Lawyers Gone Bad

by Philip Slayton

  Meanwhile, on December 16, 1998, Matheson had been charged by the Cape Breton Regional Police with four counts of theft, four counts of fraud, three counts of uttering forged documents, and one count of breach of trust.12 He refused to comment to reporters on these charges. The wheels of justice turned at their usual glacial speed. Two years went by. On November 7, 2000, he pleaded guilty to five charges involving breach of trust, theft, and forgery (the remaining charges were dropped). Perhaps the most egregious charge (Matheson pleaded guilty to it) was Count Three, criminal breach of trust; he was charged with misappropriating $55,000 of a $100,000 settlement he negotiated on behalf of a child whose mother was killed in an automobile accident. On April 12, 2001, sentence was imposed. The judge described a pre-sentence report as “extremely supportive and reflects a range of support from the offender from his family, his friends and his former co-workers.” The judge went on:13

  Other friends spoke favourably of Mr. Matheson, including his inability to say no when asked to assist persons, suggesting in some cases these persons had taken advantage of him.…

  A former colleague in the Town of Glace Bay, at a time when Mr. Matheson was the town solicitor, stated he continued to trust Mr. Matheson and described him as a great guy who was very well liked and well respected throughout the community.…

  Mr. Clarke, the former mayor of Glace Bay, with whom Mr. Matheson would have worked as Town Solicitor, described him as a man who was always upright, courteous, obliging and professional, noting he was not a “high living man” and his focus was on family and community.

  Mr. Matheson was also active in his church, including teaching Catholic Confirmation classes. The coordinator of the program described him as a good person and an excellent family man.

  After he was charged, in an inspired moment, Matheson had himself tested for ADHD. The test was positive (two of his four children also tested positive). His family physician gave testimony to the court:

  When I first saw Reeves he had combined type of symptoms of marked inattention, very concrete thinking, inability to recognize events as they would pertain, spur of the moment decisions, impulsive decisions.… They are not able to process and put their thoughts together and hence they are unable to express them. They need a lot more time. For example children in school need time to write exams, extra time, they need extra time for homework, they need extra time for projects. The same thing applies in the adult life, they are scattered all over. Their thoughts are scattered. And their thoughts have to be put together.… They suffer emotionally, they suffer academically, they suffer in their work life and personal life. And he had several symptoms.…

  They are going to defer things, they procrastinate, they wait til the last moment til panic hits them.…

  Follow through is a major problem.… Procrastination, the fear of failure …

  One of the things that adult ADHDs of high IQ are good at is variety, novelty and thrill. This is one of the impulse acts. This is the spur of the moment. They get bored with things that are desk work, written work, things like that.

  His wife Valerie’s reaction to the diagnosis of ADHD was described in the pre-sentence report: “She said, in hindsight, she realizes that indices of this disorder appeared in some of the behaviour exhibited by Mr. Matheson, in that while he commanded attention and was able to speak to anyone, he had no business sense and while his intentions were often good, he would procrastinate and fail to follow through on given tasks. Also, in support of Mr. Matheson were his two sisters, who said some of the characteristics exhibited by their brother were now, they believed, a result of this disorder. They spoke of his procrastination, his preoccupation, and his failure to follow through on tasks.” The judge quoted at length from a book on ADHD that argued that “this disorder is fundamentally a mental problem of self-control.”

  Reeves Matheson, suffering from ADHD, was given a conditional sentence—two years less a day, to be served in the community (a sentence commonly referred to as “house arrest.”) He was required to make restitution to the Nova Scotia Barristers’ Society for the amount the society had reimbursed his former clients—about $117,000. The Crown appealed the sentence as excessively lenient, but abandoned the appeal six months later. The rock solid guy dropped from sight. He didn’t—as Mary Hamood suggested—“go home to his people.” Later on, try as I could, I couldn’t find Reeves Matheson. Messages to his lawyer went unanswered. Reeves Matheson had gone.

  NOVA SCOTIA POLITICS has never been quite like politics elsewhere in Canada. Don Ripley was a prominent fundraiser for the Nova Scotia Conservative Party for twenty-five years. In a book about his experiences, he argued that politics in Nova Scotia has been characterised by pork-barrelling and cronyism: “Not long ago, judges, prosecutors, and even jailers were chosen in Nova Scotia on the basis of their political allegiance. Those selected were often fools appointed by bigger fools.”14 An October 1999 article by Kelly Toughill in the Toronto Star asked, “How did the Nova Scotia legislature become a haven for alleged thugs, thieves and former addicts …? Why are Nova Scotians so tolerant of behaviour that would not only cost politicians elsewhere their jobs, but also be a severe blow to their party?”15 Toughill answered her own questions:

  Nova Scotia ridings are small. The average MLA represents just 18,000 men, women and children. Compare that to Ontario, where each MPP tries to represent the best interests of more than 110,000 people.

