An Island businessman named in a $50-million lawsuit has claimed not to have known that he was the sole director of a shell company established by a key player in the e-gaming initiative.
Lawyers representing businessman Paul Jenkins have filed an amended statement of defence and counterclaim against Capital Markets Technology. The amended counterclaim seeks $141,614.69, plus interest and costs, from CMT.
Jenkins is one of 14 defendants named in a lawsuit filed by CMT. The list of defendants includes former premier Robert Ghiz, his former chief of staff Chris LeClair, former finance minister Wes Sheridan and the provincial government.
The lawsuit alleges that in 2010, Jenkins “insisted” to Paul Maines, president of CMT, that he control a shell company which would be established to direct the company’s operations in P.E.I. According to CMT’s statement of claim, Jenkins told Maines that he knew “influential members of the Government of Prince Edward Island,” and said the province would provide a tax-free zone for international clients if CMT could create jobs locally.
The two men were attempting to establish the operations of a secure electronic payment system, known as Simplex, on P.E.I. CMT claims Jenkins established an office for the shell company in a building he owned.
CMT’s lawsuit alleges Jenkins, Chris Leclair, then-chief of staff for Ghiz, and Brad Mix, an employee of Tourism P.E.I., convinced Maines to focus the Simplex application on attracting e-gaming clients to the Island. The lawsuit also alleges that Jenkins violated his fiduciary duty after he stepped down as director of the shell company in October of 2012.
In his defence, Jenkins claims he “had only a general understanding” of his role as the sole local representative of the company when he signed documents establishing the company in August 2010. His defence claims he understood his role to involve making contacts on P.E.I., including with members of government, and that he “had no input into the corporate structure” of CMT.
Jenkins’ defence disputes he had insisted upon controlling the local shell company.
He also claims he is unable to produce records of e-mails prior to January 23, 2013 due to his account being targeted and erased by hackers.
Jenkins claims that he is owed $41,614.69 in unpaid invoices from CMT and that a $100,000 sum he lent, which was meant to be held in escrow, was released to the company.
A report conducted by auditor general Jane MacAdam in 2016 found that elected members and staff of the Robert Ghiz government incurred costs of close to $1.5 million in their attempt to establish P.E.I. as a regulator of North American online gambling between July 2009 and 2012. Most of these costs were disbursed in grants or loans that lacked due diligence in approval, disbursement, monitoring and reporting.
The report also found that due diligence was not followed in a Memorandum of Understanding signed between Innovation P.E.I. and CMT’s shell company.
Another defendant in the CMT lawsuit, lawyer Gary Scales, filed a notice of change of lawyer on Tuesday. Scales had previously been represented by Gavin Tighe and Stephanie Clark of the Toronto-based Gardiner Roberts LLP. Tighe had represented the late Rob Ford in a defamation lawsuit against him by a Toronto restauranteur.
Scales will be represented by R. Leigh Youd, a partner of the Toronto law firm Berkow Youd Lev-Farrell Das LLP.
