Former pizza exec arrested

Austin may be the most colourful businessman ever to grace the franchise industry in Canada. He's a man of schemes, deals and ideas and even as he was released from custody Austin was talking about a breakfast business meeting he had early today.

The Toronto Star
November 3, 2006

Former pizza exec arrested
Made news in '90s franchisee battles. Accused of not declaring $2M income,
Kevin Donovan

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The flamboyant, convicted con man who helped build Pizza Pizza into a fast food empire has been arrested and charged with income tax evasion.

Lorn Austin, 57, surrendered to police early yesterday and was brought to Old City Hall court in Toronto for a bail hearing. The Canadian-born Austin, who now lives in Florida, was released later in the day after his father posted bail.

"I have spoken with my lawyer Eddie Greenspan and we will fight the charges and the truth will come out," Austin said.

Jovial and polite during his appearance and brief time in lock-up, the sometimes high-flying businessman shared court space with a series of people charged with assault, drug possession and other crimes. He is allowed to continue living in Florida and does not have to surrender his passport.

Federal prosecutor Rob Goldstein alleges Austin kept secret from the taxman more than $2 million in payments Pizza Pizza made to him between 1993 and 2001. Goldstein told court that Austin wilfully evaded paying about $650,000 in taxes on that money.

Pizza Pizza is not under investigation.

The scheme, Goldstein said, was simple.

Austin, who was a senior executive at Pizza Pizza and then a consultant, received his pay through cheques written to eight companies. Those companies did not report the income to the Canada Revenue Agency, but instead recorded losses. Austin, who Goldstein alleges was the "controlling mind" of these companies, then paid himself from their ledgers or used company funds to pay debts, such as large credit card balances.

An auditor from the Canada Revenue Agency discovered these payments in a routine audit of Pizza Pizza's books. When the auditor ran corporate searches on the eight companies he found they were linked to Austin.

Austin's wife was a director with most of the firms. Austin's wife is not under investigation.

Austin may be the most colourful businessman ever to grace the franchise industry in Canada. He's a man of schemes, deals and ideas and even as he was released from custody Austin was talking about a breakfast business meeting he had early today.

Back in the 1990s Austin was centre stage in a mammoth battle between franchisees of the pizza company and management. Franchisees who invested life savings to start their businesses alleged the company treated them unfairly and Austin and company owner Michael Overs eventually faced the franchisees in court. The company ended up paying some of the franchisees a small amount of money and Pizza Pizza continued to grow. Issues arising out of the case (many explored by Star stories) eventually moved the provincial government towards legislation to protect franchisees.

Throughout the time Austin was at Pizza Pizza, according to the prosecution's case, Austin's companies were being paid by Pizza Pizza for work he was doing at the firm. The problem was, according to the prosecution's case, Austin was not declaring the income.

A Star investigation in the 1990s revealed that Austin, though shrewd, had his share of bumps along the way.

He was personally bankrupt twice in Canada, and several of his companies on both sides of the border have gone under, often with considerable debts.

Austin also has a criminal record. He was convicted of fraud in Toronto in 1977 and ordered to pay a $1,000 fine and make $14,500 in restitution payments. He moved to Florida and got caught up in selling not-so-precious gems mail order and selling the rights to time-share properties in Miami.

In 1986 he was convicted of racketeering, credit-card fraud, grand theft and possession of property obtained by crime. As an attempt to stay out of prison, Austin tried to convince the state attorney in Florida and a judge to let him go free if he worked as an anti-crime crusader, warning the public about people like himself. The judge, instead, sentenced him to prison in 1986. He was paroled in 1989 and allowed to serve his parole time in Canada (he is no longer on parole).

In the early 1990s Austin went back to work at Pizza Pizza (he had earlier helped market the franchises) and established himself as owner Overs' right-hand man.

Austin is no longer with Pizza Pizza. The arrest warrant against Austin was sworn out two years ago but a bureaucratic mistake at the border stopped him from being picked up when he crossed.

Recently, Goldstein contacted Austin's lawyer and asked if Austin would surrender. Austin said yes and agreed to appear in court this week.


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Risks: Lorn Austin, Lorne Austin, Lawrence Austin, Fraud, Convicted fraud artist, Income tax evasion, Bankruptcies, several, Racketeering,, Canada, 20061103 Former pizza

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