Ontario Shoots Down Appeal by David & Natasha Sharpe Trustees
Bridging Finance co-owners David and Natasha Sharpe were likely dealt a blow by Ontario Courts, as an appeal for a jurisdiction change in lawsuits against them has been rejected.
The fallout from the Bridging Finance collapse continues years after the firm was placed in receivership. Husband and wife David and Natasha Sharpe, who were convicted of fraud in the case, are still facing litigation from former investors and sanctions from the government. They aren’t simply accepting that, however.
Bridging receiver PricewaterhouseCoopers and asset manager BlackRock are looking to recover funds that were allegedly hidden overseas by the Sharpes. Part of that includes a trust set up by the Sharpes, named The Salus Rete Trust. While those in charge of the trust have been trying to move the case’s jurisdiction out of Canada, the Ontario Superior Court won’t be letting that happen.
The Facts of the Case against David and Natasha Sharpe
David and Natasha Sharpe were convicted of fraud in relation to their handling of Bridging Finance, a private lending company based in Toronto. This fraud resulted in over $1 billion of losses for investors.
A tribunal found that the Sharpes channeled loans into companies tied to businessman Sean McCoshen, who then transferred money back to the Sharpes. Alongside this, disgraced “whiz kid” Gary Ng testified that he “bribed” the Sharpes with $1 million and various gifts to facilitate his purchase of an ownership stake in Bridging Finance.
PricewaterhouseCoopers and BlackRock claim that money obtained from fraudulent activities was hidden by the Sharpes overseas, particularly in The Salus Rete Trust in Liechtenstein with the trustee First Trust Management AG. As such, BlackRock and PwC have filed a lawsuit against The Salus Rete Trust in order to recoup some of that money.
As part of its defense against these arguments, First Trust Management AG filed for a motion to change the jurisdiction of the case. This would have moved the case from Ontario to First Trust’s home turf in Liechtenstein.
The judge ultimately ruled that Ontario was an appropriate jurisdiction to proceed with the case. While First Trust appealed this, the Ontario Superior Court rejected that appeal.
“At their core, the claims are readily understood. Monies beneficially belonging to the Bridging funds, their unitholders or BlackRock were inappropriately taken by the Sharpes and used to settle the trust. The trustee knew or ought to have known the source of those funds, but accepted them anyway. The plaintiffs want those monies back,” the motion judge said per Investment Executive.
What’s Next in the Case?
With the appeal being rejected, the lawsuits put forward by PwC and BlackRock will go forward in Ontario. This likely boosts their ability to pursue the case to its end, and, in turn, helps their chances of victory.
The allegations that the Sharpes used The Salus Rete Trust to hide assets related to the collapse of Bridging Finance are not yet proven. This will likely be a major focus of the upcoming proceedings.
Little information on the next step for the case has been reported. The Ontario Securities Commission confirmed that “the Commission’s materials are confidential and shall not be disclosed to the public” in accordance with the 2019 Tribunal Adjudicative Records Act.
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