IN THE SUPREME COURT OF BRITISH COLUMBIA  
HMTQ v. Wilder et al,  
Citation:  
2003 BCSC 1840  
Date: 20031217  
Docket: CC901654  
Registry: Vancouver  
HER MAJESTY THE QUEEN  
AGAINST  
ROGER E. LAWRENCE, MICHAEL L. VAZ,  
MICHAEL B. RICHARDS, VICTOR J. ATTRILL,  
RONALD L. JOHNSON, DARA M. WILDER, GERALD M. BYERLAY,  
SEONA J. WILDER, & MID-PACIFIC SERVICES INC.  
Before: The Honourable Mr. Justice S.R. Romilly  
Reasons for Judgment  
HMTQ v. Wilder et al  
Page 2  
Counsel for the Crown  
Lyndsay Smith  
Veda Kenda  
Counsel for the Accused,  
Dara M. Wilder  
H.R. Anderson  
Date and Place of Trial:  
February 2, March 12,  
June 27, September 24,  
October 9, 15, 22-26, 30,  
31, November 1, 5, 6,  
13, 14, 19, 20, 26-29,  
December 3-6, 2001,  
January 21, February 4-7,  
18-21, 25, March 4-6,  
11-14, 21, 22, April 4, 5,  
8-11, 15, 16, 22-25, 29,  
May 1, 6, 7, 13, 21, 28-30,  
June 3, 4, 6, 10-12, 17-20,  
July 15, 16, August 12, 26,  
28, 29, September 16-19,  
November 18, 2002,  
February 24, March 10-13,  
April 14-17, 22, 23, 28,  
May 5, 7-9, 13-16, 26,  
27, 29, June 3,  
September 2-5, 8-12,  
17, 22-26, 29, October 2,  
3, 15, 16, 28-30,  
November 3-7, 2003  
Vancouver, B.C.  
HMTQ v. Wilder et al  
Page 3  
TABLE OF CONTENTS  
I.  
BACKGROUND............................................8  
A. The Scientific Research Tax Credit Program.......12  
B. The Escrow Agreement.............................14  
II.  
POSITION OF THE CROWN................................16  
III. POSITION OF THE DEFENCE..............................19  
IV.  
MR. WILDER’S TESTIMONY...............................21  
A. Mr. Wilder as a Witness..........................21  
B. Prototypes and Technology........................56  
1.  
2.  
3.  
4.  
Vardax......................................56  
Confidentiality Agreements..................63  
The Fly Ash Project.........................65  
The Agreements between Mr. Wilder’s and  
Mr. Johnson’s Companies.....................71  
Dates of Execution..........................74  
Valuation...................................79  
Specific Items Purchased in the  
5.  
6.  
7.  
Three Agreements............................82  
(a) Bio-Mass Project.......................82  
(b) Hydro-Petroleum Project................84  
(c) Insurance on the Projects..............86  
(d) Payment for the Projects...............86  
(e) Projects that Mr. Johnson’s  
Companies Purchased from Mr.  
Wilder’s Companies.....................88  
(f) Transfer of Equipment from Hydro-  
Petroleum to Coseco....................88  
Findings of Fact with Respect to These  
8.  
Three Agreements............................89  
V.  
THE EVIDENCE OF JAMES BREITZMAN......................90  
A. Position of the Defence..........................90  
B. Caution Regarding Mr. Breitzman’s Testimony......90  
C. Treatment of Mr. Breitzman’s Testimony...........93  
1.  
2.  
3.  
The “Gravel Kicking” Incident...............97  
The Civil Suit.............................102  
The Bio-Mass and Fly Ash Projects..........104  
(a) First Meeting with Mr. Wilder.........106  
(b) The “Multiplier”......................107  
(c) The Bio-Mass and Fly Ash Invoices.....111  
(d) The Three Bio-Mass Machines...........123  
(e) HFI’s Cheque Register.................123  
HMTQ v. Wilder et al  
Page 4  
(f) Invoices for Equipment Purchased  
by HFI................................124  
(g) Commercial Unit Photographs...........125  
(h) Mr. Breitzman’s Cash Flow Worksheets..125  
(i) Protech Industrial Systems Inc........127  
(j) Mr. Breitzman’s Memorandum............127  
(k) Requests for Funds....................128  
(l) Relationship Between Mr. Johnson  
and Mr. Wilder........................135  
(m) July 3, 1985 Summary..................135  
(n) February 10, 1986 Memorandum..........136  
(o) Bio-Mass Move from Aldergrove to  
Manitoba..............................138  
(p) The End of the Relationship Between  
HFI and Wilder........................139  
Corroboration of Mr. Breitzman’s  
Testimony..................................140  
Critical Aspects of Mr. Breitzman’s  
4.  
5.  
Testimony..................................143  
VI.  
THE EVIDENCE OF JAMES RUSS..........................144  
A. Position of the Defence.........................144  
B. Caution Regarding Mr. Russ’ Evidence............144  
C. Evidence of James Russ..........................145  
1.  
2.  
3.  
4.  
The Bio-Mass Prototype.....................149  
Bio-Mass and Fly Ash Project Formats.......150  
The Invoices...............................154  
Corroboration of Mr. Russ’ and Mr.  
Breitzman’s Evidence from Documents in  
Mr. Wilder’s Possession....................157  
(a) Exhibit 288-151.......................157  
(b) Exhibit 9-100v........................161  
(c) Exhibit 291-152.......................162  
Critical Aspects of Mr. Russ’ Testimony....164  
5.  
VII. THE EVIDENCE OF HUGH GAGON..........................167  
A. Initial Meeting with Mr. Wilder.................167  
B. Meeting with the Attorney and Banker............171  
C. Work Begins in Winterburn.......................173  
D. Deal with Syncrude..............................177  
E. Mr. Wilder Ceases Funds.........................178  
F. Patent Licensing Agreement......................179  
G. The Brochure....................................179  
H. Mr. Wilder’s Cross-Examination of Mr. Gagon.....182  
VIII. EVIDENCE OF BETTY POLLARD (FORMERLY BETTY KLATT)....183  
A. The Invoices....................................183  
B. Findings with Respect to the Evidence of  
HMTQ v. Wilder et al  
Page 5  
Betty Pollard...................................192  
C. The Effect of the Evidence of Mrs. Pollard......197  
1.  
2.  
3.  
Exhibit 22-157.............................197  
Exhibit 23-158.............................200  
Exhibit 214-155............................201  
IX.  
EVIDENCE RELATING TO THE AUDIT......................205  
A. Evidence of Steven Choy.........................206  
1.  
2.  
3.  
4.  
5.  
6.  
7.  
8.  
9.  
Background to the S.R.T.C. Program.........206  
August 21, 1984 Meeting....................211  
August 22, 1984 Meeting....................212  
October 17, 1984 Phone Call................215  
November 5, 1984 Designation...............216  
December 3, 1984 Phone Call................216  
December 18, 1984 Phone Call...............217  
January 7, 1985 Meeting....................217  
January 23, 1985 Meeting...................218  
10. April 23, 1985 Meeting.....................218  
B. Evidence of Akbar Alibhai.......................219  
1.  
Mr. Alibhai’s Involvement in the  
Wilder File................................220  
January 7, 1985 Meeting....................221  
January 11, 1985 Phone Call................230  
January 17, 1985 Phone Call................230  
January 21, 1985 Meeting...................231  
January 23, 1985 Meeting...................231  
February 13, 1985 Meeting..................232  
April 23, 1985 Meeting.....................234  
2.  
3.  
4.  
5.  
6.  
7.  
8.  
C. Evidence of Larry Moi...........................235  
1.  
2.  
3.  
4.  
5.  
6.  
7.  
8.  
9.  
Mr. Moi’s Involvement......................235  
April 23, 1985 Meeting.....................237  
May 2, 1985 Phone Call.....................239  
May 14, 1985 Phone Call....................241  
May 21, 1985 Meeting.......................241  
May 22, 1985 Meeting.......................243  
May 27, 1985 Letter........................244  
June 7, 1985 Phone Call....................245  
June 10, 1985 Inquiry by Brian Kimmings....246  
10. June 10, 1985 Phone Call...................247  
11. June 11, 1985 Meeting......................248  
12. June 14, 1985 Meeting......................249  
13. June 18, 1985 Meeting......................249  
14. June 21, 1985 Meeting......................251  
15. June 24, 1985 Meeting......................253  
16. July 11, 1985 Meeting......................254  
17. July 25, 1985 Phone Call...................255  
18. July 29, 1985 Phone Call...................255  
HMTQ v. Wilder et al  
Page 6  
19. July 30, 1985 Phone Call...................256  
20. August 8, 1985 Meeting – Serving of the  
Requirements...............................256  
21. August 22, 1985 Meeting....................261  
22. September 11, 1985 Phone Call..............262  
23. September 13, 1985 Meeting.................262  
24. October 3, 1985 Phone Call.................263  
25. October 7, 1985 Meeting....................264  
26. October 10, 1985 Phone Call................264  
27. October 24 and 30, 1985 Phone Calls........265  
28. October 31, 1985 Meeting...................266  
29. November 15, 1985 Discussion...............266  
D. Transition from Basic Files Audit to Special  
Investigations..................................268  
1.  
2.  
Mr. Moi’s Audit Report.....................270  
Financial Statements of 7892345  
Holdings Ltd...............................270  
List of Cheques and Bank Drafts............271  
Mr. Moi’s Concluding Remarks...............271  
3.  
4.  
E. Evidence of Robert Kuhn.........................272  
1.  
2.  
3.  
4.  
5.  
Mr. Kuhn’s Involvement in the File.........272  
June 18, 1985 Meeting......................274  
June 21, 1985 Meeting......................275  
June 27, 1985 Meeting......................275  
August 8, 1985 Meeting – Serving of the  
Requirements...............................278  
September 13, 1985 Meeting.................279  
Mr. Richards’ Response to Requirements.....280  
6.  
7.  
X.  
EVIDENCE OF TEWCYN ROBERTS..........................281  
XI.  
THE ESCROW DOCUMENTS SIGNED BY MR. WILDER...........285  
A. Escrow Agreements...............................285  
B. The Certificates Signed by Mr. Wilder...........286  
XII. THE LAW.............................................287  
A. Onus on the Crown and the Meaning of  
Reasonable Doubt................................287  
B. The Law on Credibility..........................290  
C. Co-Conspirator’s Exception to Hearsay...........293  
1.  
2.  
The Co-Conspirators’ Exception.............294  
The Principled Approach to Hearsay.........297  
(a) Necessity.............................298  
(b) Reliability...........................301  
The Relationship Between the  
3.  
Co-Conspirators’ Exception and the  
Principled Approach........................303  
HMTQ v. Wilder et al  
Page 7  
(a) Necessity.............................306  
(b) Reliability...........................312  
Summary of the Process.....................313  
Other Matters..............................314  
4.  
5.  
D. Hearsay and Section 715 of the Criminal Code....315  
E. Documents in Possession.........................317  
F. Business Records................................318  
G. The Law Relating to Fraud.......................319  
1.  
2.  
3.  
Relevant Section of the Criminal Code......319  
Actus Reus.................................321  
Mens Rea...................................322  
H. Sufficiency of Counts in the Indictment.........324  
I. The Kienapple Principle and Count 9.............329  
XIII. ANALYSIS............................................331  
A. The Credibility of Mr. Wilder...................331  
B. Evidence from Co-Conspirators...................332  
C. Section 715 Evidence............................334  
D. Documents in Possession.........................335  
E. Business Records................................335  
F. Fraud...........................................340  
1.  
2.  
Evidence and Credibility...................340  
Finding of Guilt...........................341  
G. Sufficiency of Counts...........................343  
H. Application of the Kienapple Principle..........347  
I. Summary of the Analysis.........................349  
XIV. CONCLUSION..........................................350  
APPENDIX “A”  
Timeline  
APPENDIX “B”  
Flowchart  
HMTQ v. Wilder et al  
I. BACKGROUND  
Page 8  
[1] The accused, Dara Wilder, was charged with 11 counts of  
fraud and possession of property obtained by crime under the  
Criminal Code. The fraudulent acts alleged to have been  
committed occurred within the complex provisions of Part VIII  
of the Income Tax Act (the “Act”). The total amount of money  
that Mr. Wilder is alleged to have defrauded the government of  
Canada is in the neighbourhood of $42,000,000. Mr. Wilder has  
entered pleas of not guilty to Counts 1 to 7 relating to fraud  
and Count 9 relating to possession of money derived from  
crime.  
[2] Mr. Wilder represented himself for most of this trial. He  
was ably assisted by his octogenarian mother. The accused  
did, however, retain counsel for the defence portion of his  
case although defence counsel did re-argue R. v. Wilder (No.  
3), 2001 BCSC 1567 (B.S.S.C.). This was necessary due to the  
handing down by the Supreme Court of Canada of the decision of  
R. v. Jarvis (2002), 169 C.C.C. (3d) 1 (S.C.C.). During this  
trial, while acting for himself, Mr. Wilder made numerous  
applications (at least twenty) and argued the issues better  
than most lawyers.  
[3] Some of the background to this lengthy and complex trial  
could be found in R. v. Wilder (Written Ruling No. 1), 2001  
HMTQ v. Wilder et al  
Page 9  
BCSC 1599, [2001] B.C.J. No. 2913, which was a ruling on an  
application by the accused to have the charges against him  
stayed for unreasonable delay. The remainder of the  
background was stated by Esson J.A. in R. v. Wilder (2000),  
142 C.C.C. (3d) 418 (B.C.C.A.), leave to appeal to S.C.C.  
refused, [2000] S.C.C.A. No. 279. At paras. 3-8, Esson J.A.  
writes:  
Mr. Wilder was president of Canadian Biomass  
Research Inc. and Coastal Natural Resources Research  
Inc. Those companies filed a number of  
“designations” on behalf of investors pursuant to  
s.194(4) of the Income Tax Act, R.S.C. 1985, c.1 (5th  
Supp.) (“the Act”). The Crown alleges that, as a  
result, investors in the two companies received tax  
credits of about $38 million which triggered a tax  
liability of the same amount under the Act.  
The two companies deposited funds to meet their tax  
obligations in escrow accounts with a bank [the  
National Bank]. That money was not to be released  
without certificates from Mr. Wilder as president of  
the two companies, Michael Richards, an accountant,  
and Gerald Byerlay, an engineer. The certificates  
were intended to confirm that sufficient qualified  
scientific research expenditures had been incurred  
by the companies to extinguish the tax liability.  
In late 1984 and early 1985, a number of  
certificates were filed with the bank which then  
released the escrow monies to the companies.  
The Crown alleges that the certificates were  
fraudulent in that the research expenditures were in  
one case inflated, that in a second no expenditures  
were incurred and, in a third, that there actually  
was no research project and that the escrow funds  
ought therefore have been used to satisfy the tax  
liability.  
HMTQ v. Wilder et al  
Page 10  
HISTORY OF PROCEEDINGS AGAINST CO-ACCUSED  
An audit review was launched in 1985, in the course  
of which Revenue Canada personnel obtained  
information under s.231(1) of the Act. In October,  
1985, Revenue Canada’s special investigation unit  
began an investigation to determine whether there  
was a basis for charges under the Act or the  
Criminal Code. In 1985, back records were obtained  
from various financial institutions pursuant to  
powers under the Act. In 1986 potential witnesses  
were interviewed. In May, 1987 search warrants  
issued under the Act were executed, as a result of  
which records and documents were seized from the  
business premises of various corporations and  
private residences, including a house owned by Mr.  
Wilder’s wife. Some of the grounds for the searches  
were based on information obtained during the audit  
review.  
The investigation culminated in November, 1990 with  
Mr. Wilder, seven other individuals and a company  
owned by one of the seven (Lawrence) being charged  
in a direct indictment with eight counts of fraud  
and two of possession of money and property obtained  
by crime. One count of each charge was stayed  
against Mr. Wilder before his trial began.  
In February, 1993 a trial before Mr. Justice Wong  
and a jury of the charges against four of the  
accused (Lawrence, Richards, Johnson and Byerlay)  
began. Mr. Wilder had been severed from them a few  
days before that. That trial ended on September 30,  
1993 with all four being convicted on five counts of  
fraud and some other charges. Lawrence and Johnson  
were sentenced to seven years’ imprisonment,  
Richards to six years’ imprisonment and Byerlay to  
one year. The convictions and sentences of  
Lawrence, Richards and Johnson were upheld by this  
court in January, 1996. A new trial was ordered for  
Byerlay: R. v. Richards (1996), 70 B.C.A.C. 161  
(B.C.C.A.). Lawrence’s application to the Supreme  
Court of Canada for leave to appeal that decision  
was refused on October 1, 1998. For various  
reasons, the charges were never proceeded with  
against the accused Attrill, Vaz and Seona Wilder.  
HMTQ v. Wilder et al  
Page 11  
[4] At the first trial, which lasted almost three years, the  
trial judge acquitted the accused. Relying on R. v. White  
(1998), 122 C.C.C. (3d) 167 (B.C.C.A.), he was of the view  
that the information provided by the accused to the Revenue  
Canada auditors prior to the commencement of the criminal  
investigation was made under compulsion of statute and was  
therefore inadmissible at the accused’s criminal trial. The  
trial court was also of the view that s. 241(3)(b) of the Act  
that provides for confidentiality applied to these legal  
proceedings which related to the administration and  
enforcement of the Act.  
[5] The British Columbia Court of Appeal eventually heard the  
appeal on October 4, 1999, allowed the Appeal on January 14,  
2000 and ordered a new trial. Mr. Wilder appealed the  
decision of the Court of Appeal to the Supreme Court of  
Canada. On October 12, 2000, the Supreme Court of Canada  
refused Leave to Appeal. On December 27, 2000, Mr. Wilder  
filed a Notice of Motion requesting a rehearing of the  
application for Leave to Appeal to the Supreme Court of  
Canada. This application was also refused. I then had the  
pleasure of hearing this re-trial. This re-trial began in  
late 2001 and has only now concluded.  
HMTQ v. Wilder et al  
A. The Scientific Research Tax Credit Program  
Page 12  
[6] The Scientific Research Tax Credit (S.R.T.C.) provisions  
of the Act provided an impetus to investors and an incentive  
to research companies to perform research and development in  
Canada. For example, an investor would invest $100 in the  
research company. The research company would give the  
investor a promissory note for $100. The research company  
would also issue a form called a “designation” to the  
government of Canada that identified the investor. The  
designation would lead to the granting of a $50 tax credit to  
the investor which he could then claim against his taxable  
income.  
[7] In its designation, the research company would state that  
it has done or intends to do qualifying research and  
development, or that it has acquired or will acquire an  
S.R.T.C. from another company (a rolldown), in the amount of  
$100.  
[8] When the research company makes its designation, it  
becomes obligated to pay a tax, called a Part VIII tax, to the  
government equal to the amount of the tax credit received by  
the investor. If the research is done or acquired, the  
obligation to pay the Part VIII tax is extinguished. If the  
HMTQ v. Wilder et al  
Page 13  
research is not done, the research company must pay the Part  
VIII tax to the government.  
[9] A practice arose whereby the investor would invest $100  
in the research company and then receive a $100 promissory  
note from the research company. The research company would  
issue the designation, identifying the investor and stating  
that the research would be done or had been done. The  
investor would then sell the promissory note back to the  
research company at a discounted price, say, for $63. The  
promissory note was redeemed and cancelled. This transaction  
ended the relationship between the investor and the research  
company.  
[10] The taxpayer, having received his $50 tax credit and the  
$63 from the research company, would have made a $13 profit  
from his initial investment of $100.  
[11] The research company would have $37 in revenue from the  
investor and an obligation to perform $100 of research in  
order to extinguish the $50 Part VIII tax debt it would  
otherwise have. If the research company was a well-financed  
company with large reserves, the $37 served like a grant to  
supplement research. If the company was poorly funded and  
poorly financed, the risk of potential shortfall was evident.  
HMTQ v. Wilder et al  
Page 14  
[12] In the case at bar, the Crown alleges that the research  
companies involved were required to perform approximately  
$70,000,000 of research to extinguish approximately  
$35,000,000 of Part VIII taxes.  
B.  
The Escrow Agreement  
[13] The S.R.T.C. provisions of the Act put an onus on  
investors to exercise due diligence in making their  
investment. An escrow system was developed to protect the  
investors.  
[14] Using the example above, investors would receive an  
offering memorandum containing a statement that the research  
company had spent or would spend $100 on research. This  
assertion would be supported by two “comfort letters”. In the  
case at bar, one comfort letter was from Michael Richards, the  
accountant, stating the expenditures claimed by the companies  
were qualifying research expenditures. The second, from Roger  
Lawrence, the lawyer, commented on the provisions of the Act.  
There was also a certificate from Gerald Byerlay, the  
engineer, stating that the equipment qualified as research  
equipment.  
[15] For each project, the National Bank was the designated  
escrow agent. Returning to the example, the National Bank  
would receive $37 from the research company, which was what  
HMTQ v. Wilder et al  
Page 15  
remained of the initial $100 investment ($63 having been  
returned to the investor in the “quick flip”). The research  
company would also have to “top up” the $37 with another $13,  
so the amount in the escrow account exactly equalled the Part  
VIII tax liability of the research company, (which in turn  
exactly equalled the amount of the tax credit received by the  
investor).  
[16] If qualified research expenditures were made, and the  
Part VIII tax liability extinguished, the research company  
would receive the money in the escrow account. If qualified  
research expenditures were not made, the money had to be paid  
to the government of Canada to satisfy the research company’s  
Part VIII tax liability.  
[17] The Crown alleges that the money in the escrow accounts  
was improperly released to the research companies because  
certificates filed pursuant to the escrow agreements falsely  
stated that research expenditures had been incurred.  
[18] The release of the monies from the National Bank escrow  
accounts was triggered by the filing of three certificates  
with the bank: the first by an officer of the research  
company (Mr. Wilder); the second by the accountant for the  
research company (Michael Richards); and the third by an  
HMTQ v. Wilder et al  
Page 16  
independent engineer verifying certain aspects of the  
transactions (Gerald Byerlay).  
II. POSITION OF THE CROWN  
[19] Mr. Wilder is charged, with his co-accused, with seven  
counts of fraud contrary to (now) section 380 of the Criminal  
Code. Mr. Wilder, with his co-accused named above, is also  
charged with possession of money derived from crime, over one  
thousand dollars, contrary to (now) section 354 of the  
Criminal Code.  
[20] Mr. Wilder’s companies sold debt instruments to investors  
and made “designations” with respect to those debt instruments  
pursuant to section 194(4) of the Act. The companies issuing  
the debt instruments became liable to pay Part VIII tax in the  
amount of 50% of the consideration received from the  
investors.  
[21] The issuing companies could extinguish this Part VIII tax  
liability in one of three ways:  
1.) the designating corporation could purchase tax  
credits and thereby reduce its Part VIII tax in  
the amount of those tax credits, (subparagraph  
194(2)(a)(i) and subsection 194(3);  
2.)  
the designating corporation could pay the Part VIII  
tax, or  
3.)  
the designating corporation could incur scientific  
research and development expenditures, which could  
HMTQ v. Wilder et al  
Page 17  
be used to offset the tax by 50%: that is, for  
every $2.00 spent on research and development,  
$1.00 of Part VIII tax liability would be  
extinguished, (subparagraph 194(2)(a)(ii) and  
subsection 194(3).  
It is this third means that is relevant to this case.  
[22] In order to take advantage of this third means of  
extinguishing the Part VIII taxes due, the expenses incurred  
by the corporation had to qualify as being made on “scientific  
research and development.” In this case, the “qualifying”  
nature of the expenditures is largely irrelevant in that the  
expenditures made Mr. Wilder’s companies (“qualifying” or not)  
came nowhere near to the claimed amounts. One aspect of this  
definition that is relevant, however, includes the requirement  
that the capital acquisitions be “new”.  
[23] Mr. Wilder, as president of Coastal Natural Resources  
Research Inc. and Canadian Bio-Mass Research Inc., entered  
into Escrow Agreements with Mr. Donen, representative of the  
investors. These Agreements appointed the National Bank of  
Canada as Escrow Agent. The Agreements provided that the 50%  
of the consideration received by Mr. Wilder’s companies from  
the investors would be paid as Part VIII tax unless the Escrow  
Agent received certificates authenticating the expenditure by  
HMTQ v. Wilder et al  
Page 18  
the companies of monies on scientific research and  
development.  
[24] The certificates signed by Mr. Wilder to affect the  
release of the monies held by the National Bank pursuant to  
the terms of the various Escrow Agreements constitute the “use  
of deceit, falsehood or other fraudulent means” whereby Mr.  
Wilder deprived Her Majesty the Queen of the Part VIII taxes.  
[25] The Crown argues that the evidence in this case proves  
beyond a reasonable doubt that the qualifying expenditures  
certified by Mr. Wilder to have been incurred by Coastal  
Natural Resources Research Inc. and Canadian Bio-Mass Research  
Inc. were not incurred as claimed. The evidence also proves  
beyond reasonable doubt that Mr. Wilder knew this when he  
signed the certificates.  
[26] As testified to by National Bank manager Tecwyn Roberts,  
the signing of the certificates and delivering them to the  
National Bank, had the intended effect: It caused the monies  
to be released to Mr. Wilder’s current accounts of Coastal  
Natural Resources Research Inc. and Canadian Bio-Mass Research  
Inc. instead of being paid to the Receiver General, as was  
required, given that the preconditions for a Part VIII Income  
Tax Act refund were not met.  
HMTQ v. Wilder et al  
Page 19  
[27] The position of the Crown is that all of the evidence,  
when considered together, proves beyond a reasonable doubt  
that Mr. Wilder lied with respect to his companies having made  
the expenditures claimed in the certificates that he signed.  
The Crown argues that Mr. Wilder knowingly issued these false  
certificates with the intent to have Part VIII taxes  
improperly diverted to his companies’ current accounts and  
thereby deprived the government of Canada as alleged.  
III. POSITION OF THE DEFENCE  
[28] Mr. Wilder says that the Crown has failed to prove beyond  
a reasonable doubt that he committed the fraud offences as  
charged in Counts 1 to 7. Furthermore, he states that the  
logical consequence of this is that the Crown has also failed  
to prove possession of proceeds from fraud in Count 9.  
[29] His position is that the Crown has failed to prove beyond  
a reasonable doubt that his companies did not expend the  
amounts claimed in the certificates that he signed.  
[30] Alternatively, he says that the Crown has failed to prove  
that, even if the expenditures were not incurred, he honestly  
and reasonably believed that they were.  
[31] Further, Mr. Wilder submits that the inclusion of alleged  
actual expenditures in the seven fraud counts constitute  
HMTQ v. Wilder et al  
Page 20  
particularization of the offences that must be proved beyond a  
reasonable doubt; that the Crown has failed to do so and that,  
therefore, Mr. Wilder must be acquitted.  
[32] In order to understand this complex matter it is  
necessary to refer to the flowcharts in Appendix “B” to this  
judgment. The flowcharts contain a list of the companies  
involved and some of the agreements and the dates on which  
they were entered into by the accused and others in this  
matter.  
[33] Because of the length and complexity of this trial, I  
propose to review the evidence at length and make my findings  
of fact during that lengthy review of the evidence.  
Afterwards, I propose to canvass the law including the law on  
credibility, the co-conspirator’s exception to hearsay, the  
principled exception to the hearsay rule, the law on fraud,  
and other points of law relevant to this trial.  
[34] Before I review the evidence and the law, however, I wish  
to state the obvious. Because I do not refer to any  
particular item of evidence in my review, it does not mean  
that I have not considered it in arriving at my decision. I  
have lived with this case for almost two years and I have  
considered every piece of evidence that was adduced in this  
trial.  
HMTQ v. Wilder et al  
Page 21  
[35] The other obvious statement that I wish to make is that I  
am fully aware that it is for the Crown to prove its case, it  
is not for the accused to establish his innocence.  
IV. MR. WILDER’S TESTIMONY  
A.  
Mr. Wilder as a Witness  
[36] While acting on his own behalf, Mr. Wilder boasted that  
he was the descendant of Thomas Edison. When he testified on  
his own behalf he introduced what he referred to as a family  
tree to support this boast. Coming from this type of gene  
pool, it is not surprising that when the government introduced  
the S.R.T.C. scheme, Mr. Wilder decided to form not one, not  
two, but 23 S.R.T.C. companies. Only three of these 23  
companies are the subject of this trial (the “subject  
companies”). They are Coastal Natural Resources Research Inc.  
(“Coastal”), Canadian Bio-Mass Research Inc. (“Bio-Mass”), and  
Pacific Western Research Inc. (“PWR”).  
[37] According to Mr. Wilder, he and his friend, the co-  
accused, Ronald Johnson, sold prototypes and equipment to the  
S.R.T.C. companies in February of 1984. With respect to the  
three projects which are the subject of these proceedings, Mr.  
Johnson’s companies purported to sell certain new components  
and equipment to the subject companies for the sums of  
HMTQ v. Wilder et al  
Page 22  
$14,200,000.00, $20,700,000.00, and $36,000,000.00. The  
agreement for the sum of $14,200,000.00 consisted of a sale  
between Johnson & Burnett Ltd. (“J & B”) and Fly Ash Research  
(7892345 Holdings Ltd.) and was with respect to the Fly Ash  
Project. The agreement for the sum of $20,700,000.00 was the  
subject of an agreement between Pacific Natural Resources Inc.  
(“PNR”) and Bio-Mass and was with respect to the Bio-Mass  
Project. The sale between J & B and Hydro-Petroleum Research  
(7892345 Holdings Ltd.) was for the sum of $36,000,000 and was  
with respect to the Hydro-Petroleum Project. Flowcharts with  
regard to the various companies and projects are set out in  
Appendix “B” to this judgment.  
[38] Mr. Wilder testified on his own behalf for just over two  
weeks. To hear him tell it, there has been a massive  
conspiracy by Revenue Canada officials and others to frame  
him. He also would have me believe that all of the other  
witnesses called by the Crown were lying and that he is the  
one telling the truth.  
[39] From his testimony, it is clear that the accused has a  
very high opinion of himself and that he is not above shading  
the truth at times. Mr. Wilder admitted in his testimony that  
he was the sole shareholder and director of all of the Vardax  
companies: Vardax Consultants Inc., Vardax Resource Supply  
HMTQ v. Wilder et al  
Page 23  
Inc. and Vardax International Forwarding Inc., which companies  
are hereinafter collectively referred to as “Vardax”. His  
wife, Seona Wilder, only has signing authority on the various  
bank accounts of these Vardax companies in both the United  
States of America and in Canada. When asked what type of  
business Vardax International Forwarding Inc. conducted, the  
following exchange took place:  
Q
A
And what’s that about? What type of business  
does that company conduct?  
Generally in every type of business.  
[40] The resume of Mr. Wilder, Exhibit 11(a), describes one of  
his many talents as being a financial analyst, yet on cross-  
examination he had no idea as to what a financial analyst did.  
This is evidenced by the following excerpt from his cross-  
examination:  
Q
All right. Now, have you ever hired a  
financial analyst?  
A
Q
A
Q
No.  
What is one, in your view?  
I have no idea.  
You would expect, would you not, a financial  
analyst to be able to review books and records?  
No, I -- actually I have a person I went to  
school with is a financial analyst and he  
doesn’t do -- he does projections and things  
like that, with stock.  
A
[41] I find that in his testimony, the accused, Mr. Wilder,  
was more concerned with deflecting the blame from himself to  
HMTQ v. Wilder et al  
Page 24  
others rather than with telling the truth under oath. He used  
every opportunity to try to bolster his case rather than  
telling the truth; he was not responsive to questions asked of  
him by Crown counsel; he answered questions from Crown counsel  
with questions. His answers to questions from Crown counsel  
were evasive and vague. Instead of answering questions in  
cross-examination he would ask what they were getting at. He  
was evasive and cocky during most of his testimony. I found  
his testimony to be nothing more than a tissue of lies. I  
have difficulty believing anything that he said.  
[42] This case involves tens of millions of purported business  
transactions. Notwithstanding that, there have been very few  
documents evidencing those transactions. At trial Mr. Wilder  
gave numerous explanations for this. I do not believe a  
single one of these explanations.  
[43] Mr Wilder testified that there were a number of people  
involved in the three projects that are at issue before the  
court and were part of the Vardax group. There was his uncle,  
Lloyd Wilder, who was involved in financing projects. He also  
supervised the units when they were running. Tom Bartlett of  
D&B Manufacturing was a consultant. Mr. Dillman was involved  
in financing. Mr. Demedoff was involved in the Bio-Mass  
Project and Fly Ash Project. Dr. Larry Manzik (who had two  
HMTQ v. Wilder et al  
Page 25  
Phd’s, according to Mr. Wilder) was one of the main consulting  
engineers for the Fly Ash Project. His uncle, Tim Thysegen,  
also worked on the Bio-Mass Project. David Tolle was involved  
in the Hydro-Petroleum Project and the Fly Ash Project. In  
addition, there was, according to Mr. Wilder, Mr. Tony Vaughn,  
Terry Wilder, Bill Plowman and Willy Roche.  
[44] It is perhaps interesting that there was not a single  
report from any of these gentlemen that was ever shown to the  
auditors during the audit. There was not one account that was  
rendered by any of these gentlemen for their services that was  
presented to this court. Apart from that, it is significant  
that none of these people were listed on the handwritten list  
provided to Larry Moi by Mr. Wilder about his various projects  
(see: Exhibit 40-2045). Back in 1985, when they would have  
been available to verify Mr. Wilder’s version of events – one  
way or the other – their names simply did not come up.  
[45] Terry Wilder and Jack Demedoff were both still alive and  
available to speak to when Mr. Breitzman testified in 1997 and  
1998; neither of their names came up during Mr. Wilder’s  
protracted cross-examination of Mr. Breitzman in relation to  
involvement in the Fly Ash and Bio-Mass Projects.  
[46] With regard to documenting transactions and creating  
documents evidencing different parties’ respective contractual  
HMTQ v. Wilder et al  
Page 26  
rights and obligations, Mr. Wilder testified that he had been  
exposed to his dad’s business practices, which included doing  
everything “on a handshake”, and that this is how he conducted  
his own business. This “handshake” approach explained why  
there were no documents evidencing arrangements between Mr.  
Wilder and members of “the Vardax group”, who, according to  
his testimony, were instrumental in the development and  
funding of his various projects. This explanation, of course,  
obviates any basis to expect production of documents relating  
to their transactions:  
Q
A
And those contributors to the Vardax Group,  
how, if at all, would those people rewarded for  
their contributions of money, ideas, parts and  
the like? How would they be rewarded?  
Well, they would – they would get to use the –  
what was finally developed, at the end. And at  
times, some of them would get to the parts  
suppliers that were manufacturing and selling  
them.  
Q
A
Were there written agreements prepared with  
respect to the involvement of these various  
individuals?  
No, I never had any agreements. Everyone worked  
with me always on a handshake. Nobody ever had  
a problem, so they were always happy to come  
back.  
THE COURT: Even the Americans?  
Even the Americans.  
A
[47] With respect to blue prints for his prototypes, Mr.  
Wilder testified that he did not believe in obtaining patents.  
HMTQ v. Wilder et al  
Page 27  
[48] He further stated that there was no point making prints  
or drawings of his prototypes because too many changes were  
made. Instead he made his drawings of these projects on a  
white board which could have been seen if the auditors had  
taken the time to go to visit some of his projects.  
[49] Mr. Wilder also explained his lack of documentation to  
theft by an employee called Miles and either theft or  
destruction by one of his former associates, Sean Morriss. He  
also stated that the documents which were the subject of these  
thefts or destruction were located at the project sites and  
that Revenue Canada would have been able to have access to  
them if they had taken the opportunity to visit these sites as  
he requested.  
[50] The last explanation for the lack of documents was  
attributed by Mr. Wilder to a flood that he had in California  
that destroyed these documents.  
This is the second flood  
that Mr. Wilder complained to being the victim of in this  
trial. The first flood was when he requested fresh disclosure  
of the millions of the documents in this trial. The second  
flood excuse is interesting because he got mixed up with his  
dates. He testified in his examination in chief on September  
3, 2003 that the flood that destroyed his documents with  
respect to these transactions took place when he lived in  
HMTQ v. Wilder et al  
Page 28  
California between 1992 to 1994. In cross-examination on  
September 23, 2003, however, he testified that the flood had  
occurred in 1995. According to Mr. Wilder’s earlier  
testimony, he was no longer living in California in 1995. I  
agree with the submission of the Crown that Mr. Wilder’s  
evidence about the flood was nothing but a ready-made answer  
for difficult questions that were put to him by Crown counsel  
during cross-examination and an attempt to try to explain that  
the Hydro-Petroleum Project was a reality.  
[51] Mr. Wilder testified that he had never seen Mr. Gagon’s  
patents yet he provided Mr. Moi with Exhibit 40-2045, which  
specifically refers to Mr. Gagon’s patents.  
[52] Mr. Wilder testified that Exhibit 22-157 was not seized  
from his residence. Mr. Britton, a witness who referred to his  
notes made at the time of the seizure, testified that it did.  
As suggested by Crown counsel, it is noteworthy Exhibit 23-158  
was also seized from Mr. Wilder’s residence. I agree with the  
submission of Crown Counsel that if the J & B, Coastal, Fly  
Ash, and Hydro-Petroleum transactions had indeed been  
legitimate, the purchaser, Mr. Wilder or his company, would  
not have both the original and a duplicate of the invoices.  
[53] The second and bigger problem for Mr. Wilder is that  
Exhibit 22-157 contains the back-dated invoices for Fly Ash  
HMTQ v. Wilder et al  
Page 29  
and Hydro-Petroleum Projects in the amounts of $14,200,000 and  
$36,000,000, respectively. These two invoices are highly  
probative of a fraud, and they have been found in his  
possession. It is significant that Mr. Wilder, apart from  
testifying that these two incriminating documents were not at  
his residence suggests that at least one of them may have been  
put there by his assistant Alida Saulnier.  
[54] The freight bills found in Mr. Wilder’s possession, along  
with the payments by his company, and the documents produced  
by Mr. Breitzman, along with Mr. Breitzman and Mr. Russ’  
testimony, reinforces my view that this evidence by Mr. Wilder  
is indeed false.  
[55] It is also interesting that in response to a letter from  
Larry Moi (Exhibit 25-2305) for a “Listing of chief engineers  
for each project, location and address of each project”, Mr.  
Wilder produced Exhibit 41-2036. In that document, which was  
written in pencil by Mr. Wilder, there is not one reference to  
any of the gentlemen from the Vardax group. The suggestion by  
Mr. Wilder that this was merely a list of persons that they  
could expect to find at the various locations when he took  
Revenue Canada officials to inspect the premises is ludicrous.  
In my view Mr. Wilder’s reference to the completeness of  
certain of these S.R.T.C. projects reinforces my view. In my  
HMTQ v. Wilder et al  
Page 30  
view the listing by Mr. Wilder of Mr. Gagon as one of the  
engineers on one of the projects was just another attempt by  
Mr. Wilder to deceive the Revenue Canada officials.  
[56] Mr. Wilder claims in his testimony that Mr. Richards was  
not the accountant for the projects which are the subject of  
these charges. He testified that Mr. Richards’ role was  
limited to the preparation of year end financial statements.  
There is, however, overwhelming evidence that this testimony  
by Mr. Wilder is false. In fact, in a letter marked Exhibit  
284 in these proceedings Mr. Wilder authorized Mr. Lawrence to  
deal directly with his accountant, Michael Richards. There is  
also evidence that Mr. Richards was responsible for preparing  
the financial statements, corporate tax returns and Part VIII  
tax returns for Mr. Wilder’s companies which were the subject  
of these proceedings. I note parenthetically that Mr.  
Richards was also the accountant for the accused Mr. Johnson  
with respect to the Hydro Fuels project as is evidenced by,  
among other things, Exhibit 9-100-I.  
[57] There could be no doubt that the lawyers who prepared the  
various multi-million dollar agreements were aware that the  
equipment that Mr. Wilder’s companies purported to buy from  
Mr. Johnson’s companies was supposed to be new. There is also  
evidence that by all accounts the component parts and  
HMTQ v. Wilder et al  
Page 31  
equipment purchased in these multi-million dollar contracts  
was not new. In his testimony Mr. Wilder explains that new  
does not really mean new and that he was told that as long as  
the prototype was new then that would meet the specifications  
of the S.R.T.C. program. This explanation is ludicrous.  
[58] Even Mr. Wilder realized that the value placed on the  
purchased equipment under these contracts could not be  
justified so he invented a multiplier of 4.5 that was to be  
applied to the cost of the components and equipment purchased.  
This multiplier was of course never mentioned to the auditors  
from Revenue Canada. When it was drawn to his attention that  
the agreement plainly refers to the purchase price being for  
component parts and equipment and not completed prototypes he  
blames his lawyers for not properly describing what was  
intended. It is at this stage that he claims that he was  
illiterate, that he could not read and that he depended on  
advice from his accountants and lawyers. He said:  
A
No, the lawyers prepared this. See, you’ve got  
to remember, I would never have read this. I  
couldn’t read back in those days. I would  
simply review it with the lawyer, he would  
explain it to me, Mr. Donen, and that’s how it  
would be done. I – I’m not kidding you, I read  
like a grade oner, and if you don’t believe me,  
you go look at the transcripts…  
HMTQ v. Wilder et al  
Page 32  
[59] This testimony is inconsistent with the abilities of the  
man who represented himself in this very complex matter over  
the past few years. This testimony is also inconsistent with  
his resumé and with his testimony about graduating from Mount  
Royal College.  
[60] In his testimony before this court Mr. Wilder tried to  
lay a track of evidence to support a conclusion that his  
knowledge was minimal; that he lacked sophistication and that  
he relied on others to the point of being a dupe in the  
fraudulent scheme. An example of this is his effort to get  
around the fact that his resume contains reference to his  
being a “Graduate of Business Administration”:  
Q
A
How would you describe your early experience  
with record keeping and bookkeeping?  
Well, my record keeping has always been very  
poor. I’m very good in the field, but at record  
keeping I am not very good, and my mother  
always complained, and so did the accountants  
and everyone else.  
Q
A
Did you take any courses in bookkeeping?  
Well, it was part of the course at Mount Royal  
College, but I don’t think I was there those  
days. I – it seems like it, anyway.  
[61] It is also significant that in the brochure that explains  
the services offered by Vardax Consultants Inc., he lists cost  
accounting as one of the services provided by these companies  
which were entirely owned by him.  
HMTQ v. Wilder et al  
Page 33  
[62] According to the testimony of Mr. Wilder, he signed a  
contract on behalf of 7892345 Holdings Ltd. on April 12, 1984,  
in relation to $14,200,000 worth of equipment, yet a few days  
later, he signed a ratification that made it clear that he  
didn’t have signing capacity for that company on the date of  
the agreement.  
[63] The accused, Mr. Wilder, swore a statutory declaration on  
behalf of 7892345 Holdings Ltd. on August 10, 1984 that:  
2. That on or about 8th day of April, 1984, legal  
title together with any and all legal and equitable  
interests in the assets evidence by invoices from  
JOHNSON & BURNETT LTD. Number 116504 in the amount  
of $14,200,00 was irrevocable transferred and  
conveyed from JOHNSON & BURNETT LTD. to 7892345  
Holdings Ltd.  
3. THAT to the best of my knowledge, the above  
assets consist of new equipment, parts and  
components.  
[64] Mr. Wilder signed this statutory declaration when he knew  
that all of this equipment was not new; Mr. Wilder signed this  
declaration when he had received an opinion from Mr. Lawrence  
with regard to the title passing April 12, 1984, and not April  
8, 1984 as he stated in the statutory declaration.  
[65] When asked if he was aware of Camax Consultants, Mr.  
Wilder testified that he did not recall. He was then shown  
Exhibit 385 which was an invoice from Camax Consulting to  
HMTQ v. Wilder et al  
Page 34  
Hydro Fuels, Inc. (“HFI”). Upon seeing this invoice Mr.  
Wilder testified that this agreement had nothing to do with  
him and that was an agreement with Mr. Johnson. The following  
excerpt certainly indicates that Mr. Wilder was more involved  
with this transaction that he was willing to admit:  
A
Oh, I never dealt with Mr. Breitzman in the  
fall of ’84 on the Fly Ash. He dealt with Mr.  
Johnson and I only saw them when they showed  
up.  
Q
A
Q
Okay.  
Probably sometime afterwards.  
All right.  
MS. SMITH: Madam Registrar, if the witness could  
please be shown Exhibit 291.  
Q
Mr. Wilder, the first page that you’re looking  
at is a document from Norman G. Jensen Inc.  
The black and --  
A
Q
Yes. Okay.  
-- red one. And white one. And who are -- or  
what is that company?  
A
Q
A
Q
It’s a custom’s broker.  
In Bellingham?  
I don’t know, at the border.  
Blaine. All right. And the document is dated  
the 30th of November, 1984?  
Yes.  
And it’s to Vardax Consultants Inc. --  
Yes.  
-- with your home address?  
Yes.  
And the second entry on the document is dated  
11/05 and then we see “Enter MTM,” do you see  
that?  
A
Q
A
Q
A
Q
A
Q
Yes.  
And then your reference, “SE,” I think  
“DCCI/CHILER,” and then a number?  
Yes.  
Brokerage fees and then remarks and information  
regarding transactions. It says,  
“Camax/budget.” Do you see that?  
Yes.  
A
Q
A
HMTQ v. Wilder et al  
Page 35  
Q
And we’ve heard evidence from various Revenue  
Canada witnesses that these documents were  
seized from your home at 25800 Robertson  
Crescent in May of 1997. I’d like to turn to  
the next page, please.  
A
Q
Okay.  
And that is a shipper’s export declaration of  
shipments from the United States. Do you see  
that?  
A
Q
Yes.  
And under the first entry it says, “From  
Blaine, Washington, Exporting carrier,  
International Transport. Exporter, Camax.” Do  
you see that in the third box?  
Yes.  
And then “Agent of Exporter” is “Vardax,” you  
see that?  
A
Q
A
Q
Yes.  
And the description, number and kind of  
packages include, “20 chiller units sold as is,  
where is, for salvage only.” Do you see that?  
Yes.  
And a purchase price of $3,000?  
Okay.  
A
Q
A
Q
And then, “1 EIMCO filter, as is, where is, no  
warranty.” You see that?  
A
Q
Yes.  
And finally, the last page, can you tell the  
court what that document is?  
What it is?  
A
Q
A
Yes?  
Well, it says an export declaration leaving the  
United States. And it appears to be shipped by  
Camax. I think that’s just the carbon.  
And what’s your evidence with regard to your  
knowledge of these documents?  
My knowledge? This is the first time I’ve seen  
them, so -- but it appears that it got shipped  
into Canada on the 5th of November, 1984, and  
returned to the United States on the 30th of  
November, 1984.  
Q
A
[66] When asked by Crown counsel if he knew Jim Adams, who I  
find as a fact was an agent for Mr. Wilder in securing the  
HMTQ v. Wilder et al  
Page 36  
services of Mr. Gagon, we got the expected vague answer from  
Mr. Wilder as is evidenced by the following exchange:  
Q
A
All right. And who was Jim Adams?  
There were actually quite a few different Jim  
Adams that I’ve met over time.  
Okay, tell me about them.  
It’s a common name. Most of them were involved  
in the mining business.  
Q
A
Q
A
Q
Well, let’s start with how many Jim Adams?  
I think there’s three that I recall.  
All right. And let’s take -- pick one. Where  
do -- do they all live in the same town or  
let’s use geography to distinguish.  
They were -- I think there was one Jim Adams in  
Alberta that worked for us over there. And  
there was a couple of miners from different  
places in the U.S.  
A
Q
A
A couple of miners from the U.S. named Jim  
Adams?  
They were miners, yes. And actually, I rented  
some equipment to a Jim Adams at Lakeley  
(phonetic), I remember.  
Q
Did you have, apart from renting some equipment  
to Mr. Adams in Lakeley, did you have any  
business relationship with any of the three Jim  
Adams you’ve testified about?  
A
Q
A
I think, well, we kind of had a joint venture  
in mining.  
Sorry, you had a joint -- kind of had a joint  
--  
Well, he was mining on our property up there so  
I guess it was a -- we would have had a  
business relationship.  
Q
So he was using your property so -- and did he  
pay you for that?  
A
Q
Yes.  
And is he the Alberta Jim Adams or is he one of  
the two U.S. Jim Adams?  
A
Q
The U.S.  
And when did you first become involved with  
that Jim Adams?  
A
Q
Probably ’84, ’85, somewhere in there. Maybe  
earlier.  
And how about the Jim Adams in Alberta?  
HMTQ v. Wilder et al  
Page 37  
A
Q
I think that was -- I met those guys, probably  
’85 when I met that guy.  
All right. And you had no business dealings  
with the Alberta Jim Adams or the second U.S.  
--  
A
Well, he was working on the -- some of the  
projects over there.  
Q
A
Sorry?  
He was working on one of the projects in  
Alberta. I met him at the shop, I think, over  
there, at 68th Street in Alberta.  
Q
A
Which project was he working on?  
Well, there was a lot of them at that time,  
probably ’85, ’86. He was probably working on  
-- with High-tech on the --  
[67] Mr. Wilder further testified on September 24, 2003. On  
that date the evidence of Mr. Gagon was put to him regarding  
the meeting between Jim Adams and Mr. Gagon approximately six  
months before Mr. Gagon and Mr. Wilder met:  
Q
And do you know the Jim Adams that he’s talking  
about?  
A
Q
A
I know a Jim Adams. I know several of them.  
Right. You testified about that.  
There was a Jim Adams that we rental-purchased  
some mining equipment to. I don’t know, it may  
have been ’84. And he operated on one of our  
mines up at the -- Likely.  
Q
A
Right. He was --  
And he worked all summer. I contracted him,  
with the equipment we leased to him to -- to  
him to work on our properties, and we actually  
hauled coal over to the plant for the -- for  
the Bio-Mass plant. We hauled a bunch of coal  
tailings over and ran them through, to see if  
we could concentrate them.  
Q
A
So that would be in Likely, British Columbia;  
is that correct?  
We did a lot there. But I never, ever talked  
to him about this tar-sands process, or Gagon.  
HMTQ v. Wilder et al  
Page 38  
[68] On September 25, 2003, Mr. Wilder testified that he  
recognized a cheque to Jim Adams on a Vardax account dated  
November 5, 1984, for $1000 (Exhibit 1002). When asked which  
Jim Adams the cheque was written to, Mr. Wilder testified as  
follows:  
Q
Now, you testified that you knew a number of  
Jim Adams. Can you tell the court who this  
cheque is going on?  
A
Q
What do you mean, who?  
Well, you testified about three --  
THE COURT: Which one of the Jim Adams?  
THE WITNESS: Which one of them? Is that what you  
mean? This is the mining Jim Adams.  
MS. SMITH:  
Q
A
The mining Jim Adams? Which Jim Adams is that?  
The guy that was -- he was -- he had rented  
some mining equipment. He was -- he ran a  
number of tests for -- on the Bio-Mass for  
myself and for Mr. Johnson. So he was working  
for Mr. Johnson, as well. And this was one of  
the cheques he got for the work he did.  
All right. And why is Vardax paying Mr. Adams?  
Why did they pay him?  
Q
A
Q
A
Yes.  
Because he was -- Vardax was administering the  
mining. Was administering the projects that  
Vardax had sold.  
Q
A
So Vardax is paying for Johnson’s research?  
No. No, no. Vardax sold a number of projects  
to 3097, right, but kept the management of it,  
so --  
Q
A
So it turns out that Mr. Adams was involved in  
one of the projects that is before the court?  
Well, I -- I’ve just -- that’s one way. The  
other way is Vardax had its own mining  
operations, properties, it had to have work  
done on it. He was also doing that. I can’t,  
today, tell you exactly what it was he did.  
It’s one of those things, though.  
HMTQ v. Wilder et al  
Page 39  
Q
A
So you now recollect that one of the Jim Adams  
was actually involved in the projects that are  
before the court; is that correct?  
Yes, that’s what I told you.  
[69] A National Bank cheque on the Bio-Mass account payable to  
Jim Adams for $30,000 dated October 17, 1984, (from Exhibit  
253) was put to Mr. Wilder in cross-examination on September  
25, 2003, at which time the following exchange took place:  
Q
A
Q
And can you explain why you were writing a  
cheque on a Canadian Bio-Mass account to James  
Adams?  
Well, as I explained before, he was doing the  
processing on the coal for Bio-Mass, so he was  
paid by Bio-Mass.  
So when I asked you earlier do you know a Jim  
Adams, and you didn’t mention the Jim Adams  
with regard to the Bio-Mass project, did you  
just forget about him?  
A
No. You asked me earlier if I had -- a few  
days ago if I had a business relationship with  
Jim Adams and I said yes.  
[70] If this series of exchanges does not explain the evasive  
nature of Mr. Wilder’s testimony I do not know what will.  
[71] When asked if Mr. Byerlay evaluated all of the 23  
S.R.T.C. projects that were undertaken by him, Mr. Wilder gave  
the characteristic vague answer as is evidenced by this  
exchange:  
Q
And my understanding of your evidence is that  
you placed reliance on Mr. Byerlay’s  
certificate, an example of which is Exhibit  
255C; is that right?  
HMTQ v. Wilder et al  
Page 40  
A
Q
Yes.  
And you had known Mr. Byerlay for a period of  
time prior to September 1984; is that correct?  
Yes.  
A
Q
A
Were you friends?  
Well, he was a consulting engineer. I don’t  
think I would call it friends.  
All right. And he is the engineer who signed  
the certificates for all of the 23 projects  
that Coastal -- or that you were involved with;  
is that correct?  
Q
A
Q
Yes.  
He’s the only engineer who signed the  
certificates, right?  
A
No, I don’t think so. I think there was some  
other ones.  
Q
A
Q
Who else?  
I can’t recall, but there were others.  
Do you have any certificates that have people’s  
names other than Gerry Byerlay signing them?  
Not left today, but there were some. I saw  
them.  
And how about with regard to Mr. Johnson’s  
projects, Mr. Byerlay signed the certificates  
on those, didn’t he?  
A
Q
A
Q
I don’t even recall those ones.  
Mr. Byerlay signed the certificate in relation  
to Hydro -- sorry. Mr. Byerlay signed the  
certificate in relation to the Hydro-Petroleum  
Project?  
A
Q
A
Q
A
Which certificate are you talking about now?  
Which certificate were you relying on?  
Hmm?  
Which certificate were you relying on?  
Well, I was -- he -- he signed the -- a number  
of certificates.  
[72] I find the following excerpt from the accused’s testimony  
to be an illustration of his lack of candour:  
THE COURT: While there’s a break, and pardon me,  
were there patents on Johnson’s stuff, or do  
you know?  
THE WITNESS: No.  
HMTQ v. Wilder et al  
Page 41  
THE COURT: All right.  
THE WITNESS: He never got that far.  
MR. ANDERSON: Yes, let’s -- Your Lordship asked two  
questions followed by a “No” answer, which may  
have been mutually exclusive.  
Q
I think His Lordship’s questions was: Do you  
know whether or not Johnson had patents?  
Actually, I don’t know if he had them or not.  
A
THE COURT: All right.  
THE WITNESS: I shouldn’t say no. He advised me, at  
one point, that he had applied for patents on  
everything, but whether he received them is  
another thing.  
[73] Some of Mr. Wilder’s testimony is vague and equivocal as  
is evidenced by the following exchange between the accused and  
the prosecutor:  
Q
And this is an agreement with regard to --  
well, titled “The acquisition of new equipment,  
parts and components agreement,” and it’s with  
regard to the Hydro-Petroleum project; is that  
right?  
A
Q
Yes.  
And, again, the preamble is, Johnson & Burnett,  
which owns new equipment, parts and components,  
which can be used by the purchaser to develop  
prototype and you, the purchaser, wish to  
acquire it. And if you look at clause 4, the  
purchase price is set out as $36 million?  
Yes.  
And, again, directing your attention to clause  
5.1 of the agreement, the terms of repayment  
are $36 million to the vendor by the 31st of  
December, 1986. And, again, my question is:  
Did you pay Mr. Johnson $36 million?  
I think a substantial portion of it was paid,  
but I don’t think it was all paid on this.  
And why do you say that?  
A
Q
A
Q
A
Q
A
Hmm?  
Why do you say that?  
What do you mean why do I say that?  
HMTQ v. Wilder et al  
Page 42  
Q
What makes you say that you think a substantial  
part was paid?  
A
Q
A
Q
Well, because he was paid a lot of money, so --  
Well --  
-- so some of it had to apply to it, didn’t it?  
Well, we know that he was paid, according to  
your evidence, $14 million on the Fly Ash note,  
and we know from your evidence that he was paid  
$17 million on the Bio-Mass note, so that is a  
lot of money. So how can -- what makes you say  
that he was paid a substantial amount of the  
$36 million?  
A
Q
A
Q
Well, I just know he was, that’s all.  
And you have no records?  
No.  
Can you say whether or not it was paid by way  
of cheque?  
A
I think a lot of -- some of this stuff was --  
was -- after Revenue did their attack I had to  
-- to the people that were working with Mr.  
Johnson, I gave up my oil wells --  
And who are they?  
-- and -- Mr. -- my Uncle Lloyd and Dillman and  
Mr. Tolem (phonetic) Pryor. I gave them the  
oil wells, I gave them a number of mining  
properties. So I gave up a lot to try and  
clear off all these debts caused by Revenue  
Canada’s attack and destroying the business.  
And were there valuations with regard to the  
mining, wells and the things you gave these  
people?  
Q
A
Q
A
Well, I don’t think they’re formal ones, but we  
had agreed to a value.  
Q
A
Q
Just verbally?  
Yes.  
And again, clause 8 of the agreement deals with  
insurance, and my understanding is, again, you  
didn’t insure the equipment; is that right?  
Well, wasn’t insured -- like a lot of this  
ended up in the Coseco plant. So the plant was  
insured. And it’s sitting now in Edmonton, a  
lot of this equipment, and it’s not insured,  
it’s just out in the rain.  
A
Q
A
Q
And how did the --  
It’s not going to burn there.  
I’m sorry?  
HMTQ v. Wilder et al  
Page 43  
A
Q
It’s not going to burn where it’s sitting,  
unless somebody lights a grass fire, I guess.  
And how -- how did the petroleum -- Hydro-  
Petroleum equipment come to -- how did it go to  
Coseco? Explain that.  
A
Well, when we were having problems with -- we  
weren’t getting the continued recovery we  
thought with the Hydro-Petroleum, which was  
supposed to do, which I think we could do today  
if we did it again, but the -- then I traded a  
lot of the equipment into Coseco for Coastal’s  
share in Coseco --  
Q
A
Q
All right. And is there --  
-- but basically the -- hmm?  
Is there documentation reflecting those  
transactions?  
A
Not individually, no. They were just allowed  
to take whatever they required for the  
facility, and I think most of Coseco is the  
Hydro-Petroleum equipment. They took it and  
put it in there.  
Q
A
So the equipment that belongs to Coastal  
Natural, that it had paid $36 million for, was  
taken by Coseco; is that correct?  
Probably around $15 million. I think they put  
in about $12 million of equipment in their  
plant.  
Q
A
Q
A
And did Coastal get paid for that?  
It owns the stock.  
And is there documentation with regard to that?  
Yeah, it has the shares. Well, Vardax held the  
shares for it, but now it’s struck off the  
registry.  
Q
Do you have any documentation that establishes  
this $15 million equipment transaction between  
Coastal and the Hydro-Petroleum equipment and  
Coseco?  
A
Q
There’s no Coseco documentation around anywhere  
that I could find.  
And you testified that it’s your view or  
understanding that a substantial portion of the  
$36 million was paid to Johnson & Burnett. Did  
Mr. Johnson ever make demand of any of the  
monies?  
A
No.  
HMTQ v. Wilder et al  
Page 44  
MS. SMITH: Madam Registrar, if the witness could be  
shown, please, Exhibit 886. I’ll just hand up  
a copy to Your Lordship and my friend.  
Just for a comment, My Lord, the -- this  
original -- this is the original agreement in  
this Exhibit 11, and you’ve heard lots about  
it.  
A
THE COURT: Yes, I have.  
THE WITNESS: It’s the only original left of all,  
because the Crown has lost the Coastal minute  
book, which you know about now. So it appears  
to be the only original left of the whole  
works. How it got in there, wasn’t by me.  
[74] Even incriminating evidence that was found at his own  
home he tried to blame on others having put it there.  
[75] The following is also an excerpt of how cagey the accused  
tried to be in answering questions:  
MS. SMITH: Madam Registrar, could I have Exhibit  
100, please?  
THE CLERK: Exhibit 9-100?  
MS. SMITH: Yes, sorry, 9-100. Thank you.  
Q
The document that I’m showing you, part of  
Exhibit 22-1-138 on the left-hand corner under  
the word “invoice” has “Moore SpeediSet”  
7S01SB. Do you see that?  
A
Q
Okay.  
And the document that is the Hydro Fuels Inc.  
invoice dated April 8, 1984, has the same words  
and numbers, “Moore SpeediSet,” with the  
number. Do you see that?  
A
Q
Okay.  
And if you compare the columns at the top, as  
well as the wording at the bottom, I’m  
suggesting to you that they appear to be --  
that the Exhibit 9-100 Roman numeral IV appears  
to have been created from these documents.  
Well, I can’t -- I mean, this is a pretty bad  
copy, so who knows?  
A
HMTQ v. Wilder et al  
Page 45  
Q
All right. You say you have no knowledge of  
that; is that correct?  
I have no knowledge of it, no.  
Okay.  
A
Q
THE COURT: And the documents speak for themselves,  
in any event.  
MS. SMITH:  
Q
If you look at Exhibit 9-100 Roman numeral V,  
which is the purchase orders.  
Okay.  
And they are purchase orders from Johnson &  
Burnett. I’m sorry, I’m going to have to look  
at my copy here.  
A
Q
A
Q
There’s one.  
Okay. And if we look -- and if you can pass  
me, please, Exhibit 9?  
