Montreal man linked to alleged scam

MONTREAL – Another alleged fraud artist has been uncovered working out of Montreal and financing his lifestyle on the proceeds of his clients.

Although allegedly perpetrated here, the documents allegedly forged here and the bank accounts based here, the victims appear to all be from the New York City area.

The amount of the alleged fraud is believed to be $10 million U.S. and possibly more.

On Monday, Perry Newman, 51, of Hampstead, and his company Dover Financial Corp. with offices on Chabanel St., were both declared bankrupt in Quebec Superior Court.

This is a crucial step in getting to the bottom of the alleged theft and fraud and the possible recovery of any funds.

Montreal police have launched an investigation, fraud division commander Mario Lamothe confirmed this week.

Montreal law firm Stein & Stein was contacted by a New York law firm last month to act on behalf of the principal claimant, Edith Olanoff of New York City and Jerusalem.

According to documents filed with the court, Olanoff is owed $7.5 million she entrusted to Newman to invest. It was Olanoff who sounded the alarm last month when she realized something was amiss with the man with whom she had corresponded since 2005.

The wealthy woman was referred to Newman by her accountant, himself now another alleged victim of the fraud.

Newman was presented as a currency expert who had moved to Montreal from London. He claimed he charged only a 20-per-cent "performance fee" on profits in the account.

For five years, Olanoff got a monthly statement of her holdings showing how much of her money was in treasury bills and how much was in the speculative trade of futures in euros and other currencies.

The statements purported to show the trades that had been done on her behalf and held in a segregated account with the large U.S. brokerage house FCStone.

Newman, who also went by the name of William Newman and Peter Newman, is now the subject of a joint investigation by the Montreal police and the FBI.

As in the case of Earl Jones, neither Newman nor his company was registered with the Autorite des marches financiers, so his alleged victims will not be compensated for their losses.

Over the course of their business relationship, Newman counselled Olanoff to sell property and a stake in a seniors residence in Ohio and give him the money to invest. The cheques were made over to Dover Financial.

Olanoff has two sons who are rabbis in Israel, so she moved to Jerusalem.

In March, when Olanoff asked for $200,000 to pay workers who were building her an apartment in Jerusalem, Newman sent it by wire transfer within days.

In May, when she requested another $200,000, Newman allegedly tried to stall, blaming the Victoria Day banking holiday, an exchange of email shows.

Thinking her assets were

liquid, Olanoff contacted FCStone in Chicago to find out what the problem was.

She was told the brokerage firm had no record or account in her name, did not know of Newman, Dover Financial or the holding company, Ramat, that Newman had made her set up. Olanoff was advised to send copies of the statements she had received. When she faxed her statements to FCStone, the compliance department and the FBI called her back immediately.

They said the statements were forgeries, the letterhead old stock that had not been used for years.

Olanoff did not relay this information to Newman, but told him to close her account and transfer all the money in

it to her bank, because of "irreconcilable differences in investment philosophy."

In the subsequent emails, Newman makes promises, finds excuses, tells her the money has been "flagged" by the IRS and the Canada Revenue Agency, even claiming to be unable to send the money because he is in the ICU with his dying mother. That’s when Olanoff called her lawyers.

Her U.S. lawyers referred the case to Stein & Stein in Montreal.

On June 23, two petitions of bankruptcy were deposited with the court. RSM Richter, a specialist in bankruptcy, seized the computer, books and records of Dover Financial and Newman.

On June 29 at 10 a.m., a 911 call brought an ambulance to the Newman home on Harrow Crescent. Perry Newman was taken to the Montreal General Hospital with self-inflicted knife wounds to the upper body.

The petition for bankruptcy states that Newman "deceived the petitioner (Olanoff) into believing he was investing her funds carefully and that she was making significant profits … the entire time he was doing nothing more than deceiving her in a major fraud to provide him with the said money which has now disappeared."

Lawyer Neil Stein said bank records show that every month Newman transferred money from the U.S. corporate Dover Financial account to his Canadian corporate account.

All living expenses were paid out of this Dover Financial account.

Newman himself had no personal bank account, but there were accounts opened in his wife and sons’ names.

The bankruptcy papers state that at the time Olanoff asked for all of her remaining $7.5 million, there was nowhere near that amount available in the Dover Financial account.

Lamothe said his investigation is in the first, early stages, and that fraud investigators will begin by meeting with the various witnesses to the alleged fraud at the same time the FBI is looking into the international angle of the alleged crime.

Calls and email to Newman went unreturned.