  There are no parachute candidates in Nova Scotia. You don’t usually win unless you are born and bred in the community you want to represent. And that community isn’t likely to change much.

  Unlike much of North America, there is no mass migration here, no waves of people propelled by jobs, social ambition or the politics of their homeland, to move again and again. Except for pockets of Halifax dominated by military families and students, people here stay put.

  When voters go to the polls, the candidates are usually more than names on a ballot. They are neighbours who teased each other on the school playground as children, danced at the same weddings and cried at the same funerals.

  That intimacy has given Nova Scotians a rare political luxury, the ability to judge not whether someone is perfect, but if they are up to the job. That intimacy has also helped them accept the uncomfortable, important truth that good leaders are not necessarily nice human beings.

  Matheson may have been disbarred and disgraced in Halifax, but in Glace Bay, perhaps for some of the reasons given by Kelly Toughill, things were a bit more complicated. Marci Lin Melvin is a lawyer and writer. Now she works for the Nova Scotia Legal Aid Commission in Yarmouth, but not so long ago she practised law in Cape Breton. In the June 18, 1998, “Lifestyles” section of the Halifax Daily News, Melvin wrote about Reeves Matheson: “Those of us who practised regularly with him were shocked and saddened by his fall from grace. To his peers, Matheson was always a gentleman. He was an excellent litigator who vehemently fought for his clients’ best interests. And like most good parents, he often talked fondly of his children.”16 Melvin wrote of a “collective sadness” among Matheson’s former legal colleagues. Years later she wrote to me:17

  I find far too many people live in glass houses, but think nothing about throwing stones at their friends, neighbors and colleagues. In some legal communities, it seems, anyone’s throat is fair game; mistakes are not allowed; everyone is holier than thou. That being said, Reeves was in the wrong and his actions cannot be condoned in any way. He was in a position of trust, a position of great responsibility.…

  I always try to see the good in others and remember feeling truly sorry for Reeves when the story became known. Everyone can make mistakes, and the reasons for those mistakes are not necessarily borne out of dishonesty.

  ELEVEN

  THE CRIMINALS PICK THEMSELVES

  Richard Shead

  Richard Shead was a prominent tax lawyer who helped a flamboyant con artist structure and execute a complex fraud that separated many ordinary people from their
life savings. Shead gained little from the fraud—modest legal fees, and a bit of excitement along the way—and lost much, ending up disgraced and in prison. By all accounts, Shead was a cold, dull, and arrogant man. It was arrogance, his victims said, that made him do it: He thought he was smart enough to get away with anything.

  IN THE SPRING OF 2002, I went to Winnipeg to see Richard Shead. He was a former law school gold medalist at the University of Manitoba. He had been managing partner of the leading Winnipeg law firm of Buchwald Asper Henteleff, and a bencher of the Law Society of Manitoba. He had chaired an advisory committee to the federal Minister of National Revenue, and for many years had been an active member of the local volunteer community. When I went to see him, he was a disbarred ex-convict.

  Arriving downtown from the airport, I bumped into Gerry Posner, a lawyer friend, and in the course of casual conversation asked him about Shead. “One of the most brilliant lawyers Manitoba has ever seen,” Gerry said. “His firm was once a real powerhouse, back in the seventies. Izzy Asper, Gerry Schwartz, Jack London, Martin Freedman, Michael Nozick, Richard Shead—they were all partners in those days. They all went on to fame or notoriety.”1 Ingrid Chen, the infamous Winnipeg lawyer, told me some time later that she regarded Shead as “godlike.”2 Shead’s arrest in 1991 and later conviction for fraud was, as Marilyn Billinkoff, deputy CEO of the Law Society of Manitoba, put it, a “huge deal, a fall from grace.”3

  How did a leading lawyer become a penitentiary inmate? It was simple enough. Shead helped a client, Norman Bruce McLeod (known as “Bruce”), defraud people of their life savings in phony real estate transactions. The Financial Post, in a February 1, 1996, article about Canada’s biggest white-collar criminals, summed up Bruce McLeod’s scam:4

  Calling himself a developer, McLeod would approach a “client” with an offer of equity in an apartment or office building he owned. A charming and persuasive personality, he was a gifted salesman who used his skills to rope in hundreds of buyers. Typically, when the deal was done, McLeod ended up with far more money in his pocket that the property was actually worth.

