globeandmail.com

COLLECTED WOES

Friday, November 24, 2006

They mesmerized their followers in the business world with their brilliance-- until a brush with the law broke the spell. What became of these fallen titans? Our investigative reporter works his way through the entire set

Paul Waldie

Conrad Black

Then:controlled Hollinger newspaper empireWhat happened: charged with fraud, racketeering and money launderingNow:vigorously fighting the charges

Conrad Black has spent more than $20 million defending himself, and by all accounts he is just getting started.

For the last three years, the former press baron has been fending off dozens of civil lawsuits in Canada and the United States, but his main focus now is preparing for a criminal trial expected to start in March in Chicago. Lord Black has rejected any suggestion of a plea bargain, and he has given just as good as he has received from prosecutors, who spent much of this year attempting in vain to have Black's bail revoked.

This past summer, Hollinger Inc. won a court-ordered freeze on Black's assets as part of a lawsuit unrelated to the criminal charges. But even that freeze, modified by a deal he struck later with Hollinger, has not slowed Black down. Although he owes roughly $25 million, sources say he is making his payments on time. And Black, 62, managed to make a $500,000 donation over four years to Toronto's Four Seasons Centre for the Performing Arts. He's working on a book about former U.S. president Richard Nixon, and he writes a regular column in the National Post. In an e-mail to author Lawrence Martin this year, Black revealed that he has a consecrated chapel in his Toronto mansion that he visits frequently.

Lord Black has had to part with some of his prized possessions, including his $30-million house in London, a $10.5-million (U.S.) apartment in New York and a 1957 Rolls-Royce Silver Wraith, which sold for $126,500 at an auction last June.

David Radler

Then: Conrad Black's right-hand manWhat happened:charged with fraudNow:pleaded guilty to one charge; running a newspaper company

Not much has been heard from David Radler since he scurried out of a Chicago courtroom last year after pleading guilty to one charge of fraud. Under a plea agreement that will see him spend 29 months in prison, Radler is expected to be a star witness for the prosecution against his former colleagues at Hollinger International Inc., including Conrad Black.

For 36 years, Black and Radler were virtually inseparable. Together, they built a newspaper empire that peaked at 600 titles in Canada, the U.K., the U.S. and Israel. But in late 2004, a year after allegations surfaced about wrongdoing at Hollinger International, Radler began quietly co-operating with U.S. prosecutors. It's hard to know what prompted him to give up his old friend, but the death of Radler's father in June, 2004, might have been a trigger.

Things haven't been easy for Radler, who's now 64, since he made his plea agree-ment in September, 2005, and was re-leased on $500,000 (U.S.) bail. Queen's University announced it was stripping his name from a wing of its business school and giving back his $1-million donation. At the request of Hollinger Inc., a B.C. court has put a freeze on Radler's assets, limiting his spending to $25,000 a month. (Radler can still challenge the order.)

Radler spends much of his time in Van-couver, where he's trying to keep up with his main business venture, Horizon Operations Ltd., and its stateside sister, Horizon Publications Inc. Horizon owns about 40 small newspapers in the United States and Canada. But even this enterprise has a cloud over it. In a document filed in court, prosecutors have alleged that when Black and Radler bought papers for Horizon from Hollinger, they "negotiated an agreement with themselves," producing a discount price. Black has denied the allegation. The two remained co-owners of Horizon until earlier this year, when Black sold his stake for around $16 million, according to court filings. The two men are believed to still jointly own another company, Bradford Publishing Co.

Documents filed in court show that Radler has had to work at keeping Horizon afloat. In a memo dated March 3, 2006, he told Horizon debt holders, who included Black, that it was possible the company would need to raise more capital to meet an upcoming financial obligation. Another in-ternal e-mail from a lawyer, dated around the same time, discusses the difficulties the Horizon companies were having in making quarterly pay-ments on a credit facility. And a transcript of a voice mail dated June 22, 2006, also filed in court, indicated that Black was causing some difficulties for Horizon by not agreeing to sign an unspecified extension agreement with banks.

This fall, Radler got back to his roots when he became a partner in the Sherbrooke Record, where he and Black began their newspaper careers in 1969.

Robert Campeau

Then: headed a retail and real estate empire

What happened: companies filed for bankruptcy

Now: running out of money

Robert Campeau's lawyers figure he'll be flat broke by February--a sad fate for someone once celebrated as one of Canada's best-known businessmen and one of the 10 sexiest men alive.

In the 1980s, Campeau orchestrated two stunning takeovers in the United States, a $3.5-billion (U.S.) acquisition of Allied Stores Corp. and a $6.6-billion (U.S.) deal for Federated Department Stores Inc. Between the stores and his real estate holdings, Campeau's empire was worth an estimated $10 billion. Campeau, who'd come from nothing, capped his achievement by building a 30,000-square-foot, chateau-style mansion, complete with 13 bathrooms, on Toronto's exclusive Bridle Path.

But by 1990, Campeau Corp. was buckling under its debt, and Allied and Federated filed for bankruptcy protection. Ousted from the company, Campeau retreated to Austria with his second wife, Ilse. A planned come-back building housing in Berlin did not come to fruition.

Campeau returned to Canada in 2001 suffering from clinical depression. While being treated in Guelph, Ontario, Campeau learned that "my marriage to Ilse of 31 years had ended," according to a document filed in court. The relationship had been in trouble for years. Campeau was already involved with Christel Dettmann, whom he had met in Berlin.

For the past four years, Robert and Ilse Campeau have been locked in a legal battle. In 2003, Robert won a court order requiring Ilse to turn over $9 million as part of the division of the family's assets (Campeau put almost everything in his wife's name during his career). She was also ordered to pay $25,000 a month in support. Robert has also moved to seize three condos Ilse owns in Toronto, worth almost $3 million in total.