A
Q
Okay.  
And the purchase orders that we looked at  
earlier in Exhibit 9 Roman numeral 100 and V  
(sic), include numbers 24935, 24934, 24933, and  
24932. In Exhibit 138 there is not a photocopy  
of a purchase order but a blank purchase order  
with the same style numbers, the purchase  
orders this time being 24923. Do you see that?  
Yes.  
A
Q
All right. And your testimony is you don’t  
have any knowledge of the documents in Exhibit  
138; is that correct?  
A
Q
A
Q
No.  
All right.  
What do you mean by “knowledge”?  
And the --  
THE COURT: And these were seized from Johnson?  
MS. SMITH: That’s right, My Lord.  
Q
And I’m showing you Exhibit 86, the purchase  
order that you tendered in chief.  
Yes.  
That appears to be a document from your company  
going to Johnson & Burnett Company. The  
purchase order, in the preprinted form, the  
document you’ve produced is a photocopy, and  
the form itself seems to be identical to the  
purchase order that we had looked at that we  
found in --  
A
Q
A
Well, it’s a -- it’s a standard ready form you  
can buy anywhere.  
HMTQ v. Wilder et al  
Page 46  
Q
Right. And the number on your purchase order  
is 24941; is that correct?  
Yes.  
All right. And I’m going to suggest to you  
A
Q
that you got that document out of the stack of  
documents that were seized from Mr. Johnson’s  
home, and that this is just basically a pile of  
documents that you and he used to create  
documentation to paper the deals that you  
wanted to create.  
A
Q
You’d better say that one again.  
All right. I’m suggesting to you that the  
documents that were seized from Mr. Johnson’s  
house --  
A
Q
Okay.  
-- which include portions of the Mineral Gas  
Company invoices, portions of the Hydro Fuels  
invoices, was essentially a stack of papers, a  
stack of forms that you and he used  
interchangeably to create a paper trail of doc  
-- of transactions that you wanted a paper  
trail created for.  
A
Q
A
Q
A
Q
Okay. So what? Am I supposed to answer that?  
Yes. I would like you to --  
There was no question.  
I would like you to.  
Well, that’s not a question.  
So your answer is you have no knowledge of the  
documents and papers in Exhibit 221-128?  
What you’re trying to say is -- is a bunch of  
(inaudible). It’s false, I guess. Do you want  
me to translate?  
A
Q
All right. Exhibit 888 shouldn’t be in 221.  
Thank you. Can you explain, Mr. Wilder, how  
the in -- or the purchase order that is Exhibit  
886 predates later purchase orders with the  
numbering sequence?  
A
Q
I obviously had that sequence of numbers.  
And Mr. Johnson just happened to have the same  
sequence of numbers?  
A
Well, I’m sure you can go to the store and you  
buy so many out of a stack, and that’ll be the  
numbers you get. The numbers the other person  
gets is what you get.  
HMTQ v. Wilder et al  
Page 47  
[76] Mr. Wilder later in his testimony suggested that this  
invoice might have been typed by a secretary, Susan, whose  
last name he did not know, who did their typing in the complex  
that he shared with his co-accused, Mr. Johnson.  
[77] When Exhibit 41-2306 was put to the accused the court  
again got vague and equivocal answers as is evidenced by the  
following exchange:  
MS. SMITH: Can I have Exhibit 41-2036, please.  
Q
Mr. Wilder, I’m showing to you a handwritten --  
you should have it in front of you, a  
handwritten two-page document. I am showing to  
you a two-page handwritten document in pencil  
and it’s a document that Mr. Moi testified he  
received from you on, I think, 24th of June,  
1985. Can you -- is this your handwriting?  
Yes.  
All right. And with regard to the third entry  
on the first page, Hydro-Petroleum, the name  
Hugh Gagon appears. And can you tell the  
court, please, why his name appears there?  
This whole list was prepared because Mr. Moi  
had agreed to travel with me to each site and  
he wanted to know who he would meet at each  
site when we looked at the equipment, the  
prototypes.  
A
Q
A
Q
Wasn’t Hugh Gagon the engineer associated with  
the Hydro-Petroleum Project?  
A
Q
No, Hugh Gagon isn’t an engineer.  
What was Hugh Gagon’s role with regard to the  
Hydro-Petroleum Project?  
A
Q
A
Hugh Gagon showed up a couple of days a week.  
Mr. Becker and the other engineers did all the  
engineering on it.  
So why was his name put down as opposed to Mr.  
Becker or one of the other people who was there  
more frequently?  
Because when Mr. Gagon was in the -- there, he  
was in the back shop, and if we went there, he  
HMTQ v. Wilder et al  
would probably meet Mr. Gagon. That’s why I  
Page 48  
put it there.  
Q
And my understanding of your evidence is that  
the Hydro-Petroleum Project ultimately didn’t  
work out; is that correct?  
A
Q
Well, it -- yes, it didn’t give us the oil  
recovery we thought we were going to get.  
You’ve got the words, “Final Stages” here.  
Why?  
A
Q
A
Final stages?  
Yes, what does that mean?  
I don’t know why I wrote that there, but if Mr.  
Gagon (sic) came over there, he would see the  
equipment being assembled. It was probably  
going into -- it was probably well on its way  
back into reassembly as the Coseco plant, so  
then he could see what it looked like.  
When would that have been?  
Q
A
Q
In the summer of 1985.  
And with regard to the words or place,  
Edmonton, is that where the Hydro-Petroleum  
Project was located?  
A
Q
A
Q
A
Q
A
Q
A
Q
A
Q
A
Q
A
Yes.  
And where --  
Just outside Edmonton.  
Outside Edmonton? Where outside Edmonton?  
Just to the west, on the outskirts.  
Right. In an industrial park or --  
Yes.  
And what was the name of the industrial park?  
Winterburn Industrial Park, I think.  
And did I have a street address?  
I don’t recall it today.  
Were parts shipped there or delivered there?  
How do you mean, parts?  
Were items delivered there?  
Oh, of course, lots of items were delivered  
there.  
Q
So it had a street address, you just simply  
don’t remember it at this time; is that  
correct?  
A
Q
That’s what I said, I don’t recall.  
But you’d have known it at the time you  
prepared this document for Mr. Moi; is that  
correct?  
A
Q
The street address?  
Yes?  
HMTQ v. Wilder et al  
Page 49  
A
I’m not good with street address. I always  
tell everybody you go left, you go right, take  
a block. That would be my instructions. I  
wouldn’t give a street address to Mr. Moi  
because I wouldn’t expect him to go there by  
himself.  
Q
A
Well --  
But there was a list given Mr. Moi sometime in  
the first part of August. He has it in his  
notes with everything in it.  
Q
If we can drop down to the last entry on the  
first page of this document where it says Bio-  
Mass.  
A
Q
A
Q
Yes.  
And it says Jim Breitzman; is that correct?  
Yes.  
And can you tell the court, please, why his  
name appears there?  
A
Well, because he was working on that project at  
that time.  
Q
A
And what was he doing, exactly?  
Well, we’ve seen the -- we’ve seen the progress  
sheets that he provided. He was assembling the  
plant.  
Q
A
And Boundary Bay and Calgary, what do those  
place names signify?  
Well, that’s where, at that time, we must have  
had the pyrolyzer at Boundary Bay and the rest  
of the equipment was in Calgary.  
And again, with regard to the Boundary Bay  
site, there was a street address that you could  
have provided to Revenue Canada if you’d chosen  
to at that time?  
Q
A
I had no reason to provide a street address at  
that time.  
Q
A
Why do you say that?  
Because I was taking him there. Why would I  
give him an address?  
Q
With regard to Calgary, same answer? No street  
addresses provided, but there was a street  
address?  
A
There was no reason to provide a street  
address. The thought never entered my mind.  
And the status says complete.  
It says testing by units --  
Right.  
-- and they were --  
Q
A
Q
A
HMTQ v. Wilder et al  
Page 50  
Q
A
Before that it says --  
-- assembling the units and testing them. Each  
unit was completed, they were working on it.  
All right, so status complete, when I read  
that, it suggests to me that the prototype has  
been assembled; is that not correct?  
No.  
Q
A
Q
All right. So, I’m sorry, what does status  
complete mean?  
A
Q
A
It says status complete, tested by unit.  
Right.  
That’s what’s been going on at the time. If  
you read Mr. Breitzman’s chart of what he was  
doing, that’s what he was doing.  
The status of what is complete? I don’t  
understand.  
They’re assembled into modules. And so you  
make a module and then you start testing the  
module.  
Q
A
Q
A
Q
So the Bio-Mass project wasn’t complete --  
No, no.  
-- portions of it were complete; is that  
correct?  
A
Q
Well, the modules would be completed, yes.  
And on the last page, we have, “Fly ash, Jim  
Breitzman,” do you see that?  
Yes.  
And I think the words are Aldergrove and  
Edmonton?  
A
Q
A
Q
Yes.  
And with regard to both of those place names,  
again, a street name could have been provided  
but one wasn’t; is that correct?  
Yes.  
And underneath it says, “Complete.”  
Yes.  
A
Q
A
Q
What does that mean in relation to the Fly Ash  
Project?  
A
That means the -- the design is complete, it  
was now being moved off to the final assembly.  
So was the prototype --  
All the parts were completed --  
Right.  
-- and then they were moved to Edmonton to be  
assembled.  
Q
A
Q
A
Q
A
So was the --  
The -- I’m sorry.  
HMTQ v. Wilder et al  
Page 51  
Q
A
Was the Fly Ash prototype put together?  
Not at that time, no. Just the design was  
complete --  
Q
A
Q
So --  
And the parts were complete.  
-- when you say the design was complete, were  
you talking about sort of a white board thing  
or are you talking about --  
The --  
-- actually --  
-- new digesters were ready to go and the  
A
Q
A
filters were ready to go. Everything was ready  
to go now and assemble. That’s what we’re  
talking about there.  
Q
A
Q
A
And Jim Breitzman --  
If he’d have came, he’d have saw it, you know.  
I’m sorry?  
If he’d have came, he’d have seen all this  
stuff and we wouldn’t be here today.  
And Jim Breitzman’s name appears next to Fly  
Ash. Can you tell the court why that is,  
please?  
Q
A
Q
A
Well, he was working on it at that time. It’s  
in exhibits here.  
And your brother Terry was working on which  
projects at this point?  
At this point? He would bounce back and forth  
on the hydrolyzer and then the rest of the time  
he was in Calgary.  
Q
A
Q
A
Q
So the hydrolyzer is Bio-Mass; is that correct?  
Yes.  
And Calgary is also Bio-Mass; is that correct?  
Yes.  
All right. So with regard to the Bio-Mass  
project, if what Mr. Moi was seeking was the  
names of people who he would likely encounter,  
why didn’t you put your brother’s name down as  
opposed to a U.S. resident, such as Mr.  
Breitzman, who apparently spends his time in  
Boundary Bay, Calgary, Aldergrove and Edmonton?  
Because the components that he would see on the  
Fly Ash and the filter and that were still out  
here. Mr. Breitzman was there at the time, so  
he would be looking at it here, you know, in  
the summer of ’85.  
A
HMTQ v. Wilder et al  
Page 52  
[78] In addition to all of this, there is also the evidence of  
Mr. Duke, which I accept, that the equipment which was  
tendered by Mr. Wilder as photographs of equipment that were  
purported to be the subject of the 1984 Fly Ash, Hydro-  
Petroleum and Bio-Mass Project agreements were really  
photographs containing some parts from a Chevron research  
plant in Salt Lake City, Utah. Even more important is that  
this equipment was still located at that plant in 1985, one  
year after the 1984 agreements were signed.  
[79] Mr. Wilder tried to distance himself from the dealings of  
some of his co-accuseds. It must not be forgotten, however,  
that these were multi-million dollar enterprises that were  
being run by Mr. Wilder and that he was the sole director and  
sole shareholder of the companies that owned the three  
projects that are the subject of these proceedings. From the  
evidence adduced at this trial, I am satisfied that he was the  
boss; he delegated who should do what; nothing was done with  
respect to the transactions involving these S.R.T.C. companies  
without his knowledge and direction. The Revenue Canada  
officials who tried to get information from Mr. Richards found  
that Mr. Richards could not give them any information without  
Mr. Wilder’s permission. I accept the evidence of Mr.  
Breitzman, Mr. Russ and Mr. Gagon as to the role of complete  
HMTQ v. Wilder et al  
Page 53  
control played by Mr. Wilder in their dealings with respect to  
these enterprises. I also accept the evidence of Mr.  
Breitzman to the effect that Mr. Johnson would not make a  
decision with respect to these projects without first speaking  
to Mr. Wilder.  
[80] Mr. Wilder testified that he was not involved in the  
research and development with respect to the Fly Ash and Bio-  
Mass Projects. He testified that that was done exclusively by  
the co-accused Mr. Johnson until around March of 1985 when Mr.  
Johnson got sick. Mr. Wilder testified that it was only after  
Mr. Johnson got sick that he had to take over these projects  
from him. Mr. Wilder testified further that because of Mr.  
Johnson’s involvement with the Fly Ash and Bio-Mass Projects,  
he had no direct dealings with Mr. Breitzman or Mr. Russ with  
respect to either of those projects until he took them over in  
around March, 1985.  
[81] This evidence by Mr. Wilder is, however, contradicted by  
the evidence of Mr. Russ. Mr. Russ had testified that the  
equipment listed in invoice number 1001 of exhibit 370 was  
actually shipped from the U.S. to Canada in the context of his  
arrangement with Mr. Wilder, Mr. Lawrence, and Mr. Johnson and  
that the purchase order assigned for Bio-Mass was 24933.  
Although Mr. Wilder claimed that he had nothing to do with  
HMTQ v. Wilder et al  
Page 54  
this shipment, it is clear, from freight invoices which were  
seized from his home, that these items were shipped to his  
home in Bellingham and that Mr. Wilder was listed on the  
freight invoices as the consignee. Also seized from his home  
was a cancelled cheque in the sum of $3,803.55 which showed  
that his company, Vardax, had paid for the shipping bills. On  
the freight invoices from International Transport Inc., which  
are marked exhibit 2888, also appears the words “consigned to  
Dara Wilder” and next to that was Mr. Wilder’s home number, 1-  
206-671-7817.  
[82] Notwithstanding how Mr. Wilder tried to explain this  
evidence, I find as a fact that this evidence and other  
evidence adduced at this trial corroborates the evidence of  
Mr. Russ and Mr. Breitzman as to Mr. Wilder’s direct  
involvement in the Fly Ash and Bio-Mass Projects from October,  
1984 onward.  
[83] Mr. Wilder stated that, contrary to the statements made  
on January 7, 1985, there was an agreement between J & B and  
Coastal. Mr. Alibhai stated that Mr. Johnson had denied the  
existence of such an agreement. Mr. Wilder advised that Mr.  
Johnson was mistaken and that such an agreement existed, but  
that it was a simple one, which did not stipulate how J & B  
was going to get paid. Mr. Wilder advised that he was self-  
HMTQ v. Wilder et al  
Page 55  
insured and that there were no customs or border crossing  
documents because the shipping was “FOB” (Freight on Board)  
Vancouver, so the documents would be with the suppliers.  
[84] This statement by Mr. Wilder to the effect that he had no  
customs documents is interesting in view of Exhibit 291-152  
which was seized from his residence on May 7, 1987. The  
exhibit includes:  
1)  
Invoice dated November 30 1984 from Customs  
Broker Norman G. Jensen Inc. to Vardax  
Consultants, Inc, 3025 Eldridge Ave.,  
Bellingham, re: 11/05 Inter Mtn. Re:  
Camax/Budget;  
2)  
Shipper’s Export Declaration from Blaine,  
“Exporter (principal or seller – licensee:  
Camax Consulting Inc., Henderson, CO.”;  
“Agent of exporter (Forwarding agent): Vardex”  
“Description:  
20 Chiller units sold as is where is for  
salvage only ($3 000)  
1 Eimco Filter as is where is no warranty”  
3)  
Document dated November 5 1984, with reference  
no./purchase no. “20046” identifying the vendor  
as “Camax;” consignee as “Budget Diesel;”  
transportation: “Intermountain Transport,” and  
description as above; 20 chiller units “sold as  
is where is for salvage only,” at $150.00/unit,  
totalling $3 000.00; and one Eimco filter “as  
is where is no warranty” for $2 400.00.  
[85] Why was it important that Mr. Wilder refuse to tell the  
auditors about these customs documents? The answer is simple.  
This information would have given the auditors a lead to the  
HMTQ v. Wilder et al  
Page 56  
names of the American suppliers and it would have given the  
auditors an opportunity to get information about these  
shipments.  
[86] After this review of some of Mr. Wilder’s testimony, I  
reiterate that I found him to be devious, cunning, and unable  
to appreciate the duty to speak the truth under oath. I found  
him to be a brazen liar.  
B.  
1.  
Prototypes and Technology  
Vardax  
[87] The accused was the sole director and sole shareholder of  
many companies that went under the name Vardax. According to  
Mr. Wilder, these companies have been around since around  
1977. The only other person who had any signing authority of  
any kind with respect to these companies was Seona Wilder, who  
had the authority to sign cheques on the company’s bank  
accounts. These companies were billed by Mr. Wilder as being  
very progressive. In fact, the following exchange took place  
between the prosecutor and Mr. Wilder:  
Q
And with regard to British Columbian companies,  
my understanding is that you’re an officer and  
director of Vardax?  
A
Q
Yes.  
What’s the full name of that company?  
THE COURT: What’s the what?  
MS. SMITH: Full name?  
THE COURT: Oh, yes.  
THE WITNESS: Well, there’s Vardax Consultants Inc.  
HMTQ v. Wilder et al  
Page 57  
MS. SMITH:  
Q
A
Q
A
Q
A
Q
A
Q
Yes?  
Vardax Resource Supply Inc.  
Yes?  
There’s Vardax International Forwarding Inc.  
International which?  
Forwarding.  
Forwarding?  
Yes.  
And what’s that about? What type of business  
does that company conduct?  
Generally in every type of business.  
I’m sorry?  
It was generally in all types of business,  
primarily the trucking.  
A
Q
A
[88] After describing this truly remarkable company that did  
everything, Mr. Wilder seemed to have some difficulty  
describing what a freight bill was. Mr. Wilder also  
introduced into evidence a glossy flyer extolling the virtues  
and accomplishments of Vardax Engineering which was apparently  
compiled in 1985. In that brochure he also claimed that the  
company did financial analysis and yet he, the sole director  
and owner of the company, did not know what a financial  
analyst does. At any rate the address of Vardax Consultants  
Inc. in the United States of America was listed on the  
brochure as 3025 Eldridge, Bellingham, which Mr. Wilder stated  
was his home address. Mr. Wilder also stated, however, that  
the office of that company was on Birchwood in Bellingham. It  
is interesting to note that this remarkable company was struck  
HMTQ v. Wilder et al  
Page 58  
off the B.C. Company register on May 5, 1982 and restored to  
that register on June 29, 1982.  
[89] Included in the Vardax brochure that was introduced into  
evidence by Mr. Wilder with much fanfare, were the following  
supposed inventions: resonance concentrator, live sluice  
resonance, accelerator concentrator, continuous concentrator,  
high grade separator, high grade separator concentrators, a  
plant developed with elevators, a slider system conveyor, a  
portable refinery, a continuous digestor with filters,  
settling cone, suction dredge venturi, sonic crusher, Geotron,  
fume scrubber, dewatering unit, incinerator and microblaster.  
[90] Mr. Wilder testified that he was concerned about the  
confidential nature of these inventions yet, except on one  
occasion, he made absolutely no attempt to have these  
inventions patented. It may be significant that with respect  
to the one attempt at patenting his inventions he had no  
details of the pending patent number. In saying so I want to  
reiterate that I am aware that there is no onus on the accused  
to establish his innocence. The onus is on the Crown to  
establish his guilt. Nevertheless some evidence of the  
pending patent number or evidence of what Mr. Wilder submitted  
to be patented with accompanying drawings would have certainly  
been helpful to me in this case. His reason for refusing to  
HMTQ v. Wilder et al  
Page 59  
take to patent his prototypes in this matter is very curious  
indeed. The following excerpt from the transcript of his  
evidence is informative:  
Q
After Vardax was incorporated, did any of your  
focus turn to mining and refining technologies?  
Yes, it did.  
Any of the technologies that you have been  
involved in, have you patented any of them?  
No, I haven't.  
A
Q
A
Q
Can you tell the court why these various  
technologies were not patented?  
A
I always found that when I developed something,  
it’s usually done fairly quickly, and --  
THE COURT: It what?  
THE WITNESS: When I develop something, I do it  
fairly quickly, so that the -- if you were to  
go through the patenting process, by the time  
you patented it, the thing had changed, because  
these things are evolving all the time. So by  
the time you got your patent, you would have  
something that should be a new patent. So it  
was really a waste of time to try to patent  
them, and that’s even true today. I develop  
these things so fast, you couldn’t patent them  
at that speed, the changes in them.  
MR. ANDERSON:  
Q
A
Q
Back in the period of 1977 through the mid-  
1980s, what understanding, if any, did you have  
with respect to how long it took to apply for  
and obtain a patent.  
It was a two-year process, usually. By the  
time two years were up, the technology we  
develop two years ago would be obsolete, just  
in our own process.  
In the 1980s, what experience did you have, if  
any, in relation to the process of applying for  
and being granted a patent?  
A
Q
A
I had applied for one in the early ‘80s, a  
patent.  
Did -- can you tell us what happened in  
relation to that particular patent?  
Well, they came back and they wanted -- they  
wanted so much detail, it would -- it would --  
HMTQ v. Wilder et al  
you’re divulging the entire heart of what  
Page 60  
you’re trying to do, and I thought, well, if  
you’re -- if you’re going to put all that  
information in the patent, you’re just  
basically giving it to somebody else to pick up  
and come against you, and with modifications on  
a competitive edge, so I haven’t bothered to do  
that, so –  
[91] Later on in his testimony the following exchange again  
takes place:  
A
Yes, when I had a -- working on a gold mining  
property, I had developed a piece of equipment  
that looked a little bit like that. It had --  
it had a membrane between -- between -- you see  
those riffed bars that go across, those  
rifflings? It had a membrane between them that  
pumped up and down, so it made the -- as the --  
as the water in the gravel ran across it, the  
pumping up and down would keep it loose so the  
gold and heavy minerals would settle out to the  
bottom. The problem with it was we couldn’t  
get enough production. So then I -- I  
developed this resonance action and we mounted  
the -- the unit with the membrane on it, and  
when we were working with the membrane, the  
mechanism on the membrane broke and we found  
that it was doing a better job without it  
working anyway. So then we eliminated the  
membrane and I developed this piece of  
equipment for -- it’s for concentrating heavy  
minerals. It’s basically a gravity separator.  
In order to increase production, did you  
experiment with a number of methods that caused  
it to oscillate?  
Yes, we did different -- different types of  
vibrations to make it oscillate, and we ended  
up with the eccentric drive. If you look at  
the second picture, you’ll see a silver wheel  
down there, that attaches to an eccentric drive  
that causes the thing to -- the motor and  
everything is housed inside that box, there,  
and it causes the action.  
Q
A
HMTQ v. Wilder et al  
Page 61  
THE COURT: And for the same reason, you didn’t take  
out a patent on this.  
THE WITNESS: No patent on it. Well, this one is  
evolving. We’re -- we actually even, after all  
these years, if you look at the bars that are  
holding -- the bars are held down because the  
action is so severe in it. That grating that  
you see there, the riffles, they were held down  
on this one by these pull-down bars. Then we  
had problems with that. Then we -- we modified  
that hold-down system probably 10 times, and  
actually, as we sit here, we have another one -  
- I have another one that’s being built with  
trays in it, and we’re going to have it running  
in about two weeks, and the trays sit in there  
and lock, so we don’t have the problem with it.  
And I have another one drawn which has a  
continuous moving cleated belt on it. So it’s  
evolving all the time. Never stops.  
[92] Mr. Wilder testified that the drawings of the prototypes  
for his many inventions were made on a whiteboard and formal  
drawings of those prototypes were only made when the  
prototypes reached the point of being manufactured. The  
problem with this evidence is that Mr. Gagon testified that  
some of these alleged inventions of Mr. Wilder as they related  
to tar sand technology were his and did not belong to Mr.  
Wilder or Vardax. Mr. Gagon actually produced patents to  
prove this point. He testified that he only granted a licence  
to use these patents and that that licence was withdrawn when  
the project ceased to operate. Mr. Gagon also testified that  
some of the equipment, which may have been the subject of  
these agreements, was taken from junkyards, was old and had to  
HMTQ v. Wilder et al  
Page 62  
be refurbished. Mr. Gagon’s evidence will be described in  
greater detail further in this decision.  
[93] When asked by the court whether the prototypes and  
technology were purchased from his partner, Mr. Johnson, Mr.  
Wilder replied “no”. After being cautioned by his counsel  
that he should think about his answer, Mr. Wilder’s reply  
changed to “I don’t know”. At any rate, it is clear from the  
testimony of Mr. Wilder that in the late summer or early fall  
of 1983 he spoke to Michael Vaz about raising money for his  
inventions. Mr. Wilder testified that he was introduced to  
the S.R.T.C. program by Mr. Vaz. He further testified that  
Mr. Vaz introduced him to Roger Lawrence in the fall of 1983.  
He further testified that Mr. Lawrence incorporated a company  
for him which was eventually called Canadian Bio-Mass Research  
Inc. At the same time Mr. Lawrence incorporated another  
company for Mr. Wilder, 7892345 Holdings Ltd. that was later  
called Coastal.  
[94] After Mr. Lawrence had reserved the names of these  
companies, but before they were registered with the Registrar  
of Companies, another lawyer transferred some of Mr. Johnson’s  
technology to one of the new companies. The following  
statement was made by Mr. Wilder in this regard:  
HMTQ v. Wilder et al  
Page 63  
Yes. There was an agreement that that would happen,  
that -- that Mr. Johnson’s prototypes he was  
administering would be sold to 789, and then -- and  
then the -- the Vardax prototypes would be sold to a  
numbered company, which he had, and it eventually  
became Pacific Western.  
[95] Later on in Mr. Wilder’s testimony the following exchange  
occurred:  
Q
A
And how long after the agreement was made that  
you would buy Mr. Johnson’s prototypes and vice  
versa? How long after that was the meeting with  
Mr. Vaz we’re talking about?  
The -- I’m just trying to place it. The -- the  
-- the agreements for the Vardax sale to Mr.  
Johnson’s numbered company were executed on the  
24th of February 1984, so I think the meeting  
with Mr. Vaz was before that.  
2.  
Confidentiality Agreements  
[96] According to Mr. Wilder, D&B Manufacturing and Superior  
Manufacturing helped manufacture equipment relevant to the  
three projects that are the subject of this trial. It is  
interesting that although Mr. Wilder claimed that he did not  
divulge his prototypes to Revenue Canada because he was  
concerned with confidentiality, he had no confidentiality  
agreement with either of these companies. The following is an  
exchange between Crown counsel and Mr. Wilder on this subject:  
Q
A
Now, Mr. Wilder, do you know what reverse  
engineering is?  
Yes.  
HMTQ v. Wilder et al  
Page 64  
Q
A
Can you explain your understanding of that to  
the court?  
It’s when you take something apart and -- if  
you have something like that microphone and you  
want to make one, you take it apart and you  
engineer it and make it. I think that’s what  
the Chinese do all the time with our stuff,  
reverse engineer it.  
Q
And you can discover how something was built by  
working backwards, is that fair?  
Yes.  
Did you have confidentiality agreements with  
D&B Manufacturing?  
A
Q
A
Q
A
Q
No.  
And did you --  
I may have, I don’t recall. I don’t think so.  
You’ve testified to this court that your  
technology and equipment was worth millions of  
dollars. Don’t you think you’d remember  
whether or not you had a confidentiality  
agreement with one of the main manufacturers?  
Well, I didn’t really get into confidentiality  
agreements.  
A
Q
A
Why not?  
Well, usually the manufacturers only build a  
part of it, of the total plant.  
Q
Did you have confidentiality agreements with  
Superior?  
A
Q
No, I’m sure I didn’t.  
And you didn’t have patents for any of the  
processes or equipment developed on these three  
projects?  
A
Q
No, I found it was -- patents were not  
necessary.  
You testified that your brother, Terry, was  
involved in the projects and that he purchased  
equipment when needed and ensured that there  
was proper costs. Did he provide you with  
paperwork and receipts and the like?  
No, because he would be working under some  
other entity when he did whatever he was doing,  
so he would -- when he was buying something it  
was usually because they tested it and found it  
was no good. They had to go buy something else  
to replace it with.  
A
HMTQ v. Wilder et al  
Page 65  
[97] Mr. Duke was questioned about how careful and protective  
Mr. Gagon was of his technology. I am not sure what the  
reason for that line of questioning was but what I do gather  
from the evidence is that Mr. Gagon did something about that  
confidentiality issue by registering patents for his  
technology. Mr. Wilder did not.  
3.  
The Fly Ash Project  
[98] Mr. Wilder testified that the Fly Ash research was  
started by Mr. Johnson. Dr. Des Vaughan from Chevron also  
became involved. Mr. Wilder testified that he was not  
involved in developing any fly ash processes prior to Mr.  
Johnson getting involved and pursuing it in 1980 and 1981.  
[99] According to Mr. Wilder the Fly Ash prototype that he  
bought from Mr. Johnson for $14,200,000 was separate and apart  
from any equipment brought up from the United States,  
including Lawrenceburg, Kentucky, but this extra equipment was  
paid for by Coastal. Exactly what was actually bought from  
Mr. Johnson for $14,200,000 is certainly not clear. When  
asked by Crown counsel what he was actually buying for  
$14,200,000 the following exchange took place between Mr.  
Wilder and Crown counsel:  
Q
Mr. Wilder, before we go onto the deals in  
detail, I’d like you to just give us an  
overview, because I’m not quite sure that I  
HMTQ v. Wilder et al  
understood your testimony. And let’s just  
Page 66  
start with the fly ash project. Without going  
into sort of what led up to the transaction, my  
understanding is you and Mr. Johnson entered  
into an agreement. So let’s just start it from  
there.  
A
Q
A
Q
A
Q
Okay.  
What is your company wanting to buy?  
What did it buy?  
Yes.  
The prototype.  
And can you describe that, please, for the  
court?  
A
Q
A
What the prototype is?  
Yes?  
Well, it’s the prototype of the fly ash plant,  
with all its components.  
Q
A
Q
A
And did you see that plant?  
Yes.  
And where did you see it?  
At the time we did the deal, parts of it were  
in Princeton, parts of it were in Langley,  
parts of it were in Ferndale, and parts of it  
were in Richmond.  
Q
A
All right, so you never saw the prototype all  
put together at the time of the deal; is that  
correct?  
No. Well, the units that were there were  
prototype components of it, so we saw enough --  
we saw enough of it that the whole thing -- you  
knew what the whole thing was.  
Okay. And when did you see it?  
In 1983.  
Q
A
Q
When in 1983? Tell us about it? Tell us about  
the inspection?  
A
Well, it would be in -- during 1983 he was --  
he was doing the work on it so I had gone --  
usually -- my expertise was in that area, so  
they would always ask me questions so I’d  
always go and give my two bits worth. If I saw  
problems they were having at the various  
places.  
Q
And did you get appraisals with regard to the  
material that you were going to buy?  
Did I get appraisals?  
A
Q
Yes?  
HMTQ v. Wilder et al  
Page 67  
A
I got -- I got estimates of what the components  
would cost. Or actually some of them were off  
the shelf so you could price them. That’s the  
way I did it.  
And you don’t have any of that documentation?  
No.  
Q
A
[100]  
After the contract with Fly Ash (Exhibit 15A) was  
drawn to Mr. Wilder’s attention by Crown counsel, the  
following exchange took place:  
Q
Mr. Wilder, I am going to -- I’m going to ask  
Madam Registrar to give you Exhibit 15A,  
please. And this is a copy of an acquisition  
of the equipment, parts and components  
agreement between Johnson & Burnett and Fly  
Ash.  
……  
Q
A
Q
Now, you recognize this document, Mr. Wilder?  
Yes.  
And your signature appears on it; is that  
correct?  
Yes.  
A
MS. SMITH: Sorry, My Lord, I just have to find my  
copy.  
MR. ANDERSON: Do you want this?  
MS. SMITH: No, I’ve got another somewhere.  
Q
Okay. And this document is dated the 12th of  
April, 1984?  
A
Q
Yes.  
And, as we looked yesterday, that’s four days  
before the incorporation date of 789?  
Yes.  
And the vendor is Johnson & Burnett, the  
purchaser is your company, and the first clause  
opens, (a):  
A
Q
Vendor owns new equipment, parts and components  
which can be used by the purchaser to develop  
prototypes.  
HMTQ v. Wilder et al  
Page 68  
Now, by then you understood that to qualify as SRTC  
research or development the equipment, any  
equipment, had to be unused; is that not  
correct?  
A
Q
A
Q
No, didn’t -- there’s no requirement of that  
that I know of.  
So the word “New” has no significance in this  
document?  
No. I was buying the prototype and I -- I  
related the “New” as relating to the prototype.  
Clause (a) doesn’t say that it’s a prototype  
that is being sold, it indicates that it’s  
equipment, parts and components which can be  
used to develop a prototype; is that not  
correct?  
A
Q
A
Well, in my mind, I was buying the prototype.  
This is how the lawyers worded the agreement.  
These agreements were changed numerous times.  
However they wanted to do it, I knew what I was  
doing, I was buying a prototype. Prototypes  
are new.  
And if you go to page 3 of the agreement,  
“Description,” paragraph 2, “Description of new  
equipment, parts and components,” again, there  
is reference to new equipment, parts and  
components, but no reference to a prototype; is  
that not correct?  
That’s what it says, but I was buying the  
prototype. That’s what I had in my mind. How  
the lawyers worded this and why they did that,  
I don’t know.  
[101]  
In my view the reference to the purchase of  
prototypes is another example of a recent fabrication by Mr.  
Wilder. The $14,200,000 contract clearly calls for the  
acquisition by Mr. Wilder’s company of new equipment, parts  
and components that can be used to develop a prototype. The  
suggestion by Mr. Wilder that the lawyers who prepared the  
HMTQ v. Wilder et al  
Page 69  
contract did not get it right or that he could not read at the  
time he signed those contracts is ludicrous.  
[102]  
Perhaps the highlight of this two year long trial is  
the exchange between Crown counsel and the accused Mr. Wilder  
as to whether or not $14,200,000 was a “fair amount of money”.  
When asked by Crown counsel how the $14,200,000 was paid to J  
& B for the items listed in the contract the following  
exchange occurred:  
MS. SMITH: Clause 2. Page 3, clause 2, description  
of the equipment.  
Q
And then clause 4 of the agreement, Mr. Wilder,  
sets out the price of $14,200,000.  
Yes.  
And clause 5, at the next page, page 4, has the  
terms of payment, and clause 5.1 says:  
A
Q
To the supply of the equipment, parts and components  
the sum of $14,200,000 shall be due and payable  
in total by the purchaser to the vendor on  
December 31, 1986, unless all or part thereof  
of the abovementioned sum has been paid by and  
from a percentage of the net profits arising  
from the successful commercial use or  
application of products developed from the  
design of the prototype project as herein  
represented. And the purchaser and vendor do  
now here agree that the proportionment of such  
net profits shall be as follows ...  
And it sets out a percentage. Were monies ever paid  
from the profits or commercial use of a  
prototype design?  
A
No, but the 14.2 million was paid in full and  
the note was discharged --  
All right. And when --  
-- I think sometime in 1986.  
1986?  
Q
A
Q
HMTQ v. Wilder et al  
Page 70  
A
It was filed as an exhibit in the last  
proceeding.  
Q
A
And how was that paid? By cheque?  
Well, it was paid by monies that Mr. Johnson  
received.  
Q
A
Q
A
From whom?  
From Coastal.  
And where did Coastal get that money from?  
Coastal got money from all kinds of places. I  
can’t tell you that --  
Q
A
Q
A
Q
A
Q
A
Well --  
I don’t --  
-- why not?  
-- have it in front of me.  
Well, $14 million is a fair amount of money.  
Oh, it is to you, but to me it isn’t.  
Okay.  
And that’s the different scale that we operate  
on.  
Q
A
All right. Let’s just deal with the payment.  
Was it in cash?  
I don’t know -- recall exactly what the payment  
was, but I know the note was discharged. It  
had -- Johnson wrote that across it.  
I’m sorry?  
I know the promissory note was discharged.  
Exactly how it was paid for, I can’t tell you  
right sitting here today.  
Q
A
Q
A
And you don’t have a cheque or a bank statement  
reflecting Coastal paying Mr. Johnson’s company  
$14.2 million?  
No.  
(Underlining mine)  
[103]  
I do not believe that even Bill Gates or our own  
Jimmy Pattison would consider that $14,200,000 isn’t a fair  
amount of money.  
[104]  
These agreements had to be redone a short time later  
because they were prepared before the purchaser companies had  
been incorporated. These agreements are so germane to the  
HMTQ v. Wilder et al  
Page 71  
proof of the charges before the court that I should deal with  
them separately.  
4.  
The Agreements between Mr. Wilder’s and Mr. Johnson’s  
Companies  
[105]  
PNR was a company controlled by Mr. Johnson and Bio-  
Mass was a newly incorporated company completely controlled by  
Mr. Wilder. Under the agreement which was dated May 7, 1984,  
PNR sold Mr. Johnson’s technology to Bio-Mass for $17,200,000.  
When the agreement was re-drawn approximately three months  
later, that sale price was increased to the sum of  
$20,007,160. The reason for this increase was explained by  
Mr. Wilder in the following exchange between himself and his  
lawyer:  
Q
You explained to us yesterday, Mr. Wilder, that  
at some point the purchase price increased from  
$17,200,000 to what you said was slightly in  
excess of $20 million?  
A
Q
Yes.  
Okay. Now, you’ve given us an explanation, I  
think, briefly about that, but I’d like you to  
elaborate on it, if you can, as to how that  
came up with Mr. Johnson, how you discussed the  
price.  
A
Well, Mr. Johnson advised me he had this -- he  
was going to solve the pyrolyzer problem by  
using Mr. Breitzman. So he -- he brought me a  
-- a -- he had a list of equipment and the  
breakdown, which I don’t have any more and we  
went through the lists and the costs of how he  
had arrived at that, and after I reviewed that,  
I thought it was reasonable for that increase.  
HMTQ v. Wilder et al  
Page 72  
[106]  
The amount payable under the agreement between J & B  
and Hydro-Petroleum Research (7892345 Holdings Ltd.) was  
$36,000,000.  
[107]  
The first thing that is noteworthy about these  
agreements is the vagueness of the descriptions of the items  
that were being sold. There are no patents for this  
“technology”; there are no drawings of the prototypes; there  
is no way of telling whether these prototypes included the  
second hand material that was referred to in the testimony of  
Mr. Gagon and Mr. Russ; there is none of the detail which one  
expects to see for sales of this magnitude; there are no  
serial numbers or model numbers on the equipment; there is no  
suggestion in the agreements as to where these technologies  
were located. The location of these technologies is important  
since there was evidence that the accused was moving some of  
this equipment from one project to another. I am not  
suggesting that there is any onus on the accused. I am fully  
aware that it is for the Crown to prove its case beyond a  
reasonable doubt. I am also very much aware that there is no  
onus on the accused to prove his innocence. Nevertheless it  
is noteworthy that there is no credible, independent evidence  
before me as to why an additional $2,807,000 was needed to  
solve the pyrolyzer problem.  
HMTQ v. Wilder et al  
Page 73  
[108] The second interesting aspect of these sales is the  
manner in which the purchase price was paid. The purchase  
price of $36,000,000 was paid with a promissory note made by a  
new company with no assets. There are no guarantors, not even  
Mr. Wilder or his wealthy Uncle Lloyd or even Vardax, for the  
payment of this sum of $36,000,000. Similarly, the purchase  
price of $20,700,160 due under the agreement between PNR and  
Bio-Mass was also paid by a promissory note for the full sum.  
The promissory note was again from a newly formed company with  
no assets. Again, there were no guarantors for this large sum  
of money. In fact, there is absolutely no security for these  
large sums of money except for these two worthless promissory  
notes from new companies with no assets. The same could be  
said for the promissory note of $14,200,000.  
[109]  
Although these agreements were headed “ACQUISITION  
OF NEW EQUIPMENT PARTS & COMPONENTS AGREEMENT”, Mr. Wilder  
testified that it was not necessary for the equipment parts  
and components to be new. He testified that it was only  
necessary that the prototypes be new. In addition to that  
there is at least one Statutory Declaration dated August 17,  
1984 by Dara Wilder where he declared that on or about April  
27, 1984 title passed from J & B to 7892345 Holdings Ltd. of  
assets in the amount of $36,000,000 and that the assets are,  
HMTQ v. Wilder et al  
Page 74  
to the best of his knowledge, new equipment, parts and  
components: Exhibit. 229[64] – seized from Roger Lawrence’s  
office.  
5.  
Dates of Execution  
The dates of execution of these agreements for the  
[110]  
acquisition of new equipment parts and components are also  
interesting. They were executed before the companies that  
purported to buy or sell them were incorporated. Mr. Wilder  
testified that these agreements were originally executed in  
February, 1984 and then re-executed in April and May, 1984.  
The date of the execution of the three agreements which are  
the subject of these proceedings was February 24th, 1984, as  
is evidenced by this exchange between Crown counsel and Mr.  
Wilder:  
Q
All right. Now, Mr. Wilder, as I understand  
it, with regard to all three projects, you  
entered into an agreement with Mr. Johnson’s  
company in late February of 1984; is that  
correct?  
A
Q
Yes.  
So Coastal entered into an agreement with  
regard to the Hydro Petroleum items?  
Yes.  
And also entered into an agreement with regard  
to the Fly Ash items?  
A
Q
A
Q
Yes.  
And Canadian Bio-Mass Research Inc. entered  
into a contract with regard to the Bio-Mass  
items; is that correct?  
A
Yes.  
HMTQ v. Wilder et al  
Page 75  
[111]  
So what we had was the accused entering into  
these multi-million dollar agreements before the companies  
were incorporated. When he later discovers that, in fact,  
they are not valid agreements, he had to enter into new  
agreements. The following exchange between Mr. Wilder and  
Crown counsel illustrates the attitude of Mr. Wilder towards  
this error and the dates that the agreements concerning the  
three projects were re-executed:  
Q
A
Okay, that’s actually what I’m interested in.  
Can you tell us, please, exactly how you came  
to learn that the company hadn’t been  
incorporated, or the name hadn’t changed?  
Well, Mr. Lawrence called and wanted these  
agreements re-executed, like there was  
something wrong with them. He never actually  
came out and said that he forgot to incorporate  
the company.  
Q
A
Okay, and when did that phone call occur?  
It would’ve been the early part of April, 1984.  
He never -- he wasn’t -- didn’t tell the truth.  
Okay.  
It was later that I figured that out.  
So he called you and said that they needed to  
be re-executed and --  
Q
A
Q
A
Yeah, he said there was some changes that had  
to be done. So I just went and signed them.  
But I think I learned that it had -- the  
incorporation date showed up in October or  
September, when we had to redo the Fly Ash  
agreement. We found out it hadn’t been  
incorporated for that one, too.  
Q
A
And by the time you were executing this  
agreement, you had been involved in a  
significant number of corporations, right?  
Yes.  
HMTQ v. Wilder et al  
Page 76  
Q
And it’s your evidence that you didn’t ask to  
see a certificate of incorporation, or anything  
like  
that, prior to executing the agreements; is  
that correct?  
A
Q
Yes, I always relied on the lawyers at all  
times. I never, for anything, I never checked  
on them.  
So on April the 12th, 1984, you signed an  
agreement with regard to the purchase of the  
Fly Ash again; is that correct?  
Yes.  
And on the 27th of April, 1984, you signed a  
contract with regard to the Hydro Petroleum  
process?  
A
Q
A
Q
Yes.  
And the Canadian Bio-Mass one was signed May  
7th, 1984; is that right?  
A
Yes.  
[112]  
The “Acquisition of New Equipment, Parts &  
Components Agreement” between J & B and Fly Ash Research  
(7892345 Holdings Ltd.) was re-signed by Dara Wilder and  
Ronald Johnson on April 12, 1984 (Exhibit 15a[2039i]). The  
reason for that was, according to Mr. Wilder, because 7892345  
Holdings Ltd. was not incorporated when the agreement was  
originally signed in February, 1984. On the date that the  
agreement was re-signed, however, 7892345 Holdings Ltd. was  
still not incorporated. In fact Dara Wilder had nothing to do  
with the company until April 16, 1984, when he was appointed  
sole director of the company. That was the date on which the  
company was incorporated. Notwithstanding that, on April 12,  
1984, Mr. Wilder, on behalf of 7892345 Holdings Ltd., signed a  
HMTQ v. Wilder et al  
Page 77  
$14,200,000 promissory note from 7892345 Holdings Ltd. to J &  
B.  
[113]  
This agreement and the promissory note was produced  
to Akbar Alibhai during audit.  
[114]  
According to Mr. Wilder the agreement for  
acquisition of new parts and components between PNR and Bio-  
Mass was originally signed in February. 1984 and was re-signed  
on May 7, 1984, for $17,200,000 because the companies were not  
yet incorporated at the time the agreement was signed in  
February, 1984. The re-signing of this document on May 7,  
1984 did not however deal with the original problem.  
Concession Resources Ltd., which was originally incorporated  
with Roger Lawrence as the original subscriber, did not have  
its name changed to “Canadian Bio-Mass Research Inc.” until  
August 21, 1984. It was also not until August 21, 1984, that  
7892345 Holdings Ltd. changed its name to Coastal.  
[115]  
This agreement and promissory note was produced to  
Mr. Akbar Alibhai during audit.  
[116]  
Exhibits 229[64] are statutory declarations. One of  
these statutory declarations is signed by Mr. Johnson  
declaring that title passed from J & B to 7892345 Holdings  
Ltd. with regard to “new equipment, parts and components in  
HMTQ v. Wilder et al  
Page 78  
the sum of $36,000,000.00”. The second statutory declaration  
is the declaration of Mr. Wilder declaring that on or about  
April 27, 1984, title passed from J & B to 7892345 Holdings  
Ltd. and that to the best of his knowledge the equipment,  
parts and components were new.  
[117]  
Exhibit 2040 was also provided to auditor Alibhai  
sometime during the audit. It is a ratification of Exhibit  
2039, dated October 2, 1984, purporting to rectify the problem  
that 7892345 Holdings Ltd. did not exist at the time of the  
purported $14,200,000 equipment purchase on April 12, 1984.  
[118]  
The accused and his group made yet another attempt  
to get the dates on these multi-million dollar agreements  
right. Mr. Wilder testified that external lawyers identified  
the fact that 7892345 Holdings Ltd. did not exist at the date  
of Exhibit 15a-2039. Exhibit 16a-2040 was created to rectify  
this problem. Exhibit 2040 initially might be seen to lend  
credence to the transactions in that, if a fraud had  
transpired and the fraudsters realized that a document was  
poorly back-dated, a fresh document could be produced and the  
erroneous document destroyed. However, in this case, Exhibit  
2039 had been “published” prior to Mr. Wilder’s encounter with  
Revenue Canada: The Agreement of April 12, 1984 is  
specifically referred to in the Fly Ash offering dated May 28,  
HMTQ v. Wilder et al  
Page 79  
1984 (Exhibit 10-104) at page 5, clause 1 and in the  
“Engineer’s Certificate” which refers to a prototype of  
equipment referred to in an Agreement dated April 12, 1984.  
It was therefore imperative that Exhibit 15a-2039 be dealt  
with in order to make it to appear to be valid.  
6.  
Valuation  
The next issue with respect to these agreements is  
[119]  
the valuation of the technology that was sold to the S.R.T.C  
companies that are the subject of the counts before the court.  
[120]  
In my view, there was certainly no independent  
valuation of the equipment, parts and components that were the  
subject of these three sales. I have found that Mr. Byerlay  
was not an independent valuator. In any event, I found that  
he certainly did not have the expertise to provide valuations  
for the sale of the equipment, parts and components in these  
three sales. The following exchange took place between Mr.  
Wilder and his counsel on this issue:  
Q
A
Well, from your point of view, Mr. Wilder, was  
there any independent appraisal made with  
respect to the value of this equipment?  
Yes, Mr. Byerlay did an independent appraisal  
on it, and from my experience, I definitely had  
enough knowledge to determine what the value  
was.  
Q
Now, you -- to start again, here. Did you  
discuss with Mr. Johnson how he determined that  
$14,200,000 was an appropriate purchase price  
for the fly ash equipment and technology?  
HMTQ v. Wilder et al  
Page 80  
A
Yes. I -- I spoke to Mr. Johnson about it and  
he -- he advised me -- described what he did.  
He took the -- from his records he got the  
costs of the major components, and he got his -  
- the cost of components that he didn’t have,  
he would have to have to put into the fly ash  
plant. Then he actually showed me a sheet he  
had them listed on, and at the bottom he had  
them totalled, and he multiplied them by a  
factor to arrive at the number.  
Q
A
After you had the initial discussions with Mr.  
Johnson on the purchase price, what steps, if  
any, did you take to verify any of the costs of  
Mr. Johnson’s major components?  
I -- I looked at his major components and I --  
the first thing I did was check on the ones  
that were standard, that you could buy off the  
shelf. I checked the costing of those. And  
the ones that were custom, I -- I got some --  
some idea -- some quotes or estimates of what  
it would cost from Bill Plowman, who was an  
engineer and fabricator/manufacturer, and I  
went to D&B in Ferndale, who were building all  
the equipment, Mr. Bartlett, and got him to  
determine what it would cost to build these  
specialized items. And I went to another  
company called Fabricated Plastics, and got  
their costs, what it would be -- what they  
would charge to build these. And I think I  
probably visited a few other places, I’m not  
sure.  
Q
A
Did you have any discussions with Dr. Manzik  
concerning the technology or the equipment?  
Yes, I discussed the costs with him, as well,  
what it would cost to build, put these things  
together.  
Q
You mentioned Mr. Roche had some dealings with  
Mr. Johnson on this from 1983, I think you  
said. Did you have any discussions with him?  
Yes. I talked to him about what it would cost  
for some of the components.  
Let me start the question again. From your  
discussions with Mr. Johnson and the  
A
Q
information he provided to you, from your own  
experience, and from the discussions you had  
with the other individuals what, if any,  
conclusion did you come to with respect to the  
HMTQ v. Wilder et al  
Page 81  
price Mr. Johnson wanted for the fly ash  
equipment and technology?  
I concluded that what he was asking was a fair  
price.  
A
[121]  
I find the value in the purchase price to be paid  
under these agreements to be nothing but “pie in the sky,” an  
artificially high value. I further find that this  
artificially high value was placed on the sale of this  
equipment for the specific purpose of perpetrating a fraud on  
Revenue Canada. Even Mr. Wilder seemed to realize that the  
prices placed on these pieces of equipment, components and  
parts could not be justified. He therefore mentioned, for the  
first time in his testimony, that there was a multiplier of  
4.5 which was to be applied to the price of the equipment. He  
gave as examples that in the case of the $14,200,000 agreement  
the cost of parts, components and equipment was $4,000,000 and  
that in the case of the $36,000,000 agreement the cost of the  
parts, components and equipment was $10,000,000. He further  
testified that with the use of the multiplier the completed  
prototype would be $14,200,000 and $36,000,000 respectively.  
The only problem with this explanation is that is not what the  
agreements state. The second problem is that this multiplier  
was never mentioned to the Revenue Canada officials when they  
were doing their audit.  
HMTQ v. Wilder et al  
Page 82  
[122] I find this multiplier of 4.5 to be yet another one  
of Mr. Wilder’s recent fabrications. It is also interesting  
that Exhibit 274[62] which was seized from the Coastal Minute  
Book from Roger Lawrence’s office also contained a W.C.B.  
Employer’s Registration Form dated June 29, 1984, for 7892345  
Holdings Ltd. that describes the business as “non-operating”  
with no workers or operating location.  
7.  
Specific Items Purchased in the Three Agreements  
(a) Bio-Mass Project  
[123]  
With respect to the Bio-Mass Project, although the  
agreement clearly calls for the purchase of equipment, parts  
and components from Mr. Johnson’s company, Mr. Wilder claims  
in his testimony before me that his company, Bio-Mass was  
purchasing a prototype biomass plant. He testified that the  
lawyers who prepared the multi-million dollar agreement did  
not properly state what he had intended to purchase. The  
agreement for this purchase was $17,200,000. This price was  
subsequently increased to $20,000,000. Mr. Wilder testified  
that he saw the prototype before his company bought it. It  
was located in Calgary. Mr. Wilder further testified that  
this equipment had nothing to do with the equipment that was  
purchased from Mr. Breitzman in the U.S. except for an item  
HMTQ v. Wilder et al  
Page 83  
valued at $2,800,000 that represents the difference between  
$17,200,000 and $20,000,000.  
[124]  
Among the photographs that Mr. Wilder introduced  
into evidence to demonstrate that the Bio-Mass Project was not  
a sham were Exhibits 977, 980, 981, 983 and 988. This  
equipment, according to Mr. Wilder, was all part of the Bio-  
Mass Project that was purchased by Bio-Mass from Johnson’s  
company, PNR, in February, 1984 for the aforementioned price  
of $17,200,000. For instance, Mr. Wilder referred to Exhibit  
977 as a gas transfer system which Bio-Mass purchased from PNR  
as part of the $17,200,000 deal. He estimated the unit  
depicted in that exhibit to be worth over $1,000,000. The  
other exhibits were similarly identified as forming part of  
the deal between Bio-Mass and PNR.  
[125]  
From the evidence I find that the items depicted in  
Exhibits 977, 980, 981, 983 and 988 could not have been the  
subject of the 1984 sale agreement between Bio-Mass and PNR  
because at the date of the agreement they were in a plant in  
Utah and were the subject of a liquidation sale from the  
Chevron Research plant in Salt Lake City, Utah in late 1985.  
I find that up to that date (late 1985) the equipment depicted  
in Exhibits 977, 980, 981, 983 and 988 was located in that  
city.  
HMTQ v. Wilder et al  
Page 84  
(b) Hydro-Petroleum Project  
[126]  
With respect to the Hydro-Petroleum Project,  
although the written agreement speaks of the purchase of  
equipment, parts and components, Mr. Wilder testified that his  
company was really purchasing a prototype from Mr. Johnson’s  
company for $36,000,000. He further testified that the  
prototype was in parts when he saw it in Calgary, Edmonton and  
Saskatchewan.  
[127]  
As was stated in R. v. Wilder (Written Ruling No.  
9), 2003 BCSC 1526, the list of equipment purchased for this  
large amount of money was very generic. There were no serial  
numbers, no location as to where they were situated, and there  
were certainly no patents referred to in the agreement. Mr.  
Wilder testified that he had applied for a patent for one of  
his prototypes but he was unable to produce any patent pending  
number.  
[128]  
In his testimony Mr. Wilder produced a large amount  
of photographs for the first time in this trial. He never  
showed these photographs to the Crown witnesses when they  
testified. Exhibit 947 is a photograph of what Mr. Wilder  
referred to as a vacuum compressor, Exhibit 950 was a  
photograph of what Mr. Wilder referred to as a speed  
controller and Exhibit 953 was a photograph of some valves  
HMTQ v. Wilder et al  
Page 85  
which Mr. Wilder claimed Coastal purchased from Mr. Johnson’s  
company and which were included in the schedule of equipment  
purchased for this project for $36,000,000. These speed  
controllers, vacuum compressor and valves could not, however,  
have been part of the sale in February, 1984 because they were  
the subject of a liquidation sale from the Chevron Research  
plant in Salt Lake City, Utah in late 1985 and up to that date  
the equipment depicted in Exhibit 950 was located in that  
city. There is therefore no possible way that J & B could  
have owned or sold this equipment depicted in Exhibit 950 to  
Coastal. In making this finding, I want to make it clear that  
I am not satisfied that Exhibits 947 and 948 were ever part of  
the plant in Utah because Mr. Duke gave no evidence with  
respect to this exhibit.  
[129]  
I should point out at this juncture that Mr. Duke  
testified with respect to where these exhibits (except for  
Exhibits 948 and 947) originally came from. He was cross-  
examined at length by one of the best in the business. In my  
view Mr. Duke was a very forthright witness and his testimony  
was not shaken under cross-examination. I accept his evidence  
in total. I accept his evidence that the above mentioned  
exhibits, except for Exhibits 947 and 948 came from the plant  
in Utah. With respect to the credibility of Mr. Duke, I  
HMTQ v. Wilder et al  
Page 86  
hasten to add that expenses in the sum of $300.00 paid to him  
for making the trip from Utah was not, in my view, an  
unreasonable expense. That payment does not in any way  
compromise his veracity as a witness as seems to be suggested  
by the accused.  
(c) Insurance on the Projects  
[130]  
Although there was clearly a provision for insurance  
to be placed on the multi-million components and equipment in  
the contracts for the sale between Mr. Johnson’s companies and  
Mr. Wilder’s companies, this equipment was not insured. Mr.  
Wilder claims that insurance was not necessary. In my view it  
is not a stretch to accede to the suggestion of the Crown that  
this was not done because placing insurance on this equipment  
would have meant having an independent appraisal of the  
components and parts done.  
(d) Payment for the Projects  
[131]  
In his testimony Mr. Wilder was vague about the  
payment of the monies due under the notes in the sums of  
$14,200,000, $20,000,000 and $36,000,000 but he was adamant  
that they were paid although he had no supporting documents to  
verify the payment of these very large sums of money. The  
exchange between Mr. Wilder and Crown counsel illustrates this  
point:  
HMTQ v. Wilder et al  
Page 87  
Q
Well, we know that he was paid, according to  
your evidence, $14 million on the Fly Ash note,  
and we know from your evidence that he was paid  
$17 million on the Bio-Mass note, so that is a  
lot of money. So how can -- what makes you say  
that he was paid a substantial amount of the  
$36 million?  
A
Q
A
Q
Well, I just know he was, that’s all.  
And you have no records?  
No.  
Can you say whether or not it was paid by way  
of cheque?  
A
I think a lot of -- some of this stuff was --  
was -- after Revenue did their attack I had to  
-- to the people that were working with Mr.  
Johnson, I gave up my oil wells --  
And who are they?  
-- and -- Mr. -- my Uncle Lloyd and Dillman and  
Mr. Tolem (phonetic) Pryor. I gave them the  
oil wells, I gave them a number of mining  
properties. So I gave up a lot to try and  
clear off all these debts caused by Revenue  
Canada’s attack and destroying the business.  
And were there valuations with regard to the  
mining, wells and the things you gave these  
people?  
Q
A
Q
A
Well, I don’t think they’re formal ones, but we  
had agreed to a value.  
Q
A
Q
Just verbally?  
Yes.  
And again, clause 8 of the agreement deals with  
insurance, and my understanding is, again, you  
didn’t insure the equipment; is that right?  
Well, wasn’t insured -- like a lot of this  
ended up in the Coseco plant. So the plant was  
insured. And it’s sitting now in Edmonton, a  
lot of this equipment, and it’s not insured,  
it’s just out in the rain.  
A
Q
A
And how did the --  
It’s not going to burn there.  
HMTQ v. Wilder et al  
Page 88  
(e) Projects that Mr. Johnson’s Companies Purchased from Mr.  
Wilder’s Companies  
[132]  
According to Mr. Wilder, his Vardax company sold  
equipment, parts and components to Mr. Johnson’s company, 3097  
Investments Ltd., for $10,000,000 or $12,000,000. Of course  
Mr. Wilder has no records of payments made under this  
agreement or at least he did not keep them because they are  
not part of these proceedings. He has no banking records of  
the millions of dollars that he received from this sale.  
(f) Transfer of Equipment from Hydro-Petroleum to Coseco  
[133]  
According to Mr. Wilder, Hydro-Petroleum equipment  
was transferred to the Crown Oil Sands Energy Company  
(“Coseco”) Project but there are no agreements to support this  
transfer. Again a portion of the exchange between Crown  
counsel and Mr. Wilder shows Mr. Wilder’s explanation for this  
transfer:  
Q
A
And how -- how did the petroleum -- Hydro-  
Petroleum equipment come to -- how did it go to  
Coseco? Explain that.  
Well, when we were having problems with -- we  
weren’t getting the continued recovery we  
thought with the Hydro-Petroleum, which was  
supposed to do, which I think we could do today  
if we did it again, but the -- then I traded a  
lot of the equipment into Coseco for Coastal’s  
share in Coseco --  
Q
A
Q
All right. And is there --  
-- but basically the -- hmm?  
Is there documentation reflecting those  
transactions?  
HMTQ v. Wilder et al  
Page 89  
A
Not individually, no. They were just allowed  
to take whatever they required for the  
facility, and I think most of Coseco is the  
Hydro-Petroleum equipment. They took it and  
put it in there.  
Q
A
So the equipment that belongs to Coastal  
Natural, that it had paid $36 million for, was  
taken by Coseco; is that correct?  
Probably around $15 million. I think they put  
in about $12 million of equipment in their  
plant.  
Q
A
Q
A
And did Coastal get paid for that?  
It owns the stock.  
And is there documentation with regard to that?  
Yeah, it has the shares. Well, Vardax held the  
shares for it, but now it’s struck off the  
registry.  
Q
Do you have any documentation that establishes  
this $15 million equipment transaction between  
Coastal and the Hydro-Petroleum equipment and  
Coseco?  
A
Q
There’s no Coseco documentation around anywhere  
that I could find.  
And you testified that it’s your view or  
understanding that a substantial portion of the  
$36 million was paid to Johnson & Burnett. Did  
Mr. Johnson ever make demand of any of the  
monies?  
A
No.  
8.  
