First Gigi Pizza, next Livent?

Anybody who knows Toronto pizza shops knows that few establlishments east of Keele can touch Gigi Pizza. It was with some sadness that I read a few months ago that its owner and chief pizzaman had been charged by Metro Police with drug-related offences. It hasn’t yet gone to trial, and after a brief closure, the pizzas are again for sale while our man awaits trial. With its location across the street from Central Technical School, any parent can be relieved that our law enforcement agencies are paying close attention to what goes on in our school neighbourhoods.

In an unusual move, Metro Police have taken their battle one step further. According to my Toronto Star, they’ve moved to seize the ovens and building on the basis that the site was an “offence-related property” — and, subject to a conviction, one may even argue that it was ultimately paid for with the proceeds of crime. To be precise, there’s now a “restraint order” against the property while the charges are being dealt with by the courts.

As much as society would be enraged about the sale of drugs near a school, folks on Bay Street can’t help but ask themselves why similar moves aren’t made against white collar alleged criminals awaiting trial.

Think of Mitchell Finkelstein, a former Davies Ward Phillips & Vineberg LLP lawyer, currently standing trial for insider trading. I’m going to guess he owns a condo or a house; is there a restraint order against it in case he’s ultimately convicted? Moreover, are the police comfortable with him, say, putting a new mortgage against the property to pay for his legal bills? Interesting dilemma, that.

CRA moved against convicted felon Conrad Black’s Palm Beach property in an effort to get whatever outstanding taxes were owed to Her Majesty. If I’m not mistaken, their claims may have jumped ahead of Mr. Black’s $14 million mortgage from Quest Capital and a Texas-based hedge fund. Similar move by a Crown agency protecting its position involving someone standing trial.

More compelling are the properties of convicted fraudster Garth Drabinksy. Although he is currently free on Appeal, he was found by Madam Justice Benotto, one of Canada’s best judges, to be guilty of enriching himself via securities fraud. For all of the media coverage that Mr. Drabinksy has received, I’ve never read a word about the police moving to secure the property related to his crimes. Crikey, it wasn’t that long ago that he was still sitting in the 2nd row at centre court at Toronto Raptors games. And those go for $675 a ticket.

If the Integrated Market Enforcement Team is looking for a project this morning, perhaps they could go over the 361 University courthouse and file their own restraining order against Mr. Drabinsky’s assets. Or the Ontario Securities Commission perhaps. Or Metro. They all could argue standing.

But for investors to ever believe Canadian regulators and police forces are serious about hammering those involved in securities fraud or insider trading, let’s be as tough on convicted felons as we are on pizza bakers awaiting their first trial.

MRM