Ex-Canuck must pay back $384K
Backup goalie invested in Ponzi scheme that imploded like ‘house of cards’ in 2012
Former Vancouver Canucks goalie Kay Whitmore has been ordered by a judge to pay back $384,000 he received after investing in a multimillion dollar Ponzi scheme run by a Vancouver notary.
In December 2005, Whitmore invested $600,000 in the scheme being run by notary Rashida Samji after she had in approximately 2002 assisted him in the closing of his purchase of some real estate in the Vancouver area.
Whitmore, who since 2005 has been employed as a senior director of hockey operations for the NHL, testified that his understanding of the investment was that he was lending money through Samji to an “alcohol company” for a term of six months and that he would receive 7.5 per cent as interest within three weeks.
He said he was told that at the end of the six-month term, he had the option of receiving the principal of his loan or renewing the loan for a further six-month term, again with interest payable at 7.5 per cent within three weeks of the renewal.
By January 2012, by which time he’d withdrawn his principal from the scheme, Whitmore had received a total of $384,000 in gains from the investment.
In his ruling on the case, B.C. Supreme Court Justice Gordon Weatherill noted that Whitmore was not a party to nor had any knowledge that it was a Ponzi scheme he’d invested in and unbeknownst to him, Samji had sourced her gains from the funds placed by other investors with her.
The judge noted that the “house of cards imploded” in February 2012, when Samji’s fraud was discovered and she was suspended as a notary public, with a police investigation resulting in her being convicted of fraud.
Samji had run the scheme from 2002 to about January 2012 and attracted 220 investors, including Whitmore.
In December 2012, the Samji Group made a voluntary assignment into bankruptcy and in September 2014, the trustee in bankruptcy of the Samji matter was authorized to conduct a process to determine the claims of the creditors of the Samji estate.
According to the ruling, the trustee determined that the total loss from the scheme was about $41 million, involving accepted claims from 150 investors who had lost money. At trial, the trustee argued the profits that the people who made money from the scheme, such as Whitmore, should have to be repaid. The Whitmore lawsuit is the first of several actions begun against people who earned money from the scheme, according to the ruling.
Whitmore, who said he used the money he earned for living expenses, conceded that he received an overpayment of $30,000 from the Samji Group with cumulative payments of fees on that amount totalling $56,000, that he should pay back.
But he said the remainder of the “excess” money he got constituted no more than a reasonable return on his loan agreement which he received in good faith.
The judge found Whitmore was innocent of any wrongdoing, other than maybe a failure to perform “even a modicum of due diligence,” but noted he took no steps to determine the legitimacy of the scheme.
Whitmore, the backup goalie in the Canucks’ run to the 1994 Stanley Cup Final, made a number of other arguments in opposition to having to return the money, but the judge rejected them.