OPP union brass investigated over fraud allegations

The RCMP is alleging top brass of the Ontario Provincial Police union participated in a sophisticated financial scheme involving a travel company, a consulting firm and high-risk offshore investments, “to profit and deceive” their members, putting their union in peril.

Among the alleged investments: two beachside condos in the Bahamas, one valued at $1.5 million, and $100,000 in union money wired to an income fund in the Cayman Islands.

OPPA president Jim Christie, left, chief administrative officer Karl Walsh and vice-president Martin Bain stepped aside Monday in the wake of the RCMP raids. No charges have been laid.

According to unproven allegations in an affidavit the RCMP used to obtain a series of search warrants executed late last week, Ontario Provincial Police Association president Jim Christie, vice-president Martin Bain and chief administrative officer Karl Walsh are alleged to have committed theft, breach of trust, fraud and laundering the proceeds of crime.

“(Christie, Bain and Walsh) have made numerous decisions that demonstrate an intentional lack of stewardship and accountability,” wrote RCMP Sgt. Gordon Aristotle, who petitioned the court for permission for the Mountie raids on the OPPA office, union vehicles and residences of Christie, Bain and Walsh, and more.

“I believe they have financially benefited from their actions, breached the trust of the OPPA membership and placed the OPPA and its membership at a significant financial risk,” Aristotle concluded.

The trio stepped aside on Monday in the wake of the RCMP raids. No charges have been laid.

Their alleged accomplices include Toronto criminal lawyer Andrew McKay, a former police officer, as well as Noel Francis Chantiam and Klara Kozak, who are partners in First Response, the travel company believed to be involved in the scheme, the affidavit states.

McKay, Kozak and Chantiam are alleged to have committed fraudulent concealment, laundering proceeds of crime and fraud, according to the affidavit.

The following report is based entirely on allegations in the affidavit, none of which has been tested in court. None of those named in the document could be reached for comment Friday.

Acting OPPA president Doug Lewis said in a statement that he was “saddened and shocked to learn of the allegations contained in the document.”

The union is currently conducting its own independent internal investigation by the legal firm of Stikeman Elliott, Lewis said.

In a message to the union’s more than 6,000 members on Thursday, the OPPA said, “the RCMP investigation is in early stages, and ... no charges have been laid.”

RCMP Const. Jean Juneau declined to comment on the investigation, which he described as “complex.”

“Those warrants were obtained because we had suspicions of activities that we needed to confirm,” Juneau said. “It’s going to take quite a while before we’re able to establish if there’s a crime or not.”

The RCMP document, unsealed Friday, suggests a complex web of suspected criminal activity within the top echelon of the union. The allegations range from risky offshore investments, to thousands in unearned pay, to a sudden, unexplained switch to a new travel agency the Mounties allege is partly owned, in secret, by Christie, Bain and Walsh.

The probe of the OPPA was triggered from within by four union whistleblowers who approached the OPP in October after growing increasingly concerned about possible fraudulent activity, the affidavit states.

Much of the alleged fraudulent activity centres around a mysterious company called PIN Consulting Group. According to the affidavit, it was registered last June and its sole director is McKay, the lawyer.

Shortly after PIN was registered, Walsh and Christie signed a three-year contract with the company on behalf of the OPPA, which began last July and was valued at $180,000, roughly $5,000 per month. The services to be provided by PIN, run out of the same Bloor St. address as McKay’s law office, included real estate and commercial investments, vacation property opportunities and travel benefits, according to the document.

PIN has no presence on the Internet and whistleblowers told the RCMP that they have no “knowledge or evidence” to show that McKay has skills or experience in the travel and investment industry “which would be of any value to the OPPA,” the document states.

“Walsh, Christie and Bain are allegedly benefitting financially from PIN’s business relationship with the OPPA, however, the extent of this benefit is not yet known,” Aristotle wrote.

According to the document, the consulting firm was allegedly responsible for introducing the union bosses to Kozak and the travel company First Response. The company was registered just 10 days after PIN, as a partnership between Kozak and Chantiam, who is described by a union whistleblower as McKay’s “rich friend” who hosted OPPA members in a Rogers Centre box.

“Without any cause or explanation,” Walsh abruptly dropped the OPPA’s former travel company, Flight Centre, and directed union members to use First Response exclusively for all their travel needs, the document states. The travel company is also allegedly being used to secure contracts for the OPPA’s golf tournament, the annual general meeting and the spring board meeting, which have an estimated value of $400,000.

First Response was listed as a division of Leximco, according to the document, whose directors are shown as Kozak and McKay. One of the whistleblowers told RCMP that emails on Walsh’s computer showed the six players owned all the shares in the travel company, the affidavit states.

The document alleges that the monthly consulting fees paid by the OPPA to PIN were being used “for the benefit” of the union bosses, to pay $30,000 for 30 First Response shares. To hide their ownership in First Response, the shares belonging to the union bosses — none of whom disclosed their stake in the company to their board of directors or membership — were held in trust by Kozak “through an offshore investment scheme,” the document alleges.

In early 2014, the RCMP says Walsh, Christie and McKay took two trips to the Bahamas. After these trips, they started making “higher risk investment decisions” on behalf of the OPPA, two of which were based in offshore jurisdictions and allegedly not pre-approved by the board of directors, the affidavit states.

The first was a $20,000 deposit on two condos in Nassau, Bahamas, which were valued at $1.5 million and $625,000; it was only discovered when union staff requested backup paperwork for the charge on Walsh’s OPPA-issued credit card, the affidavit alleges.

According to the document, Walsh claimed he was buying the condos as high-end vacation rental property investments for the OPPA. But the employees who reported their concerns to police did not understand the purchase, which was a departure for the union’s historically conservative investment strategy and not-for-profit status.

One of the whistleblowers told the RCMP that the OPPA can’t make profits or the union will risk losing its not-for-profit status with the Canada Revenue Agency.

The backup paperwork showed the deposit for the condo investments was made in Walsh’s name, and listed McKay’s office as the mailing address, but had later been changed to the OPPA and its address, the document states. Walsh later advised that he was cancelling the condo investments; however, more than $13,000 had yet to be refunded.

Last August, Walsh allegedly made another “high-risk” offshore investment, wiring $100,015 of OPPA funds to the Cayman Islands to pay for shares in the Cayman-based New Providence Income Fund. Walsh told his employees that he intended to endorse New Providence and encouraged the membership to invest in the income fund, according to the document.

One of the whistleblowers told police they had been upset that nothing was said about the condo purchase or the Cayman investment at the union’s annual general meeting. The whistleblower told the RCMP that they ran into Walsh, who said, “We could have spent a million dollars and these idiots wouldn’t have said a thing.”

The affidavit alleges that PIN was responsible for the OPPA investing in New Providence. Some of the OPPA employees believed that PIN is also involved in the “evaluation, procurement and development” of the proposed site for the new OPPA office in Oro, Ont., and that McKay’s brother, Barry McKay, has a hand in the project.

The RCMP is also looking into allegations that the union bosses further profited with fake claims for vacation leave payouts and personal expenses.

Aristotle wrote in the affidavit, “The totality of the alleged behaviour demonstrates an ongoing breach of trust . . . by Walsh, Bain and Christie that has escalated in sophistication and significance.”

The search warrants were executed last Friday.