Ilse, who is 66 and lives in Austria, has refused to pay anything. She's also contesting the property seizures, in part through a website (Ilsa.at) that offers her side of the story.

On top of all that, Campeau is being sued by his daughter from his first marriage, Rachelle. She is seeking repayment of roughly $2.5 million she lent Campeau more than a decade ago. The case, which started in 1996, is slated to go to trial in May. Campeau has always insisted that he wants to pay the money back--but he can't, because Ilse has everything.

While the lawsuits fly, Campeau, 83, spends most of his time in a townhouse in Ottawa, living on what's left of his savings. He had visions of starting a new housing development on the outskirts of town, but that fizzled because the land was tied up by Ilse.

He still has a few powerful connections.

Former prime minister Jean Chrétien and former Liberal cabinet minister André Ouellet have been approached for some friendly help to get Campeau back some cash that was frozen by the lawsuits over Campeau Corp.'s collapse.

Donald CormieThen: founder of the Principal Group Ltd.

What happened: found guilty of misleading investors under the Competition Act

Now: living in Arizona, finally out of the legal mess

Donald Cormie once epitomized the gung--ho spirit of Western Canada. Born in Edmonton in 1922, he traded in a brilliant legal career in the early 1950s to try his hand in business. Within a few years, he had launched what would become the Principal Group, specializing in real estate financing.

By the 1980s, the company had more than $1 billion in assets and was Alberta's only homegrown financial institution, comprising a trust company, a mutual fund arm and even a bank in the Cayman Islands. The fruits of success for Cormie included homes in Edmonton, Arizona and Victoria, an 18,000-acre ranch and a 41-foot yacht.

Trouble surfaced in June, 1987, when auditors cried foul at two Principal Group entities, First Investors Corp. and Associated Investors of Canada Ltd. The provincial government moved in and shut them down. Within weeks, Principal it-self was bankrupt. Some 67,000 investors were out nearly $500 million. The debacle produced a litany of lawsuits, a massive provincial inquiry and bailouts totalling nearly $140 million.

A 1989 court-commissioned report found evidence of fraud and dishonesty on the part of key company executives. But the RCMP said it couldn't find any evidence of criminal conduct, and decided not to lay charges. Cormie was fined $500,000 under the federal Competition Act after pleading guilty in 1992 to charges of misleading advertising and deceptive marketing practices. He was also banned from trading on the Alberta Stock Exchange for 10 years. Many of his assets, including the ranch, were sold to cover debts.

After the Principal Group went bust, Cormie headed to Paradise Valley, Arizona, with his wife, Eivor. The couple lived there until a year ago, when they moved to upstate Scottsdale after Cormie, 84, suffered a period of ill health. He still manages to travel to Canada and gets around to visit his eight children.

According to one of his sons, Bruce, the legal battles cost Cormie $10 million in legal fees and dragged on until last March, when the Canada Revenue Agency finally signed off on a transfer of money that had been tied up in a trust.

According to Bruce, Cormie never could start another business after the Principal Group debacle because he spent all of his time with lawyers and accountants sorting through the company's ruins. When asked if his father was bitter, Bruce said, "He just took it in stride. I've got to hand it to him. I'm amazed at how cheerful he remained throughout the whole process."

Ever the businessman, the elder Cormie also regrets missing out on the recent good times in Alberta. "We missed the biggest boom in history," Bruce said.

Jeannette Walsh

Then: wife of Bre-X Minerals founder David Walsh and company corporate secretary

What happened: Bre-X collapsed in 1997

Now: spends most of her time in the Bahamas

Life was tough for Jeannette Walsh immediately after Calgary-based Bre-X crashed. Lawsuits flew, investigations were launched and most of the family's assets, estimated at $30 million, were tied up in court. Meanwhile, two masked gunmen broke into the Walsh home in Nassau, Bahamas. They tied up David Walsh and threatened to shoot him unless he turned over all his money. The incident ended peacefully, but three weeks later, on June 4, 1998, David died of a brain aneurysm.

Jeannette, now 62, has spent her time stoutly defending herself and her husband. She still lives in Nassau, but spends a great deal of time in Montreal, her hometown. Most of the lawsuits surrounding Bre-X's collapse have gone dormant or faded away, including a big class-action in the U.S. that was dismissed in 2005. Sources in the Bahamas say Jeannette still has some hefty legal bills to pay, but she did win a court order releasing the family's assets. Meanwhile, she's been dabbling in business and bought a commercial property in Nassau, one source said. She has also reportedly sold the family's oceanfront home and moved into an apartment on Paradise Island.

The Walshes' son, Brett, who fiercely de-fended his father, faced an assault charge in 1997 after scuffling with a TV cameraman outside the Bre-X office. The charge was dropped a year later, after Brett agreed to pay $452.78 for a camera. Brett now lives in the U.K., where he is producing a film version of Christopher Buckley's novel, Little Green Men.

As for Bre-X, it is still in bankruptcy, and its trustee, Ross Nelson, continues to plug away. In an attempt to recover billions of dollars for creditors, he launched a lawsuit in 1997 against several former Bre-X officials, including the estate of Walsh. The suit hasn't been active in years, but Nelson said he may reactivate it once there is a verdict in the insider-trading case of former Bre-X geologist John Felderhof.

Michael Holoday

Then: star broker at First Marathon Securities Ltd.

What happened: charged with 15 counts of fraud in 1996 for ripping off clients

Now: trying to get full parole

When Michael Holoday was sentenced to eight years and nine months in jail in 2001, the judge described him as "a dangerous man" who charmed and defrauded "everyone who came in his path." Holoday had swindled dozens of clients, inclu-ding his mother-in-law. He cost his victims about $22 million, one of the largest cases of fraud by a single broker in Canada. He did it all while enjoying a lifestyle that included a Porsche, a Jaguar, a 600- horsepower speedboat and a planned Car-ibbean retreat. Even when he was out on bail after his arrest, Holoday tried to manipulate accounts at three banks.

