Dropped charges in Ponzi scheme raises troubling questions

…the Crown’s decision sends a “disgraceful” message about Ontario’s attitude toward white-collar crime. “It’s like hanging a sign up saying, you know, fraud is all right in Ontario,” said the creditor, who declined to give his name. “It sends out, certainly, the wrong message.”

The Toronto Star
November 16, 2010

Dropped charges in Ponzi scheme raises troubling questions
Jennifer Yang

How does the alleged mastermind behind a $27 million Ponzi scheme walk away free without ever undergoing a criminal trial?

This is the troubling question now being raised by everyone from his alleged victims to Ontario’s attorney general.

This week, it was revealed that fraud charges have been dropped against Tzvi Erez, 43, of Toronto, partly because “the courts just didn’t have the resources to deal with a long, protracted fraud case,” according to lawyer Lou Brzezinski, whose client, Willy Tencer, was the sole complainant.

But in a civil suit, also filed by Tencer, it was alleged Erez defrauded more than 70 creditors, amounting to losses of $27 million.

“(I’m) a little bit shocked that our judicial system was so overworked that we would drop charges in a case such as this,” Brzezinski said.

“I’m afraid (people) will see this story and realize that the current criminal process will not provide to them justice at the end of the day because the Crown doesn’t have enough money to proceed.”

Attorney General Chris Bentley reacted with concern to the dropped charges, insisting Tuesday that the province “does not walk away” from criminal cases.

“We have resources for the cases that need them and where more are required, we find them,” Bentley said. “I have asked the chief prosecutor to get to the bottom of it, and I’ve asked for the report as quickly as possible.”

Erez, son of a well-known developer and one-time classical concert pianist, is accused of running a Ponzi scheme through his printing business, E Graphix, which is now bankrupt.

Erez is alleged to have used money from new investors to pay returns to his original investors, concocting forgeries to present his business as profitable.

In June 2009, Erez was charged with one count of fraud over $5,000, seven counts of forgery and failure to comply with probation conditions relating to a previous conviction. The charges stemmed from evidence provided by Tencer, who allegedly lost about $1.2 million.

According to a receiver’s report ordered by the civil court in Tencer’s suit, more than 70 investors were victimized by Erez. The civil court ultimately found Erez had no assets and he was declared bankrupt in October 2009.

The Crown decided to drop the criminal charges last Sept. 22. Brzezinski said he was given two main reasons by assistant Crown attorney Donna Gillespie: Tencer, an experienced businessman, failed to perform his due diligence and should have avoided what was clearly a risky investment. As well, the courts were tied up with more serious cases involving violent crimes and had insufficient resources to pursue a complex fraud case.

Gillespie and Crown Attorney Christine McGoey would not comment.

Brzezinski said he doesn’t blame the Crown, which was forced into making a “proverbial Sophie’s choice.”

“Are we going to let a violent criminal walk because we’re spending … hundreds of man hours tracking down the Ponzi scheme?” he asked.

“What we need is more Crowns… . And more money spent on our judicial system.”

Elliot Steiner, a 47-year-old real estate developer, invested $225,000 with Erez. He also doesn’t blame the Crown, placing some of the responsibility on himself. Like many of Erez’s alleged victims, Steiner never filed a formal complaint with police.

“It was my impression, perhaps naively, that the police would come to us when they were ready,” he said, adding he will now approach police.

But for one Toronto businessman who lent money to Erez, the Crown’s decision sends a “disgraceful” message about Ontario’s attitude toward white-collar crime.

“It’s like hanging a sign up saying, you know, fraud is all right in Ontario,” said the creditor, who declined to give his name. “It sends out, certainly, the wrong message.”

With files from The Canadian Press

http://www.thestar.com/news/ontario/article/891556--dropped-charges-in-ponzi-scheme-raises-troubling-questions?bn=1


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