Findings of Fact with Respect to These Three Agreements  
[134]  
In my view this cozy arrangement between Mr. Johnson  
and Mr. Wilder could hardly be considered to be arms length  
transactions. The coziness of the relationship is also borne  
out by the fact that Ronald Johnson erroneously signed a  
$100,000 Vardax cheque payable to his company J & B. I find  
as a fact that these three agreements were not arms length  
transactions at all. Apart from that, on the basis of the  
HMTQ v. Wilder et al  
Page 90  
evidence as reviewed above, there is an irresistible inference  
that these three agreements were shams. They were nothing but  
a deceitful and crude attempt to take advantage of write-offs  
under the S.R.T.C. scheme.  
[135]  
I now turn to a review of the evidence of James  
Breitzman.  
V.  
THE EVIDENCE OF JAMES BREITZMAN  
A.  
Position of the Defence  
[136]  
Mr. Wilder has, throughout the trial, attacked Mr.  
Breitzman’s credibility for a number of reasons. The attacks  
are largely founded on Mr. Breitzman’s swearing of an  
affidavit marked Exhibit 2061 (where it appears he resiled  
from his earlier testimony) and his denial of that affidavit  
in court the following day. Secondly, there is Mr.  
Breitzman’s civil suit against Mr. Wilder and others, which  
claims the full amount set out in the invoices. Finally, a  
number of affidavits containing purported misstatements, and  
the occurrence of “the gravel-kicking meeting” are the primary  
reasons for Mr. Wilder’s attack on Mr. Breitzman’s evidence.  
B.  
Caution Regarding Mr. Breitzman’s Testimony  
[137]  
After testifying for 20 days in the previous trial  
and while still under cross-examination, Roger Lawrence, a co-  
accused and an ex-lawyer who had been convicted of these  
HMTQ v. Wilder et al  
Page 91  
offences, took Mr. Breitzman to his lawyer and stayed in the  
same room with him until he signed a statutory declaration  
recanting his testimony. This statutory declaration was  
prepared by Mr. Lawrence before they got to the lawyer’s  
office. As soon as the statutory declaration was signed by  
Mr. Breitzman, Mr. Lawrence took the completed statutory  
declaration and immediately rushed off to have it filed in the  
British Columbia Court of Appeal Registry.  
[138]  
Mr. Lawrence had tried to get this witness to sign  
an almost exact statutory declaration three years previously  
but Mr. Breitzman had refused to do so. Mr. Lawrence appeared  
to be of the belief that he was convicted because of Mr.  
Breitzman’s testimony about a “gravel kicking” incident and he  
was of the view that if he was successful in getting Mr.  
Breitzman to recant he would be successful on appeal. Shortly  
after this statutory declaration was signed by Mr. Breitzman,  
the prosecutor who was so maligned by Mr. Wilder in these  
proceedings disclosed the statutory declaration to Mr. Wilder.  
What is even more interesting, Mr. Lawrence showed up in the  
gallery of the court to watch Mr. Breitzman being cross-  
examined by Mr. Wilder on this same statutory declaration.  
[139]  
When this statutory declaration was presented to him  
in cross-examination, this elderly gentleman at first denied  
HMTQ v. Wilder et al  
Page 92  
that the signature was his then he said that the document was  
signed with provisos. Mr. Lawrence was not called as a  
witness but what is clear from the evidence of the solicitor  
who took Mr. Breitzman’s signature is that there was no  
reference to any provisos when the declaration was signed.  
The lawyer who took Mr. Breitzman’s signature, while  
acknowledging that he was Mr. Lawrence’s lawyer, did not  
suggest that Mr. Breitzman had received independent legal  
advice before signing the declaration. He also admitted that  
Mr. Lawrence remained in the same office with Mr. Breitzman  
until he signed the statutory declaration.  
[140]  
Under cross-examination by Mr. Wilder on this  
statutory declaration Mr. Breitzman maintained that he was  
telling the truth notwithstanding what was contained in his  
statutory declaration.  
[141]  
Apart from this recantation, Mr. Breitzman also took  
two civil actions against Mr. Wilder and his companies for the  
full amount of the invoices instead of the 29 or 30% which he  
claimed was the real amount owing. Notwithstanding the amount  
claimed in these writs, however, Mr. Breitzman maintained to  
the Revenue Canada officials that he was only entitled to 30%  
of the amounts claimed in the writs.  
HMTQ v. Wilder et al  
Page 93  
[142] James Breitzman, an engineer from Lilburn, Georgia,  
was the principal of HFI and of Mineral Gas Company. He,  
along with James Russ (a metallurgist and inventor now  
deceased), were the originators of the Fly Ash and Bio-Mass  
Projects.  
[143]  
Mr. Breitzman testified in chief at Mr. Wilder’s  
first trial in this matter in March and May of 1997. He was  
cross-examined during 1997 and 1998 for 30 days. Due to the  
state of Mr. Breitzman’s health, the Crown sought the  
introduction of his prior testimony into evidence in the  
present trial. I ruled in R. v. Wilder (Written Ruling No.  
8), 2002 BCSC 1333, [2002] B.C.J. No. 2110, that this prior  
testimony was admissible pursuant to s. 715 of the Criminal  
Code or alternatively pursuant to the principled exception to  
the hearsay rule.  
C.  
Treatment of Mr. Breitzman’s Testimony  
[144]  
In R. v. Hawkins, [1996] 3 S.C.R. 1043, the trial  
judge had concluded that the probative value of the evidence  
was slight, given the witness’ direct contradictions and  
influences and the inability of the trier of fact to assess  
credibility. The Supreme Court of Canada disagreed at para.  
88:  
HMTQ v. Wilder et al  
Page 94  
The simple fact of recantation, in our view, does  
not provide a basis for the exclusion of a witness’s  
testimony.  
And at para. 89:  
When these transcripts are viewed in light of the  
surrounding evidence presented by the Crown, the  
trier of fact may still be able to conclude  
reasonably that one of her contradictory versions of  
events ought to be preferred over the other.  
Additionally, Graham’s preliminary inquiry testimony  
has probative value in relation to the matters in  
respect of which she did not contradict herself,  
(e.g. Hawkins’s propensity for abuse and Hawkins’s  
general knowledge of Morin.).  
[145]  
As I mentioned in Wilder (Written Ruling No. 8),  
supra, in allowing the introduction of this evidence it is  
necessary for me to be mindful of the fact that there was no  
opportunity to observe the witness give evidence and that the  
evidence was not tested in this court by cross-examination. I  
am also mindful of the fact that this witness was also cross-  
examined by the accused at the last trial for thirty days. I  
must also be mindful of the fact that Mr. Breitzman’s  
credibility must be carefully considered given the fact that  
he retracted part of his original testimony by way of a  
January 8, 1998 affidavit.  
[146]  
In Vetrovec v. The Queen (1982), 67 C.C.C. (2d) 1  
(S.C.C.), the Court discussed the nature of corroboration in  
HMTQ v. Wilder et al  
Page 95  
relation to accomplices and its appropriate use in relation to  
other witnesses whose evidence must be approached with  
caution. The existence of corroborating evidence in relation  
to any type of witness affords identifiable reasons to find  
that witness credible. At pp. 13-14 of the decision:  
The reason for requiring corroboration is that we  
believe the witness has good reason to lie. We  
therefore want some other piece of evidence which  
tends to convince us that he is telling the truth.  
Evidence which implicates the accused does indeed  
serve to accomplish that purpose but it cannot be  
said that this is the only sort of evidence which  
will accredit the accomplice. This is because, as  
Wigmore said, the matter of credibility is an entire  
thing, not a separable one (ibid., p. 424):  
… whatever restores our trust in him personally  
restores it as a whole; if we find that he is  
desiring and intending to tell a true story, we  
shall believe one part of his story as well as  
another; whenever, then, by any means, that  
trust is restored, our object is accomplished,  
and it cannot matter whether the efficient  
circumstances related to the accused’s identity  
or to any other matter. The important thing is,  
not how our trust is restored, but whether it  
is restored at all,”  
and at p. 18:  
However, there is, in some circumstances,  
particularly in lengthy trials, the need for helpful  
direction on the question of sifting the evidence  
where guilt or innocence might, and probably will,  
turn on the acceptance or rejection, belief or  
disbelief, of the evidence of one or more witnesses.  
All of this applies equally in the case of an  
accomplice, or a disreputable witness of  
HMTQ v. Wilder et al  
Page 96  
demonstrated moral lack, as, for example, a witness  
with a record of perjury.  
[147]  
As noted in Vetrovec, supra, (even if Mr. Breitzman  
were an accomplice), there is no requirement that all of his  
evidence be corroborated for the corroborative evidence to  
have the effect of providing a foundation of reliability to  
his other evidence. The court quotes at p. 15 the following  
passage from Spence J. in Murphy and Butt v. The Queen (1976),  
29 C.C.C. (2d) 417:  
It is a material particular of that evidence which  
must be corroborated. There is no requirement that  
the whole of her evidence be corroborated. Were that  
the requirement, there would be no need for even the  
evidence of the complainant. The so-called  
corroborative evidence would be sufficient for a  
conviction.  
[148]  
A Vetrovec warning is not required for all witnesses  
who technically fall within the category of accomplices. For  
many witnesses falling within that category a trial judge has  
discretion whether or not to give a warning. In some cases,  
however, the circumstances are such that the judge has no  
discretion, the warning must be given and failure to do so is  
an error of law: R. v. Bevan (1993), 82 C.C.C. (3d) 310  
(S.C.C.) and R. v. Brooks (2000), 141 C.C.C. (3d) 321  
(S.C.C.).  
HMTQ v. Wilder et al  
Page 97  
[149] In Brooks, supra, Major J. speaking for a majority  
of the court on this issue, described the factors that the  
court will take into account in deciding whether a warning was  
mandatory at para. 80:  
In summary, two main factors are relevant when  
deciding whether a Vetrovec warning is necessary:  
the witness’s credibility, and the importance of the  
witness's testimony to the Crown’s case. No  
specific threshold need be met on either factor  
before a warning becomes necessary. Instead, where  
the witness is absolutely essential to the Crown's  
case, more moderate credibility problems will  
warrant a warning. Where the witness has  
overwhelming credibility problems, a warning may be  
necessary even if the Crown’s case is a strong one  
without the witness's evidence. In short, the  
factors should not be looked to independently of one  
another but in combination.  
[150]  
Much of Mr. Breitzman’s testimony is corroborated by  
the evidence of other witnesses that significantly ameliorates  
my credibility concerns. I will now review some of Mr.  
Breitzman’s testimony. Before I do however, I would like to  
deal with what has become the “gravel kicking” incident.  
1.  
The “Gravel Kicking” Incident  
[151]  
I agree with the submissions of the Crown that this  
meeting did take place although Mr. Breitzman and Mr. Russ  
referred to the meeting differently.  
[152]  
Mr. Breitzman testified that at some time in August  
or September, 1984 he had discussions with Mr. Wilder, Mr.  
HMTQ v. Wilder et al  
Page 98  
Russ, Mr. Johnson and Mr. Lawrence at Mr. Wilder’s Bellingham  
residence with regard to the Fly Ash and Bio-Mass Projects.  
[153]  
This meeting has become known as “the Gravel Kicking  
Meeting” although it is not clear why it was so named.  
[154]  
On May 7, 1997, Mr. Breitzman testified that he  
believed that this meeting occurred on September 19, 1984. In  
cross-examination, he allowed for the possibility that the  
meeting occurred in August, 1984.  
[155]  
In further cross-examination by Mr. Wilder, Mr.  
Breitzman stated:  
I don’t know the exact date but it very likely was  
[September 19 1984] because we had just come from –  
he [James Russ] had come from – from his city and I  
came from mine and we met. We met and went to  
Bellingham.  
[156]  
Mr. Breitzman testified that at that meeting there  
was discussion with Mr. Lawrence about funding. He further  
testified that Mr. Wilder had asked him if he was ready to go  
to work; that he had replied “yes, if there was money  
available”. Mr. Wilder then referred the comment to Mr.  
Lawrence, who said the money was in escrow and would be out  
when Mr. Richards could see equipment that had been shipped.  
HMTQ v. Wilder et al  
Page 99  
[157] Mr. Breitzman testified that he thinks it was Mr.  
Russ who then asked whether it was 30% or 29% of the invoice  
price and Mr. Lawrence stated it was 29%. These discussions,  
in Mr. Breitzman’s view, constituted a deal.  
[158]  
On May 29, 1997, in cross-examination, Mr. Breitzman  
testified that Mr. Wilder and Mr. Lawrence advised that the  
percentage, as at the Gravel-kicking Meeting, was now “30%”.  
[159]  
It is clear from Mr. Breitzman’s calculations on the  
documents and from Mr. Russ’ testimony as well, that the  
percentage kept vacillating.  
[160]  
There is no evidence that Mr. Breitzman made notes  
and there is no reason in the evidence as to why he would have  
paid particular attention to the exact date of the meeting,  
beyond his assessment that he had a deal. He recalls the  
events and can, years after the event, provide an approximate  
time frame.  
[161]  
Mr. Wilder testified that Mr. Lawrence was never at  
his Bellingham home. If true, this would mean that Mr.  
Breitzman was completely wrong about the “gravel-kicking”  
meeting being possible at all.  
[162]  
Mr. Russ testified, however, that he met Mr.  
Lawrence at Mr. Wilder’s home in Bellingham on two occasions.  
HMTQ v. Wilder et al  
Page 100  
This evidence contradicts Mr. Wilder’s testimony and provides  
a degree of corroboration to Mr. Breitzman’s testimony.  
[163]  
Given that both Mr. Russ and Mr. Breitzman testified  
that they saw Mr. Lawrence at Mr. Wilder’s Bellingham  
residence and given Mr. Wilder’s motive to lie and his other  
attempts to minimize or eliminate his involvement in this  
matter, it is my view that Mr. Wilder’s evidence in this  
regard should be rejected. Regardless of how the meeting is  
described, the evidence established, beyond a reasonable  
doubt, that Mr. Lawrence was seen by two different witnesses,  
Mr. Breitzman and Mr. Russ at Mr. Wilder’s home in the late  
summer of 1984.  
[164]  
Mr. Russ testified that the first time he saw Mr.  
Lawrence at Mr. Wilder’s Bellingham home, was on August 11 or  
12, when the inflated invoices discussed at the August 10,  
1984, meeting were being prepared.  
[165]  
Mr. Russ testified that he saw Mr. Lawrence at Mr.  
Wilder’s Bellingham home a second time:  
We talked about the ongoing projects, are they going  
to be funded on September 4th as promised, no, are  
they going to be funded sometime, maybe, yes. That  
kind of conversation did exist in the Wilder house,  
yes, sir.  
HMTQ v. Wilder et al  
Page 101  
[166] Mr. Russ’ diary corroborates the agreement in that  
it reflects that a discussion took place with regard to the  
applicable percentage in the late summer of 1984. See Diary  
entries at:  
a) 15/9/84 – p. 1161 - 30% reference  
b) 24/9/84 – p. 1161 - 29% reference [Exhibit 295].  
[167]  
Mr. Russ testified that on September 15, 1984, Mr.  
Wilder advised him that the Fly Ash program was “on hold” and  
that 30% net was the figure.  
[168]  
Mr. Russ further testified on March 23, 1993, that  
on September 24, 1984, Mr. Wilder advised him that the figure  
was 29%, not 30% of the $14,000,000.  
[169]  
Clearly, the appropriate percentage was in issue  
during the timeframe identified by Mr. Breitzman; this, in my  
view, lends credence to his recollection of the topics of  
discussion at the meeting.  
[170]  
While Mr. Russ testified that he did not remember a  
“gravel-kicking meeting” at Mr. Wilder’s home, the “gravel-  
kicking” feature of the meeting only became relevant years  
after the meeting had occurred.  
HMTQ v. Wilder et al  
Page 102  
[171] If Mr. Russ was present at the meeting and did not  
“kick gravel” himself, or notice anyone else doing so, it is  
probable that he would not recall a “gravel-kicking meeting”.  
Whereas, if Mr. Breitzman kicked gravel, this would permit  
that characterization to fit his recollection accurately.  
Whether Mr. Russ actually saw gravel kicking is immaterial.  
The important thing is that a meeting took place in that time  
period.  
[172]  
In my view, in all the circumstances, Mr. Breitzman  
and Mr. Russ’ differences of evidence in relation to the  
meeting is not surprising, given the two different  
perspectives. I am satisfied that a meeting did in fact take  
place at Mr. Wilder’s home in Bellingham where Mr. Lawrence,  
Mr. Breitzman and Mr. Russ were present.  
2.  
The Civil Suit  
With regard to the civil suit, Mr. Breitzman  
[173]  
testified that he received legal advice that he must sue on  
the whole contract:  
Yes, and I have given testimony a number of times to  
you as to why we sued for the full amount. That was  
upon advice of a lot of legal boys in this country –  
in this city. If we had gone for less, we would have  
to do a lot of other things. Len Doust is the one  
that brought it up. He said, for God’s sakes, don’t  
sue for less than the total  
HMTQ v. Wilder et al  
Page 103  
[174] As I mentioned earlier in R. v. Wilder (Addendum to  
Written Ruling No. 3) 2003 BCSC 859, Mr. Breitzman and Mr.  
Russ were well advised by their lawyer of the latin maxim Ex  
turpi contractu actio non oritur - from an immoral or  
iniquitous contract an action does not arise. So both Mr.  
Breitzman and Mr. Russ were advised that the courts would not  
enforce an illegal contract.  
[175]  
The suit was launched in December, 1986. Mr.  
Breitzman was interviewed by Revenue Canada in March, 1986 and  
provided them with documents proving, for example, that the  
Bio-Mass Project budget was only slightly over $6,000,000,  
(see: Exhibit. 200), not the $20,000,000 ultimately pleaded in  
the statement of claim. Mr. Breitzman apparently continued  
this voluntary cooperation with Canadian authorities, meeting  
again with Revenue Canada in Denver and ultimately testifying  
for the Crown at Mr. Lawrence’s trial in 1993. I agree with  
Crown Counsel that this behaviour is inconsistent with Mr.  
Breitzman trying to portray a picture of an actual debt of  
$34,000,000 on which to sue; rather, it is consistent with his  
evidence that, notwithstanding the statement of claim in the  
civil suit, drafted by the lawyers giving the legal advice,  
Mr. Breitzman only sought 30% of the amount claimed because  
that is what he was due.  
HMTQ v. Wilder et al  
Page 104  
[176]  
I now turn to review of the remainder of Mr.  
Breitzman’s testimony.  
3.  
The Bio-Mass and Fly Ash Projects  
With respect to the Bio-Mass and Fly Ash Projects,  
[177]  
Mr. Russ worked as a consultant for Mr. Breitzman’s company,  
HFI. As a consultant Mr. Russ received a monthly salary and  
was reimbursed for out of pocket expenses. Although not a  
shareholder in HFI, Russ was to receive 5% of any money made  
on the Bio-Mass and Fly Ash Projects. Mr. Russ’ testimony  
confirms this. Mr. Russ adds that while Mr. Breitzman was on  
the design and application side, he was involved on the  
technical side. The arrangement between Mr. Russ and Mr.  
Breitzman crystallized in early 1984, and by August 1984 they  
had a contract to proceed.  
[178]  
It was through Mr. Russ that Mr. Breitzman first  
came in contact with Mr. Wilder. It seems that Mr. Russ had  
seen an advertisement for equipment that he was interested in  
for a precious metals project he was working on. The company  
advertising the equipment was Vardax. Mr. Russ travelled to  
Bellingham, Washington, to meet with Mr. Wilder in March of  
1984 to discuss the Vardax equipment. While the Vardax  
equipment was never purchased by HFI, Mr. Russ and Mr. Wilder  
had discussed the possibility of entering into a joint venture  
HMTQ v. Wilder et al  
Page 105  
with respect to research projects. Upon Mr. Russ’ return from  
Bellingham he first discussed such a possibility with Mr.  
Breitzman.  
[179]  
There is evidence which corroborates the fact that  
there was no relationship between Mr. Breitzman and Mr. Wilder  
in March, 1984. There is an invoice (Exhibit 366[2003])dated  
March 3, 1984, from Vardax to Hydro “Fields”[scratched out,  
and “Fuels” written in] “3781 Hollowtree “Land”, Lilburne, GA,  
as the prospective purchaser of “one, only 304 Vardax refining  
system complete with two digesters, two hopper feeder units,  
fumes scrubber, filtration system six reactors, roaster,  
signed Dara Wilder”. I agree with the submission of the Crown  
that the errors in HFI’s name and address corroborate James  
Russ’ and James Breitzman’s evidence that they first began  
dealing with Mr. Wilder in mid-March, 1984. At that time, Mr.  
Wilder did not know the correct name or address of HFI.  
[180]  
There is in evidence a letter from James Russ to  
James Breitzman (Exhibit 376[2004]), regarding Dara Wilder and  
Vardax preparing invoices for Mr. Breitzman’s consideration,  
f.o.b. Bellingham. In my view this letter confirms that at  
mid-March, 1984 Vardax was the prospective vendor, not  
purchaser; the Fly Ash and Bio-Mass Projects were not yet  
under consideration.  
HMTQ v. Wilder et al  
Page 106  
(a) First Meeting with Mr. Wilder  
[181]  
Mr. Breitzman flew out to Bellingham in May of 1984  
to meet with Mr. Wilder. Mr. Breitzman’s credit card  
transactions confirm that he was in the Bellingham area in May  
of 1984 (May 16, 1984 transaction for rental car from Seattle;  
May 16, 1984 Diner’s Club card indicating a flight on Frontier  
Airlines; and May 20, 1984 American Express slip for Holiday  
Inn in Bellingham). There were two reasons why Mr. Breitzman  
made the trip: one being to look at Vardax’s equipment and the  
other to see where the material was being fabricated.  
[182]  
Mr. Breitzman was shown the manufacturing plant in  
British Columbia by Seona Wilder, before returning to meet Mr.  
Wilder for the first time in Mr. Wilder’s home office. It was  
at this May meeting in Mr. Wilder’s office that he and Mr.  
Wilder discussed both a joint venture proposed by Mr. Wilder  
with respect to a precious metals project that Mr. Breitzman  
would review and respond to at a later date and other programs  
that Mr. Wilder and Mr. Russ had discussed previously. Mr.  
Breitzman testified that Mr. Wilder’s interest in these other  
programs stemmed from the availability of government of Canada  
funds for research and development.  
HMTQ v. Wilder et al  
Page 107  
[183] As to how the funds would be obtained from the  
government, the procedure was explained to Mr. Breitzman as  
follows:  
1)  
calculate the cost of the equipment and  
installation and multiply that number by 2.9  
(was formally 3.0) to come up with a figure to  
be used for obtaining the funds;  
2)  
3)  
4)  
an engineer would have to look at the project  
and determine whether or not it is viable;  
a chartered accountant would have to study the  
economics of the proposal;  
an attorney would have to verify that it was  
all being done in accordance with the  
regulations of the Canadian government.  
(b) The “Multiplier”  
[184]  
With respect to the use of the “multiplier” there  
seems to be some conflict in the evidence as to whether it was  
2.9. On the basis of Mr. Russ’ testimony, however, I am  
satisfied that it was 29% not 2.9. While Mr. Breitzman  
referred to a .3, a 3.0, a .29 and a 2.9 multiplier, it is  
apparent from the testimony of Mr. Russ that the multiplier  
was 29% of the list price of the equipment. Mr. Breitzman  
indicated that he specifically asked if it was being used to  
skim funds and was told by Mr. Wilder that the “multiplier”  
was a necessary part of the calculation to cover fees that  
HMTQ v. Wilder et al  
Page 108  
would be paid to bankers, attorneys, accountants, to Mr.  
Wilder himself and to Mr. Johnson as originators of the idea.  
[185]  
Mr. Breitzman provided an example of how the  
procedure would work; explaining that Mr. Russ would give the  
equipment requirements to Mr. Wilder and Mr. Johnson, who  
would prepare invoices and purchase orders with the 2.9  
“multiplier” tagged on to the cost of the equipment.  
[186]  
Following the Bellingham meeting Mr. Breitzman  
testified that he returned to Atlanta to talk to potential  
investors. He indicated that there was concern expressed with  
the 2.9 “multiplier” condition, particularly by HFI’s  
attorney.  
[187]  
Mr. Breitzman next returned to Bellingham in late  
August of 1984. Once again the dates are confirmed by Mr.  
Breitzman’s credit card transactions. Mr. Breitzman was  
accompanied by Mr. Russ on this occasion and they met with Mr.  
Johnson to discuss both the Bio-Mass and Fly Ash Projects.  
[188]  
While Mr. Breitzman only stayed in Bellingham for a  
couple of days, he testified that Mr. Russ stayed until August  
25, 1984. Upon Mr. Russ’ return to Atlanta, Mr. Breitzman was  
given a number of purchase orders and invoices for both the  
HMTQ v. Wilder et al  
Page 109  
Bio-Mass and Fly Ash Projects in addition to a six page  
memorandum that Mr. Russ had drafted on August 24, 1984.  
[189]  
Mr. Russ’ memorandum discussed a number of matters  
related to both the Bio-Mass and Fly Ash Projects. The  
memorandum pointed out that before HFI would receive any money  
from the equipment they sent, Michael Richards would have to  
sign some sort of document, as it had been understood that HFI  
would receive money as soon as the equipment had been shipped  
and received.  
[190]  
Mr. Breitzman first became aware of the use of  
escrow accounts via Mr. Russ’ August 24, 1984 memorandum. The  
memorandum further indicated that on receipt of the hardware  
HFI would be paid on a “30% basis of invoice level” which Mr.  
Breitzman believed to mean 30% would be paid right away like a  
down payment. It is apparent, however, that this figure was  
the base amount that HFI would receive of the inflated figure  
(application of the “multiplier”). The cheques were to be  
paid by Ron Dara Engineering Group, a Johnson and Wilder  
company.  
[191]  
Mr. Breitzman’s initial understanding of the deal  
between HFI and Mr. Wilder and his associates was that HFI  
would send equipment as per the list prepared by Mr. Russ.  
HFI would also be available to put up the buildings and get  
HMTQ v. Wilder et al  
Page 110  
the plant operational, although there had been no  
consideration of the costs should HFI be asked to do as much.  
The memorandum, however, informed Mr. Breitzman for the first  
time of the intention of joint ownership of the plants between  
HFI, Ron Dara Engineering (Wilder and Johnson) and “the  
group”. Mr. Breitzman was surprised about the inclusion of  
this group which would now be receiving the first 25% of any  
profits. Mr. Breitzman testified that before he read the  
memorandum, it was his belief that HFI would not have any  
ownership interest in the plant.  
[192]  
The memorandum indicated that compensation for  
engineering and design would be derived from savings on  
invoice levels as well as operational funds for each project,  
which under normal circumstances would be called “skimming”.  
Mr. Breitzman understood the reference to skimming to mean  
“skimming off the money that HFI was supposed to get”.  
[193]  
Further the memorandum indicates that the only  
critical programs being considered were the Fly Ash and Bio-  
Mass Projects and that upon the shipment of equipment from  
Lawrenceburg, money would be available from the release of  
escrow funds upon payment of the equipment invoices.  
HMTQ v. Wilder et al  
Page 111  
(c) The Bio-Mass and Fly Ash Invoices  
[194]  
Following Mr. Breitzman’s testimony with respect to  
Mr. Russ’ August 24 memorandum, he was questioned about the  
invoices he received from Mr. Russ on August 25, 1984. The  
following is a summary of Mr. Breitzman’s testimony with  
respect to those invoices, none of which were prepared by Mr.  
Breitzman. The invoices are referred to collectively as  
Exhibit 177 (Invoice numbers 2924-2938 - Mineral Gas Company  
Invoices dated May 7, 1984 with PNR being the recipient and  
all equipment relating to the commercial Bio-Mass plant):  
Invoice # Equipment Description  
Details provided by Breitzman  
2924  
Equipment related to Bio-  
Mass shipped from  
Lawrenceburg to Vancouver –  
The equipment did exist at the  
time the invoice was created but  
the date of the invoice could not  
be correct as Breitzman does not  
believe there was any agreement  
as of the date given, May 7,  
1984, to sell the equipment to  
Wilder or Pacific Natural Inc.  
Equipment did not exist as of  
August 25, 1984 and certainly not  
on May 7, 1984, the date given on  
the invoice.  
Total $740,660  
2925  
Bulk Storage System – Total  
$2,060,000  
2926  
2927  
2928  
2929  
2930  
2931  
2932  
2933  
Plant Delivery System –  
Total $1,998,000  
Blending and Mixing Train –  
Total $1,494,000  
Pyrolysis System – Total  
$1,424,000  
Reaction System – Total  
$1,290,000  
Metal Recovery System –  
Basic – Total $2,145,000  
10,000 gallon water storage  
unit – Total $30,000  
Acid Storage Tank and  
Equipment – Total $114,500  
Gas Transfer System – Total  
$3,470,000  
Equipment did not exist.  
Equipment did not exist.  
Equipment did not exist.  
Equipment did not exist.  
Equipment did not exist.  
Equipment did not exist.  
Equipment did not exist.  
Equipment did not exist.  
HMTQ v. Wilder et al  
Page 112  
2934  
2935  
Propane Strip and  
Liquification System – Total  
$690,000  
Butane Strip and  
Liquification System – Total  
Equipment did not exist.  
Equipment did not exist.  
$780,000  
2936  
2937  
2938  
Tail Gas Storage System –  
Total $480,000  
Ash Digestor and Component  
Equipment – Total $171,000  
Anion – Cation Separation  
Towers – Total $3,120,000  
Equipment did not exist.  
Equipment did not exist.  
Equipment did not exist.  
[195]  
Of special note with respect to these invoices is  
that only number 2924 contained equipment that actually  
existed at the time the invoices were created and that the  
figures used on the invoices were inflated and not the amount  
HFI actually expected to receive in return for the equipment.  
This evidence is corroborated by the testimony of James Russ.  
The actual amount that HFI expected to receive was 29% of the  
inflated amount provided on the invoices.  
[196]  
Mr. Breitzman questioned the use of the name Mineral  
Gas Company on the invoices instead of HFI. Mineral Gas  
Company, at that time, was no longer an operating company.  
[197]  
Mr. Breitzman was also questioned about the invoices  
he received from Mr. Russ on August 25, 1984 regarding the Fly  
Ash Project. Unlike the Bio-Mass invoices, the Fly Ash  
invoices had HFI on the letterhead. The Fly Ash invoices are  
known collectively as Exhibit 206 which is summarized as  
follows:  
HMTQ v. Wilder et al  
Page 113  
Invoice # Equipment Description  
Details provided by Breitzman  
2152  
Lawrenceburg Equipment  
related to Fly Ash – Total  
$1,349,120.  
The equipment did exist at the  
time the invoice was created but  
the date of the invoice could not  
be correct as Breitzman does not  
believe there was any agreement  
as of the date given, April 8,  
1984, to sell the equipment to  
Johnson – Burnett Ltd.  
$404,736 figure written in is  
what Breitzman and HFI expected  
to receive after applying the .29  
formula.  
$14 million figure also written  
on by Breitzman in the presence  
of Russ days after Russ returned  
to Atlanta in August 1984. .29  
formula applied to $14,160,343.60  
to determine what HFI would  
receive for the Fly Ash Project =  
$4,106,497.40  
2153  
Equipment necessary for a  
complete Fly Ash metals  
retrieval system with a  
capacity of 60 to 70 tonnes  
per day – Total $112,735  
Fly-Preparation System –  
Total $352,116  
Equipment did not exist as of  
August 25, 1984 and certainly not  
on April 8, 1984 (date of  
invoice)  
2154  
2155  
Equipment did not exist on August  
25, 1984, nor on April 8, 1984  
(date of invoice)  
Breitzman indicates the $600,000  
figure written on the invoice is  
the result of taking  
NaOh Digestion System –  
Total $2,057,048  
approximately 29% of the invoice  
amount  
Equipment did not exist on August  
25, 1984, nor on April 8, 1984  
(date of invoice)  
2156  
2157  
Acid Digestion System –  
Total $2,057,048  
$200,000 figure written on  
invoice is the result of taking  
approximately 29% of the invoice  
amount  
Equipment did not exist on August  
25, 1984, nor on April 8, 1984  
(date of invoice)  
$370,000 figure written on  
invoice is the result of taking  
approximately 29% of the invoice  
amount  
Anion – Ion Separation  
System – Total $1,281,000  
Equipment did not exist on August  
25, 1984, nor on April 8, 1984  
(date of invoice)  
HMTQ v. Wilder et al  
Page 114  
2158  
Crystallization System –  
Total $2,499,598  
$725,000 figure written on  
invoice is the result of taking  
approximately 29% of the invoice  
amount  
Equipment did not exist on August  
25, 1984, nor on April 8, 1984  
(date of invoice)  
2159  
2160  
2161  
2162  
Acid Neutralization System – Equipment did not exist on August  
Total $2,150,755  
25, 1984, nor on April 8, 1984  
(date of invoice)  
Calcination System – Total  
$433,957  
Equipment did not exist on August  
25, 1984, nor on April 8, 1984  
(date of invoice)  
Caustic Neutralization  
System – Total $79,794  
Equipment did not exist on August  
25, 1984, nor on April 8, 1984  
(date of invoice)  
Steam Generating System –  
Total $717,941  
$210,000 figure written on  
invoice is the result of taking  
approximately 29% of the invoice  
amount  
Equipment did not exist on August  
25, 1984, nor on April 8, 1984  
(date of invoice)  
2163  
2164  
6165  
Wastewater Treatment System  
– Total $1,160,640  
Equipment did not exist on August  
25, 1984, nor on April 8, 1984  
(date of invoice)  
Equipment did not exist on August  
25, 1984, nor on April 8, 1984  
(date of invoice)  
Breitzman notes that the invoice  
number likely should have been  
2165, not 6165.  
Natural Gas System – Total  
$19,575  
Bulk Storage Facility –  
Total $483,600  
Equipment did not exist on August  
25, 1984, nor on April 8, 1984  
(date of invoice)  
2166  
Electrical System – Total  
$839,560  
Equipment did not exist on August  
25, 1984, nor on April 8, 1984  
(date of invoice)  
[198]  
Mr. Breitzman testified that the handwriting on some  
of the invoices was his and that it indicated the use of the  
29% “multiplier” to the actual total provided on the invoice.  
[199]  
Like with the Bio-Mass invoices, only the  
Lawrenceburg equipment relating to Fly Ash existed at the time  
Mr. Breitzman first saw the invoices on August 25, 1984. This  
HMTQ v. Wilder et al  
Page 115  
is despite the fact that April 8, 1984 was the date given on  
the invoices. All other equipment described in the invoices  
still had to be designed in a system, specified and then  
purchased or fabricated.  
[200]  
With respect to the descriptions of the equipment  
provided in both the Fly Ash and Bio-Mass invoices, Mr.  
Breitzman testified that they were not sufficiently clear to  
allow purchasing or selling of the equipment. More  
information would be needed such as specification, size,  
material required and capacities.  
[201]  
With respect to the Lawrenceburg equipment, the  
preparation for shipping began in August, 1984, with most of  
the equipment shipped in September, 1984.  
[202]  
Mr. Breitzman testified that he next returned to  
Bellingham in September, 1984 to meet with Mr. Russ and Mr.  
Wilder. He testified that while waiting at Mr. Wilder’s house  
on September 19, 1984, he met for the first time Ronald  
Johnson, Michael Richards and Roger Lawrence. When asked by  
Mr. Wilder if he was “ready to go to work?” Mr. Breitzman  
testified that he told Wilder that he was ready if the money  
was there. Mr. Breitzman testified that he was then told that  
the money was in an escrow account and could be taken out once  
Mr. Richards had seen that the equipment had been shipped.  
HMTQ v. Wilder et al  
Page 116  
[203] Mr. Breitzman testified that during this September  
19 meeting he voiced his concern with regard to the use of the  
name Mineral Gas Company on the invoices and that Mr. Wilder  
and Mr. Lawrence told him to just do it under HFI then. Mr.  
Breitzman also indicated that he asked for some office space  
and that Mr. Johnson offered him some in Mr. Johnson’s River  
Road office. With respect to the “multiplier” Mr. Breitzman  
testified that Mr. Russ inquired in the yard as to whether the  
.29 or .3 formula was the correct one, as there had been some  
confusion as to which would be applied. Mr. Breitzman  
believed it was Mr. Lawrence who replied indicating that it  
was to be the .29 figure.  
[204]  
Mr. Breitzman testified that following the September  
19, 1984 meeting in the yard it was his understanding that an  
agreement had been reached between HFI and the Wilder,  
Johnson, Lawrence and Richards group. Mr. Breitzman’s  
understanding of the deal was that he was to follow the orders  
on the purchase orders to have the equipment designed,  
fabricated, installed and placed into operation for Bio-Mass.  
Other duties were later added bit by bit, but his initial  
duties were to furnish the engineering and the equipment and  
put it in place at a site that was indicated to him.  
HMTQ v. Wilder et al  
Page 117  
[205] Mr. Breitzman’s understanding at the time was that  
Fly Ash was secondary to the Bio-Mass Project. While HFI was  
to receive 29% of the $14,000,000 set out in the Fly Ash  
invoices (approximately $4,106,497), no money was ever paid to  
them.  
[206]  
Mr. Breitzman indicated that HFI expected to make  
money on both projects through a mark-up on the cost of the  
equipment they would be acquiring and then passing on to J &  
B.  
[207]  
Mr. Breitzman was shown Exhibit 144 which he  
identified as a Cash/Cost Determination for the Fly Ash  
Project as drawn up by Mr. Russ signed in Mr. Breitzman’s  
name. Mr. Breitzman indicated Mr. Russ had his authority to  
do as much. Mr. Russ confirms that he drew up the document.  
The document outlines the difference between the invoice  
amount and the expected cost of the equipment to HFI. Mr.  
Breitzman would have first seen this document in June of 1984.  
Discussion about how Mr. Russ came up with these numbers is  
given in Mr. Russ’ testimony, including the negotiations  
between Mr. Russ and Mr. Wilder and his associates  
[208]  
Mr. Breitzman was shown Exhibit 200 which he  
identified as a budget, dated September 30, 1984, that he had  
prepared on Simons Eastern Co. letterhead. The budget was  
HMTQ v. Wilder et al  
Page 118  
created in an effort to set out what HFI would be prepared to  
purchase, install and pay for in order to put the Bio-Mass  
Project into operation.  
[209]  
As mentioned previously, the purchase orders Mr.  
Breitzman had been given (Exhibit 177) contained  
unidentifiable information, “you can’t build a manufacturing  
operation or design one with the limited information on these  
sheets”. As such Exhibit 200 was an attempt by Mr. Breitzman  
to properly prepare for the Bio-Mass Project. The budget for  
the Bio-Mass Project, excluding the Lawrenceburg Equipment as  
it had already been built and shipped, was $19,266,500  
(corresponds with Purchase Orders given to him by Johnson).  
The date set out on the budget sheet, September 30, 1984,  
indicates the date on which Mr. Breitzman gave the budget to  
Mr. Johnson and Mr. Wilder.  
[210]  
Mr. Breitzman explained that the $5,587,285 figure  
was the actual budget that he had to work with. It was  
arrived at by applying the 29% “multiplier” to the $19,000,000  
figure. Mr. Breitzman calculated, as indicated at the end of  
the budget, that if everything went as planned the Bio-Mass  
plant could be put up for $3,748,000 leaving HFI with a profit  
of approximately $1,800,000. Mr. Breitzman testified that he  
gave the budget to Mr. Johnson and Mr. Wilder and told them  
HMTQ v. Wilder et al  
Page 119  
that he would be working from it. Mr. Wilder was not happy  
with a couple of the items, but Mr. Breitzman did not  
elaborate on Mr. Wilder’s concerns.  
[211]  
Two letters dated October 2, 1984 on Jones, Cation &  
Company letterhead were given to Mr. Breitzman by Mr. Johnson.  
One letter related to the Bio-Mass Project (Exhibit 93-I) and  
the other to Fly Ash (Exhibit 96). While Mr. Breitzman signed  
the letters on October 8, 1984, he had some concerns with  
respect to their contents.  
[212]  
Mr. Breitzman was hesitant to sign the Bio-Mass  
letter because the amount on it was different from that given  
on the purchase orders ($17,200,000 as opposed to  
$20,007,160). The amount on the letter was crossed out by Mr.  
Breitzman and it seems that Mr. Johnson called Mr. Richards  
with Mr. Breitzman’s concern. Mr. Richards told Mr. Breitzman  
to cross out the figure and replace it with the correct figure  
before signing. Although the letter indicates the invoices  
were attached, to Mr. Breitzman’s knowledge the invoices were  
not attached when he signed it.  
[213]  
With respect to Mr. Breitzman’s concerns regarding  
the Fly Ash letter, while the right amount was provided he was  
concerned that the letter gave the impression that the full  
amount, $14,200,000, was to be paid to HFI when in fact HFI  
HMTQ v. Wilder et al  
Page 120  
was only expecting to receive 29% of that amount. These  
letters were needed as one of the requirements for getting the  
research tax credit money out of escrow.  
[214]  
Mr. Breitzman testified with respect to two  
agreements, one relating to Bio-Mass and the other to Fly Ash  
(collectively Exhibit 142). The Fly Ash agreement, dated  
April 8, 1984, was between HFI and J & B. The Bio-Mass  
agreement, dated May 7, 1984, was between Mineral Gas Company  
and PNR. Mr. Breitzman testified that he signed both  
agreements under duress in late 1985 or early 1986. Mr.  
Breitzman’s contention that the agreements were signed under  
duress was based on the following reasons. For one, the dates  
given on the agreements had no relation to the actual date  
that the agreements had been made (Mr. Breitzman had not met  
Mr. Wilder, Mr. Johnson or any of the others involved with the  
projects until months after the dates given on the  
agreements). Secondly, the content of the agreements would  
obviate and change everything that they had previously agreed  
to. Specifically no equipment was owned and available for  
purchase at the time the agreements were dated, and  
additionally the agreements contained terms of payment  
(“purchaser would pay vendor amount on or before December 31,  
1987”) that had never been talked about or agreed to.  
HMTQ v. Wilder et al  
Page 121  
Furthermore, Mr. Breitzman had other concerns with the  
agreements including the fact that the invoices were not  
attached to the agreement and there was no reference made to  
the 29% “multiplier”.  
[215]  
When asked why he signed the agreements, Mr.  
Breitzman testified that Mr. Johnson had told him that Mr.  
Wilder had said it had to be done or else they could not go on  
with the projects.  
[216]  
Promissory notes were attached to the agreements Mr.  
Breitzman signed. The Bio-Mass promissory note was for  
$20,007,160 and dated May 7, 1984 (Exhibit 141-I). The Fly  
Ash promissory note was for $14,200,000 and dated April 8,  
1984 (Exhibit 141-II).  
[217]  
Regarding the actual amount of money received by  
HFI, according to Mr. Breitzman, HFI received $1,560,000 for  
the Bio-Mass Project, but never received any money for Fly Ash  
despite having spent money hiring chemical engineers and  
shipping equipment from Lawrenceburg to the Pacific Northwest.  
[218]  
In the fall of 1984 Mr. Breitzman moved into Mr.  
Johnson’s River Road office and began interviewing salesman,  
providing them with requirements and getting proposals for  
equipment HFI would need. Evidence was given to prove Mr.  
HMTQ v. Wilder et al  
Page 122  
Breitzman’s whereabouts in September of 1984. Credit card  
receipts and bills confirm he was in the Pacific Northwest at  
the time he says he was. Shortly after Mr. Breitzman moved  
into the River Road office, Mr. Johnson gave Mr. Russ a job as  
the manager of a refinery. Subsequent to obtaining this  
position, Mr. Russ played a limited role in the Bio-Mass and  
Fly Ash Projects, although he was available to work on them if  
needed. Mr. Russ testified that by the end of 1984/early 1985  
he was no longer actively involved in either Bio-Mass or Fly  
Ash.  
[219]  
Mr. Wilder provided Mr. Breitzman with some  
personnel to help him out in the assembly of the equipment  
that was being shipped from Lawrenceburg. The Bio-Mass  
equipment was to be assembled at Boundary Bay in a very large  
hangar. Mr. Breitzman indicated that he likely first saw the  
Boundary Bay facility in October or November of 1984. At  
least a year later Mr. Breitzman was advised by Mr. Wilder  
that everything had to be moved out of Boundary Bay to a  
warehouse in Aldergrove.  
[220]  
During the time period in question, late 1984 to  
early 1986, Mr. Breitzman testified that he would see Mr.  
Wilder whenever Mr. Wilder visited Mr. Johnson at the River  
Road office.  
HMTQ v. Wilder et al  
Page 123  
(d) The Three Bio-Mass Machines  
[221]  
Mr. Breitzman testified that there were three Bio-  
Mass machines. There was the Lawrenceburg machine that was  
built before he was involved with Mr. Russ, the Milwaukee  
Prototype, which was to be built prior to any involvement with  
Mr. Wilder, and finally, there was the actual commercial plant  
that would be the result of HFI’s agreement with Mr. Wilder  
and his associates.  
[222]  
Messrs. Wilder, Johnson, Richards and Lawrence found  
out about the Milwaukee Prototype sometime in late 1984 and  
were not happy. They told Mr. Breitzman that if they did not  
stop the work in Milwaukee and ship whatever was there to  
Vancouver they would not be eligible for the S.R.T.C. program.  
Thus the Milwaukee Prototype was shipped to Bellingham in  
early 1985 and later moved to Boundary Bay. A photograph of  
the Milwaukee Prototype on a flatbed was identified by Mr.  
Breitzman as being taken at Boundary Bay (Exhibit 212).  
(e) HFI’s Cheque Register  
[223]  
Evidence with respect to expenses incurred by HFI  
relating to the Bio-Mass and Fly Ash Projects was provided in  
HFI’s cheque register (Exhibit 2001). The cheque register was  
prepared by Mr. Breitzman’s CPA based on documents provided by  
Mr. Breitzman. The package dated May 29, 1985, contained a  
HMTQ v. Wilder et al  
Page 124  
complete record of expenditures paid out by HFI in 1984. Mr.  
Breitzman testified that he believed most of the equipment  
vendor’s invoices should correspond with cheques noted in the  
register except for those which had not been paid. The  
register was created for tax purposes.  
[224]  
HFI had two bank accounts from which cheques would  
be written with Mr. Breitzman and his brother having signing  
authority. The aforementioned cheque register relates to the  
main account used, another account in Milwaukee was used to  
take care of expenses and minor items that were purchased in  
Milwaukee. According to Mr. Breitzman all of the cheques  
written by HFI would be represented in the register up until  
sometime in 1985 when Mr. Wilder suggested, for convenience  
sake, opening up a Canadian account which came to be known as  
the “Protech” account. Mr. Breitzman testified that he was  
able to verify the transactions represented in the register.  
[225]  
It is noteworthy that Mr. Wilder objected to the use  
of the cheque register wanting the Crown to prove that they  
were business records. Judge Scarth held them to be  
admissible at Mr. Wilder’s first trial.  
(f) Invoices for Equipment Purchased by HFI  
[226]  
Evidence of equipment purchased by HFI for the Bio-  
Mass and Fly Ash Projects was provided by way of invoices  
HMTQ v. Wilder et al  
Page 125  
addressed to HFI (Exhibits 180-190). These invoices were  
identified by Mr. Breitzman during his testimony. These  
invoices were never shown to Mr. Johnson or Mr. Wilder because  
HFI was never under any obligation to show them.  
(g) Commercial Unit Photographs  
[227]  
With regard to photographs (Exhibits 2038 and 142-  
B2) shown to Mr. Breitzman during his testimony, he identified  
them as equipment/machinery that made up the Bio-Mass  
commercial unit. He testified that the pictures were taken in  
the latter part of 1986 in Milwaukee where the commercial unit  
had been tested in preparation for it being disassembled,  
taken to Vancouver and reassembled. Mr. Breitzman indicated  
that the commercial unit, however, was never shipped to  
Vancouver, and as of 1997 it was still in Milwaukee.  
(h) Mr. Breitzman’s Cash Flow Worksheets  
[228]  
Mr. Breitzman drew up cash flow worksheets for the  
Bio-Mass Project (Exhibit 178) which he identified during his  
testimony. The purpose of the sheets was to provide Mr.  
Wilder with a record of what was being paid and a projection  
of what costs were coming in. According to Mr. Breitzman he  
was to update the sheets every two weeks and present them to  
Mr. Wilder, thus enabling Mr. Wilder to better keep track of  
things. Mr. Breitzman was to work with Mr. Wilder’s brother,  
HMTQ v. Wilder et al  
Page 126  
Earl, in an effort to keep the worksheets up to date. Copies  
of the running total were given to Earl. The worksheets were  
kept up to date until July of 1985. Mr. Breitzman made the  
decision to cease keeping the worksheets up to date because  
despite providing the updates no payments were being made to  
HFI.  
[229]  
By July, 1985, Mr. Breitzman had been told by Mr.  
Wilder that Mr. Johnson was out of the picture and that  
everything from then on would go through him (Wilder) and that  
any payments that would be made would be made by him (Wilder).  
[230]  
With respect to the cash flow worksheet for the Fly  
Ash Project, Mr. Breitzman noted that it was heavy in planned  
expenditures because nothing had been paid out. While HFI  
made an expenditure of $131,000 for equipment, they had never  
received any funds in return. Like the Bio-Mass worksheet,  
the Fly Ash worksheet was completed every two weeks and given  
to Earl.  
[231]  
Mr. Breitzman estimated that HFI had spent at least  
$3,500,000 or slightly more on both the Bio-Mass and Fly Ash  
Projects, some of which would not be reflected in the invoices  
such as salary paid to Mr. Russ and Mr. Russ’ nephew for  
testing they had done.  
HMTQ v. Wilder et al  
Page 127  
(i) Protech Industrial Systems Inc.  
[232]  
When asked about the name Protech Industrial Systems  
Inc. (“Protech”), Mr. Breitzman testified that it was a  
company recommended by Mr. Wilder and named by Mr. Johnson.  
He indicated that he had been bugging Mr. Wilder for  
additional funds, particularly starting in 1985. Mr. Wilder  
was travelling a lot thus making it difficult to obtain any  
funds from him. Mr. Wilder suggested that an account be  
opened in Canada in which Mr. Wilder would deposit money so  
that Mr. Breitzman could pay for the materials he needed for  
testing. The account was opened in early 1985 and likely  
“dried up” by the beginning of the second quarter of 1985.  
(j) Mr. Breitzman’s Memorandum  
[233]  
Mr. Breitzman drew up a memorandum dated November  
12, 1984 (Exhibit 139) which contained plans for what he would  
accomplish while in B.C. at the time. Upon reviewing the  
memorandum Mr. Breitzman noted the following with respect to  
the various items set out in it:  
1)  
2)  
Still waiting on a choice of location for Bio-  
Mass and a bio-mass sample;  
Wanted to know more about what Protech was  
about as Breitzman never knew who owned it or  
how it was incorporated etc.;  
3)  
Could never get an answer as to why the Fly Ash  
Project was not going ahead and he wanted to  
HMTQ v. Wilder et al  
Page 128  
know when he would be paid for equipment he had  
already purchased for the Fly Ash Project;  
4)  
Wanted to know more about the corporate set-up  
of the Bio-Mass plant as Russ’ letter of August  
24, 1984, discussed the joint ownership of the  
plant with HFI being involved in the  
functioning and ownership of the plants. He  
had heard nothing since;  
5)  
6)  
Wanted a second draw of money for Bio-Mass  
machinery in the amount of $563,160 for an  
invoice he had given Johnson. He had  
previously received $1,000,000;  
Wanted details on how he should go about  
shipping the Milwaukee prototype to Bellingham.  
As of November 12, 1984 both Johnson and Wilder  
knew about the Prototype.  
(k) Requests for Funds  
[234]  
Regarding requests for funds and funds paid out, Mr.  
Breitzman testified that he made a request for $1,566,000 as  
evidenced by Exhibit 137, “Request for funds number 1” dated  
November 18, 1984 from HFI to PNR (two copies one with and one  
without handwriting). This request for funds was a normal  
type of invoice that Mr. Breitzman would create when  
requesting funds. It contained information regarding the  
amount due and why it was due.  
[235]  
While the request was for $1,566,000, $1,000,000 had  
been paid leaving $566,000 still owing. Writing contained on  
one of the copies of the invoice was Mr. Breitzman’s and  
confirmed that a further $560,000 was paid on November 20,  
HMTQ v. Wilder et al  
Page 129  
1984, thus leaving $6,000 still owing. Regarding the second  
payment of $560,000, Mr. Breitzman testified that it was  
received soon after the first payment and came about after Mr.  
Breitzman had prepared an invoice and given it to Mr. Johnson.  
He noted that Mr. Wilder was not present when the second  
payment was handed to him by Mr. Johnson.  
[236]  
Regarding additional request for funds, following  
the November, 1984 request no further requests were made until  
March of 1985. Specifically, subsequent to March 23 and 24,  
Mr. Breitzman noted that when he made requests for money to  
Mr. Johnson, he was directed to approach Mr. Wilder for funds.  
[237]  
Mr. Breitzman made an additional request for funds  
on March 23, 1985, as evidenced by Exhibit 139 II which he  
identified as an HFI invoice relating to Bio-Mass, dated March  
23, 1985. He had created the invoice because HFI needed  
money. The invoice shows that the budget for the Bio-Mass  
Project was $6,327,945 (the amount it was going to cost PNR)  
and that HFI had received payments in the amount of $1,560,000  
leaving a figure of $4,767,945 still owing. Also contained in  
the invoice are a number of items for which Mr. Breitzman was  
seeking funds at that particular time. In total he was  
requesting $823,199. Mr. Breitzman gave the original of the  
invoice to Mr. Johnson by hand at the River Road office and  
HMTQ v. Wilder et al  
Page 130  
was told by Mr. Johnson that he (Johnson) would have to  
contact Mr. Wilder regarding the invoice.  
[238]  
In addition to the March 23, 1985 invoice, Mr.  
Breitzman drew up a memorandum on March 24, 1985 for Mr.  
Johnson and Mr. Wilder regarding the Bio-Mass Project. The  
purpose of the memo was to keep them up-to-date on the  
project. Mr. Breitzman identified the memorandum as Exhibit  
139 III and indicated that it was based on his budget for the  
project. Mr. Breitzman believed that more than likely he gave  
two copies of the memorandum to Mr. Johnson who passed on a  
copy to Mr. Wilder; the memorandum was addressed to both Mr.  
Johnson and Mr. Wilder.  
[239]  
Mr. Breitzman noted that while there is a reference  
in the memorandum to a March 25 invoice, it is a mistake as it  
was really referring to the March 23 invoice (Exhibit 139 II).  
Assuming that the funds sought in the March 23 invoice would  
be paid, he indicated in the memorandum that he wanted the  
remaining funds of $1,650,000 to be paid in two equal  
instalments on May 15 and July 1, 1985. These dates were  
chosen based on Mr. Breitzman’s estimate of when HFI would pay  
the various vendors for the remaining items set out in the  
memo (8 items). Also noted in the memorandum and highlighted  
by Mr. Breitzman during his testimony was the fact that the  
HMTQ v. Wilder et al  
Page 131  
cost of the project would be $520,000 less that what was  
initially indicated on his September 30, 1984 memo (Exhibit  
200). Also noted in the memorandum was Mr. Breitzman’s  
indication that the estimate would be updated on April 30,  
1985.  
[240]  
Other evidence relating to requests for funds can be  
found in a Protech invoice (Exhibit 139 IV) which Mr.  
Breitzman identified as being drawn up by him on or about  
March 23, 1985, for $175,000. He testified that the amount  
was the portion of engineering and project management costs  
PNR was scheduled to pay as set out in his September 30, 1984  
project summary. Mr. Breitzman explained that the $175,000  
was to cover all the engineering effort of HFI, most of which  
had been done prior to March 23, 1985. The invoice was made  
up by Mr. Breitzman on Protech letterhead, despite the fact  
that the costs really should have been part of HFI’s project.  
The original of the invoice was given to Mr. Johnson.  
[241]  
As for requests for funds for the Fly Ash Project,  
Mr. Breitzman drew up a Cash/Cost Determination for the Fly  
Ash Project on March 23, 1985 (Exhibit 145 I). He explained  
that this was the first request for funds for the Fly Ash  
Project, with a total of $630,938 requested at that time.  
This figure was made up of the Lawrenceburg equipment that had  
HMTQ v. Wilder et al  
Page 132  
already been shipped out west, the equipment purchased in  
Denver with Mr. Wilder’s blessing and a 25% front fee which  
Mr. Russ had told Mr. Breitzman was part of the deal.  
[242]  
Mr. Breitzman also identified a Protech invoice for  
Fly Ash (Exhibit 145 II) which he also drew up on March 23,  
1985. He explained that the $75,000 invoice was strictly for  
engineering done on the Fly Ash Project. As with the Bio-Mass  
Protech invoice, the Fly Ash invoice was drawn up under the  
name of Protech because that was how Mr. Wilder and Mr.  
Johnson wanted engineering to be handled. These Fly Ash  
documents were given to Mr. Johnson in the same manner as the  
Bio-Mass documents.  
[243]  
Mr. Breitzman did not draft a memorandum, similar to  
the Bio-Mass memorandum (Exhibit 139 III), for the Fly Ash  
Project because there were no parameters for the project; he  
could never get anyone to sit down and say what was wanted for  
it.  
[244]  
Upon presenting Mr. Johnson with the documents  
containing the request for funds, Mr. Breitzman was informed  
that any money he was hoping to receive would have to come  
from Mr. Wilder. As a result, Mr. Breitzman went to Mr.  
Wilder’s home a couple of weeks later to meet with him and  
discuss the funds he was seeking.  
HMTQ v. Wilder et al  
Page 133  
[245] During this discussion, Mr. Wilder set out when he  
would make payments as evidenced by Mr. Wilder’s handwriting  
on copies of the March 23 and 24 invoices and memoranda. Mr.  
Breitzman identified copies of the Bio-Mass and Fly Ash  
Protech invoice (Exhibits 209 III and 208 II – originals in  
Exhibits 139 and 145) with Mr. Wilder’s handwriting on them  
indicating a payment plan for each of the projects. Regarding  
the Fly Ash request for funds, it would appear that Mr. Wilder  
indicated that he would pay for one-half of item 1  
(Lawrenceburg equipment) on May 1, 1985 and the other one-half  
on July 1, 1985; that Bio-Mass would pay for item 2 (materials  
purchased in Denver with Mr. Wilder’s approval); that the  
inventor’s front fee (which Mr. Russ had told Mr. Breitzman  
was part of the deal) would not be paid. With respect to the  
Fly Ash Protech invoice, Mr. Wilder indicated on the copy of  
the Protech invoice that he would pay one-half of the $75,000  
at that time and the other one-half on May 15, 1985.  
[246]  
Mr. Breitzman testified that there was no discussion  
between himself and Mr. Wilder regarding the validity of what  
was being paid; the discussion focused on when the amounts  
were to be paid. At this point Mr. Breitzman was under the  
impression (99% sure) that Mr. Johnson was out of the picture  
and that Mr. Wilder was the one in complete charge of the  
HMTQ v. Wilder et al  
Page 134  
projects. Mr. Breitzman was also under the impression at that  
point that Mr. Wilder was short of funds, and as such wanted  
to stretch out the payments.  
[247]  
With respect to Mr. Breitzman’s March 24, 1985  
memorandum relating to Bio-Mass, Mr. Breitzman identified a  
copy with Mr. Wilder’s handwriting on it (Exhibit 196 II –  
original Exhibit 139 III). Mr. Wilder’s writing is evidence  
of Mr. Wilder’s intention to make progress payments on items  
1-7 and his refusal to pay the inventor’s front fee.  
[248]  
Furthermore, Mr. Breitzman identified a copy of the  
March 23, 1985 HFI invoice relating to Bio-Mass (Exhibit 195  
II – original Exhibit 139 II). It too had Mr. Wilder’s  
handwriting on it providing evidence of which payments were  
due, when they were to be paid and that no front fee would be  
paid.  
[249]  
Mr. Breitzman identified a handwritten document that  
he drew up relating to an April 19, 1985 conversation he had  
with Mr. Wilder regarding when the monies would be paid out  
(Exhibit 204). He explained that everything on the document  
would correspond with the cash flow sheets he had drawn up for  
the Bio-Mass and Fly Ash Projects.  
HMTQ v. Wilder et al  
Page 135  
[250] Evidence of a cheque written by Mr. Wilder made  
payable to HFI for $215,000 was tendered though Mr. Breitzman  
as he identified a photocopy of the April 23, 1985 cheque  
which he testified was signed by Mr. Wilder (Exhibit 205). He  
explained that Mr. Wilder had written the cheque after asking  
him how much it would take to keep the project going. While  
Mr. Breitzman never saw Mr. Wilder write the cheque, he was  
sure that Mr. Wilder personally gave it to him.  
(l) Relationship Between Mr. Johnson and Mr. Wilder  
[251]  
When asked for his perspective of the relationship  
between Mr. Johnson and Mr. Wilder, Mr. Breitzman testified  
that “Wilder was the big boss, he was the chief” and that Mr.  
Johnson would not make any decisions without first asking Mr.  
Wilder. He noted that he would generally only meet with Mr.  
Johnson and Mr. Wilder together when Mr. Wilder dropped in at  
the River Road office or when Mr. Johnson held off his  
requests until Mr. Wilder could join them to make a decision.  
(m) July 3, 1985 Summary  
[252]  
Mr. Breitzman drew up a summary on July 3, 1985,  
which he gave to Mr. Wilder concerning PNR (Exhibit 179). The  
summary includes references to:  
1)  
Attached invoices for equipment and components  
of the Bio-Mass Project totalling $1,558,812.08  
– Mr. Breitzman noted that HFI had not paid the  
HMTQ v. Wilder et al  
Page 136  
suppliers 100% of the invoices at that point,  
but had paid enough to prevent “any fussing”.  
2)  
3)  
Lawrenceburg payments of over $700,000 – Mr.  
Breitzman noted that the people in Lawrenceburg  
were not very happy at the time because they  
had not been paid for the equipment they had  
previously sent to Bellingham.  
