchisee's funds, Bank refuses to provide mandatory documents, Bank violates federal privacy laws, Bank won't finance deal because they know something you don't, Bankruptcy, Bankruptcy, first the company and then you personally, Banks, Banks allegedly mastermind fraud, Banks are industry cheerleaders, Banks collude, Blocking for the industry, Canada Revenue Agency, Canada Small Business Financing Act, Canada Small Business Financing program, Canadian Alliance of Franchise Operators, CAFO, Canadian Franchise Association, CFA, Canadian Imperial Bank of Commerce, CIBC, Code of ethics, a joke, Code of ethics, almost never enforced, Coerced waiver of legal rights, self, Collaborators, Complaint letter to franchisors trade association, Conspiracy to commit fraud, Conspiracy to hide the true nature of events in order to avoid detection, Controlling, trapping or defeating the franchisee, Credence good fraudulent expert, Credence goods: taking advantage of the innocents, Credibility, Criminal charges, Debt traps, Deceptive business practices, Earnings claim made, Externalities: cheap business decision when someone else pays, Financial Consumer Agency of Canada, Franchise banker, Franchise business model perfectly suited to enable massive fraud, Franchisee leader, Franchising is the most lucrative form of commercial lending, Franchising Opportunism paper, Franchisor financing: faster in, out & resold (serial bankrupts), Franchisor knew they were selling money losing concepts, FranWhack: a system that is not investment-worthy, Fraud, Fraud financed by rigged appraisals used equipment & leaseholds, Fraudster banker, Fraudster broker, Fraudster franchisor, Futility of taking legal action, Government guaranteed loan approved extremely quickly, Government guaranteed loan filled out by sales agent, Government guaranteed loan made without proper security, Government guaranteed loan misapplied, Government guaranteed loan program very attractive to fraud, Government guaranteed loans, Government guaranteed loans used a great deal in franchising, Government guaranteed loans: program loses $1, franchisee families lose $10, Government inquiries into franchise abuse allegations, Government investigation, Government inquiries into franchise abuse allegations, Ideas once outrageous are now considered normal, Illusion of government oversight, Imbalance of information and power, Immigrants as prey, Incompetent or predatory: for the small business investor, the outcome is the same, Industry Canada, Industry in disrepute, Industry elites like this regulator, Knew or could have reasonably been expected to know, Lender's due diligence not done properly, Lending duty, Lending duty never enforced via regulation or litigation, Lending is subject to expert fraud because it is a credence good service, Lending risk much lower, Les Stewart, Loan pushing, Loan servicers and brokers attracts fraud, Minister of Finance, Canada, Ministry of Government and Consumer Services, Ontario, Misrepresentations, Most lucrative form of commercial lending, franchising, Multi-tradename franchisors are often the most ruthless, Office of the Superintendent of Financial Institutions, Canada, Ombudsman for Banking Services and Investments, Canada, Ombudsman, franchisee must sign gag order 1st, Ombudsman, funded by franchisors & suppliers, Ombudsman, risk of information going to franchisor, On Cooling the Mark Out (Erving Goffman), Only saw bank official once before loan granted, Opportunism (self-interest with deceit), Police intervention, Predatory actions, Predatory franchise lending, Predatory lending, Privacy breaches a prerequisite for fraud, Privacy Commissioner of Canada, Refuses to accept complaint, Refuses to investigate complaints, Regulator already has enough power but they don't use it, Regulatory capture breeds its own incompetence, Retaliation, Right to associate, Right to associate and right to harass, Royal Canadian Mounted Police, RCMP, Sales agent shenanigans, Shame - humiliation emotion, Some of the nastiest predators run several tradename systems, Sunshine is the best disinfectant, Symbiotic relationships (industry, banks, lawyers), Taxpayers end up paying for private gain, Termination threats, The game is rigged, Threats of physical violence, Theft, Tony Martin, Towers of gold, feet of clay, Trap for the trusting, U.S. subprime mortgage scandal, Unauthorized funds transfer by bank, Undue influence, War of attrition, Watchdog fails to bark, Willful blindness, Write a letter of complaint, Canada, 20050327 Email to2

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