  The Manitoba Court of Appeal gave a description of McLeod’s technique in the 1993 case of Skimming v. Goldberg.5 Hugh and Donna Skimming put a second mortgage on their house so they could invest in a Bruce McLeod transaction, lost everything, and sued the mortgagee to have the mortgage set aside (they failed, because it was McLeod’s fault they lost their money, and not that of the mortgagee). Mr. Justice Monnin referred to the lawsuit as “the final act of the tragedy authored by the snake oil salesman.” He described how the Skimmings got involved with McLeod:

  McLeod first approached the male plaintiff in October of 1986 and convinced him and his wife of the soundness of purchasing one unit in the Midtown Building for $15,625.00. As the plaintiffs did not have the disposable capital to effect the purchase, McLeod made arrangements with the Royal Bank of Canada for them to borrow the money. McLeod acted as go-between and basically all the plaintiffs had to do was sign the bank documentation.

  Later McLeod convinced the Skimmings to buy three more units in the Midtown Building, and it was then that they mortgaged their house.

  Bruce McLeod was arrested by the RCMP at the Osborne Village Restaurant in Winnipeg on January 15, 1991. He was swiftly convicted of fraud and went to prison for five years (he was paroled after twenty-two months). After arresting McLeod, the police turned their attention to Richard Shead. On February 7, 1991, the front page of the Winnipeg Free Press reported, “One of the city’s top tax lawyers has been portrayed by RCMP as aiding in an allegedly fraudulent investment deal.”6 In 1996, the legal process having taken its usual inordinate time, Shead was convicted on ten counts of fraud.7 On November 7, 1996, Justice Ruth Krindle sentenced him to five years in prison. The Winnipeg Free Press reported, “The 53-year-old smiled faintly, waved to family members in the gallery, and was then escorted out of the courtroom by sheriff’s officers.”8

  Ken Filkow, a Winnipeg friend of mine who knew Shead, arranged for the three of us to have lunch. As Ken and I waited for Shead in the lobby of the Delta Hotel on Winnipeg’s St. Mary Avenue, we agreed that he might not show up. Perhaps Shead had calculated that there was nothing in it for him except embarrassment, the rekindling of old and unpleasant emotions and memories, and new and harmful publicity. Perhaps he had said yes to Ken’s lunch invitation just to end an awkward telephone conversation.

  A few minutes past noon, an inconspicuous man in late middle age came into the hotel lobby. “That’s him,” said Ken. Shead, tall and thin, was flushed. He was obviously nervous. All three of us ill at ease, we went into the dining room and sat down. There was small talk, and an exchange of pleasantries.

  “You know,” Shead said after a while, “I would welcome the chance to tell my side of the story, but maybe I need the permission of my old law firm to talk to you.” Then he changed tack: “It’ll be up to my wife whether I cooperate. You can imagine how hard it all was on my family, but my marriage is very strong, my wife stood by me the whole time, she’d have to agree to anything.” (Alyce, Shead’s current wife, was his second; his first marriage, to Elly, collapsed sometime in the early nineties.)

  Had he thought about leaving Winnipeg once he got out of prison? “People in Winnipeg have been very nice to me,” he said. “I was a little sheepish at first, but I got over that. I have lunch with former colleagues, that sort of thing.” I asked if he planned to apply for readmission to the bar. He looked startled. “No, no,” he said. “There are things in life other than law.”9 Lunch over, the three of us left the Delta Hotel. Shead said he’d think things over and get back to me.