Expenses from September 1984 to June 1985  
(living, travel, acid catalyst, demonstrations  
etc.) totalling $335,000 – Mr. Breitzman noted  
that these were expenses which had been  
incurred by HFI.  
4)  
5)  
Budget for promotional work totalling $100,000  
– Mr. Breitzman noted that these expenses had  
not been incurred at that point in time.  
Contingency fees of $250,000 – Mr. Breitzman  
noted that these expenses had not been incurred  
at that point in time.  
[253]  
Mr. Breitzman gave the original of this summary to  
Mr. Wilder along with the invoices which are mentioned in the  
document. The invoices were the invoices Mr. Breitzman had  
created with respect to the Bio-Mass Project (under Exhibit  
139).  
[254]  
Mr. Breitzman noted that by July 1985, Mr. Johnson  
was definitely out of the picture.  
(n) February 10, 1986 Memorandum  
[255]  
Breitzman drew up a memorandum on February 10, 1986  
(Exhibit 156) and gave it to Mr. Wilder because he needed  
HMTQ v. Wilder et al  
Page 137  
$179,630 Canadian dollars from Mr. Wilder to pay off vendors  
that were calling HFI about money that was owed to them.  
[256]  
Regarding expenses incurred by HFI, HFI was  
reimbursed for some of the expenses via deposits sent to the  
Protech account. Once Mr. Johnson was out of the picture, Mr.  
Breitzman would call up Mr. Wilder and Mr. Wilder would  
sometimes send a deposit to the Protech account in White Rock  
or alternatively instruct Mr. Breitzman to contact Mr.  
Wilder’s attorney and the attorney would advance money to the  
Protech account.  
[257]  
When asked about the circumstances in which he  
received the initial payment of $1,000,000 in November of  
1984, Mr. Breitzman testified that the money was handed to him  
while Mr. Johnson and Mr. Wilder drove him to the airport. He  
noted that Mr. Johnson and Mr. Wilder had attended a meeting  
at Mr. Lawrence’s office prior to picking him up at the River  
Road office. Mr. Wilder had told him that Mr. Lawrence’s  
instructions were that all costs of the two projects (Fly Ash  
and Bio-Mass) were to be handled through HFI for payment.  
[258]  
The remainder of the money received generally went  
through the Protech account. Money was transferred to the  
account and used for paying bills and expenses. Mr. Breitzman  
identified a list that he created (Exhibit 191) which set out  
HMTQ v. Wilder et al  
Page 138  
payments made and when they were received. While the document  
indicates that $2,288,720 was received, Mr. Breitzman admitted  
that it was only complete with respect to high dollar amounts.  
Mr. Breitzman did not believe that he ever gave a copy of this  
document to Mr. Johnson or Mr. Wilder.  
(o) Bio-Mass Move from Aldergrove to Manitoba  
[259]  
Approximately two weeks before the Christmas of  
1985, Mr. Breitzman spent considerable time at Mr. Wilder’s  
home at Mr. Wilder’s request. During this period Mr. Wilder  
told him that he had found a “better home” for the commercial  
Bio-Mass unit in Winnipeg, Manitoba. At the time of this  
discussion the commercial unit was still in Milwaukee. Mr.  
Wilder’s brother, Earl, had moved much of the equipment from  
Aldergrove to Manitoba, but had left the Milwaukee Prototype  
as it was going to be used for a demonstration for Coors in  
Aldergrove.  
[260]  
Mr. Breitzman was also told at this time that it was  
a possibility that Mr. Wilder was going to get money to pay  
off the commercial unit which would allow them to start anew  
on units for other locations. Mr. Wilder received a telephone  
call in Mr. Breitzman’s presence and upon hanging up told Mr.  
Breitzman to fly to Milwaukee to meet a Mr. Kapoor who would  
inspect the equipment and give him a cheque for $3,000,000.  
HMTQ v. Wilder et al  
Page 139  
The $3,000,000 would have satisfied HFI’s expectations up to  
that point. When Mr. Kapoor did not show up Mr. Breitzman  
called Mr. Wilder and was told to wait. Mr. Kapoor never did  
show up.  
(p) The End of the Relationship Between HFI and Wilder  
[261]  
When asked about the end of the relationship between  
HFI and Mr. Wilder, Mr. Breitzman testified that a  
demonstration had been scheduled for the Coors people on March  
6, 1986 in Aldergrove and that following the demonstration,  
Revenue Canada officials informed him, his son and Mr. Russ  
that they may be dealing with people (Mr. Wilder and his  
associates) that are under criminal investigation. Mr.  
Breitzman told the Revenue Canada people to deal with his  
corporate attorney in Atlanta. Mr. Breitzman and his attorney  
later agreed to meet with Revenue Canada officials in Denver  
if they were given an immunity agreement.  
[262]  
Following his initial contact with the Revenue  
Canada officials he had meetings with them in Denver,  
Colorado, and Baker, Oregon, once the April 29, 1986 immunity  
letter had been obtained (Exhibit 1200).  
[263]  
It was around this time, March/April of 1986, that  
the Bio-Mass and Fly Ash Projects were terminated. Mr.  
Breitzman explained that HFI did not want to end the projects,  
HMTQ v. Wilder et al  
Page 140  
but had no choice as they had overspent the money they had  
received and were not willing to borrow any more money to  
finish the projects. The entity known as HFI did not do any  
further business.  
4.  
Corroboration of Mr. Breitzman’s Testimony  
[264]  
While I have not had the opportunity to observe Mr.  
Breitzman’s demeanour, given that his evidence takes  
transcript form, I find his evidence is consistent on the key  
points. The consistency of his evidence over the two years  
during which he was cross-examined and the corroboration of  
his evidence supports the conclusion that his evidence is  
indeed reliable.  
[265]  
As stated previously, Mr. Breitzman’s testimony is  
corroborated in many ways. Examples of evidence that  
corroborates Mr. Breitzman’s testimony include:  
1)  
James Russ’ testimony that invoices were  
“created” in Mr. Wilder’s presence; that he had  
discussions with Mr. Wilder about payments  
being made on 29% or 30% of the face value of  
the invoices; that his first dealings with Mr.  
Wilder were in mid-March 1984 and that his  
first discussions in relation to the Fly Ash  
and Bio-Mass equipment did not occur until mid-  
May 1984; that equipment from Lawrenceburg was  
sent up to Mr. Wilder in September 1984;  
2)  
Re: Mr. Breitzman’s testimony that the “New  
Equipment Acquisition Agreements” between HFI  
and J & B re: Fly Ash dated April 12, 1984 and  
between Mineral Gas Company and PNR dated May  
HMTQ v. Wilder et al  
Page 141  
7, 1984 (Exhibit 278 -142) were signed by him  
in 1985 or 1986 under “duress” long after he  
had been doing business with Mr. Wilder and his  
colleagues:  
a)  
the non-production of these two contracts  
during the audit, notwithstanding the  
auditors’ requests for such documents on  
January 7, 1985 and the obvious relevance  
of the documents to the audit issues;  
b)  
Mr. Choy’s evidence that the agreements  
had been created or last saved on Mr.  
Lawrence’s computer on May 3, 1985  
(Exhibit 238- 81);  
3)  
4)  
Mr. Wilder’s possession of shipping documents  
related to the Lawrenceburg equipment and  
related to the Camax equipment which Mr.  
Breitzman testified he shipped to Mr. Wilder  
for the Bio-Mass Project;  
Mr. Breitzman’s handwritten invoices for  
payment on the Fly Ash and Bio-Mass Projects,  
seized from Mr. Johnson’s residence:  
a)  
The Fly Ash invoice contains a  
multiplication calculation of the first  
Fly Ash invoice, no. 2291-152 “x .3”.  
There could not be clearer evidence that  
what was under consideration was payment  
of 30% of the face value of that invoice;  
b)  
c)  
The Bio-Mass invoice stipulates a budget  
of less than $6,000,000;  
The documents are dated March 23, 1985; if  
Exhibit 13-177 and Exhibit 9-100v were  
authentic, it would mean that Mr.  
Breitzman had waited almost a year before  
seeking payment;  
5)  
Payments to Mr. Breitzman in relation to the  
Bio-Mass Project equipment:  
a)  
$1,000,000 from PNR;  
HMTQ v. Wilder et al  
Page 142  
b)  
c)  
$560,000 from PNR;  
$215,000 from Vardax;  
These payments corroborate Mr. Breitzman’s  
testimony that his companies were not financing  
the projects and his evidence that the  
promissory notes in relation to the Fly Ash and  
Bio-Mass Projects were false.  
6)  
7)  
Mr. Wilder’s handwriting on Mr. Breitzman’s  
copies of those invoices corroborates Mr.  
Breitzman’s testimony that Mr. Wilder was the  
person to whom he went for money. They also  
confirm that Mr. Wilder was well aware of the  
30% arrangement.  
The documents seized from Mr. Johnsons’s house  
used to “cut and paste” Mineral Gas Company  
invoices (Exhibit 221-138) also corroborate Mr.  
Breitzman’s testimony that the invoices were  
false and not prepared by his company.  
Mr. Russ’ testimony that the address on the  
purported letterhead was the Lawrenceburg Gas  
Co. address in Tennessee and the phone number  
typed on the letterhead that of Mr. Breitzman  
also corroborates Mr. Breitzman’s testimony in  
this regard.  
8)  
9)  
Betty Klatt’s testimony that she prepared back-  
dated invoices with the approval of Mr. Wilder  
on January 6, 1985 also corroborates Mr.  
Breitzman’s testimony to a degree.  
James Russ’ diary (Exhibit 295), also  
corroborates aspects of Mr. Breitzman’s  
testimony, including the timing of their first  
involvement with Mr. Wilder group; proposals on  
projects on May 15, 1984; discussions on August  
10, 1984 with Dara Wilder and others regarding  
Fly Ash and Bio-Mass Projects and the need to  
create invoices in the amount of $14,200,000  
for Fly Ash; reference to 30% of the invoices;  
Mr. Wilder’s involvement in preparing the  
inflated invoices; 6 million was circled when  
the actual amount was $20,700,160. This is  
HMTQ v. Wilder et al  
Page 143  
important because 6 million corresponds to 30%  
of the actual invoice amount.  
[266]  
Because of the length of this judgment and having  
found Mr. Breitzman’s evidence to be reliable, it would be  
prudent for me to point out the critical aspects of Mr.  
Breitzman’s testimony.  
5.  
Critical Aspects of Mr. Breitzman’s Testimony  
[267]  
The critical aspects of Mr. Breitzman’s testimony  
which I accept are as follows:  
1)  
2)  
Mr. Breitzman met Mr. Wilder in May 1984, not  
earlier;  
Mr. Breitzman had no involvement with Mr.  
Wilder or his colleagues in April, 1984 and had  
no contractual arrangements with them on May 7,  
1984, notwithstanding the existence of invoices  
and purchase orders with his companies’ names  
dated May 7, 1984;  
3)  
4)  
An agreement with regard to Mr. Breitzman’s  
providing Fly Ash and Bio-Mass equipment was  
reached with Mr. Wilder and his colleagues in  
August or September, 1984;  
Mr. Breitzman’s companies, HFI and Mineral Gas  
Company did not prepare the invoices dated  
April 8, 1984 (Exhibit 9-100iv) and dated May  
7, 1984 (Exhibit 13-177), respectively; the  
invoices are false and reflect amounts far  
higher than the actual costs agree upon;  
5)  
Mr. Wilder advised him that he would receive  
payment of 29% or 30% of the face value of the  
invoices;  
HMTQ v. Wilder et al  
Page 144  
6)  
7)  
8)  
9)  
Mr. Breitzman expected to receive approximately  
$4,000,000 in relation to the Fly Ash equipment  
and approximately $6,000,000 in relation to the  
Bio-Mass equipment;  
Mr. Wilder was aware of these figures and was  
involved in the payment to Mr. Breitzman of the  
monies he did receive in relation to the Bio-  
Mass equipment;  
Mr. Breitzman received approximately $2,880,000  
in relation to the Bio-Mass equipment and  
received no monies in relation to the Fly Ash  
equipment;  
Equipment was shipped to Mr. Wilder from  
Lawrenceburg Tennessee and from Kentucky in  
September 1984;  
10) Mr. Breitzman obtained used equipment for Mr.  
Wilder, which Mr. Wilder knew was used, and  
shipped it up;  
11) Mr. Wilder telephone Mr. Breitzman the day  
after Revenue Canada officers’ attendance at  
the Aldergrove plant and told him not to talk  
to Revenue Canada.  
VI. THE EVIDENCE OF JAMES RUSS  
A.  
Position of the Defence  
[268]  
Mr. Wilder took the position that Mr. Russ’ evidence  
was unreliable. His counsel further submitted that his  
testimony should have very little weight because neither he  
nor Mr. Wilder was able to cross-examine Mr. Russ.  
B.  
Caution Regarding Mr. Russ’ Evidence  
[269]  
While the law with regard to the principled approach  
to the hearsay rule will be discussed later, at this point I  
HMTQ v. Wilder et al  
Page 145  
should point out that I am satisfied that the requirements of  
necessity and reliability are met. Indeed I ruled this to be  
the case in Wilder (Written Ruling No. 8), supra. I now  
confirm that ruling. The necessity requirement is met due to  
the fact that Mr. Russ is deceased. And although I find  
certain inconsistencies in the evidence of Mr. Russ,  
especially pp. 1477-81 of Mr. Russ’ transcript (Mr. Bank’s  
cross-examination,), I find that there is sufficient  
corroboration of Mr. Russ’ testimony for me to find his  
evidence reliable.  
C.  
Evidence of James Russ  
[270]  
The evidence of Mr. Russ was tendered by the Crown  
by way of testimony he gave at the previous trial of the co-  
accuseds. At this previous trial the co-accused, Mr.  
Lawrence, was represented by Mr. R. Claus, a very well  
respected criminal lawyer in British Columbia. Mr. M. Harris  
appeared for the co-accused, Mr. Richards. The co-accused,  
Mr. Johnson, was represented by John Banks, a very well  
respected member of the B.C. criminal Bar. Mr. R.J. Kaardal  
represented the co-accused, Mr. Byerlay and Mr. Neely acted on  
his own behalf. All of these counsel conducted a very lengthy  
cross-examination of Mr. Russ after which there was re-  
examination by the Crown followed by re-cross-examination by  
HMTQ v. Wilder et al  
Page 146  
these various counsel. I ruled Mr. Russ’ evidence to be  
admissible on this trial in Wilder (Written Ruling No. 8),  
supra, due to the fact that Mr. Russ is now deceased.  
[271]  
Jim Russ was never a shareholder in HFI, however he  
worked with Mr. Breitzman in getting the company up and  
running. He testified that while Mr. Breitzman was on the  
design and application side, he was involved on the technical  
side. The arrangement between Mr. Russ and Mr. Breitzman  
crystallized in early 1984, and by August of 1984 they had a  
contract to proceed. This testimony is corroborated by Mr.  
Breitzman.  
[272]  
Mr. Russ’ first contact with Mr. Wilder was by way  
of a telephone conversation on March 12, 1984. Mr. Russ  
testified that he first met Mr. Wilder in Bellingham,  
Washington. He was to meet Mr. Wilder to “check on the  
viability of a system that was advertised and to define is it  
a usable system or is it not”. Mr. Wilder’s company was  
Vardax. He was to fly out to Bellingham to meet Mr. Wilder,  
witness a test and fly back home.  
[273]  
Mr. Russ kept a diary of his understanding of what  
was going on. He claims that the diary was filled in daily.  
He used the diary to refresh his memory before testifying and  
during his testimony. He was permitted to do so by Scarth J.  
HMTQ v. Wilder et al  
Page 147  
In Wilder (Written Ruling No. 8), supra, I also ruled that  
this diary was admissible.  
[274]  
During his initial visit to Bellingham, Mr. Russ  
went with Mr. Wilder to Chilliwack to see the first generic  
Vardax plant. During the visit he met Gerald Byerlay as the  
equipment was located at Mr. Byerlay’s farm. Mr. Russ was  
told by Mr. Byerlay that he was an engineer and qualified to  
teach in school.  
[275]  
Mr. Russ was told by Mr. Wilder that there was a  
hundred million dollars of grant money available to pursue in  
various parcels. This discussion took place on May 8, 1984  
over the phone while Mr. Wilder was in Bellingham and Mr. Russ  
in Lawrenceburg.  
[276]  
Following the May 8 conversation, Mr. Russ went to  
Bellingham on May 14, 1984 with the intention to develop a fly  
ash proposal. Mr. Russ was in Bellingham from May 14 to May  
17 during which time he prepared specific proposals.  
[277]  
Mr. Russ was introduced to Mr. Johnson at Mr.  
Wilder’s home in Bellingham. Mr. Wilder indicated Mr.  
Johnson’s role was that of program coordinator.  
[278]  
Upon returning to Lawrenceburg on May 17, 1984, Mr.  
Russ prepared a proposal for a fly ash plant and sent it to  
HMTQ v. Wilder et al  
Page 148  
Mr. Wilder. This was confirmed by Mr. Russ’ diary entry. Mr.  
Russ noted that Mr. Breitzman was more interested in U.S.  
funding of specific equipment in specific locations, so he  
wasn’t involved in any way in the Canadian grant money or  
proposals at that time, although he was given copies of all  
the information; in other words Mr. Breitzman was aware Mr.  
Russ was preparing proposals.  
[279]  
Mr. Russ had discussions with Mr. Wilder and Mr.  
Johnson about equipment from Lawrenceburg; he informed them  
that the equipment was usable, viable and available. The  
equipment was both new and used. The equipment was primarily  
for fly ash work in Lawrenceburg.  
[280]  
The equipment in Lawrenceburg was owned by Chemical  
Mineral Company (“CMC”). Mr. Russ noted in his diary entry of  
July 4, 1984, that Mr. Wilder wrote a comfort letter to Billy  
Ray Helton, president of CMC and chairman of the finance  
committee for the city of Lawrenceburg, stating that Mr.  
Wilder had programs that would absorb the equipment and that  
the programs/projects would pay for the equipment. It is  
apparent that the projects Mr. Russ was referring to were Bio-  
Mass and Fly Ash. Mr. Russ explained that the Lawrenceburg  
equipment was built in Hopkinsville, Kentucky. All of the  
used equipment from Lawrenceburg was returned to Hopkinsville  
HMTQ v. Wilder et al  
Page 149  
and stored there. Mr. Russ subsequently saw the equipment  
from Kentucky in Ferndale, Washington, and Langley, British  
Columbia. Mr. Russ saw parts of the equipment from  
Lawrenceburg in Ferndale and Langley, but never a complete  
package. When asked if he had any personal involvement in  
getting the equipment from Lawrenceburg or Hopkinsville to  
Ferndale and Langley, Mr. Russ testified that:  
The direction was given by Mr. Wilder. The purpose  
was to get a hold of Mr. Breitzman who was not  
available but do it yourself, get it done. Orders  
were created, written, identified, and shipments  
scheduled and deliveries made on a given increment  
in quantity form different – four different  
shipments.  
1.  
The Bio-Mass Prototype  
[281]  
Mr. Russ testified that HFI placed an order to build  
a Bio-Mass prototype late in 1983 for the Coors company. The  
prototype was completed sometime in 1984 and was built at  
Rexnor Inc. in Milwaukee, Wisconsin (the “Milwaukee  
Prototype”). When the order was placed and the construction  
of the Milwaukee Prototype began, the project was independent  
of the Bio-Mass and Fly Ash Projects. Mr. Russ testified that  
the Milwaukee Prototype was later shipped to Canada.  
HMTQ v. Wilder et al  
Page 150  
[282] Mr. Russ identified C.P. Industries and Tennessee  
Steel Corporation as other equipment producers that produced  
equipment that was later shipped to the Northwest.  
2.  
Bio-Mass and Fly Ash Project Formats  
[283]  
Mr. Russ was shown Exhibit 1020 which he identified  
as invoices created by him. He prepared the invoices and  
presented the numbers to Mr. Breitzman who got the purchase  
orders and it proceeded from there. Mr. Russ, although able  
to identify that he created the invoices while in  
Lawrenceburg, was unable to provide a date.  
[284]  
Mr. Russ returned to Bellingham on August 9, 1984.  
He met with Mr. Wilder later that afternoon. Mr. Russ had  
concerns with respect to the legality of moving equipment from  
the U.S. to Canada as he was aware that they would have to go  
through a brokerage house and Customs. He was concerned with  
whether what they were doing was proper. These concerns were  
sorted out the next day, August 10, 1984, when Mr. Russ went  
with Mr. Wilder and Mr. Johnson to Roger Lawrence’s office in  
Vancouver. At Mr. Lawrence’s office, Mr. Russ testified that  
he met with Mr. Wilder, Mr. Johnson, Mr. Lawrence and Michael  
Richards. Mr. Russ understood Mr. Richards to be the  
accountant. During this meeting, it is apparent from Mr.  
Russ’ diary that Mr. Russ was told:  
HMTQ v. Wilder et al  
Page 151  
It was necessary to create invoices for all  
equipment, a total of 14.2 million to include the  
980,000 advance R & D package – as part of the  
package…[a]lso needed is a copy of the CT Main  
engineering report…  
[285]  
Mr. Russ noted that a lot of work needed to be done  
and that it had to be done by the end of the next week. It  
was during this meeting that the project format was developed.  
Mr. Russ noted that up to that point there had been individual  
projects, and what they were discussing at the meeting was  
putting all of the projects in a format, creating invoices for  
each project, specializing in two specific items, Fly Ash and  
Bio-Mass.  
[286]  
Mr. Russ testified that on August 11, 1984 he met  
with Mr. Johnson and reviewed the invoices as set up. He  
noted that Mr. Johnson wanted to know the actual bottom line  
cost for the production limit; $6,000,000 for a 150-ton unit.  
These numbers were used to create “artificially a demand for a  
given dollar figure”. They amended the numbers on the  
invoices to reflect a higher level than what the invoices  
contained. Mr. Russ explained why the numbers were amended:  
…to satisfy the needs and rapidly with which the  
projects were to be moving, it was necessary to  
amend levels from a basic zero cost level, in this  
case being $6 million, as opposed to fourteen two.  
The part between the six million and the fourteen  
two was the – I don’t want to use the word  
HMTQ v. Wilder et al  
Page 152  
“inflated,” I’m going to use “amended” word, which  
incorporated costs associated with the project,  
which involved overhead, legal, accounting, stock  
brokerage, advertising, whatever, to achieve a level  
that was necessary to satisfy any one project.  
[287]  
Mr. Russ was shown Exhibit 144 (Mr. Breitzman also  
testified with respect to this) which he identified as  
containing the amended figures for the Fly Ash Project. Mr.  
Russ explained that the Cash/Cost determination represented  
the difference between the amount HFI expected to receive and  
the actual invoice amount. Of the $14,200,000, the collective  
total of the invoices, HFI expected to receive approximately  
$4,230,000 (approximately 30%). Mr. Russ confirmed that the  
handwriting was his despite the fact that it appears to be  
signed James J. Breitzman. Mr. Russ noted that he had  
discussions with Mr. Breitzman regarding the preparation of  
the document.  
[288]  
The $4,230,000 figure had initially been $6,000,000,  
but was amended to the lower amount. Added to the lower  
figure was an additional level of research and development  
processing (ie. another building up of costs).  
[289]  
Mr. Russ testified that the $14,200,000 figure came  
from Mr. Lawrence. He further explained that the 30% figure  
came from conversation in Mr. Lawrence’s office, Mr. Johnson’s  
HMTQ v. Wilder et al  
Page 153  
office and later Mr. Wilder’s office. This repeated  
conversation made it clear to Mr. Russ that there were two  
numbers; the amended higher number ($14,200,000) and the 30%  
number ($4,230,000) that Mr. Russ described as the “real hard  
nut – hardware number”.  
[290]  
As a result of the meeting in Mr. Lawrence’s office,  
Mr. Russ had to rewrite the invoices to reflect the amended or  
inflated amounts. Mr. Russ did the rewriting in Bellingham at  
the Holiday Inn. Mr. Russ testified that while the Fly Ash  
and Bio-Mass Projects had priority there were eventually as  
many as 26 projects, some of which did not involve HFI.  
[291]  
Mr. Russ’ diary entry of August 14, 1984, was a  
capsule of numbers that were being provided for input into  
creating invoices. The numbers included work order numbers,  
invoice number series, grand total and a net total. The re-  
writes were done on August 13, submitted on August 14 and  
typed August 14.  
[292]  
Mr. Russ was shown the Bio-Mass invoice numbers  
2924-2938 and he testified that he was given a packet of  
invoice forms with invoice numbers assigned; Mr. Russ could  
not remember who out of Mr. Johnson, Mr. Lawrence or Mr.  
Wilder delivered them to him.  
HMTQ v. Wilder et al  
Page 154  
[293] Mr. Russ testified that during the August 10, 1984  
meeting, Mr. Lawrence was the chairperson, reviewing all  
aspects of what was to be involved, including the inflated or  
amended figures. As to how the money would be released, Mr.  
Russ’ understanding from the meeting was that Mr. Lawrence’s  
company, which included Mr. Lawrence, Mr. Wilder, Mr. Johnson  
and Mr. Richards, would have control of the funds.  
3.  
The Invoices  
Mr. Russ was shown Exhibit 1202, handwritten invoice  
[294]  
numbers 1001-1015 relating to Fly Ash, which he identified as  
being written by him on August 13, 1984. He testified that  
invoice number 1001 was a summary of the equipment that was  
sent to Canada from Lawrenceburg. He noted that the  
$1,349,120 figure was the inflated figure and that all of the  
other invoices contained inflated figures. Of particular note  
is the fact that Mr. Russ testified that only invoice number  
1001 contained equipment that actually existed at that time,  
numbers 1002-1025 contained equipment that did not exist and  
to Mr. Russ’ knowledge none of this equipment ever came into  
existence. This corroborates Mr. Breitzman’s testimony.  
[295]  
Mr. Russ was shown invoices from Exhibit 138 (Mr.  
Russ was not asked to identify them as the Crown intended Mr.  
Ma to identify them later). Beginning with invoice number  
HMTQ v. Wilder et al  
Page 155  
2924, the invoices were in Mr. Russ’ handwriting and set out  
the equipment, provided the invoice number and the gross  
amount. The name of the salesman and the company names,  
“Mineral Gas Company” and “Pacific Natural Resources Inc.”,  
were not on the invoice when Mr. Russ prepared it. The date  
May 7, 1984 was put on by Mr. Russ previously and came from a  
pro forma for the projects. The typing “Exempt” in relation  
to taxes was not on the invoice when Mr. Russ wrote on it. As  
of May 7, 1984 Mr. Russ testified that to his knowledge there  
was no contract between HFI and PNR or any entity to sell a  
Fly Ash Project to Canada because at that time it was only a  
pro forma project. The other invoice numbers 2925 – 2938  
contained Mr. Russ’ handwriting in relation to the description  
of the equipment and the bumped up or inflated dollar figure.  
Mr. Russ testified that he received the invoices from Seona  
Wilder.  
[296]  
Nola Johnson (Ronald Johnson’s wife) was identified  
by Mr. Russ as the one who was to type up the invoices. Mr.  
Russ was present while they were typed up in Mr. Wilder’s home  
in Bellingham. Mr. Russ testified that Mr. Wilder, Seona  
Wilder, Mr. Lawrence, Mr. Richards and Nola Johnson were  
present while the invoices were typed up.  
HMTQ v. Wilder et al  
Page 156  
[297]  
Mr. Russ testified that the equipment shipped from  
Lawrenceburg and Hopkinsville appeared in Bellingham,  
Ferndale, Langley and Aldergrove. Mr. Russ testified that  
this equipment made up approximately 10-12% of the equipment  
listed on the Bio-Mass and Fly Ash invoices.  
[298]  
Mr. Russ never saw the shipped Fly Ash equipment  
arranged in a sequence to be put together for the purposes of  
a Fly Ash Project, nor did he see the shipped Bio-Mass  
equipment set up for use as a Bio-Mass Project.  
[299]  
On September 15, 1984, Mr. Russ was told by Mr.  
Wilder that the Fly Ash Project was put on hold and that the  
Bio-Mass Project was done.  
[300]  
Referring now to September 24, 1984, Mr. Russ noted  
that he was in Bellingham at the time and had a discussion  
with Mr. Wilder in which Mr. Wilder told him that “fly ash was  
not funded, a goof up” in “paper work” and hoped to get it  
done sometime later on. Mr. Wilder also informed Mr. Russ at  
this time that the 30% figure was changed to 29%. As of that  
date no money had been received with regard to the Bio-Mass or  
Fly Ash Projects. The first money was received on October 10,  
1984.  
HMTQ v. Wilder et al  
Page 157  
[301] Mr. Russ testified that he was not actively involved  
in the Bio-Mass or Fly Ash Projects in the latter part of 1984  
and beginning of 1985.  
4.  
Corroboration of Mr. Russ’ and Mr. Breitzman’s Evidence  
from Documents in Mr. Wilder’s Possession  
[302]  
Certain documents were seized at Mr. Wilder’s home  
at 25800 Robertson Crescent on May 7, 1987, that prove beyond  
a reasonable doubt that he was instrumental in acquiring Fly  
Ash equipment and Bio-Mass equipment after the summer of 1984  
from the United States and that he was aware of the falsified  
purchase orders. The effect of these documents is twofold:  
first, it is another example of false testimony by Mr. Wilder;  
second, it corroborates Mr. Breitzman and Mr. Russ’ testimony  
that Mr. Wilder played a key role in the Fly Ash and Bio-Mass  
Projects and that he was aware of the details, including real  
cost and payments.  
(a) Exhibit 288-151  
[303]  
Exhibit 288-151 was seized from Mr. Wilder’s  
residence at 25800 Robertson Crescent and contains four  
International Transport Inc. Freight invoices:  
-
-
-
all identifying the Consignee as “Vardax Equip  
Co., Bellingham WA”  
all identifying the shipper as “City Gas Plant  
Lawrenceburg TN”  
all with bill/lading no. “P.O. 24932”  
HMTQ v. Wilder et al  
Page 158  
-
all with the description “P.O. 24932” must be  
on FRT BILL”  
Invoice no. 39748 is dated September 14 1984;  
Invoice no. 39749 is dated September 17 1984;  
Invoice no. 39750 is dated September 17 1984;  
Invoice no. 39365 is dated September 24 1984.  
[304]  
Exhibit 288-151 also includes an “Alternate Freight  
Delivery Bill” identifying the shipper as “City of  
Lawrenceburgh;” the consignee as “Dara Wilder c/o DNB Mfg.”  
and reference bill of lading number “24932” dated September  
24, 1984.  
[305]  
Exhibit 288-151 includes two other documents, both  
identifying Dara Wilder as the consignee for equipment shipped  
from Lawrenceburg, Tenn., and both with shipper’s number or  
bill of lading identified as “24932”.  
[306]  
The two latter documents described in Exhibit 288-  
151, above, both include reference to a “3,800 gal. tank”.  
Purchase order number 94932 in Exhibit 9-100v refers to a  
“3,800 gallon tank”, dated April 2, 1984. So does invoice  
number 2291-152 of Exhibit 9-100iv, dated April 8, 1984 from  
HFI to J & B.  
[307]  
While Mr. Wilder has testified in a manner that, if  
accepted, would eliminate any connection to the U.S. Fly Ash  
equipment, the documents in his possession prove that he was  
HMTQ v. Wilder et al  
Page 159  
aware of the back-dated document in September 1984. The  
equipment listed in this purchase order is identical to that  
listed in the HFI to J & B invoice number 2152, Exhibit 9-  
1009-iv. The invoice number 2152 is the first invoice of  
those packets of Fly Ash invoices, with quite a lengthy  
description of equipment, including the 3,800-gallon tank.  
[308]  
Mr. Russ’ letter to Mr. Breitzman confirms that  
these purchase orders were back-dated. Mr. Russ’ letter  
states that the purchase order number assigned to the Fly Ash  
equipment in August, 1984 is 94933, (see: Exhibit 2033 and  
Exhibit 9-100v). Purchase order number 94933 is also dated  
April 2, 1984. So we have purchase orders that, in my view,  
authenticate the evidence of both Mr. Russ and Mr. Breitzman  
and the description of the 3,800-gallon tank in the invoice in  
Mr. Wilder’s possession. This, in my view, is circumstantial  
evidence of Mr. Wilder’s knowledge of the contents of the  
invoices that he says he never saw.  
[309]  
In my view, there is an irresistible inference that  
the equipment referred to in the freight invoices is the same  
equipment that is referred to in the back-dated HFI/J & B  
purchase orders and invoices and that Mr. Wilder possessed the  
purchase order.  
HMTQ v. Wilder et al  
Page 160  
[310]  
As expected, Mr. Wilder testified that he did not  
see Exhibit 9-100v until the second civil suit. His  
possession of the freight invoices in relation to one of the  
purchase orders contained in that exhibit is, in my view  
another lie by Mr. Wilder given under oath. In making this  
statement I refer to the repeated reference on the documents  
to their being a requirement that purchase order number 94932  
be present. Furthermore, his accountant, Mr. Richards  
produced the purchase orders to Revenue Canada.  
[311]  
It is clear from the documentary evidence that Mr.  
Wilder’s company, Vardax Consultants Inc., paid for the  
transportation of the equipment referred to in Exhibit 288-151  
and referred to in Purchase Order number 94933 of Exhibit 9-  
100v. Cheques drawn from the Vardax Consultants Inc. account  
at Seattle First National Bank provide evidence of payment for  
various shipments, for instance “bill of lading #24932” (See:  
Exhibits 279 and 288-151).  
[312]  
In my view this documentary evidence corroborates  
the evidence of James Russ and James Breitzman that Mr. Wilder  
was instrumental in the importation of the Fly Ash equipment  
that they supplied for research projects, that agreement about  
the projects was not reached until late August, 1984 and that  
the equipment was shipped commencing September, 1984. It  
HMTQ v. Wilder et al  
Page 161  
also, in my view, demonstrates the falsity of Mr. Wilder’s  
testimony that the Fly Ash equipment that he was presenting as  
qualifying research in the Fly Ash certificates was unrelated  
to negotiations with the Americans.  
(b) Exhibit 9-100v  
[313]  
Exhibit 9-100v also includes purchase order 94933.  
It is a purchase order from J & B to HFI with regard to 11 Fly  
Ash “systems”. These systems are reflected in invoices number  
2153 – 2166 of Exhibit 9-100iv. These invoices add up to  
$14,160,343.  
[314]  
Mr. Breitzman produced to Revenue Canada a copy of  
these invoices. He had noted “$14,160,343.00 x .29 =  
4,160,343.00” on his copy, as well as “$404,736.00 net” under  
the invoice total “$1,349,120;” [30%], (Exhibit 14-206). His  
testimony is that he received these invoices in August, 1984.  
There is also a notation “all ships Lawrenceburg”.  
[315]  
The figure $14,200,000 appears in the Fly Ash  
offering dated May 28, 1984 (Exhibit 10-104), and is the  
figure certified to by Mr. Wilder on September 5, 1984  
(Exhibit 255A). However, Mr. Wilder certifies a lower amount  
of qualifying expenditures three months later, in the exact  
amount that coincides with the inflated invoices -  
HMTQ v. Wilder et al  
Page 162  
$14,160,343.00 - in his next Fly Ash certificate, dated  
January 17, 1985 (Exhibit 257A).  
[316]  
While Mr. Wilder testified at trial that the  
equipment that he purportedly purchased from Mr. Johnson’s  
company was not equipment supplied by Mr. Breitzman, in my  
view there is an irresistible inference that the documentary  
evidence proves beyond a reasonable doubt an attempt by Mr.  
Wilder to tailor the Fly Ash certificates to match the phoney  
invoices prepared in relation to the purported HFI/J & B  
transactions in the late summer of 1984.  
(c) Exhibit 291-152  
[317]  
Exhibit 291-152 was also seized from Mr. Wilder’s  
residence on May 7, 1987. The exhibit includes:  
-
-
Invoice dated November 30 1984 from Customs  
Broker Norman G. Jensen Inc. to Vardax  
Consultants, Inc, 3025 Eldridge Ave.,  
Bellingham, re: 11/05 Inter Mtn. Re:  
Camax/Budget;  
Shipper’s Export Declaration from Blaine,  
“Exporter (principal or seller – liscensee:  
Camax Consulting Inc., Henderson, CO.”;  
“Agent of exporter (Forwarding agent): Vardex”  
“Description:  
20 Chiller units sold as is where is for  
salvage only ($3,000)  
1 Eimco Filter as is where is no warranty”  
- Document dated November 5 1984, with reference  
no./purchase no.“20046” identifying the vendor as  
“Camax;” consignee as “Budget Diesel;”  
transportation: “Intermountain Transport,” and  
HMTQ v. Wilder et al  
Page 163  
description as above; 20 chiller units “sold as is  
where is for salvage only,” at $150.00/unit,  
totalling $3,000.00; and one Eimco filter “as is  
where is no warranty” for $2,400.00.  
[318]  
Exhibit 190 was produced by James Breitzman to  
Revenue Canada in 1986, (see: Exhibit 289). Exhibit 190 is  
comprised of three Camax Consulting Inc. invoices relating to  
equipment obtained by Mr. Breitzman in relation to the Bio-  
Mass Project:  
-
-
-
No. 20064 dated Oct. 25/84 to Hydro Fuels Inc.,  
shipped via “Int. Trans.;” date shipped “Oct.  
29-84” Description: “One Calciner…with gas  
burners and accessories” $24,000.00.  
No. 20047 dated Oct. 10/84 to Hydro Fuels Inc.,  
shipped via “Int. Trans.;” date shipped “Oct.  
16/84” Description: 20 Chiller units…”  
$3,200/unit.  
No. 20052 dated Oct. 11/84 to Hydro Fuels Inc.,  
shipped via Int. Trans.; date shipped “Oct.  
16/84” Description: One Eimco Leaf Filter, etc.  
$10,000.00.  
[319]  
Mr. Breitzman testified that this equipment was  
obtained on Mr. Wilder’s behalf in relation to the Bio-Mass  
Project. In my view, Exhibit 291-152 corroborates Mr.  
Breitzman’s evidence and proves that Mr. Wilder was directly  
involved in the importation of Bio-Mass equipment from the  
U.S. in conjunction with Mr. Breitzman in the autumn of 1984.  
HMTQ v. Wilder et al  
Page 164  
[320] Mr. Wilder testified that it was only when Mr.  
Johnson became too sick in late 1984 that he became directly  
involved in the management of the projects. However, there is  
evidence to the contrary. The evidence shows that Mr. Wilder  
turned over the “Nutter Ranch” negotiations to Mr. Johnson in  
late 1984. This is inconsistent with Mr. Wilder’s testimony  
that Mr. Johnson was too sick to do business in late 1984. In  
my view, Mr. Wilder’s testimony was simply a convenient  
explanation for having such incriminating documents being  
found in his hands.  
5.  
Critical Aspects of Mr. Russ’ Testimony  
[321]  
The critical aspects of Mr. Russ’ testimony which I  
accept are as follows:  
1)  
He first met Mr. Wilder on March 13, 1984, when  
he flew to Bellingham as a result of an  
advertisement by Vardax in a mining magazine;  
(this is consistent with Mr. Breitzman’s  
evidence and corroborated by the Vardax invoice  
Exhibit 366-2003, which also corroborates Mr.  
Breitzman’s evidence in this regard).  
2)  
3)  
Mr. Wilder advised that approximately  
$100,000,000 in grant money was available to  
pursue different scientific projects, and Mr.  
Russ discussed about 26 projects with Mr.  
Wilder on May 8, 1984.  
He discussed equipment in Lawrenceburg,  
Tennessee with Mr. Wilder, advising that it  
consisted of both new and used equipment; it  
was primarily for fly ash work, and there was  
additional equipment in Hopkinsville, Kentucky.  
HMTQ v. Wilder et al  
Page 165  
4)  
5)  
Some of the equipment was new, some was in the  
ground.  
As of July 4, 1984, Mr. Wilder was the person  
whom Mr. Russ planned to discuss the timing of  
Lawrenceburg equipment.  
6)  
7)  
Mr. Wilder directed that the Lawrenceburg and  
Hopkinsville equipment be shipped up.  
In a meeting with Mr. Wilder, Mr. Lawrence and  
Mr. Johnson, he was told that it was necessary  
to create invoices for all of the equipment  
totalling $14.2 million.  
8)  
9)  
He created a “cash expectancy” sheet (Exhibit  
224-144) which represented the amended figures  
($14,200,000), and the amount of money actually  
expected to be received ($4,200,000).  
Roger Lawrence specified the $14.2 million; the  
real number was 30%.  
10) He received invoices numbered 2924 – 2938 from  
Mr. Wilder, Mr. Johnson or Mr. Lawrence; HFI  
was to receive 30%.  
11) Exhibit 1202 is a summary of the equipment  
shipped from Lawrenceburg to Canada; $1,349,120  
is the “bumped up” figure, (see: invoice no.  
1001 of Exhibit 370-1202).  
12) On August 14, 1984, he met with Mr. Wilder and  
Mr. Johnson to prepare Fly Ash invoices; the  
equipment listed in invoice no. 1001 of Exhibit  
1202 was shipped to Canada.  
13) None of the Fly Ash equipment listed in  
invoices numbered 1002 – 1015 of Exhibit 1202  
came into existence.  
14) Mr. Russ did not prepare invoice no. 2924 of  
Exhibit 221-138 on May 7 1984, although his  
handwriting appears on the document; as of May  
7, 1984 Mineral Gas Company had not agreed to  
sell Fly Ash equipment to Canada.  
HMTQ v. Wilder et al  
Page 166  
15) He received the invoices from Seona Wilder.  
16) The address on the Mineral Gas Company  
“letterhead” in Exhibit 221-138 is that of  
Lawrenceburg Gas Co., in Tennessee, (not  
Mineral Gas) and the phone number is the home  
phone number of Jim Breitzman, in Atlanta,  
Georgia; it is not authentic Mineral Gas  
Company letterhead.  
17) Nola Johnson typed the invoices at Dara  
Wilder’s home office in Bellingham; Mr. Wilder  
was present for this.  
18) On September 3 1984, Mr. Russ met with Mr.  
Wilder, who had scheduled shipping dates for  
the gasification and Fly Ash equipment to be  
sent to Canada from Lawrenceburg and  
Hopkinsville.  
19) On September 24, 1984 Mr. Wilder advised that  
“Fly Ash was not funded, a goof-up in  
paperwork,”; he advised that “He has to go for  
funding” and it is now 29% rather than 30% of  
the $14 million.  
20) As of September, 1984, no monies were received;  
money was received on October 10 1984.  
March 24, 1993  
21) $20,000,000 in relation to Bio-Mass was the  
“amended” figure; $6,000,000 represented the  
equipment.  
22) The format of Exhibit 1202 to include  
“construction, engineers” and “contingencies”  
was the result of direction from Ron Johnson;  
the bottom number had to be achieved. Exhibit  
1202 does not represent the plant that Mr. Russ  
was talking about “at all”.  
23) He never saw Exhibit 12-176 or Exhibit 13-177;  
there were no purchase orders in April or May  
1984, – only the purchase order number referred  
HMTQ v. Wilder et al  
Page 167  
to in his letter of August 24 1984, (Exhibit  
2033) – Fly Ash purchase no. 24933.  
24) All the equipment from Lawrenceburg was shipped  
up in September 1984, (see: the shipping  
documents in Mr. Wilder’s possession - Exhibit  
288-151, 291-152 and Vardax cheques in Exhibit  
279).  
April 1, 1993  
25) The Fly Ash plant was never done.  
VII. THE EVIDENCE OF HUGH GAGON  
[322]  
Mr. Gagon, an inventor from Salt Lake City, provided  
commission evidence at Mr. Wilder’s previous trial. In a  
similar manner to the evidence of Mr. Breitzman, the Crown  
sought to tender this prior testimony into evidence as Mr.  
Gagon’s health made him unavailable to testify in the present  
trial. In Wilder (Written Ruling No. 8), supra, I held this  
evidence to be admissible pursuant to either s. 715 of the  
Criminal Code or as an exception to the hearsay rule.  
[323]  
Mr. Gagon’s testimony relates to his involvement  
with Mr. Wilder in Coseco and the activities he performed in  
relation to that company, which the Crown claims were  
completely unrelated to the Hydro-Petroleum Project.  
A.  
Initial Meeting with Mr. Wilder  
[324]  
At the end of October or the beginning of November,  
1984, Mr. Gagon first met with Mr. Wilder in Bellingham,  
HMTQ v. Wilder et al  
Page 168  
Washington. He and a Mr. Baker had flown up from Utah to  
attend the meeting. The meeting took place at Mr. Wilder’s  
house, in a room above his garage. Aside from Mr. Gagon, Mr.  
Baker and Mr. Wilder, a Mr. Jim Adams was also in attendance.  
Mr. Johnson also joined the meeting a couple of hours after  
the meeting had begun.  
[325]  
At the outset of the meeting Mr. Gagon gave a “sales  
pitch” to Mr. Wilder, attempting to sell him on the idea of  
getting funds to build a tar sands plant in Utah. With  
respect to the location of the project, Mr. Gagon discussed at  
the meeting the oil sands deposit that was leased in Utah.  
Mr. Wilder had nothing to say at that point with respect to  
the location.  
[326]  
Mr. Johnson arrived approximately two to two and a  
half hours into the meeting and gave Mr. Gagon and Mr. Baker a  
“sales pitch” of his and Mr. Wilder’s abilities in financing  
projects. “He told us that all of the projects that they had  
entered into were successful – very successful and that he was  
interested in our project”.  
[327]  
Mr. Gagon informed Mr. Wilder and Mr. Johnson that  
he was looking for $20,000,000 (U.S.) in financing for the  
plant in Utah which would produce 5,000 barrels a day.  
HMTQ v. Wilder et al  
Page 169  
[328] Mr. Wilder told Mr. Gagon that they would first have  
to build a plant in Canada because of financial requirements  
and then they could build a second plant in Utah. They  
discussed the cost of a plant in Canada and estimated it would  
cost between $16,000,000 - $20,000,000.  
[329]  
Mr. Wilder made a proposal to give Mr. Gagon a  
$3,000,000 initial funding start and then pay for whatever was  
needed as it was needed after that. Mr. Gagon indicated in  
his testimony that his view of the suggestion was:  
Well, my view was that it showed good faith and I  
told Mr. Wilder that it sounded like we could make  
that work providing that the money was clean and it  
didn’t come from drug trafficking or laundered money  
that was illegal, and they would have to validate  
the validity of the funds before we could talk  
further.  
[330]  
Mr. Gagon told Mr. Wilder and Mr. Johnson that he  
would like to have an attorney’s opinion and the bank’s  
opinion on the validity of the funds and if there were  
sufficient funds to cover the project. Mr. Wilder and Mr.  
Johnson agreed to this.  
[331]  
The set-up of the company was discussed during the  
meeting. Mr. Gagon made it clear that the only way he would  
set up a company internationally was to incorporate. The  
equities in the company were also worked out with Mr. Johnson  
HMTQ v. Wilder et al  
Page 170  
taking a 1/3 interest and to be a nominee; Mr. Wilder taking a  
1/3 interest and putting that interest in Vardax (he also  
wanted one share of the company to go to his mother); Mr.  
Baker taking a 1/6 interest and putting that interest in a  
trust called the Snowshoe Mountain Trust and Mr. Gagon taking  
the final 1/6 interest.  
[332]  
They named the company Crown Oil Sands Energy  
Company which was to be a private closely held corporation,  
incorporated in Alberta. The board of directors of the  
company consisted of Mr. Wilder, Mr. Johnson, Mr. Baker and  
Mr. Gagon, with Mr. Wilder’s vote being the one that would  
break any ties.  
[333]  
With respect to remuneration, both Mr. Gagon and Mr.  
Baker were to receive $50,000 bonuses up front, Mr. Gagon was  
to receive $10,000 per month for his services so long as the  
company was in business or until he died, whichever came  
first. There was also to be a $5,000 per month expense  
account for trips etc.  
[334]  
Mr. Gagon felt that by the end of the meeting an  
agreement had been reached with respect to the project.  
[335]  
Mr. Gagon’s understanding of Mr. Baker’s role was  
that he was the lawyer for Kalumar and Mr. Wilder wanted him  
HMTQ v. Wilder et al  
Page 171  
to be the comptroller; to handle the business aspects of the  
project.  
B.  
Meeting with the Attorney and Banker  
[336]  
Following the Bellingham meeting, Mr. Wilder, Mr.  
Gagon, Mr. Baker and Mr. Johnson drove to Vancouver to meet  
with the attorney, Mr. Walker, and the banker, Mr. McNeil.  
Both individuals assured Mr. Gagon that the funds were clean,  
available and sufficient to complete the project.  
[337]  
With respect to the meeting at Mr. Walker’s office,  
Mr. Walker was there part of the time along with Mr. Gagon,  
Mr. Wilder, Mr. Johnson, Mr. Baker and someone doing the  
scribe work and talking over the elements of making a  
contract. Mr. Johnson wanted to take the $3,000,000 and let  
Mr. Gagon have $250,000 at a time as it was needed, but Mr.  
Gagon refused to agree to that. Mr. Wilder told Mr. Gagon to  
take the entire sum and use it for building the plant. Mr.  
Gagon noted that Mr. Wilder left the meeting early.  
[338]  
With respect to the meeting at Mr. McNeil’s bank,  
Mr. Gagon met with Mr. McNeil alone as Mr. Johnson and Mr.  
Baker talked with someone at the counter. Mr. McNeil told Mr.  
Gagon that he wanted the money in one of their branches in  
either Edmonton or Calgary, depending on their choice of  
manufacturing site.  
HMTQ v. Wilder et al  
Page 172  
[339] Following the meetings, Mr. Gagon and Mr. Baker  
returned to Salt Lake City before returning once again to  
Calgary in late November or early December of 1984. Mr.  
Wilder and another individual met them at the airport and took  
them to a junkyard. Mr. Gagon did not believe the junkyard  
would be a good manufacturing site; they proceeded to  
Edmonton. Mr. Gagon noted that he met Bob Becker, an engineer  
that worked with Mr. Wilder, in Calgary.  
[340]  
The Edmonton site was located in Winterburn, a  
community contiguous to Edmonton. Mr. Gagon described the  
site as follows:  
It was vacant and it had been used for repairs and  
service depot for their trucks. It had a parts room  
in the front and offices and it had paint booths and  
washrooms and so on for big trucks and other service  
booths and it was equipped with a lot of good  
equipment that – compressed air systems and it would  
be very helpful to us in doing the job. And it  
looked like we could very well put a plant design  
and put it into that facility. So, Dara said, okay,  
we’ll put this into COSECO – I think there’s 16 or  
17 acres there. And this will be the plant so that  
is where we started from. (at p. 49, Oct. 16, 1996)  
[341]  
The first money received by Mr. Gagon came to him  
via Mr. Johnson who had been given the assignment by Mr.  
Wilder. Mr. Johnson made out cheques in his office for  
$50,000 and added $5,000 for expenses and a cheque for $10,000  
for the first consideration of Mr. Gagon’s contractual  
HMTQ v. Wilder et al  
Page 173  
relations. Mr. Gagon noted that he believed Mr. Baker  
received a similar amount. This money was received prior to  
their visit to Calgary and Edmonton. Documents confirm  
(Exhibit G-7) that they received the money on November 2,  
1984.  
C.  
Work Begins in Winterburn  
[342]  
Once it was decided that the Winterburn location was  
the appropriate site for the plant, Mr. Gagon looked into  
getting local people to work on the site with the exception of  
hiring the services of Bob Becker as the engineer. Bob  
Burton, who indicated he was a 20% owner in all of Mr.  
Wilder’s activities, took Mr. Gagon around to different  
contractor’s offices; eventually Ugo Fioriti was chosen. Hank  
Newcomer was hired to be the electrical subcontractor; Mr.  
Gagon noted that he was from B.C.  
[343]  
Mr. Gagon described his role in the construction of  
the facility as the supervisor. He described Mr. Duke’s role  
as the supervisor for coordinating the efforts in the  
construction of the plant and took direction directly from  
Gagon. Bob Becker was the licensed Canadian engineer and  
helped coordinate the efforts of finding materials and so on  
for the plant. Mr. Becker also participated to some degree  
with the design of the construction of the plant. Mr. Becker  
HMTQ v. Wilder et al  
Page 174  
was under Mr. Gagon’s supervision. Hank Newcome, a cousin of  
Mr. Wilder’s, was an independent contractor hired to install  
the electrical components.  
[344]  
With respect to finances, Mr. Baker was the  
comptroller and handled all of the finances. Invoices were  
brought to Mr. Gagon on a monthly basis, which he would verify  
if they were valid and cheques would be made out which Mr.  
Gagon would sign along with Mr. Baker. Mr. Gagon later  
learned that the cheques could be signed by Mr. Baker alone;  
he had some kind of an arrangement with the bank.  
[345]  
Mr. Gagon could not say whether or not the  
$3,000,000 was transferred prior to work actually beginning at  
the site. Mr. Baker had told Mr. Gagon that the money had  
been transferred and Mr. Gagon attended the bank to sign a  
signature card, but he did not verify if the funds had  
actually been transferred.  
[346]  
While the facilities at the plant were being set up,  
Mr. Gagon was setting up a mental plan and writing down things  
that they needed to acquire. Three compressors were ordered  
from New York in early 1985 and delivered in the mid part of  
1985.  
HMTQ v. Wilder et al  
Page 175  
[347] Mr. Gagon and company started looking for equipment  
in December of 1984 and January of 1985. They made a down  
payment on some compressors from Syracuse and had the rest of  
the money “postured” for the contractor, Ugo Fioriti. Mr.  
Gagon noted that he wanted his son-in-law, Jay Duke, to be the  
overall foreman of the project because he had a very good  
resumé and was willing to move to Edmonton. He was approved  
in January, 1985.  
[348]  
Mr. Gagon travelled to Rock Springs, Wyoming to look  
at seven used heat exchangers that were owned by a company  
that Mr. Duke was involved with. Mr. Gagon determined that  
with Mr. Duke’s help they could be restructured and  
refurbished, thus he called Mr. Baker and asked for Mr.  
Wilder’s approval. Mr. Baker approved the purchase, having  
gotten Mr. Wilder’s approval. The heat exchangers were moved  
to Salt Lake City and then three of them were moved to the  
Winterburn site. Documents shown to Mr. Gagon suggest the  
heat exchangers were acquired in late January or early  
February of 1985. Mr. Gagon discussed the acquisition of the  
heat exchangers with Mr. Wilder after they had been purchased.  
Mr. Wilder once again gave his approval and told Mr. Gagon  
that it was a good thing they had bought them. The price of  
the seven units was $65,000. It is noteworthy that later in  
HMTQ v. Wilder et al  
Page 176  
his testimony he says this number is wrong and provides  
figures of $49,000 and $45,000 as the actual cost (p. 6,  
October 17, 1996). Mr. Gagon suggested that they were worth a  
lot more.  
[349]  
Mr. Gagon noted that many of the other components of  
the plant were built on-site, acquired from tear down  
refineries or retrieved from a junkyard that Mr. Wilder had in  
Calgary. Mr. Gagon noted that tanks were retrieved from Mr.  
Wilder’s junkyard and described them as used, old (in excess  
of 10 years) and had to be recertified. Another heat  
exchanger was found at Mr. Wilder’s junkyard (10 to 15 years  
old). It was refurbished and also sent to the Winterburn  
site.  
[350]  
Used equipment was also purchased from a Chevron  
site in Salt Lake City and an equipment yard in Seattle. The  
Seattle equipment consisted of four digesters that had been  
made in China and were bought for $42,000. The digesters were  
shipped to the Winterburn site.  
[351]  
Four air cooled chillers were shipped from an  
airplane hangar in B.C. or Bellingham. Mr. Gagon noted that  
they were in bad shape and that he was only able to refurbish  
three of them. He recalled seeing a reference to the 1940’s  
on one of the chillers.  
HMTQ v. Wilder et al  
Page 177  
[352] Mr. Gagon was not too sure where the funds to  
purchase all of the equipment came from. He was not sure  
whether cheques were written out of the Coseco account or if  
Mr. Wilder took care of the purchases himself. The  
acquisition of all of the aforementioned equipment took place  
in the first part of 1985.  
[353]  
The assembly of the plant at the Winterburn site  
began as soon as the equipment was acquired.  
[354]  
According to Mr. Gagon, Mr. Wilder, while still  
involved with the project, visited the Winterburn site several  
times. Mr. Johnson visited twice, once when Mr. Gagon was on-  
site and once when he was not.  
D.  
Deal with Syncrude  
Mr. Gagon explained that the plant, while built at  
[355]  
the Winterburn site, was intended to be moved to a site where  
they would have access to tar sands. The plan was to move the  
plant to Northern Alberta, with a company called Syncrude  
providing access to tar sands in exchange for the oil products  
produced. It was to be an 18 month program, then after 18  
months Syncrude would buy an interest in the technology. The  
only tar sands on site were 2,000 tons of tar sands that were  
brought on-site by Syncrude for testing.  
HMTQ v. Wilder et al  
Page 178  
E.  
Mr. Wilder Ceases Funds  
[356]  
Mr. Gagon did not know how long the initial  
$3,000,000 lasted. The money was handled by Mr. Baker, not  
Mr. Gagon. Mr. Gagon did know, however, that Mr. Baker had  
asked for additional funds that were furnished by Mr. Wilder.  
[357]  
The funds eventually ceased, as Mr. Baker informed  
Mr. Gagon on February 15, 1986, that Mr. Wilder had called him  
and told him to “shut everything down, take the name off the  
door and just vacate the premises”. Mr. Gagon believes Mr.  
Becker might have also been present when Mr. Baker informed  
Mr. Gagon of the news. Mr. Gagon, Mr. Baker, Mr. Becker and  
Mr. Duke did not think that this was reasonable and proceeded  
to test the plant in May (guessing) of 1986. Mr. Gagon  
described the test as successful as they were able to produce  
clean sands and clean oil that was environmentally acceptable  
for the government of Canada.  
[358]  
From February 15 to the date of the testing, the  
plant was funded by Mr. Gagon. Mr. Duke and probably Ugo  
Fioriti had done work without being paid. Mr. Gagon stopped  
putting money into the project when he ran out of money in  
early spring of 1987.  
HMTQ v. Wilder et al  
Page 179  
F.  
Patent Licensing Agreement  
Mr. Gagon assigned a patent to Coseco for the  
[359]  
project under a licensing agreement. Coseco was given a  
license to use the patented technology, but the patents were  
not transferred, they were put in an unbankruptable trust.  
This was agreed to at the initial Bellingham meeting. The  
agreement reached in Bellingham was never put into writing.  
[360]  
Mr. Gagon received initially a $55,000 payment for  
the licence and a bonus for the beginning of the Coseco  
project, and $10,000 as payment for contractual services to  
work on the project. Additional monthly payments for  
contractual services ceased sometime in 1986.  
[361]  
Mr. Gagon had reserved the right from the outset to  
maintain control of the technology and reverse the license.  
He withdrew the license after the test was completed.  
G.  
The Brochure  
Unknown to Mr. Gagon, a brochure was created by  
[362]  
someone Mr. Wilder had hired. The brochure contained pictures  
of the Winterburn facility; some were recognized by Mr. Gagon  
as having been taken by him. Mr. Gagon recalled first seeing  
the brochure sometime in 1986. Mr. Gagon identified a number  
of the pictures in the brochure with great detail. Inside the  
last page of the brochure was a schematic drawing of the plant  
HMTQ v. Wilder et al  
Page 180  
after it was built and had commenced test operations. It  
showed all of the equipment and was drawn by a Mr. John Crane.  
Mr. Gagon identified the last page of the brochure as showing  
the office area at the Coseco plant in Winterburn.  
[363]  
A second brochure was identified by Mr. Gagon as  
being given to him by Mr. Baker. The brochure, apparently  
from Vardax and containing Vardax equipment, actually  
contained a number of pictures of the Coseco plant. Mr. Gagon  
also identified a picture in the brochure as being from the  
Bio-Mass International plant in Ogden, Utah.  
[364]  
Prior to 1988 or 1989, Mr. Gagon had never heard of  
the name Hydro-Petroleum. He had never used that expression  
in relation to the Coseco plant.  
[365]  
Mr. Gagon was not aware of Mr. Wilder being involved  
in any projects relating to tar or oil sands prior to the  
Coseco project. During his trips to Mr. Wilder’s Calgary and  
Edmonton junkyards, Mr. Gagon never saw any evidence of any  
other oil or tar sands projects.  
[366]  
Mr. Gagon did not have an agreement with Mr. Wilder  
allowing Mr. Wilder to use either the material in Mr. Gagon’s  
patents, Mr. Gagon’s oil compact commission article or Mr.  
HMTQ v. Wilder et al  
Page 181  
Gagon’s name, in any literature or material relating to other  
projects.  
[367]  
Into 1986, Mr. Gagon had not heard of Richard  
Lawrence, Michael Richards, Gerald Byerlay, David Tolle or a  
company called Cogenco.  
[368]  
Into 1986, Mr. Gagon had not seen a document called  
“Hydro Petroleum Research – a research and development  
project”. Mr. Gagon’s oil compact commission article was  
reproduced on the third page of that document. Furthermore,  
the first two pages of the document were generic statements  
that could be extracted by somebody reading the patents and  
articles that Mr. Gagon had published.  
[369]  
When shown a document entitled “A brief summary of  
the process”, Mr. Gagon identified a number of diagrams in the  
document as photocopies out of one of his patents and  
described the text in the document as a paraphrased version of  
his article. Mr. Gagon first saw this document in June of  
1996.  
[370]  
Mr. Gagon examined the text of a document entitled  
“Coastal Natural Resources Research Inc. Project Process  
Report November 30, 1984” and noted that the document  
discusses the same technology as was used in the Syncrude  
HMTQ v. Wilder et al  
Page 182  
plant. He noted that he had not seen the document in 1984,  
1985 or 1986.  
[371]  
Mr. Gagon reviewed a document entitled “Hydro  
Petroleum Schedule A” which contained a list of equipment  
descriptions. He noted that probably at least 60% of the  
items listed would be used in implementing his technologies.  