Now 42, Holoday has been trying to win full parole for four years. National Parole Board reports show that he was released on day parole in 2002, but it was revoked the following year due to his "deceitful and manipulative financial/business dealings and for withholding information from those supervising [him]," the board said in a ruling. The board added that police had considered charging Holoday at the time over his role in an unnamed company where the CEO was charged with fraud.

Holoday managed to win day parole in December, 2004, but it was revoked again in October, 2005, "due to concerns about credibility and about the affordability of your lifestyle," the parole board said. He was put back on day parole two months later. Two subsequent attempts at full parole have been denied by the board.

Parole board records show that while out on day parole and living in a halfway house, Holoday piled up debts, lived beyond his means and misrepresented himself. He managed to get a job with an employment recruitment firm--and almost immediately began borrowing money from his boss.

In its decisions, the parole board uses phrases like "disingenuous manipulation" and "apparent lack of concern for others" to describe Holoday. By law, he can try for full parole again in a few months. In any case, his sentence is up in 2009. Apart from prison, there's the matter of $2.1 million in restitution he owes his victims.

Christopher Horne

Then: star broker at RBC Dominion Securities

What happened: pleaded guilty to 18 counts of fraud

Now: living in downtown Toronto

Christopher Horne was once compared with Cary Grant--tall, dark and charming. Born in the U.K., Horne immigrated to Canada in 1971 at the age of 29. In Toronto, he joined a forerunner to RBC Dominion Securities Inc. as a broker, and quickly gained a reputation as a suave salesman. He had a knack for attracting elderly clients, particularly women, some of whom became so devoted that they included Horne in their wills.

As his client list grew, Horne indulged his passion for art. By the early 1990s, he was one of Canada's top collectors, owning works by Henry Moore and Henri Matisse in a collection valued at roughly $4 million. Horne's contribution to the art scene, which included several large donations to galleries, was so extensive that the Art Gallery of Ontario elected him a trustee in 1988 and put his name on a room.

But in late 1993, one of Horne's clients complained to the firm about problems in his account. Horne blamed administrative staff for the errors. In July, 1994, when bank officials started asking tough questions, Horne abruptly resigned. Police soon discovered that $7 million of client money had been used to finance Horne's art collection.

Horne pleaded guilty to 18 counts of fraud in August, 1996, and received a five-year prison term. His art collection was sold off at rock-bottom prices to help cover a string of debts.

Horne, now 64, was paroled after spend-ing about 10 months in jail. He has kept a low profile ever since, but acquain-tances say he lives in a condominium near Toronto's Distillery District, where he goes for walks with his beloved dog. He still lives with his long-time partner, Douglas Bradley, who has stuck by him for nearly 30 years and once held two jobs to support Horne.

Horne's private foundation, the Christopher E. Horne Charitable Foundation, is still active, although its latest financial report showed no assets. In its 2005 filing, the foundation listed its directors as Bradley and Toronto gallery owner Olga Korper, once a close friend of Horne's.

Korper knew nothing about the foundation when contacted recently. "Good heavens," she said with a laugh. "Golly, I'm not even too thrilled to hear that I am a director on it."

For his part, Horne was not eager to chat when reached at home. "I have nothing to say about anything," he said politely. "Bye."

Ron & Loren Koval

Then: ran King's Health Centre in Toronto

What happened: pleaded guilty to a $100-million fraud

Now: Ron Koval is bankrupt, but Loren Koval is hard at work

Anyone who set foot in the King's Health Centre in downtown Toronto couldn't help but be impressed. After all, Ron and Loren Koval modelled it after the famous Mayo Clinic in Minnesota, but catered exclusively to wealthy clients who could pay for expensive procedures. Along with health services, they offered everything from massage therapy to an indoor golf school when the centre opened in 1996.

The Kovals poured $20 million into re-novating the building in plush style, and had bold plans to equip it with the latest in medical technology. Their own life-style mirrored their clientele's: a $300,000 Bentley, a $150,000 Mercedes-Benz, a yacht, two homes and a permanent hotel suite in Toronto.

But on Oct. 17, 2000, the Kovals vanished, leaving the centre's more than 200 staff scrambling. At least $15 million had gone missing, and police issued Canada-wide arrest warrants for the Kovals. Over the next two months, police and reporters chased tips about the couple's whereabouts across the Caribbean and Central America. There were reports they had disguised themselves with plastic surgery and had stashed millions of dollars offshore. Meanwhile, the health centre closed and lawsuits flew.

The couple turned out to be lousy fugitives. They'd had no plastic surgery, and in 10 weeks on the lam had only made it as far as Savannah, Georgia, before the stress of being on the run took its toll. Carrying a suitcase stuffed with $1.29 million (U.S.) in cash, they returned to Canada by cab and surrendered to customs officials.

The cash was just about the only money police recovered from the fraud, which totalled nearly $100 million in bogus equip-ment leases. In March, 2001, the Kovals pleaded guilty to fraud, and each received a seven-year jail sentence.

The couple were released on day parole in May, 2002, and received full parole a year later. They immediately filed for bankruptcy, citing meagre assets and facing millions of dollars in claims from banks that lost money on the scam.

Ron Koval, 55, briefly had a job at a man-ufacturing company in Brantford, Ontario, but it is not clear what he is doing now. Records show that he is still in bankruptcy. Loren Koval, also 55, now goes by her maiden name, Loren Kemp. She is a marketing co-ordinator at Focus Physiotherapy, which runs a chain of clinics around Toronto. She was discharged from bankruptcy last June, even though she listed just $23,000 in assets and $4.4 million in liabilities on her most recent bankruptcy filings. When contacted, she was not eager to chat about the couple's new life: "I don't have time to talk right now. Thanks. Bye-bye."