  Some time later, he sent me an email: “Alyce and I have had several long discussions about participating in your book but are finding it very difficult to come to a positive response for you—partly due to the fact that we are very private people and partly because we are not sure we want to relive some of the ‘memories’ and ‘emotions.’”10 He asked what topics interested me. I sent a list: What motivated him in his dealings with McLeod? How did he manage emotionally to get through the police investigation, being charged, the trial, conviction? How had he put his life back together since being released from prison? Shead replied, “Alyce and I have discussed this further and we have now discussed it with my two sons. Our feeling was that if anyone of us was uncomfortable with further ‘public’ exposure of the case, or any personal aspects of the whole experience, we would respect that concern and say no to becoming involved. Both my sons were very emphatic that they did not want to experience any further possible publicity about the matter.”11

  In November 2003, back in Winnipeg, I called on the managing partner of Shead’s old law firm, now called Pitblado. Doug Ward, who was admitted to the Manitoba bar in 1970, is one of the province’s leading insolvency practitioners. He wasn’t happy to see me. “Shead is a friend of mine,” said Ward. “He didn’t want me to talk to you. I nearly called to tell you to forget it, not to come.” Becoming a little emotional—red in the face, his voice a little shaky—Ward went on: “Richard is a wonderful human being, straightforward, honest, always acted in the best interests of his clients and partners.” He was quiet for a moment. Then: “I feel incredibly sorry for Richard.”12

  “Of course,” said Ward, “no one wants to read any of what I’m telling you, I don’t know why you’re talking to me, no one is interested in what a wonderful guy Shead is. You know, the line is always moving; standards and perception are constantly changing. You may be on the right side of the line today, but next year when someone looks at what you did today, they decide by new standards that what you did was wrong. Now you’re on the wrong side of the line.”

  Why had Shead stayed in Winnipeg after he was released from prison, where every day he must meet people on the street who know what happened? “Family,” said Ward. “He loves his family, I mean he really loves them. He has two superstar sons by Elly, his first wife. His mother is still alive. He has a
brother. They’re all in Winnipeg.”

  Robert Morrison and Paul Jensen, of the Manitoba Department of Justice, prosecuted Shead. I went to see Morrison and suggested that some might regard Shead’s crime as a technical offence.13 Why did the resource-poor Department of Justice assign two prosecutors to spend a year preparing the case and then participate in an eight-month trial? Why pick on Shead with such ferocity? “We don’t pick the criminals,” said Morrison. “They pick themselves. Shead knew exactly what he was doing. A lot of ordinary people lost a lot of money, life savings in some cases. And Shead just didn’t care.”

  Morrison said:

  Shead thought he was smarter than we were. He was arrogant, he thought he’d done nothing wrong, and that we were just stupid. He saw the trial as a game, and completely underestimated the Crown. During breaks, at the beginning of the trial, I used to chat in the corridor with his lawyer, Richard Wolson, who I know well. Lawyers do that, we have casual social chit-chat, exchange a joke or two, it doesn’t matter what side you’re on, it’s professional camaraderie. Shead would come up to us and try and join in, be another lawyer, one of the boys. Finally, I said to him, “Look this is inappropriate. I don’t want to chat with you. I want to put you in prison.”

  If Shead was so smart—and everyone says he was smart—how could he get in such a mess? Morrison pointed to Bruce McLeod. “McLeod had a compelling personality,” Morrison said. “Shead would go over to McLeod’s house at 111 Park Boulevard in Tuxedo—it’s a mansion—for coffee every morning!” Morrison said Shead had “Lord Nelson syndrome,” putting the telescope to a blind eye to ensure that you don’t see what you don’t want to see.

  Richard Shead certainly picked his friends poorly. The Vancouver Sun, on November 5, 1997, had a story about Eron Mortgage Corporation, a real estate investment business in which the investors, according to The Sun, were “elderly and financially unsophisticated people.” Brian Slobogian was president of Eron. The Sun quoted part of a letter Slobogian wrote to a friend in November 1996, describing a golf holiday: “I am now on the aircraft, a King Air executive jet, alone with the pilots, flying to play golf. I think I’ve come a long way.”14 The friend he wrote to was Richard Shead, described by the newspaper as “an old friend and once-prominent tax lawyer who was convicted of 10 counts of fraud last year and is now serving a five-year sentence in a Manitoba jail.” On May 1, 2002, The Globe and Mail reported that, as part of “one of the biggest fraud-related investigations in Canadian history,” Brian Slobogian faced thirty-three charges of fraud, frauds in which “thousands of mainly elderly investors lost a total of $220-million.”15 In January 2005, Slobogian pleaded guilty to four counts of theft and one of fraud; in March, he was sentenced to six years in prison. Martin Chambers, a former Vancouver lawyer, was also closely involved with Eron, borrowing nearly $27 million from the company for various business projects. On December 5, 2003, a Florida court sentenced Chambers to fifteen years for money laundering connected to cocaine trafficking.16