Some of the other terms listed on the document were not terms  
that Mr. Gagon would have used in compiling a list of  
components for a plant.  
H.  
Mr. Wilder’s Cross-Examination of Mr. Gagon  
[372]  
I note parenthetically that Mr. Wilder’s cross-  
examination of Mr. Gagon lasted 19 days and appears to be  
largely useless. It did not even make a dent in his  
credibility. It would appear that most of the questions asked  
of Mr. Gagon were ones that he was unable to answer. It is  
also apparent that after 12 days of cross-examination the  
Crown applied to terminate the cross-examination on the basis  
that it was an abuse of process. The Commissioner commented  
as follows:  
Time and time again Mr. Wilder questions, attacks  
the witness, Mr. Gagon, to explain letters and  
documents and conversation between other people in  
which he had no involvement, and that, of course,  
does not progress the trial in any way, and does not  
produce anything in the nature of relevant evidence.  
HMTQ v. Wilder et al  
Page 183  
[373]  
Despite these comments, the Commissioner allowed Mr.  
Wilder to continue his cross-examination of Mr. Gagon for  
another seven days.  
VIII.  
EVIDENCE OF BETTY POLLARD (FORMERLY BETTY KLATT)  
[374]  
Mrs. Betty Pollard worked as a bookkeeper for Mr.  
Johnson in his River Road office from early January, 1985 to  
approximately the end of October of that same year.  
[375]  
She was first contacted by Mr. Johnson on the  
morning of Saturday, January 5, 1985. Mr. Johnson told her  
that he had a lot of work for her to do if she was interested.  
She was interested and at Mr. Johnson’s request went into work  
for him that day. She went to the office between 10:00 and  
10:30 a.m. on the Saturday morning.  
[376]  
Permit me to say that Betty Pollard has to be  
classified as one of the independent witnesses in this case.  
She testified in a very straightforward manner and her  
testimony was not challenged under cross-examination. I  
accept her evidence in total.  
A.  
The Invoices  
Mrs. Pollard was asked by Mr. Johnson to type up  
[377]  
invoices with Mr. Johnson’s wife, Nola, assisting her in the  
task. Mrs. Pollard was given a stack of pre-numbered, but  
HMTQ v. Wilder et al  
Page 184  
otherwise blank, invoices before being provided with her  
instructions. Mrs. Pollard testified as follows with respect  
to what Mr. Johnson wanted done:  
Q
A
All right, so let’s start with the discussion  
that was in the first office. You’re receiving  
instructions from Mr. Johnson and if you can  
tell us as best you can recall what was said.  
What I recall is that he had the – a lot of  
handwritten notes on legal size paper, foolscap  
paper and one of the first things he wanted us  
to do, because they were just written, like  
somebody had just written notes and he wanted  
us to make sure that – the purpose was to type  
invoices…And he wanted us to make sure when we  
typed the invoices, that the invoices were in  
chronological order.  
[378]  
The foolscap notes were photocopied, put in  
chronological order and split in half with Nola Johnson and  
Mrs. Pollard each taking a pile. Mrs. Pollard explained that  
in typing up the invoices she relied on the information from  
the foolscap.  
[379]  
With respect to the dates on the invoices Mrs.  
Pollard could recall April, 1984. She noted that she  
questioned the fact that these dates were being used when she  
was typing them in January of 1985.  
[380]  
Upon Mrs. Pollard and Nola Johnson completing the  
invoices on the afternoon of January 5, 1985, the invoices  
were put together and balanced by Mrs. Pollard to ensure that  
HMTQ v. Wilder et al  
Page 185  
they corresponded with the figures on the foolscap. She noted  
that although she was not sure if she typed in J & B on the  
invoices she was aware that that was the company she was  
working for.  
[381]  
Regarding the use of supporting documents, Mrs.  
Pollard testified as follows:  
Q
Did you ever see any supporting documents to  
satisfy yourself that those numbers reflected  
accurately activity at Johnson & Burnett  
Limited?  
A
Q
No.  
Did you ever make any inquiries with regard to  
that?  
A
Q
A
Q
A
Yes.  
And of whom did you make those inquiries?  
Mr. Johnson.  
And what did he say?  
I had asked him because when I was typing them,  
sometimes, like, there was balances, like,  
parts, engineering, testing and a balance, a  
total.  
Q
A
Q
A
Yes?  
And sometimes the totals never added up.  
Yes.  
And so I asked him if I could – I said, is  
there a source information here so I could  
compare to what I’m typing and he said, “Oh,  
just type it.”  
Q
A
All right, and in your experience in  
bookkeeping was that something that you had  
encountered before?  
In my experience in bookkeeping, you have a  
source. Like, you’d have something that you  
could confirm it with.  
[382]  
Mrs. Pollard was not successful in balancing some of  
the invoices and brought this to the attention of Mr. Johnson.  
HMTQ v. Wilder et al  
Page 186  
She testified that Mr. Johnson would just correct the figure  
without referring to any other document:  
A
I questioned Mr. Johnson. Like, I pulled the  
invoices, some of the invoices with a highlight  
or – put a paperclip and said, you know, “This  
isn’t adding up,” and so he just made the  
correction right there.  
Q
A
And what do you mean by that?  
He said, “Oh, it needs to have – this needs to  
have a zero,” or, “This needs to have a one,”  
or what to change.  
Q
A
So he didn’t leave and go somewhere and then  
come back with the correction; is that correct?  
Not that I recall, no.  
[383]  
Mrs. Pollard, during her testimony, was shown a  
number of J & B invoices that she identified and commented on.  
A summary of her comments are provided in the table below:  
Invoice # Info on Invoice  
Pollard’s Comments  
1016  
Date: Apr. 27, 1984  
Component Parts for Hydro-  
Petroleum Recovery Plant –  
Total: $36,000,000  
Date: Apr. 8, 1984  
Components for Fly Ash  
Research and Development  
Project  
Identified by Pollard, but not  
created by her. Told by Johnson  
to keep this separate from the  
other invoices.  
Identified by Pollard, but not  
created by her. Told by Johnson  
to keep this separate from the  
other invoices.  
1017  
Total: $14,200,000  
Initially total was $15,200,000  
which was subsequently crossed  
out and $14,200,000 handwritten  
in by Pollard  
1090  
1091  
Date: Aug. 31, 1984  
Identified by Pollard as typed by  
Re: Fly Ash Research Project Nola Johnson  
– Parts, Engineering and  
Testing  
Total: $359,400  
Date: Aug. 31, 1984  
Re: Hydro-Petroleum Research Nola Johnson  
Project – Parts, Engineering  
and Testing  
Identified by Pollard as typed by  
Total: $1,916,1000  
HMTQ v. Wilder et al  
Page 187  
1103  
Date: Sept. 31, 1984  
Re: Fly Ash Research Project her. Number of errors corrected  
Identified by Pollard as typed by  
– Progress to Date: Parts,  
Engineering and Testing  
Total: $410,500  
by using white out.  
1104  
Date: Sept. 30, 1984  
Identified by Pollard as typed by  
Re: Hydro-Petroleum Research her.  
Project – Progress to Date:  
Parts, Engineering and  
Testing  
Total: $2,004,500  
1130  
1131  
1152  
1153  
Date: Oct. 31, 1984  
Identified by Pollard as typed by  
Re: Fly Ash Research Project Nola Johnson  
– Parts, Engineering and  
Testing  
Total: $356,000  
Date: Oct. 31, 1984  
Re: Hydro-Petroleum Research Nola Johnson.  
Project – Parts, Engineering  
and Testing  
Total: $2,026,300  
Date: Nov. 30, 1984  
Identified by Pollard as typed by  
Identified by Pollard as typed by  
Re: Fly Ash Research Project her.  
– Progress to Date: Parts,  
Engineering and Testing  
Total: $373,500  
Date: Nov. 30, 1984  
Identified by Pollard as typed by  
Re: Hydro-Petroleum Research her.  
Project – Progress to Date:  
Parts, Engineering and  
Testing  
Total: $2,113,300  
[384]  
Mrs. Pollard was also shown copies of the above  
invoices (Exhibit 158, excludes invoices numbers 1016 and  
1017), that she identified as containing pencilled in  
checkmarks that she had written in while she was attempting  
to balance the figures.  
[385]  
After the invoices were compiled Mrs. Pollard and  
Mr. and Mrs. Johnson went out for dinner at which time terms  
of employment were discussed. Mr. Johnson wanted her to work  
HMTQ v. Wilder et al  
Page 188  
for him, and wanted her to come in the following day (Sunday,  
January 6, 1985) to meet Mr. Wilder.  
[386]  
Mrs. Pollard returned to Mr. Johnson’s office on  
January 6, 1985 and finished attempting to balance the  
invoices. That afternoon at the office Mrs. Pollard met Mr.  
Wilder for the first time. Mr. Wilder was introduced to Mrs.  
Pollard by Mr. Johnson as “his partner”. While Mrs. Pollard  
was unable to recall much of what was said during her first  
encounter with Mr. Wilder, she could recall the fact that he  
was pleased that she was working on the invoices.  
[387]  
At times when Mr. Johnson was unavailable for  
guidance or direction, Mrs. Pollard indicated that she would  
either phone Mr. Wilder for directions or if he was in the  
office get directions directly from him. Under cross-  
examination she pointed out that most of the directions she  
received from Mr. Wilder when Mr. Johnson was away were with  
respect to their drill ships.  
[388]  
Upon the completion of the invoices Mrs. Pollard  
gave them to Mr. Johnson who took them down the hall with Mr.  
Wilder to another office. Mrs. Pollard saw the invoices on  
the table in front of Mr. Johnson and Mr. Wilder. She was  
unable to recall any other contact with the invoices  
subsequent to her giving them to Mr. Johnson.  
HMTQ v. Wilder et al  
Page 189  
[389] Mrs. Pollard first met Mr. Richards in the office on  
January 7, 1985. He was introduced by Mr. Johnson as the  
corporate accountant. Mrs. Pollard discussed the invoices  
with Mr. Richards, explaining to him that they contained a  
number of errors. Mr. Richards told her that they would go  
through them together and take care of it. Apparently when  
Mrs. Pollard expressed her concern with respect to the absence  
of source documents, namely contracts, Mr. Richards told her  
that it was okay because they were just putting the invoices  
together for the benefit of Revenue Canada.  
[390]  
In cross-examination, Mrs. Pollard testified that  
Michael Richards attended the office the afternoon of Monday  
January 7, 1985. She also testified that he separated the  
invoices at that time and took them with him. Mr. Alibhai  
testified that he saw the invoices (or copies thereof) when he  
met with Mr. Richards in the morning of January 7, 1985.  
Someone is obviously mistaken. There could be no doubt,  
however, that some of these fake invoices (Exhibit 157) typed  
by Mrs Pollard were presented to Mr. Alihbai on January 7,  
1985.  
[391]  
With respect to Mr. Lawrence, Mrs. Pollard recalled  
meeting him at some point, but never heard him discuss the  
HMTQ v. Wilder et al  
Page 190  
invoices. She could not recall whether or not she saw the  
invoices again after they were separated by Mr. Richards.  
[392]  
When two Revenue Canada officials visited the office  
in the spring of 1985, Ms. Pollard was given the impression by  
Mr. Johnson that he did not want her to speak to them.  
[393]  
When asked if she had met any other individuals  
associated with Mr. Johnson, Mrs. Pollard mentioned the  
following names: James Russ, Jean Roller, Mr. Baker, Hugh  
Gagon, James Breitzman, Paul Breitzman, and James Breitzman’s  
brother (Harold or Howard).  
[394]  
Mrs. Pollard clarified that strictly speaking she  
was not working directly for J & B, but rather for Tara  
Pacific Consulting. She noted, however, that J & B was one of  
the companies for which she performed services. When asked  
about the company name “Protech”, Mrs. Pollard acknowledged  
that the name was familiar to her, but that she never  
performed any services for them. Her understanding was that  
there was a bank account under the name of “Protech”.  
[395]  
Regarding payments made to HFI, Mrs. Pollard, while  
reconciling bank statements, came across a couple of cheques  
that were issued to HFI. She could not recall what companies  
issued the cheques, but did remember them being for large  
HMTQ v. Wilder et al  
Page 191  
sums, with one exceeding $700,000 and the other around  
$1,000,000.  
[396]  
On June 29, 1985, Mrs. Pollard had a discussion with  
Mr. Breitzman at which time he asked if she would drop a piece  
of paper off at Mr. Richards’ office because Mr. Richards was  
waiting for it. She noted that the only thing on the piece of  
paper was Mr. Breitzman’s signature. This evidence is  
interesting especially because of the evidence of Mr.  
Breitzman that he did not actually sign some of the  
agreements.  
[397]  
I have examined the invoices typed out by Mrs.  
Pollard and have found a number of noteworthy features. The  
first is that they were for very large sums of money but had  
very little detail as to what the invoice was really for. For  
instance, one was for the sum of $14,200,000 and the only  
description on the invoice is “components for Fly Ash and  
Development project.” The second interesting aspect to these  
replicated invoices is that although they were purported to  
originate from HFI of Lilburn, GA and Mineral Gas Company of  
Lawrenceburg, Tn., both American States, there is box at the  
top of the invoices for the “PROV LICENCE NO”. There are of  
course no provinces in the United States of America.  
HMTQ v. Wilder et al  
Page 192  
Findings with Respect to the Evidence of Betty Pollard  
From the evidence adduced by Mrs. Pollard, I find  
B.  
[398]  
that the invoices that were typed by her were “bogus  
invoices”. I find that the accused Mr. Wilder was involved  
with Mr. Johnson in requesting the typing of these bogus  
invoices. I find that these bogus invoices were used to  
artificially inflate the cost of equipment and the research  
and development expenses in an effort to defraud Revenue  
Canada. In this regard the timeline in Appendix “A” is very  
informative in that it is clear that this deception took place  
at a time when the accused was being hounded by Revenue Canada  
for material with respect to research and development  
expenses.  
[399]  
When combined with Mrs. Pollard’s evidence of the  
activities on the Saturday and Sunday preceding Monday,  
January 7, 1985, is perhaps one of the most telling entries in  
Mr. Russ’ diary. January 7, 1985 was when Revenue Canada was  
going to come and talk to Mr. Wilder and Mr. Richards about  
all of these transactions. At the bottom of page 75 in Mr.  
Russ’ diary entry it says:  
– prepare new resume – talk with Joe at Camax –  
tried Jean – says JB in Abilene – Travelodge – do to  
see Joe D tomorrow – Jerry all upset – not really in  
tune – Ron and Dara going all out – nuts – talked  
Ron re suits coming up – no reaction except try and  
HMTQ v. Wilder et al  
Page 193  
cover for JB – not good – John Richards – Shawna all  
messed up – to try and handle – pass word on re  
moneys for future test runs – try John Len tomorrow  
– chains – have to get handled  
[Exhibit 295]  
[400]  
It is the Crown’s submission that, “Jerry”, referred  
to in the diary extract from Mr. Russ’ diary refers to Gerry  
Byerlay. They also suggest that “Shawna” refers to Seona.  
The Crown’s submission is that this entry in Mr. Russ’ diary  
is some circumstantial evidence of the mental state of the  
people who are involved in this fraud when Revenue Canada  
began inquiring more intensely. The Crown’s submission is  
that when the timeline and the activities that went on are  
considered, there is no doubt that these transactions were  
shams.  
[401]  
Of particular importance is the evidence of Mrs.  
Pollard when she stated that she discussed the invoices with  
Mr. Richards, explaining to him that they contained a number  
of errors. Mr. Richards told her that they would go through  
them together and take care of it. Apparently when Mrs.  
Pollard expressed her concern with respect to the absence of  
source documents, namely contracts, Mr. Richards told her that  
it was okay because they were just putting the invoices  
together for the benefit of Revenue Canada.  
HMTQ v. Wilder et al  
Page 194  
[402] In his testimony Mr. Wilder introduced Exhibit 886,  
which was an invoice dated February 24th, 1984 and numbered  
24941, from 7892345 Holdings Ltd (later called Coastal) to J &  
B for “Components for Methanol scientific research and  
development project as per the attached schedule”. In  
introducing this exhibit the following exchange took place  
between Mr. Wilder and his lawyer:  
Q
Okay, I’m sorry, the 29th. I’m showing you an  
invoice dated -- excuse me, a purchase order  
dated February 24th, 1984. Are you familiar  
with that document?  
A
Yes, I am.  
THE COURT: That’s Exhibit 886, is it, or is it --  
MR. ANDERSON: Yes, I think Your Lordship’s right.  
THE COURT: Exhibit 886. Thank you. You mark the  
exhibit number on the top?  
THE CLERK: 886, yes, sir. Do you have another  
copy, Mr. Anderson?  
MR. ANDERSON: Would you like --  
THE CLERK: I’d like another copy.  
MR. ANDERSON: The witness -- I usually only have  
four.  
THE CLERK: All right.  
MR. ANDERSON: The witness has one, but --  
THE CLERK: Very well.  
EXHIBIT 886: Purchase order from 789 dated  
February 24, 1984  
MR. ANDERSON: Thank you.  
Q
Now, Mr. Wilder, can you explain to the court  
this document?  
A
Perhaps His Lordship could have that.  
THE COURT: Thank you.  
MR. ANDERSON: Sorry.  
A
This is a purchase order from 789, and it’s  
dated 24th of February, 1984, and the purchase  
order refers to Johnson Burnett Ltd., and it is  
for the purchase of methanol scientific  
HMTQ v. Wilder et al  
research project, and this purchase order is  
Page 195  
the -- the actual name we used for the Bio-  
Mass project, initially. And initially the  
Bio-Mass project was going to be purchased by  
789, and then shortly after this purchase  
order, agreements were done with Johnson  
Burnett. One of the parties interested in  
purchasing the tax credit wanted it segregated  
from the bunch, and so it was segregated, and  
within a week or so it became under Canadian  
Bio-Mass, so it would be February.  
Q
A
Mr. Wilder, Canadian Bio-Mass, was that the  
company that you bought from Mr. Lawrence in  
late 1983?  
Yes, it was -- the name was changed, or was  
supposed to be changed in February, but -- also  
at this time the purchase orders, and I think  
the agreements were all done February 24th for  
all of them, going both ways, and this is the  
only document that I found that I have left of  
that package. They were -- things have changed  
over time and they were discarded.  
[403]  
It is indeed interesting to note that this exhibit  
was not put to Mrs. Pollard by the accused nor was it turned  
over to Mr. Alibhai during the audit. Although I draw no  
adverse inference from that especially because the accused  
was, at the time of Mrs. Pollard’s testimony, unrepresented by  
counsel from the evidence there is an irresistible inference  
that this invoice was originally part of the Exhibit 221-138  
which were some blank invoices which were seized from Mr.  
Johnson’s residence. From the date and number of Exhibit 886  
there is also an irresistible inference that Mr. Wilder got  
that document out of the stack of documents that were seized  
from Mr. Johnson’s home, and that this was just a pile of  
HMTQ v. Wilder et al  
Page 196  
documents that he and Mr. Johnson used to create documentation  
to paper the deals that he wanted to create as is evidenced by  
the evidence of Betty Pollard. It is perhaps interesting to  
note that when questioned about this invoice by Crown counsel  
the accused, Mr. Wilder on two occasions stated that it was a  
standard ready form that could be purchased anywhere.  
[404]  
After thinking about the question for a while Mr.  
Wilder in re-examination changed his testimony. He stated  
that the document was prepared at the complex on River Road  
and that the secretary had boxes of Rediform purchase orders  
and invoices and when he wanted one, he would just write up  
what he wanted and the secretary, Susan, whose last name he  
couldn’t remember, would pick one from the box and type it up.  
This evidence on re-examination is, in my view, another  
example of Mr. Wilder’s callous disregard for the truth.  
[405]  
On the evidence, I find as a fact that Mr. Wilder  
aided and abetted Mr. Johnson in the creation of these false  
invoices that were typed by Nola Johnson and Betty Pollard,  
excluding Exhibit 886. I also find as a fact that these  
documents were prepared for the specific purpose of deceiving  
Revenue Canada by overstating their research and development  
expenditures in an effort to reduce their Part VIII tax  
liability.  
HMTQ v. Wilder et al  
Page 197  
C.  
The Effect of the Evidence of Mrs. Pollard  
Exhibit 22-157  
1.  
[406]  
Revenue Canada officer Jim Britton testified that he  
seized Exhibit 22-157 from Mr. Wilder’s home at 25800  
Robertson Crescent on May 7, 1987. In cross-examination by  
Mr. Wilder, Mr. Britton testified that he could not  
“positively identify” Exhibit 22-157, but that he turned the  
seized documents over to the officer in charge of the search  
and later retrieved them from the secure bond room and created  
his inventory. In his examination-in-chief, Mr. Britton had  
described a continuity process including the “inventorying” of  
items seized. In this case, due to Mr. Wilder’s and others’  
sealing applications, the inventories were not made until  
months after the searches. I find as a fact that Exhibit 22-  
157 was indeed seized from Mr. Wilder’s residence.  
[407]  
Exhibit 22-157 is the only exhibit seized from Mr.  
Wilder’s home that Mr. Wilder denies as being there. On its  
face, it is a circumstantially incriminating exhibit. The  
exhibit is comprised of a number of typed J & B, Coastal and  
7892345 Holdings Ltd. invoices in relation to the Fly Ash  
Project and the Hydro-Petroleum Project. Some of these  
invoices, on their face, support a conclusion that they are  
back-dated and false.  
HMTQ v. Wilder et al  
Page 198  
[408] The factors that support that conclusion also  
corroborate Mrs. Pollard’s version of events with regard to  
these invoices being among the back-dated invoices that she  
prepared in early January, 1985. Mr. Wilder’s possession of  
them corroborates her evidence of his interest in them.  
[409]  
Exhibit 22-157 also includes a duplicate of invoice  
number 1017, which, as pointed out by the Crown, is an example  
of the practical difficulty of keeping everything straight in  
a fraud of this size: the invoice purports to document a  
$14,200.000 transaction (re: Fly Ash) between J & B and  
Coastal on April 8, 1984, eight days before 7892345 Holdings  
Ltd. is incorporated and four months before 7892345 Holdings  
Ltd.’s name is changed to Coastal.  
[410]  
The Crown submits that to be authentic, the parties  
would have to have anticipated the incorporation of 7892345  
Holdings Ltd. as well as its name change to Coastal, and then  
contracted in the latter’s name. I agree with Crown counsel  
that this makes no sense.  
[411]  
The Crown submits that the only rational conclusion  
is that, as testified to by Mrs. Pollard, the document was  
prepared in anticipation of the Revenue Canada meeting in  
early 1985 and Mr. Wilder and Mr. Johnson were simply unable  
to keep track of the actual incorporation dates and name  
HMTQ v. Wilder et al  
Page 199  
changes of his various companies in conjunction with the  
various fabricated transactions.  
[412]  
Exhibit 22-157 also includes the duplicate of  
invoice number 1016 dated April 27, 1984, which purports to  
document a $36,000,000 transaction (re: Hydro-Petroleum)  
between J & B and 7892345 Holdings Ltd. on April 27, 1984.  
Again, the Crown submits that the anomalies in this document  
prove that it is false and back-dated and are evidence of  
fraud. Although the pre-printed number of the duplicate  
invoice (1016) precedes invoice number 1017, the date of the  
supposed transaction reflected by invoice number 1016 is after  
the date of the supposed transaction evidenced by invoice  
number 1017. Also, the parties got the correct name of an  
existing corporate entity (Coastal) in invoice number 1016,  
but got it wrong in invoice number 1017.  
[413]  
The other invoice duplicates in Exhibit 22-157, as  
noted above, were typed on January 5, 1985 by Mrs. Pollard or  
Nora Johnson, with Mr. Wilder’s knowledge. They purport to  
evidence expenditures by Coastal to J & B for “parts,  
engineering and testing” in relation to the Hydro-Petroleum  
and Fly Ash Projects.  
[414]  
The Crown further submits that Mrs. Pollard’s  
evidence with regard to preparing falsified invoices echoes  
HMTQ v. Wilder et al  
Page 200  
Mr. Russ’ evidence that Nora Johnson typed false invoices in  
relation to the Bio-Mass Project.  
[415]  
In addition to being seized at Mr. Wilder’s  
residence, these duplicate invoices were identified by Mr.  
Alibhai as being produced during the audit on January 7, 1985  
in Mr. Wilder’s presence.  
[416]  
I must admit that, after reviewing the evidence in  
this matter, I find these submissions by the Crown to be very  
compelling indeed.  
2.  
Exhibit 23-158  
Exhibit 23-158 includes “original” invoices in  
[417]  
relation to purported transactions between J & B and Coastal  
in relation to the Hydro-Petroleum and Fly Ash Projects. I  
find as a fact that these invoices were prepared, with Mr.  
Wilder’s knowledge, the weekend before his presentation of the  
documents to Mr. Alibhai on Monday, January 7, 1985. The  
invoices break down charges for “parts, engineering and  
testing”.  
[418]  
Given Mrs. Pollard’s evidence with regard to the  
date of their creation, I find that these invoices were not  
prepared contemporaneously with any actual commercial  
transactions, as they are dated August 31, 1984 (number 1090  
HMTQ v. Wilder et al  
Page 201  
and number 1091), September 31 (sic), 1984 (number 1103),  
September 30, 1984 (number 1104), October 31, 1984 (number  
1130 and number 1131), and November 30, 1984 (number 1291-152  
and number 1153). I agree with the submission of Crown  
counsel that there is an irresistible inference that they are  
back-dated, false documents created to convince Revenue Canada  
that expenses had been incurred by Mr. Wilder’s companies that  
qualified in the context of Part VIII of the Income Tax Act.  
[419]  
Exhibits 22-157 and 23-158 were both seized from Mr.  
Wilder’s residence at 25800 Robertson Crescent. I agree with  
Crown counsel that in legitimate business, one would not  
expect the vendor to have both the original and duplicate of  
invoices. However, as in the case at bar, in the context of  
false transactions, there would be no commercial or  
bookkeeping disadvantage to one party having all the records.  
3.  
Exhibit 214-155  
On May 7, 1987 Exhibit 214-155 was seized from Mr.  
[420]  
Wilder’s residence. The exhibit consists of a file folder  
labelled “Can. Bio-Mass Working Papers” which contains:  
1)  
2)  
Seven accounting ledger sheets setting out  
adjustments;  
Copies of PNR/Bio-Mass invoices all dated May  
7, 1984 and numbered 75433, 75434 and 75436–  
75446, referable to purchase order no. 1999;  
(see: also, Exhibit 38b – which is a set of  
HMTQ v. Wilder et al  
these invoices, plus invoice no. 75431,  
Page 202  
referable to the “Laboratory Verification Unit”  
and the amount of $740,660 and invoice no.  
75435];  
3)  
Schedule “D” Research Certificate signed by  
G.M. Byerlay, “M.E.A.C., M.A.” dated April 30,  
1984, with an attached schedule of “Canadian  
Bio-Mass Research Inc. Schedule of Scientific  
Research Expenditures, Oct. 31/83 – Sept.  
30/84”. The list is of the equipment described  
in the Exhibit 38b invoices and the Exhibit 214  
invoices, with the addition of the items in the  
missing invoices, e.g., invoice no. 75431 for  
the “Laboratory Verification Unit” for  
$740,660.  
[421]  
The figures in this certificate are the same as  
those in the PNR/Bio-Mass invoices (Exhibit 38b and Exhibit  
214), as well as the figures in the typed Mineral Gas  
Company/PNR invoices produced during the audit, (Exhibit 13-  
177) and the handwritten invoices prepared by James Russ and  
seized from Mr. Johnson’s residence, (Exhibit 221-138), all of  
which Mr. Wilder testified he did not see until Crown  
disclosure or the civil suit. In her submission, Crown  
counsel outlines the list as follows:  
Ex. 38b/Ex. 214 invoice  
Ex. 13-177 invoice  
and Ex. 221[138]  
[No. 2924]  
No. 2925  
[No. 75431*]  
No. 75433  
No. 75434  
No. 75436  
No. 75437  
No. 75438  
No. 75439  
No. 75440  
=
=
=
=
=
=
=
=
No. 2926  
No. 2928  
No. 2929  
No. 2930  
No. 2931  
No. 2932  
HMTQ v. Wilder et al  
Page 203  
No. 2833  
No. 2934  
No. 2935  
No. 2936  
No. 2937  
No. 2938  
No. 75441  
No. 75442  
No. 75446  
No. 75443  
No. 75444  
No. 75445  
=
=
=
=
=
=
(*Not in Exhibit 214).  
iv.) document headed “Canadian Bio-mass Research  
Inc.” listing additions to the $20,700,160.00  
equipment to total $20,626,817.00, with Gerald  
Byerlay’s signature on it;  
v.) invoice dated May 12 1984 from Pacific Natural  
Resources Inc. to Canadian Bio-Mass Research Inc.,  
re: P.O. no. 1999, contract price: $20,700,160.00  
vi.) promissory note dated May 7 1984 from Canadian  
Bio-Mass Research Inc., signed by Dara Wilder,  
for $17,200,000.00.  
[422]  
Although Mr. Wilder testified that he had not seen  
the invoices in Exhibit 214 until they were produced during  
the civil suit, I agree with Crown counsel that this testimony  
by Mr. Wilder ought to be rejected. In this regard it is  
significant that Exhibit 214-155 contains no correspondence,  
affidavits, exhibits or notes associated with any civil  
lawsuit.  
[423]  
Furthermore, Mr. Wilder’s accountant, Mr. Richards,  
provided the very same invoices (Exhibit 38b) along with the  
May 7, 1984 Acquisition Agreement signed by Mr. Wilder  
(Exhibit 38a) to Mr. Alibhai at some point during the audit.  
Apart from that, the schedule located in Exhibit 214 is  
HMTQ v. Wilder et al  
Page 204  
identical to the list of equipment referred to by Michael  
Richards in his certificates in Exhibit 251 and 252 (the  
National Bank Bio-Mass files).  
[424]  
It is also perhaps interesting that the invoices  
found in Exhibit 214 were also prepared on the same forms on  
which the other falsified documents were prepared. They are  
prepared on Rediform Moore Speediset form 7S015E. These are  
the same pre-printed forms that the HFI/J & B Fly Ash invoices  
were created from, (Exhibit 9-100iv) and Mr. Russ’ handwritten  
Bio-Mass invoices were written on, (Exhibit 221-138). These  
documents seem to lend some credence to the testimony of Mr.  
Russ to the effect that Mr. Wilder was involved in the  
creation of “inflated” invoices.  
[425]  
At trial, Mr. Wilder produced Exhibit 886, a  
purchase order prepared on pre-printed Rediform style 1S149E  
purchase order number 24941, dated February 14, 1984 from  
7892345 Holdings Ltd. to J & B. I have already referred to  
this document earlier; nevertheless, I intend to refer to it  
again. I agree with Crown counsel that there are a number of  
problems with this document:  
1)  
this series of purchase orders were from J & B,  
to other companies, not the other way around,  
(see:Ex. 9-100v – invoices from J & B to  
7892345 Holdings re: Fly Ash);  
HMTQ v. Wilder et al  
2) “24941” is numerically “after” “24932,” but  
Page 205  
February 14 1984 is before April 2 1984;  
therefore, if the documents were prepared  
sequentially and chronologically, the lower  
numbered purchase number would coincide with  
the earlier date.  
[426]  
The Crown submits that this is another example of  
documents being carelessly created to provide whatever picture  
is required by the moment. Although I am not prepared to go  
that far, this is indeed a very curious document.  
IX. EVIDENCE RELATING TO THE AUDIT  
[427]  
Mr. Wilder claims that he cooperated fully with  
Revenue Canada officials. He further submits that they are  
responsible for not going to examine the projects. He states  
that because of this they were not able to see the various  
prototypes that he was developing. Because of some of the  
allegations made by Mr. Wilder, I believe that it is prudent  
for me to review my understanding of their involvement in this  
matter. Before I do, I should state that, according to the  
evidence of the Revenue Canada officials who testified, they  
always prepared a T2020 form stating a summary of their  
discussions with a taxpayer. These T2020’s were all made  
available to Mr. Wilder. In addition to my review of the  
evidence, I have attached as an addendum to these proceedings  
a timeline which is marked Appendix “A” to this judgment.  
HMTQ v. Wilder et al  
Page 206  
A.  
Evidence of Steven Choy  
Mr. Steven Choy was tendered by the Crown to testify  
[428]  
with respect to the Revenue Canada audit of Mr. Wilder’s  
companies. During the time period in question he was a member  
of the Collections section of Revenue Canada, having joined  
the section in 1981.  
1.  
Background to the S.R.T.C. Program  
[429]  
Collections’ role within Revenue Canada was to  
manage accounts receivable; to collect the money that was owed  
to Revenue Canada. When a taxpayer (be it an individual or  
corporation) filed a return and there was an amount owing that  
was not paid, after a certain period of time a ledger card  
would be created and sent to the responsible tax office. Upon  
receipt of the ledger card Collections would contact the  
taxpayer and arrange for payment of the debt. Collections  
would attempt to work out a solution for the payment of a  
debt, however, if nothing could be worked out Revenue Canada  
would ultimately certify the debt (proving in court that the  
debt exists) and take legal action.  
[430]  
Mr. Choy was aware of the S.R.T.C. program in 1984.  
He understood the scheme to be an incentive program to  
encourage spending money on research and development. Mr.  
Choy explained how the scheme worked as follows:  
HMTQ v. Wilder et al  
Page 207  
Q
A
And how did it work.  
A company can designate an amount to be spent  
on qualifying research and developments, and  
they can sell that amount to investors, issuing  
debentures or promissory notes, and in return,  
the investor will get 50 percent of the  
designation as tax credit towards their taxable  
income…The company who designate that amount  
would have to pay 50 percent of the designated  
amount…before the – end of the month following  
the month of designation. That means they  
would have 50 percent tax liability…If the  
company issue $100 debenture, the taxpayer –  
the issuing company would have incurred 50  
percent of that, which is $50 tax liability,  
and the investor would get 50% of the  
designation, which is…$50 as their tax credit  
toward their taxable income.  
[431]  
With respect to the payment of the taxes, Mr. Choy  
explained:  
A
[T]hey pay it – all I know, before the  
following month, the last day of the following  
month after designation. Then at the end of  
the fiscal year, by filing a return under Part  
8 [sic], which is what the SRTC’s tax credit is  
under, they file a return and they can offset  
if they spend enough qualifying R & D  
expenditure, they can offset that 50 percent  
tax.  
[432]  
When asked if he was aware of any problems that  
arose for the issuing company in having to pay the tax at the  
end of the month following the designation, Mr. Choy explained  
that by having them pay the tax up front the operating funds  
needed to carry out their research and development would be  
depleted. Thus the taxpayer would have to acquire more  
HMTQ v. Wilder et al  
Page 208  
financing to carry the projects out. That said Mr. Choy  
reiterated that if they filed a return and claim qualifying  
research and development expenses their tax debt would be  
eliminated.  
[433]  
In an effort to deal with the concern of the issuing  
companies not having enough operating funds, Revenue Canada  
implemented a monitoring program which allowed for the  
deferral of the collection of tax. The monitoring program  
allowed the issuing company to defer the payment of tax until  
they filed their return at the end of the fiscal year.  
[434]  
Both the Collections and Audit divisions of Revenue  
Canada had a role in the monitoring program, under which the  
issuing company would be examined to determine if in fact they  
were carrying out qualifying research and development.  
[435]  
Collections’ role in the monitoring program was to  
initiate first contact with the taxpayer and introduce the  
Audit section. Audit would then examine the projects and come  
up with a decision before Collections decided whether or not  
any legal collection action should be taken.  
[436]  
Mr. Choy had been involved in monitoring  
approximately 30 to 50 S.R.T.C. files. He explained that the  
files would come about when headquarters had posted an account  
HMTQ v. Wilder et al  
Page 209  
and sent his section a ledger card. The ledger card contained  
the name of the company, the account number and the amount of  
tax payable. Upon receiving a ledger card Mr. Choy would  
create a folder and put all the information he gathered into  
the folder. The ledger cards were issued once the designation  
was posted, which normally occurred before the Part VIII tax  
return was filed. The monitoring program did not, however,  
impact or preclude an assessment after the Part VIII tax  
return was filed.  
[437]  
Mr. Choy explained that the purpose of initiating  
contact with the taxpayer was to establish a liaison with them  
and to advise them as to what information will be required by  
the auditor who will be examining the research and development  
project the taxpayer claims to be performing.  
[438]  
When asked if he was familiar with the “quick flip”  
practice, Mr. Choy answered in the affirmative and explained  
as follows:  
A
A quick flip is when a company designated an  
amount and issue a debenture. Take it for  
example for that $100, issue $100 to an  
investor and the issuing company also issue a –  
a 50 percent, which is $50, tax credit to the  
investor and then immediately redeem the  
debenture for, say, $60. So that means the  
investor would get $60 back from this  
investment and $50 tax credit, and the issuing  
company only retain $40.  
HMTQ v. Wilder et al  
Page 210  
[439]  
The “quick flip” practice was a concern to  
Collections because the money retained by the issuing company  
was not enough to cover the tax debt. For example, in order  
to extinguish the $50 tax debt, the issuing company would have  
to spend $100 in research and development.  
[440]  
In situations where a company has participated in a  
“quick flip”, secondary financing becomes a very important  
consideration because the issuing company needs to finance the  
shortfall so that they are able to partake in sufficient  
research and development expenditures to extinguish the tax  
debt.  
[441]  
Audit’s role in the monitoring program was to  
examine the books and records relating to the research and  
development projects and then come back with a decision as to  
whether the projects qualified. Collections took the decision  
of the auditor and made a decision based on the account’s  
merits. There were two possible conclusions that Collections  
would reach, either that the company was doing qualifying  
research and development and they have sufficient resources to  
carry the project out, or that the company was not able to  
spend enough money to cover the tax debt or the research and  
development project was not qualified.  
HMTQ v. Wilder et al  
Page 211  
2.  
August 21, 1984 Meeting  
Mr. Choy became involved in the file in question in  
[442]  
these legal proceedings in 1984. His supervisor had received  
a call from Audit Review requesting that a member from  
Collections attend a meeting with a taxpayer; Mr. Choy was the  
Collections member assigned to attend. The meeting in  
question took place on August 21, 1984, at the 1166 West  
Pender office of Revenue Canada. In attendance were Mr. Choy,  
Mr. Dennis McClure from Audit Review, Mr. Richards (a co-  
accused) and two Toronto lawyers, Vic Peters and Patricia  
Myhal, who were representing the investors.  
[443]  
Mr. Choy understood that the purpose of the meeting  
was to address the taxpayer’s request for a letter from the  
Department regarding the designation they were about to  
submit. Essentially what they wanted was a letter setting out  
that Revenue Canada had approved the transactions. Mr. Choy  
noted that this was rare for a Part VIII tax designation.  
[444]  
At the meeting Mr. Richards gave Mr. Choy and Mr.  
McClure the financial statements of 7892345 Holdings Ltd.  
dated July, 1984 (Exhibit 311). Of the projects named on page  
four of the financial statements, Mr. Choy was familiar with  
the projects named Fly Ash and Hydro-Petroleum.  
HMTQ v. Wilder et al  
Page 212  
[445] Mr. Choy requested information from Mr. Richards on  
secondary financing because it was apparent to him, having  
looked at the balance sheet for the company, that the company  
had hardly any working capital and very little equity. He was  
concerned with how the company was going to finance their  
research.  
3.  
August 22, 1984 Meeting  
[446]  
Mr. Choy and Mr. McClure next met with Mr. Richards  
on the following day, August 22, 1984, at Mr. Richards’  
office. Mr. Lawrence (a co-accused) was brought in by Mr.  
Richards during the meeting. The purpose of the meeting was  
to look over some documentation relating to the projects.  
[447]  
During the meeting the parties discussed who was  
behind 7892345 Holdings Ltd. and who the company’s suppliers  
were. Mr. Choy was told by Mr. Richards that the principal of  
the company was Mr. Wilder. While Mr. Choy indicated that  
there was some discussion regarding Mr. Wilder’s background  
and qualifications, he did not elaborate.  
[448]  
Financing was also discussed, as Mr. Choy testified,  
he was informed that the projects were financed by way of  
promissory notes. This was significant to Mr. Choy because of  
the amount of money involved and the lack of security. He  
HMTQ v. Wilder et al  
Page 213  
indicated that he had doubts as to whether the company would  
have the financing to perform the research and development.  
[449]  
With respect to third party financing, discussions  
in this regard left Mr. Choy with the understanding that the  
$65,000,000 shortfall was to be financed by the suppliers who  
would defer the demand for payment until December 31, 1986.  
Mr. Richards told Mr. Choy that the reason the suppliers  
agreed to such an arrangement was because Mr. Wilder had been  
in the business circle a long time, was known to be reliable  
and a man of his word and had a reputation of doing what he  
promised to do regardless of whether the promise was in  
writing or merely verbal.  
[450]  
The amount of money Mr. Wilder had put into the  
company was another topic discussed at the meeting. Mr. Choy  
was interested in this information because he wanted to know  
how much working capital the company had and information  
relevant to the company’s financial ability to carry out the  
research and development.  
[451]  
The possible use of an escrow account was also  
discussed. Mr. Richards indicated that although the company  
could not top off the $36,000,000 to $50,500,000 (the total  
amount of the tax debt), they would be willing to put the  
entire proceeds in escrow. Mr. Choy’s understanding of the  
HMTQ v. Wilder et al  
Page 214  
use of the escrow account was that the proceeds from the  
designation would be put in escrow:  
Q
A
And what did you understand that arrangement to  
envisage?  
Well, this is one of the – the mechanism that  
we, or the department can have some kind of  
control over how the fund is being used, is to  
put the – the amount of the – the proceeds  
[sic] in escrow.  
Q
A
I’m sorry the amount of the which?  
The – the amount of the proceeds, you know, the  
– from the designation [sic].  
Q
A
Yes.  
Out of the money they receive, and then for  
each $2 they spend, we’ll release $1 after  
we’re satisfied that the research and  
development has been carried out.  
And how would Revenue Canada be satisfied that  
the research and development had been carried  
out?  
Q
A
That will be up to Audit.  
[452]  
When asked how the independent auditor would verify  
that the expenditure was for research and development, Mr.  
Choy explained that that determination would be up to the  
auditor.  
[453]  
Mr. Choy understood Mr. Lawrence to be the lawyer  
for the taxpayer. With respect to Mr. Lawrence’s involvement  
at the meeting, he took part in the discussion regarding the  
use of an escrow account.  
[454]  
Another discussion involved a comfort letter sought  
by the taxpayer. Mr. McClure agreed to send a comfort letter  
HMTQ v. Wilder et al  
Page 215  
advising the numbered company that Revenue Canada was aware of  
the transactions.  
[455]  
Following the August 22 meeting Mr. Choy called a  
Mr. Watson, the head of the monitoring program at Revenue  
Canada headquarters in Ottawa, regarding the escrow agreement  
and the company. Both Mr. Choy and Mr. Watson were concerned  
about the amount of money involved and the financing  
arrangement. The focus of Mr. Choy’s concern surrounded the  
company’s ability to complete the research and development.  
[456]  
Mr. Choy had no further involvement in the file  
until October of 1984 because Collections does not get  
involved any further until they have an account on their  
books.  
4.  
October 17, 1984 Phone Call  
[457]  
Mr. Choy called Mr. Richards on October 17, 1984 and  
inquired about the status of the projects. The purpose of the  
call was to keep in touch with the company’s accountant, Mr.  
Richards. Mr. Richards informed Mr. Choy that he (Richards)  
had been all over the U.S. and Canada, verifying the capital  
expenditures and that the projects were basically contracted  
out to various engineering firms.  
HMTQ v. Wilder et al  
Page 216  
5.  
November 5, 1984 Designation  
On November 5, 1984, Mr. Choy’s office was sent a  
[458]  
ledger card relating to the taxpayer meaning that the company  
had filed a designation. A note in Mr. Choy’s file indicated  
that Mr. Richards had verified $65,000,000 of research and  
development expenditures and that he was prepared to issue a  
statement to the department based on his findings and the  
opinion of independent engineers that the taxpayer’s company  
had spent the money.  
[459]  
Mr. Choy noted that this in itself would have  
satisfied the Department, but he felt that an examination  
should still be conducted on the taxpayer and their supplier,  
J & B, because of the amount money involved. An examination  
involved taking a closer look to make sure the actual  
qualifying research and development had been carried out. Mr.  
Choy reiterated that his concern was the result of the amount  
of money involved and the structure of the financing (financed  
by third parties with almost no collateral).  
6.  
December 3, 1984 Phone Call  
[460]  
Mr. Choy called Mr. Richards once again on December  
3, 1984, and spelled out the documents, vouchers and  
information that the Department would require. Mr. Choy asked  
for the incorporation date of the company, the name of the  
HMTQ v. Wilder et al  
Page 217  
principals, and the source of secondary financing. In  
response Mr. Richards told him that he would prepare the  
financial statements and would call him back on December 17,  
1984. The Bio-Mass designation was also discussed. Mr. Choy  
understood Bio-Mass to be one of Mr. Wilder’s companies.  
7.  
December 18, 1984 Phone Call  
[461]  
Having not received a call from Mr. Richards on  
December 17, Mr. Choy called Mr. Richards on December 18,  
1984. The result of the call was that a meeting was set up  
for January 7, 1985.  
8.  
January 7, 1985 Meeting  
[462]  
On January 7, 1985, Mr. Choy met with Mr. Richards  
and Mr. Akbar Alibhai, the auditor assigned to the file. Mr.  
Alibhai claims Mr. Wilder was there. Mr. Alibhai likely knows  
better as he is referring to notes while Mr. Choy wasn’t.  
Because the tax liability was on Collections’ books,  
Collections opened the file, made initial contact with the  
taxpayer and phoned Audit who would assign an auditor to join  
the Collections representative in visiting with the taxpayer.  
[463]  
As soon as the auditor, Mr. Alibhai, became involved  
in the file, Mr. Choy’s involvement in the file was by request  
only. In other words the file was handed over to Audit and he  
would attend meetings only upon request.  
HMTQ v. Wilder et al  
Page 218  
[464] With respect to what was discussed at the January 7  
meeting, Mr. Choy was unable to recall and did not make any  
notes of the meeting.  
9.  
January 23, 1985 Meeting  
[465]  
On January 23, 1985, Mr. Choy once again met with  
Mr. Alibhai and Mr. Richards. Mr. Choy was unable to recall,  
however, whether there were any discussions regarding the Bio-  
Mass, Fly Ash or Hydro-Petroleum Projects.  
10. April 23, 1985 Meeting  
[466]  
There is some conflict as to the date that this  
meeting actually took place, April 23, 1985 or April 24, 1985.  
Although Mr. Choy testified that the meeting took place on  
April 24, I find that it actually likely took place on April  
23, 1985, which is when Mr. Alibhai and Mr. Moi say it took  
place. Mr. Choy met with Mr. Alibhai, Mr. Larry Moi, another  
auditor, Mr. Richards and Mr. Wilder at Mr. Richards’ office.  
The purpose of the meeting from Mr. Choy’s perspective was to  
get more information regarding the research and development  
projects. His concern at this point was that after so many  
months they had still not received the information they were  
seeking. What information they had received had come in bits  
and pieces.  
HMTQ v. Wilder et al  
Page 219  
[467] Apart from the meeting on January 7, the April 23  
meeting was likely the second time Mr. Choy met Mr. Wilder.  
He had very little direct contact with Mr. Wilder, noting that  
he likely only met him on two occasions. He was unable to  
identify Mr. Wilder in court.  
[468]  
Mr. Choy had no further contact with the taxpayers  
following the April 23, 1985 meeting. In October of 1985 he  
certified the debt in Federal Court.  
[469]  
Mr. Choy never received any documents from the  
taxpayers as they were all given to the auditor.  
B.  
Evidence of Akbar Alibhai  
[470]  
Mr. Akbar Alibhai was tendered by the Crown to  
testify with respect to the audit of Mr. Wilder’s companies.  
At the time in question, beginning in 1984, he was working  
with Revenue Canada in the S.R.T.C. program. He was involved  
in the initial monitoring part of the program which included  
such duties as reviewing books and records (promissory notes,  
agreements etc.), speaking to scientists, and visiting sites.  
[471]  
In reviewing books and records, Mr. Alibhai was  
attempting to ensure that the research and development  
activities were actually carried out and that expenses were  
HMTQ v. Wilder et al  
Page 220  
being incurred. This was done prior to the Part VIII tax  
return being filed.  
1.  
Mr. Alibhai’s Involvement in the Wilder File  
[472]  
Mr. Alibhai became involved in the file in question  
upon being asked to conduct a monitoring program audit on it.  
He noted that Audit worked in conjunction with Collections,  
with Collections having the responsibility of ensuring that  
the taxpayer either had the ability to extinguish the Part  
VIII tax liability, and if not, that they had the means of  
paying the Part VIII tax.  
[473]  
Mr. Alibhai received the Coastal file from his team  
leader in December of 1984. He noted that there was nothing  
unusual in the file’s referral to him and that the file  
included a number of documents relating to Coastal.  
[474]  
The Collections officer that Mr. Alibhai dealt with  
regarding the file was Mr. Choy.  
[475]  
Mr. Alibhai kept a record of any conversations or  
contact he had with the taxpayers via T2020 forms and also  
prepared working papers with respect to the file. He referred  
to the T2020 forms both prior to and during his testimony so  
as to help refresh his memory.  
HMTQ v. Wilder et al  
Page 221  
2.  
January 7, 1985 Meeting  
Mr. Alibhai prepared a handwritten document (Exhibit  
[476]  
2054 – vol. 17) prior to his January 7 meeting with Mr.  
Wilder. Although Mr. Choy doesn’t include Mr. Wilder in the  
January 7 meeting, it is my view that this is the same meeting  
and Mr. Choy just failed to recall as he didn’t have notes of  
the meeting while Mr. Alibhai did. The purpose of the  
document was to provide the taxpayer with a list of  
information that Revenue Canada would be requiring from them.  
At the end of the document was the following notation “Other  
information to be provided by D. Wilder per meeting on Jan.  
7/85”. Mr. Alibhai explained that the notation was a result  
of comments made by Mr. Wilder after the January 7, 1985  
meeting. A copy of this document was given to Mr. Richards  
just after the meeting.  
[477]  
Mr. Alibhai elaborated on the content of the  
document as follows:  
1)  
Under the heading of “All projects in General”  
(a) Regarding the request for copies of  
“Comfort letters from (a) accountant (b)  
lawyer (c) engineer”. Mr. Alibhai  
testified that these were letters that  
were provided to investors because when  
they invest funds they like to have some  
assurance from accountants, lawyers and  
engineers.  
HMTQ v. Wilder et al  
(b) Regarding the request for “one copy of  
Page 222  
standard agreements issued to investors”.  
Mr. Alibhai indicated that these were  
agreements that were issued to the  
investors of the research and development  
program.  
2)  
Under the heading of “Individual Projects  
Copies”, eight headings were identified in the  
document (Alibhai’s testimony regarding the  
items in square brackets):  
(a) Back-up Schedule 1 and copies of invoices  
for purchase price for equipment [Alibhai  
was looking for invoices for equipment on  
all of the projects].  
(b) Copy of promissory notes re: equipment  
[this information was received at the  
January 7 meeting].  
(c) Copies of invoices from Johnson & Burnett  
Ltd. (monthly) [this information was  
received at the January 7 meeting].  
(d) Projections of research and developments  
expenses and revenue [this was requested  
because normally when Revenue Canada  
conducted their monitoring programs, they  
would occur two to three months after the  
projects had started, thus expenses would  
not have occurred at that point, but they  
would have projections for the rest of the  
year].  
(e) Resumes of research and development staff  
[individuals who carried out the research  
and development activities].  
(f) Description of research and development  
projects.  
(g) US invoices in relation to invoices from J  
& B.  
(h) Progress reports on projects.  
HMTQ v. Wilder et al  
Page 223  
[478]  
The January 7, 1985 meeting took place at Mr.  
Richards’ office and was set up by Mr. Choy. The purpose of  
the meeting was to obtain information about the research and  
development projects, to make arrangements to commence the  
audit, and to ensure that they had all the books and records  
to start the audit. Present at the meeting were Mr. Wilder,  
Mr. Richards, Mr. Choy and Mr. Alibhai.  
[479]  
Mr. Alibhai asked most of the questions at the  
meeting as he was the auditor who was going to be looking at  
the books and records. During this meeting Mr. Alibhai  
learned the following information from Mr. Wilder and Mr.  
Richards:  
1)  
Mr. Wilder and Mr. Richards revealed their  
respective roles in the research and  
development projects; Mr. Richards was the  
accountant who would be verifying the  
expenditures and Mr. Wilder was the shareholder  
of Coastal.  
2)  
3)  
4)  
J & B were the suppliers of the equipment.  
The cost of the equipment was $143 million.  
The equipment was financed through promissory  
notes, with the entire amount due December 31,  
1986.  
5)  
6)  
The titles of the equipment were vested in  
Coastal.  
J & B had acquired the equipment from various  
U.S. suppliers in return for promissory notes.  
HMTQ v. Wilder et al  
Thus there were two sets of promissory notes  
Page 224  
each totalling approximately $143 million, one  
between J & B and the U.S. suppliers and the  
other between J & B and Coastal.  
7)  
8)  
9)  
Mr. Johnson was the principal of J & B.  
Mr. Wilder and Mr. Johnson were good friends.  
Mr. Johnson had agreed to the arrangement  
between J & B and Coastal regarding the $143  
million promissory note because J & B believed  
so much in the research and development  
projects that they were willing to take on the  
risk.  
10) Mr. Byerlay was the consulting engineer.  
11) There were no contracts between J & B and the  
U.S. suppliers.  
12) The agreement between Coastal and J & B was  
verbal, there was no written agreement.  
13) J & B would be repaid for the promissory notes  
by 60% of the net profits of each project and  
if there was a shortfall it would be made up by  
Mr. Wilder.  
14) Mr. Wilder and Mr. Richards believed the  
projects would never fail.  
15) Coastal had the controlling role in the  
research and development projects.  
[480]  
Mr. Richards answered the majority of the questions  
during the meeting, but Mr. Wilder did answer some. Mr.  
Wilder was in attendance throughout the entire meeting. If  
either Mr. Richards or Mr. Wilder had chosen to leave Mr.  
Alibhai would not have stopped them. All four people in  
attendance were actively participating in the conversation.  
HMTQ v. Wilder et al  
Page 225  
[481] Despite the fact that the meeting was premised on  
the activities of Coastal, given the discussions regarding the  
arrangements between Coastal and J & B, Mr. Alibhai also  
requested information relating to J & B. He explained that he  
was interested in J & B’s records because there were “so many  
interrelations between the transactions of these two  
companies, like all the equipment and all the charges were  
coming from J & B so it was – became necessary to look at  
their records, as well”. Mr. Alibhai was told by Mr. Richards  
that the following information would be provided:  
1)  
Equipment costs on the promissory notes would  
be verified with invoices from suppliers;  
2)  
3)  
Records of J & B; and  
Bank statements which would show where the SRTC  
funds were as well as disbursements from the  
account.  
[482]  
Mr. Alibhai understood Mr. Wilder’s role in the  
projects to be that of the “main individual who would be  
controlling all the activities”. He understood Mr. Johnson to  
be part of the management company that conducted and  
administered all the research and development projects. He  
indicated that he was under the impression that Mr. Johnson  
received instructions from Mr. Wilder. Mr. Alibhai was  
informed by both Mr. Wilder and Mr. Richards that Coastal had  
HMTQ v. Wilder et al  
Page 226  
the controlling role in the research and development  
activities.  
[483]  
With respect to the comfort letters mentioned in  
Exhibit 2054, there was some discussion at the January 7  
meeting regarding who prepared them. Mr. Alibhai could not  
remember the name of the accountant, but identified Tom  
Riddell as one of them. He could not remember the name of the  
lawyer, but did remember that Mr. Byerlay provided the  
engineer’s comfort letter.  
[484]  
At the conclusion of the meeting Mr. Alibhai gave  
Mr. Richards a list of further information that would be  
required, but did not discuss the matter with Mr. Wilder.  
Other information requested included bank statements which  
would show where the authority to the funds was and how they  
were disbursed. Mr. Alibhai was under the impression that  
both Mr. Richards and Mr. Wilder would be providing the  
information. Mr. Wilder was going to take him to see the  
projects, one of which was in Richmond and the other in  
Aldergrove.  
[485]  
Mr. Alibhai received project reports for nine  
projects during the meeting, but the Fly Ash Project was not  
one of them.  
HMTQ v. Wilder et al  
Page 227  
[486] Mr. Alibhai was shown a document prepared by Crown  
counsel before the previous trial and entitled “Court exhibits  
received by Akbar Alibhai during his field audit” (Exhibit  
2058 – vol. 17). The exhibit is a summary of exhibits that  
Mr. Alibhai indicated he had seen. The dates beside the items  
set out in the exhibit indicate the date that Mr. Alibhai  
received the document from the taxpayers. The question marks  
beside the items indicate that Mr. Alibhai did receive the  
document, but that he was not sure when he received it.  
[487]  
Mr. Alibhai indicated that Exhibit 2058 assisted him  
in advising the court which documents he received at the  
January 7 meeting. It was Mr. Alibhai’s practice when he  
received a document from a taxpayer not to make any notations  
on the original, but would make notations on a copy.  
[488]  
Crown counsel took Mr. Alibhai through Exhibit 2058  
asking him if he recalled seeing the individual documents  
listed within it. Mr. Alibhai was requesting this information  
because he had to gather all the documents so he could send  
them to the S.R.T.C. committee for review and to see whether  
the projects qualified as research and development.  
HMTQ v. Wilder et al  
Exhibit 2058  
Page 228  
Exhibit # Description  
Alibhai’s Comments  
G 11  
G 12  
G 13  
Project description of Hydro  
Petroleum project  
He recalls seeing the  
document on Jan. 7/85, he  
does not recall seeing the  
diagrams however  
He recalls seeing the  
document on Jan. 7/85; he  
does not recall seeing the  
diagrams however  
A “Brief Summary of the  
Process” from the Hydro-  
Petroleum offer for sale of  
SRTCs (part of exhibit 109)  
Coastal Project Process Report,  
Nov. 30, 1984, Hydro-Petroleum  
Research  
First saw the document on  
Jan. 24/85  
92  
Bio-Mass offer for sale of  
SRTCs  
First saw the document on  
Jan. 7/85  
2055  
Financial Statements of 7892345  
Holdings Ltd. dated July 31,  
1984 – (not noted on exhibit  
2058)  
First saw the document on  
Jan. 7/85  
94 I  
95 A  
Purchase order for equipment  
from Pacific Natural to Mineral  
Gas, dated May 7, 1984  
He recognizes the purchase  
order, but not the Bio-Mass  
equipment list that was  
attached to it  
Equipment acquisition agreement  
between Pacific Natural and  
Bio-Mass dated May 7, 1984  
Invoices from Pacific Natural  
to Bio-Mass dated May 7, 1984  
Hydro Fuels Invoices 2152-2166  
to Johnson & Burnett, dated  
Apr. 8/94, for Fly Ash  
He did not recognize this  
95 B  
He did not recognize this  
100 V  
First saw the documents on  
Jan. 7/85  
equipment  
104  
109  
Fly Ash offer for sale of SRTC  
First saw the document on  
Jan. 7/85  
Hydro Petroleum Offering  
Memorandum  
He recognizes seeing all the  
documents except the drawings  
He recalls seeing it, but was  
not sure whether he saw it on  
Jan. 7/85 or at a later date  
He recalls seeing it, but did  
not remember on which day it  
was produced by Richards  
First saw the documents on  
Jan. 7/85  
176 (also Purchase order for equipment  
94 II)  
from Pacific Natural to Mineral  
Gas, dated May 7, 1984  
177 (also Invoices 2924-38 from Mineral  
94 III)  
Gas to Pacific Natural, dated  
May 7, 1984  
206 (also Hydro Fuels invoices 2152-2166  
100 V)  
2039 I  
to Johnson & Burnett, dated  
Apr. 8/84, for Fly Ash  
equipment  
Acquisition of New Equipment –  
Agreement between Johnson &  
Burnett and Fly Ash Research,  
dated Apr. 12/84  
He recalls seeing it, but did  
not remember on which day it  
was produced  
2039 II  
Promissory Note for $14,200,000  
– Payor = Fly Ash; Payee = J &  
B – dated Apr. 12/84  
He recalls seeing it, but did  
not remember on which day it  
was produced  
HMTQ v. Wilder et al  
Page 229  
2040 I  
Memorandum of Agreement – J & B  
and Coastal Natural Resources –  
dated Oct. 2/84  
He recalls seeing it, but did  
not remember on which day it  
was produced  
2040 II  
Promissory Note for $14,200,000  
– Payor = Coastal Natural  
Resources; Payee = J & B –  
dated Oct. 2/84  
He recalls seeing it, but did  
not remember on which day it  
was produced  
2041  
Duplicate of J & B invoice to  
7892345 Holdings (Fly Ash) for  
component parts for Hydro  
Petroleum recovery plant -  
$36,000,000 dated Apr. 27/84 –  
Schedule also attached  
He knows he has seen the  
document before because it  
has his writing on it, the  
attached schedule was  
produced at the same time as  
the invoice and thus is one  
document  
2042  
2043  
Invoice 1017 from J & B to  
Coastal Natural Resources for  
components for Fly Ash Research  
- $14,200,000 dated Apr. 8/84 –  
Schedule also attached  
Canadian Bio-Mass Research  
Project Process Report – dated  
Nov. 30/84  
He recalls receiving both the  
invoice and the schedule on  
Jan. 7/85  
He received this document on  
Jan. 24/85  
2044  
2059  
157  
Fly Ash - Project Process  
Report – dated Nov. 30/84  
Hydro-Petroleum Research –  
overview of the project  
Fly Ash Invoices 1016, 1017,  
1090, 1091, 1103, 1104, 1130,  
1131, 1152, 1153  
He received this document on  
Jan. 24/85  
He has seen this document,  
but not the attached diagrams  
He received these invoices on  
Jan. 7/85 [invoices created  
by Betty Pollard and Nola  
Johnson – see Pollard’s  
testimony]  
158  
J & B invoices to Coastal  
Natural Resources  
He received these invoices on  
Jan. 7/85  
[489]  
Once Mr. Larry Moi, another auditor, became involved  
in the file he did not receive any more documents from the  
taxpayers.  