Boaz ManorThen: headed Portus Alternative Asset Management Inc.

What happened: facing several charges of violating securities laws

Now: living in Israel, waiting to see if HE will be put in jail

Everything looked so promising for Boaz Manor at the start of 2005. Money was pouring into Portus Alternative Asset Management, the Toronto-based company he co-founded in 2003. Portus had become one of the largest hedge fund companies in Canada, with more than $800 million in assets and 26,000 clients.

It all came crashing down in February, 2005, when regulators in several provinces moved in. Within a few weeks, Portus was put into receivership, Manor took off for Israel and investors were left wondering what happened to their cash. Since then, the Ontario Securities Commission has charged Manor with several counts of violating securities laws. The charges carry a maximum penalty of five years in jail. Through his lawyer, Manor has denied any wrongdoing and promised to contest the charges.

The saga took a bizarre turn with allegations that Manor used about $9 million (U.S.) of investors' money to buy 100 diamonds in Hong Kong with the help of his sister-in-law, a mystery man and someone named Madam Ho Ho. Portus's receiver, KPMG Inc., has asked an Israeli court to jail Manor unless he produces the stones. But Manor says the diamonds are in the hands of an Israeli financier, Yitzhak Toib, who put them in a safe deposit box in a Vienna bank and refuses to give them back. Toib says he returned the diamonds to Manor's sister-in-law, and that he's being set up. Now a separate Israeli judge has ordered Toib to cough up whatever he knows; Toib is appealing. Meanwhile, Manor has been told not to leave the country until the court figures all of this out.

While Manor, 36, cools his heels in Tel Aviv, his wife, Wendy Yu, is caring for their daughter and running an art business, Fine Art Imports Inc., north of Toronto. "We have nothing to talk about," she said when contacted.

Julius MelnitzerThen: one of the top lawyers in Ontario

What happened: pleAdED guilty to 43 counts of fraud

Now: new career as a writer

Throughout the 1970s and '80s, Julius Melnitzer dazzled Ontario's legal establishment with his courtroom brilliance and stable of powerful clients, including some of the province's biggest landlords. His lifestyle reflected his prominence--three homes, a Mercedes-Benz, a Jaguar XJS, a share in a $450,000 (U.S.) Stradivarius violin, a penthouse apartment for his mistress and 11 weeks of vacation each year with his wife. He once held a lavish party, complete with $100 bottles of champagne, to celebrate the birthdays of his two dogs.

In July, 1991, a middle manager at the National Bank of Canada took a closer look at some stock certificates Melnitzer had used as collateral for a $15-million line of credit. When the certificates turned out to be fake, the bank called in the RCMP.

The police discovered that Melnitzer had printed up more than $100 million worth of stock certificates bearing blue-chip names like Exxon Corp. He'd used them to secure around $67 million in loans from several banks. Melnitzer had convinced a printing company in his hometown of London, Ontario, to make the certificates, claiming he needed to use them in an upcoming trial. Police also found out that he'd bilked several close friends out of more than $14 million by getting them to invest in a bogus property deal in Singapore.

Melnitzer pleaded guilty to 43 counts of fraud in 1992, and was sentenced to nine years in jail. He served two years before being released on day parole, and earned full parole in 1995.

Since his release, Melnitzer, 59, has written a book on his prison experience, Maximum, Minimum, Medium, and a novel, Dirty White Collar. And although he's been disbarred by the Law Society of Upper Canada, he's become a respected and widely published legal-affairs writer, covering issues such as securities laws, tax rulings and corporate fraud cases.

Andrew Rankin

Then: managing director of RBC Dominion Securities Inc.

What happened: convicted of 10 counts of tipping

Now: awaiting appeal

Andrew Rankin and Daniel Duic, boyhood friends at Toronto's exclusive Upper Canada College, went their separate ways professionally after graduating from high school. Rankin headed off to the world of finance. Duic started his own computer business, albeit while battling an addiction to cocaine.

By late 1997, Rankin had joined Domi-nion Securities' mergers and acquisitions department--dealmaking central. He soon began quietly passing tips on to Duic about pending takeovers. From 1999 to 2001, Duic pocketed $4.5 million by trading on these tips. In return, Duic showered his buddy with cash and took him on several exotic trips, paying as much as $2,000 a night in hotel bills.

In February, 2001, Duic blew the duo's cover by aggressively acquiring shares of thinly traded Irwin Toy Ltd., raising eyebrows at the Ontario Securities Commission. Within months, Rankin lost his job and Duic was co-operating with the OSC. Duic agreed to pay $1.9 million and testify against Rankin, who was charged with insider trading and tipping.

The OSC staked a lot on the case, billing it as one of their biggest ever. But after a six-week trial, Rankin was not convicted of insider trading. He was found guilty of 10 counts of the lesser charge of tipping and sentenced to six months in jail.

Rankin, 41, has appealed and is out on bail. A decision was expected in November. The OSC has also appealed.

While Rankin hasn't been able to find work since the trial, he has married. Duic, 43, has remained busy with his software company, MPX Data Systems Inc. He was in the company's Los Angeles office recently, but declined to return messages.

David SinghThen: head of Fortune Financial Management Inc.

What happened: sanctioned by the OSC and forced to sell Fortune

Now: running Destiny group of companies and selling a tax shelter

In his autobiography, The Making of Fortune, David Singh wrote about his arrival in Canada from Guyana in 1974 with $22 in his pocket. "Just over two decades later, I am a millionaire many times over." That was in 1996, when Singh's Fortune Financial Management was one of the largest financial planning companies in the country, with roughly $7 billion in assets under management and 550 advisers. But within three years, Singh's empire was facing ruin.

