Who doesn't love a wild story about our capital markets? Let me tell you one so fantastical, it defies belief. The names of most of the places and the people have been changed because it’s about very scary people. The only place that I have not disguised is British Columbia, because the story involves a publicly traded B.C. firm.
It was a cold fall day in Country X. A well-respected doctor – let’s call him Herbert Smith – was getting ready to leave for the office. Suddenly, there was a knock at his door. He answered the door and was surprised to see two Canadians there. He knew them. They worked for a little British Columbia public company.
The good doctor was also an inventor and he had created technology to improve human drug absorption, which was patented. Improved drug absorption means less medication needs to be manufactured, distributed, and used for patient care. Potentially, a lucrative patent.
A company in Country Y wanted the patent and was prepared to pay for it. The Canadians wanted it too, but didn't want to pay for it.
The Canadians at Dr. Smith’s door were not there for a friendly visit. They cut right to the chase. They were there, they said, for the formulation behind his patent and the inventory of products in his lab.
Then came the threat - if Dr. Smith did not give that to them, criminals in Country Z would come pay him a visit.
Dr. Smith understood that he was being extorted with threats of violence or death to obtain commercial property and that there was a risk he would be “killed” (his words to authorities).
The Canadians warned Dr. Smith that the people behind the British Columbia company were very powerful. Who were these very powerful people? Two Canadian lawyers.
Dr. Smith didn't bow to the threats. Instead, he reported it to the police and prosecutors in Country X.
All sorts of nasty things then happened to Dr. Smith.
They infiltrated his lab and compromised one of his employees to try to get the formulation protected by patent. The plan was that the employee would steal the formulation, and deliver it to a Vancouver shadowy figure who had been banned from the capital markets. The company would then accuse Dr. Smith of crimes and the employee would testify in a court proceeding in Country X about the alleged crimes of Dr. Smith.
A lawyer for the British Columbia company then contacted a number of agencies in the EU to report that Dr. Smith was engaged in unlawful conduct and was laundering money. They were hoping that if they kept causing him harm, he’d cave.
One weekend, it seems, the Canadians went clubbing in Budapest, Hungary (neither Country X nor Y nor Z). They made friends with a bouncer at a nightclub. They offered him a job working on a secret mission for the British Columbia company.
The mission, if he chose to accept it, included going out to meet people in the capital of Country X to “cause trouble” for Dr. Smith. In other words, to defame him and ruin his reputation. In civil jurisdictions like that of Country X, defamation is criminal, and so the mission was quite serious.
The fee wasn’t bad - €5,000 per month and paid through a third party so it would be invisible to the securities regulator.
The bouncer accepted the mission.
As you can imagine, Dr. Smith wanted nothing to do with Canadians tied to our capital markets. His company was sold to the company in Country Y, and with it the patent.
End of story? No. Stay with me on this.
The mission was not over.
The lawyer who had contacted EU government agencies claiming all sorts of money laundering was going on, had a new plan. They would damage the company in Country Y to get the patent.
It seems that the bouncer was tasked with stealing a list of buyers from Dr. Smith, and after that, he sent the list to Vancouver. In Vancouver, the company drafted a letter which claimed that it owned the patent and which threatened litigation against any company buying products from the Country Y company using with the technology from the patent. The letter was translated and sent across the EU to the clients of the Country Y company to harm its business.
Remember the shadowy figure from Vancouver who conspired with a compromised employee to steal the formulation? It turns out that Dr. Smith had one loyal employee working for him, and that employee told him about the plot from Vancouver, and it was foiled.
End of story? No.
All of these cloak and dagger activities – the death threat involving criminals in Country Z, the attempts to steal and transmit trade secrets across international borders, the false money laundering reports to government agencies, hiring the bouncer to commit criminal defamation, and the conspiracy to harm the Country Y company - were going to prosecutors in Country X and made their way into police reports and legal proceedings, which are still ongoing.
Almost everyone then pivoted and pretended the whole thing never happened.
The British Columbia public company spent millions on the failed mission and ran out of money. It pivoted into something else, and raised more money from investors in the US.
The bouncer went back to nightclubbing. The two so-called powerful lawyers from Canada with the Country Z criminals allegedly on speed dial, pivoted into technology.
Dr. Smith couldn’t pivot – his life was ruined by the British Columbia public company but he is alive.
Did I mention Netflix? Lawyers in Country X are writing on a script they hope to sell as a true crime series about the very scary people in British Columbia’s capital markets.
Christine Duhaime is a financial crime expert with Fusion Intelligence.
