How hard is it to report franchisor crime in Canada?

June 23, 2010

Not that hard really.

You can do it online at RECOL.ca:

Reporting Economic Crime Online (RECOL) is an initiative that involves an integrated partnership between International, Federal and Provincial Law Enforcement agencies, as well as, with regulators and private commercial organizations that have a legitimate investigative interest in receiving a copy of complaints of economic crime.

A few of my clients have done it to interesting outcomes.

It’s completely confidential, free and is like getting a PhD in how corporate Canada really works. In my experience, coppers know how franchising’s absolute power corrupts absolutely.

Sunlight is said to be the best of disinfectants.

Other People’s Money—and How Bankers Use ItLouis Brandeis 1856 – 1941

Criminal investigations of publicly-traded franchise systems (especially those operating in a near-monopoly) are by their nature, a just pursuit.

All you have to do is sign in.

Maintiens le droit –Defending the Law

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Criminal groups threatening capital markets, RCMP

December 8, 2008

fattonyDean Beeby, The Canadian Press and The Globe and Mail have an interesting article today, Criminal groups threatening capital markets, RCMP.

OTTAWA — Organized crime has become a significant threat to Canada’s capital markets, a new report from the RCMP’s fraud squads says.

Major crime groups are recruiting investment professionals to help them move far beyond traditional activities – smuggling, extortion and counterfeiting – into the rarefied world of high finance and market manipulation, the Mounties say.

“Using the markets requires a degree of knowledge and expertise,” says the draft report from the RCMP‘s Integrated Market Enforcement Teams, or IMETs.

“Organized crime groups harness this skill set by using professional facilitators in the industry.

“The facilitators’ subjective knowledge of the true nature of these schemes ranges from willful blindness to direct fraudulent participation.”

This has hypothetical interest only since franchising is essentially a capital exchange mechanism. Further:

Organized crime and “criminalized professionals” – rogue investment specialists – are described as the two main players in financial crimes.

Criminalized professionals? They mean the crooked investment dealers, right? Right?

The Canadian Bar Association is ferocious in protecting any tiny little-weeny, tensy attempt to limit its members’ airtight solicitor-client privilege.

This of course (again in only the most-twisted imaginations possible) creates and maintains a safe haven for the buying and selling of legal services that enable international organized crime.

  • Fat Tony and his counsel have nothing to fear from any hoser.

It’s taken Canada years to develop its reputation as the world’s best place for white-collar crime:

  1. no national regulator (take our OSC…please),
  2. no securities investigations (Lord Black, Nortel, Livent…),
  3. amnesiac centralized commercial bankers.
  4. oh the list goes on and on.

A farce, really.  In summary, just go ask Al Rosen why he doesn’t invest in CDN listed stocks.


Franchisee Narrative

February 25, 2008

It is very useful for a franchisee to write down in their own words a history of what happened from their point of view.

This is an outstanding example of a franchise investor’s narrative. In July 2005, it was written in preparation of what would become a 10 month-long Royal Canadian Mounted Police, Commercial Crime Section investigation.

We would like to help reduce the risk of franchise relationships being used as a vehicle for increased white-collar crime in Ontario. The high cost of litigation and franchisor intimidation make Ontario franchisees defenseless.

Several stakeholders, with this lender only being an example, exploit this systemic problem. Current Ontario franchise policy actually increases the risk to small business investors.

Thank you again and I look forward to working with you.

The RCMP officers were kind enough to suggest that a lawsuit was always possible when they informed the Oudovikines that they would be stopping their criminal investigation.


Investigating the bank (2)

February 25, 2008

Ottawa Citizen logo

Franchises are often financed with government guaranteed loan programs. The bankers, sales agents (aka “franchisor associates”) & franchisors have a very organized way of dealing with unsuspecting franchise investors.

In March 2006, the Ottawa Citizen newspaper published an article called: Mounties investigate ‘predatory lending’. This is the first public mention of a specific example of what I had defined to Industry Canada as Predatory Franchise Lending.

Mr. Oudovikine says his case shows how big banks, franchisors and franchise brokers team up to take advantage of franchisees, many of whom are recent immigrants like him.

“It’s predatory lending. (CIBC) didn’t do any of the due diligence they should have done,” says Mr. Oudovikine, who sent the Citizen e-mails confirming the RCMP investigation. An RCMP official said the police force doesn’t confirm or deny investigation.

The Ottawa Citizen has also published Bank springs another privacy leak on May 14, 2005.

Mr. McLeod said CIBC is also investigating the loan granted to Mr. Oudovikine to start the franchise. But he said it is standard practice to make such loans payable to the franchisor, and noted that bank loan documents make that clear.

But Country Style chief executive Patrick Gibbons said he’s never heard of such a practice. He was unaware of any dispute over Mr. Oudovikine’s loan.

“A loan agreement is business between the franchisee and the lending party, period,” he said.

Two bank drafts made payable to the franchisor of +$230,000 in loans plus +$80,000 owner’s equity but with no current account signing officer’s signature?

So it goes in franchising.


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