First, Singh and Fortune came under scrutiny over ties to a disgraced mutual fund salesman, Dino DeLellis, who was banned for life from selling mutual funds but acted as a consultant to Fortune sales representatives. Then, Fortune's star sales-man, Paul Tindall, was alleged to have sold unsuitable investments to clients and misrepresented the risks. Tindall eventually settled the allegations with the OSC, which permanently pulled his industry registration and banned him from trading securities for seven years. Finally, Singh himself faced allegations by the securities regulator that he failed to supervise Tindall. With controversy swirling, Singh was forced to sell Fortune's assets to Dundee Bancorp Inc. in 1999. A year later, he settled with the OSC and received a five-year ban on trading.

Singh has bounced back. In 2001, he started up Destiny Money Solutions, which has been described as a "knowledge-based money solutions organization offering Canadians practical, realistic solutions to the money questions they are facing." He has also written more books, including Take Control of Your Financial Destiny (which makes no reference to Fortune) and Health, Wealth & Happiness, an "inspirational" guide to wise investments and healthy eating choices.

One of Destiny's ventures is a tax shelter called Universal Healthcare Trust. It is one of dozens of so-called buy-low, donate-high programs that specialize in providing investors with big tax breaks.

These programs became popular in the mid-1990s when the federal government changed tax rules to encourage charitable donations. Here's how they work: A promoter buys a large volume of something, often art, at a discount. The promoter then arranges for clients to donate the art to charities, at a much higher appraised value, and they receive a tax break on the donation. Instead of art, Universal Healthcare buys huge volumes of medicine at a discount and then donates it at a higher market value, with investors receiving the tax break on the donated amount.

"It winds up being five or six times more than what you actually paid for [the drugs] because you are paying at cost," says Shawn Cassista, a contact person at the company, who added that Destiny has other shelter programs. "Your return is 46%."

A staffer at Destiny, now called Destiny Group of Companies, said Singh was too busy lining up seminars across the country to be interviewed.

Jurgen & Emilia von Anhalt

Then: controlled Lydia Diamond Exploration of Canada Ltd.

What happened: sanctioned by regulators

Now: awaiting trial on dozens of securities charges

Jurgen and Emilia von Anhalt claimed royal lineage through the former German principality of Saxony, and accordingly asked to be addressed as Prince and Princess. The royal couple gained infamy in 2002 when the Ontario Securities Commission filed a number of al-legations against them, including that they'd used a psychic to hunt for diamonds in Eastern Ontario. The von Anhalts dismissed this suggestion, but they were held to account for illegally selling $1.6 million worth of shares in Lydia Diamond, which they named after their daughter.

The OSC banned the couple from serving as officers or directors for 15 years, and prohibited them from trading stock for 12 years. The commission also filed dozens of quasi-criminal charges against the von Anhalts that carry up to five years in jail. The couple are contesting the charges.

Since the charges were filed, Lydia Diamond has tried to reinvent itself and the von Anhalts have divorced. Emilia has kept a low profile, but Jurgen has remarried and returned to his first love--art. He moved to Florida and recently founded Jet Art Productions.

Von Anhalt's artistic technique involves spraying paint onto a canvas with the help of a jet engine. Last July, he launched the "Millennium Jet Art Worldwide Tour" at the Pompano Beach Air Park. According to a press release, von Anhalt "created his masterpieces" while he was strapped to a hydraulic platform approximately 15 metres from a 9,500-horsepower Bombardier Challenger jet engine. When the engine was turned on, he directed paint toward a reinforced canvas. "I chose orange, yellow, blue, green, colours that are indigenous to Florida, and fiery red, a colour that symbolizes the pulsating energy of the audience," von Anhalt said in the release. It added that he arrived at the event in a helicopter and then "hopped into a Bentley." The world tour includes Rome, Paris and New York--but no Canadian dates.

Andrew Willman

Then: head of Noram Capital Management Inc.

What happened: barred for life as a broker

Now: battling angry investors

Catering to high-end clients who could see "the big picture," Andrew Willman always exuded an air of confidence. Willman was president of the Frederic Chopin Society of Canada and exhibited a taste for ornate furnishings. He and his wife, a psychology professor, hosted musical evenings in their penthouse apartment. He boasted that he rarely socialized with businesspeople because "there are other things in life, you know, besides money."

He received a rude awakening in 1999 when regulators from the B.C. Securities Commission and the Ontario Securities Commission began looking into Noram's operations. Willman's reaction was curt---he told an OSC official to "please leave me alone."

That approach didn't work. In 2000, the B.C. commission pulled Noram's registration and banned him from being an officer and director for 10 years. The next year, Willman reached a settlement with the OSC that penalized him even further. The OSC banned him for life from the brokerage industry and permanently prohibited him from serving as an officer or director. In its ruling, the OSC commissioners called Willman a "scoundrel," and said that over a seven-year period he'd misled investors, made unsuitable investments and engaged in self-dealing.

Willman shot back with an angry letter that accused the OSC of being biased. He said losses at Noram were out of his control, and that the OSC hearings into Noram were "a travesty of fairness."

The commissions' rulings were just the start of Willman's troubles. Several investors filed lawsuits against him, and last year an Ontario judge ordered him to pay them $1.6 million. It's unlikely Willman, 62, will be able to come up with the cash. He filed for bankruptcy in 2003, listing $446,000 in debts. He has yet to be discharged.

Despite all his woes, Willman has kept up his musical interests. Last year, he and his wife donated about $300 to the Southern Ontario Chamber Music Institute.

