William Tynkaluk, the former Chairman of the Board of Directors, of Leon Frazer & Associates, Inc., admitted that his firm was strictly liable, for the loss of ten million dollars of bearer instruments, which had been entrusted to it, for safekeeping, prior to a scheduled sale of the shares, to a corporate purchaser located in the United Arab Emirates. Tynkaluk, who was the personal investment adviser of an LF client, was in charge of the closing of the transaction, declared that the documents had been "lost, misplaced or misfiled, at our offices in Toronto," which resulted in the permanent cancellation of the sale, in early 2012.
The securities represented 100% of the shares of a money services business, in bearer form, and were extremely valuable, as they conferred the right of the holder to convert the MSB license to that of a full-service commercial financial institution. The market value of the stock was conservatively estimated at CAD$10m, but in 2016, four years later, is is believed to be much higher.
Tynkaluk offered to execute an affidavit, detailing the specifics of the documents that Leon Frazer was handling, which included, but were not limited to:
(1) The MSB license.
(2) The license from the Ministry of Commerce, to operate and issue credit and prepaid cards.
(3) The license from the Ministry of Finance.
(4) The license from MasterCard.
(5) The Certificate of Operation from Government.
(6) The bearer shares.
(7) The corporate share book.
When Leon Frazer "lost" the documents, the sale collapsed. Investigators, who are aware that William Tynkaluk had a long relationship with the fugitive stock trader, Alberta native Ryan Bateman, who was also interested in purchasing the MSB, and the investigators want to talk to Bateman, to determine whether he purchased the MSB, in an off-the-books transaction with Tynkaluk, for future use.
The affidavit, dated April 12, 2012, was not executed by Tynkaluk, at the meeting, scheduled for that specific purpose, when his attorney failed to appear, and the other parties present, all attorneys, stated that he needed independent advice of counsel, in order to sign the document. Though unsigned the admissions, and declaration against interest expressed at that time, by William Tynkaluk, when taken together with the affidavit, are competent evidence of his admission of liability, on the part of Leon Frazer & Associates, Inc.
At a later date, Tynkaluk, and Leon Frazer alleged that the client had the original documents, which was inconsistent with the documents and correspondence to date. The measure of lost profits, suffered by the LF client, both for the sales price, and future earnings, could render Leon Frazer insolvent, unless the firm's negligence is a covered event, inits insurance policies, though its relationship with the Cayman Gang of Four demonstrates intentional torts, which are generally outside the realm of coverage.
We shall continue to cover the progress of the litigation.