CALGARY – Investors into a Canmore-based company testified in the Court of Queen's Bench Friday (Jan. 10) about how they lost hundreds of thousands of dollars as a result.
Day five of the three-week fraud trial against James "Russ" Neilson heard from witnesses via CCTV in Finland and the U.K., along with a Calgary-based accountant and a current practising Alberta lawyer.
The witnesses were all former investors into Abaca Solutions, owned by the former Canmore accountant accused of defrauding around 40 people of approximately $5.5 million through the company.
“We thought [the business model] was interesting, but made sense [and] we were delighted to take part … we thought it would be successful and we would have capital gains as well,” Kumiko Terazawa, a former investor with property in Canmore, testified via CCTV.
Justice Kristine Eidsvik listened to witnesses explain how they were approached by then-accountant James "Russ" Neilson asking former clients, friends and acquaintances to invest in his new accounting business where labour and services would be contracted to workers in the Philippines, resulting in a more cost-efficient business model.
Witnesses said Neilson explained the company would pay investors through dividends, a payment made by a corporation to shareholders as a distribution of profits.
But the former investors who testified on Friday said they received little to no dividends payments and never received share certificates from the company.
Terazawa said she wishes she would have queried more about those "inconsistencies" after investing more than $180,000 into the company.
“I was working with advisors to try find out what was happening, we were trying to salvage the company [Abaca Solutions] … but we found out more and more that things weren’t happening and we had no option but to go to the police,” she said.
Neilson was charged by RCMP in 2015 with three counts of fraud over $5,000, one charge of theft over $5,000 and laundering the proceeds of crime. He had additional charges filed against him in 2016 of fraud over $5,000, uttering a forged document and another charge of laundering the proceeds of crime.
Representing himself at trial, Neilson attempted to adjourn the criminal proceedings on Jan. 6, the first day of the trial, claiming his election for a Judge-only trial was done improperly and that he had ineffective counsel.
Justice Eidsvik dismissed his application, as Neilson also requested an adjournment on Dec. 20, 2019, to a different pre-trial judge, but had his original application denied.
The first day of the trial was delayed due to the potential adjournment discussion, but has been moving along quickly ever since with the Crown expecting to call about 17 witnesses and little to no cross-examination from the defence on the fifth day of the trial.
During Terazawa’s testimony, Neilson cross-examined the witness, noting the projected versus actual numbers for Abaca Solution during one of the fiscal years, stating the projection numbers were highlighted.
“Well maybe I should have raised questions then about the inconsistency,” Terazawa said during cross-examination.
Other witnesses shared their stories, including not receiving cheques for their dividends payments and some losing their whole investment.
“I invested $220,000 in total and it dissolved into thin air,” said Lyle Korytar, a former Abaca Solutions investor who testified via CCTV from Finland.
“Wait, it didn’t dissolve into thin air, it was taken by Russ Neilson and used by Russ however that may have been and never repaid to me.”
Korytar said the consequence of investing $220,000 to the Canmore-based company resulted in him losing a substantial amount of retirement savings, requiring him to work longer to secure retirement funds.
The Crown is expected to call at least another four witnesses this week, while Neilson has yet to subpoena any witnesses.