[490]  
When Mr. Alibhai received the documents from Mr.  
Richards during the January 7, 1985 meeting, Mr. Wilder was  
present. Mr. Wilder was not, however, present during the  
January 24, 1985 meeting.  
HMTQ v. Wilder et al  
Page 230  
[491] During the January 7 meeting there was a discussion  
regarding Mr. Alibhai and Mr. Choy’s roles in the process. It  
was explained to Mr. Richards that Mr. Alibhai’s role was to  
gather information to ensure that expenses were incurring for  
the project and Mr. Choy’s role was to ensure that the  
taxpayer had the ability to either pay the Part VIII taxes or  
had sufficient research and development expenses to offset the  
tax liability.  
3.  
January 11, 1985 Phone Call  
[492]  
Following the January 7, 1985, meeting Mr. Alibhai’s  
next contact with the taxpayers was a telephone call to Mr.  
Richards on January 11, 1985. The purpose of the call was to  
ask Mr. Richards a few questions about some of the information  
that was missing. In particular, Mr. Alibhai wanted J & B  
records including trucker’s and Customs documents. He wanted  
these documents because he could use them to compare with the  
values provided on the invoices. Mr. Richards told Mr.  
Alibhai that he would try and get those documents for him once  
the audit was commenced; Mr. Alibhai never did receive the  
information.  
4.  
January 17, 1985 Phone Call  
[493]  
On January 17, 1985, Mr. Alibhai received a  
telephone call from Mr. Richards. Mr. Richards indicated to  
HMTQ v. Wilder et al  
Page 231  
him that the J & B records would be ready for the commencement  
of the audit on January 21, 1985. Mr. Alibhai understood  
these records to include contracts, general ledgers, invoices,  
and bank information etc. A meeting was set up for January  
21, 1985 at Mr. Richards’ office.  
[494]  
As of January 21, 1985, the purpose of the audit was  
to gather information for the S.R.T.C. committee. The role of  
the S.R.T.C. committee was to look at the gathered information  
and decide whether the projects qualified as research and  
development or not. This determination went to the issue of  
whether tax ought to be collected, not to fraud as this was  
merely an interim audit.  
5.  
January 21, 1985 Meeting  
[495]  
Mr. Alibhai went to Mr. Richards’ office on January  
21, 1985 by himself. He examined documents, but did not take  
anything away with him. He noted that although he likely had  
a conversation with Mr. Richards, it was likely nothing  
significant as he made no record of any conversation.  
6.  
January 23, 1985 Meeting  
[496]  
On January 23, 1985, Mr. Alibhai, along with Mr.  
Choy, met with Mr. Richards. The discussion during this  
meeting centred around the Noble Metals Research Project;  
HMTQ v. Wilder et al  
Page 232  
nothing was discussed with regard to Fly Ash, Bio-Mass or  
Hydro-Petroleum.  
7.  
February 13, 1985 Meeting  
[497]  
On February 13, 1985, Mr. Alibhai, Mr. Kayimzade  
(Mr. Alibhai’s supervisor) and Mr. Choy met with Mr. Johnson  
and Mr. Richards at Mr. Richards’ office. During the meeting  
the parties discussed J & B’s role with regard to research and  
development. Mr. Johnson indicated that J & B were  
administering all of the projects on Coastal’s behalf. During  
the meeting Mr. Johnson further indicated that J & B were not  
receiving any management fees for their work because they were  
interested mainly in a percentage of the profits from the  
projects once they went into production.  
[498]  
The price of the equipment that J & B had sold to  
Coastal was also discussed; the equipment was sold at cost  
with no profit to J & B. Progress billings for all of the  
projects were requested from the taxpayers.  
[499]  
During the meeting Mr. Alibhai asked Mr. Richards  
and Mr. Johnson whether the contracts noted in a number of  
invoices between J & B and 7892345 Holdings Ltd. were  
available. Noted on the bottom of invoices 1017, 1090, 1091,  
1103, 1104, 1130, 1131, 1152 and 1153 (Exhibit 157) next to  
HMTQ v. Wilder et al  
Page 233  
the heading “Terms”, “Contract” is typed in. Mr. Alibhai was  
told there were no contracts.  
[500]  
Insurance on the $143,000,000 worth of equipment was  
also discussed; Mr. Alibhai was told there was none. A  
discussion also took place regarding interest receivable on  
the promissory notes; Mr. Richards informed them that there  
was no need to worry about that because the Income Tax Act  
allowed for a deferral for three years.  
[501]  
During the meeting Mr. Alibhai asked about the  
possibility of the projects failing and was told by Mr.  
Richards that it was simply not possible and even if one did  
fail the others would make up for it. Furthermore Mr. Alibhai  
and company were told that the projects were almost complete  
so the “situation regarding them failing simply didn’t arise”.  
[502]  
Information requested from Mr. Johnson and Mr.  
Richards at the February 13 meeting included: progress  
billings (based on projected expenses), contracts, cancelled  
cheques, and progress reports (including testing results,  
engineering hours charged). None of this information,  
however, was received from the taxpayers. Explanations were  
provided by Mr. Johnson and Mr. Richards as to why the  
information was not available, but Mr. Alibhai noted that  
there was nothing provided to back the explanation up. He was  
HMTQ v. Wilder et al  
Page 234  
given no definitive answer as to when or whether he would  
receive the information requested.  
[503]  
Subsequent to the February 13, 1985 meeting, Mr.  
Alibhai prepared a referral to Basic Files Audit, a part of  
the Audit section that deals with files of over $15,000,000.  
Mr. Alibhai prepared the referral for two reasons. First,  
because the amount of money involved in the file was out of  
his range. Second, because the audit had reached the second  
stage of review known as the expenditure audit stage. The  
expenditure audit stage was conducted for all files. Mr.  
Alibhai explained that it was normal for the file to go to  
another auditor for completion.  
[504]  
Following the February 13 meeting Mr. Alibhai took a  
lesser role as Mr. Moi eventually took over as the auditor of  
the file.  
8.  
April 23, 1985 Meeting  
[505]  
On April 23, 1985, Mr. Alibhai met with Mr. Wilder,  
Mr. Choy, Mr. Moi and Mr. Richards. Mr. Alibhai’s role in the  
meeting was limited to asking the taxpayers if any of the  
information that he had requested was available so that he  
could pass it on to the new auditor. Mr. Wilder provided some  
information on a toxic scrubber, but that was it.  
HMTQ v. Wilder et al  
Page 235  
[506] Mr. Alibhai testified that he met with Mr. Wilder on  
several occasions, estimating that in total he saw him for  
about 4-5 hours. Mr. Wilder was identified by Mr. Alibhai in  
court.  
C.  
Evidence of Larry Moi  
[507]  
Mr. Larry Moi was tendered by the Crown to testify  
with respect to his involvement with the audit in question.  
He took over the audit when it was passed on from Mr. Alibhai  
to the Basic Files Audit section of Revenue Canada. Mr. Moi  
joined Revenue Canada in 1977 in the Business Audit section,  
before moving on to Special Investigations and eventually to  
Basic Files Audit in 1983. Basic Files Audit is an audit  
division for corporations of a larger size (at the time  
revenue exceeding $15,000,000).  
[508]  
Much of Mr. Moi’s memory with respect to the audit  
was refreshed through his review of the T2020 forms he had  
created while performing the audit (forms used within Revenue  
Canada to record details of discussions). Without them he  
testified he would have not remembered much.  
1.  
Mr. Moi’s Involvement  
[509]  
Mr. Moi first became involved with the Coastal file  
in April, 1985 when Mr. Robert Kuhn, head of Basic Files,  
asked him to do the audit. He indicated that he had never  
HMTQ v. Wilder et al  
Page 236  
done an S.R.T.C. file before and noted that previously the  
file had been dealt with by Mr. Akbar Alibhai and Mr. Gorelle  
Ali Kayimzade of the Field Audit section and Mr. Steve Choy  
from Collections.  
[510]  
Upon receiving the file Mr. Moi had no thoughts of  
referring it to Special Investigations because they require  
some evidence of a fraud having taken place and at that time  
he had nothing to that effect.  
[511]  
It seems Mr. Alibhai’s supervisor, Mr. Kayimzade,  
informed Mr. Moi that he was suspicious of the transactions  
because having met with Mr. Johnson, he didn’t think Mr.  
Johnson was the type of man who would be doing business  
involving millions of dollars, mainly because of the way he  
was dressed. This conversation did not however have an impact  
on his approach to the file.  
[512]  
Mr. Moi’s job with respect to the file was to verify  
that the research and development expenditures had been  
incurred in the amounts claimed and that the related  
activities qualified as research and development. The file  
involved three research companies: Coastal ($80,000,000), PWR  
($10,000,000) and Bio-Mass ($10,000,000). These three  
companies were conducting 23 research projects.  
HMTQ v. Wilder et al  
Page 237  
[513] The type of information Mr. Moi was interested in  
were documents which would support the expenditures and  
outline the nature of the activities. These documents,  
according to Mr. Moi, should have been with the taxpayer and  
available upon request.  
[514]  
Mr. Peter Quinn was the head of the S.R.T.C.  
Monitoring Committee in the spring of 1985. The role of this  
Committee was to oversee audits of S.R.T.C. files, to ensure  
that the conclusions reached were proper and that certain  
documents had been examined pursuant to checklists that had  
been created.  
2.  
April 23, 1985 Meeting  
[515]  
From the evidence I find that Mr. Moi first met with  
the taxpayers involved in the file on April 23, 1985. He  
attended a meeting with Mr. Alibhai and Mr. Choy at Mr.  
Richards’ office; Mr. Wilder was also present. Mr. Alibhai  
and Mr. Choy were at the meeting because they were following  
up on information that they had previously requested.  
[516]  
Mr. Moi viewed Mr. Wilder and Mr. Johnson as the  
taxpayers on the file. Mr. Richards was their accountant.  
Generally when meeting with these individuals he noted that  
the tone of the conversation was businesslike, however, he did  
HMTQ v. Wilder et al  
Page 238  
indicate that Mr. Wilder did raise his voice when served with  
a Requirements for Information in August, 1985.  
[517]  
During the meeting Mr. Alibhai sought documents from  
Mr. Wilder relating to the 23 projects; apparently he received  
an engineer’s report for only one of the projects (toxic  
scrubbing program). An engineering report describes what the  
project was, what testing was done, the purpose of the testing  
and the test results. They were also seeking from the  
taxpayers any evidence of an agreement between Coastal and J &  
B. Mr. Moi was told by Mr. Wilder that there was an  
agreement; a written agreement was however not produced at the  
time.  
[518]  
Mr. Moi noted that when Mr. Alibhai told Mr. Wilder  
that Mr. Johnson had previously denied that such an agreement  
existed, Mr. Wilder indicated that Mr. Johnson had been  
mistaken; there was an agreement, but it was only a simple  
one.  
[519]  
As for the quantity of documentation Revenue Canada  
had received with respect to the three companies, Mr. Moi  
indicated that there was generally a lack of it. Mr.  
Richards’ explanation was that the client had not spent any  
money on administrative staff; all staff members were involved  
in actually carrying out the projects. Mr. Wilder indicated  
HMTQ v. Wilder et al  
Page 239  
that they intended to pay the suppliers of the equipment they  
were using through revenue received from programs upon their  
completion; there were nine programs on the go and the success  
of anyone of them would be sufficient.  
[520]  
Mr. Moi noted that one area that Mr. Alibhai was  
following up on was insurance. In response Mr. Wilder  
explained that he did not obtain any business or property  
insurance because he was self-insured up to $140,000,000. Mr.  
Moi also noted that Mr. Alibhai was seeking border crossing  
documents, however Mr. Wilder explained that there were none  
because the shipping was “FOB” (Freight on Board) Vancouver  
and thus the documents would be with the supplier.  
[521]  
During the April 23 meeting Mr. Moi requested that  
he be given documents such as contracts, notes and invoicing.  
He noted that this information should have been available.  
Mr. Richards agreed to obtain this information.  
[522]  
A meeting was set up for May 15, 1985.  
3.  
May 2, 1985 Phone Call  
[523]  
On May 2, 1985, Mr. Moi received a call from Mr.  
Richards inquiring as to why he had visited Mr. Johnson’s  
office. It seems that Mr. Richards was under the impression  
that Mr. Moi would not be making any further enquiries until  
HMTQ v. Wilder et al  
Page 240  
their scheduled meeting on May 15, 1985 (as agreed to on April  
23). The purpose of Mr. Moi’s visit to Mr. Johnson’s office  
had been to find out what records Mr. Johnson had available  
with respect to the audit. He was under the impression that  
on May 15 they would be receiving information with respect to  
Coastal only and they needed information from J & B as well.  
Mr. Moi believed that Mr. Johnson might have some relevant  
documents because Mr. Johnson was the project manager for the  
projects; he was handling the administration plus contracting  
with third party suppliers for the equipment used in the  
research.  
[524]  
During the May 2 telephone conversation Mr. Richards  
informed Mr. Moi that he would be presenting information on  
both Vardax and J & B on May 15. Mr. Richards agreed to bring  
all the records of Coastal and J & B into his office. Mr.  
Richards told Mr. Moi that there would be very little  
documentation with respect to the suppliers because Mr. Wilder  
generally did business by phone or verbally with very little  
left in writing. Mr. Richards also indicated during the  
conversation that Mr. Wilder was willing to take Mr. Moi to  
Calgary and Edmonton to view the facilities for the research  
projects. Mr. Moi was interested and wanted to know how long  
the tour would take, but he questioned whether it was  
HMTQ v. Wilder et al  
Page 241  
necessary at that point as he had not yet familiarized himself  
with the business and the type of equipment he would be  
expecting to find.  
[525]  
As of May 2, 1985, Mr. Moi was still expecting the  
May 15 meeting to take place. He expected at that time to  
receive a number of documents.  
4.  
May 14, 1985 Phone Call  
[526]  
On May 14, 1985, Mr. Moi called Mr. Richards to  
ensure that the records would be available at the May 15  
meeting. Mr. Richards informed Mr. Moi that there would be  
some delay with Mr. Johnson’s records and as such the parties  
agreed to put the meeting off until May 21, 1985.  
[527]  
With respect to Coastal, Mr. Moi was seeking not  
only suppliers’ agreements, but also engineers’ reports,  
invoicing details, engineers’ notes and any other written  
documents relating to the projects.  
5.  
May 21, 1985 Meeting  
[528]  
The purpose of the May 21, 1985 meeting at Mr.  
Richards’ office was to follow up on the records that had been  
promised; Mr. Moi and Mr. Richards were in attendance. At  
this meeting Mr. Moi received bank summaries, cancelled  
cheques and cheque stubs with respect to J & B, and a general  
HMTQ v. Wilder et al  
Page 242  
ledger and synoptic with respect to Coastal. The records were  
not completely up-to-date nor were they adjusted to reflect  
the current financial status. Mr. Moi had expected to see  
more records including all underlying source documents to the  
transactions, correspondence, records of negotiation,  
contracts, invoices, details of invoices, engineering records  
and reports. He had made it clear as far back as the April  
23, 1985 meeting that he was seeking this information. All  
the records were supposed to be brought into Mr. Richards’  
office as it was to be the central location where all of the  
records were kept. Mr. Moi was unsatisfied with the  
information he had received so he requested that all the  
records of Coastal, J & B, PWR, Bio-Mass and PNR be  
centralized at Mr. Richards’ office by the Friday of that week  
(May 24). In response, Mr. Richards indicated that both Mr.  
Johnson and Mr. Wilder were out of town, but that Mr. Wilder  
was supposed to call the next day (May 22), and he wanted Mr.  
Moi to attend when he (Richards) asked Mr. Wilder for the  
records.  
[529]  
Mr. Moi’s understanding was that Mr. Wilder had  
ultimate control of Coastal and Bio-Mass.  
[530]  
During the May 21 meeting Mr. Moi requested that Mr.  
Richards provide him with his working papers. While Mr.  
HMTQ v. Wilder et al  
Page 243  
Richards admitted to having such documentation, he wanted Mr.  
Wilder’s approval before he released them to Mr. Moi.  
Further, Mr. Moi followed up on his request for engineers’  
reports, suppliers’ agreements and he also asked that Mr.  
Wilder set out in writing the arrangements he had with J & B  
and any suppliers with respect to their future participation  
in any profits from the research projects.  
6.  
May 22, 1985 Meeting  
[531]  
Mr. Moi returned to Mr. Richards’ office on May 22,  
1985, at which time Mr. Richards called Mr. Wilder. Mr.  
Richards informed Mr. Wilder that Revenue Canada wanted the  
records for all of the companies moved to his office by  
Friday, May 24. Mr. Wilder indicated that he was preparing  
for a meeting in Mexico involving a transaction that might  
result in $300,000,000 -$400,000,000 in sales and would be  
returning to Canada on June 2, 1985. Given this information,  
Mr. Moi requested that the records be brought in by June 7,  
1985 and Mr. Richards and Mr. Wilder agreed to that date as a  
deadline. Mr. Wilder later claimed that he had not agreed to  
a deadline, but rather he only agreed to do his best to get  
the records by that time.  
HMTQ v. Wilder et al  
Page 244  
[532] Mr. Moi learned from Mr. Richards at this time that  
the money obtained from investors was held in trust by J & B  
and Vardax for Coastal.  
[533]  
Subsequent to the May 22 phone call, Mr. Moi  
remained in Mr. Richards’ office where he prepared a list of  
specific information that he wanted; namely documents relating  
to agreements between Coastal and the suppliers (of equipment  
used for the research) of J & B and between Coastal and J & B.  
He wanted details of any arrangements as to handling and  
control of funds between Coastal and J & B (referring to funds  
received on the sale of tax credits).  
[534]  
Mr. Moi was shown Exhibit 157, original yellow  
office copies of J & B invoices which had been typed up by  
Mrs. Pollard and Nola Johnson and summarized in Mrs. Pollard’s  
evidence. These invoices were also referred to in Mr.  
Alibhai’s evidence. Mr. Moi remembered seeing these documents  
as part of the package given to him by Mr. Alibhai. He noted  
that the invoices were not as specific as he would have liked.  
Like Mr. Alibhai before him, he wanted more specific details  
with respect to the engineering and testing.  
7.  
May 27, 1985 Letter  
Mr. Moi prepared a letter dated May 27, 1985  
[535]  
(Exhibit 2035) addressed to Mr. Wilder and Mr. Johnson, and  
HMTQ v. Wilder et al  
Page 245  
delivered care of Mr. Richards. The purpose of the letter was  
to put in writing the information that Revenue Canada  
required. Although, Mr. Moi had asked for this information  
orally, he felt it was necessary at the time to give a brief  
history of the information requests and list the specific  
information they still needed. Attached to the letter was a  
Schedule of Required Material prepared by Mr. Moi. An  
original of the letter along with two copies were delivered to  
Mr. Richards by hand. Mr. Moi told Mr. Richards that the  
copies were for Mr. Wilder and Mr. Johnson.  
8.  
June 7, 1985 Phone Call  
[536]  
On June 7, 1985, Mr. Moi had a telephone  
conversation with Mr. Richards. Mr. Richards indicated that  
Mr. Wilder was in Mexico and Mr. Johnson had not returned Mr.  
Richards’ call. Mr. Richards told Mr. Moi that he would have  
the records for Coastal on June 10, 1985. Mr. Moi requested  
that the J & B records also be available on that date; Mr.  
Richards told Mr. Moi that he would get back to him on that  
one.  
[537]  
At this point in time Mr. Moi decided to prepare a  
list which he attached to a T2020 outlining dates and  
information that had been requested and received. When asked  
why he prepared the list, Mr. Moi replied:  
HMTQ v. Wilder et al  
Page 246  
It was prepared just to give us a summary of what  
had transpired in terms of getting information and  
to show the difficulties in that respect basically  
for information for others in the department, my  
seniors…for their information as to the background  
of the file, especially if I was – if the taxpayer  
was not going to come up with the information, I  
would have to consider making a decision to – to  
recommend collection action and this would be part  
of the information that I would provide to – to  
others for – to justify the recommendation.  
9.  
June 10, 1985 Inquiry by Brian Kimmings  
[538]  
On June 10, 1985, Mr. Moi was asked by Mr. Brian  
Kimmings, the director of the Vancouver tax office, about the  
status of the Coastal file. Mr. Moi advised Mr. Kimmings that  
Coastal had promised the delivery of records for months, that  
their production of records had been unsatisfactory and that  
the June 7 deadline had been missed. Mr. Kimmings asked if an  
“assessment” was out with respect to the file and Mr. Moi  
replied that yes there was, when in actual fact it was really  
a “liability”. Mr. Moi explained the difference between a  
liability and an assessment as follows:  
…an assessment confirms the liability at the end of  
the year for purposes of Part 1 tax, but for Part 8,  
there is a requirement for the taxpayer to make a  
payment on account of the – the designations. They  
have to make a payment of taxes equal to 50 percent  
of what was designated and they have to make that  
payment at the end of the moth following the  
designation. So, in this particular case  
designations had been made and they were required to  
make a payment on account of the Part 8 taxes. Our  
policy was that if thy could demonstrate to us that  
HMTQ v. Wilder et al  
Page 247  
they were carrying out sufficient R & D work, we  
would not collect on those Part 8 taxes because the  
claiming of Part 8 taxes to what the taxpayer is  
allowed to claim, Part 8 tax expenditures, to reduce  
their Part 8 taxes by the end of the year. So my  
job in this audit was to take a look at these  
expenditures and see if they were sufficient to  
reduce that outstanding liability.  
10. June 10, 1985 Phone Call  
[539]  
Later that day Mr. Moi received a phone call from  
Mr. Richards and Mr. Wilder. They informed Mr. Moi that the  
accounting records should be substantially completed that week  
and the engineers’ reports by the following week. To their  
surprise some monthly engineers’ reports had been found and  
would be incorporated into the engineers’ reports. During  
this conversation Mr. Moi indicated to Mr. Wilder that he had  
spoken with the director, Mr. Kimmings, and thus Mr. Wilder  
would have to ensure that all records were centralized at Mr.  
Richards’ office. With respect to the J & B records, Mr.  
Richards indicated that he would work on them after he had  
finished the Coastal and Bio-Mass records. Mr. Moi informed  
Mr. Richards and Mr. Wilder that the director wanted the J & B  
records submitted along with the Coastal records even if they  
were not fully summarized. Mr. Wilder told Mr. Moi that he  
would get Mr. Johnson to comply. At the end of the  
conversation two arrangements were made. Firstly, Mr. Moi was  
to go to Mr. Richards’ office on June 11, with respect to Mr.  
HMTQ v. Wilder et al  
Page 248  
Wilder’s Mexican dealings. Secondly, Mr. Moi was to go to Mr.  
Richards’ office on June 14 to review the work on the records  
up to that point. The work was supposed to be submitted on  
June 7, but the deadline was later shifted to June 21 by Mr.  
Kimmings.  
11. June 11, 1985 Meeting  
[540]  
On June 11, 1985, Mr. Moi attended Mr. Richards’  
office to meet with Mr. Richards, Mr. Wilder and a Jessie  
Monroy. During a 15 minute period before Mr. Wilder and Mr.  
Monroy arrived at the office, Mr. Moi and Mr. Richards talked  
about Vardax (there were two Vardax corporations: one U.S. and  
one B.C.) and Bio-Mass (Western Mining was currently  
interested in the machine). Upon the arrival of Mr. Wilder  
and Mr. Monroy, the discussion shifted away, for the most  
part, from the Bio-Mass, Fly Ash and Hydro-Petroleum Projects.  
Towards the end of the meeting, however, Mr. Moi asked for  
materials regarding Bio-Mass that Mr. Wilder had taken down to  
Mexico. Mr. Moi also asked if Mr. Wilder had talked to Mr.  
Johnson regarding the records he wanted. Mr. Wilder indicated  
that he had not, but would phone him that evening. Mr. Moi  
emphasized that the records should be available by next week,  
and additionally that he wanted the negotiation files with  
respect to the Mexicans. Regarding the planned meeting of  
HMTQ v. Wilder et al  
Page 249  
June 14, 1985, Mr. Richards agreed to have his assistant,  
Jessie Acosta, call Mr. Moi on that day to update him on the  
accounting work.  
12. June 14, 1985 Meeting  
[541]  
Mr. Moi was unable to say whether or not the  
scheduled June 14 meeting took place. He had no T2020’s with  
respect to that date. The June 14 deadline was moved to June  
21 by Mr. Kimmings.  
13. June 18, 1985 Meeting  
[542]  
On June 18, 1985, Mr. Moi met with Mr. Richards, Mr.  
Wilder and Mr. Kuhn. Prior to the commencement of the meeting  
Mr. Moi and Mr. Kuhn had been given Ms. Acosta’s files with  
respect to Coastal including a trial balance to March 31,  
1985, and some bank statements. Ms. Acosta was apparently an  
employee of Mr. Richards’ but Mr. Wilder denied this. He  
testified that Mr. Richards was not his, or Coastal’s  
accountant and that he hired Ms. Acosta to have her comply  
with the requests made by the Revenue Canada officials. At  
any rate, Mr. Richards informed Mr. Moi and Mr. Kuhn that the  
Coastal records would be written up followed by Bio-Mass and  
PWR. Mr. Wilder arrived subsequent to Mr. Richards and  
expressed concern as to whether he would be able to get the  
required reports ready as ongoing negotiations were taking  
HMTQ v. Wilder et al  
Page 250  
place with potential customers and he didn’t want to take his  
engineers off of the projects just to produce reports. Mr.  
Moi and Mr. Kuhn reminded Mr. Wilder that Revenue Canada had  
been seeking documentation since January. They indicated that  
the June 7 deadline had not been unreasonable. Mr. Moi also  
reminded Mr. Wilder that he had agreed to have the information  
ready on June 7; Mr. Wilder denied as much, saying that he had  
only agreed to do his best. Mr. Moi then discussed the  
company’s tax liability under Part VIII.  
[543]  
Mr. Wilder gave Mr. Moi and Mr. Kuhn an engineer’s  
report with respect to the invert burner and explained that he  
had two others but wanted comments on the first one so that he  
could improve the others. Mr. Moi told Mr. Wilder he wanted  
the others in original form and that Mr. Wilder could revise  
them later. There was then a discussion with respect to the  
Aldergrove site (Gold Refinery plant, one of the 23 projects)  
as Mr. Wilder indicated that there were various agreements at  
the site. Mr. Moi was told by Mr. Richards that the records  
were too voluminous to bring to his office. Mr. Kuhn  
suggested they visit the site and Mr. Wilder made arrangements  
for a visit to examine the records.  
[544]  
Mr. Moi and Mr. Kuhn went to Aldergrove later that  
day (June 18) and met with Alida Saulnier, an accountant doing  
HMTQ v. Wilder et al  
Page 251  
work with respect to the Vardax inter-company accounts. She  
directed Mr. Kuhn and Mr. Moi to the Coastal records that were  
at the location. They turned out to be agreements between the  
research companies and the investors; these were of no use to  
Mr. Moi. Nothing was obtained from the Aldergrove site that  
furthered the audit.  
14. June 21, 1985 Meeting  
[545]  
On June 21, 1985, Mr. Moi and Mr. Kuhn met with Mr.  
Richards at his office. The purpose of the meeting was to  
collect records that were supposed to be made available  
earlier. The June 7 deadline had been extended to the 14th  
and then further to the 21st by the director Mr. Kimmings.  
Mr. Richards told Mr. Moi and Mr. Kuhn that Mr. Wilder was in  
Edmonton at the time. Mr. Moi informed Mr. Richards as to how  
the engineers’ reports could be improved and Mr. Richards told  
them that a package of information was being couriered out  
from Aldergrove. Mr. Kuhn told Mr. Richards that the  
information they had received up to that point was  
insufficient in verifying both the research and development  
and the expenditures.  
[546]  
There was a discussion regarding the confidential or  
proprietary nature of the engineering information. Mr.  
Richards indicated that Mr. Wilder was reluctant to release  
HMTQ v. Wilder et al  
Page 252  
information for that very reason. Mr. Moi told Mr. Richards  
that he expected to see the information regardless. Mr.  
Richards acknowledged as much and indicated that he would  
contact Mr. Wilder on the matter. With respect to equipment  
verification, Mr. Richards said that he physically inspected  
the equipment and had discussions with engineers, but did not  
have any working papers for the equipment verification. Mr.  
Richards had previously told them that he had working papers  
but did not want to release them without Mr. Wilder’s  
approval.  
[547]  
Regarding Mr. Johnson’s companies, J & B and PWR,  
Mr. Richards indicated that Mr. Johnson had not provided any  
further records as he was busy providing a net worth statement  
to a Securities Commission. Mr. Moi and Mr. Kuhn also asked  
for Mr. Byerlay’s working papers. Mr. Byerlay was an engineer  
working for Coastal and provided the engineer’s certificate  
with respect to the research and development programs.  
[548]  
Following the June 21 meeting, Mr. Moi, given the  
scarcity of information he had received, wanted to conclude  
the audit and get Collections involved. Mr. Moi prepared a  
T20 (Exhibit 2046), setting out his views with respect to the  
progress of the audit and presented it his supervisor who  
subsequently approved it.  
HMTQ v. Wilder et al  
Page 253  
15. June 24, 1985 Meeting  
[549]  
On June 24, 1985, Mr. Moi had a meeting with Mr.  
Wilder at Mr. Richards’ office. Mr. Wilder provided Mr. Moi  
with four sets of documents relating to technical aspects of  
the research and development programs that should have been  
delivered on June 21. The information provided that related  
to the Hydro-Petroleum Project was a document referred to as  
“Tar Sands Tests” (Exhibit 40). There were also various  
drawings and schematics for the invert burner, the toxic  
scrubber, the Bio-Mass machine and some drawings for the  
projects of PWR. Mr. Wilder mentioned David Tolle as being  
involved with the aircraft and mining projects.  
[550]  
With respect to the document relating to the “Tar  
Sands Tests”, Mr. Moi testified that he reached the conclusion  
that the Tar Sands Project was the same as the Hydro-Petroleum  
Project because during the course of the audit, Mr. Richards  
and Mr. Wilder used them interchangeably and because the  
Hydro-Petroleum Project involves the use of tar sands.  
[551]  
During the June 24, 1985 meeting, Mr. Moi was told  
that Coseco was a company that had been formed to sell the  
developed Hydro-Petroleum process and was to be owned 50% by  
Mr. Gagon, 25% by J & B and 25% by Coastal. Mr. Moi also  
received a list of the chief engineers for the projects that  
HMTQ v. Wilder et al  
Page 254  
Coastal was involved in. Mr. Wilder told Mr. Moi that he had  
prepared the list (Exhibit 2036). Mr. Moi’s handwriting  
appears on various parts of the memo indicating page numbers  
and that the document was prepared by Mr. Wilder for him  
amongst other notes. In particular, the memo notes each of  
the Hydro-Petroleum, Bio-Mass and Fly Ash Projects with the  
following notes after each:  
Project  
Hydro Petroleum  
Chief Engineer  
Gagon  
Project Site  
Edmonton  
Status  
Final Stages  
Tested by  
component  
Complete –  
Tested by unit  
Complete  
Bio-Mass  
Fly Ash  
Breitzman  
Breitzman  
Boundary Bay –  
Calgary  
Aldergrove –  
Edmonton  
16. July 11, 1985 Meeting  
[552] On July 11, 1985, following the approval of Mr.  
Moi’s report, Stan McKenzie, the chief of Audit, called a  
meeting. In attendance were Mr. Moi, Patty Connors from  
Collections, Mr. Flett and Mr. Choy. Special Investigations  
was not involved in this meeting because they had yet to find  
any positive evidence of fraud.  
[553]  
On July 10, 1985, Mr. Moi had discussed collections  
action with Mr. Kimmings, but was told to wait and talk to Mr.  
McKenzie, which he did on July 11. Mr. McKenzie wanted Mr.  
Moi to work with Collections and send out a Requirements  
HMTQ v. Wilder et al  
Page 255  
letter. A Requirements letter is a demand under the Income  
Tax Act for the taxpayer to provide specified information  
and/or documents with a penalty of possible prosecution if not  
complied with. The purpose of requesting the information at  
this stage was to find out what could be collected and where  
the assets were.  
17. July 25, 1985 Phone Call  
[554]  
Mr. Moi called Mr. Richards on July 25, 1985, and  
was told that Mr. Wilder was out of town, but would be  
returning on July 26. Mr. Richards indicated that he would  
try and arrange for Mr. Moi to meet with Mr. Wilder on the  
following Monday. Mr. Moi wanted to meet with Mr. Wilder so  
he could serve him with the Requirements for Information,  
although he did not tell Mr. Richards as much. Mr. Moi  
mentioned to Mr. Richards that there were a number of  
outstanding items from the May 27 letter that had not been  
dealt with. Mr. Richards told Mr. Moi that the matter should  
be taken up with Mr. Wilder and not him.  
18. July 29, 1985 Phone Call  
[555]  
Mr. Moi called Mr. Richards and was told that Mr.  
Wilder would call Mr. Moi later that day (he never called).  
Mr. Richards also told Mr. Moi that Mr. Wilder was sending  
HMTQ v. Wilder et al  
Page 256  
some materials to Mr. Richards’ office and gave Mr. Wilder’s  
Bellingham phone number to Mr. Moi.  
19. July 30, 1985 Phone Call  
[556]  
On July 30, 1985, Mr. Moi called Mr. Wilder in  
Bellingham and asked him about the further information he had  
apparently sent to Vancouver. Mr. Wilder explained that he  
had already sent it and then went into a discussion regarding  
the Mexican project which was apparently a $1 billion project  
involving 300 mine sites. Mr. Moi was interested in this  
project to the extent that if money was coming in then Mr.  
Wilder might be able to pay for the research expenditures. By  
the end of their conversation, Mr. Moi and Mr. Wilder had  
agreed to meet on August 8, 1985 at Mr. Richards’ office.  
20. August 8, 1985 Meeting – Serving of the Requirements  
[557]  
As previously planned, Mr. Moi and Mr. Kuhn met with  
Mr. Wilder at Mr. Richards’ office on August 8, 1985. In  
preparation for the meeting Mr. Moi had drawn up three  
Requirements letters, one for each of Coastal, Bio-Mass and  
Vardax.  
[558]  
Mr. Wilder began the meeting by briefing Mr. Moi and  
Mr. Kuhn on some new projects. They then talked about the  
information they had requested in their prior meeting which  
Mr. Wilder told them had been delivered to Mr. Richards’  
HMTQ v. Wilder et al  
Page 257  
office. Mr. Moi went over the information still required and  
noted information already received including materials for the  
Bio-Mass Project, Noble Metals, Tar Sands (Hydro-Petroleum),  
Toxic Scrubbing and the Invert Burner. Nothing had been  
received with respect to the Fly Ash Project.  
[559]  
The meeting also involved a discussion of the  
Continental Trust transactions. Mr. Wilder indicated that he  
was not involved in that and that Mr. Johnson had acted on his  
own with money from J & B. Mr. Wilder told Mr. Moi that he  
had advised Mr. Johnson not to purchase Continental Trust.  
Also discussed were the funds Coastal had received from  
investors (net of about $60,000,000 -$70,000,000). Other  
topics of conversation included the negotiations with respect  
to the Bio-Mass Project, the sale of Vardax equipment to  
Mexico and engineers’ reports for PWR that Mr. Wilder claimed  
had already been provided.  
[560]  
Following these discussions Mr. Moi gave Mr. Wilder  
an envelope containing the three Requirements letters. Mr.  
Moi informed Mr. Wilder that the letters listed the  
information required and that there was a provision for  
prosecution should Mr. Wilder not comply within 30 days  
(Exhibits 3114-3116).  
HMTQ v. Wilder et al  
Page 258  
[561] At this point in time Mr. Moi had not advised Mr.  
Wilder that there had been a decision made to take collection  
action as he was concerned about the risk of assets  
disappearing. Upon reading the letters Mr. Wilder raised his  
voice and indicated while going through each of the items that  
either he would not provide any more information, that the  
Department had all the information or that the information  
would be in the financial statements. Mr. Wilder then asked  
Mr. Moi to decide whether or not Revenue Canada was going to  
collect on the Part VIII taxes. Mr. Moi did not believe that  
he answered that question during the meeting.  
[562]  
Mr. Wilder’s response to items in the Requirements  
letters:  
Exhibit  
3114I –  
Coastal  
Letter  
Item  
A1  
Wilder’s Response  
Info available in financial statements  
A2  
A3  
A4  
A5  
A6  
No info available  
Info available in financial statements  
Info available in financial statements  
Info available in financial statements  
First said info was available in financial  
statements, but later said funds had been advanced to  
J & B to pay current bills to suppliers, other funds  
were prepayments of notes and some of the money had  
been assigned back to Vardax  
A7  
A8  
Info available in financial statements  
He said he could describe the location and how to get  
there, but did not have the addresses  
Info available in financial statements  
Initially he said he could not answer the question  
due to its wording, however later he stated he did  
not consider Coastal not owning the refinery anymore  
a disposition  
A9  
A10  
A11  
He would not provide any info as it was proprietary  
in nature  
HMTQ v. Wilder et al  
Page 259  
A12  
B1  
No info available  
No info available  
B2  
No info available and even if there was he would not  
release it given its proprietary nature  
He would get that info  
Nothing was finalized, but he would check  
He would find out and check registration  
No info available  
No info available  
No info available  
Info available in financial statements  
B3  
B4  
B5  
B6  
B7  
B8  
A1  
3115I – Cdn  
Bio-Mass  
Letter  
A2  
A3  
He said he had already given them this info  
A letter was later sent with this info  
Wilder refused to continue responding to the letter  
and motioned to tear it up, but did not. He called  
the Department incompetent for not remembering what  
they had and had not seen. He then moved onto the  
Vardax letter  
3116I –  
Vardax  
Letter  
A1  
No info available as Vardax only made disbursements  
on behalf of Johnson & Burnett  
A2  
A3  
A4  
A5  
A6  
A7  
B
No info available  
Refer to memos in Richards’ office  
No info available  
No info available  
No info available  
No info available  
No info available  
[563]  
After the demands had been served and Mr. Wilder had  
gone through them point by point, Mr. Moi advised Mr. Wilder  
that he could comply by simply writing down his answers as he  
went through the letters, that the procedure would not be  
time-consuming and that the answers did not have to be typed.  
Mr. Kuhn offered the Department’s assistance in answering any  
questions. At the end of the meeting Mr. Wilder’s tone  
returned to normal and he agreed to allow Mr. Moi to commence  
an audit of the books for Coastal, Bio-Mass and Vardax. While  
going through the letters, Mr. Moi testified that Mr. Wilder  
HMTQ v. Wilder et al  
Page 260  
at times attempted to pass the letters back to Mr. Moi stating  
that he would not comply as he had given them everything  
already. Mr. Wilder also attempted to tell Mr. Moi how to  
proceed with the audit. Mr. Wilder believed the Department  
had no guidelines as to how to proceed so he would make some.  
Mr. Moi explained to Mr. Wilder that the objective of the  
audit was to verify the research and development and the  
expenditures. Mr. Kuhn advised Mr. Wilder that they had seen  
large payments out of Coastal, but nothing to back up the  
research, the delivery of the equipment and also the fact that  
the invoices submitted were not specific. In response Mr.  
Wilder stated that if they enforced the letters he would move  
his research and development to the U.S. and take the matter  
up with politicians.  
[564]  
In response to the Requirements letters, Mr. Moi  
received three letters from Mr. Richards on behalf of Mr.  
Wilder (Exhibits 3114II, 3115II and 3116II).  
[565]  
Other matters discussed at the August 8, 1985  
meeting included Mr. Richards agreeing to allow Mr. Moi to  
review his accounting files for Coastal, Bio-Mass and PWR on  
August 19.  
HMTQ v. Wilder et al  
Page 261  
21. August 22, 1985 Meeting  
[566]  
Mr. Moi next met with Mr. Richards on August 22,  
1985. They had planned on meeting on August 19 but that fell  
through. Mr. Moi once again indicated that the engineering  
reports could be more specific, namely that time periods could  
be provided. Mr. Richards agreed during the meeting that Mr.  
Wilder was giving information on the basis of the minimum  
amount thought to satisfy the needs of Revenue Canada. Mr.  
Richards indicated at this point that he would prefer to have  
the Department deal directly with Mr. Wilder with respect to  
the information it required.  
[567]  
Following the August 22 meeting Mr. Moi attempted to  
determine, based on the information he had been given, whether  
the Requirements letters had been complied with. At this  
point although Mr. Moi was not satisfied with the information  
he had been given with respect to Mr. Wilder’s companies, he  
was not willing to recommend that the Department proceed with  
the prosecution. In Mr. Moi’s mind the audit questions,  
relating to the nature of the research and development and the  
amount spent on research and development, had still been left  
unanswered.  
HMTQ v. Wilder et al  
Page 262  
22. September 11, 1985 Phone Call  
[568]  
On September 11, 1985, Mr. Moi had a telephone  
conversation with Mr. Richards at which time Mr. Richards  
informed him that he had received the Requirements letters  
from Mr. Wilder and Mr. Johnson, that the tax returns for  
Coastal and Bio-Mass were complete and that he was given no  
information regarding the verbal agreements referred to in the  
letter as Mr. Wilder had told him that the agreements may not  
actually be agreements because they were subject to change.  
Mr. Moi told Mr. Richards that all of the agreements were  
needed, even those superseded by new ones as these would  
provide a history of the agreements and the Department could  
determine their meaning.  
[569]  
Mr. Moi and Mr. Richards agreed that Mr. Moi would  
attend Mr. Richards’ office on September 13, 1985 to view the  
available materials.  
23. September 13, 1985 Meeting  
[570]  
On September 13, 1985, Mr. Moi and Mr. Kuhn met with  
Mr. Richards at his office and received from him draft  
financial statements and his working paper for Bio-Mass. Mr.  
Richards informed them that a tax return for Bio-Mass had been  
prepared and would be available. He also said that similar  
information for Coastal was available.  
HMTQ v. Wilder et al  
Page 263  
[571] Mr. Richards confirmed that he would be working on J  
& B, PNR and PWR. With respect to Vardax information, Mr.  
Richards told them that the Department’s business file auditor  
could have obtained the information if he had updated his  
work. Mr. Richards once again explained that Mr. Wilder may  
be reluctant to give details of verbal agreements or  
understandings because it might tie down third parties. Mr.  
Kuhn’s response was that the information would be kept  
confidential. Mr. Moi asked Mr. Richards about the addresses  
of the project sites (includes Hydro-Petroleum, Bio-Mass and  
Fly Ash Projects), but they were not available. Mr. Kuhn  
advised Mr. Richards that the information provided did not  
completely comply with the Requirements letters.  
24. October 3, 1985 Phone Call  
[572]  
On October 3, 1985, Mr. Richards returned Mr. Moi’s  
phone call regarding the Requirements letters. Mr. Richards  
had nothing new regarding Mr. Johnson’s companies (Terra  
Pacific, PWR, J & B and PNR) aside from PWR’s draft financials  
that were available. Mr. Moi was to meet with Ms. Acosta on  
October 7 to go over them.  
[573]  
Mr. Moi had requested production agreements between  
J & B and its suppliers. Mr. Moi informed Mr. Richards that  
they may have to enforce the Requirements letters based on the  
HMTQ v. Wilder et al  
Page 264  
information obtained to date. Mr. Moi also asked about asset  
registration information because it is part of asset  
verification (locating the assets, discovering who has title).  
Mr. Richards informed him that none of the assets were  
registered.  
25. October 7, 1985 Meeting  
[574]  
On October 7, 1985, Mr. Moi met with Mr. Richards  
regarding the Coastal Requirements letter. Mr. Richards  
informed him that the Bio-Mass reply letter had already been  
sent.  
[575]  
The location of assets was also discussed; Mr. Moi  
indicated to Mr. Richards that there was no cross-reference of  
addresses (of the assets) to specific projects. Mr. Richards  
indicated that the planes owned by Mr. Wilder were owned, but  
not registered.  
26. October 10, 1985 Phone Call  
[576]  
On October 10, 1985, Mr. Moi called Mr. Richards  
with regard to the production of materials that had been  
discussed on October 7. Mr. Moi requested a draft copy of the  
Bio-Mass reply letter; Mr. Richards said he would provide one.  
Mr. Richards said he had not received any answers from Mr.  
Wilder because he was out of town for one or two days, but  
that Mr. Wilder would contact Mr. Richards before 3 o’clock on  
HMTQ v. Wilder et al  
Page 265  
October 11. Mr. Moi indicated that the Department may want to  
view the projects to cross-check their addresses (a viewing  
never took place).  
[577]  
Mr. Moi’s next contact was with Ms. Acosta, an  
employee of Mr. Richards (date of contact unknown). During  
this meeting payments to a Mr. R.J. Crump in trust were  
discussed. Mr. Crump was a corporate lawyer for Hi-Tech  
Fluids Processing in Calgary. A May 7, 1985 payment of  
$500,000 could not be located, however a June, 1985 payment of  
$1,000,000 and an April 11, 1985 payment for $500,000 were  
identified as both being charged to Vardax. The $1,000,000  
cheque was a Coastal payment to R.J. Crump in trust.  
27. October 24 and 30, 1985 Phone Calls  
[578]  
On October 24, 1985, Mr. Moi called Vardax looking  
for Mr. Wilder. Mr. Moi was told that Mr. Wilder was in  
Winnipeg. Mr. Moi left a message for Mr. Wilder to call him.  
The call was not returned. Mr Wilder in his testimony  
introduced a telephone bill with one number on it that he  
claims indicated that he had returned this call.  
[579]  
On October 30, 1985, Mr. Moi once again called  
Vardax looking for Mr. Wilder. Mr. Moi was told Mr. Wilder  
was in Calgary and Mr. Moi once again left a message for Mr.  
Wilder to call him. Once again the call was not returned.  
HMTQ v. Wilder et al  
Page 266  
28. October 31, 1985 Meeting  
[580]  
On October 31, 1985, Mr. Moi met with Mr. Richards  
and Ms. Acosta. Mr. Moi told Mr. Richards that he had left  
two messages at Vardax for Mr. Wilder to contact him and that  
Mr. Wilder had not returned his calls. Mr. Richards said Mr.  
Wilder may have been in China. Mr. Richards agreed to obtain  
all cheques and vouchers relating to Vardax’s transactions  
with Coastal and PWR. Mr. Moi also requested Mr. Lawrence’s  
trust account bank statements and vouchers. Mr. Moi indicated  
that he wanted both the payment instructions and the banking  
documents. Mr. Richards indicated that he was unsure how Mr.  
Lawrence would react to the request.  
29. November 15, 1985 Discussion  
[581]  
On November 15, 1985, Mr. Moi had a discussion with  
Mr. Richards regarding a box of Mr. Johnson’s records. Mr.  
Richards indicated that he would need Mr. Johnson’s  
authorization before he could allow Mr. Moi to review them.  
[582]  
When asked what was going on at the time with the  
file at Revenue Canada, Mr. Moi stated the following:  
I had written up the – the file sometime in October,  
indicating that I could not come to a conclusion,  
one way or the other, whether the research work had  
been carried out and, therefore, we should go ahead  
with the collection with the limited information –  
information we had. I also recommended that the  
work be continued through Special Investigations.  
HMTQ v. Wilder et al  
Page 267  
[583]  
Mr. Moi had prepared a memo to Robert Roy dated  
October 21, 1985 with regard to Coastal, Bio-Mass, PWR and  
related Part VIII taxes (Exhibit 2051). In the memo Mr. Moi  
recommends that collection action be taken and that the file  
be referred to Special Investigations.  
[584]  
As of October 21, 1985, there were still many  
unanswered questions including: what was done with respect to  
research, the unusual transactions involving tens of millions  
of dollars without documents regularly seen with such  
transactions, dealings with little known American  
corporations. From his audit, Mr. Moi was unable to determine  
what had really gone on.  
[585]  
In his memo Mr. Moi makes reference to  
“irregularities”; he testified that he was referring to the  
unusual transactions involving equipment bought without  
payment or guarantees and third party suppliers having  
inconsistent addresses from one document to the other.  
[586]  
Mr. Moi pointed out that Special Investigations did  
not typically take a file unless fraudulent transactions have  
been identified in which case a T134 form would have been  
prepared. In this case Mr. Moi was unable to point to  
anything in terms of a positive indication of fraud and thus  
HMTQ v. Wilder et al  
Page 268  
prepared the memo which included a recommendation for the file  
to Special Investigations. Mr. Moi felt that it was better  
for Special Investigations to deal with the file because they  
liaison with U.S. tax authorities that allows them to obtain  
U.S. tax information more readily and because they were more  
experienced in issuing Requirements letters and bank  
Requirements. Mr. Moi explained that the use of bank  
Requirements helps with tracking the flow of funds.  
D.  
Transition from Basic Files Audit to Special  
Investigations  
[587]  
On November 25, 1985, Mr. Moi and Mr. Maurice Ma of  
Special Investigations went out to Mr. Johnson’s office. At  
this point the file was with the Special Investigations  
Department. Mr. Moi’s involvement was limited to looking at  
information with respect to assets for collection and  
assisting Mr. Ma in the passing over of the file from Basic  
Audit to Special Investigations.  
[588]  
Once the recommendation to move the file to Special  
Investigations was made, Basic Files Audit’s involvement was  
limited to assist in the transition of the file, decide if  
they should prosecute for the failure to comply with the  
demands and decide whether they should proceed with  
HMTQ v. Wilder et al  
Page 269  
collection, although that was more into Collections’ area of  
responsibility.  
[589]  
Mr. Moi informed Mr. Johnson that he had received  
the records that Mr. Johnson had sent to Mr. Richards, but  
that the records were not what the Department was looking for.  
When Mr. Moi asked Mr. Johnson if other records were  
available, Mr. Johnson said that he had found some cheque  
stubs. Mr. Moi indicated that bank statements and cancelled  
cheques were required. Mr. Johnson replied that Mr. Richards  
had the information, but Mr. Moi told Mr. Johnson that Ms.  
Acosta had said they had been returned to Mr. Johnson. Mr.  
Moi asked Mr. Johnson to check his office for the records at  
that point. Mr. Johnson said he would rather do it at his own  
convenience. Mr. Ma told Mr. Johnson that he had already  
delayed for two weeks. Eventually Mr. Johnson agreed to get  
the records which included bank accounts of three companies:  
J & B, PNR and PWR. Mr. Moi requested further records  
suggesting to Mr. Johnson that he call his bookkeeper Betty  
Klatt (Mrs. Pollard). Mr. Johnson obtained further records,  
boxed them up and requested that Mr. Moi drop them off at Mr.  
Richards’ office on his way back downtown. Mr. Moi suggested  
that Mr. Johnson seal the box up, but Mr. Johnson said that it  
was not necessary.  
HMTQ v. Wilder et al  
Page 270  
[590] Mr. Moi asked Mr. Richards later that day if he  
could take Mr. Johnson’s records back to his office. Mr.  
Richards agreed so long as Mr. Moi left him with an inventory  
of the records.  
[591]  
Mr. Moi testified that he prepared an audit file  
which involves the assembly of all the working papers, all  
correspondence, T2020 memos and any documents of the taxpayer  
that may have been photocopied.  
1.  
Mr. Moi’s Audit Report  
[592]  
As part of Mr. Moi’s Audit Report (Exhibit 2046) he  
created a chart indicating the dates when he requested  
documents and the dates the documents were expected to be  
received and the results. The purpose of the chart was to  
give a history of the requests made and to show that all of  
the documents requested were not received. This chart  
illustrates the difficulty Revenue Canada had in getting the  
materials from the taxpayer and is indicative of the numerous  
delays.  
2.  
Financial Statements of 7892345 Holdings Ltd.  
[593]  
During his testimony, Mr. Moi reviewed the financial  
statements of 7892345 Holdings Ltd. (Exhibit 2055). The  
accounting firm that created the statements, Jones Cation,  
advise on the statements that they did not do an audit, thus  
HMTQ v. Wilder et al  
Page 271  
their opinion does not extend to whether or not the financial  
statements reflect fairly in a material way the financial  
status of the company.  
[594]  
With respect to the document, Mr. Moi found  
significance in the line described as Research and Development  
under the Assets heading which had an amount of $143,319,500  
and under the Liabilities heading a line described as Notes  
Payable in the amount of $140,300,000.  
3.  
List of Cheques and Bank Drafts  
[595]  
Mr. Moi identified Exhibit 2052 as a list of cheques  
and bank drafts which were court exhibits and also found in  
his audit file. The records were received from Mr. Richards  
on November 25, 1985.  
4.  
Mr. Moi’s Concluding Remarks  
[596]  
Mr. Moi explained that in the context of a Part VIII  
tax scheme, a taxpayer’s liability arises when a designation  
is made with respect to Part VIII scientific research tax  
credits. A designation is when a taxpayer agrees to provide  
an amount for an investor and that amount or designated amount  
is used by the investor to claim a tax credit. The taxpayers  
in this context were the research companies: Coastal, PWR and  
Bio-Mass.  
HMTQ v. Wilder et al  
Page 272  
[597] Mr. Moi indicated that the sale of the tax credits  
by Coastal and Bio-Mass generated millions of dollars, but at  
no time during the audit could Mr. Moi determine where the  
money had gone.  
E.  
Evidence of Robert Kuhn  
[598]  
Mr. Robert Kuhn was tendered by the Crown to provide  
evidence with respect to the audit of the companies in  
question.  
[599]  
Mr. Kuhn is a chartered accountant by profession and  
had joined Revenue Canada in 1960. In the years between 1960  
and 1985 he had been involved in a number of large corporate  
audits. During those audits he dealt with the importation of  
equipment into Canada which would normally include such  
documentation as engineering feasibility reports, purchase  
orders, point of entry documents, and freight (insurance  
costs, brokerage costs, customs costs).  
1.  
Mr. Kuhn’s Involvement in the File  
[600]  
In the spring of 1985, Mr. Kuhn was the supervisor  
of General Audit; Larry Moi worked under him. The file in  
question was the only S.R.T.C. file that Mr. Kuhn was involved  
with. He became aware of the file in April, 1985, when his  
section supervisor, Mr. Ralph Flett, was approached by Field  
Audit. Field Audit had had the file since January, 1985 and  
HMTQ v. Wilder et al  
Page 273  
had been unable to get the documents and information needed in  
order to determine if scientific research had been done.  
[601]  
Mr. Kuhn was familiar with the S.R.T.C. committee  
which coordinated audits of S.R.T.C. companies. This  
committee provided expertise to the Audit groups.  
[602]  
Mr. Kuhn explained how the S.R.T.C. scheme worked.  
He noted that the tax liability arose when the research  
companies sold a debenture or shares to investors and the  
investors received a tax credit. The following example was  
given by Mr. Kuhn:  
For example, if an outside investor bought a million  
dollars in debentures and the full million dollars  
was designated by the scientific research company to  
be for scientific research, then the documentation  
included a form called a T2113 and that – that form  
had to be filed with – with the Income Tax  
Department in the month following the investment by  
the outside investor and at that time, the  
scientific or research company was liable for 50  
percent of the amount that they’d designated. So in  
the example that I’ve drawn they would be liable for  
$500,000 to be paid in the month following the year  
– the month in which the designation was made.  
[603]  
Mr. Kuhn noted that in 1984 and 1985 the Department  
began taking a closer look at S.R.T.C. companies as they  
became aware that some companies were not sufficiently  
capitalized to carry out the scientific research and pay the  
tax as well. The Department began conducting cursory reviews  
HMTQ v. Wilder et al  
Page 274  
of the companies to ensure they were complying with the Income  
Tax Act.  
[604]  
Mr. Kuhn was involved in the decision to appoint  
Larry Moi as the auditor of the S.R.T.C. file in question. He  
felt that Mr. Moi was right for the file given the large  
figures involved (aggregate of $101,000,000 in tax credits)  
and Mr. Moi’s past exposure to fairly large clients, having  
worked with a fairly large chartered accounting firm.  
[605]  
Mr. Kuhn had spoken with the previous auditor of the  
file, Akbar Alibhai, who was involved with the field audit of  
the company. It seems Field Audit had been frustrated with  
the lack of information they were receiving from the company.  
They had spent a great deal of time between January and April  
of 1985 looking into the matter and felt they needed someone  
with a little more expertise in acquiring information.  
[606]  
According to Mr. Kuhn, Mr. Moi was to continue the  
work Mr. Alibhai had started and discuss the matter with Mr.  
Kuhn on a weekly basis. It was Mr. Kuhn’s job to oversee what  
was going on.  
2.  
June 18, 1985 Meeting  
[607]  
Mr. Kuhn attended his first meeting with Mr. Moi and  
the taxpayers in Mr. Richards’ office on June 18, 1985. The  
HMTQ v. Wilder et al  
Page 275  
purpose of the meeting was to receive from the taxpayers some  
of the information requested in the May 27 letter Mr. Moi had  
sent to the taxpayers. Although some information was  
produced, the letter in its entirety was not responded to.  
[608]  
When the taxpayers were asked about obtaining the  
remaining materials as requested in the letter, additional  
information was said to be available in Aldergrove at the site  
of one of the S.R.T.C. programs. Mr. Kuhn and Mr. Moi  
arranged with Mr. Wilder to go out to the site on the  
afternoon of June 18, 1985. Mr. Kuhn noted that the materials  
recovered from Aldergrove were not very useful, only  
agreements between the investors and the S.R.T.C. companies.  
These agreements had nothing to do with the information Mr.  
Moi had requested in his letter. It is interesting to note  
that Mr. Moi was of the same view.  
3.  
June 21, 1985 Meeting  
[609]  
On June 21, 1985, Mr. Kuhn and Mr. Moi met with Mr.  
Richards as the taxpayers were to provide some more  
information; they didn’t.  
4.  
June 27, 1985 Meeting  
[610]  
Another meeting was set for June 27, 1985, at which  
time Mr. Kuhn was to meet with both Mr. Richards and Mr.  
Wilder at Mr. Richards’ office. Mr. Wilder was supposed to  
HMTQ v. Wilder et al  
Page 276  
bring some information for the tax authorities, but failed to  
show up to the meeting.  
[611]  
During this period both Mr. Kuhn and Mr. Moi were  
keeping the S.R.T.C. committee apprised of the file’s  
progress. They told the committee that they were getting  
frustrated with the lack of information being given, thus a  
decision was made to issue Requirements to the research  
companies. Mr. Kuhn testified as follows as to why he was in  
support of issuing the Requirements:  
There were a number of reasons. We had – we had  
several attempts to obtain the information. We had  
never received any satisfaction or we hadn’t  
received very much satisfaction for our May 27th,  
1985 letter, and that letter was sort of a roll up  
of outstanding requests from Mr. Alibhai as well.  
We had gone to a number of meetings as have been  
outlined and we were somewhat frustrated there. The  
information just wasn’t coming. But some of the  
information that was coming was, for example,  
invoices for aircraft and – and the invoices  
consisted of – they all seemed to be photocopies.  
There was never an original and there was a one  
letter-size – an example would be on one letter-size  
invoice, a photocopy, and the supplier would be  
somebody in Reno, Nevada or Las Vegas, and the  
description would be one-line…We asked for well, how  
did it get here and is there any customs or  
brokerage invoices or any insurance or was there a  
certificate of air worthiness or has it got its call  
letters, CEF, like where did they come from and we  
just didn’t get it.  
[612]  
Mr. Kuhn indicated that the kinds of documentation  
they were receiving were not in accord with regular business  
HMTQ v. Wilder et al  
Page 277  
practice. For instance while J & B was supposed to be doing  
scientific research, Revenue Canada was only receiving  
evidence of one invoice a month that was a one-liner and  
contained very little description with an amount given. Many  
of the payments made were not by cheque, but by promissory  
note. Mr. Kuhn was concerned by the fact that large  
expenditures, in the millions of dollars, were being satisfied  
by promissory notes. In his mind this was not regular  
business practice.  
[613]  
Mr. Kuhn noted that generally the decision to issue  
Requirements was only used when information was not  
forthcoming.  
[614]  
In addition to the concern regarding the  
verification of expenditures, there was also a concern with  
respect to documentation relating to whether any scientific  
research was actually being done. One of the requirements of  
the S.R.T.C. program was to obtain an explanation of the kind  
of work done. They needed this information to ensure that the  
work was in compliance with the Income Tax Act. Mr. Kuhn  
testified that they were not getting any information, or what  
they were given was not satisfactory.  
HMTQ v. Wilder et al  
Page 278  
August 8, 1985 Meeting – Serving of the Requirements  
The Requirements were served on August 8, 1985 and  
5.  
[615]  
dated July 30, 1985. Prior to the preparation of the  
Requirements, Mr. Kuhn was aware that Mr. Moi felt that  
Collections should take action; meaning Revenue Canada would  
start garnishing bank accounts and locating assets in order to  
satisfy the taxpayers’ tax liability.  
[616]  
At the August 8, 1985 meeting Mr. Kuhn witnessed the  
Requirement letters being given to Mr. Wilder by Mr. Moi. Mr.  
Moi discussed the letters with Mr. Wilder. Mr. Kuhn noted  
that during the meeting a number of projects were discussed,  
however the projects mentioned by Mr. Wilder were not relevant  
as they were not ones that Mr. Kuhn was concerned about.  
[617]  
In response to the Requirements letters three  
letters were sent by Mr. Richards in September, 1985. The  
combination of these letters and Mr. Wilder’s comments at the  
meeting left Mr. Kuhn unsatisfied that the Requirements  
letters had been complied with.  