Brian Costello

Then: hugely popular financial adviser

What happened: SAnctioned by the OSC

Now: helping his son with a lawn-products business

Who can forget Brian Costello? That booming voice, those popular books, the countless columns and seminars, all providing eager investors with advice--and, sometimes, tips. Costello had enjoyed a 30-year career as one of Canada's best-known personal-finance commentators when he was hit with sanctions by the Ontario Securities Commission in 2003. At its peak, his empire included five bestselling books, spots on 180 radio stations, weekly articles in 60 newspapers and dozens of seminars every year. But the OSC put a stop to much of that when it alleged Costello promoted specific investments without being registered as a financial adviser, and that he failed to disclose "his many conflicts of interest." He was ordered to pay $300,000 in penalties and banned from giving specific investment advice for five years unless he registered as an adviser.

Costello, who lost an appeal of the OSC's ruling, has since kept a low profile. His website is defunct and he appears to spend much of his time helping his son, Brian, run a lawn-products company, BioTLC. Based in Burlington, Ontario, BioTLC says on its website that it was formed in 2003 by BKC Enterprises Ltd. That's a company Costello created in 1994, according to incorporation documents. BioTLC sells a variety of fertilizers and also offers Whey-9, "a new food supplement for dogs."

John Felderhof

Then: Bre-X Mineral's chief geologist

What happened: charged with illegal insider trading

Now: awaiting verdict on his trial

Geologist John Felderhof is the only Bre-X official to stand trial for a charge related to the company's spectacular crash. Felderhof was often the public face of the company, boasting about its gold find in Indonesia--30 million ounces "plus, plus, plus," he once said.

When Bre-X collapsed amid allegations that the discovery was a hoax, there weren't that many people for authorities to go after. The company's other main geologist, Michael de Guzman, jumped out of a helicopter in 1997. CEO David Walsh died in 1998 of an aneurysm. Most of the on-site workers in Indonesia made tracks for their homes in the Philippines.

That left Felderhof, who lived in the Cayman Islands. In 1999, the Ontario Securities Commission hit him with eight counts of insider trading and issuing press releases that misled investors. Felderhof is accused of illegally selling $84 million of Bre-X shares in 1996 while possessing undisclosed information about the company's fortunes. He was also named in a series of civil lawsuits by angry investors, and his assets were frozen by a judge.

Felderhof has always maintained his innocence, arguing that he was duped just like everyone else. His trial on the OSC charges has been among the longest in the regulator's history. It began in 2001 but abruptly ended in April of that year, when the commission tried, and failed, to get a new judge. The case resumed in 2004, and final arguments were held last summer. A verdict is expected in February, almost 10 years after Bre-X's big strike came into question. Felderhof made a couple of brief appearances during the trial, but he did not testify.

Felderhof and his wife, Ingrid, divorced in 2001, and they are battling over the family's assets, according to documents filed in court. The couple used to live in an oceanfront mansion in the Cayman Islands, but Felderhof now splits his time between Grand Cayman and Bali, Indonesia, where he has various mining interests. Under the court order that froze the family's assets, only Ingrid was permitted to withdraw money to pay for legal fees. She allegedly stopped covering Felderhof's bills last year. "I am not responsible for [John Felderhof's] liabilities or debts," Ingrid said in a letter filed in court, which was sent to Felderhof's lawyer, Joseph Groia.

Groia alleges in court filings that Ingrid is now claiming that all of the frozen assets are hers. As a result, Groia has not been paid nearly $1 million in legal fees. Groia's version is hotly contested by Ingrid's lawyer, James Chapman, who called the allegations "trumped up and scandalous."

Scott Paterson

Then: CEO of Yorkton Securities Inc.

What happened: sanctioned by the OSC

Now: heading JumpTV, an on-line ethnic television service

Scott Paterson arrived on Bay Street in the mid-1980s and immediately established himself as a superb salesman. After soaring as a rookie broker at Dominion Securities, Paterson joined Yorkton Securities in 1995 as executive vice-president. He was running the firm within three years, while still in his early 30s. Paterson drew plaudits for switching Yorkton's focus from junior mining plays to the burgeoning world of high tech. His reputation rose along with the firm. In 2001, he was named vice-chairman of the Toronto Stock Exchange.

Late in 2001, the Ontario Securities Commission began investigating the role Paterson and other senior Yorkton officials had played in some of its stock offerings. In December, 2001, the commission filed a series of allegations against Paterson. He steadfastly denied any wrongdoing, but was promptly fired by Yorkton's board.

The OSC alleged Paterson and his colleagues had played conflicting roles in several small companies they brought to market between 1997 and 2000. For example, the OSC alleged that Paterson served as a director and shareholder of some of the companies and bought shares in them while he had information that had not been disclosed publicly.

Paterson reached a settlement with the OSC on Dec. 19, 2001. He agreed to pay $1.1 million and received a six-month ban from trading. He was also barred from serving as an officer or director for two years. In a letter he sent to friends months later, Paterson insisted he was innocent and said the OSC "did not produce a single allegation of securities law violation."

Since the OSC sanctions expired in 2003, Paterson, now 42, has become involved in a dozen companies, serving as a director in some and a partner in others. His biggest venture is JumpTV Inc., which boasts of being "the world's leading subscription-based broadcaster of ethnic television over the internet as measured by the number of channels." That's around 200 channels, from 65 countries.

Paterson got involved in Toronto-based JumpTV in 2002. He became CEO in 2005 and helped take the business public last August at $5.50 per share, raising more than $70 million. Paterson's stake is worth more than $40 million--not bad for a company that in the first six months of this year had 18,000 subscriptions, less than $1 million (U.S.) in revenue and a $10.4-million loss.

Garth Drabinsky

Then: founded Livent Inc.

