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Justice for all, sooner or later BERTRAND MAROTTE MONTREAL- From Saturday's Globe and Mail Published Friday, Apr. 15, 2011 7:05PM EDT A Quebec Superior Court judge has ruled that the auditors for a "The whole team at our firm feels incredibly exhilarated,"
said Mark Meland "It's a big, big win." Despite the epic length of the case, which is believed to be the longest The Castor litigation, which is also believed to be the largest auditors' Many shareholder lawsuits against auditors don't get very far because
of Friday's decision may help bolster the case for auditors' responsibilities "I hope it wakes up the rest of Canada, but I'm not expecting any
immediate Castor was the creation of German-Canadian businessman Wolfgang Stolzenberg, Following the collapse, a group of investors - including major European Their case has dragged on for more than 16 years, 12 of them in court,
and In a hefty 752-page decision released Friday, Madam Justice Marie St-Pierre She said Coopers & Lybrand also issued "faulty opinions"
concerning Castor's "This outcome is disappointing for our clients," said Yvan
Bolduc of Heenan "We're studying [the decision] and when we are done, we will make
the Judge St-Pierre's judgment relates directly to one investor's case, that
of The judge ruled that Mr. Widdrington suffered damages as a direct result
of The judgment concluded that Castor's audited financial statements for
1988, The findings of professional negligence are applicable to and binding
in Mr. Meland, who was present on the first day of the trial back in September Among the reasons the trial - which comprised two proceedings - took
so long More related to this story
BERTRAND MAROTTE MONTREAL - Globe and Mail Update Bleak House, Dickens' tale of seemingly endless legal jousting, comes to mind. One expert witness was in the box for a total of nearly four years. The trial itself was in its eighth year before a halt last fall. The initial lawsuit was launched in 1993. The presiding judge underwent heart-related surgery last year at the age of 71 and subsequently had to abandon the marathon proceedings. A key plaintiff - Peter Widdrington, the former beer-company executive and chairman of the Toronto Blue Jays baseball club - died in 2005. The mountains of data piling up in courtroom 1503 of the Palais de Justice in Old Montreal long ago squeezed out the rows of spectator seats and a storage room had to be enlisted to take up the overflow. It has been dubbed Canada's longest-running trial and it is entering a new phase under a new judge and strict orders to wrap things up by ... 2010. If the deadline is actually met, a legal appeal could drag out the matter for several more years. The case involves the financial wreckage left by the 1992 collapse of Castor Holdings Ltd., a Montreal-based private real-estate investment bank. Castor - the brainchild of German-Canadian entrepreneur Wolfgang Stolzenberg, who is now on the RCMP's wanted list for alleged fraud - left $1.6-billion in debts. A group of investors who lost out in the fiasco - including European banks, Chrysler Canada Inc.'s pension fund and credit unions in British Columbia and Saskatchewan - are suing Castor's former auditor Coopers & Lybrand, a predecessor of PricewaterhouseCoopers LLP, for about $1-billion. They allege in Quebec Superior Court that the firm was negligent in failing to properly audit Castor and grossly misrepresented the health of Castor. Coopers denies any wrongdoing. The case is a test for about two dozen related lawsuits that are on hold pending a decision on Coopers' liability. Montreal lawyer Leonard Flanz, 69, has been acting for the plaintiffs since 1995. "Yes, it's rather incredible. This should not have lasted this long," he says. Among the reasons for the glacial pace were difficulties in gathering evidence that was scattered among dozens of Castor offices in Canada and abroad, including Curacao, Lichtenstein and Switzerland, he said. Mr. Flanz also alleges that the defence has used every delaying and evasion tactic in the book. Yvan Bolduc, the lead lawyer for the defence, replies that the defence has had no choice but to deal as best it can with the plaintiffs' "shotgun approach," which he said involves attacking every tiny detail, requiring time-consuming rebuttals. As well, getting testimony from witnesses scattered around the world proved difficult and took up much time, he said. He agrees that the case is "absolutely unique. "It's very long. It's almost gone beyond reason." When he predicted at the outset that the trial would run about three years, he was dubbed "alarmist" by some members of the plaintiffs' team, he recalls. "They said nine months." Outspoken portfolio manager and investor-rights champion Stephen Jarislowsky is not amused by the way the case has ground its way through the justice system and cost millions of dollars in legal fees and taxpayers' money. "I think it's a joke," he said. "It's a total travesty of justice," says Mr. Jarislowsky, who was a character witness for Mr. Widdrington. "There has to be a better way than this." Mr. Flanz says the new aspects that come up in the seemingly endless case help him cope. "You're limited to one file. On the other hand, the file has so many facets to it, almost like when you cut a diamond: there are shapes and perspectives that emerge, new issues of the law that arise which are interesting." The latest twist came recently when the defence team requested that the newly appointed judge - Madam Justice Marie St-Pierre - recuse herself because of a possible conflict-of-interest: Her son and daughter are employed as lawyers at a Montreal firm acting as counsel to one of the plaintiffs. The request was turned down earlier this month by Judge St-Pierre and the defence has given notice it's going to seek leave to appeal the decision. That means - yes - yet another delay. "It's not a happy turn of events," Mr. Flanz said. "You could see that the [new judge] was anxious to get the ball rolling again."
Warrant issued for Castor Holdings boss A Canada-wide warrant has been issued for the arrest of a former Montreal businessman suspected of orchestrating one of the country's most colossal frauds. The warrant, issued last week, lists 41 criminal allegations against Wolfgang Stolzenberg, owner of Castor Holdings Ltd., a Montreal-based holding company and real estate lender. The charges pertain to more than $200-million in losses by Canadian firms, but federal prosecutor Claude Haccoun told the Montreal Gazette they are "just the tip of the iceberg" and many more charges could follow. The RCMP has been investigating Castor's collapse for more than six years. Investigators refused to comment on the case, saying they are planning a press conference tomorrow in Montreal. Police are expected to announce that an international warrant is also being issued against Mr. Stolzenberg. The 59-year-old businessman is believed to be living in Darmstadt, Germany. There is no extradition treaty between Canada and Germany. Castor filed for bankruptcy in 1992 with more than $1.6-billion owing, mostly to pension funds and banks. A civil case against Coopers & Lybrand, Castor's auditors, is continuing. In a series of related lawsuits, investors are seeking to recoup more than $1-billion, alleging that audited statements misrepresented the financial health of the company. The biggest victim of the alleged frauds is Chrysler Canada Ltd., which
invested $176-million from its employee pension fund in Castor. Castor
and its principals have always denied any wrongdoing, blaming a meltdown
in commercial real estate for the company's collapse.
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