[618]  
The file was referred to Revenue Canada’s Special  
Investigations in October, 1985. Mr. Kuhn was in support of  
this decision because they had been unable to get the  
information they wanted, and what they did receive was vague  
and unspecific. For instance they had some vouchers about the  
HMTQ v. Wilder et al  
Page 279  
acquisition of assets and work done by the research company  
such as J & B, but they were never able to get any information  
about who did the work, who were the sub-trades, where the  
work was done, where were the payrolls and who were the  
subcontractors.  
[619]  
Mr. Kuhn was aware that Maurice Ma was the agent  
from Special Investigations ultimately put in charge of the  
file. When asked if he felt that there was evidence of fraud,  
Mr. Kuhn replied:  
There were no answers to our questions. We weren’t  
satisfied with out – with – with any answers, but  
the – the lack of cooperation and the lack of  
evidence might have felt that there was fraud  
involved. In other words, why wouldn’t they comply?  
6.  
September 13, 1985 Meeting  
[620]  
Subsequent to the August 8, 1985 meeting, Mr. Kuhn  
noted that he and Mr. Moi met with Mr. Richards in September  
of 1985. It is apparent from Mr. Moi’s testimony that the  
meeting was on Sept. 13, 1985 after the receipt of the three  
letters given in reply to the Requirements. Details of this  
meeting were included in Mr. Moi’s testimony summary.  
[621]  
Once special investigations became involved in the  
matter Mr. Kuhn had no other involvement on the file apart  
from preparing for various court proceedings.  
HMTQ v. Wilder et al  
Page 280  
7.  
Mr. Richards’ Response to Requirements  
Mr. Kuhn was shown Exhibits 30-32. These were  
[622]  
written responses by Mr. Richards to Revenue Canada’s  
Requirements letter. These letters related to Vardax (Exhibit  
30, dated September 27, 1985), Bio-Mass (Exhibit 31, dated  
October 2, 1985) and Coastal (Exhibit 32, dated October 27,  
1985). Mr. Kuhn remembered seeing each of the letters and  
that none of them satisfied what was requested in the  
Requirements letters. When asked what his view of the file  
was following the receipt of these letters Mr. Kuhn made the  
following comments:  
…I took into account…some of the following kinds of  
things, the length of time in which Revenue had been  
trying to get information starting from January of  
’85 to this time, the lack of authenticity of the  
few invoices that we had seen…I took into account  
that what was involved was $101,000,000 in tax  
credits which means that companies would have to  
expend $200,000,000 in scientific research and we  
just didn’t see – we just didn’t see the evidence.  
It was never provided to us. We took all these  
things into account, the delays and the fact that –  
that if people were dealing with these large sums of  
money, the first thing they should be doing is  
complying with the laws of the country in order to  
make these things qualify themselves and for the  
investors, and it just wasn’t happening. And at  
that point I though, “This isn’t right. This is a  
house of cards. I can’t see any evidence given to  
us that the work’s been done.” [emphasis added]  
HMTQ v. Wilder et al  
Page 281  
X.  
EVIDENCE OF TEWCYN ROBERTS  
Escrow accounts were established at the National  
[623]  
Bank wherein monies were to be held to satisfy the Part VIII  
tax obligations of the research companies.  
[624]  
The Crown tendered Mr. Tewcyn Roberts, the manager  
of commercial banking for the National Bank of Canada during  
the period of time in question, to testify with respect to the  
escrow accounts involved in the transactions.  
[625]  
Mr. Roberts testified that National Bank acted as  
the escrow agent with respect to an escrow agreement that had  
been arranged between Darrel Donen (agent for the investors),  
Coastal and Bio-Mass. He explained that as the escrow agent  
the bank was to carry out the terms of the escrow agreement.  
The escrow agreement spelled out the conditions under which  
the bank could pay out the funds. Mr. Roberts explained as  
follows:  
[T]he escrow agreement spelled out the conditions  
under which the bank could pay out the funds that we  
had received to the vendor…and these conditions were  
basically the production of certain documents. They  
were fairly cut and dried [sic] because the –  
attached to the escrow agreement were samples of the  
documents that were to be received. In other words,  
the wording was spelled out already. We didn’t have  
to devise anything, and an escrow agent will only  
act as an agent if the terms of the agreement are  
very clear cut, and the responsibility of the agent  
is very clear cut. He deals in documents and cash.  
(at p. 3, June 18, 2002)  
HMTQ v. Wilder et al  
Page 282  
[626]  
Mr. Roberts testified that in his view the bank did  
not have a duty to inquire with regard to the underpinnings of  
the documents received. He indicated that the documents in  
question were three certificates: one from the vendor (Coastal  
and Bio-Mass), one from an accountant and one from a  
scientist. Also needed was a letter from the company  
authorizing the escrow agent to pay out the monies.  
[627]  
Mr. Roberts explained that the agreement provided  
for the bank to remit the money to Revenue Canada in the event  
that the bank was unable to pay the funds out according to the  
certificates.  
[628]  
Mr. Roberts testified that he dealt with Mr. Wilder  
and Mr. Johnson with respect to the funds in question, noting  
that they were the principals of the companies involved. He  
also dealt with Mr. Richards, who he identified as the  
accountant involved and identified the name of Gerald Byerlay  
as the scientist.  
[629]  
With respect to the release of the escrow funds, the  
following table summarizes Mr. Roberts’ testimony:  
HMTQ v. Wilder et al  
Page 283  
Date of  
National Bank of  
Acct # Date of Request for  
Release of Escrow  
Funds  
Amount $  
Ex.  
#
Agreement Canada Escrow Agent  
for  
Aug. 31,  
1984  
Coastal Natural  
Resources Research  
Inc./Fly Ash  
01-  
Sept. 5, 1984 – Wilder  
$1,400,000 255  
123-29 certificate  
Project number 1  
Wilder letter  
requesting payment be  
made to Lawrence &  
Company – No date  
given  
Aug. 29, 1984  
resolution allowing  
payment to be made to  
Lawrence & Co  
Funds released: Sept.  
5, 1984  
Sept. 12, Canadian Bio-Mass  
01-  
Oct. 11, 1984 – Wilder  
$5,223,250 250  
$3,210,500 251  
$2,306,000 259  
1984  
Research Inc.  
number 1  
147-20 letter  
Funds released: Oct.  
12, 1984  
Oct. 11, 1984 – Wilder  
Sept. 14, Canadian Bio-Mass  
01-  
1984  
Research Inc.  
number 2  
172-23 letter  
Funds released: Oct.  
12, 1984  
Oct. 23, 1984 – Wilder  
Sept. 14, Coastal Natural  
01-  
1984  
Resources Research  
Inc. number 2  
171-26 letter – ex. 259D  
Funds released: Oct.  
23, 1984  
Sept. 17, Canadian Bio-Mass  
01-  
Oct. 11, 1984 – Wilder  
$1,806,500 252  
1984  
Research Inc.  
number 3  
175-25 letter  
Funds released:  
$1,583,537.14 released  
on Oct. 12, 1984  
$236,670 released on  
July 5, 1985  
Sept. 17, Coastal Natural  
01-  
Oct. 23, 1984 – Wilder  
$3,515,000 260  
1984  
Resources Research  
Inc. number 3  
174-28 letter  
Funds released: Oct.  
23, 1984  
Sept. 18, Coastal Natural  
01-  
Oct. 23, 1984 – Wilder  
$1,625,000 261  
1984  
Resources Research  
Inc. number 4  
176-22 letter  
Funds released: Oct.  
23, 1984  
HMTQ v. Wilder et al  
Page 284  
Sept. 18, Coastal Natural  
01-  
Oct. 23, 1984 – Wilder  
$1,757,500 262  
1984  
Resources Research  
Inc. number 5  
178-27 letter  
Funds released: Oct.  
23, 1984  
Sept. 20, Coastal Natural  
01-  
Oct. 23, 1984 – Wilder  
$1,320,000 263  
$1,250,000 264  
$4,112,000 265  
$4,875,000 266  
1984  
Resources Research  
Inc. number 6  
205-26 letter  
Funds released: Oct.  
23, 1984  
Oct. 23, 1984 – Wilder  
Sept. 21, Coastal Natural  
01-  
1984  
Resources Research  
Inc. number 7  
208-28 letter  
Funds released: Oct.  
23, 1984  
Oct. 23, 1984 – Wilder  
Sept. 21, Coastal Natural  
01-  
1984  
Resources Research  
Inc. number 8  
209-25 letter  
Funds released: Oct.  
23, 1984  
Oct. 23, 1984 – Wilder  
Oct. 3,  
1984  
Coastal Natural  
Resources Research  
Inc. number 9  
01-  
214-25 letter  
Funds released:  
$3,242,921 released  
Oct. 23, 1984  
$80,000 removed from  
fund due to investor  
pulling out Dec. 13,  
1984  
Unclear from  
documentation when  
remaining funds were  
released  
Oct. 3,  
1984  
Coastal Natural  
Resources Research  
Inc. number 11  
01-  
Oct. 23, 1984 – Wilder  
$1,352,500 267  
$1,500,000 256  
273-26 letter  
Funds released: Jan.  
9, 1985  
Jan. 17, 1985 – Wilder  
Oct. 3,  
1984  
Coastal Natural  
Resources Inc.  
number 10  
01-  
274-23 letter  
Funds released: Jan  
29, 1985  
Dec. 28,  
1984  
Coastal Natural  
Resources Inc.  
number 12  
01-  
May 1, 1985 – Wilder  
$1,247,500 35-  
36  
270-24 certificate (could  
find no letter)  
Funds released: June  
18, 1985  
Dec. 31,  
1984  
Coastal Natural  
Resources Research  
Inc. number 13  
01-  
Jan. 17, 1985 – Wilder  
$1,789,500 258  
$1,500,000 257  
271-21 letter  
Funds released: Jan.  
29, 1985  
Jan. 17, 1985 – Wilder  
Jan. 2,  
1985  
Coastal Natural  
Resources Research  
Inc. number 14  
01-  
272-29 letter  
Funds released: Jan.  
29, 1985  
HMTQ v. Wilder et al  
Page 285  
Note:  
•
•
Agreements are ordered by the date of their creation.  
Funds released would include interest earned while money was held in  
escrow.  
•
Under the escrow agreements the funds were to be released upon the  
National Bank of Canada receiving certificates from the vendor, the  
accountants for the vendor and a scientist in addition to a direction  
authorizing the escrow agent (the “bank”) to pay monies to the  
vendor.  
[630]  
This summary clearly indicates how Mr. Wilder  
cannibalized these accounts with indecent haste. These large  
sums of money were then immediately squirreled away by Mr.  
Wilder.  
XI. THE ESCROW DOCUMENTS SIGNED BY MR. WILDER  
A.  
Escrow Agreements  
Mr. Wilder signed three Escrow Agreements on behalf  
[631]  
of Bio-Mass for the Bio-Mass Project, five on behalf of  
Coastal for the Fly Ash Project, and nine on behalf of Coastal  
for the Hydro-Petroleum Project. Each of these Agreements  
specifically identifies the Vendor’s Part VIII tax liability.  
For example:  
AND WHEREAS under the provisions of the Income Tax  
Act (Canada), the Vendor must either make qualifying  
scientific research and development expenditures,  
acquire qualifying scientific research and  
development securities or pay an appropriate amount  
of tax under part VIII of the Income Tax Act  
(Canada), [emphasis added];  
clause 3 of the actual Agreement also identifies the  
Vendor’s Part VIII tax liability but for the  
occurrence of certain events:  
HMTQ v. Wilder et al  
Page 286  
The Vendor shall deposit on closing of the  
Purchase Agreement referred to in schedule “B”  
with the Escrow Agent at Vancouver, British  
Columbia, or Winnipeg, Manitoba, Canada [dollar  
amount], representing Fifty (50%) percent of the  
total consideration received from all Investors  
under each Agreement which sum represents the Part  
VIII tax liability of the vendor hereunder,  
(emphasis added),  
as does the last sentence of clause 4 of the actual  
Agreement:  
If at [date specified] there are any funds  
remaining in the Escrow fund, the Escrow Agent  
shall pay the amount then held by it to Revenue  
Canada, Vancouver District Taxation Office, on  
account of the Vendor’s Part VIII tax liability,  
(emphasis added).  
[632]  
By the terms of the documents signed by him, Mr.  
Wilder was on notice (if one can imagine that he was not  
before, given that he had surrounded himself with a lawyer and  
accountant to construct the tax scheme), that the escrow  
monies were to go to Part VIII tax payment in the absence of  
the qualifying expenditures, evidenced by the production of  
certain certificates.  
B.  
The Certificates Signed by Mr. Wilder  
[633]  
Mr. Wilder signed three certificates as president of  
Bio-Mass in relation to the Bio-Mass Project. As president of  
Coastal, Mr. Wilder also signed three certificates in relation  
to the Fly Ash Project and two certificates in relation to the  
HMTQ v. Wilder et al  
Page 287  
Hydro-Petroleum Project. This was required by clause 4a of  
the Escrow Agreements to achieve the release of the escrow  
funds to his companies, Bio-Mass and Coastal. Mr. Wilder’s  
signature attested that “as such [he had] knowledge of the  
matters referred to in th[e] Certificate[s] and [was] duly  
authorized to complete and deliver same,” in relation to each  
of the projects.  
[634]  
In my view, the language of the certificates clearly  
conveys that it is Mr. Wilder who is to be relied upon: as  
president of the issuing companies, he can reasonably be  
expected to know what his companies have purchased, and in the  
certificates he is saying that this is so.  
[635]  
Mr. Roberts testified that the monies were released,  
pursuant to the Certificates.  
XII. THE LAW  
A.  
Onus on the Crown and the Meaning of Reasonable Doubt  
[636]  
In considering the evidence in this case I have  
reminded myself that the presumption of innocence has enjoyed  
long-standing recognition. In this regard, I am well aware of  
the statement in Woolmington v. Director of Public  
Prosecutions, [1935] A.C. 462 (H.L.), where Viscount Sankey  
L.C. stated at p. 481:  
HMTQ v. Wilder et al  
Page 288  
Throughout the web of the English Criminal law one  
golden thread is always to be seen, that it is the  
duty of the prosecution to prove the prisoner’s  
guilt subject to what I have already said as to the  
defence of insanity and subject also to any  
statutory exception. If, at the end of and on the  
whole of the case, there is a reasonable doubt,  
created by the evidence given by either the  
prosecution or the prisoner, as to whether the  
prisoner killed the deceased with a malicious  
intention, the prosecution has not made out the case  
and the prisoner is entitled to an acquittal. No  
matter what the charge or where the trial, the  
principle that the prosecution must prove the guilt  
of the prisoner is part of the common law of England  
and no attempt to whittle it down can be  
entertained.  
[637]  
In this case, although it should be taken as a given  
that I am well acquainted with it, because of the nature of  
the defence submissions it has also become necessary for me to  
point out that I am aware of the meaning of reasonable doubt.  
In R. v. Lifchus (1997), 118 C.C.C. (3d) 1 (S.C.C.), Cory J.  
proposed a model jury charge on the issue of "reasonable  
doubt" at p. 14. With the amendments to that charge suggested  
in R. v. Starr (2000), 147 C.C.C. (3d) 449 (S.C.C.), the  
charge that I usually give to the jury is as follows:  
The accused enters these proceedings presumed to be  
innocent. That presumption of innocence remains  
throughout the case until such time as the Crown has  
on the evidence put before you satisfied you beyond  
a reasonable doubt that the accused is guilty.  
What does the expression "beyond a reasonable doubt"  
mean?  
HMTQ v. Wilder et al  
Page 289  
The term "beyond a reasonable doubt" has been used  
for a very long time and is part of our history and  
traditions of justice. It is so engrained in our  
criminal law that some think it needs no  
explanation, yet something must be said regarding  
its meaning. The standard of reasonable doubt is a  
special concept with special meaning.  
A reasonable doubt is not an imaginary or frivolous  
doubt. It must not be based upon sympathy or  
prejudice. Rather, it is based on reason and common  
sense. It is logically derived from the evidence or  
absence of evidence.  
In situating the criminal standard of proof, it  
falls much closer to absolute certainty than to  
proof on a balance of probabilities, consequently,  
even if you believe the accused is probably guilty  
or likely guilty, that is not sufficient. In those  
circumstances you must give the benefit of the doubt  
to the accused and acquit because the Crown has  
failed to satisfy you of the guilt of the accused  
beyond a reasonable doubt.  
On the other hand you must remember that it is  
virtually impossible to prove anything to an  
absolute certainty and the Crown is not required to  
do so. Such a standard of proof is impossibly high.  
In short if, based upon the evidence before the  
Court you are sure that the accused committed the  
offence you should convict since this demonstrates  
that you are satisfied of his guilt beyond a  
reasonable doubt.  
[638]  
This is the charge that I usually give to the jury.  
In this case, although I am sitting as a judge alone, I  
nevertheless have instructed myself accordingly.  
HMTQ v. Wilder et al  
Page 290  
B.  
The Law on Credibility  
As credibility is probably the essential issue in  
[639]  
this matter, it is vitally important to consider the law in  
this area.  
[640]  
In White v. The King, [1947] S.C.R. 268 Estey J.  
wrote at p. 272:  
The issue of credibility is one of fact and cannot  
be determined by following a set of rules that it is  
suggested have the force of law and, in so far as  
the language of Mr. Justice Beck may be so  
construed, it cannot be supported upon the  
authorities. Anglin J. (later Chief Justice) in  
speaking of credibility stated:  
by that I understand not merely the  
appreciation of the witnesses’ desire to be  
truthful but also of their opportunities of  
knowledge and powers of observation, judgment  
and memory - in a word, the trustworthiness of  
their testimony, which may have depended very  
largely on their demeanour in the witness box  
and their manner in giving evidence. Reymond v.  
Township of Bosanquet [(1919) 59 Can. S.C.R.  
452, at 460.].  
The foregoing is a general statement and does not  
purport to be exhaustive. Eminent judges have from  
time to time indicated certain guides that have been  
of the greatest assistance, but so far as I have  
been able to find there has never been an effort  
made to indicate all the possible factors that might  
enter into the determination. It is a matter in  
which so many human characteristics, both the strong  
and the weak, must be taken into consideration. The  
general integrity and intelligence of the witness,  
his powers to observe, his capacity to remember and  
his accuracy in statement are important. It is also  
important to determine whether he is honestly  
endeavouring to tell the truth, whether he is  
HMTQ v. Wilder et al  
Page 291  
sincere and frank or whether he is biassed, reticent  
and evasive. All these questions and others may be  
answered from the observation of the witness’  
general conduct and demeanour in determining the  
question of credibility.  
[641]  
The comments of O’Halloran J.A. in Faryna v. Chorny,  
[1952] 2 D.L.R. 354 (B.C.C.A.), also deal with some of the  
considerations that come into play in assessing the  
credibility of a witness. At pp. 356-357 he writes:  
If a trial Judge’s finding of credibility is to  
depend solely on which person he thinks made the  
better appearance of sincerity in the witness box,  
we are left with a purely arbitrary finding and  
justice would then depend upon the best actors in  
the witness box. On reflection it becomes almost  
axiomatic that the appearance of telling the truth  
is but one of the elements that enter into the  
credibility of the evidence of a witness.  
Opportunities for knowledge, powers of observation,  
judgment and memory, ability to describe clearly  
what he has seen and heard, as well as other  
factors, combine to produce what is called  
credibility, and cf. Raymond v. Bosanquet (1919), 50  
D.L.R. 560 at p. 566, 59 S.C.R. 452 at p. 460, 17  
O.W.N. 295. A witness by his manner may create a  
very unfavourable impression of his truthfulness  
upon the trial Judge, and yet the surrounding  
circumstances in the case may point decisively to  
the conclusion that he is actually telling the  
truth. I am not referring to the comparatively  
infrequent cases in which a witness is caught in a  
clumsy lie.  
The credibility of interested witnesses,  
particularly in cases of conflict of evidence,  
cannot be gauged solely by the test of whether the  
personal demeanour of the particular witness carried  
conviction of the truth. The test must reasonably  
subject his story to an examination of its  
consistency with the probabilities that surround the  
HMTQ v. Wilder et al  
Page 292  
currently existing conditions. In short, the real  
test of the truth of the story of a witness in such  
a case must be its harmony with the preponderance of  
the probabilities which a practical and informed  
person would readily recognize as reasonable in that  
place and in those conditions. Only thus can a  
Court satisfactorily appraise the testimony of  
quick-minded, experienced and confident witnesses,  
and of those shrewd persons adept in the half-lie  
and of long and successful experience in combining  
skilful exaggeration with partial suppression of the  
truth. Again a witness may testify what he  
sincerely believes to be true, but he may be quite  
honestly mistaken. For a trial Judge to say “I  
believe him because I judge him to be telling the  
truth”, is to come to a conclusion on consideration  
of only half the problem. In truth it may easily be  
self-direction of a dangerous kind.  
[642]  
In short then, while there is no set rule to  
determine credibility, it can be suggested that the witness’  
demeanour along with the reasonability of the testimony in the  
context of circumstances should be considered when assessing  
credibility.  
[643]  
Because the Crown has referred to the accused’s  
demeanour in the witness box, I wish to make one further  
observation on the law of credibility. In R. v. Gostick  
(1999), 137 C.C.C. (3d) 53 (Ont.C.A.), the court warned  
against an approach to the evidence that bases credibility  
solely on the basis of demeanour. In R. v. C.(J.) (2000), 145  
C.C.C. (3d) 197 (Ont.C.A.), a new trial was ordered where the  
trial judge rejected the accused’s evidence without properly  
HMTQ v. Wilder et al  
Page 293  
assessing it in light of all the other evidence that supported  
his version of events. See also R. v. F.(J.) (2003), 177  
C.C.C. (3d) 1 (Ont.C.A.).  
C.  
Co-Conspirator’s Exception to Hearsay  
[644]  
Because the Crown alleges that the statements made  
to Revenue Canada officials and other statements made in the  
absence of the accused are admissible it is now necessary for  
me to canvass the law relating to the co-conspirator’s  
exception to the hearsay rule.  
[645]  
Acts and declarations made in Mr. Wilder’s absence  
which the Crown submits are true include Ronald Johnson’s  
statements and actions on January 5 and 6, 1985, as described  
by Mrs. Pollard and outlined above. Also, Mr. Johnson’s  
statement to Mr. Breitzman that Mr. Wilder had stated that if  
Mr. Breitzman did not sign the back-dated HFI and Mineral Gas  
Company agreements, there would be no more monies advanced,  
(Exhibit 278-142). Also, Mr. Richards’ statement to Mrs.  
Pollard that the invoices were being prepared for production  
to Revenue Canada. For the reasons stated below, I find that  
these acts and declarations made in Mr. Wilder’s absence are  
admissible in this trial as evidence in the trial.  
HMTQ v. Wilder et al  
Page 294  
[646] There are two rules before us that are applicable to  
this case: the co-conspirators’ exception and the principled  
approach to hearsay.  
[647]  
The discussion before us is how these two rules mesh  
with each other. There have been a number of cases now that  
have considered how the co-conspirators’ exception relates to  
the principled approach. In this court, there are the  
decisions of Regina v. Wasfi 2000 BCSC 1766, [2000] B.C.J. No.  
2754, aff’d [2003] B.C.J. No. 452, (sub nom R. v. Mapara); R.  
v. Chow, 2003 BCCA 131, [2003] B.C.J. No. 452; and Insurance  
Corp. of British Columbia v. Sun [2003] B.C.J. No. 1668. In  
particular, an extensive discussion can be found in the  
decisions of Regina v. Pilarinos 2002 BCSC 855, 2 C.R. (6th)  
273 and in the Ontario Court of Appeal case of Regina v. Chang  
[2003] O.J. No. 1076.  
1.  
The Co-Conspirators’ Exception  
[648]  
Taschereau J. in Regina v. O’Brien (1954), 110  
C.C.C. 1 (S.C.C.) describes the elements involved in  
conspiracy in the following passages at pp. 3-4:  
The two elements of agreement and of common design  
are specifically stated to be essential ingredients  
of the crime of conspiracy. Willes J. in Mulcahy v.  
The Queen (1868), L.R. 3 H.L. 306 at p. 317, said:  
"A conspiracy consists not merely in the intention  
of two or more, but in the agreement of two or more  
to do an unlawful act, or to do a lawful act by  
HMTQ v. Wilder et al  
Page 295  
unlawful means. So long as such a design rests in  
intention only, it is not indictable. When two agree  
to carry it into effect, the very plot is an act in  
itself, and the act of each of the parties ...  
punishable if for a criminal object."  
The definition of conspiracy itself supposes an aim.  
People do not conspire unless they have an object in  
view. The law punishes conspiracy so that the  
unlawful object is not attained. It considers that  
several persons who agree together to commit an  
unlawful act, are a menace to society, and even if  
they do nothing in furtherance of their common  
design, the state intervenes to exercise a  
repressive action, so that the intention is not  
materialized, and does not become harmful to any  
one. The intention must necessarily be present  
because it is the unlawful act necessarily flowing  
from the intention, that the state wishes to  
prevent.  
[649]  
The co-conspirators’ exception allows the acts and  
declarations of an accused’s alleged co-conspirators, done or  
made in furtherance of the conspiracy, to be adduced as  
evidence against the accused. The exception applies to all  
admissions by parties in furtherance of a common design,  
whether the charge is conspiracy or some other offence. In R.  
v. Koufis, [1941] S.C.R. 481, the Supreme Court of Canada made  
it clear that the co-conspirator’s exception to the hearsay  
rule applies equally to parties to an offence even though no  
conspiracy has been charged.  
[650]  
Although the co-conspirators’ exception has existed  
for centuries, the most convenient starting point is in the  
HMTQ v. Wilder et al  
Page 296  
Supreme Court of Canada decision of R. v. Carter, [1982] 1  
S.C.R. 938. That court established a three stage process for  
applying the co-conspirators’ exception to the hearsay rule.  
A summary of these three stages can be found in the dissenting  
judgment of McIntyre J. in Barrow v. The Queen, [1978] 2  
S.C.R. 694, 38 C.C.C. (3d) 193 at pp. 228-229:  
1.  
2.  
The trier of fact must first be satisfied  
beyond reasonable doubt that the alleged  
conspiracy in fact existed.  
If the alleged conspiracy is found to exist  
then the trier of fact must review all the  
evidence that is directly admissible against  
the accused and decide on a balance of  
probabilities whether or not he is a member of  
the conspiracy.  
3.  
If the trier of fact concludes on a balance of  
probabilities that the accused is a member of  
the conspiracy then he or they must go on and  
decide whether the Crown has established such  
membership beyond reasonable doubt. In this  
last step, only the trier of fact can apply the  
hearsay exception and consider evidence of acts  
and declarations of co-conspirators done in  
furtherance of the object of the conspiracy as  
evidence against the accused on the issue of  
his guilt.  
[651]  
One concern from the start is whether the hearsay  
evidence in question can be used to establish the existence of  
the conspiracy at the first stage of the Carter approach. An  
extensive discussion of this can be found in Pilarinos, supra,  
at paras. 51-57. As in that case, I have no need to decide on  
that issue at this point. Even without the hearsay evidence I  
HMTQ v. Wilder et al  
Page 297  
am satisfied beyond a reasonable doubt that a conspiracy  
exists. However, I will point out the statement of Bennett J.  
at para. 57:  
I point out the dilemma because if the hearsay  
evidence is admissible at the first stage of the  
Carter test, then this test may be resting on  
unreliable evidence, unless the evidence is assessed  
for reliability pursuant to the principled approach.  
[652]  
Therefore, it is perhaps more prudent to restrict  
consideration of “all the evidence” to “all the admissible  
evidence” for the first stage.  
[653]  
Also, for clarification, the definition of “in  
furtherance” does not include that which is a mere narrative  
of past events during the conspiracy or acts and declarations  
made after the conspiracy has been terminated. Only acts and  
declarations by one conspirator in furtherance of the common  
design are admissible against a co-conspirator: R. v. White  
and Sennet (1997), 114 C.C.C. (3d) 225 at 274 (Ont.C.A.).  
2.  
The Principled Approach to Hearsay  
[654]  
Beginning in R. v. Khan (1990), 59 C.C.C. (3d) 92  
(S.C.C.), the Supreme Court of Canada introduced a principled  
approach to admitting reliable hearsay evidence for the truth  
of its contents. A series of cases further developed the  
principled approach: R. v. Smith (1992), 75 C.C.C. (3d) 257  
HMTQ v. Wilder et al  
Page 298  
(S.C.C.); R. v. K.G.B. (1993), 79 C.C.C. (3d) 257 (S.C.C.); R.  
v. Hawkins (1996), 111 C.C.C. (3d) 129 (S.C.C.); and R. v.  
Starr, supra.  
[655]  
Starr, supra, put to rest the debate as to the  
relationship between traditional hearsay exceptions and the  
principled approach. Iacobucci J., writing for the majority,  
stated at para. 155:  
I conclude that in the event of a conflict between  
the two, it is the principled approach that must  
prevail. The governing principles for hearsay  
admissibility must be reliability and necessity.  
[656]  
The two arms of the principled approach are  
necessity and reliability. A discussion for the rationale for  
the principled approach can be found in Smith, supra at pp.  
267-268 and K.G.B., supra at pp. 287-297. I will only briefly  
go over the points here.  
(a) Necessity  
[657]  
Necessity refers to “reasonable necessity” as  
McLachlin J. (as she then was) put it in Khan, supra. Bennett  
J. sums it up in Pilarinos, supra at para. 14 as follows:  
Necessity means the necessity of the hearsay  
evidence to prove a fact in issue and the  
unavailability of the declarant to testify. The  
concept of necessity is flexible and will encompass  
many circumstances: R. v. Smith, supra, at p. 9.  
The issue is the availability of the testimony, not  
HMTQ v. Wilder et al  
Page 299  
the availability of the witness: R. v. Parrott  
(2001), 150 C.C.C. (3d) 449 (S.C.C.) at para. 64.  
Sometimes the criteria of necessity is met because  
it is the "best evidence": R. v. U.(F.J.), supra, at  
para. 33 and R. v. Starr, supra, at para 206.  
[658]  
Therefore, the key is the unavailability of the  
witness’ courtroom testimony. This includes being unable to  
obtain the same evidence of the same value, for instance when  
a declarant recants: K.G.B., supra. In Smith, supra at p.  
271, Lamer C.J.C. quotes from Wigmore:  
The assertion may be such that we cannot expect,  
again or at this time, to get evidence of the same  
value from the same or other sources…The necessity  
is not so great; perhaps hardly a necessity, only an  
expediency or convenience, can be predicated. But  
the principle is the same.  
[659]  
However, it is not enough that a witness is  
unwilling to testify. Reasonable efforts must be made to  
bring forth the witness. R. v. Pelletier (1999), 30 CR (5th)  
333 (BCCA) held that necessity was not to be found merely  
because potential witnesses are simply disinclined to testify  
or are unlikely to cooperate. In R. v. J.M., [2001] O.J. No.  
1748 (Ont.Ct.Jus.), a number of cases were cited including  
Pelletier, supra. At paras. 14-15, Lane J. summarizes the  
arguments made by counsel as follows:  
Ms. Fineberg submitted that one must take a flexible  
approach based on what is reasonably necessary. The  
HMTQ v. Wilder et al  
Page 300  
unavailability of a witness occasioned by the  
refusal of a witness to testify in court has been  
found to constitute necessity, particularly where  
the crown’s case cannot proceed without the  
evidence: R. v. Becchina [1995] O.J. No. 1229 (Ont.  
Gen. Div.); R. v. Trudel [1996] O.J. No. 1131 (Gen.  
Div.); R. v. Collins [1996] O.J. No. 2881 (Ont.  
Prov. Div.): R. v. Big Eagle [1997] S.J. No. 825  
(Sask. C.A.); R. v. Bird [1999] S.J. No. 672 (Prov.  
Ct.); R v. Guy [2000] O.J. No. 1796 (Ont. Sup. Ct):  
R. v. Simon [2000] O.J. No. 2151 (Ont. Sup. Ct.).  
Ms. Grinberg, on the other hand, submitted that  
other decisions set more rigid limits on the finding  
of necessity in these types of cases. Binnie J.  
writing for the majority of the Supreme Court of  
Canada in R. v. Parrot [2001] S.C.J. No. 4 (January  
27, 2001) reiterated that the use of hearsay  
statements for the truth of their contents occurs  
only in exceptional circumstances and, “if the  
witness is physically available and there is no  
suggestion (of potential trauma) ... (after) the  
trial judge has first had an opportunity to hear the  
potential witness and form his or her own opinion as  
to testimonial competence.” Ryan J.A. of the  
British Columbia Court of Appeal in R. v. Pelletier  
[1999] B.C.J. No. 2591 (November 23, 1999) found at  
para. 36 that “when the Supreme Court ... set down  
the "reasonably necessary” test in R. v. Khan, I do  
not believe that it meant to include within the  
ambit of “necessity” the evidence of those who are  
simply disinclined to testify or are unlikely to  
cooperate.” Justice Ryan relied on the Supreme  
Court of Canada decision in R. v. F.(W.J.) [1999]  
S.C.J. No. 61 (October 15, 1999) where McLachlin J.  
at para. 44 set out outer limits for the necessity  
requirement:  
Underlying the insistence on knowing why the  
child cannot give meaningful testimony is the  
concern that if one finds necessity too readily  
one risks depriving the defence of cross-  
examination when, with more diligence it would  
have been available. A witness cannot be  
excused from testifying because the witness is  
not in the mood, or is generally fearful of the  
process, which might create an incentive for  
HMTQ v. Wilder et al  
witnesses, who would rather not endure the  
Page 301  
rigors of cross-examination to “clam up.” The  
simple answer to this concern is that fear or  
disinclination, without more, do not constitute  
necessity.  
And at para. 17, Lane J. continues:  
The question is whether, on the facts and  
circumstances of this case, necessity has been  
established. As McLachlin J. said in R. v.  
F.(W.J.), supra, “Often that will involve going into  
the reasons for the problem. ... What is required  
is that the trial judge be satisfied that the  
evidence is unavailable despite reasonable efforts  
to obtain it.”  
(b) Reliability  
[660] Bennett J. sums up the criteria of reliability in  
Pilarinos, supra at paras. 15-16:  
The second criteria of reliability may be  
established if there is a circumstantial guarantee  
of trustworthiness. A statement is reliable if it  
is made under circumstances which substantially  
negate the possibility that the declarant was  
untruthful or mistaken: R. v. Smith, supra, at p.  
10.  
The requirement for a circumstantial guarantee of  
trustworthiness counteracts the traditional dangers  
associated with hearsay evidence: R. v. Hawkins,  
supra, at para. 74. The trial judge is concerned  
with a threshold level of reliability, and not  
ultimate reliability, which remains for the trier of  
fact. Further, the issue is not whether the  
statement is true, but whether there is a  
circumstantial guarantee of trustworthiness to  
alleviate concerns that either the witness had a  
motive to lie or that there were no safeguards in  
HMTQ v. Wilder et al  
Page 302  
place to ensure that a lie would be discovered: R.  
v. Starr, supra, at para. 215.  
[661]  
While there are a wide variety of factors to take  
into account when considering the circumstances surrounding  
the making of the hearsay statement, Iacobucci, J. writes in  
Starr, supra, para. 217:  
At the stage of hearsay admissibility the trial  
judge should not consider the declarant’s general  
reputation for truthfulness, nor any prior or  
subsequent statements, consistent or not. These  
factors do not concern the circumstances of the  
statement itself. Similarly, I would not consider  
the presence of corroborating or conflicting  
evidence.  
[662]  
This last point has been the subject of some  
controversy. Professor Stuesser points out the problems this  
statement creates (“R. v. Starr and Reform of the Hearsay  
Exceptions” (2002) 7 Can. Crim. L.R. 55). In particular, he  
points out that prohibiting consideration of corroborating  
evidence is inconsistent with earlier Supreme Court of Canada  
precedents such as Khan, supra and U.(F.J.), [1995] 3 S.C.R.  
764, 101 C.C.C. (3d) 97. Also, in the Starr decision this was  
not an issue before the Court for argument. This was an issue  
where there was considerable debate in the appeal courts below  
and yet not one case was cited. Therefore, this statement of  
Iacobucci J. is arguably an obiter statement which may or may  
HMTQ v. Wilder et al  
Page 303  
not be regarded as per incuriam. I have no need to decide on  
this issue in this case. However I will point out that  
Professor Stuesser notes at p. 73-74 that:  
What the majority judgment in Starr does is place a  
trial judge in a straight jacket. The result will  
be inflexibility and the admissibility of either  
unreliable evidence or the exclusion of otherwise  
reliable evidence; both results are inconsistent  
with the search for truth. Judges are trained and  
experienced in weighing evidence. They understand  
the value and limitations of corroborating evidence.  
---  
The notion of “threshold reliability” should conform  
to the well accepted function of the trial judge to  
determine the admissibility of evidence. As stated  
in R. v. Hawkins, “The function of the trial judge  
is limited to determining whether the particular  
hearsay statement exhibits sufficient indicia of  
reliability so as to afford the trier of fact a  
satisfactory basis for evaluating the truth of the  
statement.”  
3.  
The Relationship Between the Co-Conspirators’ Exception  
and the Principled Approach  
[663]  
It is clear through such decisions as Pilarinos and  
Chang, supra that the co-conspirators’ exception has survived  
the principled approach. The question is whether or not and  
in what way that principled approach changes the co-  
conspirators’ exception.  
[664]  
In Chang, supra, the court was of the opinion that  
all evidence that goes through a Carter process is hearsay and  
HMTQ v. Wilder et al  
Page 304  
that therefore the principled approach in Starr applies  
(paras. 77-90). In Sun, supra, Groberman J. states that  
evidence that is put through the Carter process but is not  
being used for the truth of its contents should not be  
subjected to Starr (paras. 49-51).  
[665]  
I agree with the analysis taken in Chang, supra,  
that evidence put through the Carter process becomes hearsay  
for whatever purpose that evidence ultimately is used for.  
[666]  
In Chang, supra, the court dealt with two accused  
who were charged with the same conspiracy and jointly tried.  
The court re-evaluated the co-conspirators’ exception under a  
Starr analysis and concluded that, at para. 129, “the co-  
conspirators’ exception should be maintained, at least for  
unavailable declarants”.  
[667]  
However, what is to be the process in a situation  
where an accused is not jointly tried with the co-  
conspirators?  
[668]  
In examining the co-conspirators’ exception in this  
light, it is instructive to bear in mind some comments of  
Iacobucci J. in Starr, supra. At para. 202:  
Having recognized the primacy of the principled  
approach, it is nevertheless important for a court  
to exercise a certain degree of caution when  
HMTQ v. Wilder et al  
Page 305  
reconsidering the traditional exceptions. While the  
exceptions may need to be reexamined in light of the  
principled approach, their complete abolition is not  
the answer. Rather, the exceptions continue to play  
an important role under the principled approach.  
Our task therefore is to reconcile the traditional  
exceptions with the principled approach.  
[669]  
Iacobucci J. then emphasizes the usefulness of the  
traditional exceptions. First, they bring certainty and  
predictability to the law of hearsay. Second, they serve an  
explanatory or educative function regarding the relevant  
factors litigants and judges should consider when dealing with  
hearsay. Since the principles of necessity and reliability  
underlie the exceptions to the hearsay rule, it is a strong  
indicator that evidence meeting the requirements of  
traditional exceptions also meets the requirements of the  
principled approach. Further, it recognizes that the  
exceptions have the benefit of being fact-specific and  
contextually sensitive. Finally, traditional exceptions  
inform us as to the historical and contemporary rationale for  
admitting certain forms of hearsay.  
[670]  
Iacobucci J. states that in revisiting hearsay  
exceptions in the future, he notes that evidence falling  
within a traditional exemption will be presumptively  
admissible. However, he reiterates that the principled  
HMTQ v. Wilder et al  
Page 306  
approach prevails in a situation where there is a conflict  
with an existing exception.  
[671]  
Finally, in the rare case where evidence falling  
within an otherwise valid exception does not meet the  
requirements of necessity and reliability, then that evidence  
will be excluded. However, the onus will be on the challenger  
to show that the evidence does not meet the requirements.  
(a) Necessity  
[672]  
It is clear that the necessity requirement is met in  
cases where a declarant is not able to testify. This may be  
because the declarant cannot be located, has died, or has  
recanted earlier testimony that possessed greater value. In  
Chang, supra, the reason was because the declarant was a co-  
accused and therefore could not be compelled to give evidence  
by either the Crown or the accused.  
[673]  
In obiter, the court in Chang addresses the  
situation where a co-conspirator is available to testify at  
paras. 107-109:  
The more difficult question arises in the situation  
where a co-conspirator declarant is available to  
testify. The respondent argues that the evidentiary  
value of a declaration of a co-conspirator made in  
furtherance of the conspiracy cannot be duplicated  
by viva voce testimony of the declarant. It is  
superior evidence that is otherwise unavailable to  
the trier of fact and, therefore, should always meet  
HMTQ v. Wilder et al  
Page 307  
the necessity requirement for the admission of  
hearsay.  
The contrary argument is that if the declarant is  
available, the Crown should at least start by  
calling the declarant. If the declarant as a  
witness recants or gives evidence that is not  
consistent with the statement that the Crown seeks  
to have admitted, then the Crown can seek to  
confront the witness with the earlier statement  
either under s. 9 of the Canada Evidence Act, R.S.C.  
1985, c. C-5, or by having the witness declared  
adverse. Depending on how the confrontation plays  
out, the prior statement may then become admissible  
for the truth of its contents under the principles  
laid down in K.G.B.  
An intermediate position would be to permit the  
Crown to introduce the statement because of its  
unique evidentiary value and then to have the Crown  
make the witness available for cross-examination by  
the defence on matters relating to the making of the  
statement in issue.  
[674]  
This discussion pre-supposes that the co-conspirator  
declarant is available to testify. In the case before me,  
neither party has raised the issue as to whether the declarant  
is available in the first place. In other words, who has the  
onus of showing whether or not the declarant is available to  
testify?  
[675]  
In looking at the necessity requirement under the  
principled approach, it seems that the Crown has the onus of  
making reasonable efforts to have the declarant testify.  
However, Starr, supra, has come after the decision in  
HMTQ v. Wilder et al  
Page 308  
Pelletier, supra. Starr, supra, instructs us to consider more  
closely the purpose and role of existing exceptions.  
[676]  
The context for conspiracy and the co-conspirators’  
rule was reviewed extensively in the decisions of Pilarinos,  
supra, and Chang, supra. In para. 25 of Pilarinos, supra,  
Bennett J. stated:  
The co-conspirator exception to the rule against  
hearsay has universal recognition in Canada,  
England, Australia and the United States. The reason  
for this “common sense principle” has been stated by  
Sir John Smith in "Proving Conspiracy" [1996] C.L.R.  
386, and cited in R. v. Keen, [1999] E.W.J. No. 5578  
(Court of Appeal, Criminal Division) at para. 32:  
Conspirators are rarely overheard conspiring  
together. The unlawful agreement usually has  
to be inferred from their acts and declarations  
subsequent to the alleged conspiracy. If these  
are not reasonably explicable except on the  
basis that they had made the agreement alleged,  
it is proved.  
Continuing at para. 41:  
The co-conspirator’s exception to the hearsay rule  
is a powerful tool in the proof of a conspiracy.  
The crime of conspiracy is seldom proved by direct  
evidence. More often it is proved with  
circumstantial evidence. As Rinfret, J. wrote in  
Paradis v. The King (1934), 61 C.C.C. 184 at 186  
(S.C.C.):  
Ordinarily the evidence must proceed by steps.  
The actual agreement must be gathered from  
"several isolated doings" (Kenny, Outlines of  
Criminal Law, 13th ed., p. 294) having possibly  
little or no value taken by themselves, but the  
bearing of which one upon the other must be  
HMTQ v. Wilder et al  
interpreted; and their cumulative effect,  
Page 309  
properly estimated in the light of all the  
surrounding circumstances, may raise a  
presumption of concerted purpose entitling the  
jury to find the existence of the unlawful  
agreement.  
[677]  
As we can see, conspiracy is a crime that is usually  
proved by little pieces of circumstantial evidence. Even in  
Pelletier, supra, the Court of Appeal agrees that “The police  
officers were likely right, it would be pointless to interview  
Mr. Kong. Experience tells us that the chance that Kong would  
confess to the police or in the witness box that he hired two  
people to kill Ward was barely a remote possibility.” (Para.  
36).  
[678]  
In considering the co-conspirators’ exception under  
a Starr analysis, I have to consider the fact that all the  
decisions thus far can agree that the co-conspirators’  
exception has survived the principled approach. However, in  
order to properly give effect to co-conspirators’ exception,  
it becomes necessary to relax the necessity requirement when  
it comes to reasonable efforts. This is an acceptable  
proposition when the nature of conspiracy and Starr, supra, is  
taken into account.  
[679]  
Under Starr, supra, Iacobucci J. reminds us of the  
importance of the existing exceptions. For the co-  
HMTQ v. Wilder et al  
Page 310  
conspirators’ exception, I would focus on the following. In  
paras. 204-205, Iacobucci J. writes:  
…the exceptions have served an explanatory or  
educative function, instructing litigants and judges  
about the relevant factors to consider in  
determining whether to admit a particular type of  
hearsay evidence, or whether to admit hearsay in a  
particular factual context. Different hearsay  
scenarios by their nature raise different  
reliability concerns, and different issues of  
necessity. The specific requirements of the  
individual exceptions have had the useful effect of  
focussing attention upon the peculiar factors that  
make it desirable, or undesirable, to admit a  
particular form of out-of-court statement…  
---  
It is true that there is guidance inherent in the  
principled approach itself, which directs a court to  
gauge whether a particular hearsay statement is  
reliable and whether its admission is necessary in  
the circumstances. However, the exceptions are more  
fact-specific and contextually sensitive.  
In para. 206, Iacobucci J. continues:  
A third important function played by the traditional  
hearsay exceptions is that they teach us about the  
historical and contemporary rationale for admitting  
certain forms of hearsay. It has quite properly  
been noted that some hearsay exceptions allow for  
the admission of evidence that is unreliable,  
unnecessary, or both. In the interest of fairness  
for the litigant against whom it is used, unreliable  
hearsay evidence should never be admitted. Apart  
from that, a review of the traditional exceptions  
reveals that there are reasons beyond “pure”  
necessity why a court might wish to admit reliable  
hearsay evidence. This point was addressed by Lamer  
C.J. in B. (K.G.) at pp. 796-97, where he explained  
that the need to permit the admission of certain  
HMTQ v. Wilder et al  
Page 311  
forms of hearsay can stem not only from the  
unavailability of the out-of-court declarant, but  
also from the quality of the evidence itself. Lamer  
C.J. cited Professor Wigmore’s explanation (Wigmore  
on Evidence (Chadbourn rev. 1974), vol. 5, at p.  
253) that some hearsay evidence “may be such that we  
cannot expect, again, or at this time, to get  
evidence of the same value from the same or other  
sources" (emphasis in original). Such hearsay may be  
admitted, where appropriate, less on the basis of  
necessity and more on the basis of "expediency or  
convenience". The traditional exceptions are useful,  
therefore, because they are instructive as to the  
types of situations that may produce hearsay that is  
the best evidence in the circumstances.  
[emphasis mine]  
[680]  
Therefore, when considering the balance that must be  
considered to bring the co-conspirators’ exception into  
conformity with the principled approach, the factual context  
and rationale for the exception must be considered. When  
considering the factual context for the co-conspirators’ rule  
it is clear that: 1) conspiracy is proven by pieces of  
circumstantial evidence; and 2) it is a remote possibility  
that a co-conspirator will confess to a court. When viewed in  
this light, the co-conspirators’ exception is a contextually  
sensitive approach to the difficulty of proving conspiracy by  
other means.  
[681]  
I find that in light of all these factors, it is not  
necessary for the Crown to show that they have made reasonable  
efforts to have the declarant testify. Experience has shown  
HMTQ v. Wilder et al  
Page 312  
time and again the remote possibility of having a co-  
conspirator appear in court to respond to their part in a  
conspiracy. Therefore, this is an appropriate circumstance  
where hearsay may be admitted more on the basis of expediency  
or convenience than on the basis of necessity. However, it  
must be stressed that reliability is a step that must not be  
compromised. The court must never admit unreliable hearsay  
evidence.  
(b) Reliability  
[682]  
Groberman J. in Sun, supra, points out that there is  
some disagreement as to whether the co-conspirators’ exception  
meets the reliability requirement. In paras. 45-46, he  
writes:  
There is some difference of opinion on whether the  
co-conspirators’ exception to the hearsay rule  
generally meets the principle of "reliability". In  
Pilarinos, at paragraph 69, Bennett J. appears to  
have been of the view that the co-conspirators’  
exception is “not generally founded on the principle  
of reliability” (see also paragraph 49 of the  
judgment, citing Stephen Whitzman). On the other  
hand, the Ontario Court of Appeal found that the  
Carter test generally will result in circumstantial  
guarantees of reliability (see paragraphs 111-124 of  
that judgment).  
In my view, there is some force to the argument that  
elements of the conspirators’ exception to the  
hearsay rule are based on the principle of  
reliability. In that regard, I would refer  
particularly to the strict requirement that in order  
to come within the exception, acts or declarations  
HMTQ v. Wilder et al  
Page 313  
must be in furtherance of the objects of the  
conspiracy. This would seem to provide some  
circumstantial reliability for statements tendered  
under the Carter test.  
[683]  
The Ontario Court of Appeal in Chang, supra, at  
para. 115 states:  
There are several safeguards against the admission  
of unreliable evidence found in the Carter approach  
to co-conspirators’ declarations. The cumulative  
effect of the Carter requirements provides  
safeguards against the dangers traditionally  
associated with hearsay evidence and, in our view,  
provides sufficient guarantees of trustworthiness to  
permit the use of hearsay that satisfies those  
requirements.  
[684]  
I would agree with Groberman J. and the Ontario  
Court of Appeal in Chang, supra. There are ample safeguards  
within the Carter process to ensure reliability to a threshold  
level.  
4.  
Summary of the Process  
[685]  
In summary, it seems to me that the process for  
allowing the testimony of a co-conspirator should be as  
follows.  
[686]  
First, I agree with the Ontario Court of Appeal in  
Chang, supra, that all evidence that goes through the Carter  
process becomes subject to the principled approach in Starr.  
HMTQ v. Wilder et al  
Page 314  
[687] Second, for the reasons discussed above, for the co-  
conspirators’ exception I find that the Crown does not have to  
show that they made reasonable efforts to have the declarant  
testify. The nature of conspiracy satisfies the necessity  
requirement due to expediency or convenience and the fact that  
the court may be unable to hear evidence of the same value.  
It follows then, that if the accused wishes to have the  
declarant testify, that the onus should be on the accused to  
call the declarant.  
[688]  
Third, I agree with Groberman J. and the Ontario  
Court of Appeal in that the Carter process ensures a  
sufficient level of reliability in order to admit hearsay  
evidence.  
5.  
Other Matters  
Finally, I would highlight some of the comments in  
[689]  
Chang, supra. First, I agree with the comments made at para.  
130 that the task of determining whether a co-conspirator’s  
declarations are admissible should be the task of judges.  
Second, I agree with the comments made at para. 132 that given  
the complexity of conspiracy trials, voir dires should be the  
exception rather than the rule.  
HMTQ v. Wilder et al  
Page 315  
[690] It is perhaps fortunate that in the case at bar the  
accused has not sought to challenge the admissibility of this  
evidence. He is therefore not in a position to say that he  
has discharged the burden of showing that the evidence is  
inadmissible.  
D.  
Hearsay and Section 715 of the Criminal Code  
[691]  
I now turn to the caution that I should take in this  
case with respect to the evidence which was received in this  
trial under, not only the principled exception to hearsay, but  
also under s. 715 of the Criminal Code. Section 715 provides  
for the admissibility at trial of the transcript of the  
evidence given at a preliminary inquiry or previous trial  
under certain circumstances such as death or illness. The  
evidence of Mr. Gagon, Mr. Russ and Mr. Breitzman falls under  
this heading.  
[692]  
The trial judge in Hawkins, supra, had concluded  
that the probative value of the evidence was slight, given the  
witness’ direct contradictions and influences and the  
inability of the trier of fact to assess credibility. The  
Supreme Court of Canada disagreed at para. 88:  
The simple fact of recantation, in our view, does  
not provide a basis for the exclusion of a witness’s  
testimony.  
HMTQ v. Wilder et al  
Page 316  
And at para. 89:  
When these transcripts are viewed in light of the  
surrounding evidence presented by the Crown, the  
trier of fact may still be able to conclude  
reasonably that one of her contradictory versions of  
events ought to be preferred over the other.  
Additionally, Graham’s preliminary inquiry testimony  
has probative value in relation to the matters in  
respect of which she did not contradict herself,  
(e.g. Hawkins’s propensity for abuse and Hawkins’s  
general knowledge of Morin.).  
[693]  
In discussing prejudice, the Court noted that there  
was no evidence indicating how the accused or the trial  
process would actually be prejudiced by the admission of the  
witness’ preliminary testimony. At para. 93 the Court states:  
We should first point out that, there has been no  
evidence indicating how the admission of Graham’s  
preliminary inquiry testimony would actually  
prejudice the accused and the trial process. It is  
only this sort of prejudice that is relevant to the  
exercise of discretion.  
[694]  
In Wilder (Written Ruling No. 8), supra, I stated at  
paras. 307-308:  
In R. v. Hawkins, supra, the Court stated at para.  
82:  
Where necessary, the trial judge should  
properly caution the jury in relation to  
the proper weight to be attached to such  
statements given the witness’s lack of  
presence in court.  
I have ruled that the sworn testimonies of Messrs.  
Breitzman, Gagon and Russ be admitted into evidence  
HMTQ v. Wilder et al  
Page 317  
in the form of transcripts of prior court  
proceedings. Normally, the law requires that a  
witness give evidence in court so that he or she can  
be contemporaneously cross-examined in front of the  
trier of fact. When a witness is allowed to give  
evidence through statements made outside the court,  
it is necessary for the trier of fact, in according  
weight to that evidence, be mindful of the fact that  
there was no opportunity to observe the witness give  
evidence and that the evidence was not tested in  
this court by cross-examination.  
I have instructed myself with respect to that  
caution.  
[695]  
I have not forgotten to instruct myself on this  
issue accordingly.  
E.  
Documents in Possession  
In R. v. Turlon (1989), 49 C.C.C. (3d) 186  
[696]  
(Ont.C.A.), the court was of the view that possession of a  
letter was evidence of complicity in the scheme of drug  
importation and distribution. Aside from finding that the  
standard of proof beyond a reasonable doubt does not exist for  
individual pieces of evidence, the court stated at pp. 190-  
191:  
In Phipson on Evidence, 13th ed. (1982), para. 21-  
09, it is stated:  
Documents which are, or have been, in the  
possession of a party will, as we have seen,  
generally be admissible against him as original  
(circumstantial) evidence to show his knowledge  
of their contents, his connection with, or  
complicity in, the transactions to which they  
HMTQ v. Wilder et al  
Page 318  
relate, or his state of mind with reference  
thereto. They will further be receivable  
against him as admissions (i.e. exceptions to  
the hearsay rule) to prove the truth of their  
contents if he has in any way recognized,  
adopted or acted upon them.  
(Emphasis in original.) I accept this statement from  
Phipson as an accurate statement of the law.  
Knowledge of the contents of the letter was not a  
condition precedent to evidentiary value of the  
letter. Possession of the letter was evidence of  
knowledge or complicity in the scheme of drug  
importation and distribution. On the other hand,  
the respondent’s denial that he knew the letter was  
in his brief-case was evidence to the contrary. The  
possession of the letter and the denial by the  
respondent were both part of the evidence as a whole  
to be considered by the jury.  
See also: R. v. Morris (1984), 7 C.C.C. (3d) 97, [1983] 2  
S.C.R. 190 (S.C.C.) at pp. 191-193; R. v. Jeppe, [1987] W.A.R.  
124 (S.C.Western Australia).  
F.  
Business Records  
As stated previously, the Crown is not putting these  
[697]  
documents in to prove the truth of them, but, rather, to prove  
the continuation and concealment of the crime. As a result,  
they submit, they take on the character of original evidence.  
[698]  
As noted in the previous appeal of this matter in R.  
v. Wilder (2000), 142 C.C.C. (3d) 418 (B.C.C.A.), much of the  
evidence tendered by the Crown in this case is not tendered to  
prove its truth, but, rather is tendered as evidence of  
HMTQ v. Wilder et al  
Page 319  
further falsehoods and the perpetuation of the crime of fraud.  
Esson J.A. writes at para. 28:  
Two other factors should be noted. First, the  
records in question here are not remotely like  
"confessions". That is one of the more obvious  
distinguishing features from White where the  
statement was made after the events which gave rise  
to the charge. A related consideration is that a  
true confession (as was the accident report in  
White) is generally tendered to prove the truth of  
what is said therein. These business records may  
not serve that purpose but any falsity in them may  
constitute the essence of the offence.  
[699]  
In my view this characterization is certainly  
appropriate to the documents produced by Mr. Wilder’s co-  
accused to Revenue Canada officials in his absence. As such,  
those documents do not violate the hearsay rule.  
G.  
The Law Relating to Fraud  
1.  
Relevant Section of the Criminal Code  
Section 380(1) of the Criminal Code reads as  
[700]  
follows:  
380. (1) Every one who, by deceit, falsehood or  
other fraudulent means, whether or not it is a false  
pretence within the meaning of this Act, defrauds  
the public or any person, whether ascertained or  
not, of any property, money or valuable security or  
any service,  
(a) is guilty of an indictable offence…  
HMTQ v. Wilder et al  
Page 320  
[701] The decisions of R. v. Olan, [1978] 2 S.C.R. 1175;  
R. v. Théroux, [1993] 2 S.C.R. 5; and R. v. Zlatic, [1993] 2  
S.C.R. 29, are instructive when considering the elements of  
fraud.  
[702]  
Also, in the case of R. v. Berntson (2000), 145  
C.C.C. (3d) 1 (Sask.C.A.), Vancise, J.A. (dissenting)  
summarizes the Supreme Court of Canada jurisprudence relating  
to fraud at para. 33:  
The Supreme Court of Canada considered the  
requirements necessary to prove the elements of  
fraud contained in s. 380(1)(a) of the Code in R. v.  
Theroux and R. v. Zlatic. McLachlin J., writing for  
the majority in both cases, began her analysis with  
a reiteration of the Court’s decision in R. v. Olan  
which provided:  
a)  
b)  
the offence of fraud had two elements:  
dishonest act and deprivation;  
the dishonest act is established by the  
proof of deceit, falsehood or “other  
fraudulent means;”  
c)  
the element of deprivation is established  
by proof of the detriment, prejudice or  
risk of prejudice to the economic  
interests of the victim, caused by the  
dishonest act. Economic loss is not  
essential but rather the imperilling of  
the economic interest is sufficient,  
(emphasis added).  
HMTQ v. Wilder et al  
Page 321  
2.  
Actus Reus  
The actus reus of fraud has two components. The  
[703]  
first component is the prohibited act: either by deceit,  
falsehood, or other fraudulent means. The second component is  
the deprivation, either actual loss or placing the victim’s  
pecuniary interests at risk, caused by the prohibited act.  
[704]  
With regard to the first component, proof of deceit,  
falsehood, or other fraudulent means is determined on an  
objective basis. Under the third heading of “other fraudulent  
means”, Dickson J. states in Olan, supra at p. 1180:  
The words “other fraudulent means” in s. 338(1)  
include means which are not in the nature of a  
falsehood or a deceit; they encompass all other  
means which can properly be stigmatized as  
dishonest.  
[705]  
McLachlin J. in Zlatic, supra, states that the  
standard of a reasonable person is to be used in determining  
whether an action may be stigmatized as dishonest. While  
there is no precise definition of dishonesty, McLachlin J.  
offers at para. 32:  
It does, however, connote an underhanded design  
which has the effect, or which engenders the risk,  
of depriving others of what is theirs. J. D. Ewart,  
in his Criminal Fraud (1986), defines dishonest  
conduct as that “which ordinary, decent people would  
feel was discreditable as being clearly at variance  
with straightforward or honourable dealings” (p.  
99)… The dishonesty of “other fraudulent means” has,  
HMTQ v. Wilder et al  
Page 322  
at its heart, the wrongful use of something in which  
another person has an interest, in such a manner  
that this other’s interest is extinguished or put at  
risk. A use is “wrongful” in this context if it  
constitutes conduct which reasonable decent persons  
would consider dishonest and unscrupulous.  
[706]  
The second component of the actus reus for fraud is  
deprivation caused by the prohibited act. The deprivation  
need not be actual loss. As Dickson J. states in Olan, supra,  
at p. 1182:  
The element of deprivation is satisfied on proof of  
detriment, prejudice, or risk of prejudice to the  
economic interests of the victim. It is not  
essential that there be actual economic loss as the  
outcome of the fraud.  
3.  
Mens Rea  
There are also two components in establishing mens  
[707]  
rea for fraud. There must be subjective knowledge of the  
prohibited act and subjective knowledge that the consequence  
of the prohibited act could cause deprivation to another.  
[708]  
McLachlin J. in Theroux, supra, at para. 24 states:  
The mens rea would then consist in the subjective  
awareness that one was undertaking a prohibited act  
(the deceit, falsehood or other dishonest act) which  
could cause deprivation in the sense of depriving  
another of property or putting that property at  
risk. If this is shown, the crime is complete. The  
fact that the accused may have hoped the deprivation  
would not take place, or may have felt there was  
nothing wrong with what he or she was doing,  
provides no defence. To put it another way,  
HMTQ v. Wilder et al  
Page 323  
following the traditional criminal law principle  
that the mental state necessary to the offence must  
be determined by reference to the external acts  
which constitute the actus of the offence (see  
Williams, supra, c. 3), the proper focus in  
determining the mens rea of fraud is to ask whether  
the accused intentionally committed the prohibited  
acts (deceit, falsehood, or other dishonest act)  
knowing or desiring the consequences proscribed by  
the offence (deprivation, including the risk of  
deprivation). The personal feeling of the accused  
about the morality or honesty of the act or its  
consequences is no more relevant to the analysis  
than is the accused’s awareness that the particular  
acts undertaken constitute a criminal offence.  