What happened: charged with fraud

Now: consulting and awaiting trial

By the time Garth Drabinsky and his colleague Myron Gottlieb go on trial over allegations of fraud at Livent Inc., it likely will have been almost 10 years since the company collapsed.

Drabinsky and Gottlieb first gained fame by building Cineplex Odeon into one of the largest cinema chains in North America. After an aborted attempt to take control of the company, they left in 1989. They took Cineplex's live-entertainment assets with them and founded Livent, which eventually operated theatres in Toronto, New York, Chicago and Vancouver.

Trouble began brewing at Livent in 1998, shortly after a group led by Hollywood superagent Michael Ovitz acquired control of the company. Allegations surfaced about financial irregularities, and Drabinsky and Gottlieb were forced out. Livent filed for bankruptcy protection in November, 1998, and its theatres were sold. The following year, the partners and several other former Livent executives were charged with fraud in the United States. Two pleaded guilty. As for Drabinsky and Gottlieb, the case was put on hold pending completion of a police investigation in Canada. In 2002, the RCMP filed several fraud charges against Drabinsky, Gottlieb and two other former executives.

Drabinsky and Gottlieb have pleaded not guilty and have consistently denied any wrongdoing at Livent. A trial is not expected to begin before next spring.

The pair still share an office in Toronto, and have kept busy working on a variety of projects, most notably Visual Bible International Inc., which was founded in 2002 to produce films based on the Bible. The company released its first film, The Gospel of John, in September, 2003. The Drabinsky-produced feature won wide acclaim, but its DVD sales were disappointing. With losses mounting, Visual Bible filed for bankruptcy protection in April, 2005, citing a deficit of $18.6 million. Its assets have since been sold.

The Livent legal battles, which include several civil suits, appear to have taken their toll on Gottlieb. In a statement of claim for a suit against the law firm Stikeman Elliott, Gottlieb tallied up his losses: $23.6 million worth of Livent stock, $4.3 million in lost employment income, $8.2 million in "loss of securities portfolio" and a $5.7-million loss on the distress sale of property, including a house in Toronto and a country home.

As for Drabinsky, he remarried in 2005 and appears to be coping well. He recently announced plans for a new reality show on CBC Television. In Triple Sensation, young Canadians will compete in dancing, acting and singing. "It is our hope that the talented young competitors who make it past the initial audition phase will be a collection of sexy, irrational, disarming, emotional, funny, dynamic, raw and conflicted human beings who truly reflect the multicultural fabric of Canada," Drabinsky said.

Michael Cowpland

Then: head of Corel Corp.

What happened: settled allegations of insider trading

Now: running Zim Corp.

Michael Cowpland and his wife, Marlen, became darlings of the tech scene in the 1990s--Michael for running Ottawa-based Corel Corp., and Marlen for her singular sense of style, which famously included a $1-million leather catsuit with a 24-karat gold breastplate topped by a 15-carat diamond nipple. But the party ended in 1999 when the OSC alleged that Cowpland had sold $20 million worth of Corel shares in August, 1997--a month before a sales warning that caused the stock price to drop. A year after the charges were filed, Cowpland resigned from Corel, then a major contender in office software.

Corel went into a tailspin, and Cowpland settled the OSC allegations in 2003. Under the agreement, he was banned from acting as a director of an Ontario company for two years and was ordered to pay a $575,000 penalty.

Even as the OSC settlement was being negotiated, Cowpland had already become president, CEO and majority shareholder of another high-tech venture, Zim. The fledging Ottawa-based software company went public over the counter in the United States (and hence out of reach of the OSC ruling) in June, 2003.

Zim lost $3.4 million (U.S.) last year, and revenue fell to $3.6 million (U.S.) from $4 million (U.S.). Its share price was as high as 17 cents in 2005, but sank as low as 2 cents last July. Cowpland, 63, isn't deterred. He is banking on moving Zim from text-messaging into offering "hundreds of free channels" on internet TV.

Leonard Rosenberg

Then: controlled Greymac, Crown and Seaway trust companies

What happened: charged with fraud over a massive real estate flip

Now: consulting

It's been almost 25 years since the great Toronto apartment flips, a scandal that still ranks as one of the costliest in Canadian history. It all started with the sale of 10,931 apartment units in November, 1982. Leonard Rosenberg's company, Greymac Credit Corp., had bought the apartments from Cadillac Fairview Corp. Ltd. for $270 million. He and his partners immediately flipped them, twice, for roughly $500 million.

The purchase was to be financed, in part, by loans from Crown Trust, Seaway Trust and Greymac Trust, which the partners also controlled. Regulators worried about the solvency of the trust companies and tenants were aghast at Rosenberg's plan to jack up rents by 25%. Two months after the sales, the Ontario government seized the trust companies, and police delved into allegations that the sale prices had been artificially boosted.

After more than a decade of investigations, inquiries and preliminary hearings, Rosenberg pleaded guilty in April, 1993, to 13 counts of fraud. Crown prosecutors said the fraud cost investors more than $131 million.

Rosenberg spent barely a year of his five-year sentence in jail. He was granted full parole on Oct. 31, 1994. Parole board records show he faced a contraband charge while inside that was later dismissed. Some prison officials opposed his parole, arguing in documents that they had seen an increase in fraudulent behaviour by Rosenberg and a lack of respect for rules "similar to that toward defrauded institutions." In fact, his case-management team "strongly opposed" his release on day parole. But the parole board decided that he showed remorse.

After his release, Rosenberg returned to Miami, where he and his wife, Renée, had a mansion. He dabbled in a few businesses and became a consultant to a company run by his daughter Alison, Value Holdings Ltd. It held investments in a number of companies, including a few lumber businesses in Canada, but ran out of money in 2001. Not much has been heard from Rosenberg since. He popped up in 2002 with a column in the National Post that warned about the "condo bubble."

