A former Cape Breton man has been ordered to pay a bank $20,000 as a condition to securing a discharge from bankruptcy.
The Supreme Court has ordered Michael Evan Rizzato, 33, formerly of New Waterford but now a resident of the Halifax Regional Municipality, to turn over all outstanding income and expense information, surrender all remaining property and provide information regarding relevant tax returns.
The written court decision by Raffi Balmanoukian, registrar in bankruptcy and insolvency, was delivered last Dec. 12 but was only released publicly last week.
In his decision, Balmanoukian described Rizzato as “a knave and convicted fraudster.”
Rizzato was sentenced in a Sydney provincial court in October 2017 after pleading guilty to 17 counts of fraud, forgery and uttering forged documents. The offences occurred between December 2013 and August 2014.
The charges involved a furniture store and Rizzato admitted to selling merchandise but failing to turn over the money. He also admitted to falsifying invoices.
Rizzato paid $40,000 in restitution to his former employer and was sentenced to complete an 18-month conditional sentence followed by 12 months probation. Conditional sentences allow offenders to serve their time in the community, under strict conditions, rather than going to jail.
The case before Balmanoukian dealt with the purchase in 2012 of a 2013 Ford Explorer financed through the Bank of Montreal for $47,378.91.
At the time, Rizzato was involved in a company called MER Investments Ltd., but at some point in 2014, according to the court decision, Rizzato and the company parted ways and Rizzato was de-listed as a director.
However, in January 2016, Rizzato showed up at a Bank of Montreal branch with a cheque from MER Investments and paid out the vehicle loan.
The cheque was written on a Sydney Credit Union account that had been closed at the time and Rizzato had no signing authority for the company.
The registrar noted that Rizzato testified he thought the account was still open but he didn’t recall the specific cheque.
“This strains credulity, falling somewhere between the reply churlish and the reproof valiant,” said Balmanoukian.
BMO proceeded to immediately order the discharge of the financing statement without waiting for the cheque to clear.
To further muddy the issue, BMO was initially acting on a different vehicle — a 2010 Dodge van — that Rizzato had already sold for scrap.
Rizzato sold the Explorer sometime in 2015 or 2016 for $15,000.
In February 2018, BMO sued Rizzato and obtained a judgment for $34,586,.02. On April 18 of that year, Rizzato filed for bankruptcy.
He explained that he used the $15,000 from the sale of the Explorer to make home repairs and argued that since the house was sold and the proceeds used to pay off debt, he got nothing out of the venture.
“I do not accept that he 'got nothing out of it' even if I accept that he put the $15,000 into his house and later sold it with proceeds paid towards debt,” wrote Balmanoukian.
“He had the benefit of the property in the interim basis and even if that was not the case, it was not for him to decide that he could deprive one creditor of its security to benefit another or others.”
In assessing the actions of BMO, the registrar made a comparison to Keystone Cops.
Balmanoukian noted the bank registered the bill of sale to Michael E. Rizzato but under the provisions of the Personal Property Security Act, a full name is necessary.
The registrar also wondered why the bank accepted an uncertified third party cheque from another lending institution and then ordered a discharge of security before the cheque was honoured.
“Next, it did nothing for some four and a half months after knowing it had been deceived to stop the discharge process. It did not even sue Mr. Rizzato in debt until the very end of the limitation period (being the time in which it should have been aware of the default, plus two years).
“It is trite to say that a primary objective of the Bankruptcy and Insolvency Act is to give a fresh start to the 'honest but unfortunate debtor.' Unfortunate, he (Rizzato) may have been. Honest, he has been anything but.”
As for the bank, the registrar said it is easy to accept that the position they are in was of their own creation.
“I have concluded that BMO’s financial sanction for having dropped the ball on the security discharge is properly addressed through costs,” he said, in ordering all sides to pay their own costs of the hearing.