And at para. 40, McLachlin J. writes:  
The requirement of intentional fraudulent action  
excludes mere negligent misrepresentation. It also  
excludes improvident business conduct or conduct  
which is sharp in the sense of taking advantage of a  
business opportunity to the detriment of someone  
less astute. The accused must intentionally  
deceive, lie or commit some other fraudulent act for  
the offence to be established… Again, an act of  
deceit which is made carelessly without any  
expectation of consequences, as for example, an  
innocent prank or a statement made in debate which  
is not intended to be acted upon, would not amount  
to fraud because the accused would have no knowledge  
that the prank would put the property of those who  
heard it at risk. We are left then with  
deliberately practised fraudulent acts which, in the  
knowledge of the accused, actually put the property  
of others at risk. Such conduct may be  
appropriately criminalized, in my view.  
[709]  
Therefore what is required is for the Crown to prove  
that the accused subjectively knew that the acts taken  
constituted falsehood, deceit or other fraudulent means, and  
HMTQ v. Wilder et al  
Page 324  
that the accused was subjectively aware that deprivation could  
result from such conduct. The personal feelings as to the  
morality or honesty of the acts by the accused are not taken  
into consideration.  
H.  
Sufficiency of Counts in the Indictment  
[710]  
Defence counsel submits that the Crown has failed to  
prove the counts as particularized in the Indictment.  
[711]  
In particular, defence counsel submits that the  
Crown alleged in Counts 1 and 2 of the Indictment that the  
amount spent or incurred by Bio-Mass was $2,288,720 in U.S.  
dollars. He submits that the evidence at trial has  
established that the amount spent or incurred by Bio-Mass  
exceeded $2,288,720 U.S. dollars. He submits that the amount  
spent or incurred as particularized by the Crown is a material  
particular and as such the Crown is required to prove said  
particular. He further submits that given that the evidence  
has established that the amount spent or incurred by Bio-Mass  
exceeded that as particularized by the Crown, Mr. Wilder is  
entitled to an acquittal on Counts 1 and 2.  
[712]  
Likewise, defence counsel submits that the Crown  
alleged in Counts 3 through 5 that there were no expenditures  
by Coastal for the purposes of scientific research for the Fly  
Ash Project. He submits that the evidence at trial has  
HMTQ v. Wilder et al  
Page 325  
established that there were expenditures by Coastal for the  
purposes of scientific research for the Fly Ash Project. He  
further submits that given that the evidence has established  
that there were expenditures by Coastal on scientific research  
for the Fly Ash Project contrary to particulars of the Crown,  
Mr. Wilder is entitled to an acquittal on Counts 3 through 5.  
[713]  
Finally, defence counsel submits that the Crown  
alleged in Counts 6 and 7 that the amount spent or incurred by  
Coastal for the purpose of scientific research for the Hydro-  
Petroleum Project was about $3,000,000. The Crown in its  
opening address further particularized the counts with respect  
to the Hydro-Petroleum Project in that it is alleged that the  
Hydro-Petroleum Project never actually existed. He submits  
that the evidence at trial establishes that the amount spent  
or incurred in scientific research on the Hydro-Petroleum  
Project exceeded the amount particularized by the Crown. He  
further submits that the Crown has failed to prove a material  
particular of the charges and as such Mr. Wilder is entitled  
to an acquittal on Counts 6 and 7.  
[714]  
Defence counsel further submits that the Oxford  
English Dictionary of Current Language defines “about” to mean  
approximately. “Approximate” means “fairly correct, near to  
the actual”. It is submitted that the evidence at trial with  
HMTQ v. Wilder et al  
Page 326  
respect to amount spent or incurred on the Hydro-Petroleum  
project is not near to $3,000,000.  
[715]  
In support of his submissions defence counsel drew  
my attention to the case of the Supreme Court of Canada  
decision in R. v. Rooke and De Vries (sub nom. R. v. Saunders)  
(1990), 56 C.C.C. (3d) 220 (S.C.C.).  
[716]  
In R. v. Rooke and De Vries, supra, the accused were  
charged with conspiracy to import a narcotic, specifically  
heroin. During the course of the trial, evidence was given of  
an earlier conspiracy to import cocaine. One of the accused  
took the stand and testified that while he had been involved  
in a conspiracy to import other drugs, he was not involved in  
the conspiracy to import heroin in the manner alleged.  
[717]  
The trial judge decided that it was sufficient if  
the jury found that accused had conspired to import a narcotic  
of any kind and so charged the jury. The accused was then  
convicted. The British Columbia Court of Appeal allowed an  
appeal by the accused on the ground that the Crown having  
charged the accused with conspiracy to import heroin must  
prove that conspiracy. The Supreme Court of Canada agreed and  
stated at p. 223:  
It is a fundamental principle of criminal law that  
the offence as particularized in the charge, must be  
HMTQ v. Wilder et al  
Page 327  
proved. In R. v. Morozuk (1986), 24 C.C.C. (3d) 257  
at p. 262, 25 D.L.R. (4th) 560, [1986] 1 S.C.R. 31,  
this court decided that once the Crown has  
particularized the narcotic in a charge, the accused  
cannot be convicted if a narcotic other than the one  
specified is proved.  
[718]  
However, in R. v. A.D., [2003] B.C.J. No. 379  
(B.C.C.A.), the British Columbia Court of Appeal states at  
para. 30:  
It is well established that non-essential averments  
in charges need not be strictly proved if there is  
no prejudice to the accused: see for example R. v.  
Vezina; R. v. Cote, [1986] 1 S.C.R. 2; Ewaschuk,  
Criminal Pleadings & Practice in Canada, 2d ed., Vol  
1 (Aurora: Canada Law Book Inc., 2002) at 9-45.  
[719]  
In A.D., supra, the information in question alleged  
that the accused “did, using a firearm, commit robbery”. It  
was held that the charge did not particularize a specific mode  
of robbery. The proof of the use of a firearm is not an  
essential element of the offence of robbery. The court also  
found that the accused had sufficient knowledge of the  
circumstances of the offence alleged in the charge and that  
there was no prejudice to the accused.  
[720]  
In R. v. Côté, [1978] 1 S.C.R. 8, De Grandpré J.,  
for the majority, states at p. 13:  
…the golden rule is for the accused to be reasonably  
informed of the transaction alleged against him,  
thus giving him the possibility of a full defence  
HMTQ v. Wilder et al  
Page 328  
and a fair trial. When, as in the present case, the  
information recites all the facts and relates them  
to a definite offence identified by the relevant  
section of the Code, it is impossible for the  
accused to be misled. To hold otherwise would be to  
revert to the extreme technicality of the old  
procedure.  
[721]  
Where there is a defect in the indictment or count,  
s. 601 of the Criminal Code allows the court to make the  
necessary amendments at any stage in the proceedings. In  
particular, s. 601(4) directs the court to consider a variety  
of factors in determining whether or not to amend.  
[722]  
The Quebec Court of Appeal in Regina v. Callocchia  
and D’Angelo (2000), 149 C.C.C. (3d) 215, considered the use  
of s. 601. At paras. 57-58:  
The Supreme Court of Canada has repeatedly affirmed  
that section 601 of the Code leaves trial judges  
little discretion to refuse a permissible amendment  
that will cause no irreparable prejudice to the  
accused.  
Morozuk, [1986] 1 S.C.R. 31, 24 C.C.C. (3d) 257,  
like the present case, involved a variance between  
the indictment and the evidence. Delivering the  
judgment of the Court, Lamer J. (later C.J.C.)  
stated at p. 37:  
The Crown should have sought an amendment under  
s. 529 [now 601] of the Criminal Code to  
correct the variance between the particular and  
th[e] evidence. The trial judge should have,  
under s. 529, absent the Crown’s motion,  
considered amending proprio motu. The only  
question he had to address was whether such an  
HMTQ v. Wilder et al  
Page 329  
amendment would prejudice the accused and, if  
so, whether it can be cured.  
[723]  
In Rooke and De Vries, supra, the Crown requested  
that the Supreme Court amend the charge. However, no such  
amendment was requested at trial or at the Court of Appeal.  
As one of the accused took to the stand and testified on the  
basis as set out in the charge, it was held to be unfair and  
prejudicial to the accused to permit an amendment that would  
fundamentally and retroactively change the nature of what the  
Crown needed to prove.  
I.  
The Kienapple Principle and Count 9  
[724]  
The accused submits that in view of my finding in  
Counts 1 to 7 inclusive, a conviction on Count 9 would violate  
the principle laid down in R. v. Kienapple (1974), 15 C.C.C.  
(2d) 524 (S.C.C.).  
[725]  
In Kienapple, supra, Laskin J., writing the majority  
judgment, held that a doctrine of res judicata precluded  
multiple convictions for the same delict, even if they result  
from the same proceedings. At p. 539 he stated:  
If there is a verdict of guilty on the first count  
and the same or substantially the same elements make  
up the offence charged in a second count, the  
situation invites application for a rule against  
multiple convictions...  
HMTQ v. Wilder et al  
Page 330  
[726] In R. v. Prince (1986), 30 C.C.C. (3d) 35, 33 D.L.R.  
(4th) 724, [1986] 2 S.C.R. 480, it was held that the rule  
against multiple convictions applied only where there was both  
a factual and a legal nexus between the charges.  
[727]  
In terms of summarizing these principles I find R.  
v. Andrew (1990), 78 C.R. (3d) 239, (1990), 57 C.C.C. (3d) 301  
(B.C.C.A.), to be most helpful. In Andrew, supra, Lambert  
J.A., speaking for a five-member bench of that court, stated a  
practical guide that should be followed in order to ascertain  
if Kienapple applies. He stated at pp. 243-45:  
The result of Chief Justice Dickson’s corollary and  
the three examples he gave of cases where an element  
of an offence is not additional or distinct, is that  
there are four clear keys to when the Kienapple  
principle should be applied, other than the long-  
standing case of included offenses, which is usually  
not regarded as an application of the Kienapple  
principle at all. I will set out the four key  
situations, following Chief Justice Dickson’s words  
as closely as possible:  
1)  
Where the offences are of unequal gravity,  
Kienapple may bar a conviction for a lesser  
offence, notwithstanding that there are  
additional elements in the greater offence for  
which a conviction has been registered,  
provided that there are no distinct additional  
elements in the lesser offence (Prince [1986] 2  
S.C.R.480 (S.C.C.) at p. 499).  
2)  
Where an element of one offence is a  
particularization of essentially the same  
element in the other offence (Prince, p. 500).  
HMTQ v. Wilder et al  
Page 331  
3)  
Where there is more than one method, embodied  
in more than one offence, to prove a single act  
(Prince, p. 501. But I have used "criminal  
act" instead of "delict".).  
4)  
Where Parliament has deemed a particular  
element to be satisfied on proof of another  
element (Prince, p. 501)  
....  
In summary, in deciding whether the Kienapple  
principle is applicable in any case, this is the  
course that should be adopted:  
A.  
Look at the facts, in the context of the  
offenses, and ask whether one wrongful act, in  
both its physical and mental elements, is  
involved.  
B.  
Look at the offences, in the context of the  
facts, and ask whether there is an additional  
or distinguishing element in one offence that  
is not contained in the other. If there is,  
the Kienapple principle does not apply unless  
the additional and distinguishing element is  
covered by one of the four types of situations  
enumerated by Chief Justice Dickson as I have  
set them out above.  
The two tests which I have described should be  
undertaken together. Each of the tests becomes an  
empty exercise unless the two tests complement each  
other. It is a double test; not two consecutive  
tests.  
XIII.  
A.  
ANALYSIS  
The Credibility of Mr. Wilder  
As I have mentioned throughout this judgment, I have  
[728]  
found Mr. Wilder to be a brazen liar whose stories lack even a  
shred of credibility. Like the Revenue Canada auditors, I  
HMTQ v. Wilder et al  
Page 332  
have been frustrated by the vague and unspecific information  
offered as evidence by Mr. Wilder. In terms of courtroom  
demeanour, I have found him to be cocky, evasive and  
unresponsive. Mr. Wilder was more concerned with deflecting  
blame from himself than answering questions in earnest. His  
testimony is full of contradictions. Depending on how it  
suits him, Mr. Wilder is either a genius descendent of Thomas  
Edison or an illiterate with a Grade One reading level  
victimized by lawyers, accountants, Revenue Canada, and the  
justice system. In saying this, I am aware that there is no  
onus on Mr. Wilder to establish his innocence. As I have said  
before, it is on the Crown to prove guilt beyond a reasonable  
doubt.  
B.  
Evidence from Co-Conspirators  
[729]  
In my view, when all of the evidence is considered,  
I am satisfied beyond a reasonable doubt that Mr. Wilder and  
his co-accused, particularly Mr. Richards, Mr. Lawrence and  
Mr. Johnson, were part of a joint enterprise to defraud the  
government of Canada. The back-dated invoices; transactions  
before corporate entities existed; the testimony of Mr. Russ,  
Mr. Breitzman, Mr. Gagon and Mrs. Pollard all prove the  
existence of this joint deception.  
HMTQ v. Wilder et al  
Page 333  
[730] I am also satisfied that the evidence directly  
admissible against Mr. Wilder, discussed above, more than  
establishes that he was a member of the joint enterprise. In  
addition, I find that once all the evidence, direct and  
indirect, is considered, the case against Mr. Wilder is proved  
beyond a reasonable doubt.  
[731]  
As I have discussed above, I have found that it is  
unnecessary for the Crown to show that they have made  
reasonable efforts to have the declarants testify. The  
necessity element is satisfied due to the nature of conspiracy  
and because of the value of the evidence. Reliability is  
satisfied due to the fact that much, if not all, of this  
evidence was put forth in a previous trial, subjected to  
cross-examination by numerous defence counsel.  
[732]  
For these reasons, I find that the acts and  
declarations made in Mr. Wilder’s absence are admissible in  
evidence at this trial. This includes Ronald Johnson’s  
statements and actions on January 5 and 6, 1985, as described  
by Mrs. Pollard. It also includes Ronald Johnson’s statement  
to Mr. Breitzman that Mr. Wilder had stated that if Mr.  
Breitzman did not sign the back-dated HFI and Mineral Gas  
Company agreements, then no more monies would be advanced.  
Also, it includes Mr. Richards’ statement to Mrs. Pollard that  
HMTQ v. Wilder et al  
Page 334  
the invoices were being prepared for production to Revenue  
Canada.  
[733]  
In addition to the foregoing, all of the statements  
made by Mr. Richards and Mr. Johnson to the Revenue Canada  
officials are admissible. The significance of this evidence  
is that it proves that Mr. Wilder and his co-accused were  
aware of the Part VIII tax liability the companies faced and  
were taking steps to make Revenue Canada believe that monies  
to cover that liability would be preserved and available.  
[734]  
However, in my view, the business records that were  
produced to Revenue Canada in Mr. Wilder’s absence are not  
necessarily admissible under this heading. This is especially  
so because the business records are not tendered to prove its  
truth, but rather are tendered as evidence of further  
falsehoods and perpetuation of the crime of fraud.  
C.  
Section 715 Evidence  
[735]  
The evidence of Mr. Gagon, Mr. Russ and Mr.  
Breitzman may be admitted under s. 715 of the Criminal Code or  
under the principled approach to hearsay.  
[736]  
In the case of Mr. Gagon, he was unable to testify  
in court due to illness. As for Mr. Russ, he is deceased.  
Mr. Breitzman is currently suffering from dementia. Because  
HMTQ v. Wilder et al  
Page 335  
of these circumstances, the evidence of those witnesses may be  
properly admitted under s. 715 of the Criminal Code.  
[737]  
In the alternative to s. 715, this evidence may be  
admitted under the principled approach to hearsay. Necessity  
is clearly met under these circumstances. Reliability is met  
as these witnesses have already been cross-examined in the  
previous trial.  
D.  
Documents in Possession  
[738]  
The documents found at Mr. Wilder’s residence are  
admissible as original evidence to show Mr. Wilder’s knowledge  
of their contents or as admissions as to the truth of their  
contents. Mr. Wilder’s testimony that he has never seen such  
documents until the second civil trial is evidence to the  
contrary. However, given his lack of credibility, I have  
found that Mr. Wilder’s testimony is yet another lie under  
oath. I therefore accept in total the documentary evidence  
found at Mr. Wilder’s residence.  
E.  
Business Records  
I find that all business documents which were  
[739]  
produced to Revenue Canada officials are admissible as  
evidence in this trial. This includes the various invoices,  
the majority that I’ve found to be false, given to the  
auditors by Mr. Richards and Mr. Johnson.  
HMTQ v. Wilder et al  
[740] For instance, Exhibit 12-176 is ostensibly a  
Page 336  
purchase order from PNR to Mineral Gas Company. However, Mr.  
Breitzman’s and Mr. Russ’ evidence indicate that such an  
arrangement did not exist in May 1984. PNR was preceded by a  
numbered company, (29800 BC Ltd.), which was incorporated on  
July 26, 1984, two and a half months after this purported  
purchase order. The name of the numbered company was not  
changed to “Pacific Natural Resources Inc.” for a further  
month.  
[741]  
The terms of the purchase order are identified as  
per “Contract”. While a contract or “Equipment Acquisition  
Agreement” between PNR and Mineral Gas Company purportedly  
dated May 7, 1984 was seized (Exhibit 278-142) and last saved  
on Roger Lawrence’s computer on May 3, 1985 (Exhibit 238-81),  
no such contract was produced during the audit. Mr.  
Breitzman testified that the Agreement was produced to him  
long after he had been working on the Bio-Mass Project with  
Mr. Wilder, likely mid-1985.  
[742]  
Exhibit 13-177 was also provided to Mr. Alibhai at  
some point during his portion of the audit. This exhibit is  
comprised of 15 invoices, all dated May 7, 1984, from Mineral  
Gas Company to PNR. As noted above, PNR did not exist.  
Further, while the invoices are supposed to be from an  
HMTQ v. Wilder et al  
Page 337  
American company, the pre-printed form provides for “prov. Tax  
lic. No.;” peculiarly distinct to Canada and other countries  
with “provinces”, rather than “states”.  
[743]  
If one places the blue sheet of Mineral Gas Company  
“letterhead” seized from Ronald Johnson’s residence, (Exhibit  
221-138) and places it on these invoices, the name, address  
and typed phone number, match perfectly. Mr. Russ and Mr.  
Breitzman identified the address as Tennessee and the phone  
number as Georgia. The invoice forms are modified. I agree  
with the submission of Crown counsel that, like the invoices  
typed up by Mrs. Pollard, these invoices are also false.  
[744]  
Each of the invoices, numbered 2924 – 2938 refers to  
one of the systems set out in the biomass “component list”  
attached to Exhibit 12-176 purchase order number 1954.  
[745]  
The first invoice, number 2924, is in relation to a  
“Laboratory verification unit,” the cost of which is $740,660.  
Mr. Breitzman testified that this figure reflects actual, as  
distinct from inflated, costs. This evidence is corroborated  
by the invoices he provided to Mr. Johnson and Mr. Wilder and  
by his September 30, 1984, budget. It is noteworthy that the  
Vibrasonics invoice referred to purchase order 1954. Mr.  
Wilder testified, however, that he was unaware of any purchase  
HMTQ v. Wilder et al  
Page 338  
order in relation to the Bio-Mass project other than number  
1999.  
[746]  
The Bio-Mass Project process report dated November  
30, 1984 was produced on January 24 1985, in Mr. Wilder’s  
absence. This document contains no specifics regarding  
testing or the site address (Exhibit 19-2043).  
[747]  
Exhibit 36-93, an acknowledgement by Mr. Breitzman  
on behalf of Mineral Gas Company that PNR owes the company  
$17,200,000 as at September 30, 1984 was also produced  
sometime during the audit. Mr. Breitzman testified that this  
document is false.  
[748]  
Exhibit 221-138 was seized from Ronald Johnson’s  
residence on May 7, 1987. The testimony of Mr. Russ makes it  
clear that the document was created in furtherance of the  
joint enterprise. Furthermore, given his testimony with  
regard to Mr. Wilder’s presence during the creation of this  
document, it is more properly viewed as direct evidence  
against Mr. Wilder.  
[749]  
As noted above, if Exhibit 13-177 is lined up with  
the blue sheet in Exhibit 221-138, the words and phone numbers  
are an exact match. Similarly, if Exhibit 12-176 is lined up  
with the PNR address in Exhibit 221-138II, it is an exact  
HMTQ v. Wilder et al  
Page 339  
match. The Crown submits that Exhibit 221-138 is the source  
for the false documents created and proffered as evidence of  
the claimed expenditures. I agree with this submission.  
[750]  
Mr. Russ repeatedly testified that the “inflated”  
invoices were typed in Mr. Wilder’s presence; the Crown  
submits that Exhibit 221-138 supports the credibility of Mr.  
Russ’ evidence that false invoices were “created” and lends  
credence to his other evidence, including that Mr. Wilder was  
involved in their creation.  
[751]  
In my view, Exhibit 221-138 invoice number 2927 is a  
particularly clear example of the “cut and paste” creation of  
these invoices.  
[752]  
The Equipment Acquisition Agreements (Exhibit 278-  
142) which Mr. Breitzman testified were signed by him sometime  
in 1985 or 1986 were last saved on Mr. Lawrence’s computer on  
May 3 1985 (Exhibit 238-81). While outside the date of the  
fraud charges, this date is well within the time frame of the  
joint offence of possessing monies obtained by fraud (Count  
9). The Crown submits that this evidence is admissible  
against Mr. Wilder, as it was created in order to provide  
further false documentation to authenticate the false  
transactions and therefore is in furtherance of the possession  
offence. I agree with this submission by the Crown.  
HMTQ v. Wilder et al  
Page 340  
F.  
Fraud  
1.  
Evidence and Credibility  
[753]  
Because Mr. Wilder testified and his testimony  
contradicts much of that of the Crown witnesses, as stated at  
the outset, this case is largely about credibility. In such a  
case, the evidence, as a whole must be examined to determine  
the credibility of the various witnesses.  
[754]  
I reject out of hand the suggestion by defence  
counsel that because Revenue Canada officials may have only  
had a “suspicion” prior to speaking with Mr. Breitzman and Mr.  
Russ, that, practically speaking, the only additional evidence  
for the Court to consider is the evidence of those two  
witnesses and that it is insufficient to found a conviction,  
given problems with credibility.  
[755]  
It is trite law that it is all the trial evidence  
that must be considered by me and that it must be considered  
together.  
[756]  
As pointed out previously in this judgment, the  
appropriate approach where an accused testifies and  
credibility is a critical factor is discussed in R. v. W.(D.)  
(1991), 63 C.C.C. (3d) 397 (S.C.C.), where Cory J. stated for  
the majority at p. 409:  
HMTQ v. Wilder et al  
Page 341  
In a case where credibility is important, the trial  
judge must instruct the jury that the rule of  
reasonable doubt applies to that issue. The trial  
judge should instruct the jury that they need not  
firmly believe or disbelieve any witness or set of  
witnesses. Specifically, the trial judge is  
required to instruct the jury that they must acquit  
the accused in two situations. First, if they  
believe the accused. Secondly, if they do not  
believe the accused’s evidence but still have a  
reasonable doubt as to his guilt after considering  
the accused’s evidence in the context of the  
evidence as a whole: see R. v. Challice (1979), 45  
C.C.C.(2d) 546 (OCA); approved in R. v. Morin,  
supra, at p. 207.  
[757]  
First, as stated before, I do not believe the  
evidence of the accused.  
[758]  
Second, even though I do not believe the testimony  
of the accused, I am not left in reasonable doubt by it.  
[759]  
Third, on the basis of the evidence before me, I am  
convinced beyond a reasonable of the guilt of the accused on  
all counts.  
2.  
Finding of Guilt  
In my view, all of the evidence, when considered  
[760]  
together, proves beyond a reasonable doubt that Mr. Wilder  
lied with respect to his companies having made the  
expenditures claimed in the certificates that he signed; that  
he knowingly issued these false certificates with the intent  
to have Part VIII taxes improperly diverted to his companies’  
HMTQ v. Wilder et al  
Page 342  
current accounts and thereby deprive the government of Canada,  
as alleged. Further, I find that Mr. Wilder’s companies  
expended no monies on the Fly Ash Project; $2,288,720 on the  
Bio-Mass Project and approximately $3,000,000 on the Hydro-  
Petroleum Project. That Mr. Breitzman’s companies incurred  
higher expenditures with regard to the Fly Ash and Bio-Mass  
Projects is of no comfort to Mr. Wilder.  
[761]  
These facts are proved by:  
1)  
the incredibly improbable nature of the  
transactions as explained by Mr. Wilder and as  
“documented” by him and his co-accused;  
2)  
3)  
the production of false documents and the  
making of false statements to Revenue Canada;  
the production of false documents constituting  
the fabrication of physical evidence before  
this Court;  
4)  
5)  
6)  
7)  
documents found in the possession of Mr.  
Wilder;  
documents found in the possession of his co-  
accused;  
the testimony of James Breitzman, James Russ,  
Hugh Gagon, Betty Pollard and Jay Duke;  
corroborative evidence of various Crown  
witnesses.  
[762]  
On the evidence before me I am satisfied that the  
Crown has proven beyond a reasonable doubt that the accused  
subjectively knew that the acts taken constituted falsehood,  
HMTQ v. Wilder et al  
Page 343  
deceit or other fraudulent means, and that the accused was  
subjectively aware that deprivation could result from such  
conduct.  
[763]  
The evidence before me supports a conviction on each  
count in the indictment. When all of the evidence is  
considered, the testimony of the Crown witnesses is  
overwhelmingly corroborated. I agree with Crown counsel that  
the direct evidence against Mr. Wilder is sufficient to found  
these convictions. The indirect evidence simply provides  
further evidence to support this conclusion.  
G.  
Sufficiency of Counts  
[764]  
The offence of fraud is complete when there is proof  
of a dishonest act that deprives (or potentially deprives)  
another of what is his/hers, with the knowledge that this  
could occur, (see Theroux, supra). The amount expended is not  
an element or “the essence” of the offence with which Mr.  
Wilder is charged. He is charged with fraud, which in this  
case involves acts of “deceit, falsehood, or other fraudulent  
means,” accomplished by the issuance of the certificates, that  
“deprive, prejudice, or risk prejudice to the economic  
interest” of the government of Canada. In my view, this  
prejudice has been proved. As noted in Berntson, supra, and  
HMTQ v. Wilder et al  
Page 344  
the other authorities cited above, economic loss is not even  
required to found a finding of fraud.  
[765]  
In the case at bar, the offence is proved when the  
Crown proves the act of issuing the instrument of deceit,  
falsehood or fraudulent means – the false certificates – as  
charged, and also proves the attendant intended deprivation or  
risk of deprivation. The certificates are defined in the  
Indictments as follows:  
-
-
-
signed by certain persons;  
issued to the National Bank;  
certifying certain minimum sums had been spent  
or incurred between certain dates.  
[766]  
The counts then contain the following language:  
which certificates were deceitful, false or  
fraudulent in that the amount spent or incurred by  
Coastal [or Bio-Mass] for the purpose of scientific  
research for the… Project was $X, and did thereby  
commit an offence contrary to section 338(1)(a) of  
the Criminal Code…  
[767]  
This description does not detract from the clear  
identification of which certificates were in issue. In my  
view, the effect of the Crown’s not proving the dollar figure  
mentioned in this part of the count is that the net amount of  
the fraud increases. That the trial evidence proves that the  
value of what is lost is more than the amount alleged in the  
Indictment does not nullify the fact that the Crown has proved  
HMTQ v. Wilder et al  
Page 345  
the elements of the offence of fraud. Further, it is  
difficult to see how the accused is prejudiced in such a case.  
[768]  
With regard to the Bio-Mass Project, I agree with  
the Crown’s submission that, while not necessary, it has  
proved beyond a reasonable doubt that $2,288,720 was expended  
on the project. Mr. Breitzman testified that this was the  
amount of money that he received on the project and he  
provided documents that support this. The remainder of the  
evidence proves that the Bio-Mass Project was, apart from  
these expenditures acknowledged by Mr. Breitzman, a sham.  
[769]  
With respect to Fly Ash, I also agree with the  
Crown’s submission that the evidence of James Russ and Mr.  
Breitzman also established that no expenditures were made, as  
set out in the Indictment.  
[770]  
With respect to Counts 6 and 7, (the Hydro-Petroleum  
Project counts), the Crown concedes that it has not proved  
that $3,000,000 was “spent or incurred” by Coastal on the  
project. The $3,000,000 cheque dated November 5, 1984  
(Exhibit 43C-149), which corroborates Mr. Gagon’s evidence of  
his discussions with Mr. Wilder, is long after the date of the  
claimed Hydro Petroleum expenditures; it therefore cannot  
relate to that project. Consequently, while the Crown has  
proved that Mr. Wilder has made false and deceitful statements  
HMTQ v. Wilder et al  
Page 346  
in the Hydro-Petroleum certificates by stating that it had  
expended $38,000,000 when it had not, thereby depriving the  
government of Canada of the Part VIII taxes due, the Crown has  
not proved that he spent $3,000,000 on the Hydro-Petroleum  
Project.  
[771]  
In my view, however, this expenditure relates to the  
quantification of the extent of the fraud, not the fraud  
itself.  
[772]  
An analysis of the case law dealing with a  
potentially defective indictment or charge reveals the  
following considerations.  
[773]  
The first consideration is whether the phrase in  
question is a particularized element of the offence? If so,  
then subject to amendment considerations, the Crown is bound  
by the indictment. If not, then the phrase is mere surplusage  
which need not be proved.  
[774]  
Even if a defect in the indictment is found, s. 601  
will allow for amendment as long as it would not fundamentally  
change the nature of the charge so as to prejudice the  
accused.  
[775]  
To put it simply then, if the phrase in question is  
mere surplusage, then there is no need to change the  
HMTQ v. Wilder et al  
Page 347  
indictment as it is an unnecessary element. But even if the  
phrase in question is an essential element to the offence, s.  
601 will allow amendment of a defective indictment. The  
overriding consideration at both steps is that of prejudice to  
the accused.  
[776]  
In regards to this case, it cannot be said that Mr.  
Wilder is not reasonably informed of the charges before him  
and the case he has to meet. Clearly nothing in this case is  
news to him. If the defect complained of is the exact amount  
of money that he is alleged of defrauding, then this is simply  
surplusage. Section 380 of the Criminal Code stipulates five  
thousand dollars as the dividing line between an indictable or  
summary conviction offence for fraud. Even if it is wrong to  
characterize the amount as a surplusage, this may be an  
appropriate case to amend the indictment as per s. 601 of the  
Criminal Code. It is difficult to see how amending the amount  
that Mr. Wilder is alleged to have defrauded will  
fundamentally change the nature of the case such that it would  
cause irreparable prejudice to Mr. Wilder.  
[777]  
The defence’s application is therefore dismissed.  
H.  
Application of the Kienapple Principle  
[778]  
Applying the principles as explained in Andrew,  
supra, it is my view that the Kienapple principle does not  
HMTQ v. Wilder et al  
Page 348  
preclude me from entering convictions in Counts 1 to 7  
inclusive and also entering a conviction on Count 9. The  
crime of fraud, as enumerated in s. 380 of the Criminal Code,  
is where a dishonest act deprives (or potentially deprives)  
another of what is his/hers, with the knowledge that this  
could occur. Section 354 prohibits possession of property  
obtained by crime where the accused knowingly possesses any  
property or proceeds that were obtained or derived from the  
commission of an indictable offence.  
[779]  
Fraud, as stated above, does not require actual  
deprivation or economic loss to the victim. In other words,  
an accused can be convicted of fraud without being able to  
successfully deprive the victim and thus never come into  
possession of the prize. Actual deprivation and therefore  
possession is not relevant to the offence of fraud. In  
contrast, possession of property obtained by crime obviously  
requires actual possession. In addition, possession does not  
require a depriving act or an intent to deprive. Simple  
possession with the knowledge that the property was obtained  
through an indictable offence is sufficient. Therefore, in  
considering the two tests as enunciated in Andrew, supra, I do  
not find that Kienapple applies.  
HMTQ v. Wilder et al  
Page 349  
I.  
Summary of the Analysis  
In summary then, I find the accused, Mr. Wilder,  
[780]  
guilty on all counts based on the evidence before me. I  
accept all of the evidence tendered by the Crown either as  
original evidence or through various exceptions to hearsay.  
While the evidence of Mr. Breitzman and Mr. Russ needs to be  
approached with some caution, the evidence of Mr. Duke, Mr.  
Gagon and Mrs. Pollard is absolutely credible and trustworthy.  
I can also sympathize with the Revenue Canada auditors who  
were frustrated by Mr. Wilder’s attitude and lack of  
cooperation in his own defence. Enough has been said about  
Mr. Wilder himself. None of his testimony is to be believed.  
[781]  
I have rejected defence counsel’s argument that the  
Crown has failed to prove the counts as particularized in the  
Indictment. The exact amount of money that Mr. Wilder is  
alleged to have defrauded is mere surplusage. Even if I am  
wrong, then this would be an appropriate case to amend the  
Indictment according to s. 601 of the Criminal Code.  
[782]  
I have also rejected defence counsel’s argument that  
the Kienapple principle applies to this case. There is an  
insufficient legal nexus between fraud and possession of  
property obtained by crime.  
HMTQ v. Wilder et al  
Page 350  
XIV. CONCLUSION  
[783]  
On the basis of the foregoing, I find the accused  
guilty of Counts 1 to 7 inclusive. I also find the accused  
guilty of Count 9.  
“S.R. Romilly, J.”  
The Honourable Mr. Justice S.R. Romilly  
APPENDIX “A”  
WILDER TIMELINE  
Date  
Witness  
Event  
Comments  
Mar., 1984 Breitzman  
Russ meets Wilder  
for the first time  
Russ calls Wilder  
•
•
•
Discuss Vardax  
equipment.  
First contact Russ  
had with Wilder.  
Breitzman flew out  
to Bellingham to  
look at Vardax’s  
equipment and see  
where the material  
was being  
Mar. 12,  
1984  
Russ  
May, 1984  
Breitzman  
Breitzman meets  
Wilder for the  
first time in  
Bellingham  
fabricated.  
•
•
Breitzman and Wilder  
discussed possible  
joint venture on a  
precious metals  
project and other  
projects that Russ  
and Wilder had  
discussed.  
Wilder’s interest in  
the projects stemmed  
from the  
availability of Govt  
of Canada research  
and development  
funds.  
May 8,  
1984  
Russ  
Russ  
Phone call – Russ  
and Wilder  
•
•
Wilder tells Russ  
there is grant money  
available.  
Purpose of trip was  
to develop a  
May 14,  
1984  
Russ goes to  
Bellingham  
proposal termed Fly  
Ash.  
•
•
In Bellingham from  
May 14 – 17.  
Russ prepares a  
proposal for a Fly  
Ash plant and sends  
it to Wilder.  
Purpose of the  
comfort letter to  
the chairman of the  
finance committee  
was to assure him  
that Wilder’s  
May 17,  
1984  
Russ  
Russ  
Russ returns to  
Lawrenceburg  
July 4,  
1984  
Wilder writes  
comfort letter to  
Chemical Mineral  
Company  
•
projects could  
absorb the  
Lawrenceburg  
equipment and pay  
for them.  
Aug., 1984 Breitzman  
Russ  
Breitzman and Russ  
have a contract to  
proceed  
Aug. 9,  
1984  
Russ  
Russ returns to  
Bellingham  
•
•
Russ expressed  
concern to Wilder  
about shipping the  
Lawrenceburg  
equipment to Canada.  
Concerns sorted out  
on Aug. 10 when  
Wilder, Russ and  
Johnson met with  
Lawrence and  
Richards.  
Aug. 10,  
1984  
Russ  
Meeting at  
•
Project format  
developed for Fly  
Ash and Bio-Mass.  
Lawrence’s office –  
Russ, Wilder,  
Johnson, Richards,  
Lawrence  
Aug. 11,  
1984  
Aug. 21,  
1984  
Russ  
Choy  
Russ meets with  
Johnson  
Meeting at Revenue  
Canada Office –  
Choy, McClure,  
Richards,  
•
•
Review the invoices  
created by Russ.  
Choy’s initial  
contact with the  
file.  
Taxpayer wanted a  
letter from Revenue  
Canada stating that  
they had approved  
the SRTC  
•
Investor’s Lawyers  
transactions.  
•
•
Request made by Choy  
to Richards for  
information on  
secondary financing.  
Aug. 22,  
1984  
Choy  
Meeting at  
Discussed who was  
behind Coastal –  
Wilder said to be  
the principal.  
Richards’ Office –  
Choy, McClure,  
Richards, Lawrence  
•
•
Told financing was  
done through  
promissory notes.  
Suppliers would  
defer the demand for  
payment until Dec.  
31, 1986 – told  
suppliers agreed  
based on Wilder’s  
reputation.  
•
•
Agreed to the use of  
an escrow account.  
Revenue Canada  
agreed to send out  
comfort letter for  
the transactions.  
Aug. 25,  
Breitzman  
Breitzman receives  
1984  
Russ’ Aug. 24  
memorandum and  
invoices at Atlanta  
airport  
Sep., 1984 Breitzman  
Breitzman moves  
into Johnson’s  
River Rd. office  
Russ talks to  
Wilder  
Sep. 15,  
1984  
Russ  
•
•
Wilder tells Russ  
that Fly Ash is put  
on hold and that  
Bio-Mass is  
complete.  
Sep. 24,  
1984  
Russ  
Russ talks to  
Wilder  
Wilder tells Russ  
that Fly Ash was  
“not funded, a goof  
up” in paperwork and  
he would try and get  
it done sometime  
later on.  
•
•
Russ told that  
“multiplier” would  
be 29%, not 30%.  
Sep. 30,  
1984  
Breitzman  
Breitzman  
Bio-Mass budget  
drawn up by  
Breitzman  
Johnson gives  
Breitzman two  
letters: Fly Ash  
(exhibit 96) and  
Bio-Mass (exhibit  
93-I)  
Oct. 2,  
1984  
Breitzman signed the  
letters despite  
having some concerns  
with their contents.  
Oct. 17,  
1984  
Choy  
Choy calls Richards  
•
•
Purpose of call to  
keep in touch with  
Richards.  
Richards says he had  
been travelling  
around US and Canada  
verifying capital  
expenditures and  
that the projects  
were contracted out  
to various  
engineering firms.  
Late Oct.  
early  
Nov., 1985  
Gagon  
Gagon  
Meeting at Wilder’s  
home – Gagon,  
Baker, Adams,  
Wilder, Johnson  
Gagon and Baker  
receive their first  
instalment of money  
from Wilder  
•
•
First discussion  
regarding the COSECO  
project.  
Nov. 2,  
1984  
Money given to Gagon  
via Johnson who was  
given the task by  
Wilder.  
Nov. 5,  
1984  
Choy  
Collections  
•
Choy notes that  
Richards had told  
him that he had  
receives ledger  
card for taxpayer’s  
company  
verified $65 million  
in expenditures and  
was prepared to  
issue a statement  
based on his  
findings, and the  
opinions of  
independent  
engineers that the  
taxpayer’s company  
had spent the money  
Nov. 18,  
1984  
Breitzman  
Breitzman makes a  
request for funds  
•
$1 million had been  
paid – Breitzman was  
requesting an  
additional $566,000.  
Nov. 20,  
1984  
Breitzman  
Gagon  
Breitzman  
acknowledges  
payment of $560,000  
Gagon and Baker  
meet Wilder in  
Calgary  
•
•
Payment given to him  
by Johnson, Wilder  
was not present.  
They visited a  
Calgary and Edmonton  
site for the  
Late Nov.  
early  
Dec., 1984  
manufacturing plant  
for COSECO – they  
choose the Edmonton  
site.  
Dec. 3,  
1984  
Choy  
Choy calls Richards  
•
•
Choy spelled out the  
information required  
from Richards.  
Richards told Choy  
that he would  
prepare the  
financial statements  
and call Choy on  
December 17, 1984.  
•
Bio-Mass designation  
also discussed.  
Dec. 17,  
1984  
Dec. 18,  
1984  
Choy  
Choy  
Choy receives no  
call from Richards  
Choy calls Richards  
•
•
•
Meeting set up for  
January 7, 1985.  
Pollard meets Wilder  
for the first time.  
Wilder pleased  
Pollard is typing up  
invoices.  
Jan. 5-6,  
1985  
Pollard  
Pollard typing up  
and balancing  
invoices  
Jan. 7,  
1985  
Pollard  
Pollard meets  
Richards  
•
Pollard told by  
Richards that the  
absence of source  
documents was  
alright because the  
invoices were only  
being put together  
for Revenue Canada.  
Jan. 7,  
1985  
Choy  
Alibhai  
Meeting – Choy,  
Alibhai, Richards,  
Wilder [Alibhai  
•
Choy could not  
recall what was  
discussed as he made  
says Wilder was  
there, Choy doesn’t  
mention him]  
no notes of the  
meeting.  
Choy’s involvement  
in the file was now  
limited as it was  
passed on to the  
auditor – Alibhai.  
Alibhai presented a  
handwritten document  
(exhibit 2054) to  
Richards at the end  
of the meeting – it  
outlined a list of  
information that  
Revenue Canada  
•
•
wanted.  
•
Alibhai saw purpose  
of the meeting as to  
obtain information  
about research and  
development, to make  
arrangements to  
commence the audit  
and to ensure that  
they had all the  
books and records to  
start the audit.  
[see summary of evidence  
for information learned at  
the meeting – Alibhai’s  
testimony]  
•
Richards promised  
the following  
information:  
•
Equipment costs  
verification by  
invoices from  
suppliers;  
•
•
Records of Johnson &  
Burnett;  
Bank statements  
showing where the  
SRTC funds were and  
disbursements from  
the account.  
Jan. 11,  
1985  
Alibhai  
Alibhai calls  
Richards  
•
•
•
Purpose was to ask  
Richards about some  
information that was  
missing.  
Alibhai wanted J & B  
records including  
truckers and Customs  
documents.  
Despite being  
promised the  
documents, Alibhai  
never did receive  
them.  
Jan. 17,  
1985  
Alibhai  
Alibhai  
Richards calls  
Alibhai  
•
Richards tells  
Alibhai that J & B  
records will be  
ready for Jan. 21.  
Alibhai examined  
documents.  
No record of any  
conversation with  
Richards.  
Jan. 21,  
1985  
Alibhai attends  
Richards’ office  
•
•
Jan. 23,  
1985  
Choy  
Alibhai  
Meeting – Choy,  
Alibhai, Wilder,  
Richards  
•
•
Choy could recall  
very little of the  
meeting.  
Alibhai said no  
discussion regarding  
Bio-Mass, Fly Ash or  
Hydro Petroleum.  
Feb. 13,  
1985  
Alibhai  
Meeting at  
•
•
Discussed J & B’s  
role with regards to  
R & D.  
J & B receiving no  
mgt fees, just a  
percentage of the  
profits.  
Richards’ office –  
Alibhai, Choy,  
Kayimzade, Johnson,  
Richards  
•
•
J & B sold equipment  
at cost to Coastal.  
Alibhai told there  
were no contracts  
despite invoices  
indicating there  
were.  
•
Alibhai told there  
was no insurance on  
the $143 million  
equipment.  
•
•
Alibhai told the  
projects could not  
and would not fail.  
Alibhai requested:  
progress billings,  
contracts, cancelled  
cheques and progress  
reports – none of  
this was ever  
provided.  
•
Subsequent to this  
meeting a referral  
to Basic Audit was  
prepared by Alibhai  
– Alibhai would take  
a lesser role as Moi  
took over.  
Feb. 15,  
1985  
Russ  
Baker informs Gagon  
that Wilder called  
him and told him to  
shut everything  
down.  
•
Gagon, Baker, Becker  
and Duke did not  
think it was  
reasonable to shut  
down the plant and  
proceeded to test it  
in May of 1985  
(guessing).  
Mar. 23,  
1985  
Breitzman  
Breitzman  
Breitzman’s 2nd  
request for funds  
for Bio-Mass and 1st  
for Fly Ash  
Mar. 24,  
1985  
Breitzman draws up  
Bio-Mass memo  
•
•
Purpose of the memo  
was to keep Johnson  
and Wilder up-to-  
date on the project.  
Apr. 23,  
1985  
Alibhai  
Moi  
Meeting at  
Alibhai’s role in  
meeting was limited  
to asking if any of  
the information he  
had requested was  
available – Wilder  
had info on a toxic  
scrubber but that  
was it.  
Richards’s office–  
Alibhai, Moi, Choy,  
Richards, Wilder  
•
•
Moi’s first contact  
with the taxpayers.  
Evidence of an  
agreement between  
Coastal and J & B  
was sought – Wilder  
said there was a  
simple agreement  
despite Johnson  
previously denying  
there was an  
agreement.  
•
Explanation for a  
lack of information  
provided was that  
all staff were  
working on the  
projects and none on  
administration.  
•
•
Wilder indicated  
they intended to pay  
the suppliers  
through revenue  
earned from the  
projects  
Moi requested notes,  
contracts and  
invoicing which  
should have been  
available – Richards  
agreed to get this  
info.  
•
Agreement to meet on  
May 15, where  
information would be  
provided.  
Breitzman  
Choy  
Breitzman receives  
$215,000 cheque  
(exhibit 205) from  
Wilder  
[likely meant April 23]  
Apr. 24,  
1985  
Meeting at  
Richards’ office –  
Choy, Moi, Alibhai,  
Richards, Wilder  
•
•
•
•
Purpose of the  
meeting was to get  
more information  
regarding the  
projects.  
Very little  
information had been  
received and what  
had come in was in  
bits and pieces.  
Suggests that this  
was likely the first  
meeting he had with  
Wilder [what about  
Jan. 7 meeting?]  
Richards wanted to  
know why Moi had  
visited Johnson’s  
office looking for  
information on J &  
B.  
May 2,  
1985  
Moi  
Richards calls Moi  
•
•
Richards told Moi he  
would be giving him  
information on  
Coastal, Vardax and  
J & B on May 15.  
Richards told Moi  
that there is very  
little documentation  
with respect to  
suppliers because  
Wilder generally did  
business by phone or  
verbally with very  
little left in  
writing.  
•
•
Richards told Moi  
that Wilder was  
willing to take him  
to see facilities in  
Calgary and  
Edmonton.  
Moi called to ensure  
May 14,  
Moi  
Moi calls Richards  
1985  
documents would be  
there for May 15  
meeting, told by  
Richards there would  
be a delay so  
parties agree to  
move meeting to May  
21.  
May 21,  
1985  
Moi  
Meeting at  
Richards’ office –  
Moi, Richards  
•
•
Purpose of the  
meeting was to  
follow up on records  
that had been  
promised.  
Received from  
Richards: bank  
summaries, cancelled  
cheques and J & B  
cheque stubs, and a  
general ledger and  
synoptic with  
respect to Coastal.  
•
Moi expected to see  
more – he was  
unsatisfied and  
asked that all  
records relating to  
Coastal, J & B,  
Pacific Western,  
Bio-Mass and Pacific  
Natural be  
centralized at  
Richards’ office by  
May 24.  
•
Moi requested  
Richards’ working  
papers, but Richards  
wanted Wilder’s  
approval before  
releasing them.  
May 22,  
1985  
Moi  
Meeting at  
Richards’ office –  
Moi, Richards  
•
•
Richards calls  
Wilder to discuss  
information  
requested by Moi.  
Wilder indicates he  
is preparing for a  
meeting in Mexico  
which might generate  
$300-$400 million in  
sales and will  
return to Canada on  
June 2, 1985.  
•
Moi requests that  
the information he  
seeks be provided by  
June 7, 1985.  
•
•
Wilder and Richards  
agree to that  
deadline – Wilder  
later says he never  
agreed to provide  
the information,  
just to do his best  
to get it.  
Subsequent to the  
phone call, Moi  
remained in  
Richards’ office and  
prepared a list of  
specific info he  
wanted  
May 27,  
1985  
Moi  
Letter sent to  
Wilder and Johnson  
via Richards  
•
•
Moi puts in writing  
info required by  
Revenue Canada.  
Although oral  
requests had been  
made, Moi felt it  
necessary at the  
time to give a brief  
history of the info  
requests and outline  
the info still  
needed.  
June 7,  
1985  
Moi  
Moi  
Moi and Richards  
have telephone  
conversation  
•
•
Wilder still in  
Mexico and Johnson  
hadn’t returned  
Richards’ call.  
Richards told Moi  
that the Coastal and  
J & B info would be  
ready for June 10.  
Kimmings asks Moi  
about status of  
Coastal file.  
Moi advises Kimmings  
that they had been  
promised the  
June 10,  
1985  
Inquiry by Kimmings  
(director of  
Vancouver tax  
office)  
•
•
delivery of records  
for months, that the  
production of  
records had been  
unsatisfactory and  
that the June 7  
deadline had been  
missed.  
June 10,  
1985  
Moi  
Richards and Wilder  
call Moi  
•
Moi told accounting  
records would be  
completed that week,  
the engineer’s  
reports by the  
following week and  
that some monthly  
engineer’s reports  
had been found and  
would be  
incorporated into  
the engineer’s  
reports.  
•
•
Moi told Wilder of  
his talk with  
Kimmings.  
Moi told them that  
he wanted the J & B  
records submitted  
with the Coastal  
even if they weren’t  
fully summarized –  
Wilder said he would  
get Johnson to  
comply.  
•
Two arrangements  
made: 1) on June 11  
Moi would go to  
Richards’ office to  
discuss Wilder’s  
Mexican dealings and  
2) on June 14 Moi  
would go to  
Richards’ office to  
review the work on  
the records up to  
that point.  
June 11,  
1985  
Moi  
Meeting at Richards  
office – Moi,  
Richards, Wilder,  
Monroy  
•
•
Mostly about Mexican  
dealings.  
Moi asked Wilder if  
he had talked to  
Johnson about the  
records – Wilder  
said he would call  
him that evening.  
•
Moi emphasized that  
the records should  
be available by the  
next week.  
June 14,  
1985  
Moi  
Scheduled deadline  
for delivery of  
records  
Meeting – Moi,  
Kuhn, Wilder,  
Richards  
•
•
Deadline moved to  
June 21 by Kimmings.  
June 18,  
1985  
Moi  
Kuhn  
Wilder expressed  
concern about  
getting reports done  
in time because he  
didn’t want to take  
his engineers off  
the projects.  
•
Moi and Kuhn  
reminded Wilder he  
had agreed to meet  
the June 7 deadline  
– Wilder denied as  
much saying he only  
agreed to do his  
best.  
•
Wilder gave them an  
engineer’s report on  
an invert burner and  
wanted feedback  
before giving them  
others – Moi and  
Kuhn wanted the  
others in original  
form.  
•
Arrangements made  
for Moi and Kuhn to  
visit the Aldergrove  
plant to review  
records – the  
records were not  
useful according to  
Moi and Kuhn.  
June 21,  
1985  
Moi  
Kuhn  
Meeting at  
Richards’ office –  
Moi, Kuhn, Richards  
•
•
•
Deadline for the  
collection of  
records.  
Wilder was in  
Edmonton at the  
time.  
Moi and Kuhn told  
records were being  
couriered out from  
Aldergrove.  
•
•
Kuhn told Richards  
that the info they  
had received up to  
that point was  
insufficient in  
verifying the R & D  
and expenditures.  
Richards suggested  
that Wilder had a  
problem releasing  
confidential or  
proprietary  
engineering info.  
•
•
Moi told Richards he  
wanted the info  
regardless.  
Richards denied  
having equipment  
verification working  
papers despite  
previously saying he  
had them.  
•
•
Richards informed  
Moi and Kuhn that  
Johnson hadn’t  
provided any more  
info because he was  
busy dealing with a  
Securities  
Commission.  
Following the  
meeting Moi prepared  
a T20 report(exhibit  
2046) setting out  
his views with  
respect to the file  
– based on the  
scarcity of info he  
wanted the audit  
concluded and  
Collections  
involved.  
•
•
Moi’s supervisor  
approved the report.  
June 24,  
1985  
Moi  
Meeting at  
Richards’ office –  
Moi, Wilder  
Wilder provides 4  
sets of technical R  
& D info that should  
have been provided  
on the 21st.  
•
Info included: “Tar  
Sands Tests”,  
drawings and  
schematics for an  
invert burner, toxic  
scrubber, Bio-Mass  
machine and projects  
of Pacific Western.  
•
•
•
Moi was told by  
Wilder that COSECO  
was a company formed  
to sell the Hydro  
Petroleum process.  
Moi received a list  
of chief engineers  
for the projects  
that Coastal were  
involved in.  
Wilder was supposed  
to bring some  
information but  
never showed up.  
June 27,  
1985  
Kuhn  
Meeting at  
Richards’ office –  
Kuhn, Richards  
July 1985  
Breitzman  
Breitzman  
Breitzman told by  
Wilder that Johnson  
was “out of the  
picture”  
Breitzman draws up  
Pacific Natural  
July 3,  
1985  
Resources summary  
and gives it to  
Wilder  
July 10,  
1985  
Moi  
Moi  
Moi talks to  
Kimmings  
•
•
Moi suggests  
collections action  
but is told by  
Kimmings to wait and  
discuss it with  
Mckenzie (chief of  
Audit) on July 11.  
Meeting called by  
Chief of Audit,  
McKenzie, in which  
Moi was told to work  
with Collections to  
send out a  
July 11,  
1985  
Meeting – Mckenzie,  
Connors, Flett,  
Choy, Moi  
Requirements letter.  
•
•
Earlier in the day  
Choy and Moi had  
gone to Richards’  
office to look at  
some further  
documents.  
July 25,  
1985  
Moi  
Moi calls Richards  
Richards indicates  
he will try and  
arrange a meeting  
between Moi and  
Wilder - Moi wanted  
to serve Wilder with  
Requirements  
although he did not  
tell Richards as  
much.  
July 29,  
1985  
Moi  
Moi  
Moi calls Richards  
•
Richards tells Moi  
that Wilder will  
call him later that  
day (he never did  
call).  
Moi gets Wilder’s  
Bellingham phone  
number.  
•
•
July 30,  
1985  
Moi calls Wilder  
Set up meeting for  
Aug. 8, 1985, at  
Richards’ office  
Aug. 8,  
1985  
Moi  
Kuhn  
Meeting at  
•
•
Wilder discussed  
some new projects.  
Moi went over info  
still required and  
info that had been  
received.  
Richards’ Office –  
Moi, Kuhn, Wilder,  
Richards  
•
•
Discussed Johnson’s  
Continental Trust  
transaction.  
3 Requirements  
served (dated July  
30) for Coastal, Cdn  
Bio-Mass and Vardax.  
•
•
•
Moi did not tell  
Wilder of  
collections action  
in fear of assets  
disappearing.  
Wilder’s responses  
to the items in the  
letters set out in  
Moi’s testimony  
summary.  
Wilder told he could  
respond to the  
letters by simply  
writing answers down  
and Kuhn offered the  
department’s  
assistant.  
•
•
Wilder at times  
attempted to hand  
letters back saying  
he would not comply  
because he had given  
them everything.  
Wilder got upset,  
but eventually  
calmed down and  
agreed to allow Moi  
to audit the books  
of Coastal, Cdn Bio-  
Mass and Vardax.  
•
•
Wilder threatened to  
move his projects to  
the U.S. if the  
letters were  
enforced.  
Richards agreed to  
allow Moi to review  
his accounting files  
for Coastal, Cdn  
Bio-Mass and Pacific  
Western on Aug. 19  
Aug. 19,  
1985  
Moi  
Moi  
Meeting with  
Richards fell  
through and was  
moved to Aug. 22  
Meeting between Moi  
and Richards (had  
planned on meeting  
on Aug. 19)  
Aug. 22,  
1985  
•
•
Richards agreed that  
Wilder was giving  
the minimum amount  
of info he could to  
satisfy Revenue  
Canada.  
Richards tells Moi  
that he would prefer  
the department to  
deal directly with  
Wilder regarding the  
information they  
were requesting.  
•
Moi still not  
willing to recommend  
prosecution with  
respect to the  
Requirements  
letters.  
Sep. 11,  
1985  
Moi  
Moi and Richards  
telephone  
conversation  
•
•
Richards had  
received the  
Requirements letters  
from Wilder and  
Johnson.  
Richards told Moi  
that the tax returns  
for Coastal and Bio-  
Mass were ready and  
that he was given no  
info on any verbal  
agreements as Wilder  
had told him they  
might not be  
agreements because  
they were subject to  
change.  
•
Moi told Richards  
that he wanted all  
the agreements as  
they would provide a  
history and the  
department could  
determine their  
meaning.  
•
•
Meeting set up for  
Sep. 13, 1985.  
Richards gives Moi  
and Kuhn draft  
financials and his  
working paper for  
Bio-Mass.  
Sep. 13,  
1985  
Moi  
Meeting at  
Richards’ Office –  
Moi, Kuhn, Richards  
•
•
Richards told them  
that the tax return  
for Bio-Mass was  
ready and similar  
information was  
available for  
Coastal.  
Johnson confirmed he  
would be working on  
J & B, Pacific  
Natural and Pacific  
Western info – he  
blamed the  
department for the  
lack of Vardax info.  
•
Richards reiterated  
that Wilder was  
reluctant to give  
details because of  
confidentiality –  
Kuhn assured him the  
info would remain  
confidential.  
•
•
Richards was unable  
to provide the  
addresses of the  
projects.  
Kuhn advised  
Richards that the  
Requirements letters  
had not been  
complied with.  
Oct. 3,  
1985  
Moi  
Richards returns  
Moi’s phone call  
•
•
Moi informed  
Richards that they  
may have to enforce  
the Requirements  
letters.  
Moi asked about  
asset registration  
info – told assets  
were not registered.  
•
•
Arranged for Moi to  
meet with Jessie  
Acosta on Oct. 7.  
Discussed the  
Coastal Requirements  
letter, which  
Richards said had  
already been sent.  
The location of  
assets was also  
discussed.  
Discussed production  
of materials as  
discussed on Oct. 7.  
Moi requested a  
draft copy of the  
Bio-Mass reply  
letter – Richards  
said he would get  
one.  
Oct. 7,  
1985  
Moi  
Moi  
Moi meets with  
Richards  
•
•
•
Oct. 10,  
1985  
Moi calls Richards  
•
Richards said he had  
received no answers  
from Wilder because  
Wilder was out of  
town for one or two  
days but was to  
contact him on Oct.  
11.  
Date  
unknown –  
but  
between  
Oct. 10-24  
Oct. 21,  
1985  
Moi  
Moi  
Meeting – Moi,  
Acosta  
•
Discussed payments  
to R.J. Crump  
(Caldary corporate  
lawyer) in trust.  
Moi prepares memo  
for Robert Roy  
•
•
Memo relates to  
Coastal, Bio-Mass  
and Pacific Western.  
Moi recommends that  
collection action be  
taken and that the  
file be referred to  
Special  
Investigations.  
•
As of this time  
there were many  
unanswered questions  
in Moi’s mind – he  
was unable to  
determine what had  
really gone on – ie.  
unusual  
transactions,  
suppliers with  
different addresses  
from document to  
another.  
Oct. 24,  
1985  
Oct. 30,  
1985  
Oct. 31,  
1985  
Moi  
Moi  
Moi  
Moi leaves message  
for Wilder  
Moi leaves message  
for Wilder  
Meeting – Moi,  
Acosta, Richards  
Call not returned  
Call not returned  
•
•
•
Richards told Moi  
that Wilder might  
have been in China  
and that’s why his  
phone calls weren’t  
returned.  
Richards agreed to  
obtain all cheques  
and vouchers  
relating to Vardax  
transactions with  
Coastal and Pacific.  
Moi requested  
Lawrence’s trust  
account statements  
and vouchers –  
Richards was unsure  
how Lawrence would  
react to the  
request.  
Nov. 12,  
1985  
Breitzman  
Breitzman draws up  
“things to do” memo  
Nov. 15,  
1985  
Moi  
Moi  
Moi has discussion  
with Richards  
•
•
Discussion regarding  
box of Johnson’s  
documents – Richards  
indicates he would  
need Johnson’s  
approval before  
letting Moi look at  
them.  
Nov. 25,  
1985  
Meeting at  
Johnson’s Office –  
Moi, Ma, Johnson  
By this time the  
file was with  
Special  
Investigations –  
Moi’s involvement  
limited to looking  
at info on assets  
for collection and  
assisting in passing  
the file over to  
Maurice Ma in SI.  
•
•
•
Moi informed Johnson  
that he had received  
the records that  
Johnson had sent to  
Richards but that  
they weren’t what  
Moi was looking for.  
After denying he had  
any records, Johnson  
finally gave Moi  
access to records of  
J & B, Pacific  
Natural and Pacific  
Western.  
Moi was to drop the  
records off at  
Richards’ office,  
which he did and  
then took them back  
to his own office  
with the approval of  
Richards.  
•
•
Records included  
exhibit 2052 – bank  
drafts and cheques.  
Approximately 2  
weeks before  
Christmas.  
Dec., 1985 Breitzman  
Bio-Mass to be  
moved from  
Aldergrove to  
Winnipeg, Manitoba  
Bio-Mass  
Mar. 6,  
1986  
Breitzman  
•
Breitzman told by  
Revenue Canada  
officials that  
Wilder and his  
associates are under  
criminal  
demonstration for  
Coors  
investigation.  
Mar./Apr., Breitzman  
1986  
Bio-Mass and Fly  
Ash projects  
terminated.  
•
•
Breitzman had no  
choice but to end  
them as they had run  
out of money.  
Subsequent to having  
been given immunity,  
Breitzman met with  
Revenue Canada  
Apr. 29,  
1986  
Breitzman  
Revenue Canada give  
Breitzman an  
immunity letter in  
exchange for  
information  
officials in Baker,  
Oregon, and Denver,  
Colorado.  
APPENDIX “B”  
FLOWCHART  


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