"History has a habit of repeating itself," Rosenberg, now in his late 60s, wrote. "A word to the wise. Be careful where you invest your hard-earned money."

Sheldon Zelitt

Then: founder of VisuaLabs Inc.

What happened: busted for 11 securities violations and charged with fraud

Now: awaiting trial

There may never have been a better storyteller in Canadian business than Sheldon Zelitt. Over the years, Zelitt has claimed to be a physicist and to have served in Vietnam, dismantled a MiG fighter plane, developed a spy satellite, and worked for the CIA and the Mossad. All untrue. The biggest Zelitt whopper of all was his invention: 3-D television. His revolutionary idea captivated shareholders of Calgary-based VisuaLabs in the late 1990s, and VisuaLabs' share price soared.

Things began to unravel for Zelitt at the company's annual meeting in 2001, when he tried to pass off a Sony TV he'd just bought as his radical new invention. Some of the wires in his newfangled set weren't connected or didn't go anywhere, as company officials quickly discovered. Just as securities regulators and police began probing the company, Zelitt took off for the Czech Republic with his wife and large brood of children. Meanwhile, VisuaLabs' share price sank to pennies, wiping out roughly $300 million in market capitalization.

Zelitt was charged, tried and convicted in absentia in January, 2003. He was sentenced to eight years in prison, the longest term for a securities conviction ever handed down in Alberta. Zelitt was also ordered to pay a $1.8-million fine.

A year later, police laid fraud charges against him as well.

Czech police arrested Zelitt in May, 2004, and shipped him back to Canada after a prolonged legal fight. Since then, Zelitt, now 60, has resided at the Grande Cache Institution and has pleaded not guilty to the fraud charges. He was eligible for parole in September, 2006, but could not be released because of a pending bail hearing on the fraud charge. On Oct. 2, he was denied bail. But on Oct. 27 he got better news: His sentence was reduced to four years on appeal.

Nelson Skalbania

Then: real estate and sports mogul

What happened: convicted of theft

Now: running a solar energy company

Throughout the 1970s and '80s, Nelson Skalbania was a household name, partly for his flamboyant lifestyle, partly for his rise and fall in the real estate world, but mainly for his obsession with sports teams. Among his claims to fame are selling the young Wayne Gretzky to the Edmonton Oilers and moving the Atlanta Flames to Calgary.

Skalbania ran into trouble in the early 1990s, when a recession hit and the Vancouver real estate market tanked. In 1996, he was convicted of stealing $100,000 from a prospective partner (he eventually paid the money back, plus $4,000). Skalbania was later sentenced to one year in prison but was allowed to serve his time at home wearing an ankle monitor.

"I'm spending most of my time on energy-related businesses, a company called Solar Energy and companies related to the Kyoto Accord," says Skalbania, 68. "That's all I want to say, thank you. But I do a lot of real estate on the side."

One of those real estate projects is a ski resort near Squamish, B.C., just down the road from Whistler, a key site for the 2010 Olympics. As for Solar Energy, it trades in the U.S. over the counter. One of its projects is something called "iron fertilization," which it says is a "technology designed to stimulate plankton growth in the world's oceans as a means by which to sequester (isolate from the atmosphere) CO2."

Mark Valentine

Then: chairman of Thomson Kernaghan

What happened: pleaded guilty to securities fraud

Now: still sorting out legal issues

Mark Valentine, the son of a Canadian diplomat, was just 24 years old when he joined Thomson Kernaghan & Co. Ltd., a respected Bay Street brokerage firm. Within a few years, thanks largely to the tech boom, Valentine was one of the wealthiest brokers in Toronto and was named chairman of the firm, which also gave him a Ferrari for generating so much business.

In 2001, with the tech bubble burst, Thomson Kernaghan ran into financial trouble. Valentine, who was one of the company's largest shareholders, orchestrated a series of loans to save the firm, but also made several trades that put his own interests first. In June, 2002, the firm's management committee suspended Valentine after uncovering some questionable trades. By then, the damage was extensive, and Thomson Kernaghan folded.

Two months later, Valentine was swept up in a massive FBI operation, code-named Bermuda Short. Valentine was shipped to Florida, where he was charged with three counts of fraud over allegations he'd agreed to a stock transaction that involved paying nearly $8 million (U.S.) in kickbacks to an undercover FBI agent posing as a mutual fund trader. Valentine pleaded guilty in March, 2004, and reached a deal that saw him serve nine months under house arrest, followed by four years on probation. He was also banned from working as a stockbroker in the U.S. or Canada.

Valentine, now 36, has kept a low profile since returning to Toronto in 2004. Just before his return, he tried unsuccessfully to launch an internet service for stranded Canadian travellers called SOStravelclub.

Earlier this year, Valentine's name surfaced in a lawsuit over a Falcon airplane he and his wife used during his heyday. A company named Chell, which was connected to Valentine, owned the plane. In 2001, it was left with the Ontario company Maxwell Aero Maintenance Ltd. That's when the trouble began.

According to court documents, the plane's tail cones, worth about $325,000, went missing, and police were called to investigate. Officials at Maxwell later said they had mistaken the cones for junk and threw them away. The plane ended up in the hands of Provident Bank, which soon discovered that a $7-million (U.S.) loan, taken out by Chell and secured by the aircraft, was in default. Provident also learned that Maxwell had put a $235,000 lien on the plane to cover maintenance costs. The bank went to court to erase the lien, arguing in part that Maxwell had been negligent in losing the cones. The bank won and managed to keep the scant proceeds it recovered after selling the plane.

For more Collected Woes, go to http://www.theglobeandmail.com/robmagazine

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